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TMI Tax Updates - e-Newsletter
March 8, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Provisional attachment of petitioner's Bank Accounts - Section 83 - every provisional attachment shall cease to have effect after expiry of period of one year from the date of attachment order - In the present case the order of attachment was passed more than a year back and would therefore be ceased to be effective upon completion of period of one year. - HC
Income Tax
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Giving credit to the TDS deducted by the tenants - tenants have in fact deducted the amount and failed to remit as remittance is not found in the records of the revenue. Insofar as prayer at (iii) is concerned, it is open to the Department to take appropriate action against respondent nos. 3 and 4 as per law to recover sums deducted by the respondents and not remitted to the Department and other penal action. - HC
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Addition towards single premium paid on policy taken for the Director by the Company - Determination of sum of addition - Gross amount or Net amount of premium - assessee had neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI nor claimed any deduction under section 10(10D) of the Act and offered ₹ 3,09,000/- for tax in his ROI, according to me, no addition was warranted. Therefore in this case only the net amount (Net of TDS) should have been taxed, which assessee has already offered to tax in his ROI. - AT
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Set off of brought forward loss against Long Term Capital Gain (LTCG) - AO was of the view that since the LTCL no longer exist in books of account, it cannot be set off consequent to the scheme of arrangement - It has not been brought out on record that by reason of the restructuring the books and the order of the Hon’ble Kerala High Court, the assessee is precluded from utilizing the carryforward LTCL against set off of LTCG in future years as contemplated by section 74 of the Act. - AT
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TP Adjustment - international transaction involving payment of royalty undertaken by Diesel India with its Associated Enterprise (“AE”) - the arithmetic mean of comparables comes to 5.25 which is more than the royalty paid by the assessee. The royalty paid by the assessee thus within arm”s length range. - AT
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Income from house property - Deduction u/s 23(1) - Annual mixed use charges paid by the assessee to Municipal Corporation - The said charges is in the nature of regularization of the usage of the property, which cannot be construed as tax levied by the local authority/Municipal Corporation of Delhi - collection of the annual mixed used charge will not make any difference in the annual let out value of the property, therefore the same is not allowable as per the proviso under section 23(1) of the Income Tax Act, 1961. - AT
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TP adjustment made in respect of provision of back office services - In any case, we find the main grievance of the ld. DRP seems to be that AE revenue is only ₹ 19 Crores and Non-AE revenue is ₹ 176 Crores and salary cost of back office income unit seems to be more by 24% and requires allocation to non-AE unit. If this observation is to be accepted then, the same would only be beneficial to the assessee as the same would result in increase of margins for the AE BPO segment. This fact itself proves that the ld. DRP had not applied its mind at all on the basis of allocation of expenses between the AE units and the non-AE units.- AT
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Cessation of liability - Additions u/s 41(1) - Unsecured loans received on account of transfer entry made through banking channel - Sundry creditors for more than 4 years - liability has been acknowledged by the assessee and duly shown in the balance sheet and since some of the creditors could not file confirmation before the AO, it cannot be held that there was a cessation of liability. Genuineness and creditworthiness does not come into play for application of section 41(1) of the Act. - AT
Customs
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Levy of penalty on the appellants u/s 114 of the Customs Act, 1962 - Customs Broker firm - A Custom Broker is supposed to safeguard the interests of both exporters and the Customs. It is not possible to manage the huge volume of transactions in each port without some trust on the Customs Broker by the officers of Customs. Any act facilitating an attempt for export of prohibited goods would fall under Section 114 of the Act - AT
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Violation of principles of natural justice - There is no reason in the Order-in-Appeal for distinct decision given for Noticee No.1 while denying the same opportunity of personal hearing to the remaining noticees including the present appellant. In the given circumstances and in the interest of justice, appellant’s case along with that of Noticee No. 3 & 4 is on much better footings as there is apparent admission that notice could not be delivered upon him and the same was received back undelivered. - As per principles of Audi Alteram Partam, the first principles of natural justice which requires that none should be condoned unheard - Matter restored back - AT
Indian Laws
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Corruption is a distinct type of offence. It is like a cancer to the society. It eats the social and economical health every second resulting in unimaginable consequences. It is only few officers of the Government misuse their official position forgetting their duty and loyalty to the State, resulting in eroding the economy of the country at large. It is often said that world is not suffering from 'violence of many'; but is suffering from 'silence of many'. Therefore, when a true complainant has taken recourse to the legal battle, his testimony cannot be disbelieved on flimsy reasons. - HC
IBC
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Refund sought by home-buyers due to an inordinate delay in the completion of the project and failure to handover possession within the stipulated time - application was filed prior to the amendment to Section 7 of the IBC, which now permits 100 or 10% of the home buyers/allottees to apply under Section 7 of the IBC - In the present case, as observed, out of the total 128 home buyers of 176 units, 82 homebuyers are against the insolvency proceedings and the original applicants have also settled their dispute with the appellant and corporate debtor. Even the object and purpose of the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the company runs as a going concern - SC
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Initiation of CIRP - The amount cannot be construed as a ‘default’ as on January, 2019. It is satisfying that the Appellant could not establish any ‘default’ on the part of the Respondent by way of any documentary evidence - It is also an admitted fact that the Balance Sheet of the Respondent which was relied on by the Appellant, perusal thereof, crystal clear that the amount was accepted by the Respondent for investment purposes. - Application was rightly dismissed by the NCLT - AT
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Maintainability of application - initiation of CIRP - all the dues pertaining to invoices placed on record pertains to Partnership Firm. No transaction pertains to the respondent company herein. Partnership firm still does not come under the jurisdiction of NCLT as such no petition can be maintained - the issue stands decided against the petitioner and in favour of the respondent. - Tri
Central Excise
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Valuation - Job Work - In the case in hand, inasmuch as the job-worked goods were sent by the appellants to another job worker for further manufacture and such manufactured goods thereafter were used by the principal-manufacturer for manufacture of a entirely different excisable product. In other words, the ‘Lamination’ manufactured by the appellants were not used by the principal-manufacturer for manufacture of ‘Compressors’. - Demand set aside - AT
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Levy of penalty on Director, managing director and general manager u/r 26 of the Central Excise Rules, 2002 - There are no merits in the impugned order imposing penalties on the appellants who were performing their duties within the company - AT
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100% EOU - Refund of CENVAT Credit - export of goods - Without denying the CENVAT Credit taken/ availed by the appellant in their book of accounts during the relevant period (quarter) by way of initiating proceedings against the appellant in terms of Rule 14, revenue could not have altered the quantum of “Net CENVAT Credit” availed during the said quarter, and deny the encashment of that amount of the CENVAT Credit which is due as per the Rule 5. It is now well settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. - AT
VAT
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Levy of Excise Duty - weak spirit, which was more than 2% allowable wastage - industrial alcohol not fit for human consumption - Perusal of Section 27(1) of the said Act would reveal that the State’s power to impose duty on import, export, transport and manufacture is only in respect of any excisable articles imported, exported, transported and manufactured. ‘Excisable article’ has been defined to be any alcoholic liquor for human consumption or any intoxicating drug. It is thus clear that even under the relevant statute, the State has power to levy excise duty only in respect of the alcoholic liquor for human consumption. - the State has no power to levy excise duty on wastage of liquor after distillation. - SC
Case Laws:
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GST
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2022 (3) TMI 309
Refund of GST alongwith interest - export of goods as zero rated supplies - Petitioner s refund application has not been processed till date and neither any acknowledgment in FORM GST RFD-02 nor any deficiency memo has been issued in RFD-03 within stipulated time limit of fifteen days - HELD THAT:- Mr. Gautam Narayan, learned ASC accepts notice on behalf of the Respondents. He states that the Petitioner s refund application shall be processed and an order shall be passed within six weeks. Learned counsel for the Petitioner has no objection to the same, provided, interest is also paid on the delayed payment. The present writ petition along with pending application is disposed of with a direction to the Respondents to process the Petitioner s refund application for the month of November, 2019 along with the interest accrued thereon, in accordance with law within six weeks.
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2022 (3) TMI 308
Provisional attachment of petitioner's Bank Accounts - Section 83 of the Central Goods and Services Tax Act - HELD THAT:- Section 83 of the CGST Act pertains to provisional attachment to protect the revenue in certain cases. In sub-section (1) of Section 83 the commissioner is empowered to order provisional attachment of the property of the assessee including bank account where proceedings under Chapters XII, XIV and XV are pending and the commissioner is of the opinion that for the purpose of protecting the interest of government revenue it is necessary so to do. Sub-section (2) of Section 83 provides that every such provisional attachment shall cease to have effect after expiry of period of one year from the date of order made under sub-section (1). Also, CBIC's circular dated 23.02.2021 has also clarified that every provisional attachment shall cease to have effect after expiry of period of one year from the date of attachment order - In the present case the order of attachment was passed more than a year back and would therefore be ceased to be effective upon completion of period of one year. The provisional attachment order stands stayed - Leave to join the concerned adjudicating officer at Udaipur as additional respondent is granted, as prayed for.
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Income Tax
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2022 (3) TMI 307
Addition u/s 68 - unexplained cash credit - HELD THAT:- CIT (A) on studying the bank account carefully found that while ₹ 41 lakhs was deposited on 12th June, 2010 and within two days thereafter there was a debit with the narration TRF to LIC MF Liquid Fund which meant that it had been invested in the above liquid fund and not used for any investment in land or building on behalf of the Assessee s daughter. The fact is that the CIT (A) disbelieved that the Assessee was appointed as the general power of attorney holder for his daughter for entering into land/building transactions on behalf of his daughter. Since the funds were used by the Assessee for his own investment it strongly indicated that the source of investment i.e. the cash deposit of ₹ 41 lakhs also belongs to him. Learned Senior Counsel was unable to overcome the above categorical finding of the CIT(A) on how the cash deposit or ₹ 41 lacs was actually used. The explanation offered by the Assessee raised more questions than it answered. For instance, it was not explained why marriage gifts in a substantial sum of ₹ 25 lacs was kept as cash with the Assessee s daughter. If indeed the daughter maintained a bank account it was but natural that such cash amount would be deposited in such account. The Court is, therefore, not persuaded that any factual or legal error has been committed by the AO, or the CIT (A) or the ITAT in sustaining the above additions under Section 68 of the IT Act. The question framed is therefore, answered in the affirmative i.e. in favour of the Department and against the Assessee.
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2022 (3) TMI 306
Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- The reason to believe is invalid and has no rational nexus to the belief for escapement of income and there was no fresh material on record to initiate re-assessment proceedings. This Court is further of the view that no useful purpose would be served by giving an opportunity to file a counter affidavit. Accordingly, the said request of learned counsel for the respondent is declined and the impugned notice dated 28th March, 2021 and the order disposing objections dated 27th December, 2021 are quashed.
