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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter March 4, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles MORATORIUM ORDER UNDER IBC – A BAR TO PROCEEDINGS UNDER TAX LAWS? News Major Racket of Fake Invoicing of ₹ 7896 Crore Busted Involving Network of 23 Shell Companies New and innovative measures to improve working in MCA BCP V Multiple Holdings Pte. Ltd. proposes to acquire 40% paid up equity share capital of IndoStar Capital Finance Limited through CCI’s Green Channel Government amends Export Policy of APIs and formulations made from these APIs More than 81% account holders are Women under Stand Up India Scheme In the interest of farmers, Government permits export of onions w.e.f 15th March Income Tax Department conducts search on a group of individuals, hawala dealers and businessmen in Raipur Notifications Companies Law G.S.R. 151 (E) - dated 2-3-2020 - Co. Law Exemptions to Government Companies under section 462 of the CA 2013 G.S.R. 150 (E) - dated 2-3-2020 - Co. Law Corrigendum - Notification No. G.S.R. 114 (E) dated 14 Feb 2020 DGFT 50/2015-2020 - dated 3-3-2020 - FTP Amendment in Export Policy of APIs and formulations made from these APIs 49/2015-20 - dated 2-3-2020 - FTP Amendment in Export Policy of Onions GST 08/2020 - dated 2-3-2020 - CGST Central Goods and Services Tax (Second Amendment) Rules, 2020 GST - States 43/2018–State Tax - dated 28-2-2020 - Delhi SGST Supersession Notification Nos. 57/2017–State Tax dated 12th December, 2017 and 33/2018–State Tax dated 30th August, 2019 SEBI SEBI/LAD-NRO/GN/2020/05 - dated 2-3-2020 - SEBI Securities and Exchange Board of India (Infrastructure Investment Trusts) (Amendment) Regulations, 2020 Circulars / Instructions / Orders DGFT Trade Notice No. 54/2019-20 - dated 3-3-2020 Import of additional quota of Urad (2.5 Lakh MT) for the fiscal year 2019-20 TRADE NOTICE NO. 53/2019-2020 - dated 2-3-2020 Online filling and Issuance of Preferential Certificate of Origin under India Korea Comprehensive Economic Partnership Agreement (IKCEPA) for India's Exports to Republic of Korea w.e.f. 06th March 2020 Companies Law 05/2020 - dated 2-3-2020 Clarification on prosecutions filed or internal adjudication proceedings initiated against Independent Directors, non-promoters and non-KMP non-executive directors Highlights / Catch Notes GST Value of supply in case of lottery, betting, gambling and horse racing. - Rule 31A of the Central Goods and Services Tax Rules, 2017 - As amended Visit to Get Source Unilateral appropriation of a part of refundable amount in terms of the FORM-GST-RFD-06 - Show Cause Notice (SCN) not issued - recovery of dues - the respondents being statutory authorities, need to practice fairness while dealing with a citizen and that, the unilateral recovery by way of appropriation falls short of fairness standards which the respondents are expected to maintain. - HC Visit to Get Source Assessment of non-filers of returns - Default in filing of return - Even after receipt of the impugned orders of assessment, they failed to avail the remedy provided under subsection (2) of Section 62. - Under such circumstances we cannot entertain the challenges raised against the best judgment assessments finalized. - HC Visit to Get Source Income Tax Deduction u/s 80-IB - whether production of poultry feeds constitutes manufacture? - poultry feed is not merely rice bran or maize or vitamins or minerals but a mixture of all in calculated proportions through a process involving mills and manufacturing by the use of machinery - the end product being the pellet is wholly different from each of the ingredients - HC Visit to Get Source Delay in deposit of employee’s contribution to Provident Fund and ESI u/s 2(24)(x) r.w.s. 36(1)(va) - due date of deposit of PF and ESI contribution is to be considered from close of the month, for which charges is required to be paid by the employer. - additions confirmed - HC Visit to Get Source Penalty levied u/s 271C - Non deducting TDS on the LTC payments made towards foreign travel - there is a reasonable cause on the part of the assessee in not deducting TDS on the LTC payments - No penalty - AT Visit to Get Source Revision u/s 263 - MAT - assessment of the prior period income’s assessment for the purpose of sec.115JB computation as per the scheme of settlement of case - once the said prior period income stood assessed under normal provisions in the corresponding earlier assessment year(s) 2010-11 to 2013-14, The Assessing Officer’s alleged inaction in not disallowing the very sum(s) as prior period income for the purposes of MAT computation could neither be termed as erroneous nor causing prejudiced to interest of the Revenue - AT Visit to Get Source Additional depreciation - whether coffee, beverage and food stuffs are not distinct and new articles or things within the meaning of section 32(1)(iia) & 2(29BA) - It came to that position by storing, drying of coffee, hulling, pealing, polishing, grading, colour sorting, garbling and manual grading, out-turning of garbled coffee and bulking, thereby, the same being a irreversible process, there is a change in the chemical composition of the product. Alternatively, one cannot say that the same is a 'processing'. It amounts to production and manufacture of a distinct commercial product different from original product. - AT Visit to Get Source Nature of advance received - AO has brought to tax advances which the assessee had received during the period 1996-97 to 2008-09 totally ₹ 269.48 cr under the head other source. We are surprised to note that the AO had made additions contrary to the provision of section 56 of the Income Tax Act which govern the assessment of income under the residuary head. - AT Visit to Get Source Customs Revocation of Customs Brokers License - There is nothing on record to arrive that the ‘G’ card-holder, who was investigated for his key role in the conspiracy to smuggle ‘red sanders’ out of India, was concerned with the activities for which appellant herein was licenced. - License is directed to be restored - AT Visit to Get Source Refund claim - export of goods - they had received remittance in excess of what was indicated in the invoice. - principles of unjust enrichment - After going through the provisional and final invoices, it can be concluded that the appellant had not passed on the burden of export duty to their overseas customers - refund allowed - AT Visit to Get Source DGFT Online filling and Issuance of Preferential Certificate of Origin under India Korea Comprehensive Economic Partnership Agreement (IKCEPA) for India's Exports to Republic of Korea w.e.f. 06th March 2020 - Trade Notice Visit to Get Source Corporate Law Exemptions to Government Companies under section 462 of the CA 2013 from provisions of this Act - Notification dated 5-6-2015 amended Visit to Get Source Indian Laws Dishonor of Cheque - Corroborative piece of evidence is not a rule of law, but it is a rule of prudence and presumption under Section 139 of the Act, 1881 is rule of law and presumption has to be drawn by the court as per Section 139 of the Act, 1881. When presumption is not rebutted, charge under Section 138 of the Act, 1881 is established. - HC Visit to Get Source Service Tax Reverse charge mechanism (RCM) - revenue neutrality - If the argument of revenue neutrality was to be considered a valid argument under the scheme of Finance Act, 1994, then entire provisions relating to payment of service tax on reverse charge will become otiose and every service recipient will claim that what so ever service tax he pays on reverse charge basis will be available to him as CENVAT Credit. - AT Visit to Get Source Business Auxiliary Service - they received recharge voucher cards from the principles at a discounted price and thereafter, sold the same at M.R.P. - where the service tax has been paid on the M.R.P by the main operator the commission agent / distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged. - AT Visit to Get Source Refund of Service Tax erroneously paid - sob-contractor - main contractor having refused to pay the Service Tax on the ground that the services relating to construction of road were covered under the category of Works Contract Service which was exempt - The rejection of refund is not in order - AT Visit to Get Source Case Laws: GST 2020 (3) TMI 134 Levy of penalty - confiscated goods alongwith the vehicle have already been released upon payment of taxes- clause (a) of Sub-section (1) of Section 129 of the GGST/ CGST Act - HELD THAT:- The writ applicant availed the benefit of the interm order passed by this court and got the vehicle along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV-10, deserves to be discharged - Application disposed off. 2020 (3) TMI 133 Unilateral appropriation of a part of refundable amount in terms of the FORM-GST-RFD-06 - Show Cause Notice (SCN) not issued - recovery of dues - HELD THAT:- the respondents being statutory authorities, need to practice fairness while dealing with a citizen and that, the unilateral recovery by way of appropriation falls short of fairness standards which the respondents are expected to maintain. This writ petition succeeds in part; that part of the impugned which appropriated a portion of refundable amount having been set at naught, the other part has been left intact; matter is remitted to the answering respondent for consideration afresh after hearing the petitioner or his agent, within a period of eight weeks. 2020 (3) TMI 132 Assessment of non-filers of returns - Default in filing of return - non-compliance with the yardsticks prescribed under Sec.62 of GST Act - HELD THAT:- The matter in issue raised in these cases is fully covered against the petitioners and in favour of the respondent revenue as per the dictum laid down by the Division Bench of this Court in [ 2019 (10) TMI 1181 - KERALA HIGH COURT ] The assesses herein had committed default continuously in filing the returns, in responding to the notices requiring them to file the returns, in responding to the notice proposing best judgment assessments etc. Even after receipt of the impugned orders of assessment, they failed to avail the remedy provided under subsection (2) of Section 62. Under such circumstances we cannot entertain the challenges raised against the best judgment assessments finalized. Petition dismissed. Income Tax 2020 (3) TMI 131 Characterization of income - amount received towards restrictive convenant - revenue or capital receipt - 'payment received as non-competition fee under a negative covenant has to be treated as a capital receipt till the Assessment Year 2003-04' - HELD THAT:- SLP Dismissed. 2020 (3) TMI 130 Deduction u/s 80-IB - whether production of poultry feeds constitutes manufacture? - HELD THAT:- New definition of manufacture which is there in the said Act from April 1, 2009, as stated in paragraph 5 above, it will be clear that all that is necessary to take an activity out of the realm of mere process to that of manufacture, would be that the application of processes brought out a change to take the commodity to a commercially different and distinct commodity that it could no longer be considered as the original commodity . This also satisfies the first limb being Section 2(29-BA)(a) of the said Act, and the definition having two disjunctive clauses, it is clear that there does not have to be change of chemical composition of the end product from that of the original ingredients, to take an activity out of the purview of an ordinary process and constitute manufacture as argued by the Revenue. This is in accordance with the law laid down by the Hon'ble Supreme Court in JALANI ENTERPRISES [ 2011 (3) TMI 311 - SUPREME COURT] As apparent from the facts on record as in paragraphs 6 and 7 of this judgment, where I have set out and dwelt at length on the stages of the process involved, and the end product and its separate commercial utility and identity from that of the original ingredients, it is clear that poultry feed is not merely rice bran or maize or vitamins or minerals but a mixture of all in calculated proportions through a process involving mills and manufacturing by the use of machinery which run on electricity and where the end product being the pellet is wholly different from each of the ingredients and results in a product which is commercially different and distinct as a commodity so that it cannot be considered as any of the original commodities which were used as ingredients. As a result, the question of law framed by this Court as in paragraph 3 of this judgment is answered against the revenue and it is held that the conclusion of the learned tribunal that production of poultry feeds constitutes manufacture is not perverse. Consequentially, appeal of the Revenue is dismissed and the order of the learned tribunal is confirmed. The Revenue shall bear the costs of the appeal assessed at 1000 GMs. - Decided in favour of the assessee. 