TMI Tax Updates - e-Newsletter
April 10, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. CLAIM OF DEPRECIATION ON GOODWILL

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. NITI Aayog to Launch Online Dispute Resolution Handbook on Saturday

2. Provisional Direct Tax collections for the Financial Year 2020-21 show growth of almost 5%

3. Finance Minister Smt. Nirmala Sitharaman attends Plenary Meeting of International Monetary and Financial Committee (IMFC) of IMF through video-conference

Notifications

Central Excise

1. 08/2021 - dated 8-4-2021 - CE

Seeks to amend central excise notifications to make changes consequential to enactment of Finance Act, 2021.

Customs

2. 26/2021 - dated 8-4-2021 - Cus

Seeks to amend customs notifications to make changes consequential to enactment of Finance Act, 2021

GST - States

3. ERTS(T) 73/2017/249 - dated 22-3-2021 - Meghalaya SGST

Constitute the Standing Committee for the ‘Consumer Welfare Fund of Meghalaya’

4. ERTS (T) 65/2017/Pt. I/306 - dated 28-2-2021 - Meghalaya SGST

Amendment Notification No. 95/2020 - State Tax, dated the 30th December, 2020

5. ERTS (T) 65/2017/Pt. I/305 - dated 23-2-2021 - Meghalaya SGST

Supersession Notification No. 17/2020- State Tax, dated the 23rd  March, 2020

Circulars / Instructions / Orders

DGFT

1. 53/2015-2020 - dated 9-4-2021

Late cut for MEIS applications for exports made in the Financial Year 2019-20

Customs

2. PUBLIC NOTICE NO. 09/2021 - dated 18-3-2021

Updating of Bank Account details of Exporters with new IFSC code due to merger of certain Banks etc. for IGST refund and Customs Drawback

Highlights / Catch Notes

GST

• Court Orders Refund of Rs. 2 Crores to Petitioner After GST Liability Retraction u/s 74(5) of GST Act.

  Case-Laws - HC : Refund of the amounts paid during investigation - remittances made by the petitioner during investigation - self- ascertainment - Section 74(5) of GST Act - statement recorded at the time of search admitting GST liability and setting the scheme of instalments have been retracted by the petitioner on 05.11.2019 and the petitioner has consistently and vehemently been contested the liability to tax. With this, the requirement of ‘ascertainment’ under Section 74(5), fails. - The mandamus as sought for by the petitioner is granted. The amount of ₹ 2.00 crores collected shall be refunded to the petitioner within a period of four (4) weeks from today. - HC
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Income Tax

• Income Tax Act Section 271(1)(b) Penalty Canceled Due to Satisfactory Compliance in Proceedings Despite Initial Non-Compliance.

  Case-Laws - AT : Penalty levied u/s 271(1)(b) - assessee had failed to provide full submissions - penalty levied by the Assessing Officer u/s 271(1)(b) of the IT Act deserves to be cancelled if there are materials to suggest on conclusion of the proceedings before the Assessing Officer; that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during proceedings before the Assessing Officer - Penalty deleted - AT
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• Assessing Officer Must Complete Assessments in One Month Post-DRP Directions u/s 144C(13), Not Section 153.

  Case-Laws - HC : Assessment u/s 144C(13) - Time limit for completion of assessments and reassessments - Sub-section (13) to Section 144C, in my view, imposes a restriction on the Assessing Officer and denies him the benefit of the more expansive time limit available under Section 153 to pass a final order of assessment as he has to do so within one month from the end of the month when the directions of the DRP are received by him, even without hearing the assessee concerned. - the impugned notices issued by the DRP after a period of four years from the date of order of the Tribunal would be barred by limitation - HC
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• Court Supports Baroda Cricket Association's Tax Exemption Claim, Emphasizes Charitable Activities u/s 11 & 2(15) of IT Act.

  Case-Laws - HC : Exemption u/s 11 - subsidy received from BCCI - BARODA CRICKET ASSOCIATION - Charitable activities u/s 2(15) - we are not convinced with the case put up by the Revenue. It is not the case of the Revenue that the objects of the Trust are not charitable, but the case of the Revenue is that the activities undertaken by the Association are not charitable in nature. - Irrespective of the nature of the activities of the BCCI (commercial or charitable), what is pertinent for the purpose of determining the nature of the activities of the assessees, is the object and the activities of the assessees and not that of the BCCI. - HC
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• Supreme Court Rules Third Proviso to Section 254(2A) of Income Tax Act Unconstitutional, Violates Article 14.

  Case-Laws - SC : Automatic vacation of a stay as granted on the completion of 365 days - Constitutional validity of the third proviso to Section 254(2A) - It is liable to be struck down as violating Article 14 of the Constitution of India - the third proviso to Section 254(2A) of the Income Tax Act will now be read without the word “even” and the words “is not” after the words “delay in disposing of the appeal”. Any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee - SC
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Customs

• Court Orders Re-assessment of Goods; Petitioner Entitled to Amend Bill of Entry for Refund Under Customs Act Section 27.

  Case-Laws - HC : Direction to re-assess the goods in Bill of Entry - In this case, the amendment sought for is based on the documents that were available before the import. Since the imported lost goods were never cleared, the petitioner was entitled to have the subject Bill of Entry amended for the purpose of refund under Section 27 of the Customs Act, 1962 subject to other safeguards under Section 27 of the Customs Act,1962. - HC
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• Court Upholds Validity of Pigeon Peas Import Before March 31, 2021, As Per Foreign Trade Policy Certificate.

  Case-Laws - HC : Star Trading House - Seeking clearance of Pigeon Peas for home consumption - In the facts of the present case the RC is binding on the respondents until the completion of the import quota mentioned therein and considering that the petitioner has imported the import item before 31.03.2021, petitioner's import is required to be declared as valid import under the FTP - HC
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IBC

• Flat Buyer Status as Financial Creditor Under Insolvency and Bankruptcy Code Examined in HBPL Case.

  Case-Laws - AT : Initiation of CIRP - Flat Buyer is a Financial Creditor or not - Whether ‘HBPL’ falls within the ambit of the definition of ‘Corporate Debtor’, as defined under Section 3(8) of the Code? - ‘HBPL’ is the ‘Corporate Debtor’ and the second Respondent the ‘Financial Creditor’ and the amount involved is the ‘Financial Debt’ as defined under the Code - the asset of the ‘Corporate Debtor Company’ of that particular Project is to be maximized for balancing the Creditor such as ‘Allottees’, ‘Financial Institutions’ and ‘Operational Creditors’ of that particular Project. - AT
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Service Tax

• Petitioners' Voluntary Statements Not a Pre-Show Cause Consultation Under 2017 Master Circular, Paragraph 5.

  Case-Laws - HC : Pre-Show Cause Notice Consultation - it cannot be said that voluntary statements made by the officials of the petitioners before the Senior Intelligence Officer would constitute a pre-show cause notice consultation, as stipulated under paragraph 5 of the 2017 Master Circular - The contesting respondents will serve an appropriate communication on the petitioner indicating therein the date, time and venue at which they intend to convene a meeting for holding pre-show cause notice consultation - HC
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Central Excise

• Court Overturns Demand Due to Lack of Direct Evidence in Case of Alleged Clandestine Removal of Metal Goods.

  Case-Laws - AT : Suppression of production and clandestine removal - bars/ rods - MS Ingots - The order is not discussing any documents of the appellant proving the alleged clandestine removal on part of the appellant. The Adjudicating Authority has merely relied upon the statement of the Director. Resultantly the confirmation of demand is merely based on third party evidence. - Demand set aside - AT
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• Territorial jurisdiction issue: Excise duty liability falls on principal manufacturer at factory in Una, Himachal Pradesh. Respondents lack authority.

  Case-Laws - HC : Liability of Central Excise Duty - principal manufacturer or job-worker - Territorial Jurisdiction - it is evidently clear that the taxable event i.e. manufacture of the goods in question had taken place in the factory premises of Tigaksha at Una in Himachal Pradesh. Thus, neither respondent No.2 nor respondent No.3 has the territorial jurisdiction to issue any notice to show cause-cum-demand for levy of central excise duty on such products. - HC
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Case Laws:

• GST

• 2021 (4) TMI 366
  Refund of the amounts paid during investigation - remittances made by the petitioner during investigation - self- ascertainment - Section 74(5) of GST Act - HELD THAT:- Section 74(5) is a statutory sanction for advance tax payment, pending final determination in assessment. This is contrary to the scheme of assessment set out under Section 74. Records were summoned to examine whether there was an ascertainment in this case. The records revealed the tabulation of instalments furnished by the assessee at the time of recording of statement and out of which the first two instalments have been paid. These, according to Mr.Sundareswaran constitute self-ascertainment and trigger the provisions of Section 74(5) and (7) - Had this been the position, the records must contain material to show that (i) the assessee accepts the ascertainment made by it and (ii) the revenue has applied its mind and arrived at the position that the self-ascertainment by the assessee is inadequate. However, statement recorded at the time of search admitting GST liability and setting the scheme of instalments have been retracted by the petitioner on 05.11.2019 and the petitioner has consistently and vehemently been contested the liability to tax. With this, the requirement of ascertainment under Section 74(5), fails. The ascertainment contemplated under Section 74(5) is of the nature of self-assessment and amounts to a determination by it which is unconditional, and not one that is retracted as in the present case. Had such ascertainment/self-assessment had been made, there would be no further proceedings contemplated, as Section 74(6) states that with ascertainment of demand in Section 74(5), no proceedings for show cause under Section 74(1) shall be issued. In this case, enquiry and investigation are on-going, personal hearings have been afforded and both the parties are fully geared towards issuing/receiving a show cause notice and taking matters forward. The mandamus as sought for by the petitioner is granted. The amount of Rs. 2.00 crores collected shall be refunded to the petitioner within a period of four (4) weeks - Petition allowed.