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2022 (3) TMI 305
Validity of Assessment u/s 153C - Proof of incriminating material found in search - HELD THAT:- Nothing belonging to the assessee was found at the time of search at the premises of Abhay Maheshwari. The laptop was found from the premises of Abhay Maheshwari and as per the provisions of section 132 (4A) (i) and 292 C of the Act the presumption is that the document and assets found in the course of search from premises of a person it may be presumed that such item belong to the person whose premises are searched. It can be seen from the satisfaction note there is no reference to any laptop found at the time of search and as mentioned here in above whatever was found at the time of search belonged to Abhay Maheshwari. The Hon'ble High court of Gujarat in the case of Anilkumar Gopikishan Aggarwal [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] has held that section 153C as amended w.e.f. 01.06.2015 would not be applicable to cases where search is initiated prior to the date. In the present case since the search was conducted on 27.11.2014 the un-amended provision as mentioned elsewhere would apply. A bare perusal of the assessment order would show that there is no reference to any incriminating material for the addition made by the AO, therefore, the ratio laid down by the Hon'ble Supreme Court in the case of Singhad Technical Education Society (supra) squarely apply.
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2022 (3) TMI 304
Giving credit to the TDS deducted by the tenants - HELD THAT:- The respondent no. 2 to decide the Rectification application at Annexure-'R' and 'R1' taking note of the discussion made above in light of settled position of law. Noticing that rectification applications are still pending before the respondent, this court relegates the matter to the respondent no. 2 to dispose off the rectification application, taking note of the discussion as made above. The authority may take note of the material to be submitted by the petitioner to evidence deduction of tax at source by the respondent nos. 3 and 4. Senior Counsel appearing for the petitioner has also produced along with the memo dated 11.01.2022, the letter dated 02.12.2009 whereby the tenant has acknowledged the remittance of TDS which the learned counsel for petitioner would indicate the factum of deduction of TDS by the tenants and if read along with Annexure-'C1' to 'C13' and 'D1' to 'D16' would indicate that tenants have in fact deducted the amount and failed to remit as remittance is not found in the records of the revenue. Insofar as prayer at (iii) is concerned, it is open to the Department to take appropriate action against respondent nos. 3 and 4 as per law to recover sums deducted by the respondents and not remitted to the Department and other penal action.
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2022 (3) TMI 303
Late fee under Section 234-E - intimation under Section 200A - petitioner submits that insofar as intimation under Section 200A, the petitioner had sought for rectification under Section 154 - section 264 proceedings initiated - HELD THAT:- As in light of legal position arising from the judgment of this court in the case of FATHERAJ SINGHVI v. UNION OF INDIA [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] the Department did not have any authority to seek computation of fee under Section 234E with respect to the period prior to 01.06.2016. Thus it would serve the interests of justice to set aside the impugned order at Annexure-'G' dated 07.03.2020. The delay as made out is condoned by taking note of the law laid down in the case of FATHERAJ SINGHVI (supra). That apart, it must be noticed that the Department has taken a conservative and hyper technical view, as regards limitation and accordingly the impugned order is set aside by condoning the delay.
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2022 (3) TMI 302
Assessment u/s 153A - Period of limitation - HELD THAT:- This Court had directed the learned Senior Standing Counsel for the Revenue to apprise the Court with regard to the stipulated period of limitation that would be applicable for completion of the Assessment Proceedings by the A.O. concerned in respect to the show-cause notices for the relevant years issued to the petitioners as detailed hereinabove. At the time of resumption of hearing today, the learned counsel for the Revenue, upon instructions from the Department, very fairly concedes that the period of limitation for concluding the Assessment Proceedings under Section 153-A of the I.T. Act has been provided under Section 153-B which was in operation at the time of search on 24.9.2014 and not the period of limitation as substituted by the amendment with effect from 1.6.2016. It is not in dispute that as per the period of limitation operational with effect from 1.6.2003 before its amendment with effect from 1.6.2016 provided the period of limitation for completion of the block assessment years within two years . This stand of the Revenue squarely addresses the relief qua extension of limitation period. Jurisdiction to initiate the Assessment Proceedings by the A.O. for the relevant assessment years - We are unable to persuade ourselves to issue any direction to the Assessing officer as to how he should decide the said application prior to the completion of the Assessment Proceedings. Passing of such an order, at this stage, would amount to passing a peremptory order which would be totally beyond the scope of our jurisdiction under Article 226 of the Constitution. Needless to say, we hope that the jurisdictional issue raised by the petitioners would be addressed by the Assessing Officer concerned at the appropriate stage. Application dated 29.10.2021 seeking inspection of records of search and the satisfaction note - We find that the AO had already provided an opportunity to both the petitioners to appear before him on 16.11.2021 or 17.11.2021 (between 11 A.M. to 5 P.M.) to inspect the record and the satisfaction note.The petitioners in spite of receipt of the said intimation choose to stay away from doing the needful. Still, if the Assessing Authority in its discretion feels that one more opportunity is required to be given, nothing stops him from adopting such a recourse. However, no mandamus is warranted to be issued by us, because entertaining such requests made by the assessee including the direction to pass a speaking order during the proceedings, would result in unnecessarily delaying the proceedings. Further, putting pressure on the Assessing Authorities would invariably affect the due discharge of their duties, apart from opening of Pandora s box, resulting in abuse of the process of the Court. It is to be acknowledged that in case any plea raised before the Assessing Authority and the said Authority fails to address their plea, the petitioners would be free to make a grievance before the Appellate Authority. We are of the opinion that no exceptional case is made out by the petitioners warranting interference under Article 226 of the Constitution at this stage of the proceedings before the Assessing Officer.
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2022 (3) TMI 301
Reopening of assessment u/s 147 - Addition u/s 68 - reliance on report of the Investigation Wing that the assessee has received accommodation entry from four companies - cross-examination of Shri S.K. Gupta, whose statement recorded to make addition - CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit - HELD THAT:- It is clear that despite the request of the assessee for cross-examination of Shri S.K. Gupta, whose statement is the basis of addition made by the AO, the AO has not provided the opportunity of cross-examination to the assessee. We find, identical issue had come up before the coordinate Bench of the Tribunal in the case of TRN Impex Pvt. Ltd. [ 2021 (2) TMI 678 - ITAT DELHI ] where the Tribunal deleted the addition on the ground that the AO did not grant the opportunity of cross-examination despite being asked for by the assessee. In the instant case, reopened the assessment on the basis of the report of the Investigation Wing that the assessee has received accommodation entry from four companies, the details of which are given in the reasons recorded. We find, the AO after going through the various statements filed by the assessee from time to time, made addition being the share application money/share capital received by the assessee by invoking the provisions of section 68 of the Act and made further addition being 1.5% of the above amount which the assessee incurred as commission for arranging the accommodation entries. CIT(A) dismissed the ground challenging the validity of the reassessment proceedings as well as the addition on merit. It is the submission of the ld. Counsel that the assessee during the assessment proceedings had categorically asked for the corss-examination of Shri S.K. Gupta, whose statement was the basis for making the addition to the total income of the assessee. Despite the request of the assessee for cross-examination of Shri S.K. Gupta, whose statement is the basis of addition made by the AO, the AO has not provided the opportunity of cross-examination to the assessee. Since, in the instant case also the reopening was made on the basis of the report of the Investigation Wing in the case of Mukesh Gupta group along with its close confidants Sh. Rajan Jassal and Sh. Surinder Pal Singh, but the addition was made on the basis of the statement of Shri S.K. Gupta recorded during the course of survey on 20.11.2007 in the case of M/s Sino Credits Liasing Limited, M/s Rapid Packaging Limited, Girisho Company (P.) Limited, M/s Mitsu Securities Management (Pvt.) Ltd., M/s Sino Securities and M/s Anila Industries and since even after repeated requests of the assessee, the AO has not provided the opportunity of cross-examination of Shri S.K. Gupta to the assessee, therefore, respectfully following the decisions cited supra, we hold that the addition made by the AO and sustained by the CIT(A) is not in accordance with the law. We, therefore, delete the addition. So far as the grounds challenging the validity of the reassessment proceedings are concerned, the ld. Counsel for the assessee did not seriously argue these grounds for which we dismiss the grounds challenging the validity of the reassessment proceedings. - Decided partly in favour of assessee.
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2022 (3) TMI 300
Addition towards single premium paid on policy taken for the Director by the Company - Determination of sum of addition - Gross amount or Net amount of premium - component of the maturity of Life Insurance Policy as Income from other source - According to the Ld. AR, assessee is not entitled to benefit u/s. 10 of the Act, since the assessee s premium payable exceeds 10% of the actual capital sum assured, so the assessee does not get the benefit of chapter III, section 10 since it is evident that its LIC policy s, one time premium paid by the assessee was almost the assured value i.e. ₹ 10 lacs and the assured value was ₹ 10,88,000/- - it is the premium amount paid by the assessee in AY 2012-13 and the same is his investment which assessee had in his possession/saving being tax paid amount, so, according to assessee in effect the impugned action tantamount to double taxation and confusion happened because SBI (Payer) has deducted tax at source of one (1%) on the entire amount as contemplated u/s. 194DA - HELD THAT:- Under section under section 194DA of the Act, a person is obliged to deduct tax at source, if it pays any sum to a resident under a life insurance policy, which is not exempt under sub-section (10D) of section 10. The present requirement is to deduct at the rate of one per cent of such sum at the time of payment. Several concerns have been expressed that deducting tax on gross amount creates difficulties to an assessee who otherwise has to pay tax on net income (i.e after deducting the amount of insurance premium paid by him from the total sum received) From the point of views of tax administration as well, it is preferable to deduct tax on net income so that the income as per TDS return of the deductor can be matched automatically with the return of income filed by the assessee. The person who is paying a sum to a resident under a life insurance policy is aware of the amount of insurance premium paid by the assessee. From a reading of the aforesaid observation as well as taking note of the contention of the assessee, and taking note of the fact that assessee had neither availed any deduction under Sec 80C of the Act in respect of the premium paid to SBI nor claimed any deduction under section 10(10D) of the Act and offered ₹ 3,09,000/- for tax in his ROI, according to me, no addition was warranted. Therefore in this case only the net amount that is ₹ 3,09,000/- should have been taxed, which assessee has already offered to tax in his ROI. Therefore,assessee s claim is valid and allow the claim of the assessee by directing deletion of the addition of ₹ 10 Lakhs. - Decided in favour of assessee.