2020 (3) TMI 129 Unexplained income - declaration made by another party before the Settlement Commission - HELD THAT:- Assessee need not to be asked to explain the entries or notings in the books of a third party. In the absence of any other independent material to corroborate the statement of Shri Bhikhubhai Padsala made before the Settlement Commission, it would not be prudent to take the view that there was a transaction between the assessee and Shri Bhikhubhai Padsala in cash with regard to the purchase of certain parcels of land. CIT(A) relied upon the decision of the Delhi High Court in the case of CIT Vs. Vineeta Gupta [ 2014 (5) TMI 543 - DELHI HIGH COURT] wherein, the view taken is that the declaration made by another party before the Settlement Commission is not binding upon the assessee, therefore, no additions can be made in absence of any independent material. Question of law as proposed by the Revenue cannot be termed as a substantial question of law. 2020 (3) TMI 128 Stay of the demand notice on deposit of 20% of the demand amount made - petitioner seeks considerable time for the payment, as even 20% would be more than Ten Crores of rupees - HELD THAT:- Upon instructions, the learned standing counsel appearing for Revenue, stated that the petitioners are permitted to pay 20% of the total demand in five(05) equal monthly installments, first of such installment would commence on or before 30.03.2020. The corresponding installments will have to be paid on 30.04.2020, 30.05.2020, 30.06.2020 and on 30.07.2020. The payment of the balance 80% of the amount is stayed on payment of the above such installments for the 20% of the demand amount. In the meanwhile, the second respondent is directed to hear the appeal in expedition. 2020 (3) TMI 127 Addition on account of sales - Addition loose sheets recovered during survey operations - HELD THAT:- We do not find any reason to interfere in the impugned order. The documents recovered during the survey operation have to be read as they exist and nothing can be added to them. The said documents disclose what they state. The said documents reflect broker-wise due as on 12.01.2005 . This clearly means that the tabulation reflected the amount recoverable by the assessee from the named brokers, as on 12.01.2005, and it did not reflect the amount actually received or accrued. The assessee, admittedly, is a real estate developer and its explanation that it had received booking amount of ₹ 17 crores, which was reflected in the book of accounts to the AY 2005-06, and that in respect of the said bookings, further amounts were to be received in subsequent years was completely a plausible explanation. Indeed, the assessee disclosed in its books of accounts further receipt of ₹ 1,34,59,86,447/- in the subsequent years, and the assessee also reflected the balance amount due as ₹ 7,88,50,502/-. AO was not justified in making addition on account of sales. 2020 (3) TMI 126 Rectification of mistake u/s 254 - HELD THAT:- When the Tribunal had dismissed the appeal of the assessee holding that there was no illegality or infirmity in the order passed by the first appellate authority which the Tribunal affirmed, by necessary implication it would mean that the appeal filed by the Revenue had become redundant inasmuch as it had challenged the same order of the first appellate authority which the Tribunal has affirmed. Therefore, not on the ground mentioned by the Tribunal in the impugned order dated [ 2019 (7) TMI 1581 - ITAT MUMBAI] but on the above ground, we feel that filing of the Misc. Application by the Revenue was wholly unwarranted. Appeal filed by the Revenue stated to be pending before the Tribunal would be covered by the decision rendered by the Tribunal in the appeal of the assessee unless reversed in subsequent proceedings by the High Court. 2020 (3) TMI 125 Conditional stay to the demand raised - AO directed the Petitioner to pay 20% of the demand by way of five instalments as mentioned in the impugned order, pursuant to which recovery of the balance demand would be stayed till 30.09.2020 or to be reconsidered thereafter - HELD THAT:- We are of the view that it would be in the interest of justice if the first appellate authority i.e. the Commissioner of Income Tax (Appeals) decides the appeal of the Petitioner expeditiously and till such time to keep in abeyance the demand raised in terms of the assessment order dated 27.12.2019. Accordingly, we direct that the appeal filed by the Petitioner be taken on board by the Commissioner of Income Tax (Appeals) and to decide the same within a period of eight weeks from the date of the receipt of an authenticated copy of this order and during the interregnum there shall be stay of the recovery of the demand pursuant to the assessment order dated 27.12.2019. 2020 (3) TMI 124 Delay in deposit of employee s contribution to Provident Fund and ESI u/s 2(24)(x) r.w.s. 36(1)(va) - HELD THAT:- The aforesaid issue is squarely covered against the assessee by Hon ble jurisdictional High Court s judgment in the case of CIT vs. Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act. The law so laid down by the Hon ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon ble Supreme Court does not dilute binding nature of this judicial precedent. Also in the case of Ask Me Lab Con Services Ltd V/s. Income Tax Officer Ward [2019 (6) TMI 759 - GUJARAT HIGH COURT ] by following the decision given in the case of M/s Checkmate Facility and Electronic Solutions Pvt. Ltd. [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] held that due date of deposit of PF and ESI contribution is to be considered from close of the month, for which charges is required to be paid by the employer. - Decided against assessee 2020 (3) TMI 123 Delay in deposit of employee s contribution to Provident Fund and ESI u/s 2(24)(x) r.w.s. 36(1)(va) - HELD THAT:- The aforesaid issue is squarely covered against the assessee by Hon ble jurisdictional High Court s judgment in the case of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act. The law so laid down by the Hon ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon ble Supreme Court does not dilute binding nature of this judicial precedent. Also in the case of Ask Me Lab Con Services Ltd V/s. Income Tax Officer Ward [ 2019 (6) TMI 759 - GUJARAT HIGH COURT ] by following the decision given in the case of M/s Checkmate Facility and Electronic Solutions Pvt. Ltd. [ 2018 (10) TMI 994 - GUJARAT HIGH COURT] held that due date of deposit of PF and ESI contribution is to be considered from close of the month, for which charges is required to be paid by the employer. - Decided against assessee 2020 (3) TMI 122 Exemption u/s 11 - registration u/s. 12AA and approval u/s. 80G - HELD THAT:- We find the CIT(E) refused to grant registration 12A/12AA on the ground that the assessee failed to substantiate that the objects of the society / trust are charitable in nature and the activities of the society/ trust are genuine, since the assessee failed to produce the requisite details called for by him. We find the assessee in the grounds of appeal has specifically taken grounds that the CIT(E) has not granted him reasonable opportunity of being heard. In the interest of justice we deem it proper to restore the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate the charitable activity of the society for grant of registration 12AA of the Act. The assessee is also hereby directed to appear before CIT(E) and file the requisite details as called for by him without seeking any adjournment under any pretext. CIT(E) shall decide the issue as per fact and law after giving reasonable opportunity of being heard to the assessee. Since we are restoring the issue of registration 12A/ 12AA, which is one of the pre condition for granting of approval u/s. 80 G of the Act, therefore, we also restore the grounds challenging the denial of approval u/s. 80G CIT(E) for fresh adjudication. Appeals filed by the assessee are accordingly allowed for statistical purpose. 2020 (3) TMI 121 Deduction u/s 80IC - expenses related to generator, electricity expenses - manufacturing provided in section 2(29BA) - HELD THAT:- In the instant case, section 80IA(8) and 80IA(10) are relevant to find out the reason of the abnormal profit and examine whether the assessee has shifted profit or expenditure to eligible business or to any other business carried on by the assessee or shifted profit or expenditure to any other person. CIT(A) in impugned order has mentioned that the AO has not commented in remand report on this issue. CIT(A), however, on the basis of the financial statements and discussion with the Authorized Representative of the assessee held that there was no other business which was carried out by the assessee company and, therefore, there was no reason to go into the issue of deriving more than ordinary profit which might be expected to arise in the eligible business. CIT(A) did not call for report or comment from the AO on the specific submission of Authorized Representative. Application of section 80-IA(8) and 80-IA(10), CIT(A) was required to examine all the expenses incurred by the assessee for ascertaining shifting of any expenses to any other business of the assessee or to any other concern. From the finding of the CIT(A), it cannot be ascertained that he has examined the expenses as per the requirement of the section 80IA(8) or 80IA(10). CIT(A) is having coterminous power of the Assessing Officer, and thus, he was required to examine this issue thoroughly. In view of the facts of the circumstances of the case and in the interest of the substantial justice, we feel it appropriate to restore this issue back to the file of the Assessing Officer for deciding applicability of section 80IA(8) and 80IA(10) of the Act over the affairs of the assessee. The grounds raised by the Revenue in both the appeals are accordingly allowed for statistical purposes 2020 (3) TMI 120 Order as passed ex-party in violation of the principle of the natural justice - HELD THAT:- It is evident from the above paragraph of the impugned order, that numerous opportunities have been provided by the Learned CIT(A) to the assessee, however, the assessee has avoided the hearings and did not avail the opportunities to represent before the CIT(A). In such circumstances, the action of the CIT(A) in passing the order on the basis of the material on record, cannot be said to be unjustified or in violation of the principle of the natural justice. Accordingly, this ground of the appeal of the assessee is dismissed. Non-speaking and unreasoned - We do not agree with the grounds raised by the assessee. We find that the CIT(A) has decided the issue in para 4.2 of the impugned order and supported his finding with the reasoning, which we will be referring while deciding the ground on merit of the addition. This ground of the appeal of the assessee is accordingly dismissed. Cessation of trading liability so as to apply section 41(1) - Balance-sheets filed by the assessee are neither signed by the Auditor nor by the Director and, therefore, the same are not reliable. The assessee has failed to produce any confirmation to the effect that the assessee received payment from M/s. Omax as interest free unsecured loan. The assessee has neither filed any agreement for obtaining unsecured loan from said party. In the facts and circumstances of the case and in the substantial interest of the justice, we feel it appropriate to restore this matter to the file of the Assessing Officer with the direction to the assessee to produce following documents and direction to the Assessing Officer to carry out enquiries deemed fit and then decide whether the remission of the liability in question is liable to be income under Section 41(1) Since the assessee has not cooperated before the learned First Appellate Authority it is its responsibility to produce all the documents required by the Assessing Officer and cooperate in the proceedings. Thus, ground no. 4 of the assessee is allowed for statistical purposes. 2020 (3) TMI 119 Unaccounted interest income - Addition based on seized papers - HELD THAT:- In the seized paper name of the assessee is not mentioned. It is stated cash paid to BDR through Mr. Rajesh and Mr. Vikram. No statement of Mr. Rajesh and Mr. Vikram, if any, have been mentioned in the assessment order. It is not clear whether any interest have been paid to the assessee or not. Since the laptop and seized Diary belong to Shri Ravinder Gupta and his statement was recorded under section 132(4) of the I.T. Act in the course of search in their ASL Group of cases and he denied in his statement to have made any interest payment to assessee, therefore, no liability could be fasten on assessee to prove that assessee received any interest. In the absence of any evidence connecting the assessee with the receipt of interest, the Ld. CIT(A) rightly came to the conclusion that it is not a case of making addition against the assessee. The above decisions relied upon by Learned Counsel for the Assessee squarely apply to the facts and circumstances of the case and supports the finding of fact recorded by the Ld. CIT(A) that it is not a case of making any addition against the assessee.. - Decided against revenue 2020 (3) TMI 118 Penalty levied u/s 271C - Non deducting TDS on the LTC payments made towards foreign travel - HELD THAT:- As relying on STATE BANK OF INDIA VERSUS THE ACIT (TDS) , JAIPUR [ 2019 (1) TMI 145 - ITAT JAIPUR] we hold that there is a reasonable cause on the part of the assessee in not deducting TDS on the LTC payments made towards foreign travel. Accordingly we hold that penalty u/s 271C is not sustainable. Accordingly we set aside the order passed by the ld CIT(A) and direct the AO to delete the penalty levied u/s 271C of the Act for the year under consideration. - Appeal filed by the assessee is allowed. 