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• 2021 (4) TMI 323
  Refund of accumulated ITC - zero-rated supply of goods or services or both without payment of tax - Section 54 of the CGST Act, 2017 - HELD THAT:- As per Rule 90(3) of CGST Rules, 2017 it has been provided that where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the appellant, requiring him to file afresh refund application after rectification of such deficiencies - While in the instant case, it is found that the proper officer had directed to the appellant in reference to the deficiencies memo, for submission of certain documents and thereafter passed the impugned order in reference to the refund application filed by the appellant earlier - Procedure for manual processing of refund application has been given in Circular No. 17/17/2017-GST, dated 15-11-2017 in the said circular it is clearly stated that after issuance of deficiency memo, the fresh refund application shall be filed by the applicant/ claimant. There are force in the appellant s plea that the said impugned order was passed without issuing the notice and without being heard to him - it would be appropriate to remand back the matter to the Adjudicating Authority for providing the proper opportunity of being heard to the appellant and pass the reason/ speaking order - appeal allowed by way of remand.

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• 2021 (4) TMI 322
  Revocation of cancellation of registration of petitioner - rejection of application due to non-submission of reply to the SCN within the time specified therein - Rule 23 of the CGST Rules, 2017 - HELD THAT:- Where the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, he shall revoke the cancellation of registration by an order in FORM GST REG-22* within a period of thirty davs from the date of the receipt of the application and communicate the same to the applicant - The proper officer may, for reasons to be recorded in writing, under circumstances other than those specified in clause (a), by an order in FORM GST REG-05* reject the application for revocation of cancellation of registration and communicate the same to the applicant. Central Board of Indirect Taxes Customs, New Delhi has clarified the issue vide Circular No. 99/18/2019-GST, dated 23-4-2019 has clarified that where the registration has been cancelled with effect from the date of order of cancellation of registration, all returns due till the date of such cancellation are required to be furnished before the application for revocation can be filed. Further, in such cases, in terms of the second proviso to sub-rule (1) of rule 23 of the said Rules, all returns required to be furnished in respect of the period from the date of order of cancellation till the date of order of revocation of cancellation of registration have to be furnished within a period of thirty days from the date of the order of revocation. The appellant has now been complied with the above said provisions, therefore, the registration of appellant may be considered for revocation by the proper officer - appeal disposed off.

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• Income Tax

• 2021 (4) TMI 369
  Constitutional validity of the third proviso to Section 254(2A) - automatic vacation of a stay as granted on the completion of 365 days - HELD THAT:- It is settled law that challenges to tax statutes made under Article 14 of the Constitution of India can be on grounds relatable to discrimination as well as grounds relatable to manifest arbitrariness. These grounds may be procedural or substantive in nature There can be no doubt that the third proviso to Section 254(2A) of the Income Tax Act, introduced by the Finance Act, 2008, would be both arbitrary and discriminatory and, therefore, liable to be struck down as offending Article 14 of the Constitution of India. First and foremost, as has correctly been held in the impugned judgment, unequals are treated equally in that no differentiation is made by the third proviso between the assessees who are responsible for delaying the proceedings and assessee who are not so responsible. This is a little peculiar in that the legislature itself has made the aforesaid differentiation in the second proviso to Section 254(2A) of the Income Tax Act, making it clear that a stay order may be extended upto a period of 365 days upon satisfaction that the delay in disposing of the appeal is not attributable to the assessee. It is only when a stay of the impugned order before the Appellate Tribunal is granted, that the appeal is required to be disposed of within 365 days. So far as the disposal of an appeal by the Appellate Tribunal is concerned, this is a directory provision. However, so far as vacation of stay on expiry of the said period is concerned, this condition becomes mandatory so far as the assessee is concerned. The object sought to be achieved by the third proviso to Section 254(2A) of the Income Tax Act is without doubt the speedy disposal of appeals before the Appellate Tribunal in cases in which a stay has been granted in favour of the assessee. Since the object of the third proviso to Section 254(2A) of the Income Tax Act is the automatic vacation of a stay that has been granted on the completion of 365 days, whether or not the assessee is responsible for the delay caused in hearing the appeal, such object being itself discriminatory, in the sense pointed out above, is liable to be struck down as violating Article 14 of the Constitution of India. Also, the said proviso would result in the automatic vacation of a stay upon the expiry of 365 days even if the Appellate Tribunal could not take up the appeal in time for no fault of the assessee. Further, vacation of stay in favour of the revenue would ensue even if the revenue is itself responsible for the delay in hearing the appeal. In this sense, the said proviso is also manifestly arbitrary being a provision which is capricious, irrational and disproportionate so far as the assessee is concerned. The law laid down by the impugned judgment of the Delhi High Court in M/s Pepsi Foods Ltd. [ 2015 (5) TMI 655 - DELHI HIGH COURT ] is correct. Resultantly, the judgments of the various High Courts which follow the aforesaid declaration of law are also correct. Consequently, the third proviso to Section 254(2A) of the Income Tax Act will now be read without the word even and the words is not after the words delay in disposing of the appeal . Any order of stay shall stand vacated after the expiry of the period or periods mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee

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• 2021 (4) TMI 364
  Taxability of proceeds generated in the hands of the assessee on sale of DEPB/DFRC entitled to it as an exporter - HELD THAT:- .In view of the ratio laid down by the Hon ble Supreme Court in the judgment Vikas Kalra Vs. Commissioner of Income Tax-VIII, New Delhi[ 2012 (2) TMI 99 - SUPREME COURT] . we are of the considered view that the first question of law should be decided in favour of the assessee and against the Revenue. Accordingly, the first question of law is decided against the Revenue and in favour of the assessee.

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• 2021 (4) TMI 360
  Nature of land sold - whether the land which was sold by the assessee was an agricultural land or not? - Whether tribunal was right in treating the land sold by the assessee as an agricultural land falling outside the purview of the capital asset and consequently holding that no capital gains tax is leviable on the sale of land? - HELD THAT:- It is not in dispute that the land belonging to the respondent assessee and her husband, which is the subject matter in [ 2019 (2) TMI 647 - MADRAS HIGH COURT] are adjoining lands and therefore, when the Hon ble Division Bench finds that the respondent s husband s land is an agricultural land, the very same finding applies to the case of the respondent assessee. In these circumstances, following the judgment the concurrent findings recorded by the Commissioner of Income Tax and the Income Tax Appellate Tribunal does not call for any interference.

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• 2021 (4) TMI 359
  Exemption under section 11 - subsidy received from BCCI - Benefit of Section 11 and 12 to the appellant cricket associations - Charitable activities u/s 2(15) - HELD THAT:- Revenue submitted that the similar issues have been decided against the Revenue by this Court in the case of Director of Income Tax V/s. Gujarat Cricket Association [ 2019 (11) TMI 35 - GUJARAT HIGH COURT ] ultimate beneficiary is either the cricketer or the game of cricket. The assessee is not charging any fees or revenue from the cricketer who is the ultimate beneficiary. Thus there is no quid pro quo relationship with the cricketer. The assessee is promoting cricket on the charitable basis as far as real beneficiary is concerned. Whenever the revenue is earned, the same is not on commercial lines and the same could be said to be earned without any commercial attributes. The revenue is generated for recovering the cost, at least partly if not in full In the aforesaid view of the matter, we are not convinced with the case put up by the Revenue. It is not the case of the Revenue that the objects of the Trust are not charitable, but the case of the Revenue is that the activities undertaken by the Association are not charitable in nature. Irrespective of the nature of the activities of the BCCI (commercial or charitable), what is pertinent for the purpose of determining the nature of the activities of the assessees, is the object and the activities of the assessees and not that of the BCCI. The nature of the activities of the assessee cannot take its colour from the nature of the activities of the donor. - Decided in favour of assessee