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2022 (3) TMI 299
Set off of brought forward loss against Long Term Capital Gain (LTCG) - AO was of the view that since the LTCL no longer exist in books of account, it cannot be set off consequent to the scheme of arrangement whereby accumulated losses were set off against share premium amount reflected in the books of account - HELD THAT:- As right held by the CIT(A), the corporate restructuring and the consequent reduction in the accumulated losses by setting it off against share premium account reflected in the books of account will have no effect whatsoever in so far as the claim for set off of brought forward loss under the Act made by assessee. Moreover the finding of the AO that the assessee adopted colourable devise has also been rightly held to be without any basis by the CIT(A). It has not been brought out on record that by reason of the restructuring the books and the order of the Hon ble Kerala High Court, the assessee is precluded from utilizing the carryforward LTCL against set off of LTCG in future years as contemplated by section 74 of the Act. In such a scenario, we are of the view that the set off was rightly directed to be allowed by the CIT(A). - Decided against revenue. Addition u/s 41(1) - AO was of the view that the aforesaid liability no longer existed and by virtue of the provisions of section 41(1) - HELD THAT:- Though the Revenue has contended in ground No.6 that it had requested the filing of additional evidence in the form of letter of M/s. Anushka Business Consulting, wherein they have informed the AO that they have written off the liability of the assessee in their books of accounts, there is no such discussion in the order of the CIT(A) nor was any evidence filed before the Tribunal. In the given circumstances, we are of the view that the conclusions of the CIT(A) are just and proper and call for no interference. As rightly held by the CIT(A), the fact that the debt is outstanding for a long time without any payment cannot be the basis to come to a conclusion that the said debt ceased to exist. We, therefore, confirm the order of the CIT(A). - Decided against revenue.
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2022 (3) TMI 298
Exemption u/s 54F - in whose hands the capital gains is to be assessed - Whether in the hands of the company or in the hands of individual directors of the company? - HELD THAT:- The company and the directors submit that income arising from capital gains is to be substantially assessed in the hands of the company and not in the hands of the directors. It is claimed that funds for acquisition of the impugned lands in the year 2004 was paid directly by the company to the sellers of the properties. The properties were purchased in the name of the directors only to circumvent the provisions of section 79A and 79B of the Karnataka Land Reforms Act (The said provision prohibited corporate entities from buying and owning agricultural land). Therefore, the contention is that the directors were only facilitator of the transactions and there is no direct or indirect benefit to them. In such a factual scenario, we have to determine who had the actual / de facto owner of the impugned properties. This fact can be determined only by examining who is actually funded the purchase of land and who is in receipt of the sale consideration when the land was sold during the assessment year 2008-2009 and 2009-2010. There is no material on record, except the Board s Resolution dated 13.12.2001, regarding the purchase of agricultural land (which has a reference at page 2 and 3 of the assessment order in the case of the company for assessment years 2008-2009 and 2009- 2010). The Board Resolution by itself cannot be the determinative factor to decide who is the de facto owner of the impugned lands. Therefore, we are not in a position to decide and is constrained to restore this issue to the files of the A.O. A.O. is directed to examine whether the company had paid the purchase price in the year 2004 (as claimed) and company was in receipt of sale consideration when the lands were sold in the year 2008-2009 and 2009-2010 and the directors of the company are only facilitators of the said transactions. If the answer to the above questions are in the affirmative, prima facie, the capital gains of sale of land is to be assessed substantially in the hands of the company. With these observations, we dispose of the four appeal preferred by the assessee. It is to be mentioned that in company s appeals, grounds are raised that sale of impugned land would not be exigible not give rise to capital gains, since it is agricultural land. However, during the course of hearing AR did not press this ground. Similarly, in directors appeal (Sri.P.Shyamaraju and Sri.Umesh S. Raju) grounds are raised with regard to the claim of deduction u/s 54F. Claim of deduction u/s 80IA(4)(iii) - HELD THAT:- CIT(A) had directed the A.O. to verify the correctness of the claim and allow to the extent the claim is found to be correct. Pursuant to the CIT(A) s order, the A.O. on verification had passed the order giving effect allowing the claim in full after due verification.CIT(A) only directed the A.O. to obtain bifurcation of expenditure between owned and sold portion of the properties (since the A.O. had sought for these details in the course of assessment). We fully endorse the directions of the CIT(A) and confirm the order as regards the claim of deduction u/s 80IA(4)(iii). It is ordered accordingly.
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2022 (3) TMI 297
TP Adjustment - international transaction involving payment of royalty undertaken by Diesel India with its Associated Enterprise ( AE ) - approach by considering Rampage and Bill Blass with a Guaranteed Minimum Royalty ( GMR ) clause for the purpose of benchmarking the payment of royalty transaction, while rejecting Antik Denim as it also has GMR clause - HELD THAT:- We have noted that admittedly in the cases of Rampage as also Bill Blass, there is clause for guaranteed minimum royalty and even though this fact is clearly noted by the CIT(A), these cases are accepted as valid comparables. That is, in our considered view, an unacceptable approach. Once it is clear that the guaranteed minimum royalty clauses are present in comparables adopted and these clauses are missing in the assessee s case and admittedly guaranteed minimum return clause makes the situation maternally different there could not be any valid justification in including these comparables. We, therefore, direct exclusion of these cases. On doing so, we find that the arithmetic mean of comparables comes to 5.25 which is more than the royalty paid by the assessee. The royalty paid by the assessee thus within arm s length range. We, therefore, uphold the plea of the assessee, and direct deletion of impugned ALP adjustment. The assessee gets the relief accordingly. International transaction of payment of design fees undertaken by the Appellant with its AE - assessee had paid design fees to Diesel SPA but TPO held that the design fees was part of royalty agreement, and as such the payment so made was in excess of the arm s length price of royalty because inter alia, royalty paid itself has been held to be more than it s arms length price - HELD THAT:- We find that even if the payment of ₹ 14,00,761 is to be treated as part of payment for royalty, the total payment for royalty will be less than 5.25% which is held to be arm s length price in our findings in paragraph 9 above. The impugned ALP adjustment is, therefore, devoid of legally sustainable basis. We delete the same. Addition in respect of international transactions involving purchase of merchandise and samples - Selection of MAM - CIT rejecting the Transactional Net Margin Method (TNMM) adopted by the AO/TPO as the Most Appropriate Method and in directing adoption of Resale Price Method (RPM) as done by the Assessee - HELD THAT:- On a careful consideration of all these factors, as also entirety of the case, we are of the considered view that the rejection of RPM method adopted by the assessee was incorrect, and learned CIT(A) has rightly reversed the said action. We have also noted that the conclusion arrived at by the learned CIT(A) were not solely on the basis of Hon ble Bombay High Court in the case of L oreal India Pvt. Ltd., [ 2014 (11) TMI 1216 - BOMBAY HIGH COURT] as alleged in the ground of appeal before us. On this count, grievances of the Assessing Office ill conceived TNMM is in away provision. As long as RPM can be reasonably applied, we see no issues with the same. Nothing, therefore, turns on the decision either. - Decided against revenue.
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2022 (3) TMI 296
Assessment u/s 153C - Whether material seized during the course of search show undisclosed income? - HELD THAT:- All documents cannot be considered as incriminating materials on the facts of the case. Insofar as the contention that balance sheet filed for assessment years 2004-2005 and 2005-2006 (as comparative) is different from the balance sheet filed before the AO is concerned, it is relevant to state that whenever there is a change in accounting policy followed by the assessee, the assessee is required to disclose the same in accordance with the Accounting Standard-1 `Disclosure of Accounting Policies issued by the Institute of Chartered Accountants of India (ICAI) as applicable then and also required to regroup /reclassify the figures of the previous year so as to make them comparable with current year figures in the financial statements. It is pertinent to state that, the assessee had offered capital gains even after reclassification and it was not disputed by the Assessing Officer in the order dated 28.12.2007. There is no incriminating materials seized during the course of search, which can be linked to the three additions made in the assessment completed u/s 143(3) r.w.s. 153A of the I.T.Act. Hence, in view of the Hon ble jurisdictional High Court judgment in the case of CIT v. IBC Knowledge Park (P) Ltd. [ 2016 (5) TMI 372 - KARNATAKA HIGH COURT] and Pr.CIT v. Delhi International Airport Pvt. Ltd. [ 2021 (11) TMI 928 - KARNATAKA HIGH COURT] these additions cannot be sustained. - Decided in favour of assessee.
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2022 (3) TMI 295
Income from house property - Deduction u/s 23(1) - Annual mixed use charges paid by the assessee to Municipal Corporation of Delhi - whether the same is amounts to 'tax' - HELD THAT:- The definition of the 'tax' under the Delhi Municipal Corporation (Property Tax) bye Laws 2004 means and includes only building tax or vacant land tax or both, which does not include the Annual Mixed Used Charge. In the present case, the collection of 'mixed used charges' is for the purpose of regularizing the usage of residential premises for certain commercial purposes as prescribed under the Delhi Development Authority (Fixation of Charges For Mixed Use And Commercial Use of Premises) Regulations, 2006. The said charges is in the nature of regularization of the usage of the property, which cannot be construed as tax levied by the local authority/Municipal Corporation of Delhi - collection of the annual mixed used charge will not make any difference in the annual let out value of the property, therefore the same is not allowable as per the proviso under section 23(1) of the Income Tax Act, 1961. We are of the view that, the CIT(A) has rightly upheld the disallowance made by the A.O. in respect of the claim made by the assessee for deduction of annual of mixed use charges paid by the assessee to Municipal Corporation of Delhi, in respect of the property of the Assessee.
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2022 (3) TMI 294
Reopening of assessment u/s 147 - eligibility of reasons to believe - unexplained cash deposits - borrowed satisfaction - non independent application of mind - HELD THAT:- AO has never disputed that the assessee has not filed the return of income or that the copy of the acknowledgment of the return of income dated 25.07.2011 is false or untrue. Therefore, AO has recorded wrong facts while recording reasons that the assessee has not filed the return of income Approval given by the Pr. CIT - Even the superior authority has also given her approval in a mechanical manner and without independent application of mind especially when the assessee has filed her return of income and reopening was made on the ground that no return has been filed. It has been held in various decisions that reopening of the assessment on incorrect or wrong facts is a nullity - reopening of the assessment on wrong facts or incorrect facts and without independent application of mind by the AO and on borrowed satisfaction makes such reopening a nullity. Since, the AO in the instant case, has reopened the assessment on the basis that the assessee has made cash deposits of ₹ 21,10,000/- and has not filed the return of income, whereas, the assessee in fact has filed her return of income on 25.07.2011 declaring total income of ₹ 3,03,640/-, therefore, it is established that the reopening was based on incorrect/wrong facts and without application of mind and on borrowed satisfaction. Therefore, it has been held that the reopening of assessment on incorrect/wrong facts makes such reopening a nullity - Decided in favour of assessee.
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2022 (3) TMI 293
Estimation of income - Bogus purchases - HELD THAT:- We find that the ld. CIT(A) had categorically observed that the ld. AO had not doubted the sales as disclosed by the assessee out of the purchases made from the aforesaid disputed parties. He also held that without the purchases there could not be any sales. Ultimately going by the VAT rate prevailing at the relevant point in time for diamonds, and incidental profit element thereon, the ld. CIT(A) estimated the profit percentage @3% on the entire value of disputed purchases as detailed hereinabove. The very same issue was subject matter of adjudication by this Tribunal in assessee's own case [ 2019 (3) TMI 1958 - ITAT MUMBAI] wherein the purchases made from the similar parties were restored back to the file of the ld. AO for denovo adjudication. Both the parties before us fairly agreed that let this entire appeal to be restored to the file of the ld. AO for denovo adjudication. In view of the aforesaid facts and in light of the Tribunal decision in A.Y. 2008-09 and in view of the fact that both the parties had consented to the decision, we deem it fit and appropriate to restore this entire appeal to the file of ld. AO for denovo adjudication in accordance with law. Grounds raised by the assessee as well as by the Revenue are allowed for statistical purposes.