2020 (3) TMI 117 Disallowance of deduction u/s 80P - HELD THAT:- As decided in M/S. SINDHU CREDIT SOUHARDA SAHAKARI NIYAMITA [ 2019 (12) TMI 1277 - ITAT BANGALORE] Assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, set aside the order of CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. 2020 (3) TMI 116 Assessment u/s 153C - addition based on papers found in search - HELD THAT:- Papers found and seized relates to the estimations, but not related to any income or expenditure of the assessee or investment made by the assessee which has bearing on the income. The AO did not make any addition on the basis of the loose sheets found during the course of search. DR also did not bring any decision of the Hon ble Jurisdictional High court reversing the order of this Tribunal. Therefore, respectfully following the view taken by this Tribunal in the case of Sri Pattapagalu Venkata Rao [ 2019 (7) TMI 1030 - ITAT VISAKHAPATNAM] , we hold that the AO issued notice u/s 153C without having incriminating material or the material having impact on determination of income which is bad in law and hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided in favour of assessee 2020 (3) TMI 115 Rejection of books of accounts - applying the higher N.P. rate - HELD THAT:- If on technical reasons books of account may be rejected because assessee surrendered additional income, but, there were no justification to apply higher N.P. rate for making further addition against the assessee. Whatever material was found during the course of search was considered in detail by the A.O. and assessee made surrender accordingly which is accepted by the A.O. Thus, there was no reason to make further addition against the assessee which was based on no material on record. A.O. in the remand report accepted that no direction was given to assessee to produce the books of account and no explanation of assessee was called, for any discrepancy in the books of account during the statement recorded of the Director. A.O, however, asked for production of the books of account by the assessee at the remand proceedings which have been verified and no defect whatsoever have been noted. It would clearly prove it is a case of violation of principles of natural justice because the A.O. without giving opportunity to the assessee and without any justification made the addition by enhancing the net profit rate. Therefore, on this reason alone the Departmental Appeal is liable to be dismissed. There is no requirement under the Law that the trading result should be constant or should keep going up always even if there justification for the same to vary. CIT(A) at the appellate stage forwarded all the documents to the A.O. for examining and filing remand report. The A.O. examined the same and found the contention of assessee to be correct. Thus, assessee produced the books of account when called for by the A.O. and explanation of assessee was found to be correct for fall in N.P. rate which was on account of increase in financial cost and increase in cost of raw material consumed. Since no discrepancy was found in the maintenance of the books of account, therefore, the CIT(A) correctly deleted the addition. The decisions noted above clearly apply to the facts and circumstances of the case. Additional income declared by the assessee, the A.O. has specifically noted in the assessment order that assessee made declaration of additional income which is based upon Annexure-A1 seized during the course of search. It is connected with the business activity of the assessee. Whatever discrepancy was explained by assessee have been accepted and whatever discrepancy assessee could not explain as per seized paper, assessee offered the same for taxation. Therefore, it is clearly business income in nature and assessee has rightly taken it into P L A/c. A.O. has not brought any material on record if assessee doing any other business so as to link the surrender to any other income earned by the assessee. Therefore, there is no infirmity in the Order of the Ld. CIT(A) in deciding this issue in favour of the assessee. We are of the view that there was no justification to make the addition by enhancing the N.P. rate. CIT(A) on correct reasoning has correctly deleted the addition. The Departmental Appeal fails and is accordingly dismissed. 2020 (3) TMI 114 Revision u/s 263 - MAT - assessment of the prior period income s assessment for the purpose of sec.115JB computation - declaration of additional income followed payment of tax as per settlement Commission orders u/s 245D(4) and 245D(6B) order(s) - HELD THAT:- Case file suggests that the clinching factual position herein is that the assessee had declared additional income of ₹12,56,69,73/- in its disclosure petition(s) before the Settlement Commission on 18.03.2014 for assessment year(s) 2010-11 to 2013-14. It is an admitted fact that the said additional income had not been included in the corresponding computation(s) finalized earlier. The said declaration of additional income followed payment of tax as per sec. 245D(4) and 245D(6B) order(s) in pages 49 to 70 and 71 to 86; respectively. There is further no dispute that the corresponding additional income of ₹12,56,69,703/- had also been incorporated in the books of account of the relevant previous year 2013-14 as well as in the profit and loss account as an exceptional income alongwith the corresponding expenditure of ₹153,50,000/- which had not been claimed in the settlement petition. Once the assessee had declared additional income of ₹12.56 crores in earlier assessment year(s) 2010-11 to 2013-14 in due compliance of the Settlement Commission and got the same assessed under normal scheme than MAT assessment, there is hardly any scope left of under-assessment on impugned prior period income going by the PCIT s observations. We wish to re-emphasise here that PCIT has raised the issue of prior period income of ₹11,04,19,703/- for sec. 115JB computation only relating to the relevant previous year. We thus are of the opinion that once the said prior period income stood assessed under normal provisions in the corresponding earlier assessment year(s) 2010-11 to 2013-14, The Assessing Officer s alleged inaction in not disallowing the very sum(s) as prior period income for the purposes of MAT computation could neither be termed as erroneous nor causing prejudiced to interest of the Revenue going by the foregoing settled legal proposition (supra). The assessee had admittedly incorporated its additional income of ₹12,56,69,703/- in its books of account of the relevant previous year in the nature of its capital. The same therefore acquired the character of a capital receipt routed in profit and loss account as per part- I and part-II of the schedule-VI of the Company s Act. That being the case, we hold that there was no loss or prejudice caused to the Revenue even otherwise also since a capital receipt not taxable under the normal provision could also not be added u/s 115JB MAT computation as per this tribunal s co-ordinate Bench s decision Tata Metaliks Ltd. vs. Income Tax Officer, Ward-3(2), Kolkata [ 2018 (4) TMI 1757 - ITAT KOLKATA] Assessee ought not to have any grievance at this premature stage since the PCIT has merely directed the Assessing Officer to recompute its book profits as per the foregoing detailed observations - assessee had very well placed all of its additional income declaration details before the Settlement Commission followed by the corresponding order(s) finality culminating assessment thereof in assessment years) 2010-11 to 2013-14 in normal scheme. We thus conclude that even if the PCIT s directions are taken as for the purpose of mere re-computation, the same go against the settled legal proposition that the sec. 263 revision jurisdiction is not attracted in absence of the corresponding assessment being both erroneous as well as causing prejudice to interest of the Revenue. In Narayan Tatu Rane vs. Income Tax Officer [ 2016 (5) TMI 1162 - ITAT MUMBAI] also holds that insertion of Explanation-2 in sec. 263 vide the Finance Act, 2015 w.e.f 01.06.2015 does not ifso facto mean that every regular assessment could be revised even in those cases wherein the action of the Assessing Officer satisfies normal prudence test in scrutiny. We accordingly hold that the PCIT s revision directions qua this former issue of prior period income s sec. 115JB MAT computation is not substantive. The same is accordingly reversed. Deduction of excise duty on payment basis - paid for the period from December, 2009 to July 2011 as per the settlement of the case - deduction u/s 43B - Held that:- In clinching factual aspects as well that the Assessing Officer s action in not disallowing / adding the impugned excise duty claim could neither be termed as erroneous nor prejudicial to the interest of the Revenue so as to set sec. 263 revision mechanism in motion as per PCIT s directions. We accordingly accept the assessee s foregoing arguments challenging correctness of the impugned revision action. The same stands reversed. - Decided in favour of assessee. 2020 (3) TMI 113 Addition u/s. 14A r.w. Rule 8D(2)(iii) - HELD THAT:- It is admitted fact that the assessee has not earned exempted income. As decided in case of Cheminvest Ltd. vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein it was held that the expression does not form part of the total income u/s. 14A of the I.T. Act envisages that there should be actual receipt of income which was not includible in the total income, during the relevant previous year, for the purpose of disallowance of any expenditure incurred in relation to the said income. In other words, section 14A of the Act would not apply if no exempt income was received or receivable during the relevant previous year. Since in the present case, the Assessing Officer has not brought on record any earning of exempt income so as to invoke the provisions of section 14A r.w. Rule 8D(2)(iii) of the Act, we are in agreement with the finding of the CIT(A) on this issue. Accordingly, this ground of appeal of the Revenue in both the appeals is dismissed. Additional depreciation - Addition made u/s. 32(1)(iia) - whether coffee, beverage and food stuffs are not distinct and new articles or things within the meaning of section 32(1)(iia) 2(29BA) - whether storing, drying of coffee, hulling, pealing, polishing, grading, colour sorting, garbling and manual grading, out-turning of garbled coffee and bulking thereby turning to liquid coffee is a manufacturing activity or not ? - HELD THAT:- In the present case, converting raw coffee beans which are not fit for human consumption as such to 'liquid coffee' which is fit for human consumption has to be considered as manufacturing activity, as it is an irreversible process producing different marketable product fit for human consumption. It came to that position by storing, drying of coffee, hulling, pealing, polishing, grading, colour sorting, garbling and manual grading, out-turning of garbled coffee and bulking, thereby, the same being a irreversible process, there is a change in the chemical composition of the product. Alternatively, one cannot say that the same is a 'processing'. It amounts to production and manufacture of a distinct commercial product different from original product. In view of this, the machinery like coffee making machine, vending machine, express kiosks etc., which are used for such activities, on which the additional depreciation was claimed by the assessee is to be allowed. The Supreme Court in the case of Commissioner of Income-tax vs. N.C. Budharaja and Co. and another reported in [ 1993 (9) TMI 6 - SUPREME COURT] has held that for determining whether manufacturing can be said to have taken place is where the commodity which is subject to the process of manufacturing can no longer be regarded as the original commodity but is recognized in a trade as a new and distinct commodity. Thus, the whole process of conversion of the raw material when leads to production of new article and when its character, use and nature also indicate complete transformation bringing into existence the new product altogether. The assessee has rightly been allowed the benefit of additional depreciation by the CIT(A) . Interest capitalization towards work in progress - HELD THAT:- As decided in own case e proviso to section 36(1)(iii) inserted by the Finance Act, 2003 w.e.f. 01.04.2004 is very relevant for this issue. As per the same, till the asset for which the loan is borrowed is put to use, interest is not allowable. The judgments cited by the learned AR are