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• 2021 (4) TMI 357
  Anticipated loss claimed on account of Equity linked debentures - as per tribunal allowable as a business loss when market to market losses are not ascertained liability which could be set off against taxable income? - whether when market to market loss is a mere provision created in the balance sheet and does not constitute an ascertained liability which is contingent in nature and therefore not an allowable deduction? - whether the assessee has followed the test laid down by the Hon ble Supreme Court in the case of CIT Vs. Woodward Governor India [ 2009 (4) TMI 4 - SUPREME COURT ] - HELD THAT:- Commissioner of Income Tax (Appeals)-1, Chennai [CIT(A)] considered whether the assessee has fulfilled the test prescribed by the Hon ble Supreme Court for deductibility of market to market losses (MTM) and found that the assessee has fulfilled all the conditions. The correctness of this order was examined by the Tribunal and having been satisfied that the findings rendered by the CIT(A) are correct and that the assessee has fulfilled the test laid down in Woodward Governor India (P.) Ltd., the Tribunal dismissed the appeal filed by the Revenue. No error in the order passed by the Tribunal. - Decided against the Revenue

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• 2021 (4) TMI 355
  Assessment u/s 144C(13) - Time limit for completion of assessments and reassessments - submission of the revenue is that Section 144C is a complete code by itself, not governed by the time lines set out in Section 153 - whether the proceedings before the DRP are circumscribed by the limits of time imposed by Section 153? - HELD THAT:- No doubt, Section 144C is a self contained code of assessment and time limits are inbuilt each stage of the procedure contemplated. Section 144C envisions a special assessment, one which includes the determination of Arms Length Price (ALP) of international transactions engaged in by the assessee. The DRP was constituted bearing in mind the necessity for an expert body to look into intricate matters concerning valuation and transfer pricing and it is for this reason that specific timelines have been drawn within the framework of Section 144C to ensure prompt and expeditious finalisation of this special assessment. The purpose is to fast-track a specific type of assessment. This does not however lead to the conclusion that overall time limits have been eschewed in the process. In fact, the argument to the effect that proceedings before the DRP are unfettered by limitation would run counter to the avowed object of setting up of the DRP a high powered and specialised body set up for dealing with matters of transfer pricing. Having set time limits every step of the way, it does not stand to reason that proceedings on remand to the DRP may be done at leisure sans the imposition of any time limit at all. Sub-section (13) to Section 144C, imposes a restriction on the Assessing Officer and denies him the benefit of the more expansive time limit available under Section 153 to pass a final order of assessment as he has to do so within one month from the end of the month when the directions of the DRP are received by him, even without hearing the assessee concerned. Nothing in the language of Section 144C or 153 to lead me to the conclusion that the latter is operated from the operation of the former. The specific exclusion of Section 153 from Section 144C(13) can be read only in the context of that specific sub-section and once again, reiterates the urgency that sets the tone for the interpretation of Section 144C itself. Thus the impugned notices issued by the DRP after a period of four years from the date of order of the Tribunal would be barred by limitation by application of the provisions of Section 153(2A) of the Act. These Writ Petitions are allowed.

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• 2021 (4) TMI 354
  Seeking release of cash as seized from the petitioner - exercise conducted under the guidelines Standard Operating Procedure Order / Instructions of the Election Commission of India - petitioner submitted a representation on 14.03.2019 to the District Election Officer / District Collector, Tirunelveli, requesting for return of the seized cash and informing them that there is an urgent need for the said cash to meet out the expenditure for their School - HELD THAT:- It is settled law that only when there is admission of liability on the side of the respondents, a positive direction can be issued by this Court under Article 226 of the Constitution of India for refund / release of the money, which is allegedly seized from the petitioner. In the case on hand, as seen from the counter affidavit and also as seen from the submissions made by the learned Senior Standing counsel, the respondents have not admitted that they are liable to release the seized cash back to the petitioner. It is their case that the request of the petitioner for releasing of the cash is under investigation. In such view of the matter, this Court cannot issue a positive direction as sought for by the petitioner in this Writ Petition. As seen from the documents filed along with this Writ Petition, several representations have been given by the petitioner for return of the seized cash. Further, it is contended by the learned Senior counsel for the petitioner that funds which were seized as early as on 12.03.2019 are urgently required for the smooth functioning of the School run by the Charitable Trust. Therefore, this Court is of the considered view that the representations of the petitioner seeking for release of the seized cash will have to be considered by the respondents expeditiously. For the foregoing reasons, this Court directs the first and second respondents to consider the representation of the petitioner dated 18.03.2019 requesting for release of the seized cash amounting which was seized from the petitioner on 12.03.2019 and pass final orders on merits and in accordance with law, after giving due consideration to the Standard Operating Procedure Order / Instructions, issued by the Election Commission of India on 29.05.2015 as well as the Hon ble Division Bench Judgment of the Patna High Court in the case of M/s.Indian Traders Vs. State of Bihar and others [ 2019 (6) TMI 101 - PATNA HIGH COURT ], by giving sufficient opportunity to the petitioner including granting him the right of personal hearing within a period of four weeks from the date of receipt of a copy of this order.

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• 2021 (4) TMI 348
  Reopening of assessment u/s 148 - re-opening was done in the facts of the present case recording that no return was filed - whether no reasons to believe that the income of the assessee had escaped assessment?- HELD THAT:- Reason is patently contradictory to the facts recorded in the assessment order itself. The language recorded in the reasons recorded gives credence and strength to the allegation raised on behalf of the assessee that it is a mechanical exercise of power wherein non-application of mind is clearly evident as no effort was made to see whether any return had been filed or not by the assessee. Had such an exercise been attempted, the return filed would have been noticed and application of mind would have been based on cogent facts. In the facts as they stand, the formation of belief that income has escaped assessment is plainly a mechanical exercise looking of non-application of mind. Once the return filed in due course itself remains ignored, the mechanical exercise of power becomes the inescapable conclusion. Thus, the position of law as considered by the Co-ordinate Bench in the case of Monika Rani [ 2020 (9) TMI 271 - ITAT CHANDIGARH] comes into play. Thus the appeal filed by the assessee succeeds on the jurisdiction ground itself. The impugned order is set aside and the assessment order accordingly is quashed.

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• 2021 (4) TMI 345
  Disallowance of interest u/s 36(1)(iii) - AR submitted that the assessee has given details of interest expenses as debited in the profit and loss account in respect of interest on loan from PNB and interest on car loan- HELD THAT:- CIT(A) has observed that no documentary evidence in support of the value of the machinery was produced before the Assessing Officer as well as before the Appellate Authority i.e. CIT(A). CIT(A) further observed that no proof of creation of charge of machinery in favour of bank was filed. AR submitted that all the relevant documents were submitted before the Assessing Officer as well as before the CIT(A), but the same was not verified by the Assessing Officer as well as by the CIT(A). Therefore, it will be appropriate to remand back the issue to the file of the Assessing Officer for proper adjudication in respect of the evidences produced by the assessee and thereafter pass an appropriate order in accordance with law. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Appeal of the assessee is partly allowed for statistical purpose.

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• 2021 (4) TMI 344
  Income deemed to accrue or arise in India - Treatment towards IT Support services provided by the assessee to its four Indian affiliates as Fees for technical services (FTS) within the meaning of Article 12 of India-Sweden Double Taxation Avoidance (hereinafter also called the DTAA ) read with India-Portugal DTAA (via Protocol) - HELD THAT:- As the authorities below have relied on their respective views taken in the assessee s own case for the assessment year 2016-17 [ 2020 (11) TMI 867 - ITAT PUNE] which has been overturned by the Tribunal, respectfully following the precedent, we hold that the amount received by the assessee from SAPL is not chargeable to tax within the meaning of Article 12 of the DTAA. Assessee also received IT support services fee from Walter Tools India Pvt. Ltd.; Seco Tools India Pt. Ltd.; and Dormer Tools India Pvt. Ltd. - AO held such amount to be chargeable to tax under Article 12 of the DTAA because the assessee could not provide the correct nature of services - we find that similar issue came up for consideration before the Tribunal for the immediately preceding assessment year. Relevant discussion has been made in para nos. 5 and 6 wherein the matter has been restored to the file of AO for fresh determination of the issue in accordance with the direction given by the Tribunal for preceding years. Insofar as the factual scenario for the year under consideration is concerned, both the sides fairly agreed that the same is identical to that for the immediately preceding assessment year, 2016-17. Respectfully following the precedent, we set-aside the impugned order on this score and remit the matter to the file of AO for a fresh determination of the nature of services offered by the assessee to Walter Tools India Pvt. Ltd.; Seco Tools India Pvt. Ltd.; and Dormer Tools India Pvt. Ltd. in the terms as given in the orders for the earlier years and thereafter determine its taxability or otherwise in law after affording due opportunity of hearing to the assessee. Assessee appeal is partly allowed.