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2022 (3) TMI 292
TDS u/s 194H - disallowance made u/s. 40(a)(ia) on sales rebate - HELD THAT:- As relying on ASUS INDIA PVT. LTD.[ 2020 (10) TMI 510 - ITAT MUMBAI] principal- agent relationship between the assessee and the dealers/distributors is not discernible. Therefore, the rebate/discount given cannot be treated as commission under section 194H - Our aforesaid reasoning rendered in context of ground no. 2, would equally apply to this ground as well. Therefore, the disallowance made under section 40(a)(ia) deserves to be deleted. As regards the contention of the learned Departmental Representative that the provision is not allowable as expenditure, we are afraid, we cannot entertain such claim at this stage. As could be seen from the facts on record, the AO has not raised any doubt with regard to the genuineness or allowability of expenditure. He has disallowed part of such expenditure simply for the reason that tax has not been deducted at source in terms of section 194H. Commissioner (Appeals) has also approved the aforesaid decision of the Assessing Officer. Therefore, the limited issue before us is the validity of disallowance under section 40(a)(ia) - Decided in favour of assessee. Disallowance u/s. 40(a)(ia) by disallowing the expenditure on account of refurbish and rebate on defective products - HELD THAT:- AR before us had brought several fresh facts which was apparently either not argued before this Tribunal or stated before the lower authorities while adjudicating the issue under consideration. Hence, we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the ld. AO for denovo adjudication in accordance with law. In the said set aside assessment proceedings, the ld. AO shall factually examine all the contentions of the assessee and take a reasoned view uninfluenced by either his views taken in the assessment order or by the order of the ld. DRP or by this Tribunal in A.Y₹ 2016-17 and 2017-18. This direction is given in view of the fact that this issue being a repetitive issue as pointed out by the ld. AR, would have the recurring effect in all the years for the assessee. So, it would be relevant to bring all the facts pertaining to this issue on record. Accordingly, the ground No. 5 raised by the assessee is allowed for statistical purposes. Transfer Pricing (TP) adjustment made in respect of provision of Marketing Support Services (MSS) - Comparabile selection - HELD THAT:- Axis Integrated Systems Ltd., is functionally not comparable with the marketing support services rendered by the assessee. We direct the ld. TPO to exclude Inmacs Management Services Ltd., from the final list of comparables chosen by him for benchmarking the marketing support service transaction of the assessee.
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2022 (3) TMI 291
TP adjustment - Addition regarding provision of guarantee - HELD THAT:- As relying on own case [ 2020 (8) TMI 562 - ITAT MUMBAI] we hold that ALP of Corporate guarantee shall be computed @ 0.5% of guarantee value and as regards the determination of ALP for provision of performance guarantee, the same is restored to the file of the ld. TPO for fresh adjudication in the light of above mentioned directions given by this Tribunal. Accordingly, the ground Nos. 1-1.5 raised by the assessee are allowed for statistical purposes. TP adjustment made in respect of provision of back office services - TPO had accepted the segmental results of the first two AEs - TPO had only doubted the segmental results of the third AE i.e. Intelenet UK Services Ltd. The allocation method of expenditure are the same for all the three AEs - HELD THAT:- We find the basis of allocation of various expenses has been clearly given by the assessee for each of the segments as is evident from the aforesaid table. In any case, we find the main grievance of the ld. DRP seems to be that AE revenue is only ₹ 19 Crores and Non-AE revenue is ₹ 176 Crores and salary cost of back office income unit seems to be more by 24% and requires allocation to non-AE unit. If this observation is to be accepted then, the same would only be beneficial to the assessee as the same would result in increase of margins for the AE BPO segment. This fact itself proves that the ld. DRP had not applied its mind at all on the basis of allocation of expenses between the AE units and the non-AE units. In view of the above, the other grounds raised by the assessee on inclusion and exclusion of the comparables need not be gone into at all and they are left open. Going by the segmental data of back office services income which is evident from the table above, the assessee had earned a margin of 20.45% and even assuming if all the comparables chosen by the ld. TPO are to be accepted, the arithmetical mean margin of comparables is only 20.52%. Hence, the transactions of the assessee would be at arm's length requiring no TP adjustment. Accordingly, the ground Nos. 2.1 to 2.4 raised by the assessee are allowed. Relief for MAT credit - HELD THAT:- AO restricted the MAT credit of assessee as per return of income despite the fact that assessee had sufficient brought forward MAT credit. This matter requires factual verification and hence, the same is restored to the file of the ld. AO to re-compute the tax liability of the assessee in accordance with law. Accordingly, the ground No. 3.4 raised by the assessee is allowed for statistical purposes.
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2022 (3) TMI 290
Exemption u/s 11 denied - assessee was not having registration u/s. 12A - AO while passing the re-assessment u/s. 143(3) r.w.s. 147 of the Act, the assessee was not in a possession of registration u/s. 12AA - Scope of amendment brought to the Finance (No. 2), Act, 2014 by inserting first proviso after sub-section (2) to Section 12A of the Act w.e.f. 01.10.2014 - as per revenue first proviso to section 12A(2) of the Act cannot be applied to the present assessee as on the date of grant of registration i.e. on 21.06.2019 no assessment proceedings were pending before the AO, therefore, the registration u/s. 12A of the Act cannot be given effect in A.Y. 2009-2010 - HELD THAT:- Appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer. Accordingly, respectfully following the above order of Amritsar Bench of the Tribunal in the case of St. Joseph's Convent School [ 2017 (2) TMI 1511 - ITAT AMRITSAR] we hold that the subsequent grant of registration will operate retrospectively for the assessment year under consideration also i.e. A.Y. 2009-2010 as the appeal before the CIT(A) against reassessment order dated 18.07.2011 was pending before CIT(A) which was decided on 29.07.2019 and on the date of grant of registration u/s. 12A of the Act i.e. on 21.06.2013, the first appeal was pending which has to be considered as in continuation of reassessment proceedings. Assessee/appellant trust was entitled to enjoy benefits of registration u/s. 12A of the Act w.e.f. A.Y. 2009-2010 under the benefit of first proviso to Section 12A(2) of the Act inserted by the Finance Act (No. 2), 2014 w.e.f. 01.10.2014. The authorities below have decided the matter considering that the assessee was not having registration u/s. 12A of the Act for A.Y. 2009-2010 but as per foregoing discussion, we have reached to a logical conclusion that the benefit of registration u/s. 12A of the Act is available for the assessee for A.Y. 2009-2010 also after insertion of first proviso to Section 12A(2) of the Act. Therefore, the orders of the authorities below are set aside and the case is restored back to the file of the AO for de novo reassessment keeping in view that the assessee was entitled to have benefit of registration u/s. 12A of the Act for A.Y. 2009-2010 - Appeal of the assessee is allowed for statistical purposes.
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2022 (3) TMI 289
Cessation of liability - Additions u/s 41(1) - Unsecured loans received on account of transfer entry made through banking channel - Sundry creditors for more than 4 years has not been written back in the profit loss account - HELD THAT:- We find that the assessee had genuine business transactions with all these parties which are corroborated from the copy of ledger accounts and several confirmations as well as invoices. In fact, out of sum of ₹ 57,85,077/- outstanding amount of ₹ 28,53,423/- pertained to purchases made during the year under consideration, therefore, to this extent, AO could not have drawn any inference of cessation of liability u/s. 41(1) of the Act. Even, for the balance amount, we find that liability has been acknowledged by the assessee and duly shown in the balance sheet and since some of the creditors could not file confirmation before the AO, it cannot be held that there was a cessation of liability. Genuineness and creditworthiness does not come into play for application of section 41(1) of the Act. Assessee has submitted copies of purchase bills of each and every creditors showing their sales tax registration number, excise number, PLA number etc. Hon'ble Delhi High Court in case of CIT vs. Shri Vardhman Overseas Ltd. [ 2011 (12) TMI 77 - DELHI HIGH COURT ] has held that if the outstanding balance in the name of sundry creditors for more than 4 years has not been written back in the profit loss account, the same cannot be taxed u/s. 41(1) of the Act. Hon'ble Supreme Court in case of CCIT vs. Kesaria Tea Co. Ltd. [ 2002 (3) TMI 1 - SUPREME COURT ] has laid down that resort to section 41(1) could arise only if the liability of the assessee has said to have ceased finally without having possibility of reviving it, which is not the case here. Accordingly, the order of the ld. CIT(A) deleting the said addition is upheld and the ground raised by the Revenue is dismissed. Unexplained cash deposits - HELD THAT: - It is undisputed fact that opening cash in hand was available in the books of account. There is no reason to treat the cash deposit in the bank account from unexplained sources; once the cash book and regular books of accounts have been accepted by the AO and no adverse inference can be drawn if there are sufficient availability of cash in the books of account. Hence, cash deposit made in the bank account, the addition cannot be sustained. Accordingly, the order of the ld. CIT(A) on this issue is upheld and the ground raised by the Revenue is dismissed.
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2022 (3) TMI 288
Revision u/s 263 - order passed under section 201(1) and 201(1A) is erroneous and prejudicial to the interest of the revenue - HELD THAT:- We find the CIT(A) has considered the facts, circumstances, provisions of law and judicial decisions and dealt on the issue of limitation and allowed the appeal. Now, CIT(TDS) has passed revision order u/sec 263 of the Act setting aside the order passed under section 201(1) and 201(1A) of the Act. But the fact remains that, the assessee has challenged the order before the CIT(A) and the CIT(A) has quashed the order.The Ld.DR submitted that the revenue has not filed the appeal against the CIT(A) order with the Honble Tribunal due to low tax effect. We find the revision order of the CIT-TDS does not subsists as the order under section 201(1) and 201(1A) of the Act is annulled. Accordingly, We dismiss the revision order U/sec 263 of the Act on non-maintainability and allow the grounds of appeal in favour of the assessee.