for the period before insertion of this proviso and hence, not relevant. Hence, there is no merit in these grounds of the assessee and therefore, rejected. Nature of expenses - expenditure related to establishment of outlets - Revenue or capital expenditure - HELD THAT:- The above expenditure consisting of salary, travelling/conveyance etc. is in the nature of revenue. The Assessing Officer had allowed the salary expenses but had disallowed the other expenses like travelling, conveyance, etc. which were linked to the above expenditure and are of the same nature and there is no enduring benefit accruing to the assessee for incurring such expenditure. The provisions of Income Tax Act also do not provide for capitalization of such expenses. The CIT(A) by relying on the decisions of the Bangalore Bench of the Tribunal in the case of EMDEE Apparels cited supra and the Mumbai Bench of the Tribunal in the case of Reliance Wellness Ltd. supra and the also considering the decision of the CIT(A) for the A.Ys. 2011-12 2012-13, held that the disallowance made in the assessment order was not warranted, as the expenditure on setting up of new outlets being an expansion of the existing business, is an allowable expense. Accordingly, the CIT(A) deleted the disallowance under project expenses made by the Assessing Officer. We do not find any infirmity in the order of the CIT(A) and confirm the order of the CIT(A). This ground of appeals of the Revenue is dismissed. Forex Loss - Allowable revenue expenditure - whether as per proviso to section 43A of the Act any adjustment can be done only on final settlement of the liability - HELD THAT:- The Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] had already held that the actual payment was not a condition precedent for making adjustment in respect of foreign currency transactions at the end of the closing year. We are, therefore, unable to concur or agree with the view of the Assessing Officer that liability could arise only when the contract would have matured as such a stand is totally divorced from the accounting principles and is in variance with the principle upheld by the Apex Court in the case of Woodward Governor India Pvt. Ltd. (supra). It is also not in dispute that assessee is following the mercantile system of accounting consistently. The foreign exchange loss is due to the reinstatement of the accounts at the end of the financial year as well as loss incurred on account of exchange fluctuation on repayment of borrowings is similar to the interest expenditure and it is to be allowed as revenue expenditure u/s 37 as per the accounting standard approved by the Institute of Chartered Accountants of India. Hence, we do not find any infirmity in the finding of the CIT(A) on this issue and confirm the same. This ground of appeals of the Revenue is dismissed. 2020 (3) TMI 112 Additions u/s 153A - no incriminating material found during the course of search by the searched team and the addition is not on the basis of any incriminating material, which has been challenged by the assessee by way of cross objections - HELD THAT:- There is no reference of any incriminating material on record. It has been observed by the CIT(A) that the additions made by the AO, has been recorded in the books of accounts, therefore, he deleted the addition as per Section 292C - it cannot be said that whatever the addition made by the AO was already recorded in the books of accounts. There is no any whisper in the assessment order that there was any undisclosed materials discovered by the search team. The assessee has filed return u/s.139(1) of the Act on 29.09.2009 and the search was took place on 16.01.2014 and 25.02.2014. therefore, it would be treated as unabated assessment as no assessment was pending before the AO. Therefore, without referring to any incriminating material found during the course of search, the addition cannot be made. CIT(A) relying upon the decisions of the Hon ble High Court of Kerala in the case of E.N.Gopakumar Vs. CIT [ 2016 (11) TMI 72 - KERALA HIGH COURT] and case of CIT Vs. Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] has held that even if there is no incriminating material, the AO is empowered to make additions in an assessment framed u/s.153A of the Act. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision favouring the assessee should be followed. For this, we derive support from the decision in the case of CIT vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] - Assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated and even no incriminating material found during the course of search, is unsustainable in the eyes of law. As per the decision of Hon ble Delhi High Court in the case of Kabul Chawla, [ 2015 (9) TMI 80 - DELHI HIGH COURT] completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A of the Act only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Undisputedly, in the instant case, the assessment for the assessment years in question have already been completed on the date of search and the AO has not referred to any incriminating material found during the course of search in the assessment order. Nothing is found contrary to the stated position of the assessee, therefore, the assessment framed u/s.153A is not sustainable - we quash the orders of both the authorities below and held that without referring any incriminating material by the AO in the assessment order for the years under consideration, stated to be unearthed during the course of search, framing the assessment under section 153A of the Act, is void ab initio. Thus, the legal ground raised by the assessee in both the cross objections is allowed. 2020 (3) TMI 111 TP Adjustment - international transactions of the assessee with its AE s - HELD THAT:- We are of the considered view that the Ld.CIT(A) has rightly deleted additions made by the Ld. AO towards TPA, as suggest by the TPO u/s 92CA(3) of the Act, in respect of international transactions of the assessee with its AE s. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue. Notional interest charged on export receivables from AE s for extended credit period - HELD THAT:- We find that the Tribunal had considered an identical issue for AY 2005-06 AY 2008-09, where under identical set of facts, it has been held that when, the assessee is not charging interest, either from the AE or from the third parties towards extended credit period, the Ld. AO/TPO was incorrect in charging notional interest on receivables from the AE s for extended credit period without considering the impact of payables to AE s, in respect of various services. In this year, the Ld.CIT(A) has recorded categorically finding that if, credit period extended to AE s for receivables and credit period taken by the assessee for making payments to AE s for payables is netted of then, the credit period allowed to AE is less than four days and which is less than the credit period allowed to non AE s. Therefore, no adjustment is required, in respect of interest on receivables from AE s. We, further noted that as a matter of fact, the assesse does not charged any interest, either from the AE, or from the non AE s towards extended credit period. CIT(A) was right in deleting additions made by the Ld. AO towards TPA on account of notional interest on receivables from AE s and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue. Disallowances of deduction u/s 10A in respect of profits earned by the eligible units in view of erstwhile provisions of section 10A(9) - HELD THAT:- We find that the Tribunal has considered an identical issue for AY 2005-06 2008-09 [ 2019 (1) TMI 1128 - ITAT MUMBAI] and after considering the amendment made by the Finance Act, 2003, provisions of section 10A of the Act, held that omission of sub-section (9) of section 10A by the Finance Act, 2003 would effectively meant that the provision never existed in the statute and consequently, the assessee is entitled for deduction towards profit derived from eligible units u/s 10A - we are of the considered view that the Ld.CIT(A) was right in deleting additions made by the Ld. AO towards disallowances of deductions claimed u/s 10A of the I.T.Act, 1961, in respect of profits earned by the eligible units and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue. Disallowances of depreciation on intangibles representing acquisition of business contracts - HELD THAT:- We find that the Tribunal has considered an identical issue for AY 2008-09 [ 2019 (1) TMI 1128 - ITAT MUMBAI] where under identical set of facts, it has bench held that the assessee has acquired contractual rights, which no doubt is a valuable commercial right and hence,it comes within the meaning of intangible assets, as per section 32(1)(ii) r.w. Explanation 3(b) of the Act and hence, the assessee is entitled for depreciation on said intangibles at the rate applicable to intangible assets. In view taken by the Tribunal in assessee own case, we are of the considered view that the Ld.CIT(A) was right in deleting additions made by the Ld. AO towards disallowances of depreciation on intangibles and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue Restrict disallowances to 10% of total expenditure claimed under the head other expenses . 2020 (3) TMI 110 Nature of advance received - transfer of capital assets is in dispute regarding the validity of lease rent agreement as well as development right agreement . - Taxability as income from other sources - Addition on account of alleged 12% share of the sale realization of flats - Business income or capital gains - HELD THAT:- Once the tribunal has held that the amounts collected by Ferani during the pendency of the suit and kept in FD's are amounts kept in custody of the court and not accessible to the Administrator till disposal of the suit and to be governed by the final order of the high court, then the amounts so collected cannot be considered to be income of the assessee. Further, AO has brought to tax advances which the assessee had received during the period 1996-97 to 2008-09 totally ₹ 269,48,90,856/- under the head other source. We are surprised to note that the AO had made additions contrary to the provision of section 56 of the Income Tax Act which govern the assessment of income under the residuary head. Further, said provisions nowhere permit the A.O. to assess receipts of prior years in one lump sum in later year on the ground that in prior years the receipt was not taxed. It is further observed that section 41(1) has no application, because the liability contemplated by that section relates to trading liability for which deduction was allowed to the assessee the computation of income of any earlier year. In this case, the amount assessed was never allowed as a deduction in any earlier year. AO was incorrect in taxing advances received by the assessee up to the A.Y. 2011-12 as income chargeable to tax under the head income from other sources. Taxability of lease rental - Held that:- Merely because grant of lease was provided in the Agreement dated 02.01.1995 but when in fact the lease deed was never executed in favour of the parties, then said Ferani Ivory could not presume that lease rights were in fact awarded in their favour by the Administrator. In absence of any formal registered lease agreement, Ivory Ferani could not legally infer that the lease of land was granted by the Administrator in respect of the lands. Enforceable lease was not in operation was not disputed by the revenue. The Ivory had accepted contractual tenancy when it had executed conveyance in FY 2001-02 and 2002-03. The assessee had filed copy of lease deed dated 25- 10-2001. We find that clause (iv)(b) of the deed of conveyance dated 25.10.2001 executed between the assessee and Ivory properties and hotels Pvt. ltd and Toyota Lakozy Auto Pvt. Ltd., which clearly talks about contractual monthly tenancy on the expiry of the lease. It is evident that even if one accepts the claim of the developers that lease for the period of five years was granted the same came to conclusion in January 2000 on expiry of five year period. Relationship between the parties was that of landlord and contractual monthly tenant. Before the lower authorities, the assessee had filed requisite documentary evidence to prove that in 2008 the assessee had taken necessary legal steps to terminate the contractual tenancy of each developer. Once the assessee had taken legal steps to terminate the contractual monthly tenancy, the developers could not unilaterally claimed themselves to be having leasehold rights in the land in terms of covenants contained in the agreement dated 02.01.1995. AO before concluding that income by way of lease rent had accrued, failed to bring on record sufficient, adequate and cogent documentary evidence which proved that a legally valid binding agreement subsisted between the Administrator and Ferani Ivory in terms of which the assessee had vested right of claiming monthly rent from them. The assessee had taken sufficient legal steps for termination of tenancies which could be inferred only from the conduct of the parties and consequent to the termination of tenancies, the assessee had stopped accepting the monthly payments tendered by Ivory Ferani. When the assessee stopped accepting the monthly payments, Ferani Ivory unilaterally opened accounts with the Banks in their own names and continued depositing the monthly sums of ₹ 55,000/- . But, fact remains that these accounts were opened by Ferani Ivory entirely on their own volition and in their own names and the Administrator had never granted his consent either for opening of the Accounts or depositing the monthly sums of ₹ 55,000/-. It is also material that there existed no privity of contract either written or implied in terms of which Ferani or Ivory had legal obligation to pay and the Administrator had vested right to demand payment of monthly lease rent. These accounts were opened by these companies by providing details information about themselves. The Administrator of Estate of EFD had never authorized or permitted either of the companies to open the account nor had it provided any information enabling either of the companies to open these accounts. On account of unilateral acts of the project coordinators, no income in law could be inferred particularly when no part of the income assessed was either legally due to the assessee or when the amounts were not actually received by the Administrator. CIT(A) after considering relevant facts has rightly held that the AO was incorrect in taxing lease rent as income chargeable to tax under the head income from other sources. Hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the revenue. 