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• 2021 (4) TMI 343
  Reopening of assessment u/s 147 - assessee maintained five bank accounts and the total credits appearing in these accounts is Rs. 1,88,28,865/- whereas the assessee has declared a turnover of Rs. 1,80,76,482/- and, thus, the assessee has concealed the particulars of income amounting to Rs. 7,52,383/- and, during the course of assessment proceedings, there was non-compliance from the side of the assessee for which he made the above addition in the order passed u/s.147/148/144 - HELD THAT:- AO could not have ignored the audited balance sheet filed along with the return of income. As sufficient force in the argument of the Ld. Counsel that the deposits in the bank accounts stand fully explained and, in fact, the actual deposits in the bank accounts are much more than the amount mentioned by the AO. Considering the totality of the facts and considering the smallness of the amount in question,we donot think it proper to restore the issue back to the file of the lower authorities since the assessment year involved is A.Y. 2011-12 and the various documents/details filed by the assessee before the CIT(A) were also forwarded to the AO for his comments although he has not given any comments. In my considered opinion, the audited balance sheet which was filed along with the return of income cannot be considered as an additional evidence. If the AO had given a cursory look to the audited balance sheet, he could have seen the differences. A bare perusal of the audited balance sheet shows that the cash in hand as on 31.03.2010 at Rs. 6,77,576.81 has gone down to Rs. 65,585.56 as on 31.03.2011. Similarly, other debts has gone down from Rs. 66,67,356.79 as on 31.03.2010 to Rs. 61,06,363.52 as on 31.03.2011. The fixed assets as on 31.03.2010 has gone down from Rs. 34,87,321.80 to Rs. 29,63,883.91 after depreciation of Rs. 6,44,091.61. I find, the AO, in the instant case has also not rejected the books by invoking the provisions of Section 145(1) and has simply gone for the addition on the basis of the information received from the Investigation Wing which was the reason for reopening of the case. Since the Ld. Counsel has demonstrated before me regarding the source of deposits in the bank account which includes the increase in share capital to the tune of Rs. 43,37,700/- and the net sale proceeds and movement in current assets/current liabilities and the books of account were not rejected by invoking the provisions of section 145(1), therefore,set aside the order of the CIT(A) and direct the AO to delete the addition. The grounds raised by the assessee are accordingly allowed.

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• 2021 (4) TMI 342
  Reopening of assessment u/s 147 - assessee has sold an immoveable property, she has failed to respond to notice u/s. 133(6) and thus, the assessee has failed to disclose the said transaction and which has thus been made the basis for reopening the assessment proceedings - HELD THAT:- The fact that there is a return of income already filed by the assessee wherein she has disclosed the said transaction has thus not been considered by the AO while recording the reasons. The assessee may not have responded to notice u/s. 133(6), however, where she has already filed her return of income and wherein the said transaction has been duly disclosed, there cannot be any failure on part of the assessee to disclose truly and fully such transaction. Thus, the very basis for reopening the assessment is basis incomplete facts available on record where such transaction has been duly disclosed and offered to tax which shows non-application of mind by the AO while recording the reasons and it cannot be held that there is a nexus between the material available on record and formation of belief that the income has escaped assessment. See NARAIN DUTT SHARMA VERSUS INCOME-TAX OFFICER, WARD- 6 (1) , JAIPUR [ 2018 (4) TMI 427 - ITAT JAIPUR] Thus where the very foundation for reopening the case is vitiated given that the assessee has filed her return of income disclosing the transaction of sale of immovable property for the specified consideration and offering the same to tax, there cannot be any reasons to believe that income has escaped assessment for the very same transaction the assumption of jurisdiction u/s. 147 cannot be sustained and the subsequent proceedings are hereby directed to be set-aside. - Decided in favour of assessee.

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• 2021 (4) TMI 341
  Disallowance of expenditure not exclusively for business - whether the expenditure incurred by the assessee wholly and exclusively for the purpose of earning remuneration from the partnership firm are allowable to the assessee or not from remuneration received from partnership firm which is chargeable to tax u/s. 28(v)? - HELD THAT:- It is not in dispute that assessee has already disallowed personal expenditure and expenditure under Section 14A of the Act. For assessment year 2013-14 the assessee has disallowed the expenditure on his own for assessment years 2013-14 and 2014-15 respectively. The identical issue has been considered in the case of Mr. Anand Prasad [ 2020 (10) TMI 1237 - ITAT DELHI] . DR could not controvert the above finding in that decision as to why it does not apply. It is not case of revenue that assessee has not incurred those expenditure or those are not incurred in the business of the assessee. We allow the appeal of the assessee

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• 2021 (4) TMI 340
  Exemption u/s 11 - denying sec. 12AA registration to the assessee - charitable activity u/s 2(15) - failure on assessee s part in removing all defects - HELD THAT:- We thus restore the instant issue back to him to be adjudicated afresh within three effective opportunities of hearing it is made clear that the assessee or its Authorised Representative shall appear before CIT(E) on or before 30.07.2021 with all relevant evidences; at his own risk and responsibility.

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• 2021 (4) TMI 339
  Exemption u/s.11 - society was not a religious society and there was a violation of section 13(1)(b) - Assessee argued that assessee has been allowed exemption for all the preceding years - HELD THAT:- As the provisions of section 13(1)(b) are attracted in case of charitable societies only and not in case of religious societies and hence there is no violation of section 13(1)(b) as alleged by the Assessing Officer, since this assessee is religious society. Keeping in view of the facts and circumstances of the case and respectfully following the orders of the ITAT in assessee s own case, we decline to interfere with the reasoned order of the ld. CIT(A). Appeals of the revenue are dismissed.

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• 2021 (4) TMI 338
  Disallowance u/s 14A - Whether assessee had not earned any exempt income during these assessment years? - HELD THAT:- There is no dispute and as a matter of fact authorities below categorically recorded that the assessee had not earned any exempt income during these assessment years and therefore the decision of the Hon ble jurisdictional High Court in the cases of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] and Holcim India Pvt. Ltd . [ 2014 (9) TMI 434 - DELHI HIGH COURT] are applicable to the facts of the case. We are of the considered opinion that where there is no dispute of fact that no dividend income was earned by the assessee during the year, no disallowance is called for under section 14 A of the Act. For these reasons, we uphold the findings of the Ld. CIT(A) and dismiss the grounds of appeal of the Revenue.

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• 2021 (4) TMI 337
  Interest levied u/s. 234B and 234C on the revised book profit - CIT-A deleted the addition - AR submits that the AO ought not to have levied interest u/s. 234B and 234C of the Act as the same issue was decided by this Tribunal in the original assessment proceedings u/s. 143(3) of the Act in favour of the assessee - The Revenue challenged the same before the Hon ble High Court of Bombay and there was no contrary order either by reversing or modifying the order of this Tribunal - HELD THAT:- CIT(A) rightly held the order of this Tribunal is holds the field today and supported the impugned order. We find force in the arguments of ld. AR the AO ought not to have levied interest as there was no order from Hon ble High Court of Bombay reversing the finding of Tribunal, therefore, in our opinion, the finding rendered by the CIT(A) is justified. Therefore, we do not find any infirmity in the order of CIT(A). Accordingly, the grounds raised by the Revenue are dismissed. Appeal of Revenue is dismissed.

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• 2021 (4) TMI 336
  Disallowance u/s 14A - addition under the normal provisions as well as while computing income under section 115JB - suo motu disallowance - HELD THAT:- Legal principles on this issue are now fairly well settled. The decisions referred to by learned Commissioner (Appeals) clearly express this view. Even, in the decisions cited before us by learned Counsel for assessee, as noted earlier, HSBC INVEST DIRECT (INDIA) LTD. [ 2019 (2) TMI 731 - BOMBAY HIGH COURT] has also expressed the view that disallowance under section 14A cannot exceed the exempt income earned during the year. Therefore, keeping in view the ratio laid down in various decisions, including, the decisions of Hon ble jurisdictional High Court, supra, we uphold the decision of learned Commissioner (Appeals) in restricting the disallowance under section 14A to the extent of exempt income earned during the year. Disallowance under section 14A r.w.r. 8D while computing book profit under section 115JB - As squarely covered in favour of the assessee by the decision in case of CIT vs Vireet Investments (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] Though, under Explanation I(f) to section 115JB of the Act, the assessing officer is empowered to disallow expenditure attributable to exempt income; however, the assessing officer has to identify the expenditure incurred by the assessee which is directly attributable to earning of exempt income. In the facts of the present case, the assessing officer has not identified any such expenditure. Therefore, we do not find any reason to interfere with the decision learned Commissioner (Appeals) on the issue. Grounds raised are dismissed. Appeal is dismissed.

