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TMI Tax Updates - e-Newsletter March 6, 2021 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax TMI SMS Imposition of penalty equivalent to duty and interest u/s 114A of Customs Act - the word 'or' cannot be interpreted as 'and' - HC Articles TAXABILITY OF CONTRIBUTIONS RECEIVED FROM MEMBERS News CGST East Delhi Commissionerate arrests two for defrauding Government Exchequer of more than ₹ 392 crore Competition Commission of India organises Sixth Edition of National Conference on Economics of Competition Law First export consignments of ‘red rice’ from Assam to the USA flagged off Enabling Dealings by IFSC – Banking Units in Bullion Unallocated Accounts Notifications Customs 27/2021 - dated 5-3-2021 - Cus (NT) Notification in relation to Land Customs Stations and routes "the river route as per the Protocol on Inland Water Transit and Trade between India and Bangladesh connecting Tribeni (Bandel) in India to Bangladesh" by amendment of Principal Notification No. 63/1994-Customs (N.T.) dated 21st November, 1994. Money Laundering G.S.R.152 (E) - dated 1-3-2021 - PMLA Amendment in Notification No. G.S.R. 381(E), dated the 27th June, 2006 Circulars / Instructions / Orders SEBI SEBI/HO/IMD/DF4/CIR/P/2021/29 - dated 5-3-2021 Guidelines for votes cast by Mutual Funds SEBI/HO/IMD/DF2/CIR/P/2021/024 - dated 4-3-2021 Circular on Mutual Funds Income Tax 03 of 2021 - dated 4-3-2021 Circular under section 10 of the Direct Tax Vivad se Vishwas Act, 2020 Highlights / Catch Notes GST Works Contract - supply of services - supply to Government, Government Agency or Government Entity - The impugned works are used commercial/business activities in view of the facts and circumstances as discussed above and accordingly the same are taxable under GST. - AAR Visit to Get Source Jurisdiction of CMM (MEERUT)(UP) - Investigation were conducted at Gaziabad (UP) by the DGGI - all Firms/Companies which are said to be of accused, are registered in New Delhi - This court comes to the conclusion that this court is not found to have jurisdiction in the present case. Remand and other records of accused should be submitted before the competent jurisdiction court of Ld. C.M.M. Patiala House Court, New Delhi as per procedure - DSC Visit to Get Source Income Tax Exemption u/s 10(21) - AO treated the assessee as an institution while granting approval under Section 35(1)(ii) by the competent authority as well as by the Directorate of Income Tax (Exemption) (DITE) and not as an association and therefore, the assessee cannot claim the benefit under Section 10(21) of the Act. - The above submission cannot be countenanced for more than one reason. - HC Visit to Get Source Penalty u/s 271FA - failure to file AIR - mandatory requirements of Section 285 BA calling upon the petitioners to file the returns within a period of 60 days from the date of notice has not been complied with. Instead, the petitioners have been directly asked to show cause only why penalty should not be imposed. In this case the petitioner has in any event filed the returns on 20.10.2011 though belatedly. The purpose of the requirements of section 285 BA of the Income Tax Act, 1961 stands satisfied. - Penalty order quashed - HC Visit to Get Source Penalty U/s 271(1)(b) - As only source of income of the assessee is from salary from Government of Rajasthan on which TDS has all ready been deducted and apart from this there is no other source of income of the assessee. Hence, there could not be any intention upon the assessee for skipping the service of notices. It was proved that there was ‘reasonable cause’ for the assessee in failure to comply with the provisions of Section 271(1)(b) of the Act as the ‘non-appearance’ of the assessee before the A.O. was only because of the ‘non-receipts’ of the notices - AT Visit to Get Source Merely because certain income had been offered voluntarily by the assessee in the returns filed for subsequent years, that would not bind assessee for the year under consideration as there is no estoppel against the statute and the said change in stand in the peculiar facts and circumstance of the instant case cannot be termed as 'colourable device' - AT Visit to Get Source Customs Rectification of Mistake - mistake apparent from the records - Application was rejected with the view of Third Member of the tribunal - the Judicial Member, who agreed with the petitioner, rightly held that if the observations made in the other portion of the impugned order were not eschewed, it would be fatal to the case of the petitioner. Furthermore, the mistake is clearly visible from the records and it does not require any long drawn reasoning for a prudent man to come to a conclusion that there is a mistake. - order rectified - HC Visit to Get Source Imposition of penalty equivalent to duty and interest u/s 114A of Customs Act - The expression used is 'or' which is disjunctive between duty or interest and further use of expression as the case may be clearly suggest that aforesaid provision refers to two different persons and two different situations viz., one in which a person will be liable to duty and in other he may be liable to pay interest only and provides that in both the situations the person liable to duty would be liable to penalty equal to duty and person liable to interest would be liable to penalty equal to interest. Therefore, in view of law laid down by constitution bench of Supreme Court, the word 'or' cannot be interpreted as 'and'. - HC Visit to Get Source Levy of Penalty on CHA u/s 112 of Customs Act - mis-declaration during the physical examination of the goods - The penalty imposed is not sustainable in the absence of any specific role performed by the appellant in the wrong doing done by the importer - AT Visit to Get Source IBC Preferential transactions or not - Corporate Guarantees - the transaction covered under the Corporate Guarantees would not come within the parameters of the preferential transaction provided under Section 43 of the Code - Tri Visit to Get Source Service Tax SVLDRS - Our courts are flooded with avoidable litigation and government by way present scheme has initiated step to minimise litigation and generate revenue, thus keeping in mind intent and purport of the scheme as well Board Circulars, it would be appropriate to liberally interpret Section 125 of FA, 2019. It is apt to notice that in case of voluntary disclosure, as per section 124(1)(e) of the FA, 2019 no immunity from tax liability is available though immunity from 40% of tax liability is available in other categories including arrears - The scheme came into force w.e.f. 01.09.2019, thus any enquiry/audit/investigation initiated after aforesaid date cannot make any person ineligible - HC Visit to Get Source Central Excise Removal of Capital Goods without reversal of Credit / Payment of duty - Since the removals were contrary to spirit of the provisions of the CENVAT Credit Rules, 2004, there are no merits in the submission of the learned counsel for the petitioners as far as the challenge to imposition of penalty or redemption fine under the impugned common order as a condition for granting immunity from prosecution under the provisions of the Central Excise Act, 1944 to the petitioners. - HC Visit to Get Source Recovery of Central Excise dues - whether the flats belonging to the appellant which she purchased under Registered Sale deeds out of monies received as gifts from her mother-in-law and father-in-law, can be proceeded against by the Excise department for recovery of Central Excise dues against two proprietory firms of her late husband? - Held NO - AT Visit to Get Source Process amounting to manufacture - When the process of cutting and slitting itself does not amount to manufacture within the meaning of Section 2 (f) of the Central Excise Act, 1944, scrap arising out of such activity cannot be subjected to Excise Duty for the simple reason that the appellant has not consciously manufactured any waste or scrap. - AT Visit to Get Source VAT Sale or service - Information Technology Service - Canned software - the petitioner should have obtained a clarification from the Commercial Tax Department before taking a drastic step to stop paying tax under the provisions of the Tamil Nadu VAT Act, 2006 instead of obtaining a opinion only from the Assistant Commissioner of Excise. - The petitioner appears to have risked to avoid VAT. Therefore, if tax was due, it has to pay such tax to the Commercial Tax Department. - The petitioner has to independently satisfy the respondent, that the transaction in questions were outside the purview of TN VAT Act 2006 by producing agreements and invoices. - HC Visit to Get Source Validity of assessment order - transfer of right to use of goods - As a matter of fact, the subject transaction may have been liable to tax under Section 65(105)(zzzzj) of the Finance Act, 1994 with effect from 2008 after service tax was levied on “Supply of Tangible Goods” as about test for “transfer of right to use” is conspicuously absent - HC Visit to Get Source Input tax credit - Rejection of returns - There cannot be any dispute, that burden is cast on the assessee to establish the transaction to lay a claim for deduction of input tax by production of necessary documents. This Court is of the considered opinion that the assessee has discharged this burden by placing necessary documents. - If the supplier has not remitted the tax to the Department, for which assessee cannot be penalized. - HC Visit to Get Source Transfer of the assets of a firm on dissolution or a sale or not - the Appellate Tribunal committed an error in dismissing the Revenue's appeal without examining the factual position. - HC Visit to Get Source Nature of Transaction - No conclusion on facts can be arrived under Article 226 of the Constitution of India based on sample copies of invoices filed by the petitioner before this Court to convince the court to conclude that there was indeed “works contract“ during the supply of ready mix concrete to its customers. - HC Visit to Get Source Case Laws: GST 2021 (3) TMI 203 Permission for withdrawal of Advance Ruling application - HELD THAT:- The application filed by M/s. Premier Solar systems Private Limited, is infructuous and dismissed as withdrawn. 2021 (3) TMI 202 Permission for withdrawal of application - classification of the services received from the State of Telangana and applicable rate of GST - HELD THAT:- The application for advance ruling filed by the applicant is dismissed as withdrawn at the behest of the applicant. 2021 (3) TMI 201 Withdrawal of advance ruling application - clarification sought on dealer have paid required fee of ₹ 10,000/- towards IGST and CGST instead of SGST and CGST - in the reference 6th cited, M/s. Eclery Foods LLP, have given a mail, that the business has shut down and they don t need any ruling against their application. Hence the dealer has withdrawn the advance Ruling Application - HELD THAT:- The application filed by M/s. M/s. Eclery Foods LLP, is infructuous and dismissed as withdrawn. 2021 (3) TMI 200 Permission for withdrawal of Advance Ruling application - classification and rate of tax on sacks and bags manufactured from Polypropylene non-Woven fabric and Polypropylene Woven Sack Fabric - After filing their application CBIC has clarified the classification and rate of tax on Sacks and bags though its notifications, therefore applicant would like to withdraw their Advance Ruling application - HELD THAT:- The application is infructuous. The application for advance ruling filed by the applicant is dismissed as withdrawn at the behest of the applicant. 2021 (3) TMI 199 Permission for withdrawal of application - All the Joint Commissioner(CT), All Deputy Commissioners(CT), All the Assistant Commissioners(CT), All the Senior Officers in the O/o Commissioner of Commercial Taxes, all the Appellate Joint Commissioners(CT) in the State of Telangana, were requested to go through the attachment and inform the above pendency of the issue and also requested to offer his/her comments on the clarification sought by applicant. HELD THAT:- In the reference 3rd cited, M/s. Compass Group (India) Support Services Private Limited, have filed letter, that is The Government of India has issued the Notification No. 13/2018- Central Tax (Rate) Dated: 26-07-2018, that is substituted in entry No. 7(i) Notification No, 11/2017-Central Tax (Rated) Dated.28-06-2018 - Hence, basis the explanation inserted by way of the aforesaid notification, the dealer have withdraw in advance Ruling Application. The application for advance ruling filed by the applicant is dismissed as withdrawn at the behest of the applicant. 