2020 (3) TMI 109 Capital gain on property sold as Sale Agreement-cum-GPA - Date of transfer of asset - capital gains as per section 50C - HELD THAT:- Full consideration has been received on 26/07/2004 and the possession of the land was given to the purchaser Sri Paturi Krishna Babu S/o Paturi Radha Krishna, therefore as per section 2(47)(v), transfer has been completed and possession is given to the party. In the present case, assessee has received full consideration on 26/07/2004, therefore it can be concluded that the property has been transferred to Sri Paturi Krishna Babu on 26/07/2004. From 27/07/2004 onwards the entire land is in the possession and ownership of Shri Paturi Krishna Babu, therefore the capital gains as per section 50C as on the date of sale i.e. 28/05/2012 has to be taxed in the hands of Shri Paturi Krishna Babu. So far as assessees is concerned, the capital gains has to be taxed in the hands of the assessee by considering the transfer has taken place on 26/07/2004 as per section 50C of the Act. In view of the above, the Assessing Officer is directed to tax the capital gains according to law. 2020 (3) TMI 108 Deductibility of tax on the payments made to the shipping agents u/s 194C / 195 - AR argued that the Ld.CIT(A) ought to have admitted the additional evidence, since, Circular No.723 dated 19.09.1995 exempt the assessee from deduction of tax at source on payments made to shipping agents of nonresident ship owners and the assessments are to be made under section 172 - HELD THAT:- As per para No.2 of the assessment order, the authorized representative of the assessee appeared before the AO and furnished the information called for. There was no indication from the assessment order that the assessee failed to furnish any of the information called for by the AO. AO made the addition for non deduction of tax at source without examining the applicability of TDS provisions in the case of Ocean Freight. As per Circular No.723 of CBDT, there is no requirement of deduction of tax at source in case of payments made to shipping agents for carriage of passengers, shipped at a port in India since, the shipping agents steps in to the shoes of nonresident ship owners. Therefore, we remit the matter back to the file of the AO with a direction to admit the additional evidence and examine the issue of deductibility of tax on the payments made to the shipping agents u/s 194C / 195 or otherwise in the light of Circular No.723 and decide the issue afresh after giving opportunity to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purpose. 2020 (3) TMI 107 Reopening of assessment u/s 147 - Statutory notice u/s 143(2) not issued - HELD THAT:- AO was under the obligation to issue a notice under section 143(2) of the Act for making the assessment or reassessment as the case may be. But the AO has not done so. Accordingly, the order framed under section 143(3) read with section 147 of the Act becomes invalid. Provisions of section 292BB of the Act deals with the situation where notice is not served or not served on time or served in a improper manner viz a viz the assessee does not raise objection before the completion of the assessment. As such, the provision of section 292BB of the Act does not deal about the issuance of notice. In the present case, the issue is whether the assessment framed under section 147/143(3) of the Act is valid without the issuance of the mandatory notice under section 143(2) of the Act. Accordingly we hold that, the provision of section 292BB of the Act does not extend any benefit to the Revenue. We conclude that there was not issued the statutory notice under section 143(2) of the Act within the prescribed time. The Ld. DR has also not brought anything on record contrary to the arguments advanced by the Ld. AR for the assessee. Thus in the absence of the statutory notice, the assessment framed under section 143(3)/147 of the Act is not sustainable. Hence the ground raised by the assessee is allowed. 2020 (3) TMI 106 Assessment u/s 153C r.w.s. 153A - addition by estimating profit @ 10% in the alleged undisclosed receipt - HELD THAT:- A perusal of Section 153C would indicate that satisfaction of the Assessing Officer of the searched person is must exhibiting the fact that documents/evidences shown escapement of undisclosed income of a person other than the searched person is available which required to be assessed; thereafter, he would transmit his satisfaction note along with that evidences to the Assessing Officer of such other person having territorial jurisdiction. In case satisfaction by the Assessing Officer of the searched person is being not recorded, then no assessment under Section 153C is sustainable. These appeals are lying in the Tribunal since 2012 and the Department has filed paper-book, but failed to place on record the copy of the satisfaction note. Putting reliance on the submissions of the assessee and, in the absence of any details, we are satisfied that the assessment order is not sustainable. See M/S. Calcutta Knitwears [ 2014 (4) TMI 33 - SUPREME COURT ] - Decided in favour of assessee. Customs 2020 (3) TMI 105 Jurisdiction - power of DRI to issue SCN - grievance of appellant is that CESTAT remanded the issues for reconsideration by the concerned Commissioner in view of the previous judgment of this Court in Mangli Impex Limited v. Union of India M/S MANGALI IMPEX LTD., M/S PACE INTERNATIONAL AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2016 (5) TMI 225 - DELHI HIGH COURT] - HELD THAT:- This Court is of the opinion that an identical approach is necessary in this case. Accordingly, following the order in FORECH INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS INLAND, CONTAINER DEPOT, TUGHLAKABAD, NEW DELHI [ 2017 (12) TMI 984 - DELHI HIGH COURT] , this appeal is allowed and the CESTAT would independently apply its mind to the question of jurisdiction and also decide the appeal on merits including the aspect of imposition of penalty if any. Appeal allowed in part. 2020 (3) TMI 104 Revocation/suspension of Customs Broker License - whether the Customs Broker Licence of the petitioner / appellant which was already suspended, has to be revoked or the suspension should continue? - HELD THAT:- Though notice has been given by the Revenue to the licensee to appear for enquiry in order to comply with the direction issued by the learned Judge in the order impugned directing the Revenue to consider the application of the licensee dated 17.10.2014, which was pending all along, the licensee has not chosen to appear before the authorities concerned of the Revenue - Though this factor is disputed by the learned counsel for the licensee / appellant, no document has been produced by the licensee / appellant to show that in response to the said communication given by the Revenue to the licensee / appellant to appear before the authority concerned, the licensee / appellant appeared before such authority. This Writ Appeal deserves to be rejected - However, since it had not been made clear before this Court as to whether the enquiry has been conducted pursuant to the notice issued in this regard by the Revenue, we are inclined to give an opportunity to the appellant licensee to appear before the authorities concerned and accordingly the appellant licensee shall appear before the authorities concerned on 10.03.2020. 2020 (3) TMI 103 Revocation of Customs Brokers / CHA License - non-compliance with the timelines prescribed in the Regulation - HELD THAT:- Though time-lines prescribed in the Regulations have been held to be directory, and not mandatory, there is an implicit responsibility on the part of the competent authority to adhere to the time-lines with acceptable justification for delays, if any. This is more so when the appellant places on record that it was not non-cooperation or intransigence, on their part, that caused delay. It is seen that the suspension itself, though challenged successfully before the Tribunal, and withdrawn on 11th January 2017, another 15 days elapsed for the enquiry proceedings to commence. Thereafter, there is a lapse of more than six months in completion of enquiry and further a lapse of more than two months in revocation of the licence. All of these delayed disengagements with the procedure laid down in the Customs Brokers Licensing Regulation, 2013 had its origin in an incident that occurred in November 2015. Considering the nature and scope of investigations normally undertaken by the Directorate General of Revenue Intelligence, whose report led to the initiation of proceedings under the Regulations, the delay in commencement of the proceedings for revocation of the licence does not command itself as indicative of proper undertaking of responsibility - There is nothing on record to arrive that the G card-holder, who was investigated for his key role in the conspiracy to smuggle red sanders out of India, was concerned with the activities for which appellant herein was licenced. License is directed to be restored - appeal allowed - decided in favor of appellant. 2020 (3) TMI 102 Refund claim - refund was allowed but was ordered to be credited to consumer welfare fund - principles of unjust enrichment - allegation that the appellant could not prove that they had not passed on the burden of excess duty to their customers - HELD THAT:- The only ground on which the refund was ordered to be credited to consumer welfare fund was that they had received remittance in excess of what was indicated in the invoice. Therefore, it was presumed that the burden of export duty has been passed on to the customers. The learned counsel for the appellant has satisfactorily explained that this was on account of the excess quantity exported as was determined after testing at the discharge port. After going through the provisional and final invoices, it can be concluded that the appellant had not passed on the burden of export duty to their overseas customers - impugned order is modified to the extent of setting aside the direction to credit the amount to the consumer welfare fund - appeal allowed - decided in favor of appellant. Corporate Laws 2020 (3) TMI 101 Winding up of respondent company - HELD THAT:- This petition is revived. It is an admitted fact that this company petition was admitted by order dated 28/08/2017 and advertisement with regard to the same was deferred so that chance can be given to the company to pay the dues. Though sufficient time has been granted, respondent company did not comply his statement made in the aforesaid Undertaking and the amount was not paid to the petitioner and hence, the matter was revived as observed in the order dated 11/12/2019. Till date, Undertaking filed by the respondent company is not complied with and not paid the dues to the petitioner. Registry is directed to notify the petition for final hearing on 04/05/2020. 