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• 2021 (4) TMI 335
  Admission of additional ground of appeal - Allowability of deduction of Expenditure incurred in respect of Employee Stock Option Plan (ESOP) - HELD THAT:- We find that the assessee had, in fact, raised the issue of deduction of education cess as well as deduction of expenditure incurred in respect of Employee Stock Option Plan (ESOP) by way of additional ground of appeal vide letter dated 04/12/2018. These two grounds remained to be adjudicated in Tribunal order dated 14/10/2019. In the MA order,, the bench noted the aforesaid fact and allowed the ground of deduction of education cess but recalled the order for the purpose of adjudicating ground related to deduction of ESOP expenditure. Therefore, it is quite evident that the issues were admitted as well as argued during the hearing of original appeal, though not adjudicated in the order. Therefore, the objection raised by Ld. CIT-DR as to admission of additional ground of appeal stand rejected. On the merit of the case we concur with the submission of Ld. CIT-DR that the factual matrix with respect to issue of deduction of ESOP expenditure is not available on record and the same was not subject matter of assessment framed by Ld. AO for the year under consideration. Accordingly, while admitting this ground of appeal, we restore the same back to the file of Ld. AO to consider the factual matrix of the same and adjudicate the issue after providing due opportunity of hearing to the assessee. The assessee, in turn, is directed to substantiate his claim accordingly. Additional ground raised stand allowed for statistical purposes

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• 2021 (4) TMI 334
  Penalty u/s 271(1)(c) - denial of claim of exemption against long term capital gains on the ground that the investment made was in excess of Rs. 50,00,000/- in a particular financial year in terms of section 54EC - HELD THAT:- Facts of the case as narrated by the Assessing Officer above clearly indicate that there was some confusion in this regard as assessee had made two investments in two years and made one claim for both the amounts. There was no case of concealment or furnishing inaccurate particulars as everything was disclosed. The assessee s claim can also not be said to be ex facie bogus. In these circumstances, the decision of Hon ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., . [ 2010 (3) TMI 80 - SUPREME COURT] comes to rescue the assessee. In this case it was expounded that the rejection of claim by the Assessing Officer cannot ipso facto lead to the conclusion that the assessee deserves to be visited with rigours of penalty u/.s 271(1)(c) of the Act. Hon ble Supreme Court in the case of Hindustan Steel Vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] through larger bench had expounded that the authorities may not levy penalty if the conduct of the assessee is not found to be contumacious. We find that on the facts and circumstances of the present case, the submissions of the assessee and explanations are not ex facie bogus or contumacious. Shortfall in the disclosure of interest income - We find that the assessee s explanation deserves to be accepted. When interest amount is already disclosed to the Department through ITS details, there is no reason why the assessee would deliberately try to conceal the interest income. Our adjudication and reference of case laws on the earlier issues are also applicable on this issue. We set aside the orders of the authorities below and direct that the penalty should be deleted. Appeal of assessee allowed.

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• 2021 (4) TMI 333
  Estimation of income - bogus purchases - CIT (A) confirming the action of the AO in making addition on adhoc basis @ 12.50% - HELD THAT:- In this case the sales have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported in the case of Nikunj eximp enterprises [ 2014 (7) TMI 559 - BOMBAY HIGH COURT] as upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to government agency. In the present case the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee, learned counsel pleaded that as held in M/S MOHOMMAD HAJI ADAM CO. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases. We set aside the matter to the file of the assessing officer with the direction to restrict the addition as regards the bogus purchases by bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases - Assessee s appeal is partly allowed.

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• 2021 (4) TMI 332
  Condonation of delay - delay in filing of the appeal by 37 days - assessee had mentioned that the delay was due to oversight and inadvertent mistake - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice direct the Ld. CIT(A) to condone the delay of 37 days in filing the appeal by the assessee and decide the issue on merit as per fact and law after giving a final opportunity of being heard to the assessee hold and direct accordingly, Grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2021 (4) TMI 331
  Disallowance u/s 14A r.w.r. 8D - AO was of the view the borrowed fund has been utilized by the assessee in the earning of exempted income - HELD THAT:- Admittedly, the own fund of the assessee exceeds the amount of investment shown in the balance sheet as on 31/03/2013. Therefore an inference can be drawn that the assessee had not utilized borrowed fund in making such investment. Thus there cannot be any disallowance on account of interest expenses as provided under Rule 8D of Rules. See RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . Thus we hold that no disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above. Administrative expenses disallowance - We find that the assessee has claim to have maintained separate books of accounts and accordingly the assessee has prepared separate income and expenditure account. On perusal of the income and expenditure accounts we find that the assessee has claim only bank charges and demat charges amounting to Rs. 2728.91/- only. As such we find that the assessee has not debited any other expenses in its personal income and expenditure account which the assessee might have incurred in earning such dividend income. Such administrative expenses may include accountancy expenses, electricity expenses, traveling expenses, stationary expenses, salary expenses etc. On a specific question to the Ld. AR for the assessee about the non-disallowance of other administrative expenditure, the assessee cannot make any satisfactory reply rather he agrees to confirm the disallowance made by the authorities below qua the administrative expenses. Hence we confirmed the findings of the authorities below for the disallowance of Rs. 42,079/- under the provision of section 14A r.w. Rule 8D of Rules. Thus the grounds of appeal of the assessee is partly allowed.

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• 2021 (4) TMI 330
  Penalty u/s 234E - Late fee for filing the TDS Returns - assessee is a charitable trust runs its educational institution / school affiliated to CBSE Board ad the assessee trust is also registered under the Bombay Public Trusts Act, 1950 and is also granted registration under section 12A - whether or not the Assessing Officer could charge late fee under provisions of section 234 E of the Act, where admittedly 1st quarterly TDS returns filed by assessee was delayed? - HELD THAT:- Identical issue arose before the Co ordinate Bench of the Tribunal, Mumbai E Bench, Mumbai, in a group of cases EMSONS EXIM PVT. LTD. VERSUS INCOME TAX OFFICER (TDS) WARD-1 (2) (3) , MUMBAI [ 2019 (8) TMI 1461 - ITAT MUMBAI] wherein the Co ordinate Bench followed the majority view expressed by the Third Member by observing that the fee under section 234E of the Act can only be charged in respect of delay in filing the statement of TDS for the period after 1st June 2015. Although, the fact remains that the assessee is defaulted in filing the TDS return belatedly prior to 1st June 2015. Since the issue raised in the present case is squarely covered by the aforesaid ratio laid down by the Co ordinate Tribunal, Mumbai Bench, respectfully following the same, we hold that the authorities below were not justified in levying penalty and the interest thereon. Since the default committed by the assessee is prior to 1st June 2015, the Assessing Officer is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act - Decided in favour of assessee.

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• 2021 (4) TMI 329
  Exparte order passed by the ld. CIT(A) - denial of natural justice - non affording sufficient opportunity of being heard and without addressing the grounds of appeal on merits - HELD THAT:- On perusal of the appellate order, we find that despite giving various opportunities from 13.11.2018 to 30.01.2019, there was no response from assessee s side and by clubbing the appeals for other assessment years, the ld. CIT(A) dismissed all the appeals after considering the written submissions of the assessee. Since the ld. Counsel for the assessee made a submission that the assessee was not provided sufficient opportunity of being heard and not addressed the grounds of appeal on merits, we remit the matter back to the file of the ld. CIT(A) to adjudicate the issues on merits in accordance with law by affording an opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (4) TMI 328
  Estimation of income - bogus purchases - CIT-A restricted addition @12.5% of value - AR before us stated that out of the total purchases made by the assessee, only the miniscule portion was found to be bogus which works out to hardly 0.7% approximately - HELD THAT:- Since the sales made out of alleged purchases had not been doubted by the Revenue, then only profit element could be brought to tax thereon. This profit element has been reasonably estimated by the ld. CIT(A) @12.5% by placing reliance on the decision of CIT vs. Simit P Sheth [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] on which we do not find any infirmity and hence, we are not inclined to interfere in the same. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2021 (4) TMI 327
  Penalty levied u/s 271(1)(b) - assessee had failed to provide full submissions which were called for on hearing fixed on 01.09.2016 in the course of the assessment proceedings; and that on the said date (01.09.2016) none appeared or made any submissions - HELD THAT:- Observation of the Assessing Officer that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during the assessment proceedings. The satisfaction of the Assessing Officer with the compliances made by the assessee is also evidenced by the fact that no addition was made by the Assessing Officer, and the returned income was accepted in the order passed u/s 143(3) IT Act. We are of the view that penalty levied by the Assessing Officer u/s 271(1)(b) of the IT Act deserves to be cancelled if there are materials to suggest on conclusion of the proceedings before the Assessing Officer; that the Assessing Officer was, on the whole, satisfied with the overall compliances made by the assessee during proceedings before the Assessing Officer. We hereby cancel the penalty levied by the Assessing Officer u/s 271(1)(b) of Income Tax Act. Appeal filed by the assessee is allowed.