2021 (3) TMI 198 Works Contract - supply of services - supply to Government, Government Agency or Government Entity in terms of the Notification No.20 dated:22.08.2017, Notification No. 32, dated:13.10.2017 or not - norms to decide a contractee is Government/ Government Agency/Entity? - Contractee gets funds/grants from Central or State Government for given work - non-commercial or not - contractees shall basically be Government/Agencies/ Entity or is there any possibility in a particular work it can be said that a contractee is of this kind? - reimbursement of money for agriculture service - Whether TSSPDCL falls under the definition of Government Authority/ Government Entity as defined in Notification No. 31/13-10-2017 Central Tax (Rate) and other connected Notifications? - applicable rate of tax. HELD THAT:- A reference is to be made to entry No. 3 (vi) of the Notification No. 11/2017 CGST, dt. 28-06-2017 amended by Not. Nos. 20/2017-CT(R) dated 22.08.2017, 24/2017-CT (R) dated 21.09.2017 and Not. No. 31/2017-CT (R) dated 13.10.2017 etc. which prescribes rate of tax in respect of specified construction services supplied to the Central Government, State Government, Governmental Authority, Government entity etc. - Sl.No. 3 (vi) (a) is the relevant entry to the present issue which prescribes GST rate of 12% (6% CGST + 6% SGST)in r/o services provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. Thus to attract rate of tax @12% under Sl. No. 3(vi)(a), the specified service should primarily be provided to the Central Government/State Government/Union Territory/Local authority/Government Authority/ Government Entity and must be used for other than commercial, industrial, or any other business or professional activity. Whether the Contractee in the instant case i.e. M/s. TSSPDCL falls under the specified categories of recipients viz., Central Government/State Government/Union Territory/local authority/Government Authority /Government Entity or not? - HELD THAT:- It is noticed from the schedule concerning Shareholding of Promoter of the annual accounts of M/s TSSPDCL that 100% shares of the company were held by the Hon ble Governor of Telangana. This clear indicates that the Government of Telangana have 100 percent control over TSSPDCL and thus TSSPDCL is evidently covered under the definition of Government Entity . Whether the impugned services supplied by the applicant are for the works which are used for other than commerce, industry, or any other business or profession? - HELD THAT:- As per the details furnished by the applicant in the Annexure II enclosed to the application, the works undertaken are for execution/implementation of various projects for (i) Capacitor Bank Works in Nalgonda etc.; (ii) HVDS-High Voltage Distribution Systems in Suryapet used for agricultural feeders. The applicant further stated that the Government of Telangana is reimbursing the money to M/s TSSPDCL on behalf of the customers for agricultural services rendered. Thus, M/s TSSPDCL is not rendering any non-commercial services in as much as they are getting reimbursed for their activity on behalf of their customers. Therefore, this activity cannot be termed as other than commercial/business purposes. Thus, the impugned works undertaken are for business/commercial purposes and therefore, the benefit of Concessional Rate of 12% is not applicable to the services supplied by the applicant. Further, it is noticed that the services supplied by the applicant are subjected to 18% in terms of Sl. No. 3(xii) of Not. No. 11/2017-CT (R) dated 28.06.2017 (as amended). 2021 (3) TMI 190 Maintainability of petition - availability of alternative remedy of appeal - contention of petitioner is that respondents may be directed not to insist on the pre-deposit - HELD THAT:- Having regard to the facts but without expressing any opinion on the merits, it is deemed appropriate to require the petitioner to file an appeal before the Appellate Authority within a period of 10 days. It is also directed that the Appellate Authority shall in the peculiar facts entertain and without insisting on payment of pre-deposit decide the appeal on merits of the case within three months - Petition disposed off. 2021 (3) TMI 185 Release of provisionally attached Bank Accounts - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- There is a challenge to the constitutional validity of Rule 159 and sub-rules 1, 5 and 6 apart from a challenge on merits to the notice dated 14.08.2020 and the impugned order dated 28.09.2020. Issue notice to the respondents. 2021 (3) TMI 145 Grant of Regular Bail - input tax credit - issuance of invoices without the actual movement of the goods - HELD THAT:- The perusal of the record clearly points out that the allegations against the present applicant/accused relate to his being involved in issuance of invoices without the actual movement of the goods as well as in wrongful availing of the Input Tax Credit (ITC) by receiving only invoices without actual receipt of goods. In this manner, there remains no doubt that the allegations constitute an offence under Section 132 of the CGST Act and not under Section 122 of the CGST Act, as being claimed on behalf of the applicant. Contention that there is no document on record connecting the accused with the alleged fake firms - HELD THAT:- The enquiry officer during the course of enquiry has collected bulky record which prima-facie supports the contentions of the complainant department regarding the role played by the accused in the commission of offence under consideration. Hence the contention in this regard raised by the accused/applicant is not sustainable at this stage. In the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 896 - SUPREME COURT ] it was held by the Hon ble Supreme Court of India that: the economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deprecated conspiracies involving huge loss of public funds need to be view seriously and considered as grave offence effecting the economic of the country as a whole and therefore, by causing a serious threat to the financial health of the country . As well as observations made by the Hon ble Supreme Court of India, it becomes clear that gravity of the matter of quantum of taxation involved in it not only has adverse effect upon the Government exchequer, but same plays a crucial role in weakening the economy of the country. The case in hand is still under investigation. The possibility of tampering with witnesses can not be ruled out. There appears no reason to grant concession of bail to the accused as investigation is still pending - Application dismissed. 2021 (3) TMI 144 Jurisdiction of CMM (MEERUT)(UP) - Investigation were conducted at Gaziabad (UP) by the DGGI - all Firms/Companies which are said to be of accused, are registered in New Delhi - whether the remand of the accused was sent to the appropriate jurisdictional/C.M.M., New Delhi? - HELD THAT:- This court does not have jurisdiction over the prima facie case, because the three firms with which the alleged crime is alleged to have been committed by the accused are all firms located and registered in Delhi. This court comes to the conclusion that this court is not found to have jurisdiction in the present case. Remand and other records of accused Daman Thukral should be submitted before the competent jurisdiction court of Ld. C.M.M. Patiala House Court, New Delhi as per procedure - The accused Daman Thukral is detained in the transitory District Prison, Meerut. The department/lnvestigator is ordered to submit an application to the concerned court regarding summoning the accused for advance/ transit of remand. Application disposed off. Income Tax 2021 (3) TMI 204 Advance ruling - tax liability u/s 115-O - application of beneficial provision of India-Singapore DTAA in respect of DDT on dividend paid/payable to non-resident shareholder - transaction was designed prima-facie for avoidance of tax - whether the Dividend distribution tax ( DDT ) paid/payable by Comstar Automotive Technologies Private Limited (Comstar or the Applicant or the Company) under the provisions of Section 115-O on dividend paid/payable to Singapore VII Topco III Pte. Ltd. ('Singapore Topco') and Comstar Mauritius Limited ('Comstar Mauritius') is in substance and effect, a tax on dividends? - Whether Applicant, being a resident of India, is entitled to apply the lower tax rate of 10% provided under Article 10 of India-Singapore DTAA' and 5% under Article 10 of India-Mauritius DTAA' in respect of DDT payable on dividend paid to Singapore Topco and Comstar Mauritius respectively under Section 115- O of the Act? - HELD THAT:- We do not find any design to avoid tax by any illegal or improper means. The objection of the Department is found to be rather on merits of the questions raised in the present application. An Identical issue was considered by us in the case of Signify Innovations India Private Limited [ 2021 (2) TMI 1062 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] wherein it has been held that, if the applicant has raised question to avail treaty benefit in respect of its tax liability u/s 115-O of the Act. it cannot be considered as a transaction designed for avoidance of tax. Following that ruling the application is admitted u/s 245 R (2) of the Act The date of next hearing will be intimated in due course. 2021 (3) TMI 197 TP Adjustment - comparable selection - delay of 359 days in filing the Special Leave Petition - HELD THAT:- The explanation offered in support of the prayer for condonation is far from being satisfactory, we refuse to condone delay. Consequently, the SLP stands dismissed on the ground of delay. 2021 (3) TMI 196 Undisclosed payment - Addition based on seized material - assessee never provided the details of the transaction either during the course of assessment proceedings or thereafter and the assessee was in the exclusive knowledge - close business relationship between the assessee and PA - Tribunal held that the said amount may be demanded by the assessee but there was no evidence of the same having been paid as confirmed by HC - HELD THAT:- SLP dismissed. 2021 (3) TMI 195 Penalty levied u/s. 271(1)(c) - defective notice - notices issued had not struck off the portion which were inapplicable - HELD THAT:- SLP dismissed. 2021 (3) TMI 194 Re-opening of the assessment u/s 147 - level of enquiry at stage of re-opening of assessment and in reopening proceedings - alleged that bribe was paid to the Iraqi officials which required to be added to the income of the Assessee - HELD THAT:- SLP dismissed. 2021 (3) TMI 193 Reopening of assessment u/s 147 - TDS u/s 195 - payments made to non-residents under the voyage agreements - Non deduction of TDS - reopening after four years - Addition u/s 40(a)(i) - petitioner had made payments to the owners of the ship/liners under the Bare Boat Charter Cum Demise (BBCD), Voyage Charter and Time Charter to M/s.Dolphin Maritime Inc., Cyprus and to few others under Voyage Charter - HELD THAT:- In this case, at the time of assessment, for the Assessment Year 2004-05 the details were called for from the petitioner vide notice dated 17.8.2006 issued u/s 143 (2)/142 (1) of the Income Tax Act, 1961. In its reply dated 30.8.2006, the petitioner declared that it had paid a total sum as freight. During assessment, only a sum of ₹ 6,08,98,646/-from the aforesaid amount was disallowed under Section 40(a)(1) of the Income Tax Act, 1961. Thus, there is no case made out for suppression of facts or failure to truly and fully disclose information by the petitioner. Therefore, invocation of the machinery prescribed under the Act for reopening the assessment beyond the normal period of limitation was not available to the respondent. Though, the petitioner has an alternate remedy before the Commissioner of Income Tax (Appeals), this court is inclined to interfere by quashing the impugned order dated 28.12.2011 for the Assessment Year 2004-05, as there was no failure on the part of the petitioner to truly and fully disclose all materials that are required for assessment by the assessment officer. Coming to the Assessment Year 2005-06 only reason given for re-opening of the assessment is on account of the failure on the part of the petitioner to pay tax on the freight under voyage charter. In the notice issued under section 143 (2) of the Income Tax Act, 1961 and the consequent communication dated 15.11.2007 of the Assistant Commissioner of Income Tax the petitioner was called upon to furnish the details in writing to the questionnaire attached to the said notice. The questionnaire specifically called upon the petitioner only to furnish details of BBCD hire charges paid to M/s.Dolphin Maritime Inc.Cyprus, with the details of tax deducted at source. The petitioner not only produced the details but also furnished the details of the payment made towards charter hire for a sum of ₹ 2,12,28,88,338/-. By another communication dated 3.12.2007 also these details were furnished again by the petitioner. The Asst Commissioner of Income Tax in the assessment order dated 31.12.2008 merely disallowed the BBCD hire charges for a sum of ₹ 4,35,64,010/-. This was perhaps on account of the order dated 27.4.2005 passed by the Income Tax Officer (International Taxation) Division. Thus, there was no failure to truly and fully disclose all information required for assessment. 2021 (3) TMI 191 Depreciation on the windmills - as per revenue wind mills had not generated any electricity during the previous year and thus there was no user of the asset for the purpose of the business of generation of power - ITAT allowed the claim - HELD THAT:- Issue involved in the present appeal is covered by the decisions of M/s. Tenzing Match Works, Sivakasi [ 2019 (7) TMI 1047 - MADRAS HIGH COURT] stating even trial production machineries kept ready for use etc., were considered to be used for the purpose of business to qualify for depreciation and further held that it would amount to passive use and would qualify for depreciation.- Decided in favour of assessee. 