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Customs
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2022 (3) TMI 287
Levy of penalty on the appellants u/s 114 of the Customs Act, 1962 - Customs Broker firm - smuggling - evidence to prove that the customs broker had actively abetted the exporter in the illegal export of red sanders or not - only allegation against the appellants herein is that they lent their digital user ID and password to M/s.Bro Logistics to file shipping bill for a monthly consideration - violation of principles of natural justice - HELD THAT:- It has to be stated that on perusal of the order passed by the adjudicating authority, it is seen that the adjudicating authority has taken the view that leasing the User ID and Password of a Customs Broker can be considered as violation under CBLR, 2013 only. It is held that for such violation the Customs Broker cannot be held to have abetted in the attempt to smuggle red sanders. The decision in the case of K.V. PRABHAKARAN VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2017 (10) TMI 1446 - MADRAS HIGH COURT ] has been relied by the Commissioner (Appeals) to arrive at the conclusion that the matter has to be remanded to the original authority for reconsidering the issue of imposing penalty under Section 114 of the Act ibid. A Custom Broker is supposed to safeguard the interests of both exporters and the Customs. It is not possible to manage the huge volume of transactions in each port without some trust on the Customs Broker by the officers of Customs. Any act facilitating an attempt for export of prohibited goods would fall under Section 114 of the Act, ibid - appellants has relied upon the decision in the case of KAILASH BAHIRU JADHAV VERSUS COMMISSIONER OF CUSTOMS (EXPORT) [ 2019 (7) TMI 1061 - CESTAT MUMBAI ] to argue that the violation if any would fall only under CBLR, 2013 and not under Section 114 of Customs Act, 1962. The facts in the said case are that appellant therein had filed export documents and later revealed that there was overvaluation of goods which facilitated the exporter in claiming excess drawback. In para-6 of the said decision, the Tribunal held that for all contraventions in every case, the customs broker cannot be proceeded against under Section 114 of the Act, merely because he acted as an agent - The facts in the above case reveal that the allegation therein was of filing export documents in which the goods were overvalued. Needless to say that value of the goods are entered in the shipping documents as provided by exporter and the Customs Broker / CHA would have minimal or negligible role to play in the valuation of goods. The facts of the said case being entirely different, it is not applicable to the present situation wherein the allegation is lending of Customs Broker Digital ID and password to unauthorised person for monetary consideration. There are no merit in the appeals of the appellant - appeal dismissed.
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2022 (3) TMI 286
Mis-declaration and under valuation of imported goods - printed book catalogue - opportunity of personal hearing by the Original Adjudicating Authority not provided - violation of principles of natural justice - HELD THAT:- None of the four noticees of the impugned show cause notice had marked their presence before the original adjudicating authority. Though three dates have been mentioned in the order as the date of personal hearing for all four of them, but it is specifically been recorded in para 39.2 of Order-in Original that the notice for three of these dates were received back undelivered from the postal authorities with respect to the Noticee No. 2, 3 and 4. It is also observed that no reasonable time was granted for these three dates as there has been two days gap in each of the dates (4.8.2017, 7.8.2017 and 9.8.2017). As far as the main noticee/importer is concerned, there is no such mention that notice served to him was received back undelivered . Still Noticee No. 1 has been granted opportunity of being heard by the Original Adjudicating Authority as his matter has been remanded for denovo adjudication. There is no reason in the Order-in-Appeal for distinct decision given for Noticee No.1 while denying the same opportunity of personal hearing to the remaining noticees including the present appellant. In the given circumstances and in the interest of justice, appellant s case along with that of Noticee No. 3 4 is on much better footings as there is apparent admission that notice could not be delivered upon him and the same was received back undelivered. As per principles of Audi Alteram Partam, the first principles of natural justice which requires that none should be condoned unheard, the findings of the Commissioner (Appeals) are held to be highly unreasonable and illegal. The same are accordingly hereby set aside. Matter of present appellant also is directed to be readjudicated denovo - appeal allowed by way of remand.
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Corporate Laws
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2022 (3) TMI 285
Sanction of Scheme of Arrangement by way of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with rule 3 5 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with respect to calling, convening and holding of the meetings of the shareholders, Secured and Unsecured Creditors or dispensing with the same are issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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2022 (3) TMI 284
Sanction of Scheme of arrangement in the nature of Merger - Sections 230-232 and other relevant provisions of the Companies Act, 2013 read with Rule 3 of the Companies (Compromise, Arrangement and Amalgamation) Rules, 2016 - HELD THAT:- Various directions with regard t holding, convening and dispensing with various notices issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (3) TMI 283
Refund sought by home-buyers due to an inordinate delay in the completion of the project and failure to handover possession within the stipulated time - application was filed prior to the amendment to Section 7 of the IBC, which now permits 100 or 10% of the home buyers/allottees to apply under Section 7 of the IBC - it is alleged that during the hearing before the NCLAT/Appellate Authority, the appellant herein tried to settle the matter with the original applicants, however, the settlement did not go through - HELD THAT:- In the present case, although the COC was constituted on 23.11.2020, there has been a stay of CIRP proceedings on 3.12.2020 (within ten days) and no proceedings have taken place before the COC. It is to be noted that the COC comprises 91 members, of which 70% are the members of the Flat Buyers Association who are willing for the CIRP proceedings being set aside, subject to the appellant and the Corporate Debtor company honouring its undertaking given to this Court as per the settlement plan dated 3.2.2022. In the peculiar facts and circumstances of the case, where out of 128 home buyers, 82 home buyers will get the possession within a period of one year, as undertaken by the appellant and respondent No.4 Corporate Debtor, coupled with the fact that original applicants have also settled the dispute with the appellant/Corporate Debtor, this is deemed to be a fit case to exercise the powers under Article 142 of the Constitution of India read with Rule 11 of the NCLT rules, 2016 and to permit the original applicants to withdraw the CIRP proceedings. In the present case, as observed, out of the total 128 home buyers of 176 units, 82 homebuyers are against the insolvency proceedings and the original applicants have also settled their dispute with the appellant and corporate debtor. Even the object and purpose of the IBC is not to kill the company and stop/stall the project, but to ensure that the business of the company runs as a going concern - In view of the facts and circumstances, more particularly when the withdrawal of the CIRP proceedings initiated by the original applicants is allowable by the NCLT in exercise of its powers under Rule 11 of the NCLT rules, 2016 and in the peculiar facts and circumstances of the case, instead of relegating the original applicants to approach the NCLT/Adjudicating Authority by moving an application under Section 12A of the IBC, this is a fit case to exercise powers under Article 142 of the Constitution of India as the settlement arrived at between the home buyers and the appellant and corporate debtor company shall be in the larger interest of the home buyers and under the settlement and as undertaken by the appellant/corporate debtor, out of 128 home buyers, 82 home buyers are likely to get possession within a period of one year, for which they are waiting since last more than eight years after they have invested their hard earned money. This shall be in furtherance of the object and purpose of IBC. Appeal allowed.
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2022 (3) TMI 282
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - entire case of the Appellant as well as the Respondent is based on an alleged oral agreement/arrangement and the correctness of the same can be verified only by leading evidence available to both the parties before the Civil Court and cannot be done in summary proceedings before NCLT/NCLAT - HELD THAT:- It is seen from the record that the Appellant has not disputed the rate at which the interest was payable either before the Adjudicating Authority or before this Tribunal and therefore the claim of the Appellant that interest was payable at 15% per annum is not substantiated by any documentary evidence. There are force in the contention of the Counsel for the Appellant that the amount remitted by the Appellant has been reflected in the Balance Sheet of the Respondent Company as Long Term Borrowings due to its tenure being 10 years and later to be converted to Investment . The amount cannot be construed as a default as on January, 2019. It is satisfying that the Appellant could not establish any default on the part of the Respondent by way of any documentary evidence - It is also an admitted fact that the Balance Sheet of the Respondent which was relied on by the Appellant, perusal thereof, crystal clear that the amount was accepted by the Respondent for investment purposes. There is no illegality in the impugned order while dismissing the Application filed by the Appellant under Section 7 of the IBC, therefore, the impugned order passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Bench-III is hereby affirmed - the appeal is dismissed.
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2022 (3) TMI 281
Voluntary Dissolution - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (IBBI Regulations) - HELD THAT:- Pursuant to the service of the notices to the ROC and IBBI, no objection has been raised by them. The voluntary liquidator has filed an affidavit confirming that neither he nor the Company has received any objection with regard to the present liquidation proceedings of the company from any authority whatsoever - the applicant states that necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been stated within time, more specifically submission of the Form GNL-2 to the ROC and the intimation to the IBBI vide email, after realisation and distribution of the assets to its members and closure of the Bank account. In view of the satisfaction accorded by the voluntary liquidator by way of the present application, the said company is hereby dissolved with effect from the date of the present order - Petition allowed.
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2022 (3) TMI 280
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor to the Corporate Debtor - existence of debt and dispute or not - service of demand notice - HELD THAT:- The Applicant had received a reply dated 09.07.2021, from the Personal Guarantor, being Mr. Vibu Venkat Subramanian, to the Demand Notice dated 24.06.2021. However, despite receipt of the notice dated 24.06.2021, the Personal Guarantor failed to make payment within 14 days from the date of receipt of the Demand Notice which falls on 12.07.2021. It is pertinent to mention that as per part-III of Form-C, the total debt from the personal guarantor, by way of personal guarantee given to M/s. State Bank of India, including interest, amounts to ₹ 43,38,58,364.80/-. Hence, the application is in order for proceeding as per the code. Application admitted - moratorium declared - List the matter for further proceedings in the case on 23.03.2022.
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2022 (3) TMI 279
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - petitioner being sole proprietor is entitled to maintain the present petition as Operational Creditor? - doctrine of harmonious construction - HELD THAT:- Though, the sole proprietorship firm has no legal entity as that of partnership firm, but it has been still recognized under the statute and have same identity as of person, because this is entity which require registration under the various acts like that of the person or individual. Further, Section 2(f) clearly laid down that the provisions of this Code are applicable to sole proprietorship firm also. Hence, Section 2(f) has to be read along with Section 3(23) of the Code. Section 2 (f) of IBC provides inter alia that the provision of the code are applicable to partnership firm and proprietorship firm - Apart that it is settled law that the doctrine of harmonious construction has to be adopted because the Parliament makes a separate set of statute rules and regulations as well as Constitution of Provision under their well-defined power. While framing of these provisions, it has to be done very carefully, conflict still occurs sometimes due to overlapping in the provisions of acts. The rule of interpretation is the doctrine of harmonious construction which laid down when there is a conflict between two or more statute or two or more parts of statute and the rule of harmonious construction need to be adopted. Every statute has a purpose and intent as per law and should be read as a whole. While using the harmonious rule, the interpretation should be consistent with all the provisions of the statute - Operational Creditor refers to a word person and the definition of person is laid down under Section 3(23) of the Code, which does not include sole proprietorship concern specifically, but that Section 3(23) as to be read in consonance of Section 2(f) to draw a harmonious construction among all these sections. The sole proprietorship firm is entitled to maintain the petition under Section 9 of the Code being Operational Creditor before NCLT - the issue is decided in the favour of the petitioner against the respondent. Whether the present petitioner is entitled to initiate CIRP proceedings against the respondent on the basis that the respondent owed debt for the goods supplied by the petitioner? - HELD THAT:- It is to be mentioned that all the invoices placed on record pertains to M/s. Nikhil Footwear. Both the entities are having different GSTIN/UIN PAN Numbers. As the GSTIN/UIN number of M/s. Nikhil Footwear Private Limited is 06AAACN0749A1Z1, whereas of M/s. Nikhil Footwear is GSTIN/UIN is 06AANFN8088L1ZF and PAN Number of Nikhil Footwears is AANFN8088L, whereas the PAN Number of the Corporate Debtor is herein is AAACN0749A. All these bills contains GST and PAN No. of partnership firm and not of the respondent company - Even, during the course of arguments, Learned Counsel for the petitioner herein also fairly admitted that the invoices pertains to M/s. Nikhil Footwear i.e. partnership firm and not Nikhil Footwear Private Limited. Therefore, both these are different entities constituted under the different laws and having different GSTIN/UIN_Numbers. Hence, all the dues pertaining to invoices placed on record pertains to M/s. Nikhil Footwear i.e. Partnership Firm not to M/s. Nikhil Footwear Private Limited. No transaction pertains to the respondent company herein. Partnership firm still does not come under the jurisdiction of NCLT as such no petition can be maintained - the issue stands decided against the petitioner and in favour of the respondent. Relief - HELD THAT:- The present petitioner miserably failed to prove on record that M/s. Krishna Industries supplied any goods as per the invoices to the respondent company i.e. M/s. Nikhil Footwear Pvt. Ltd. and dues were against the Corporate Debtor herein qua those bills/invoices. The present petition stands dismissed.