2020 (3) TMI 100 Validity of scheme of arrangement - reduction of share capital is rejected inter alia on the ground that the requisite material was not placed before the shareholders and creditors at the time of meeting so as to take informed decision and for approving scheme of arrangement - HELD THAT:- If the prayers of the petition are examined, then one will have no other option but to come to the conclusion that the scheme, as it stood in the backdrop those factual narration of the SEBI and SAT's prohibitory orders, would surely militate against granting of the prayers. The Court is of the view that the passage of time i.e. when the scheme was floated or sought to be implemented after approval of the Court was that of year 2008. The requisite meeting of the concerned stake holders were held within that year or around that time and when the petition was taken up for hearing and judgment was rendered in the year 2015, the said consent or lack of objection of the stake holder could not have been acted upon by the Court and therefore from that angle also one has to accept that the learned single Judge did not erred in not granting the prayers. The Court is of the view that the present findings recorded in this judgment and the judgment of the learned single Judge may not be treated as impediment in the way of the petitioner in seeking fresh mandate from the stakeholders for floating appropriate scheme hereafter and in such eventuality it goes without saying that the same would be brought to its logical conclusion in accordance with law - appeal dismissed. Insolvency & Bankruptcy 2020 (3) TMI 99 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- If the demand notice is sent in Form 3, then the Operational Creditor has to submit the document to prove the existence of operational debt and the amount in default along with the notice. The said document may either be invoice or any other document to prove the existence of the operational debt and the amount in default. This situation may arise when the operational debt, is of such nature where no invoice is generated. For example, if an operational debt is relating to the salary dues of an employee, then, in that case, the operational creditor will not have any invoice. It is clear that to prove the existence of the operational debt; the operational creditor has to file its claim along with an invoice demanding payment for the goods and services supplied to the Corporate Debtor . On perusal of the language of Section 8, it is clear that an Operational Creditor on the occurrence of default has been provided with the option of delivering a demand notice of the unpaid operational debt or raising an invoice demanding payment of the amount involved. The two options available for initiation of Corporate Insolvency Process are provided to deal with all the eventualities that may occur. It is clear that the choice of issuance of demand notice u/s 8(1) of the Insolvency and Bankruptcy Code 2016, either in Form 3 or Form 4, under the Insolvency and Bankruptcy Code Application to Adjudicating Authority Rules 2016, depends on the nature of Operational Debt. Section 8(1) does not provide the Operational Creditor, with the discretion to send the demand notice either Form 3 or Form 4, as per its convenience. The applicability of Form 3 or Form 4 depends on whether the invoices were generated during the course of transaction or not. It is also made clear that the copy of the invoice is not mandatory if the demand notice is issued in Form 3 of the Insolvency and Bankruptcy Code Application to Adjudicating Authority Rules 2016 provided the documents to prove the existence of operational debt and the amount in default is attached with the application. For filing application u/s 9 of Insolvency and Bankruptcy Code 2016, in case the demand notice is delivered in Form 3 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, then the submission of a copy of the invoice along with the application in Form 5 is not a mandatory requirement, provided the documents to prove the existence of operational debt and the amount in default is attached with the application. It is clear there was an existing dispute on 26th March 2018, i.e. before the initiation of CIRP. It is also apparent that the dispute between the parties was on account of not taking delivery of 21,808 TVs, which were imported by the Operational Creditor, based on the assurance by the Corporate Debtor. But the Corporate Debtor failed to pick up these goods. Therefore, the Operational Creditor sent the notice to the corporate debtor to make the payment within 30 days, failing which Operational Credit threatened to refer the dispute to Arbitral Tribunal - the Demand Notice issued under Section 8(1) of the Code against the Corporate Debtor in Form-3 was incomplete. It is also apparent that the Application filed in Form -5 under Rule 6(1) of the Adjudicating Authority Rules is also incomplete and the Operational Creditor has failed to produce invoices, purchase orders or any documents to prove its claim and has filed a defective Section 9 Application for initiation of Corporate Insolvency Resolution Process. The application filed under Section 9 by the Operational Creditor Cloudwalker Streaming Technologies Pvt Ltd., company petition is Rejected. 2020 (3) TMI 98 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Existence of debt and default or not - HELD THAT:- On perusal of the records it is found that from time to time the corporate debtor has made payments towards the outstanding. That, the last payment is made by the corporate debtor on 31st October, 2017, towards interest which is reflected in the statement at page No. 454 to the application. That, the documents filed along with the application is sufficient to prove that there exists financial debt - Though the respondent has tried to refute the statement made by the applicant, could not succeed to defend himself because no convincing documents are being filed so as to believe that the corporate debtor is not a defaulter. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor - That, the application is found to be complete in all respect. Hence it does not warrant any rejection or dismissal. The application under section 7 (2) of the IB Code is complete in all respects and there is debt due to the Financial Creditor and there is default on the part of the corporate debtor . Hence, there is no alternative but to admit the application in absence of any infirmity - Application admitted - moratorium declared. 2020 (3) TMI 97 Maintainability of application - initiation of CIRP - Corporate Debtor has committed default for a total outstanding amount - existence of debt and default or not - HELD THAT:- The issue raised by the Petitioner is the non-payment of an amount stated to be owed by the Respondent/Corporate Debtor to the Petitioner/Operational Creditor and that the Respondent has committed a default in not paying the same. As per section 3(11) of the Code, a 'debt' means a liability or obligation in respect of a claim which is due from any person. Section 3(6) of the Code states that a 'claim' means a right to payment. This right to payment has to arise from a valid understanding or agreement between the two parties, which should contain specific terms as to the goods and services to be rendered and the terms and basis of payment. Due to the non-acceptance of the terms and details of payment by the Respondent, it cannot be said that the right to payment or claim arising from this Agreement will acquire the meaning of Debt under the Code, or make the Respondent a Corporate Debtor. It cannot be said that the amounts claimed by the Petitioner from the Respondent on the basis of MMG, as mentioned in the unsigned Agreement not agreed to or accepted by the Respondent could be the basis of a valid right to payment, claim or debt - The position of law on the issue is clear that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. Since there was no valid operational debt in the absence of an agreement being signed by both parties which was to be the basis of the payments due, the Respondent could not be termed as a Corporate Debtor within the meaning of the Code. Further, there was a pre-existing dispute between the parties over the basis of the payments sought. In both these circumstances, the provisions of Sections 8 and 9 of the Code cannot be invoked and the Application made under Section 9 of the Code has to be rejected - the Petitioner has attempted to use this forum for recovery of its dues by praying for ordering a CIRP against the Respondent, which is not the purpose for which the Code was enacted. Petition dismissed. 2020 (3) TMI 96 Liquidation order - provisions of section 33(1) of the Code - HELD THAT:- The Resolution Professional and the CoC have made all efforts to revive the operations of CD but in vain. The Adjudicating Authority has also exercised its discretion in granting sufficient time in order to exhaust all possibility of getting solution to the issue in question. Therefore, there is no other alternative for the Adjudicating Authority except to initiate Liquidation proceedings, as per extant provisions of Code, in respect of Corporate Debtor, and the delay occurred till this date is deemed to be condoned in the interest of justice. Application disposed off. 2020 (3) TMI 95 Liquidation of Rama Krishna Knitters Private Limited (Rama Krishna) - Section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the Adjudicating Authority has not received a resolution plan under Section 30(6) of the Code before the expiry of Insolvency Resolution Process period. We have discussed above that invitation for EOI was published in the newspapers on a number of occasions and that only one resolution plan was received from Swissline Intertrade Private Limited. The said Resolution Plan was considered by the COC in its 11th meeting held on 08.11.2019 and was put to e-vote as Agenda Item No. 11.05. However, 99.85% of the votes were against the acceptance of the resolution plan. The alternative resolution for approval of the liquidation of Rama Krishna under Section 33 of the Code (Agenda Item No. 11.06) was approved with 99.90% votes - The conditions provided for in section 33(1)(a) are satisfied. Therefore order is passed requiring Rama Krishna, to be liquidated in the manner as laid down in Chapter-III of the Code. Further directions for issuance of public announcement stating that Rama Krishna is in liquidation and requiring the order of liquidation to be sent to the authority with which Rama Krishna is registered are given below. Application disposed off. 2020 (3) TMI 94 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- On perusal of the reply filed by the corporate debtor it is also observed that more stress is made towards the issue of interest and the main defence raised by the corporate debtor that there is no agreement between the parties on payment of interest towards overdue payments as per the purchase orders placed on the operational creditor is illogical and without any justification - It is also a fact that amount is due and payable to the operational creditor which is above ₹ 1.00 lac as per section 4 of the I B Code and no dispute is ever raised by the corporate debtor nor the same is barred by law of limitation. This adjudicating authority is of the considered view that operational debt is due to the Applicant, No dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - . Here in this case the application is in proper format as prescribed under I B Code 2016 and is complete in all respect and is not barred by any law. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under section 9(5)(1) of the Code - Petition admitted - moratorium declared. 2020 (3) TMI 93 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its outstanding dues - existence of debt and dispute - time limitation - HELD THAT:- On perusal of the records it is found that having failed to get the outstanding payments from the respondent, the applicant was compelled to issue demand notice under section 8 of I B Code on dated 23.07.2019. Record also shows that the respondent has not raised any reply/dispute against the demand notice so issued by the applicant. On perusal of the records it is found that the corporate debtor had raised invoice dated 25th April, 2015 for an amount of ₹ 15,60,600/- and the operational creditor made payment of said invoice via RTGS on 30th April, 2015, whereas, closer order was issued by the Gujarat Pollution Control Board (GPCB) on 08.06.2015 i.e. much after receipt of the advance payment by the operational creditor/applicant. Under such circumstances, the plea raised by the corporate debtor that due to closer order of GPCB, the corporate debtor could not supply the ordered goods is not justifiable - the operational debt has fallen due on 30.04.2015 and the petition is filed on 19th December, 2017, the petition is well within limitation. On perusal of the record it is found that the petition is complete in all respect. The petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force - petition admitted - moratorium declared. 2020 (3) TMI 92 Approval of a Resolution Plan - Section 30(6) of the Insolvency Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) 2016 - HELD THAT:- The Resolution Plan in hand satisfies the minimum threshold of approval by 66% majority of the CoC. Hence, as per the CoC, the plan stands the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Bench. As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the I B Code - Further, in case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant. Subject to the observations made in this Order, the Resolution Plan in question is hereby APPROVED by this Bench - The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth. 2020 (3) TMI 91 Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- This Petition reveals that there is a debt as defined in section 3(11) of IBC; there is a default within the meaning of section 3(12) of IBC; the application of the Financial Creditor is complete; an amount of more than Rupees One Lakh is due and payable and in default and no disciplinary proceedings are pending against the proposed resolution professional. Therefore, this petition deserves to be admitted - The application made by the Financial Creditor is complete in all respects as required by law, and it clearly shows that the Corporate Debtor has not paid the dues, and this has also been confirmed by the Corporate Debtor. Application admitted - moratorium declared. 