2021 (3) TMI 188 Reopening of assessment u/s 147 - reasons to believe - HELD THAT:- As the Tribunal has rightly noted, the jurisdiction for the Assessing Officer to resort to Section 147 of the Income Tax Act is crystallized in the Reasons supplied. The Tribunal has rightly, observed that the Reasons only referred to a need to verify the documents and there is no link between the statement that there is a reason to believe that income as escaped assessment with the rest of the Reasons supplied. It is not permissible, as rightly noted by the Tribunal, to add to the Reasons. The contention that there was an information received was not included in the Reasons. The Tribunal has followed the decision of the Jurisdictional High Court in the case of Nivi Trading Limited [ 2015 (4) TMI 411 - BOMBAY HIGH COURT] . If the Tribunal in these facts and circumstances has found that the reopening of assessment was without jurisdiction based on reading of the Reasons, it cannot be said that any perverse or illegal view has been taken by the Tribunal. No question of law arises. The Appeal is dismissed. 2021 (3) TMI 183 Deduction u/s 10B - assessee had utilised the export profits in U.S.A. for the purpose of carrying on export activities and AO held that the said amount had not been received in convertible foreign exchange in India within the prescribed time under section 10B(3) and the said amount could not be treated as part of export turnover for the purpose of computation of deduction under section 10B - AO held that the RBI's Guideline for remittance under the FEMA was not applicable in interpreting the term export turnover as defined in section 10B - HELD THAT:- The issue involved in the present appeals had already been decided by this Court in Commissioner of Income Tax-I,Chennai v. M/s.Tata Consultancy Services Ltd., Chennai] [ 2021 (2) TMI 988 - MADRAS HIGH COURT] wherein this Bench, following the Judgment M/S MPHASIS LTD. (FORMERLY KNOWN AS MPHASIS BFL LTD.) [ 2019 (11) TMI 1383 - SUPREME COURT] and the Judgment reported in Commissioner of Income-Tax, Bangalore v. Mphasis Ltd [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] decided the issue in favour of the assessee. Decided in favour of the assessee. 2021 (3) TMI 181 Revision u/s 263 - immovable property were not verified and that there were huge unsecured loans, were not properly enquired by the Assessing Officer - HELD THAT:- Tribunal observed that complete details were filed in the form of confirmation letters before the Assessing Office and he has examined and investigated the same in its correct perspective. The Tribunal found no error in the assessment order and also found that the CIT lacks jurisdiction to revise the assessment order in question. Ultimately, the Tribunal set aside the order passed by the CIT un/s 263 and restored the order passed by the Assessing Officer. On a perusal of the order passed by the Tribunal, it is clear that the Tribunal has categorically held that the order passed by CIT is based on no reason and he has simply given an abrupt finding that the assessment order is erroneous. Tribunal, taking into consideration all the materials available on record, found that the CIT lacks jurisdiction to revise the assessment order passed by the AO. When the Tribunal has given a categorical finding with regard to the order passed by the CIT, we do not find any error or irregularity in the order passed by the Tribunal. Further, we find no ground much less any substantial question of law to interfere with the order passed by the Tribunal. - Decided against revenue. 2021 (3) TMI 177 Exemption u/s 10(21) - said provision mandates exemption only to the association and not to the institutions - assessee pointed out that they are notified as engaged in scientific research within the meaning of Section 35(1)(ii) of the Act and they have been claiming exemption under Section 10(21) ever since its inception from 1987 and the claim has been accepted by the Department consistently - Tribunal allowed exemption - HELD THAT:- Tribunal rightly took note of the objectives of the assessee and their activities, which have been carried out ever since their inception in the year 1987. They are engaged in the research work in agricultural related activities and it is recognized as a leading nationally acclaimed society engaged in the field of research in Bio- Technology and Toxicology and they undertake various aspects including research and development studies that directly impact the safety in nonclinical, health and environmental areas and the Tribunal has rightly accepted the stand taken by the assessee and consequently reversed the finding of the AO who treated the assessee acclaimed to have been a contractor. AO treated the assessee as an institution while granting approval under Section 35(1)(ii) by the competent authority as well as by the Directorate of Income Tax (Exemption) (DITE) and not as an association and therefore, the assessee cannot claim the benefit under Section 10(21) of the Act. The above submission cannot be countenanced for more than one reason. Firstly, ever since the inception of the assessee society, they have been treated as an association. It is not disputed by the Revenue that the assessee is registered under the provisions of Tamil Nadu Societies Registration Act, 1975 and it has been treated as an association/society since 1987. The change done in the interregnum was set aside by the Tribunal, which decision stands confirmed as on date, in the light of the various orders passed by the Tribunal, which we have referred above. Therefore, the contention raised by the Revenue does not merit acceptance. The observation made by the Assessing Officer is wholly unsustainable, going by the objectives, for which, the assessee association had been established. Thus, in the light of the above undisputed position, we find no good ground to interfere with the order passed by the Tribunal. - Decided in favour of assessee. 2021 (3) TMI 176 Disallowance u/s 14A r.w.r. 8D - ITAT deleted the addition made holding that disallowances made u/s 14A cannot exceed the exempt income - whether ITAT is right in not appreciating the CBDT Circular No. 5/2014 wherein it's clarified that, disallowance u/s 14A r.w.r 8D has to be made even if the tax payer in a particular year not earned any exempt income? - HELD THAT:- Substantial questions of law raised by the Revenue in these appeals have been decided against the Revenue in M/s.Tidel Park Limited.[ 2020 (7) TMI 339 - MADRAS HIGH COURT ] AO must, in the first instance, determine whether the claim of the assessee in that regard is correct and the determination must be made having regard to the accounts of the assessee. The satisfaction of the AO must be arrived at on an objective basis. It is only when the AO is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. Sub-s. (3) of s. 14A provides for the application of sub-s. (2) also to a situation where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under the Act. See GODREJ AND BOYCE MFG. CO. LTD [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided in favour of assessee. 2021 (3) TMI 172 Penalty u/s 271 FA - failure to file annual information report under subsection 285 BA of the Income Tax Act, 1961 - petitioners have challenged the impugned order before passing the impugned order, mandatory notice contemplated under section 285 BA (5) was not issued to them and that the penalty was imposed by the respondents directly by passing the mandatory requirement of the aforesaid provision - HELD THAT:- A show cause notice dated 8.9.2010 which in turn states that earlier another notice dated 30.3.2010 was issued to the petitioners and since the petitioners failed to furnish annual information report in time, the show cause notice was being issued to the petitioners to show cause as to why penalty under section 271 FA of the Income Tax Act, 1961 should not be imposed on the petitioners. Copy of notices dated 30.3.2010 have not been filed either by the petitioners or by the respondents. The counter filed by the respondents is also silent on this aspect. It appears that mandatory requirements of Section 285 BA calling upon the petitioners to file the returns within a period of 60 days from the date of notice has not been complied with. Instead, the petitioners have been directly asked to show cause only why penalty should not be imposed. In this case the petitioner has in any event filed the returns on 20.10.2011 though belatedly. The purpose of the requirements of section 285 BA of the Income Tax Act, 1961 stands satisfied. 2021 (3) TMI 167 Penalty u/s 271(1)(c) - Non recoding of satisfaction - defective notice - deduction u/s 57 on the expenditure of 'service charges' 'maintenance expenses' has not been incurred in connection with making investment in deposit with ICICI bank or loan / advance given to Shri Dhiraj Sarna Shri Shakti Singh and disallowed the expenditure - HELD THAT:- Revenue has not specified under which limb of Section 271(1)(c) the penalty has been levied. It is elementary that for assuming valid jurisdiction to impose penalty, the Assessing Officer must, first be satisfied, though prima facie , that the assessee has either concealed income or furnished inaccurate particulars of income and on the basis of such satisfaction a show cause notice has to be issued u/s 274 of the Act to the assessee specifying the addition/ disallowance in respect of which penalty is sought to be imposed and also the precise charge/ ground on which penalty is proposed to be imposed thereon. The particulars of expenses have been duly provided in the P L account and has also provided the basis of apportionment of these expenses. Hence, it cannot be said that the assessee has furnished inaccurate particulars of income . The disallowance made by the Assessing Officer cannot be treated as concealment too. Mere disallowance of an expense cannot lead to levy of penalty u/s 271(1)(c). This is not a fit case for levy of penalty u/s 271(1)(c) - Decided in favour of assessee. 2021 (3) TMI 164 Estimation of income - bogus purchases - Commissioner (Appeals) restricted the disallowance to 12.5% of the disputed purchases - HELD THAT:- AO disallowed entire purchases made from M/s. Sumit Sales on the reasoning that the assessee was unable to furnish any evidence to prove that purchases, however, as observed by Commissioner (Appeals), the Assessing Officer has not disputed that the assessee had effected the corresponding sales. Assessee might have purchased the goods from grey market by suppressing the profit element. In such circumstances, as rightly held by Commissioner (Appeals), only the profit element embedded in such purchases can be considered for addition. Further, in my considered opinion, the disallowance sustained by Commissioner (Appeals) by estimating the profit rate at 12.5% is fair and reasonable; hence, does not require any interference. Ground raised is dismissed. 2021 (3) TMI 163 Ex-parte appellate order passed by learned CIT(A) - reassessment proceedings - HELD THAT:- Assessee is equally to be blamed for its woes as the assessee did not appear before the learned CIT(A). Now, before us, both the parties have submitted that the appellate order passed by learned CIT(A) be set aside and matter be remanded back to the file of learned CIT(A) for fresh adjudication of the appeal filed by assessee with learned CIT(A). After considering the entire material on record, we are of the considered view that the interest of justice will be served if the appellate order dated 29.11.2016 passed by ld. CIT(A) be set aside and the matter is set aside/restored back to the file of learned CIT(A) for fresh adjudication of all the grounds of appeal raised by assessee in its appeal filed with learned CIT(A). The assessee did not co-operated with learned CIT(A) in the first round of litigation and if in the set aside remand proceedings, if the assessee again did not co-operate, the learned CIT(A) shall be free to decide all the issues raised by assessee, on merits in accordance with law. 2021 (3) TMI 162 Estimation of income - Bogus purchases - addition to 12.5% of the alleged non genuine purchases - HELD THAT:- AO has received information from the sales-tax department that disputed purchases are non genuine and further, the assessee was unable to prove the genuineness of purchases to the satisfaction of the AO, however, it is a fact on record that the Assessing Officer has not disputed either the consumption of goods or sales effected by the assessee. Thus, it has to be accepted that the disputed purchases have entered assessee's stock and utilized in the manufacturing process and ultimately resulting in sales. Therefore, in such circumstances, only the profit element embedded in such purchases can be considered for addition. That being the case, fully agree with the decision of Commissioner (Appeals) in restricting the disallowance to 12.5% of the alleged non-genuine purchases. 2021 (3) TMI 161 Estimation of income - Bogus purchases - assessee having failed to prove the genuineness of purchases, disallowance made at 12.5% - HELD THAT:- Assessee was unable to furnish documentary evidence to the satisfaction of the Assessing Officer to prove the genuineness of purchases made, however, it is also a fact that the sales made by the assessee have not been doubted. This pre-supposes that in absence of the purchases, the assessee could not have effected corresponding sales. Even, the AO was also convinced with this fact. Hence, instead of disallowing the entire purchases, he disallowed only the profit element by estimating at 12.5%. Keeping in view the nature of business carried on by the assessee and the profit rate normally attached to such line of business, disallowance at 5% of the alleged non genuine purchases would be fair and reasonable. Accordingly, direct the Assessing Officer to restrict the disallowance to 5% of the alleged non genuine purchases. This ground is partly allowed. 