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• 2021 (4) TMI 326
  Additional expenses for purchase of sites from the owner of land on which a project by name `Gokul Gardens was developed - Admission of additional evidence by assessee - before the A.O., the assessee had not furnished any details as to which are the sites purchased out of the additional consideration paid - CIT(A) during the course of appellate proceeding had not called for the remand report from the Assessing Officer and has decided the issue in favour of the assessee without giving opportunity to the A.O. to rebut the additional evidence produced before him - HELD THAT:- The prescription of Rule 46A is clear. The assessee is ordinarily not entitled to produce additional evidence before the CIT(A) other than that furnished to the AO except in the four circumstances enumerated in clause (a) to (d) of sub-rule (1). Sub-rule (2) however provides that no evidence shall be admitted under sub-rule (1) unless the CIT(A) records in writing the reasons for its admission. Sub-rule (3) further stipulates that the CIT(A) shall not take into account any evidence produced under sub-rule (1) unless the AO has been allowed a reasonable opportunity to examine the evidence or document or to cross examine the witness produced by the assessee or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the assessee. In the instant case, as mentioned earlier, the CIT(A) has admitted as fresh evidence, the sale deeds executed by the assessee with third parties. These were properties purchased by the assessee from the land owner for which additional consideration was paid. The CIT(A) had allowed the appeal of the assessee by placing reliance on documents / evidence not produced before the A.O. The admission of additional evidence without giving an opportunity to the A.O. to rebut the same, goes against the principles laid down under Rule 46A of the I.T. Rules. Accordingly, the impugned order of the CIT(A) is set aside and the matter is remitted to the A.O. for deciding the issue afresh as per law after affording a reasonable opportunity of being heard to the assessee. Needless to state, the assessee shall extend full cooperation to the A.O. so as to facilitate him for proper framing of the assessment and would be entitled to file any additional evidence before the A.O. in support of its claim. It is ordered accordingly.

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• 2021 (4) TMI 325
  Disallowance by invoking the provisions of Section 14A r.w. Rule 8D(2)(ii) and 8D(2)(iii) - HELD THAT:- The management of the assessee is involved in taking a decision with regard to investment in exempted income. This investment decision is very strategic which resulted in incurring of various administrative expenses. The assessee cannot take a plea that the assessee has not incurred any administrative expenditure to take such strategic decision of making investment in exempted income yielded assets. The disallowance made by the AO under Rule 8D(2)(iii) is justified and thus the disallowance is confirmed. However coming to the disallowance under Rule 8D(2)(ii), it is indirect interest expenditure. The contention of the assessee is that the assessee is having interest free funds in the form of reserves and surplus and no part of interest bearing funds were used for making these investments which yielded exempted income. The availability of interest free funds in the year of investment has not been demonstrated by the assessee before the lower authorities by producing the relevant financials which shows that there was actually interest free funds available with the assessee. It is the duty of the assessee to prove that no interest bearing funds were utilized for investment in these assets which yielded exempted income. The assessee has to file necessary fund / cash flow statements with the lower authorities as on date of making investments which had given rise to exempted income. If there is actual availability of the interest free funds as on date of making the investment, there cannot be any disallowance under Section 14A r.w. Rule 8D(2)(ii) of the I.T. Rules. In the interest of justice, we deem it appropriate to remand this issue to the file of Assessing Officer for fresh consideration. If the assessee proves that there is availability of interest free funds for making these investments by producing necessary fund/cash flow statements for the respective year of investment, the claim of the assessee is to be allowed. With these observations, we remit this issue of disallowance u/s. 14A r.w. Rule 8D(2)(ii) of the I.T. Rules to the file of Assessing Officer for fresh consideration. Appeal of the assessee is partly allowed for statistical purposes.

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• 2021 (4) TMI 324
  Estimation of income - bogus purchases - CIT(A) sustaining 25% disallowance - Information was received from the sales tax Department that assessee has made bogus purchases - HELD THAT:- Upon careful consideration we find that assessee has provided the documentary evidence for the purchase. Adverse inferences have been drawn due to the inability of the assessee to produce the suppliers and also the statement of the partner of the assessee firm. We find that in this case the sales or any other aspect of assessee s workings have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. In the present case the facts of the case indicate that assessee has made purchase from the grey market. This is also the finding of learned CIT(A). Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expenses of the exchequer. In such situation in our considered opinion on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases meets the end of justice. In this regard we also note that Id counsel of the assessee has submitted that in assessee s own case for A.Y. 2007-08, ITAT in similar facts has restricted the disallowance to 12.5%. A.Y. 2007-08 is also a port of common order of learned CIT(A) and it is not the case of the Revenue the ITAT order has been reversed by Hon ble High Court. Hence, in the background of the aforesaid discussion and precedent we modify the order of learned CIT(A) and direct that disallowance be restricted to 12.5% of the bogus purchases. Appeals filed by the assessee are partly allowed.

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• Customs

• 2021 (4) TMI 367
  Star Trading House - Seeking clearance of Pigeon Peas for home consumption - valid registration of Advance Payment Certificate is there - perishable goods - change in status from free to restricted/ prohibited goods - Foreign Trade Policy 2015-2020 - HELD THAT:- Paragraph No.1.01 of chapter 1 of the FTP states that the FTP shall come into force with efect from the date of notifcation and shall remain in force upto 31.03.2020, unless otherwise specifed as stated; the said policy now stands extended upto 31.03.2021. Paragraph No.1.05 relates to transitional arrangements and clause (b) thereof states that in case of change of policy from free to restricted / prohibited / state trading or otherwise regulated, the import / export already made before the date of such regulation / restriction will not be afected. It further states that any import / export on or after the date of such regulation / restriction will be allowed for the importer / exporter if he has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction / regulation. Clause (b) however does not apply to the case of an importer / exporter whose commitment is through advance payment which needs to be noted in the present case. From N/N. 18/2015-20 dated 05.08.2017, amendment in the import policy of Pigeon Peas under chapter 7 of the Indian Trade Classifcation (HS) 2017 for the FTP is made specifcally in respect of import of Pigeon Peas whereby the import is changed from free to restricted category. A further condition is incorporated stating that import shall be subject to an annual (fscal year) quota of 2 lakh MT as per the procedure to be notifed. Condition No.2 states that import shall be subject to an annual quota of 2 lakh MT. From this it can be safely inferred that the import under the FTP is for the duration of the FTP and not for the fscal year 2017-2018 - By trade notice No.13/2015-2020 dated 11.08.2017 it was made mandatory for importers having an Irrevocable Letter of Credit opened prior to 05.08.2017 to register with the jurisdictional Regional Authority as per the provisions of paragraph 1.05 of the FTP for permitting their import. This was because as 2 lakh MT of Pigeon Peas had already been imported during the said fscal year (2017- 2018). In the facts of the present case the RC is binding on the respondents until the completion of the import quota mentioned therein and considering that the petitioner has imported the import item before 31.03.2021, petitioner s import is required to be declared as valid import under the FTP - On perusal of the notifcation dated 05.08.2017 it cannot be said that it imposed restriction to complete the import of goods only during the fscal year 2017-18; though there is a reference to the fscal year appearing in condition No.2 of the said notifcation as regards the quota of 2 lakh MT per annum; this reference is merely for the purposes of procedure to be notifed for such import in terms of para 2.08 of the FTP; however the subsequent trade notice dated 31.08.2017 which directly concerns the petitioner s case in hand does not mention its applicability to the fscal year 2017-2018 and categorically specifies its applicability to the contract under the FTP. It is clearly discernible that petitioner s import of 22000 MTs of Pigeon Peas under the RCs issued to the petitioner is valid upto 31.03.2021 and the case of the respondents that the same is restricted only to the fscal year 2017-18 is clearly untenable. Respondents shall allow clearance of 2650 MT of Pigeon Peas for home consumption to the petitioner forthwith - Considering the lapse of time from the date of fling of the petition, the respondents shall allow clearance of the balance 8350 MT of Pigeon Peas if imported by the petitioner for home consumption upto a period of 6 weeks from the date of passing of the present order - petition allowed.

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• 2021 (4) TMI 363
  Maintainability of petition - writ petition dismissed on the ground that the appellant should invoke the appeal remedy available under the Statute - HELD THAT:- This appeal are not pure questions of law. There are several factual allegations, which have been set out in the show cause notice as well as in the Order-in-Original. This aspect of the matter had been noted by the learned Single Judge and it was observed in the impugned order that it would not be proper for the Writ Court to go into the disputed questions of fact and that this has been best left for the Appellate Authority for a decision. There are no good grounds to interfere with the impugned order. The time limit stipulated by the learned Single Judge for filing the appeal shall enure in favour of the appellant and the appellant is permitted to file the appeal before the Appellate Authority within two weeks from the date of receipt of a copy of this judgment - Appeal dismissed.