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2022 (3) TMI 278
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - monetary amount involved in the application - HELD THAT:- As per Section 4 of the Code, in order to file application for initiation of Corporate Insolvency Resolution Process the applicant must prove that the default committed by the Corporate Debtor is ₹ 1 Crore or more - Before the publication of notification No. S4/1205 (E) dated 24.3.2020 published by the Ministry Corporate Affairs, Government of India, the threshold limit in Part-II was ₹ 1 lac only, however, to prevent large scale insolvencies due to the financial stress caused by the pandemic, the Government notified the minimum amount of default as ₹ 1 Crore instead of ₹ 1 Lakh. When the aforementioned litmus test in the facts of the present matter it is seen that the fresh Demand Notice was served upon the Corporate Debtor on 22.02.2021 and the application was filed for initiation of Corporate Insolvency Resolution Process on 09.10.2021. The amount of default as claimed by the applicant is less than the threshold limit defined under Section 4 of the Code. Therefore, the present case is not maintainable in terms of provisions of Section 4 of the Code. The present application stand rejected as not maintainable with no order as to costs.
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2022 (3) TMI 277
Seeking voluntary dissolution - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- When the matter was first heard, this Bench had directed that notices be issued to the RoC. The ROC has filed their status report dated 04.02.2022 - Pursuant to the service of the notices to the ROC and IBBI, no objection has been raised by them. The applicant states that necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been stated within time, more specifically submission of the Form GNL-2 to the ROC and the intimation to the IBBI vide email, after realisation and distribution of the assets to its members and closure of the Bank account - in view of the satisfaction accorded by the voluntary liquidator by way of the present application, the said company is hereby dissolved with effect from the date of the present order. Petition allowed.
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2022 (3) TMI 276
Seeking direction/order for extension of liquidation process of the Corporate Debtor - Seeking extension of the liquidation period by six months for the final fulfillment of its legal requirement of the assignment pending as liquidation process, due to which the applicant is not able to dissolve the Corporate Debtor as per the provisions of IBC, 2016 IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- This bench, after taking into consideration the facts and circumstances of the present case, grants an extension of 6 months to the timeline of liquidation proceedings of the Corporate Debtor from the date of passing of this order and further directs the stakeholders to pay fee to the liquidator as prescribed in regulation 4 of the Liquidation process. Application disposed off.
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2022 (3) TMI 266
Maintainability of application - appropriate forum - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - application was barred by limitation or not - HELD THAT:- The Appellant has relied upon certain material in the form of correspondences during the years 2014 to 2017 and balance sheets for the Financial Years ending 2015, 2016, 2017, 2018 and 2019 to show that the application filed under Section 7, IBC was within the period of limitation. Admittedly, the material relied upon by the Appellant was not before the Adjudicating Authority. In a similar situation, this Court in Asset Reconstruction [ 2021 (4) TMI 753 - SUPREME COURT ], after noting that the appellant therein was completely remiss in not pleading acknowledgement of liability, provided another opportunity to the appellant to amend its pleadings before the NCLAT. In the said case, the appeal was remanded to the NCLAT subject to cost of ₹ 1,00,000/-, after taking into account the huge amount of money that was due from the corporate debtor therein. Permission granted to the Appellant to amend the application under Section 7, IBC, subject to payment of cost of ₹ 1,00,000/- by the Appellant to the Corporate Debtor. The appropriate forum to consider the amended application is the NCLT - matter remanded back to the NCLT to consider the amended application under Section 7, IBC afresh.
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PMLA
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2022 (3) TMI 275
Seeking grant of regular bail - criminal conspiracy - forgery - diversion/misappropriation of the public money - grant of various credit facilities to borrowers, in violation of banking norms and against receipt of illegal gratification - Sections 44/45 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Article 21 of the Constitution of India guarantees a right to personal liberty to every person, and thus, there is no gainsaying that bail is the rule and jail an exception. Time and again, it has been opined by Courts across the country that bail is the rule and jail an exception. Besides reiterating this view, the Supreme Court in Sanjay Chandra [ 2011 (11) TMI 537 - SUPREME COURT ] has further laid down that both factors, i.e. severity of the punishment and gravity of the offence, have to be simultaneously weighed while determining whether or not to grant bail to an accused. In P. Chidambaram [ 2019 (12) TMI 186 - SUPREME COURT ], it was held by the Supreme Court that even though gravity of the offence is an important factor for determining whether or not to grant bail, and economic offences of the nature involved in the case were prima facie grave, it is not a rule that bail shall inevitably be denied. No case may be seen as setting a precedent with respect to grant/rejection of bail, except on principle, and it will be for the Court concerned to determine the gravity of the charged offence in each case based on the facts and circumstances. Further, the gravity of the offence is a factor which is in addition to the triple test/tripod test. In matters of regular bail under Section 439 Cr.P.C., a Court must consider aspects, including but not limited to, the larger interest of the State or public, whether the accused is a flight risk, whether there is likelihood of his tampering with evidence, whether there is likelihood of his influencing witnesses, etc. Apart from these, another factor relevant to the question of bail would be the gravity of the alleged offence and/or nature of the allegations levelled, which may serve as an additional test and can be applied while keeping in view the severity of the punishment that the offence entails - It is equally well-settled that economic offences constitute a class apart and need to be visited with a different approach, given their severity and magnitude. Albeit these offences are likely to adversely impact the economic fabric of the country, bail shall not be denied to a person accused of an economic offence in a routine manner. Each case must be adjudged on the basis of the peculiar facts and circumstances, while striking a balance between the right to personal liberty of the accused and the interest of the society in general. Applicability of Section 45(1) of PMLA - HELD THAT:- In 2017, the constitutional validity of Section 45 PMLA came to be challenged before the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] , wherefore, by a judgment rendered in 2018, explicating the defects inherent in the provision and the challenges posed thereby, the Supreme Court held that the twin conditions imposed by Section 45(1) PMLA were manifestly arbitrary, discriminatory and violative of Articles 14 and 21 of the Constitution of India - Post the decision in Nikesh Tarachand Shah, an amendment was made to Section 45 PMLA vide the Finance Act, 2018 and brought into effect from 19.04.2018. Coming to the present case, it is noted that while rejecting the applicant s bail application on 30.10.2021, the learned Special Judge held that the complaint having been filed and the documentary evidence having been collected, there was no possibility of the applicant tampering with the evidence. It was further held that the evidence having been collected and the witnesses having been examined, chances of the applicant influencing witnesses were remote - this Court concurs that the apprehensions of the applicant tampering with evidence and influencing witnesses are unfounded. Insofar as the apprehension of the applicant being a flight risk is concerned, it is noted that the respondent has already issued LOCs against the applicant, who is also willing to surrender his passport. In this backdrop, this Court is of the opinion that the applicant s presence during the trial can be secured by taking adequate measures, including surrender of his passport, and imposing necessary conditions. This Court is not inclined to admit the present applicant on bail. The bail application is accordingly dismissed.
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Central Excise
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2022 (3) TMI 274
Captive consumption - benefit of the exemption Notification No. 67/95-CE dated 16.03.1995 till financial year 2005-2006 - Revenue has predicated their case on the addition of the item other in heading No.22.04 made vide subheading 2204.90 with effect from 01.03.2005 - CESTAT [ 2014 (11) TMI 919 - CESTAT CHENNAI] held that denial of CENVAT credit on the Molasses purchased from other sugar mill used in the manufacture of Rectified Spirit and ENA are also liable to be set aside - HELD THAT:- The addition is not a substantive change or modification. In fact, the Tribunal has pointed out and it is accepted that the changes were made pursuant to adoption and re-structuring of tariff from six digit to eight digit. The changes made were not with the intend to withdraw the existing benefits or to withdraw an exemption which had been given and had been enjoyed by the respondent/assessee for the last twenty years - appeal dismissed. Benefit of N/N. 67/95 - denial on the ground that molasses has been consumed in the manufacture of non-excisable ethyl alcohol - CESTAT [ 2018 (2) TMI 813 - CESTAT BANGALORE ] held that rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - HELD THAT:- Appeal dismissed.
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2022 (3) TMI 273
Valuation - Job Work - applicability of valuation provisions contained in the newly inserted sub-clause (iii) of Rule 10A read with Rule 8 ibid - consequent upon insertion of Rule 10A in the Central Excise Valuation Rules,2000 (w.e.f. 01.04.2007) - liability to pay Central Excise Duty on 110% of the cost of production of the Laminations - HELD THAT:- It is not the case of Revenue that the Laminations manufactured by the appellants were sold by the principal manufacturer in as it is condition to the buyers. Since the said goods were used by another job worker and such job-worked goods were further used by the principal manufacturer for ultimate manufacture of the final product by themselves, which were subsequently sold in the open market, the valuation of the goods manufactured by the appellants cannot be done as per the provisions of Rule 10A(iii) ibid read with Rule 8 ibid. Rather, in our considered opinion, the valuation in the circumstances of the present case should appropriately be done as per the formula laid down by the Hon ble Supreme Court in the case of Ujagar Prints [ 1989 (1) TMI 124 - SUPREME COURT] . - This view of the Bench is in consonance with the co-ordinate Bench decision in the case of Advance Surfactants India Ltd. [ 2011 (3) TMI 1380 - CESTAT, BANGALORE] . In the case in hand, inasmuch as the job-worked goods were sent by the appellants to another job worker for further manufacture and such manufactured goods thereafter were used by the principal-manufacturer for manufacture of a entirely different excisable product. In other words, the Lamination manufactured by the appellants were not used by the principal-manufacturer for manufacture of Compressors . There are no merits in the impugned order passed by the learned Commissioner (Appeals) in upholding confirmation of the adjudged demands on the appellant - the appeal is allowed in favour of the appellant.