2021 (3) TMI 160 Penalty U/s 271(1)(b) - non-appearance of the assessee before the A.O. - non service of notice to assessee - as argued no notices either u/s 143(2) or 142(1) of the Act were ever served upon the assessee - HELD THAT:- Assessee at that relevant time was posted at Jaipur and since all the notices issued by the Revenue were served at Pali and Kakari but were never personally served upon the assessee as at that particular time, the assessee was posted at Jaipur, therefore, service of notices could not be taken effect upon the assessee and because of this reason, the said notices U/s 143(2) and 142(1) of the Act could not be complied with by the assessee. Revenue has not been able to demonstrate before us that even a single notice was ever served upon the assessee. However, even as per the order of the A.O., notice was served either upon one Shri Rajesh Davera or upon one Shri Raghverder but no notice was served upon the assessee and the order of penalty passed u/s 271(1)(b) of the Act even do not mention the relation of said alleged Shri Rajesh Davera and Shri Raghverder with the assessee - non-receipt of notice by the assessee was the reasons for non-compliance of notices which according to us is a reasonable cause , therefore, in our view, penalty u/s 271(1)(b) of the Act could not be imposed. Thus non-appearance of the assessee before the A.O. or non-compliance of the notices issued was only because of non-receipt of the notices by the assessee and therefore, in our considered view, the same was a reasonable cause as has also been held in the case of Woodward Governor India P Ltd. Vs CIT ([ 2001 (4) TMI 34 - DELHI HIGH COURT] wherein it was held that levy of penalty is not automatic and the absence of a reasonable cause is necessary. As only source of income of the assessee is from salary from Government of Rajasthan on which TDS has all ready been deducted and apart from this there is no other source of income of the assessee. Hence, there could not be any intention upon the assessee for skipping the service of notices. It was proved that there was reasonable cause for the assessee in failure to comply with the provisions of Section 271(1)(b) of the Act as the non-appearance of the assessee before the A.O. was only because of the non-receipts of the notices. - Decided in favour of assessee. 2021 (3) TMI 159 Deduction u/s 80P - disallowing its interest income as not entitled for 80P deduction since derived from deposits made in scheduled banks - HELD THAT:- In decision in Vavveru Co-operative Rural Bank Ltd., Vs. CIT [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT ] holds the very nature of income as eligible for Section 80P deduction held that original source of the investments made by the petitioners in nationalised Banks is admittedly the income that the petitioners derived from the activities listed in sub Clauses (i) to (vii) of Clause (a). The character of such income may not be lost, especially when the statute uses the expression attributable to and not anyone of the two expressions, namely, derived from or directly attributable to . Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence direct the Assessing Officer to delete the impugned disallowance thereby treating that the assessee as eligible for Section 80P deduction. - Decided in favour of assessee. 2021 (3) TMI 158 Deduction u/s. 80IA - Denial of deduction as assessee failed to comply to the provision of sec. 80IA(7) - assessee not filed Form 10CCB along with the original return - CIT-A allowed deduction - HELD THAT:- assessee had very well raised its sec. 80IA deduction claim with original return filed u/s. 139(1) followed by its revised return along with form 10 CCB which was processed u/s. 143(1) of the Act disallowing the above relief. This clinching fact has gone unrebutted from department side. Coupled with this, we also wish to reiterate here that sec. 80 IA r.w.s. 80IA(7) expressly provides for the impugned relief. We therefore quote hon'ble apex court's landmark decision in KV Pillai vs. CIT [ 1966 (10) TMI 35 - SUPREME COURT] to express our complete agreement with the CIT(A)'s detailed discussion treating the assessee eligible for the impugned relief. Revenues sole substantive grievance to this effect fails therefore. - Decided against revenue. 2021 (3) TMI 157 Disallowance u/s 14A r.w.r. 8D - exclusion of income derived from strategic investments for the purpose of computation of disallowance - HELD THAT:- The observation on i.e. exclusion of tax exempt income derived from a strategic investments, is not a correct view in the light of the decision of the Supreme Court in Maxopp Investment Ltd. Vs. Commissioner of Income Tax, [ 2018 (3) TMI 805 - SUPREME COURT] . Accordingly, the observations are set aside. However, its observations with respect to the calculation of disallowance under Section 14A being confined to investments that derived tax exempt income are valid in the light of the Division Bench ruling in ACB India Ltd. v. ACIT,[ 2015 (4) TMI 224 - DELHI HIGH COURT] - In view of the above clarification, the ITAT's order, to the extent that it makes observations with respect to exclusion of income derived from strategic investments, is hereby set aside. Deduction in respect of 'Education Cess' and 'Secondary and Higher Education Cess' - HELD THAT:- Keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66-ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon'ble High Court of Bombay and Hon'ble High Court of Rajasthan, we hereby direct the revenue to consider the claim of deduction of the 'Education Cess' as per the provisions of Section 37 of the Income Tax Act. 2021 (3) TMI 156 Income from house property - Determination of rental income - whether the flat Nos. 16 17B situated in 5th floor, flat No. 18 situated in 6th Floor could be considered as a single unit or separate unit? - HELD THAT:- There is no dispute that assessee is having three properties namely 1/3rd share in flat No. 18, half share in flat No. 16 and full share in flat No. 17B. It is not in dispute that flat Nos. 16 18 are situated at 5th and 6th floor respectively - It is not in dispute that these flats are duplex flats having a common staircase attached to both the floors inside the said premises and therefore, adjusted adjacent to each other. This is also evidenced from a certificate dated 06/11/2018 issued by Kalpak Cooperative Housing Society Ltd., It is not in dispute that flat No. 17B is adjacent to flat No. 16 on 5th floor and the society has considered flat No. 16 17B as one single unit. This fact is evidenced by certificate dated 25/05/2016 issued by Kalpak Co-operative Housing Society. From the above, it could be seen that all the three flats i.e. Flat No. 16, 17B and 18 are to be considered as one single unit and treated as self-occupied. This Tribunal in assessee's own case [ 2019 (7) TMI 1753 - ITAT MUMBAI] had accepted the fact that properties of the three flats are to be considered as one single unit and treated as self-occupied property but since there was some additional evidence filed in that case, the same was restored to the file of the ld. AO for verification and decided in accordance with law. This Tribunal had also considered the fact that merely because certain income had been offered voluntarily by the assessee in the returns filed for subsequent years, that would not bind assessee for the year under consideration as there is no estoppel against the statute and the said change in stand in the peculiar facts and circumstance of the instant case cannot be termed as 'colourable device'. For the year under consideration, we find that there is no additional evidence filed by the assessee requiring any verification of the lower authorities. Respectfully following the decision of this Tribunal in assessee's own case and also in the case of assessee's mother-in-law referred to supra, we direct the ld. AO to delete the addition on account of notional rental income in the hands of the assessee. Accordingly, the ground Nos. 1-4 raised by the assessee are allowed. 2021 (3) TMI 155 Condonation of delay against intimation u/s 200A - levy of late filing fee passed under section 234E - HELD THAT:- Assessee was not aware in time the levy of late filing fee passed under section 234E of the Act since the intimation was communicated by e-mail, which were unnoticed by the employees and only after receipt of notice dated 09.10.2018 for all the above assessment years, the receipt of intimation was brought to the notice of the assessee. Therefore, after consulting income tax practitioners/Advocates, the assessee preferred appeals with delay before the ld. CIT(A). Under the above facts and circumstances and in view of the legal position, we condone the delay in filing the appeals before the ld. CIT(A) and accordingly, we set aside the common order passed by the ld. CIT(A) and direct him to adjudicate the appeals for all the assessment years under appeal on merits after giving sufficient opportunities of hearing to the assessee. Appeals filed by the assessee are allowed for statistical purposes. 2021 (3) TMI 154 Addition u/s 68 - unexplained cash credit - HELD THAT:- On perusal of the orders of authorities below, it is not clear as to whether the above credits were opening balance of the earlier assessment year or relevant assessment year under appeal, because, section 68 of the Act applies only to any sum credited in the books of the assessee in the financial year relevant to the assessment year under appeal. In the case of KNR Roofing Pvt. Ltd. v. ACIT [ 2019 (10) TMI 842 - ITAT BANGALORE] Tribunal was of the opinion that under section 68 of the Act, it is only the credit entry appearing in the books of account of an assessee for the relevant previous year, that can be treated as unexplained cash credit in the absence of proper explanation by the assessee and therefore, the opening balances of preceding previous years cannot be added under section 68 of the Act. In view of the above, the Assessing Officer is directed to verify as to whether the above credit entry appearing in the books of account of the assessee for the relevant previous year or preceding previous years and decide the issue in accordance with law after affording an opportunity of being heard to the assessee. Disallowance of sales promotion expenses - assessee has claimed to have incurred sales promotion and sales promotion material towards purchase of complimentary items like Ball pens, telephones, wall calendars, Dr. Note Pads, etc. - HELD THAT:- Applicability of CBDT Circular No. 5/2012 dated 01.08.2012 in the assessment year 2010-11. Actually, under the head sales promotion and sales promotion material , the assessee has claimed total expenditure for the purchase of complimentary items like Ball pens, telephones, wall calendars, Dr. Note Pads, etc., against which the AR of the assessee has submitted bills only for ₹ 46,61,249/- and for the balance amount of ₹ 22,64,048/- the AR of the assessee could not file any bills/vouchers. In the appellate order, the ld. CIT(A) has not given any findings on this ground. Assuming jurisdiction and after hearing both the parties, we proceeded to decide the ground on merits. For allowance of any expenditure, proper bills and vouchers are required for verification. In this case, in the absence of any bills/vouchers produced before the Assessing Officer or any higher appellate authorities for the amount of ₹ 22,64,048/- incurred for sales promotion and sales promotion materials, the said amount is liable to be disallowed. Accordingly, the expenditure of ₹ 22,64,048/- disallowed by the Assessing Officer for want bills/vouchers stands confirmed. Thus, the ground raised by the assessee is dismissed. 2021 (3) TMI 152 Disallowance u/s 14A - no exempt income was earned by the assessee during the financial year 2015-16 relevant to the AY 2016-17- HELD THAT:- When there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made is no longer res integra. Similar is the decision by the Hon ble Bombay High Court in Pr. CIT v. M/s Ballarpur Industries Ltd. [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] and the decision by the Hon ble Punjab Haryana High Court has held in CIT v. Winsome Textiles Industries Ltd. [ 2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] . The Hon ble Madras High Court in the case of CIT v. Celebrity Fashion Ltd. [ 2020 (9) TMI 1022 - MADRAS HIGH COURT] has similarly held that no disallowance can be made u/s 14A in absence of exempt income. - Decided in favour of assessee. 2021 (3) TMI 150 Estimation of income - addition of bogus purchases - disallowance restricted @ 5% - HELD THAT:- We are of the considered view that no doubt the purchases made from the suspected parties are not genuine. However, the purchases itself cannot be doubted as rightly adjudicated by Ld. CIT(A) that AO has not doubted sales declared by the assessee, only he suspects the purchases. By respectfully following the decision in the case of CIT vrs. Smith P. Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] we are inclined to agree with the findings of Ld. CIT(A). Therefore, grounds raised by the revenue are dismissed. 