2020 (3) TMI 90 Legality of Liquidation Process - Allegation that the Liquidator did not give opportunity to bid - HELD THAT:- In our considered opinion, we have already permitted M/S Maithan Alloys Ltd. to withdraw from the process because we have accepted some good offer from the applicant in the applicants in CA(IB)No.796/KB/2019 are not complying the order passed by this Authority, they shall be dealt with separately but only for this reason the Liquidator cannot withhold the amount deposited by Maithan Alloys Ltd. - Hence, we direct the Liquidator to pay back sum of ₹ 17,06,25,000/- along with interest agreed thereon within 7 days from today. 2020 (3) TMI 89 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- In the present case, as we find that the Appellant is a 'Corporate Debtor', in respect of whom 'Liquidation Order' has been made, cannot make an application for initiation of 'Corporate Insolvency Resolution Process' under Chapter II, which includes application under section 9. Even if, it is accepted that there is no pre-existing dispute, the application under section 9 preferred by Meka Dredging Company Pvt. Ltd. (Corporate Debtor) is not maintainable - Appeal is dismissed. 2020 (3) TMI 88 Approval and acceptance of Bid - direction to Liquidator to sell the Corporate Debtor - applicants seek direction to the Liquidator to allow them to start the work so that the Corporate Debtor can be made operational upon their paying first installment. Ld. Counsel for State Bank of India objected this arrangement only on the ground that the successful bidders did not pay even first installment as per time schedule - HELD THAT:- We have accepted and approved bid of the applicant. They were only bidders and they have offered an amount more than the liquidation value of the Corporate Debtor. We also consider the fact that the Corporate Debtor must be made operational so that some people may get employment. While directing the successful bidders to pay first installment to the Liquidator within 3 days, we further direct the Liquidator to allow the successful bidders to start the work under his supervision so that the Corporate Debtor can be made functional - It is made clear that above arrangement is made for convenience of the successful bidders. But we make it clear that custody and possession of all assets of the Corporate Debtor shall remain with the Liquidator as per order dated 25.09.2019. Clarification disposed off. 2020 (3) TMI 87 Aauction sale of the Corporate Debtor - directions to the Liquidator of the Corporate Debtor to hold an open auction afresh allowing them to participate in - Regulation 32(c) of Insolvency and Bankruptcy Board of India (Liquidation Process, Regulation) 2016 - HELD THAT:- It was made clear to the applicants that upon sale of the Corporate Debtor to them, it is for the Liquidator to disburse the sale proceeds as per water fall mechanism provided under Section 53 of the Insolvency and Bankruptcy Code, 2016. The Successful Bidder cannot suggest anything as to how such distribution to be done. We also directed the applicant to improve and enhance the payment schedule so as to enable the Liquidator to accept the bid. Accordingly, they filed the revised offer by affidavit dated 23.09.2019. We have gone through the entire record and proceeding of this case. Earlier Successful Bidder, M/S Maithan Alloys Limited has withdrawn offer, hence there was no purchaser of the Corporate Debtor. At that point of time, the applicants gave i proved offer to purchase the Corporate Debtor for sum of ₹ 70 Cr res. We hold that this offer of enhanced bid amount is in tune with the object of the Insolvency and Bankruptcy Code, 2016 i.e. maximization of the assets of the Corporate Debtor. Hence, we direct the Liquidator to accept the bid of the applicants. Application disposed off. PMLA 2020 (3) TMI 86 Provisional attachment of Fixed Deposit - It is the case of the petitioner that the third respondent has not followed the procedure contemplated under proviso to Section 8(1) of the Prevention of Money Laundering Act, 2002 by giving notice to the petitioner bank before passing the final orders confirming the provisional attachment - HELD THAT:- As seen from the first proviso to section 8(1) of the Prevention of Money Laundering Act, 2002, it is clear that before passing final orders of attachment under Section 8(1), a notice shall be sent not only to the offender, but also to a person in whose custody the property of the offender is being held - In the case on hand, the fixed deposit is alleged to have been created by the fourth respondent with the petitioner bank. In fact, a copy of the provisional order of attachment dated 15.03.2012 was also communicated by the Director of Enforcement to the petitioner bank as seen from the names found in the last page of the said provisional order of attachment. Even though the provisional order of attachment was communicated to the petitioner, even without hearing the petitioner and without giving any opportunity to the petitioner, the final adjudication order of attachment has been passed by the third respondent under the impugned order. It is clear that the third respondent has not followed the procedure as contemplated under first proviso to section 8(1) of the Prevention of Money Laundering Act, 2002 by not issuing notice to the petitioner who is having custody of the said fixed deposit standing in the name of the fourth respondent before passing final orders of attachment under section 8(1) of the Prevention of Money Laundering Act, 2002 - It is clear that the respondents have also violated the principles of natural justice by not affording any opportunity to the petitioner to place all their objections with regard to the attachment of fixed deposit standing in the name of the fourth respondent. In view of the non-compliance of the first proviso of Section 8(1) of the Act, 2002, the petitioner has not been given any opportunity to explain as to how the fixed deposit receipt standing in the name of the fourth respondent cannot be attached - the matter is remanded back to the third respondent for fresh consideration and the third respondent after giving sufficient opportunity to the petitioner to raise all objections available to them under law with regard to the attachment of the fixed deposit standing in the name of the fourth respondent shall pass final orders within a period of eight weeks from the date of receipt of a copy of this Order, after affording personal hearing to the petitioner. Petition allowed by way of remand. 2020 (3) TMI 85 Maintainability of appeal - money laundering - an appeal under section 42 of the Prevention of Money Laundering Act, 2002 has been filed by the Central Government and the same has been registered as APO - HELD THAT:- Section 54 of the Foreign Exchange Regulation Act, 1973 and section 35 of the Foreign Exchange Management Act, 1999 are pari materia with section 42 of the 2002 Act, yet, absence of any reference to the 2002 Act in the said Rules is a bit surprising. Absence of a code number for appeals that are carried in terms of or under section 42 of the 2002 Act and presented before this Court has resulted in assigning case code APO to this appeal. This is coupled with the omission in the said Rules to indicate which Bench would have the determination to entertain such an appeal, which has resulted in the aforesaid order of assignment. Although, the High Court has inherent power to frame rules, and rules have also been framed to regulate the procedure of hearing of appeals under various enactments, rules of procedure for hearing of appeals under the 2002 Act are conspicuous by its absence in the said Rules or elsewhere in the Original Side Rules and this we view as a serious omission, which must be addressed at the earliest. Since the appeal has been registered with case code APO and assigned to us, we have proceeded to consider the same. The appeal is time barred and an application seeking condonation of delay in its presentation has been preferred by the appellant - Let such application be served on the respondent within five days from date with intimation that the same shall be listed on next Wednesday (22.1.2020). Service Tax 2020 (3) TMI 84 Reverse charge mechanism (RCM) - import of services - revenue neutrality - Principle of construction of the statue - principle of ejusdem genersis and noscitur a sociis - Classification of services - service of providing the C-Band Transponder - outsourced activities or not - Appellants have argued that the services provided to them by M/s AsiaSat are specialized services without which the Broadcasting would be impossible. These services cannot be called as outsourced service or infrastructural support service, for classification of these service under the category of Business Support Services - demand along with interest and penalty - extended period of limitation. HELD THAT:- The arguments of appellant cannot be agreed upon - The principle of ejusdem genersis and noscitur a sociis are essentially principle of construction of the statue, provide that the words used in a statue should be interpreted along with the words in company which they occur i.e. the word occurring together derive the colour from each other. This essentially mean that the word which are more general in nature get restricted by the other words used therein. However the said principles are not applicable when the words used in the statute are simple plain and clear. In the SIDDESHWARI COTTON MILLS (P) LTD. VERSUS UNION OF INDIA AND ANR. [ 1989 (1) TMI 126 - SUPREME COURT] , Hon ble Supreme Court has applied the principle of Ejusdem Generesis for interpreting the phrase like or any other process - It is not the case herein wherein separate identifiable words have been used in the definition clause. Hence following the decision of Hospital Mazdoor Sabha, supra we hold that the said principles of Noscitur a Sociis and Ejusdem Genersis to be not applicable in the present case. Relying on the explanation to Section 65(104c) and the decision of the tribunal in the case of M/S. AIR LIQUIDE NORTH INDIA PVT. LTD. VERSUS C.C.E. JAIPUR [ 2017 (6) TMI 476 - CESTAT NEW DELHI] and DISH T.V. INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2015 (9) TMI 785 - CESTAT NEW DELHI] appellants have argued that for the service to be considered as infrastructural support service , office should have been provided along with various other facilities - In our view the said decision do not lay down that office should be provided as must for the service to be classified under the category of infrastructure support service . Nor do the explanation to Section 65(104c) state so. In the case of South Gujarat Roofing Tiles Manufactures, relied upon by the bench while passing the said decision, Hon ble Supreme Court was interpreting the entry 22 of Minimum Wages Act, 1948 and held that the items included in it were plainly comprised in the expression potteries industry which showed that the word includes was not to extend the normal meaning of this expression. The conclusion was that the word includes was used in the explanation in the sense of means and the definition provided by the explanation was exhaustive. From the explanation, it is evident that infrastructure support service has been defined using the phrase includes and not the word, means . The services rendered by M/s AsiaSat to appellant are nothing but infrastructure support services for supporting the business of broadcasting services undertaken by the appellants. Thus these services are appropriately classifiable as Business Support Services by the Section 65(104c) of the Finance Act, 1994 and taxable as per Section 65 (105)(zzzq) ibid - Since the service provider i.e. M/s AsiaSat do not have any fixed business establishment in India, appellants as recipient of service are required to discharge the service tax liability as per Section 66A of the Finance Act, 1994 read with Rule 3(iii) of the Taxation of Services (Provided from outside India and received in India) Rules, 2006. Extended period of limitation - only argument advanced by the appellant against the invocation of extended period of limitation for making the demand is that the issue is completely revenue neutral as any service tax paid by them on the basis of reverse charge as recipient of service would be available to them in the form of CENVAT Credit - HELD THAT:- We are not in position to agree with the said submissions made by the appellants. Unlike the erstwhile