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• 2021 (4) TMI 361
  Maintainability of appeal - Revocation of CHA License - the proprietor of the respondent passed away - HELD THAT:- Nothing survives for adjudication in this appeal. Appeal disposed of as nothing survives for adjudication.

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• 2021 (4) TMI 358
  Levy duty with interest and penalty - diversion of due free imported capital goods - stand of the petitioners is that during the relevant time Covid-19 pandemic was prevailing, the office was closed and the notice that was sent by registered post was received only on 20.07.2020 - HELD THAT:- Some more time could have been granted to the petitioners herein. This Court has to take notice of the fact that the petitioners had paid the entire duty liability amount. Covid-19 was prevailing and the impugned orders have also been passed without hearing the petitioners herein. Even now the petitioners state that within a period of six weeks from the date of receipt of a copy of this order, the petitioners would pay the interest amount as quantified by the authorities. This undertaking is recorded. The petitioners are directed to pay the interest amount as quantified by the respondents 1 to 3, within a period of six weeks from the date of receipt of a copy of this order - Petition allowed by way of remand.

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• 2021 (4) TMI 356
  Direction to re-assess the goods in Bill of Entry - Refund the amount for missing pallet within a reasonable time frame - HELD THAT:- The Airport Authority of India was responsible for safe keeping of the imported goods as per Regulation 6(i) of the Handling Cargo in Customs Area Regulations, 2009. Airport Authority of India was the custodian of the imported goods as per Handling Cargo in Customs Area Regulations, 2009 - The imported goods were lost while in the custody of Airport Authority of India after assessment and payment of duty but before they could be physically delivered to the petitioner by the Airport Authority of India. In this case, the amendment sought for is based on the documents that were available before the import. Since the imported lost goods were never cleared, the petitioner was entitled to have the subject Bill of Entry amended for the purpose of refund under Section 27 of the Customs Act, 1962 subject to other safeguards under Section 27 of the Customs Act,1962. Further, to have the refund processed, the Bill of Entry has to be re-assessed - Petition allowed.

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• 2021 (4) TMI 350
  Validity of Service of SCN - condition precedent for giving jurisdiction to the Adjudicating Authority to pass an order - Section 153 of the Customs Act - HELD THAT:- In the present case inspite of opportunity given, Revenue failed to produce the proof of delivery of the show cause notice. Further, from perusal of the order-in-original, it is found that the Adjudicating Authority have not recorded satisfaction of service of show cause notice and have proceeded to pass the ex-parte order-in-original, which is held to be a nullity in the eyes of law. Substituted service by way of affixation on the notice board of the Department is by way of last resort. In the facts of the present case, it is found that without identifying, the noticee, nor taking any reasonable measures of any substituted service as mentioned in clause (d) and (e) of Section 153(1), the Adjudicating Authority have proceeded to pass the ex-parte adjudication order. For passing a valid adjudication order, valid service of show cause notice is essential. There is no valid service of show cause notice - Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (4) TMI 353
  Maintainability of petition - initiation of CIRP - Flat Buyer is a Financial Creditor or not - Whether HBPL falls within the ambit of the definition of Corporate Debtor , as defined under Section 3(8) of the Code? - HELD THAT:- In the instant case HBPL as a Principal has created HCPL its marketing arm vide an Assignment Agreement dated 05.07.2013 and Marketing Agreement dated 06.07.2013 wherein HCPL was authorized to enter into Agreements/arrangements on behalf of HBPL and issue Allotment Letters/Builder Buyer Agreement and other related documents for and on behalf of HBPL . The definition of agent and principal in Section 182 of the Contract Act, 1872 is crystal clear - In this case, there is an express consent to the creation of HCPL given by one party to another and it can be safely stated that there is an existence of an agent relationship. The principal in this case has placed the agent in a position (Marketing Agreement), which in the outside world is generally regarded as carrying authority to enter into transactions of the account in question. Agency is consensual not contractual. For creating a contract of agency, in view of Section 185 of the Contract Act, even passing of the consideration is not necessary. In the present case, all the Clauses of the Assignment Agreement and the Marketing Agreement entered into on 05.07.2013 and on 06.07.2013 is prior to the Apartment Buyer Agreement dated 14.02.2014. Whether there was any breach committed by HBPL of the terms of the ABA . Clause-C of the ABA stipulates that the developer shall deliver possession on or before expiry of 36 months from the date of execution of ABA ? - HELD THAT:- This documentary evidence on record substantiates the plea of the Home Buyer that there was never any injunction for any substantial period of time, preventing HBPL from continuing the construction activity of the Project. Therefore, the grounds raised by the Counsel for the Appellant with respect to Force Majeure , cannot be accepted. It is pertinent to mention that on a pointed query from the Bench it was admitted that the said Project is still incomplete - there is a breach of the terms of the ABA specifically Clause-C giving rise to a Claim as defined under Section 3(6)(b) of the Code. Explanation (i) to Section 5(8) of IBC specifically provides that in amounts raised from an Allottee under a Real Estate Project shall be deemed to be an amount having a commercial effect of borrowings . Explanation (ii) further provides that the term Allottee and Real Estate Project used in IBC shall have the meaning as provided under Clauses (d) and (zn) of Section 2 of Real Estate (Regulation and Development Act, 2016) - Under RERA Section 2(k) defines promoter as a person who constructs or causes to be constructed an independent building or a building consisting of an Apartments or converts existing building apart from into an Apartment for the purpose of selling all or some of the Apartments to other persons and includes as assignee . HBPL is the Corporate Debtor and the second Respondent the Financial Creditor and the amount involved is the Financial Debt as defined under the Code - the asset of the Corporate Debtor Company of that particular Project is to be maximized for balancing the Creditor such as Allottees , Financial Institutions and Operational Creditors of that particular Project. The Learned Adjudicating Authority has rightly observed that the Petition filed by the second Respondent against HBPL is maintainable - Application disposed off.

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• 2021 (4) TMI 352
  Wrongful and erroneous curtailment of the rights of the Appellant in respect of the property - seeking physical possession post CIRP commencement - HELD THAT:- There are certain facts which are very clear from the deliberation of submissions including the pleadings by the parties that M/s. Energy Properties Pvt ltd is the owner of the property and the Corporate Debtor (in CIRP) is a Developer of the Property in terms of the Development Agreement dated 16.06.2008 and they will be governed by inter - se agreements. Here the Adjudicating Authority has not gone into the issue of ownership of the property, he has restricted its role as provided in Section 14 of the Code vide Section 14(1)(d) including its explanations. It is also undisputed fact that the Corporate Debtor (In CIRP) is holding the development right and the Development Agreement dated 16.06.2008 has not been terminated before the commencement of CIRP. In all such situations Section 14 of the Code is applicable till it reaches the stage of approval of Resolution Plan or Liquidation. However, the RP is to appropriately disclose the status of the Property in the Information Memorandum and other documents as required in the IBBI (Insolvency Resolution for Corporate Perrons) Regulations, 2016. M/s. Victory Iron works limited - HELD THAT:- They have been provided space of 10,000 sq ft approximately on the said land by virtue of leave and license agreement dated 11.08.2011 and it is their privilege to use the land in terms of same leave and license agreement and this is also not disputed by Corporate Debtor in Resolution through RP. There is no infirmity in the impugned order - Appeal dismissed - decided against appellant.

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• 2021 (4) TMI 351
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Non-performing assets - time limitation - HELD THAT:- As seen from the decision in the case of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [ 2021 (3) TMI 1183 - SUPREME COURT ], it is clear that the Article 137 of the Limitation Act, 1963 defining a period of 3 years will be computed after considering Section 18 or 19 of The Limitation Act, 1963 with a fresh period of limitation inspite of these dates being after the date of NPA. Appellant acknowledging the debt on 21.06.2017 itself shifts the 3 years period to June, 2020 whereas the Application before the Adjudicating Authority itself is filed on 22.11.2019. If we consider the part payment which has been made between May, 2019 to June / July, 2019, then naturally the application has been filed within a period of 3 years. There are no merit in this appeal - appeal dismissed.

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• Service Tax

• 2021 (4) TMI 365
  Pre-Show Cause Notice Consultation - Scope of voluntary statements recorded before the Senior Intelligence Officer - Applicability of paragraph 5 of the 2017 Master Circular - HELD THAT:- The voluntary statements recorded before the Senior Intelligence Officer cannot constitute pre-show cause notice consultation as envisaged in the paragraph 5 of the 2017 Master Circular. Consultation entails discussion and deliberation. There is back and forth between parties concerned with the consultative process, leading to, metaphorically speaking, often, separation of wheat from the chaff. A voluntary statement is at best a one-way dialogue made before an authority which does not take a decision as whether or not next steps in the matter are required to be taken - Therefore, it cannot be said that voluntary statements made by the officials of the petitioners before the Senior Intelligence Officer would constitute a pre-show cause notice consultation, as stipulated under paragraph 5 of the 2017 Master Circular. The contesting respondents will serve an appropriate communication on the petitioner indicating therein the date, time and venue at which they intend to convene a meeting for holding pre-show cause notice consultation - captioned writ petitions are disposed off.