2021 (3) TMI 149 Estimation of income - bogus purchases - CIT-A restricted the disallowance to 25% - HELD THAT:- No infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 25% of the purchases for the assessment years 200-10 and 2010-11- See VIJAY PROTEINS LTD. VERSUS ASSISTANT COMMISSIONER [ 1996 (1) TMI 144 - ITAT AHMEDABAD-C] . Grounds raised by the revenue are dismissed for both these assessment years. 2021 (3) TMI 148 Revision u/s 263 - Estimation of income on bogus purchases - AO estimated addition of 3% against these purchases and added the same to the income of the assessee - HELD THAT:- AO estimated an addition against the same @3%. It is notable that the sales were not doubted and there could be no sale without actual purchase of material. Therefore, there was no option but to estimate the additions to account for unaccounted profit which may have generated by the assessee in these suspicious transactions. The action of Ld. AO in estimating the addition could not be said to be arbitrary or perverse, in any manner. There was due application of mind by Ld. AO on the stated issue. Merely because, Ld. Pr.CIT did not agree with the aforesaid estimation, the same could not be sole ground to invoke revisional jurisdiction u/s 263 particularly when there is due application of mind to the issue by Ld. AO. Once a possible view has been taken by Ld. AO, the revisional jurisdiction u/s 263 would not be valid. Merely because the inquiries were not done in a particular manner, the same would not make assessment order expose to revisional jurisdiction u/s 263.- Decided in favour of assessee. 2021 (3) TMI 146 TP Adjustment - payment made by the assessee after 5% mark up - tested party - HELD THAT:- When it is admitted by DRP that the functions and risks of the assessee are more complex in nature and numerous adjustments would have to be made, in our considered opinion, as per the Tribunal order cited by learned AR of the assessee having been rendered in the case of Ranbaxy [ 2008 (1) TMI 445 - ITAT DELHI-H ], the foreign AEs in the present case should be considered as tested party as has been considered by the assessee in the TP study. This is not the case of the TPO or DRP that the data of AEs are not available or not reliable because this is admitted position that the foreign AEs are paid 5% mark up and therefore, even if in the comparable cases, no mark up is paid by the customers of such uncontrolled comparables, then also, 5% mark up paid by the assessee in the present case will be within ALP as per 2nd proviso to section 92C(2) in which it is specified that if the variation between the Arm s Length Price and price at which international transaction has actually been undertaken does not exceed 5% of transaction price, there should not be a T P adjustment. So in the present case, if cost incurred is 100, the assessee is paying 105 after 5% mark up and therefore, even if in the case of the comparable, the payment is made of ₹ 100/- without any mark up then also the payment made by the assessee after 5% mark up is excess by 5% only for which no TP adjustment can be made up in these two assessment years involved in the present two appeals i.e. A. Y. 2010 11 and 2011 12 because the amendment in this proviso has taken place from Assessment Year 2012 13 and therefore, in the present two years, the unamended provisions are applicable and as per that, for up to +/- 5% difference, no T P adjustment is called for in these two years. We find no merit in the TP adjustment proposed by the TPO and approved by DRP and AO and we delete the same in both years. Customs 2021 (3) TMI 187 Rectification of Mistake - mistake apparent from the records - Application was rejected with the view of Third Member of the tribunal - While, the Judicial Member of the Tribunal held that there had been a mistake apparent from the records and that if the mistake was not rectified, the very purpose of remanding the matter to the Authority would be lost and if the observations were allowed to stand, it would be fatal to the order of assessment. - Power of the tribunal u/s 129B(2) - HELD THAT:- The concept of mistake, which is capable of being rectified under Section 129B(2) of the Act has been explained to mean that it is not confined to clerical or arithmetical mistakes alone. At the same time, the mistake to be rectified must be one apparent from the record and it should not be a mistake, which can be discovered by long drawn reasoning. While analyzing the legal principle for exercise of power under Section 129B of the Act in the said decision, the Court also noted the power given under the Civil Procedure Code where the words are an error apparent on the face of the records . It was pointed out that the power of Tribunals under Section 129B(2) of the Act to rectify any mistake apparent from the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record . Further, it was pointed out that mistake is an ordinary word, but in taxation laws, it has a specific and special significance, that it is not an arithmetical or clerical error alone that comes within its purview and that it comprehends errors which,after a judicious probe into the record from which it is supposed to emanate, are discerned. It was also held that in order to attract the power to rectify under Section 129B(2) of the Act, it is not sufficient if there is merely a mistake in the order sought to be rectified; and the mistake to be rectified must be one apparent from the record. Certain materials were placed when the Tribunal was hearing the matter for the first time and therefore, the Tribunal opined that adequate opportunity was not granted to the assessee and thought fit to remand the matter for de novo consideration. Having arrived at such a conclusion, the Tribunal ought not to have ventured to give a finding on the very same issue, which the Tribunal though fit to remand to the Adjudicating Authority for a fresh consideration - the Judicial Member, who agreed with the petitioner, rightly held that if the observations made in the other portion of the impugned order were not eschewed, it would be fatal to the case of the petitioner. Furthermore, the mistake is clearly visible from the records and it does not require any long drawn reasoning for a prudent man to come to a conclusion that there is a mistake. Hence, we are of the opinion that the Tribunal ought to have exercised its power under Section 129B(2) of the Act and deleted the conclusive observations made by the Tribunal on the issue, which it thought fit to remand for de novo consideration because the issue is an open issue. The findings rendered by the Judicial Member stating that the miscellaneous petition is maintainable and that the mistake should be rectified are upheld - Petition allowed. 2021 (3) TMI 184 Maintainability of appeal - appeal dismissed on the ground that the appellant has no justifiable reasons to bypass the alternative remedy available under the provisions of the Customs Act before the Customs, Excise and Service Tax Appellate Tribunal - HELD THAT:- The issues raised in the writ petition are not purely questions of law, but mixed questions of fact, which would require a process of adjudication. Such matters cannot be decided by a Writ Court based on affidavits. Therefore, we do agree with the ultimate conclusion of the learned Writ Court that the appellant should avail the alternate remedy available under the Act. The Writ Appeal stands dismissed and the appellants are granted 60 days time from the date of receipt of a copy of this judgment to file an appeal before the Commissioner of Customs (Appeals) and if the same is filed, the Commissioner of Customs (Appeals) shall entertain the appeal, without reference to the limitation as the writ petition was filed before this Court in the year 2016, which is well within the period of limitation, had the appellants filed appeals before the Commissioner of Customs (Appeals) at the relevant point of time. 2021 (3) TMI 174 Imposition of penalty equivalent to duty and interest u/s 114A of Customs Act - Interpretation of Statute - Section 114A of Customs Act - applicability of Circular No.61/2002 issued by CBEC on the adjudicating authorities working under the CBEC - Whether the terms (conjunctions) or used in Section 114A of Customs Act, 1962 has to be read as and for the purpose of imposing penalty under the said Section? HELD THAT:- The rule 114A of statutory interpretation was referred to by constitution bench of the Supreme Court in INDORE DEVELOPMENT AUTHORITY VERSUS MANOHARLAL AND ORS. [ 2020 (3) TMI 1310 - SUPREME COURT] - From perusal of the relevant extract of Section 114A, it is evident that the language employed by the legislature is plain and unambiguous and the provision contains a positive condition with regard to levy of penalty equal to duty or interest and does not contain any negative condition. The expression used is 'or' which is disjunctive between duty or interest and further use of expression as the case may be clearly suggest that aforesaid provision refers to two different persons and two different situations viz., one in which a person will be liable to duty and in other he may be liable to pay interest only and provides that in both the situations the person liable to duty would be liable to penalty equal to duty and person liable to interest would be liable to penalty equal to interest. Therefore, in view of law laid down by constitution bench of Supreme Court, the word 'or' cannot be interpreted as 'and'. Applicability of clarification issued by Central Board of Excise and Customs dated 20.09.2002 - HELD THAT:- Suffice it to say that the clarification cannot be contrary to the plain language of the provision. For yet another reason, no interference is called for as the tribunal has taken a similar view in the case of B.SURESH VASUDEV BALIGA [ 2015 (1) TMI 1206 - CESTAT BANGALORE ] and there is no material on record to show that the aforesaid order was challenged by the revenue. Therefore, in the facts of the case, the view taken by the tribunal otherwise also binds the revenue. The substantial question of law framed in this appeal are answered against the appellant and in favour of the respondent - there are no merits in the appeal - appeal dismissed. 2021 (3) TMI 170 Levy of Penalty on CHA u/s 112 of Customs Act - mis-declaration during the physical examination of the goods - allegation is that the penalty on the ground that the CHA cannot absolve themselves from the wrong doings of the importers and that CHA has colluded with the importer to defraud the Revenue - HELD THAT:- There is no material evidence with the Revenue to come to the conclusion that the appellant had the knowledge of the wrong doing of the importer and has colluded with the importer to defraud the Revenue. It is also found that the importer has also stated in his statement before the Original Authority in reply to Question No.10 that the CHA has filed the Bill of Entry based on the description on the invoice and there is no instruction by the importer to the CHA to do any wrong act. In the absence of any material evidence of knowledge and collusion between the appellant and the importer, it is not appropriate to punish the CHA for filing the document in good faith and on the basis of documents supplied by the importer. All the decisions relied upon by the appellant cited supra has consistently held that in order to impose penalty on the CHA under Section 112 of the Customs Act, there has to be a knowledge on the part of the CHA and there should be a collusion between the CHA and the importer in defrauding the Revenue - reliance can be placed in the case of ASHOK JAISWAR VERSUS COMMISSIONER OF CUSTOMS (ADJ.), MUMBAI-I [ 2006 (2) TMI 416 - CESTAT, NEW DELHI] . The penalty imposed is not sustainable in the absence of any specific role performed by the appellant in the wrong doing done by the importer - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2021 (3) TMI 169 Seeking extension of time period of CIRP - COVID-19 pandemic situation - HELD THAT:- The outbreak of COVID-19 declared as pandemic globally and resulting in imposition of nationwide lockdown with effect from 25th March, 2020 and having the disastrous effects of disrupting all economic activities with probably the worst adverse impact on Infrastructure Projects/ Real Estate Projects compounded by migration of labour, restrictions in place for the safety of human lives besides economic hardship unleashed by the unforeseen circumstances, impact whereof still subsists, it would be in the interest of all stake holders to mitigate the hardship created by the unprecedented situation in the wake of outbreak of COVID-19 resulting in imposition of lockdown and halting/ slowing down economic activities/ construction activities. It is indisputable that cash flow and liquidity has suffered a setback and the credit market is making desperate effort to bounce back and stand back on its feet. This warrants a magnanimous approach as the Reverse Corporate Insolvency Resolution Process, showing encouraging results and safeguarding the interests of all stake holders must be given one more chance of proving result oriented. We make it clear that though we are convinced about delay having been occasioned on the part of Promoter in adhering to the directions, as regards, infusion of ₹ 13.88 crores in Corporate Debtor within 30 days from