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2022 (3) TMI 272
Recovery of Excise duty alongwith interest and penalty - benefit of SSI exemption in view of the Notification No.08/2003 dated 01.03.2003 or as amended - clearance of goods with the brand name of others - settlement of case under SVLDRS-2019 - penalty on Director, managing director and general manager u/r 26 of the Central Excise Rules, 2002 - HELD THAT:- The declaration made by the Company for settlement of its case under the SVLDRS-2019 cannot be termed as admission of the case of revenue by the appellants. In the impugned order, it can be said to be the findings recorded by the Commissioner, against the appellants who are present here. The findings recorded are very general in nature without assigning any role to the appellants herein specifically. Also the issue was in relation to the ownership of the brand name which in any case belonged to the sister concern of Company at Goa, and is purely an interpretational issue without any mens rea. Even impugned order does not records any finding to that effect. As the issue of Company has been settled in terms of SVLDRS-2019, any observations in respect of the case of the Company is refrained. In the case of SHRI RAMESH DESHPANDE AND SHRI DEBDUTTA CHATTERJEE VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2021 (7) TMI 1307 - CESTAT MUMBAI] where on similar facts, it was held that Since the impugned order fails to establish the ingredient of mens rea on the part of the Appellants who were otherwise performing their duties as employee of the company, the penalties cannot be imposed on the appellants in these two appeals. There are no merits in the impugned order imposing penalties on the appellants who were performing their duties within the company - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 271
100% EOU - Refund of CENVAT Credit - export of goods - denial of refund on the ground that there is no nexus between the goods exported and the credit for which the refund claim has been made - denial of CENVAT Credit on the ground that service which was paid by them on reverse charge basis was not payable as it was in respect of the services exported - payment of service tax by the provider of input services is doubted - inadmissibility of credit as duplicate copy of the invoice has not been produced - applicability of N/N. 27/2012-CE (NT) - HELD THAT:- From the reading of Rule 5, it is providing for the refund of the accumulated CENVAT Credit in the books of account against the goods exported under Bond or letter of undertaking and the services exported. The basic principle which is being provided by the said Rule, is as per the avowed policy of the Government to reduce the prices of export so that they are internationally competitive. It is also imperative to note that no country will like to export the taxes leviable locally along with the goods and services exported. To accomplish this Government has provided for various schemes to zero rate the goods and services exported. From the reading of the provisions of Rule 14 it is quite evident that if for a moment it is accepted that certain credit were wrongly or erroneously taken by the appellant contrary to the provisions contained in Rule 3 and 4 of the said Rules, then the same could have been denied by following the procedure as laid down in Rule 14. The so availed erroneous credit cannot be the subject matter of proceedings of Refund in terms of Rule 5 of the CENVAT Credit Rules, 2004 - Admittedly and undisputedly no proceedings for denial of any CENVAT Credit as claimed by the appellants, for encashment of which they have filed these refund claims have been initiated by the revenue. Without denying the CENVAT Credit taken/ availed by the appellant in their book of accounts during the relevant period (quarter) by way of initiating proceedings against the appellant in terms of Rule 14, revenue could not have altered the quantum of Net CENVAT Credit availed during the said quarter, and deny the encashment of that amount of the CENVAT Credit which is due as per the Rule 5. It is now well settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. There are no merits in the impugned order - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (3) TMI 270
Levy of Excise Duty - weak spirit, which was more than 2% allowable wastage - industrial alcohol not fit for human consumption - loss arising during the process of re-distillation in the State of Orissa - HELD THAT:- It is not in dispute that the license, which was granted to the respondent-Company, is for the purpose of manufacturing, bottling, blending and reduction of IMFL. It is also not in dispute that as required under the license, the respondent-Company has installed one ENA column to rectify the rectified spirit to be used in the manufacturing of IMFL. It is also not in dispute that the sample of wastage generated in the manufacturing process was sent for examination to the State Drugs Testing and Research Laboratory, Orissa - It is thus clear that the wastage generated has been found to be unfit and unsafe for potable purpose. The Constitution Bench of this Court in the case of SYNTHETICS CHEMICALS LTD., ETC. VERSUS STATE OF UP. [ 1989 (10) TMI 214 - SUPREME COURT] was considering the issue, as to whether the States are entitled to levy excise duty in respect of industrial alcohol. Different legislations in the different States dealing with such a power of the State Government came up for consideration before the Constitution Bench of this Court in the said case. The Constitution Bench observed thus Constitution makers distributed the term alcohol liquor into two heads, viz., (a) for human consumption; and (b) other than for human consumption. It has been held that the alcoholic liquors, which are for human consumption, are put in Entry 51 List II authorizing the State Legislature to levy tax on them, whereas alcoholic liquors other than for human consumption have been left to the Central Legislature under Entry 84 for levy of duty of excise. It has been held that what has been excluded in Entry 84 has specifically been put within the authority of the State for purposes of taxation. The Constitution Bench clearly held that the State Legislature had no authority to levy duty or tax on alcohol, which is not for human consumption as that could be levied only by the Centre. A three Judge Bench of this Court in the case of STATE OF UP. ORS. VERSUS M/S. MODI DISTILLERY ETC. AND M/S. AJUDHIA DISTILLERY [ 1995 (8) TMI 300 - SUPREME COURT] was considering the power of the State Government to levy excise duty on wastage of liquor after distillation. Following the judgment of the Constitution Bench of this Court in the case of Synthetics and Chemicals Ltd., this Court observed that this Court held that the State was only empowered to levy excise duty on alcoholic liquor for human consumption. This Court held that the State has no power to levy excise duty on wastage of liquor after distillation. Perusal of Section 27(1) of the said Act would reveal that the State s power to impose duty on import, export, transport and manufacture is only in respect of any excisable articles imported, exported, transported and manufactured. Excisable article has been defined to be any alcoholic liquor for human consumption or any intoxicating drug. It is thus clear that even under the relevant statute, the State has power to levy excise duty only in respect of the alcoholic liquor for human consumption. There are no reason to interfere with the impugned judgment and order. The appeals, therefore, are found to be without merit and as such, dismissed.
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2022 (3) TMI 269
Maintainability of the present writ petition - alternate remedy of appeal - case of the petitioner is that he never carried forward the said input tax credit to Tran-1 as there was no excess for the assessment year 2017-18 but was carried forward from the previous assessment year 2016-17 only - HELD THAT:- It is an admitted position that though Section 33 of the Act provides for appeal but the same cannot be availed by the petitioner as the Haryana Tax Tribunal is presently not functional. Thus, we are constrained to interfere in the present lis exercising jurisdiction under Article 226 of the Constitution of India. Whether the Revisional Authority was justified in rejecting the claim of the petitioner relying upon Section 20(2)(a)(b) of the Act without taking into consideration Section 20(4) of the Act? - HELD THAT:- The Revisional Authority has decided the issue in hand without resorting to Section 20(4) of the Act. No reason has been assigned by the Revisional Authority as to why the case of the petitioner will not fall within the ambit of Section 20(4) of the Act. The counsel for the respondents has failed to spell any reason as to why the case of the petitioner will not be covered under Section 20(4) of the Act. Once it is admitted that the Assessing Authority on assessment found that the petitioner has paid an amount in excess of tax, interest or penalty imposed on him, the case will be covered by Section 20(4) of the Act and not Section 20(2)(a)(b). The order passed by the Deputy Excise Taxation Commissioner-cum-Revisional Authority, Gurugram (East), is hereby set aside - petition allowed.
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2022 (3) TMI 268
Validity of assessment order - Petitioner claims to have been deprived of sufficient opportunity to contest the case - violation of principles of natural justice - HELD THAT:- The impugned orders Ext.P5, Ext.P6 and Ext.P7 are in fact, issued in violation of the principles of natural justice. The principle of natural justice has twin ingredients; firstly the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and be granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reasons for arriving at any conclusion showing a proper application of mind. Violation of either of them could in the given facts and circumstances of the case vitiate the order itself. On an analysis of the facts of the instant case, this Court notices the availability of the above-mentioned twin ingredients. The orders of assessment apart from failing to give a reasonable opportunity of hearing had failed to consider any of the issues that arose and are seen to be non-speaking orders, issued without due application of mind - the opportunity for contesting a case must be a real opportunity and not an unreal one. The real opportunity arises when the petitioner is accorded a sufficient chance to place all the materials before the assessing officer. The opportunity contemplated must be real and not ritualistic, effective and not illusory. In the instant case, it is found that such an opportunity was not available to the petitioner for reasons beyond the control of the petitioner. Even the request for three months time to produce the documents, requested as per Ext.P8, is seen refused, on the ground that already two months time had been granted. Application of mind to the request was glaringly absent. This Court notices that the orders of assessment are not speaking orders, since the specific issues arising in the case were not considered by a proper application of mind. Non-application of mind as mentioned earlier is also a case of violation of principles of natural justice. This Court had, in a case where the assessing officer merely adopted the conclusions in the order of penalty, without applying his mind independently - In the instant case, there is no application of mind at all. The assessing officer had merely proceeded on the basis of non-reply by the assessee, without independently applying his mind to the case. The petitioner is directed to appear before the first respondent on 15.12.2021 and file necessary objections if any, on the same day, without fail - petition allowed.
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Indian Laws
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2022 (3) TMI 310
Interpretation of statute - jurisdiction of consumer forum - whether Section 7B of the Indian Telegraph Act 1885 ousts the jurisdiction of the consumer forum in deciding a dispute between a telecom company and a consumer? - HELD THAT:- Under Section 7B, any dispute concerning a telegraph line, appliance or apparatus, between the telegraph authority and the person for whose benefit the line, appliance or apparatus is or has been provided has to be determined by arbitration. Such a dispute has to be referred to an arbitrator appointed by the Central Government either especially for the determination of that dispute or generally for the determination of the disputes under the Section - The only distinction in the present case is that where Section 7B of the Act of 1885 applies, a statutory remedy of arbitration is provided. The fact that the remedy of an arbitration under the Act 1885 is of a statutory nature, would not oust the jurisdiction of the consumer forum. The Act of 1986 and its successor, the Act of 2019 are subsequent enactments which have been enacted by Parliament to protect the interest of consumers. Hence, an ouster of jurisdiction cannot be lightly assumed unless express words are used or such a consequence follows by necessary implication. In Emaar MGF Land Ltd. [ 2018 (12) TMI 1940 - SUPREME COURT ], this Court held that the complaint under the Act of 1986 is a special remedy provided to Imperia Structuresa consumer in addition to the remedies that can be availed of by them, including arbitration. In Imperia Structures Ltd. v Anil Patni [ 2020 (11) TMI 189 - SUPREME COURT ], this Court held that the remedies available under the Act of 1986 are in addition to the remedies available under other statutes, including special statutes like the Real Estate (Regulation and Development) Act 2016 RERA . In the present case, the existence of an arbitral remedy will not, therefore, oust the jurisdiction of the consumer forum. It would be open to a consumer to opt for the remedy of arbitration, but there is no compulsion in law to do so and it would be open to a consumer to seek recourse to the remedies which are provided under the Act of 1986, now replaced by the Act of 2019. The insertion of the expression telecom services in the definition which is contained in Section 2(42) of the Act of 2019 cannot, for the reasons which we have indicated be construed to mean that telecom services were excluded from the jurisdiction of the consumer forum under the Act of 1986. On the contrary, the definition of the expression service in Section 2(o) of the Act of 1986 was wide enough to comprehend services of every description including telecom services. Appeal dismissed.