proviso to section 11A(1) Central Excise Act, 1944 where the intention to evade payment of duty was material factor in cases where suppression etc; was invoked, the construction of Section 73(1) of Finance Act, 1994 is different. We are in complete agreement with the findings recorded by the Commissioner. If the argument of revenue neutrality was to be considered a valid argument under the scheme of Finance Act, 1994, then entire provisions relating to payment of service tax on reverse charge will become otiose and every service recipient will claim that what so ever service tax he pays on reverse charge basis will be available to him as CENVAT Credit. Argument of revenue neutrality thus would not be available in case where the service tax is demanded by the recipient of service on the reverse charge basis - the demand made in this Show Cause Notice by invoking the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994 is upheld. Demand of interest made from them in terms of Section 75 of Finance Act, 1994 - HELD THAT:- The demand is not justified - reliance can be placed in the case of COMMR. OF SERVICE TAX, AHMEDABAD VERSUS PEPSI COLA INDIA MARKETING CO. [ 2007 (8) TMI 51 - CESTAT, AHMEDABAD] . Interest under Section 11AB and penalty under Section 11AC of the Central Excise Act, 1944 - HELD THAT:- Since the invocation of extended period of limitation in respect of the show cause notice dated 08.04.2013 is upheld, the penalties imposed under Section 78 cannot be faulted with in view of the above referred decision of the Hon ble Bombay High Court and the decision of Hon ble Supreme Court in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] . Penalty under Section 77 for various infractions noticed in complying with provision of law - HELD THAT:- Penalty under Section 77 are civil in nature and are imposed for infractions noticed - Since there is no dispute about such infractions as recorded by the Commissioner in his impugned order, penalties as imposed under Section 77(2) are justified. Penalty u/s 76 of FA - HELD THAT:- Any person liable to Service Tax fails to pay the same is required to pay the same is required to pay penalty under Section 76 at the rate specified therein from time to time, in addition to Service Tax and the interest thereon - as in the present case, the is non-payment of service tax, penalty u/s 76 is upheld. Appeal allowed in part. 2020 (3) TMI 83 Business Auxiliary Service - appellant have promoted the DTH Services of M/s. Sun Direct TV Pvt. Ltd., Chennai, for which they received recharge voucher cards from the principles at a discounted price and thereafter, sold the same at M.R.P. - demand alongwith interest and penalties - HELD THAT:- The very issue has been dealt with by the co-ordinate Benches in M/s. Kumar s Electronics v. Commissioner of Central Excise, Madurai [ 2019 (6) TMI 852 - CESTAT CHENNAI ] where it was held that On the SIM cards, recharge coupons etc., where the service tax has been paid on the M.R.P by the main operator the commission agent / distributor need not pay service tax on the commission received by him because commission also forms part of the M.R.P. on which service tax has already been discharged. Demand not sustainable - appeal allowed - decided in favor of appellant. 2020 (3) TMI 82 Refund of Service Tax erroneously paid - sob-contractor - main contractor having refused to pay the Service Tax on the ground that the services relating to construction of road were covered under the category of Works Contract Service which was exempt - HELD THAT:- In the case of PHOENIX ENGINEERING VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR, [ 2015 (12) TMI 749 - CESTAT MUMBAI ] the Mumbai Bench of the Tribunal has considered a more or less similar situation has held that All these activities have been retrospectively exempted either by way of notification or by means of a specific provision in the Finance Act itself and therefore, the activities undertaken by the appellant is either exempted or falls outside the purview of the taxable services. In the case on hand, there is no dispute as regards the appellant rendering services to M/s. GMR SPV in the capacity of a sub-contractor with the main contractor rendering the services of construction of roads, which included installation of Highway Traffic Management System, Toll Management System, etc., to ensure complete functioning of the road in all respects - the nature of service being Works Contract, is clearly exempt since the service is provided only towards the construction of road and not for the benefit of any of the parties. The rejection of refund is not in order - Appeal allowed - decided in favor of assessee. Central Excise 2020 (3) TMI 81 CENVAT credit - inputs used in the provision of exempted goods as well as traded goods - non-maintenance of separate account as required under Rule 6(2) of the CCR - option available under Rule 6(3) of the CCR not followed - HELD THAT:- The issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-II VERSUS MAIZE PRODUCTS [ 2008 (8) TMI 365 - HIGH COURT OF GUJARAT AT AHMEDABAD] where it was held that In the facts and circumstances of the case, it is apparent that the entire controversy has been decided by the Tribunal by merely remitting the matter back to the Adjudicating Authority to re-determine the credit in accordance with law. If any reversal has been made by the respondent-assessee, the same is subject to verification and adjustment if ultimately any further amount is found reversible. Appeal dismissed. 2020 (3) TMI 80 Vires of Rule 8(3A) of Central Excise Rules, 2002 - Default in discharging duty beyond 30 days from the due date - sub rule 8 of Central Excise Rule, 2002 - whether utilization of CENVAT credit during the period of default in discharging monthly duty liability is irregular and in breach of Rule 8(3A) of Central Excise Rules,2002? HELD THAT:- The issue is no more res-integra and considered by the Hon ble Gujarat High Court in the case of Indsur Global Ltd vs. Union of India [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] - It has been held that during the default period payment of duty by utilization of CENVAT credit account is not irregular and consequently the said portion of the Rule 8(3A) of Central Excise Rules,2002 which debars utilization, has been held as ultra vires. Appeal allowed - decided in favor of appellant. 2020 (3) TMI 79 CENVAT credit - input services, which were being utilized by the appellant in respect of manufacturing of their final product as also other trading activities - non-maintenance of separate records - liability to discharge 5%/6% of the value of the such traded goods - extended period of limitation - penalty. HELD THAT:- Admittedly the appellant was recording the entire activity in their balance sheet which is a proper document. As such according to the settled law, it cannot be said that the appellant suppressed anything with a mala fide intention - Apart from that, we also agree with the Learned advocate that there was confusion in the field and as per various decisions, trading activity was not considered to be an exempted service prior to April 2011. After 2012, with the introduction of negative list regime, the law was not very clear and in the absence of any specific evidence attributing to the mala fide intent of the appellant, it has to be held that there can be a bona fide belief on the part of the assessee, especially when the entire activities are being reflected in the Books of accounts - As such we hold that the demand for period beyond the normal period of limitation would be barred. The matter to the original adjudicating authority for re-quantification of the demand falling within the period of limitation - As regards the normal period, appellant is entitled to contest the same before the authorities below based upon the dates when the normal period was changed as also on the basis of precedent decision - Further, the appellant s plea of reversal of proportionate credit would also be re-considered by the lower authorities. Penalty - HELD THAT:- There was no mala fide on the part of the appellant, the same would not justify imposition of penalty upon them. Appeal allowed by way of remand. CST, VAT & Sales Tax 2020 (3) TMI 78 Withdrawal of charge and attachment on property - recovery of alleged dues of erstwhile owner of the property - HELD THAT:- It is clear that the respondents were directed to withdraw the charge and the attachment on the property, located at Plot No.4/C, Block No.211, Survey No.133/2, Village Karanj, Taluka Mandvi, District Surat, in respect of alleged dues of the erstwhile owner of the property namely Varun Filaments Private Limited under the Gujarat Value Added Tax Act, 2003. However, the grievance voiced by the writ-applicant in the present Writ-Application is that till this date, directions issued by this Court, have not been complied with. One last opportunity is granted to the respondent No.2 to comply with the directions, issued by this Court - application disposed off. 2020 (3) TMI 77 Withdrawal of Refund with due interest from the fixed deposit in the bank account of the petitioner - Bihar Value Added Tax Act, 2005 - HELD THAT:- In the instant case, the amount of ₹ 6,15,804/- has been realized from the account of the bank by the respondent-Commercial Taxes Department in exercise of powers conferred under Section 47 of the Act. The said power has been invoked in view of the fact that the petitioner has failed to respond to the notice issued under Section 28(1) of the Act - The withdrawal of the amount in question from the bank was made prior to the order by the appellate authority whereby the matter was remanded back for passing order afresh. The issue of refund of the amount to the tune of ₹ 6,15,804/- withdrawn from the fixed deposit in the bank account of the petitioner with due interest would arise only if it is found that the amount is in excess of the amount due from the petitioner. The action of the respondent authorities of the Commercial Taxes Department in invoking the jurisdiction under Section 47 of the Act can not be held to be bad - petition disposed of with a direction to the taxing authority i.e. the Commercial Taxes Officer, Jamui Circle, Jamui (respondent no.7) to pass order afresh as directed by the appellate authority within a period of two months from the date of receipt/production of a copy of the order in accordance with law after hearing the parties. Indian Laws 2020 (3) TMI 76 Compliance with the requirement of pre-deposit - whether the High Court was right in directing that pre-deposit was not required for entertaining an appeal before the DRAT as mandated by Section 18 of the SARFAESI Act, 2002? - HELD THAT:- The order of the High Court does not show any exercise of such discretionary powers but according to the High Court on an interpretation of the Section, predeposit was not required. We are also not impressed with the argument of Mr. Chaudhri that his client is not a borrower. A guarantor or a mortgagor, who has mortgaged its property to secure the repayment of the loan, stands on the same footing as a borrower and if he wants to file an appeal, he must comply with the terms of Section 18 of the SARFAESI Act. Also, the High Court has no powers akin to powers vested in this Court under Article 142 of the Constitution. The High Court cannot give directions which are contrary to law. Appeal allowed. 2020 (3) TMI 75 Dishonor of Cheque - insufficiency of funds - acquittal of charge under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption - HELD THAT:- As per Section 139 of the Negotiable Instruments Act,1881, It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. Presumption is rebuttal but respondent did not enter into witness box to rebut the same nor it is rebutted by evidence of appellant side. From the statement of the appellant, respondent borrowed a sum of ₹ 25,000/- from him due to personal relation, therefore, it is not a case under Money Lenders Act, 1934. Again, the amount in question is not within purview of the Income Tax Act, 1961. Any infringement of provision of Income Tax Act, 1961 is matter between revenue and assessee, but same is not relevant because it is proved that money was borrowed by the respondent. Corroborative piece of evidence is not a rule of law, but it is a rule of prudence and presumption under Section 139 of the Act, 1881 is rule of law and presumption has to be drawn by the court as per Section 139 of the Act, 1881. When presumption is not rebutted, charge under Section 138 of the Act, 1881 is established. On an overall assessment, it can be said that the finding of the trial Court is against weight of the evidence and same is not legal because it is contrary to the provisions of the Act, 1881. In view of the evidence of both sides, argument advanced on behalf of the respondent is not acceptable and the act of the respondent falls within mischief of Section 138 of the Act, 1881 - Acquittal of the respondent set aside. Respondent is convicted under Section 138 of the Negotiable Instruments Act, 1881 - appeal allowed.
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