the date of judgment viz. by 5th of March, 2020, we stop short of holding that the Reverse Corporate Insolvency Resolution Process contemplated in terms of the judgment dated 5th of February, 2020 has aborted due to non-compliance on this score, the single instance of default on the eve of outbreak of COVID-19 pandemic and imposition of lockdown being viewed only as an aberration. This is not with a view to condone the default but only to promote the ends of justice as giving further lease of life to the visionary step taken in pursuance of an experiment in the form of Reverse Corporate Insolvency Resolution Process must not give way to a single instance of default which happened just on the eve of imposition of lockdown due to outbreak of COVID-19 pandemic. While allowing the Application seeking extension in the context of timelines provided in the judgment to the extent indicated, direct extension of timelines as indicated in the proposed extended timelines filed on behalf of the Applicant vide Diary No.24606 dated 12th of January, 2021 (also reproduced at paragraph 16 above of this judgment), with further provision that the time allowed to allottees who were directed to deposit balance amount and pay 90% by 15th March, 2020 shall stand extended to 15th of June, 2021. All directions, except for the extended timelines, remaining intact, it is reiterated that if the Applicant-Promoter fails to comply with the undertaking and fails to invest as Financial Creditor or does not cooperate with the Resolution Professional, the amount invested by him as Financial Creditor in terms of the judgment shall stand forfeited and the Adjudicating Authority, National Company Law Tribunal will complete the Insolvency Resolution Process. Application disposed off. 2021 (3) TMI 166 Maintainability of application - Preferential transactions or not - Seeking to declare certain Corporate Guarantees as fraudulent and preferential transactions and to set them aside and reconstitute/reorganise the Committee of Creditors (CoC) removing Respondent Nos. 2 to 7 - Whether, the admission of R2 to R7 into the CoC of the Corporate Debtor basing on the Corporate Guarantees dated 03/03/2017 reportedly executed by the Corporate Debtor in their favour is proper? - HELD THAT:- The Code is a self-contained legislation as per Innoventive Industries Limited V/s. ICICI Bank [ 2017 (9) TMI 58 - SUPREME COURT] which provides specific procedure for collation of claims. Neither the RP nor any authority under the Code could afford to deviate from the procedure prescribed there under. R1 has not been able to show that the claims of the R2 to R7 were submitted to him electronically as provided under Form A. R2 to R7 have also not been able to show that they furnished their claims as provided under Regulation 8 of the CIRP Regulations in Form C of the Schedule. Item 5 of the Form C mandates the Financial Creditor(s) to furnish the details of the documents by reference to which the debt can be substantiated. It was contended by the Applicant that the so called Corporate Guarantees attracted stamp duty in the State of Maharashtra. But in the absence of the documents itself either in the electronic form or physical form, it would not be appropriate for this Authority to comment whether the documents could attract stamp duty under the Maharashtra Stamp Act, 1958 (Bombay Act No. LX of 1957) - thus, the the irresistible conclusion would be that R1 without proper submission of documents before him and without proper verification admitted R2 to R7 as Financial Creditors of the Corporate Debtor - answered in the negative. Whether, the Corporate Guarantees dated 03/03/2017 executed by the Corporate Debtor in favour of R2 to R7 and other members of the Consortium are preferential transactions? - HELD THAT:- In order to come under the preferential transactions, the transaction must satisfy the requirements of Section 43(2) of the Code. The execution of the so called Corporate Guarantees dated 03/03/2017 could not be a transfer of property or an interest of the Corporate Debtor for the benefit of one of its Creditors or a body of Creditors. Admittedly on the date of execution of the documents i.e., on 03/03/2017, the R2 to R7 were not Creditors of the Corporate Debtor. Therefore, the execution of the Corporate Guarantees cannot be said to be for the benefit of the Creditors. Therefore, the transaction covered under the Corporate Guarantees would not come within the parameters of the preferential transaction provided under Section 43 of the Code - answered in the negative. Maintainability of application - HELD THAT:- The admission of the R2 to R7 as Financial Creditors adversely affected the position of the Applicant in the CoC of the Corporate Debtor. The Applicant was thus entitled to agitate the matter before the Adjudicating Authority seeking appropriate redressal. In view of the findings the Application is maintainable - answered in the affirmative. The Application be and the same is allowed on contest in part. R2 to R7 are not recognised as Financial Creditors of the Corporate Debtor. R1 (RP) is directed to re-constitute the CoC. 2021 (3) TMI 165 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of loan - Corporate Debtor denied the liability alleging that that the said amount was towards capital contribution and was not a loan - existence of debt and dispute or not - time limitation - HELD THAT:- It is evident from the record that the application has been filed on the Performa prescribed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. The application under Section 7 is complete - The last balance of confirmation is issued on 01.04.2017, the amount due was payable in the year 2019, the applicant approached corporate for payment of debt in April 2019 and the present application is filed on 04.09.2019. Hence, the application is within in the period and is not barred by limitation. The registered office of the Corporate Debtor is situated at Delhi and therefore this tribunal has jurisdiction to entertain and try this application. The application is complete and deserves to be admitted - application admitted - moratorium declared. 2021 (3) TMI 151 Seeking directions to the Key Personnel of the Corporate Debtor to provide cooperation for resumption of work by the Liquidator at the registered office of the Corporate Debtor - HELD THAT:- Admittedly in the Application under Section 19(2) r/w Section 34(3) of the I B Code, the key personnel of the Corporate Debtor were arrayed as Respondent, and the Appellants and respondent no.3 were not arrayed as party. Thus, without giving any opportunity of hearing to the Appellants the impugned order 17.07.2020 was passed. It is also admitted fact that when the Appellants came to know about the order dated 17.07.2020 then the Appellant No. 1 filed an Application for clarification of the order dated 17.07.2020, but the Application has not been considered by the Adjudicating Authority and passed the impugned order dated 14.08.2020. In this Application it was prayed that a direction be issued against the Liquidator not to claim exclusive possession of the office premises as the premises used by other 20 companies as their head office and the liquidator has the right only to access the records and documents pertaining to the Corporate Debtor maintained in the office premises. The Learned Adjudicating Authority without considering the Application for clarification passed the impugned order dated 14.08.2020 on the Contempt Application - while considering the Contempt Application the Adjudicating Authority should have decided the Application for clarification. In the light of such admission, and the fact that office premises is used by other 20 Companies as their registered office, the direction of Adjudicating Authority to hand over the keys to the liquidator and in case the set of keys are not handed over to the liquidator, the liquidator is free to approach the Superintendent of Police to provide necessary help and protection to the liquidator in having the lock(s) broken and replaced with new lock(s) without any delay, is erroneous and not sustainable. It is clear that the Adjudicating Authority thought it proper that the matter requires a detailed hearing for an overall view of the situation - Adjudicating Authority is directed to consider the matter afresh and pass appropriate order as per law - Appeal allowed. 2021 (3) TMI 147 Seeking extension of the period of Corporate Insolvency Resolution Process for a further period of 90 days - section 12(2) of IBC 2016 - HELD THAT:- In view of the fact that there is only one Prospective Resolution Applicant before the Committee of Creditors as on date and the time to examine the resolution plan under the Code and verification of the contents of the resolution plan is limited, and also the intention of the Committee of Creditors to invite fresh Expression of Interest to enable more bona fide resolution applicants to bid for the revival of the Corporate Debtor seems to be reasonable, I am of the view that the request of Resolution Professional to extend the CIRP period for a further period of 90 days is justifiable. The prayer of the Resolution Professional to extend the period of Corporate Insolvency Resolution Process for a further period of 90 days from 18-10-2020 is hereby allowed. Service Tax 2021 (3) TMI 171 Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - declaration rejected on the sole ground that department has already initiated enquiry prior to the date of filing declaration - Amnesty Scheme - HELD THAT:- Without going into question of receipt or non-receipt of notice, before or after filing of first/second declaration, we find that present petitions deserve to be allowed on the ground that notices/summons initiating enquiry/investigation were issued after 1.9.2019 i.e. date of commencement of the scheme. No cut-off date for different persons like convicted for any offence under the Indirect Tax, arrears, voluntary disclosure etc. has been prescribed. The scheme as per notification No. 5/2019-C.E. (N.T.) dated 21.8.2019 came into force w.e.f. 01.09.2019 and declaration could be filed till 31.12.2019. It means for most of the persons, 30th June 2019 was considered as relevant date and for the category of arrears there was no restriction, however as per respondent voluntary disclosure was not permitted even though enquiry has been initiated after 1.9.2019. Section 125 of FA, 2019 debars few persons from filing declaration but does not prescribe any date though for some categories like pending show cause notice, pending appeal etc. 30.6.2019 has been notified as cut-off date - The scheme came into force w.e.f. 1.9.2019, thus on the said date right/liabilities, eligibility and non-eligibility stood freezed. If as contended by respondent is upheld, there would be different dates of eligibility for every person who files declaration under the category of voluntary disclosure . Thus, contention of respondent being untenable does not appeal to us. Amnesty Scheme is a piece of beneficial legislation and liberal interpretation which makes the scheme successful should be advanced. Strict interpretation which frustrates intent and purport of beneficial legislation deserves to be avoided - Section 125(1)(f) debars a person from making voluntary disclosure after being subjected to any enquiry or investigation or audit. As per respondent, the date of initiation of enquiry is irrelevant as aforesaid clause debars a person who has been subjected to enquiry. If on the date of filing declaration, some notice in form of enquiry is pending though issued after 1.9.2019, applicant is debarred. The Central Board of Indirect Taxes and Customs (for short Board ) has issued various circulars enlarging scope of the scheme. Circular dated 29.10.2019 permits a person to file declaration who has filed appeal after 30.6.2019 though he is not otherwise entitled as per FA, 2019. Similarly, as per Para 2(viii) of the circular dated 12.12.2019, where show cause notice has been issued on or after 1.7.2019, applicant is not eligible to opt for the scheme still application can be filed under the category of arrear . Our courts are flooded with avoidable litigation and government by way present scheme has initiated step to minimise litigation and generate revenue, thus keeping in mind intent and purport of the scheme as well Board Circulars, it would be appropriate to liberally interpret Section 125 of FA, 2019. It is apt to notice that in case of voluntary disclosure, as per section 124(1)(e) of the FA, 2019 no immunity from tax liability is available though immunity from 40% of tax liability is available in other categories including arrears - The scheme came into force w.e.f. 01.09.2019, thus any enquiry/audit/investigation initiated after aforesaid date cannot make any person ineligible because period running from 01.09.2019 to 31.12.2019 is meant for filing application and any event occurring after 01.09.2019 cannot make any person eligible or ineligible. Any other interpretation would be violative of scheme as well article 14 of the Constitution because there would be discrimination between two persons who are similarly situated on 01.09.2019 but enquiry is initiated against any one of them. Petition allowed. Central Excise 2021 (3) TMI 180 Maintainability of petition - availability of alternative remedy of appeal - an order of interim stay was granted on 17.9.2015, which continued to remain in force till the writ petition was disposed of - when the writ petition was taken up for hearing on 11.12.2020, the Court opined that the appellant should avail alternative remedy - HELD THAT:- There have been several decisions of the Hon'ble Supreme Court which have held that when writ petitions are pending for several years and when they are taken up for final hearing, the Court should seldom relegate the party to avail the alternative remedy as it would be very harsh on the party to approach the statutory authority after several years. Precisely, in the instant case, this has happened and after nearly six years, the petitioner has been directed to avail the appeal remedy. Therefore no useful purpose would be served in directing the appellant to file an appeal before the Tribunal and more particularly when an argument was made before the adjudicating authority. The point, which was canvassed by the assessee would have wider ramification and may be applicable to other export oriented units also - Considering the fact that a clarification had been issued on 02.04.2008, it would be necessary for the Adjudicating Authority to examine as to the applicability of the said clarification qua the appellant's case. Therefore, we are inclined to remand the matter to the Adjudicating Authority for de novo adjudication and take a fresh decision on merits and in accordance with law. Appeal allowed by way of remand. 