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2022 (3) TMI 267
Illegal gratification for the vehicle - offences punishable under Sections 7, 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act - Whether the prosecution has successfully established all ingredients to attract the offence punishable under Sections 7, 13(1)(d) and Section 13(2) of the Prevention of Corruption Act, 1988, beyond all reasonable doubt? - Whether the impugned judgment is suffering from legal infirmity or perversity and thus calls for interference? - HELD THAT:- It is crystal clear that in the event of a particular transporter/carrier is unable to furnish satisfactory documents to show that the tax has not been paid in respect of the goods that has been carried in the lorry, ship, vessel or the boat, the customs authority or the Commercial Tax Officer has got the authority to initiate penalty proceedings - In the case on hand, the GC note, which is marked at Ex.P-31 is issued by Ananthanarayana. It was he, who has been authorised to deal with the said case further. To that extent, there is some force in the arguments put forth on behalf of the accused/appellant that he is no way connected with the intercepting of the lorry and initiating proceedings. But, if that were to be so, why did he negotiate with Shabbir Huseni over telephone and arrived at a sum of ₹ 5 lakhs as illegal gratification and that ₹ 5 lakhs would be shared among himself, Ananthanarayana and Chandrashekar Dalwai is a question that remains un-answered. Shabbir Huseni is not possessing any previous enmity or animosity against the accused to depose falsely against him. Further, without initiating any penalty proceedings, there was no occasion for the accused or for that matter, Ananthanarayana to receive any money towards the penalty. It is crystal clear that after issuance of the GC note and after expiry of ten days, if no documents are furnished as is required under Ex.P-31, then only, initiation of the penalty proceedings would commence. In other words, GC note came to be issued on 7.12.2008 and thereafter, upto 17.12.2008, there could not have been any penalty proceedings at all. Further, even after 17.12.2008, having regard to the fact that the end point of supply of the equipment being at Koppal, which is more than 100 kilometers away from Dhulked check post, another show cause notice was required to be issued as per sub section (13) of Section 53 of the KVAT Act, giving ten days time to pay penalty - penalty proceedings would have commenced in the case only on 27.12.2008 that too, only in the event of not furnishing satisfactorily replying to the show cause notice. Further, it is Ananthanarayana would get a right to confiscate the equipment and auction it for the purpose of recovery of the penalty. On careful perusal of provision of Section 20 of the Prevention of Corruption Act, the prosecution has successfully established its case and discharged its initial burden by placing necessary oral and documentary evidence on record as discussed supra. Accused knew that it is his responsibility to rebut the said presumption. Accordingly, accused did tried to explain the incident perhaps with an intention to rebut the presumption by submitting the written submissions - Appreciation of the oral testimony of the shadow witness is peculiar in nature. His testimony is always intended to somehow inculpate the accused. However, only on that ground, the oral testimony of the shadow witness cannot be doubted. Corruption is a distinct type of offence. It is like a cancer to the society. It eats the social and economical health every second resulting in unimaginable consequences. It is only few officers of the Government misuse their official position forgetting their duty and loyalty to the State, resulting in eroding the economy of the country at large. It is often said that world is not suffering from 'violence of many'; but is suffering from 'silence of many'. Therefore, when a true complainant has taken recourse to the legal battle, his testimony cannot be disbelieved on flimsy reasons. The court has to take a pragmatic approach in appreciating the material evidence on record in a particular case - the finding recorded by the learned trial judge that accused is guilty of the aforesaid offences is not suffering from legal infirmity or perversity. Whether the sentence is excessive? - HELD THAT:- Learned trial judge has awarded simple imprisonment for 2 years for Section 7 of the Act and awarded fine of ₹ 1 lakh, with default sentence of simple imprisonment for one year; whereas minimum punishment available for Section 7 of the Prevention of Corruption Act is three years. State has not preferred any appeal against the inadequacy of the sentence. Therefore, hands of this court are tied in enhancing the imprisonment period in the appeal filed by the accused - Further, for the offence under Section 13(1)(d) of the Prevention of Corruption Act, the Trial Court has sentenced the accused to undergo simple imprisonment for four years and imposed fine of ₹ 1,50,000/-. Since both the sentences are ordered to run concurrently, the mistake crept in while passing the inadequate sentence for the offence punishable under Section 7 of the Act would get into insignificance would only remain on record as an academic in nature. The Criminal Appeal is dismissed.
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2022 (3) TMI 265
Suit for specific performance - direction to return of the amount paid by the Plaintiff under the contract - second Defendant was a bonafide purchaser of the site for value without notice of the earlier agreement of sale as well as pendency of the Suit - Bangalore Development Authority Act, 1976 - Pari Delicto Potior Est Conditio Defendentis - Is the suit premature? - scope of article 54 of the Limitation Act - Impact of absence of prayer questioning repudiation by first defendant - Is the second defendant, a bonafide purchaser - Not a case under Article 136?. Pari Delicto Potior Est Conditio Defendentis - HELD THAT:- Section 61 of the Karnataka Land Reforms Act, 1961 provided that no land for which occupancy was granted, shall within 15 years of the order of the Tribunal, be transferred by sale, inter alia. A partition was permitted. Equally, a mortgage could be effected to secure a loan. Cases of Conditional decree of specific performance - HELD THAT:- The High Court, in the impugned Judgment, had dismissed the Suit for Specific Performance, taking the view that till 1999, when the Tamil Nadu Urban Ceiling Act was repealed, the agreement was not enforceable. That apart, under the agreement of sale, vacant land, in the aggregate, exceeding the ceiling limit of the Plaintiff, would have to be conveyed to him, attracting the VETO contained in Section 5(3) read with Section 6 of the State Act. It was this view, which was reversed by this Court, following the Judgments, which we have referred to which relate to conditional decrees. This result was arrived at by this Court, after finding that agreement to sell contemplated transfer of the land only after getting exemption. Clause (4) of the Agreement contemplated that the vendor was to obtain permission from the Competent Authority under the Urban Land Ceiling Act. We need not multiply authorities. All that is necessary to notice and find is that when an agreement to sell is entered into, whereunder to complete the title of the vendor and for a sale to take place and the sale is not absolutely prohibited but a permission or approval from an Authority, is required, then, such a contract is, indeed, enforceable and would not attract the shadow of Section 23 of the Indian Contract Act, 1872. Whatever may be intention of the parties, a contract which is expressly or impliedly prohibited by a Statute, may not be enforced by the Court. The Bombay Act did not prohibit a contract of sale of agricultural land between two agriculturists. The invalidity of the acquisition of land in excess, involved the consequence that the land would vest in the Government. In the context of the said Act, the Court has taken the view that a person can be said to hold land only when it is conveyed to him, which would not take place when there is a mere agreement to sell. The further reasoning of the Court appears to be that it is open to the buyer to transfer or dispose of land already held by him to another agriculturist and unless at the date of acquisition, the buyer held the land in excess of the ceiling limit, the acquisition to the extent of the excess over the ceiling, would not be invalid. It was further declared that the mere possibility that the Respondent/buyer may not have disposed of his original holding on the date of acquisition of title under the agreement to sell, would not render the object of the agreement such that, if permitted, it would defeat the provisions of any law. Thus, the contract was found to be not void. Is the suit premature? - scope of article 54 of the Limitation Act - HELD THAT:- Article 54 contemplates that when a date is fixed for the performance of the contract, then, the period of limitation begins to run from that date. When such a date is not fixed in an agreement to sell, then, refusal or breach by the vendor will start the clock ticking. Impact of absence of prayer questioning repudiation by first defendant - HELD THAT:- We do not need to rest our decision to non-suit the Plaintiff on this score in view of our finding that the agreement dated 17.12.1982 should not be enforced. Lis pendens - HELD THAT:- It would appear that the High Court has, in arriving at the finding that the transfer in favour of the Appellant is hit by lis pendens, taken into consideration the Doctrine of Notice/Constructive Notice. We have already observed that the Doctrine of Notice and Constructive Notice would be inapposite and inapplicable. Neither the fact that the transferee had no notice nor the fact that the transferee acted bonafide, in entering into the transaction, are relevant for applying Section 52 to a transaction. This is unlike the requirement of Section 19(1)(b) of the Specific Relief Act whereunder these requirements are relevant - As far as the transfer is made by Defendant 1(b) to the second Defendant in his own right and in so far as Defendant 1(b) was not a party and by the time the sale was effected the period of limitation for impleading Defendant 1(b) had already clearly expired even the principle laid down in the decision of the Madras High Court would not apply and the High Court was not correct in finding that the sale by Defendant 1(b) in favour of second Defendant was hit by lis pendens. Is the second defendant, a bonafide purchaser - HELD THAT:- The sale deed in favour of the second Defendant, cannot be treated as a sham transaction and the finding, in fact, on point No. 2 by the High Court, also that the second Defendant is not a bonafide purchaser. Once we come to the conclusion that the agreement, relied upon by the Plaintiff, cannot be enforced, as to whether, even proceeding on the basis that the sale in favour of the second Defendant was made, not in circumstances which would entitle the second Defendant to set up the case that he is a bonafide purchaser, the question of granting relief to the Plaintiff must first be decided. In other words, in view of the illegality involved in enforcing the agreement dated 17.11.1982, the question would arise, whether, on principles, which have been settled by this Court, the Court should assist the Plaintiff or the Defendant. We have noted the state of the evidence, in particular, as it is revealed from the deposition of PW2. We have found that the agreement, relied upon by the Plaintiff, cannot be acted upon. In such circumstances, we would think that, even if we do not reverse the finding of the High Court that the second Defendant is not a bonafide purchaser, it will not itself advance the case of the Plaintiff. This is for the reason that his case is in the teeth of the law, as found by us, making it an unenforceable contract. The Plaintiff is seeking the assistance of the Court which must be refused. Not a case under Article 136? - HELD THAT:- The High Court has clearly erred in holding that the Suit was maintainable. We would find that the Suit to enforce the agreement dated 17.11.1982, should not be countenanced by the Court. We are inclined to overturn the impugned judgment by holding that the Suit itself, was not maintainable, we must notice that the High Court had decreed the Suit on the appeal by the Plaintiff. The Defendants did not challenge the Decree of the Trial Court. Therefore, the setting aside of the judgment of the High Court would not result in dismissal of the Suit. What is more, we are of the further view that to do complete justice between the parties, while we allow the appeals, we must pass an Order, which will result in a fair amount being paid to the Plaintiff. Appeal allowed - Suit for Specific Performance will stand dismissed.
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