2021 (3) TMI 179 CENVAT Credit - Capital goods or not - M.S.Angles - M.S.Joint Beams - TOR Steel - Whether the order of the Tribunal placing reliance on Vandana Global to disallow the claim of CENVAT on M.S.Angles, M.S.Joint Beams and TOR Steel is unsustainable in view of the fact that it has lost its value as a precedent in view of the contrary view expressed by the Supreme Court in Central Excise, Jaipur, vs. Rajasthan Spinning Weaving Mills Ltd. [ 2010 (7) TMI 12 - SUPREME COURT ]? HELD THAT:- We had an occasion to consider similar questions in the case of Dalmia Cements (Bharat) Ltd. vs. CESTAT, Chennai Ors., [ 2021 (1) TMI 927 - MADRAS HIGH COURT ], wherein the civil miscellaneous appeal filed by the assessee was allowed, by holding that In the light of the recent decision of the Hon'ble Division Bench of this Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT ] wherein an identical question was considered and the only difference being that the case arose under the CENVAT Credit Rules, which subsequently stood substituted by the MODVAT Rules. The substantial questions of law are answered in favour of the assessee - appeal allowed. 2021 (3) TMI 178 Doctrine of forum conveniens - Removal of Capital Goods without reversal of Credit / Payment of duty - Levy of interest and penalty on the petitioner as a condition for granting immunity from prosecution - jurisdiction of this Court to entertain the present writ petitions on the ground of forum non conveniens - HELD THAT:- This doctrine of forum conveniens is a well-known doctrine in international law. The courts have held the question of forum conveniens / forum conveniens involves balancing the considerations of the interests of the parties involved (especially factors of costs and convenience), as well as wider concerns of convenience and justice to third parties involved in the litigation, wastage of resources, the risk of inconsistent judgments from different courts and justice in the broadest sense, as well as considerations of international comity, i.e., the respect for the jurisdiction of the courts of other countries - The doctrine pre-supposes that two or more courts have jurisdiction over the subject matter of the dispute but one among them is more appropriate and therefore the court would decline to pass any order in a court if it finds the other court to be more appropriate to decide the dispute as that court was a forum convenient to decide the lis between the parties. Since there are no disputed questions of fact involved in the present cases and issue arises solely on account of interpretation of the provision, I am of the view that the challenge to the impugned common order of the first respondent Settlement Commission located within the jurisdiction of this Court is maintainable before this Court under Article 226 of the Constitution of India. Levy of interest and imposition penalty under the provisions of the Central enactment namely the Central Excise Act, 1944 and the Rules made therein, namely CENVAT Credit Rules, 2004 and Central Excise Rules, 2002 - HELD THAT:- The present writ petitions can be decided on merits based on the available case laws instead of driving the petitioner to work out its remedy in the Andhra Pradesh High Court or Telangana High Court at this distant point of time. As per the Rule 3(5A) of the CENVAT Credit Rules, 2004, removal of the used capital goods was to accompany a payment of amount equal to the Cenvat credit taken on the said capital goods reduced by percentage point calculated by straight line method - The removals by the petitioner of the capital goods were between 22.11.2011 and 14.03.2012 and therefore strictly there was no liability to pay the amounts under Rule 3(5A) of the CENVAT Credit Rules, 2004 as it did not exist in the Rules. The first amendment to Rule 3 of the CENVAT Credit Rules, 2004 for the purpose of recovery of amount came into force only on 01.03.2013 vide Notification No.3/2013-CE (NT) dated 01.03.2013 after the petitioner had started paying an amount of ₹ 1,23,56,697/- in installments on various dates between 29.05.2012 and 07.10.2013 to the credit of the second respondent for removals made between 22.11.2011 and 14.03.2012. The above amendment was later substituted vide Notification No.1/2014-CE (NT) dated 08.01.2014. Therefore, question of imposing interest under Rule 14 of the Act cannot be sustained as the Rules did not exist at the time of removals - Thus, the amount payable under Rules 3(5), (5A), (5B) and (5C) of the CENVAT Credit Rules, 2004 which were made recoverable in the same manner provided under Rule 14 of the aforesaid Rules if no amount was paid at the time of removal came into force only w.e.f. 01.03.2013 for the first time. Since the petitioner paid the aforesaid amount of ₹ 1,23,56,697/- on various dates between 29.05.2012 and 07.10.2013 and a further sum of ₹ 8 lakhs on 26.11.2013, the invocation of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 on the date of Show Cause Notice dated 14.11.2012 was without jurisdiction - Since the removals were contrary to spirit of the provisions of the CENVAT Credit Rules, 2004, there are no merits in the submission of the learned counsel for the petitioners as far as the challenge to imposition of penalty or redemption fine under the impugned common order as a condition for granting immunity from prosecution under the provisions of the Central Excise Act, 1944 to the petitioners. Invocation of Rule 8(3A) of the Central Excise Rules, 2002 in the impugned order of the first respondent was wholly misplaced. Rule 8(3A) of the Central Excise Rules, 2002 applies only to a situation where an assessee defaults in payment of duty beyond 30 days due date as prescribed in the said Rules. Then, notwithstanding anything contained in CENVAT Credit Rules, 2004, such an assessee was required to pay excise duty on each consignment at the time of removal, without utilising the Cenvat Credit till the outstanding amount including interest thereon was paid in cash; and in the event of failure, it shall be deemed that goods have been cleared without payment of duty and the consequence of penalties as provided in these Rules were attracted. This is not applicable to the facts of the cases. Therefore, while upholding the impugned common order imposing penalty and redemption fine on the respective petitioners, I set aside the impugned common order insofar as it seeks to direct the petitioners to pay the balance amount of ₹ 22,44,953/- towards interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 - petitioners therefore are directed to remit the balance amount of penalty and redemption fine imposed in the impugned common order as a condition for settling the case and for granting immunity from prosecution within a period of 30 days from date of receipt of a copy of this order if the aforesaid amount has already not been paid by the petitioners. Petition allowed in part. 2021 (3) TMI 168 Recovery of Central Excise dues - whether the flats belonging to the appellant which she purchased under Registered Sale deeds out of monies received as gifts from her mother-in-law and father-in-law, can be proceeded against by the Excise department for recovery of Central Excise dues against two proprietory firms of her late husband? - HELD THAT:- After remand by the Hon ble High Court, the appellant, before the Adjudicating Authority had placed Chartered Accountant s certificate dated 10.06.2011 giving full details of source of income from which the appellant has purchased the said four flats. It was submitted by the appellant that the entire money which was paid by her for purchase of four flats was received by her as gift from her Father-in-law Shri Satyanarayan Agarwal and Mother-in-law Mrs. Panna Devi. To substantiate this fact, the appellant submitted income tax returns, capital accounts, bank statements and Income tax assessment orders of both the persons. On scrutiny of these documents, it is absolutely clear that the appellant have received gift from her father-in-law and mother-in-law. Accordingly, it is legally earned income by the appellant from which the entire payment of cost of flats was made. This fact has also not been disputed by the lower authorities. As admittedly, no sale or purchase deed was registered between Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with the builder. In this fact, it is established that no sale purchase of four flats against the payment made by Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal was concluded. Therefore, even though some transaction was made towards purchase of four flats by Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with the builder but since the deal was cancelled there exists no sale purchase of four flats. Subsequently, in the fresh deal, the appellant has made payment from her own source which was received as gift from her mother-in-law and father-in-law and the sale deed for purchase of four flats with the builder was registered. Therefore, the appellant is sole owner of four flats purchased by making payment from her own source of income. In the deal between the appellant and the builder, the earlier inconclusive deal of Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal with builder has no relevance. Even if there is remote connection with Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal, since the deal was not fructified that any transaction made by them is not relevant as regards the present ownership of the appellant of these four flats for a simple reason that the payment by the appellant made to the builder is not from Zenith Chemicals Pvt. Limited and Ms. Shivangi Agarwal but entire payment was made by her from her own source of income. Since the four flats were purchased by the appellant from her own source of income, question of inheritance from her late husband Shri Krishna Agarwal does not arise. The Hon ble High Court precisely directed the department to examine only two points whether the appellant has made payments for purchase of four flats by her own source of income and whether the property was possessed by the appellant as a result of inheritance from her late husband Shri Krishna Agarwal. From the detailed submissions along with the documentary evidence submitted by the appellant, it is clearly established that appellant have purchased four flats and made payment from her own source of income and it is also fact that appellant has not inherited the property from her late husband Shri Krishna Agarwal. In this undisputed fact, the lower authorities have travelled blindly ignoring the observations made by the Hon ble Gujarat High Court and without any basis held that the appellant has not purchased four flats from her own source of income which completely in defiance of the order passed the Hon ble High Court - taking into consideration the Hon ble High Court s order, undisputed facts and documentary evidence presented by the appellant, it is clear that the appellant is the sole owner of four flats purchased from her own source of income and not inherited from her late husband Shri Krishna Agarwal or even any member of the family. The impugned order is not sustainable - Appeal allowed - decided in favor of appellant. 2021 (3) TMI 153 Process amounting to manufacture - Department entertained a view that the scrap arising out of such activity of cutting and slitting of steel coils is covered under the definition of waste and scrap mentioned in Note 8 to Section XV of the Central Excise Tariff Act, 1985 and therefore, the same is liable to Excise Duty - HELD THAT:- The C.B.E.C. vide Circular No. 811/8/2005-CX dated 02.03.2005 has clarified that the process of cutting of HR/CR coils of iron or non-alloy steel into sheets or slitting into strips of lesser width would not amount to manufacture. So also, in the case COMMISSIONER OF CENTRAL EXCISE VERSUS INDIAN ALUMINIUM CO. LTD. [ 2006 (9) TMI 6 - SUPREME COURT] it has been held that the process of cutting/slitting of jumbo coils into baby coils/sheets would not amount to manufacture. When the process of cutting and slitting itself does not amount to manufacture within the meaning of Section 2 (f) of the Central Excise Act, 1944, scrap arising out of such activity cannot be subjected to Excise Duty for the simple reason that the appellant has not consciously manufactured any waste or scrap. Emergence of such waste and scrap of iron is incidental to the activity of slitting and cutting of bigger coils into smaller ones - The very same issue was decided by the Tribunal in the case of RAIL COACH FACTORY VERSUS COMMISSIONER OF CENTRAL EXCISE, JALLANDHAR [ 2008 (7) TMI 787 - CESTAT, NEW DELHI] . Notification No. 89/95-CE dated 18.05.1995 issued by the Department also supports the contentions of the assessee. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2021 (3) TMI 192 Maintainability of petition - Validity of assessment order - transfer of right to use of goods - whether the petitioner should be relegated at this distant point of time to avail the alternate remedy before the Appellate Authority under the respective enactment or whether these writ petitions can be disposed on merits as there are no disputed questions of fact involved? - HELD THAT:- Since there are no disputed questions of fact and only application of settled position of law to the facts of the case, I am inclined to exercise the jurisdiction of the court under article 226 of the Constitution of India. Further, clarity on the law is available as on this date in the light of the decision of the Hon'ble Supreme Court in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] . The said decision was not available when the impugned orders were passed. Article 366(29A) of the Constitution of India was amended by the 46th Amendment to the Constitution to bring transactions where one or more of the essential ingredients of a sale as defined in the Sale of Goods Act, 1930 were absent, within the ambit of the definition of purchase and sales for the purposes of levy of sales tax. The amendment especially allowed specific composite contracts viz. works contracts [Clause (b)], hire purchase contracts [Clause (c)], catering contracts [Clause (e)] by legal fiction to be divisible contracts where the sale element could be isolated and be subjected to sales tax. In the facts and circumstances of the present case, the above test enunciated for transfer of right to use is not satisfied. Therefore, the petitioner cannot be subjected to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959 and/or under the provisions of the Central Sales Tax Act, 1956. In the transactions entered between the petitioner and the banks, the effective control over to ATM's continued to vest with the petitioner. Since the issue stands fully covered in favour of the petitioner in the above cited decision of the Hon'ble Supreme Court in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] , these writ petitions deserve to be allowed by quashing the impugned orders. As a matter of fact, the subject transaction may have been liable to tax under Section 65(105)(zzzzj) of the Finance Act, 1994 with effect from 2008 after service tax was levied on Supply of Tangible Goods as about test for transfer of right to use is conspicuously absent - Petition allowed - decided in favor of petitioner. 2021 (3) TMI 189 Input tax credit - Rejection of returns - sales of textile and readymade garments from the registered dealers within the State - In spite of discharge of burden cast under the statute the audit authority passed an order dated 26.12.2014 under Section 39(1) of the Act, rejecting the input tax credit claimed by the appellant - HELD THAT:- In the case on hand, there is no dispute that the assessee produced the true copies of communication certificate, turnover analysis of M/s. Tallam Apparels for the year 2012-13. It is not in dispute that M/s. Tallam Apparels was registered dealer bearing Tin No.29850733495 - From perusal of these documents, it can safely be concluded that the transaction is not a bogus transaction or make believe transaction. Since M/s. Tallam Apparels is not a bogus dealer, as is evident from the documents produced by the assessee, dis-allowing of input tax is incorrect. There cannot be any dispute, that burden is cast on the assessee to establish the transaction to lay a claim for deduction of input tax by production of necessary documents. This Court is of the considered opinion that the assessee has discharged this burden by placing necessary documents. In the case on hand, if M/s. Tallam Apparels has not remitted the tax to the Department, for which assessee cannot be penalized. Therefore, we do not find any justification in interfering with the order of the Karnataka Appellate Tribunal. Under the scheme of the Act, there is no power vested in the authority to proceed against the assessee for non-remittance of tax by his purchaser. This aspect of the matter has been rightly considered by the Karnataka Appellate Tribunal in the right perspective - there are no infirmity in the impugned order recording a finding that the AA and the FAA were wrong in disallowing the input tax credit in favour of the assessee for the purchases made from M/s. Tallam Apparrels. Sales Tax Revision Petition is dismissed. 2021 (3) TMI 186 Service tax or VAT - Sale or service - Information Technology Service - petitioner had availed input tax credit on several goods purchased by the petitioner to pay VAT on sale of Information Technology Products (ITP) but had failed to pay tax on such sale - HELD THAT:- Information Technology Software Services was specifically excluded from the definition of Business Auxiliary Services (BAS) in Section 65(19) of the Finance Act, 1994 when the definition of Business Auxiliary Services (BAS) was amended in the year 2003 - In the explanation appended to the definition of Business Auxiliary Services (BAS) in Section 65(19) of the Finance Act, 1994, it was clarified that Information Technology Software Service means any service in relation to designing, developing or maintaining of computer software or computerized data processing or system networking or any other service primarily in relation to operation of computer systems. Information Technology Software Service was brought within the purview of taxable service with effect from Finance Act No.2 of 2009 with the introduction of Section 65(53a) and Section 65(105)(zzzze) in the Finance Act, 1994 - In 2009 vide Finance (No.2) Act 2009, the definition of taxable service of Information Technology Service in Section 65(105)(zzzze) of the Finance Act, 1994 was tweaked and amended with effect from 16.05.2008. When a software is copied on a CD or magnetic disk or other forms of transmission, a goods come into existence in such media. The sale of such CD or magnetic disk or in other forms of transmission of the software may license the user to use the software therein. However, there is goods which has come into existence and prima facie it appears the petitioner was liable to tax under the provisions of the Tamil Nadu Value Added Tax Act, 2006 - Therefore, it is for the petitioner establish that it was not engaged in sale of IT software of any Media and that it was providing only taxable service of Information Technology Software Service within the meaning of Section 65(105) (zzzze) of the Finance Act,1994. From a reading of the representation of the petitioner, it is clear that the petitioner was prima facie selling software license to its customer in a compact disc or other electronically readable format or through Internet. Such sale permitted the user a license to use the software contained therein - The representation of the petitioner on 3.9.2009 to the Central Excise Department indicates that the clarification was sought for as to whether software license in a compact disc or other electronically readable format or over the Internet, whereby its clients/customers are permitted to use the software for a specified period of time and sale of software licenses attracts VAT under the provisions of the Tamil Nadu Value Added Tax Act, 2006. The petitioner has to independently satisfy the respondent, that the transaction in questions were outside the purview of TN VAT Act 2006 by producing agreements and invoices. It is not answer to the impugned notice issued under Section 27 of the TN VAT Act, 2006 that the petitioner was not liable to tax in view of the letter of the Assistant Commissioner of Central Excise - The petitioner should therefore submit all the agreements signed with its client and invoices raised on its client during the period in dispute before the 2nd respondent and file written submissions before the 2nd respondent and demonstrate on facts how it was not liable to pay tax under the provisions of the Tamil Nadu Value Added Tax Act, 2006 under Entry 68, Part B of the Schedule I to the said Act within period of 45 days from the date of receipt of a copy of this Order. Petition dismissed. 2021 (3) TMI 182 Transfer of the assets of a firm on dissolution or a sale or not - HELD THAT:- In the instant case, the Assessing Officer noted that at the time of check of accounts, there was no mention of any dissolution agreement and taking up the goods worth ₹ 32,45,350/- by one partner and even during the existence of the firm M/s.S.S.Fabs, one of the partner Thiru B.Salam has obtained a Registration Certificate under the TNGST Act and under the CST Act and the Assessing Officer also noted that he has been doing business in the same commodity in the same address and the Registration Certificate is valid from 20.07.2000. Further, the Assessing Officer has also recorded the statement of the assessee, which was during the course of enquiry and it has been candidly admitted that there has been no transfer of stock. The Tribunal, without examining the factual issue, dismissed the Revenue's appeal, which is not sustainable - the Appellate Tribunal committed an error in dismissing the Revenue's appeal without examining the factual position. Tax Case Revision is allowed. 2021 (3) TMI 175 Adjustment of tax deducted at source - Benefit of Section 7C of the TNGST Act, 1959 denied - demanded towards freight and pumping charges - HELD THAT:- The present writ petition ought not to have been admitted in the 1st place as the petitioner had an alternate remedy before the Sales Tax Appellate Tribunal against the impugned order passed by the 2nd respondent Appellant Joint Commissioner. Be that as it may, since the writ petition was admitted in the year 2012 and an interim injunction was ordered by restraining the Commercial Tax Department from proceeding further with the recovery proceedings pursuant to the impugned order of the 2nd respondent, it would be unfair to relegate the petitioner to an alternate remedy at this distant point of time. Further, one of the issue can be answered based on the law. Therefore, I take up the case and dispose this writ petition on the merits. The demand sustained for alleged violation of Rule 6C of TNGST Rules Act, 1959 regarding the inclusion of the freight and pumping charges into the taxable turnover are concerned is liable to be quashed. Therefore, to that extent the impugned order is quashed. Tax Deducted at Source (TDS) - HELD THAT:- There cannot be any grievance of the petitioner as the case has been remitted back to the 1st respondent to pass a speaking order after due verification. The 2nd respondent has clearly held that for administrative delay or deficiency in the mechanism of transfer of TDS credits to the petitioner s account, the petitioner cannot be made to suffer. There are different kinds of transactions involved. Some are pure supply and therefore sale and some were deemed sale viz. works contract within the meaning of Section 2 (u) of Tamil Nadu General Sales Tax Act, 1959. When the petitioner ad-disguised sale as 'works contract' - Since the question as to whether the transaction involved sale or works contract liable to tax under Section 3B or under Section 7C of the Tamil Nadu General Sales Tax Act, 1959 is a question of fact. No conclusion on facts can be arrived under Article 226 of the Constitution of India based on sample copies of invoices filed by the petitioner before this Court to convince the court to conclude that there was indeed works contract during the supply of ready mix concrete to its customers. The petition is partly allowed. 2021 (3) TMI 173 Classification of goods - switches, hubs and routers - fall under Entry 18(i) in Part B of the first schedule to the TNGST or not - HELD THAT:-Reliance can be placed in the case of M/S. DAX NETWORKS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER [ 2017 (11) TMI 929 - MADRAS HIGH COURT] where it was held that appropriate classification of switches, hubs and routers dealt with by the petitioner should undoubtedly fall under Entry 18 (i) in Part B of the first schedule to the TNGST. These writ petitions are disposed off by setting aside the impugned revised Assessment Orders dated 01.02.2006 for the Assessment Years 2001-2002 to 2003-2004 and by directing the respondents to pass a fresh order in terms of the decisions of this Court cited and in accordance with law. The assessment orders passed by the 3rd respondent are set aside and the case is remitted back to the respondents to pass a fresh order within a period of three months from the date of receipt of a copy of this order - Petition disposed off.
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