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• 2021 (4) TMI 349
  Levy of Penalty u/s 78 of FA - CENVAT Credit on disputed services, reversed or not - suppression of material facts or not - it is alleged that but for the audit of records by the Department, the issue relating to wrong availment of service tax credit on services not used for providing output service during the relevant period would have gone unnoticed - HELD THAT:- It is not disputed that the appellant reversed the cenvat credit on impugned services on being pointed out by the Department before the issuance of the show-cause notice. Further the appellant has not utilized the said credit and had sufficient balance during the relevant period in their cenvat credit account which was reversed and the Department was informed vide its letter dt. 14/10/2015 regarding the reversal of the said credit. Further the Division Bench of this Tribunal in the case of YCH LOGISTICS (INDIA) PVT. LTD. VERSUS C.C.E C.S.T. -BANGALORE SERVICE TAX- I [ 2020 (3) TMI 809 - CESTAT BANGALORE] has considered the aspect of imposition of penalty under Section 78 and has dropped the penalty after considering the various decisions relied upon by the assessee. The imposition of penalty under Section 78 in the present case is not sustainable - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (4) TMI 368
  Liability of Central Excise Duty - principal manufacturer or job-worker - Territorial Jurisdiction - Recovery of duty u/s 11D as amount collected in the name of Duty of central excise - safety razor blades and shaving system - It was alleged that as principal manufacturer, petitioner had failed to discharge the duty in terms of the provisions of section 4A of the Central Excise Act on the goods cleared by Tigaksha from its factory at Una, Himachal Pradesh - extended period of limitation - HELD THAT:- it is evidently clear that the taxable event i.e. manufacture of the goods in question had taken place in the factory premises of Tigaksha at Una in Himachal Pradesh. Thus, neither respondent No.2 nor respondent No.3 has the territorial jurisdiction to issue any notice to show cause-cum-demand for levy of central excise duty on such products. Though on this point itself a clear conclusion can be reached that the impugned show cause-cum-demand notice dated 26.05.2020 is without jurisdiction, we may also add that in the order in original dated 20.11.2019 the adjudicating authority had recorded a clear finding that the only presumption for the demand was that because the maximum retail price of the goods manufactured at Una, Himachal Pradesh and those manufactured elsewhere by the petitioner, which included excise duty, were the same, therefore the maximum retail price of the goods manufactured at Una, Himachal Pradesh included central excise duty which were collected from the ultimate consumers but not deposited in the government treasury. Negating the fallacy of this presumption the adjudicating authority held that other than such a presumption, there was no evidence at all to establish that any amount was collected by the petitioner as representing duty of excise. In such a case, provisions of section 11D of the Central Excise Act would not be applicable. This again is a conclusive finding of fact which has remained undisturbed. The impugned show cause-cum-demand notice is clearly without jurisdiction and is an attempt to reopen an issue which was concluded by the adjudicating authority vide the order in original is not permissible - Petition allowed.

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• 2021 (4) TMI 347
  Suppression of production and clandestine removal - bars/ rods - MS Ingots - entire case is on the basis of wrong allegation based upon the documents recovered from third party - HELD THAT:- The documents recovered from the premises, based whereupon the show cause notice was issued, admittedly are in the form of loose parchies and in the form of hand written ledger book that too those got recovered from the premises of SSSRM. There appears no corroborative evidence to support those loose handwritten documents. Nor any evidence to connect them to the alleged guilt of the appellant. The statement of appellant, Smt. Sunita Devi, was recovered in June, 2005. There appears no acknowledgement on her part about she being involved in the alleged collusion with SSSRM for the alleged clandestine removal except for the raw material to have been delivered to SSSRM - the entire burden was that of the Department to prove that the appellant have been clearing the raw material from their premises and were getting the same delivered to SSSRM without discharging their liability. The demand against the appellant has been confirmed solely on the ground that the Director of the appellant could not indicate any reason as to why the entries in the private record of SSSRM mention appellant s name, the same finding are definitely presumptive finding. The order is not discussing any documents of the appellant proving the alleged clandestine removal on part of the appellant. The Adjudicating Authority has merely relied upon the statement of the Director. Resultantly the confirmation of demand is merely based on third party evidence. In the present case also there is no evidence either from the transporter or inquiry with respect to the output of SSSRM. In such circumstances, the allegation of clandestine clearance even for the quantity as that to 201.165 MT has wrongly been confirmed - the demand even against a smaller quantity of 201.165 MT of ingots though much larger quantity of 9551.278 MT of ingots was otherwise alleged to have clandestinely removed, has wrongly been confirmed. Time Limitation - HELD THAT:- Apparently and admittedly appellant was regularly filing the returns. There is nothing produced on record by the Department to show any positive act on part of the appellant which may amount to suppression of relevant facts. Resultantly, the demand for a period of more than one year could not have been made. Department could not have invoked the extended period of limitation. Show cause notice is therefore held to be barred by time. Appeal allowed - decided in favor of appellant.

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• 2021 (4) TMI 346
  CENVAT Credit - input services - outward transportation of goods from the factory/bulk terminal/depot to their customer s premises - place of removal - case of Revenue is that the place of removal will always be factory gate and the assessee is not entitled to cenvat credit on GTA up to the buyer s premises - HELD THAT:- On an identical issue, this Tribunal in the case of BHARAT FRITZ WERNER LTD. VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH WEST COMMISSIONERATE [ 2019 (11) TMI 1050 - CESTAT BANGALORE] has remanded the case back to the original authority to pass a fresh order after examining various documents for the disputed period. The case remanded back to the original authority to pass a fresh order after examining the various documents for the disputed period - appeal allowed by way of remand.

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• 2021 (4) TMI 321
  Entitlement to petitioner s surrender leave salary for 64 days payable from the date of retirement to till the date of actual payment - respondents have not settled the surrender leave salary, at the time of retirement and now seeking disbursement - HELD THAT:- The issue involved in the present writ petition is covered by various orders of this Court, in the case of S. ALAGESAN VERSUS THE MANAGING DIRECTOR TAMIL NADU STATE TRANSPORT CORPORATION (KUMBAKONAM) LTD., THE GENERAL MANAGER TAMIL NADU STATE TRANSPORT CORPORATION (KUMBAKONAM LTD. [ 2019 (12) TMI 1471 - MADRAS HIGH COURT] wherein an issue was dealt in the case of THE TAMIL NADU STATE TRANSPORT CORPORATION (KUMBAKONAM) LIMITED, KUMBAKONAM, THE GENERAL MANAGER, THE TAMIL NADU STATE TRANSPORT CORPORATION (KUMBAKONAM) LIMITED, PUDUKKOTTAI. VERSUS D. SOUNDARARAJAN [ 2019 (9) TMI 1512 - MADRAS HIGH COURT] where it was held that The learned Single Judge took into consideration the facts placed before him and also noted the circular dated 09.01.2017 and taking note of the fact that there is record to show that the appellants transport corporation pleaded financial crises for non-settling the surrender leave salary, allowed the writ petition. - In view of the decision being in favour of the petitioner, this Court is also of the view that the petitioner herein is entitled to succeed in the present writ petition. Interest on belated payment of earned leave - HELD THAT:- In all the decisions cited by the learned Standing Counsel, both the Division Bench, as well as the learned Single Judges, there is no discussion with regard to the non entitlement of the interest - Since there is no dictum laid down in any of the decisions to the effect that the employees will not be entitled for interest on belated payment of earned leave, the submissions made by the learned Standing Counsel cannot be accepted that employees will not be entitled for interest on belated payment of earned leave. There shall be a direction to the respondents herein to settle the surrender leave salary for 64 days, in respect of the years 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2017-2018 and 2018-2019, together with interest at the rate of 6% per annum from the date of retirement till the date of actual disbursement. The respondents shall be entitled to disburse the surrender leave salary in six Equal Monthly Installments and the 1st Installment shall commence from 1st of April 2021. Petition allowed.

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• Indian Laws

• 2021 (4) TMI 362
  Seeking grant of Bail - Smuggling - suspected parcels containing MDMA drugs, weighing 150 gms - contraband articles seized from the possession of the petitioner - case of Revenue is that investigation clearly revealed that the said drugs were purchased and ordered by the petitioner through parcel from Netherland, he is from the Kerala State - HELD THAT:- This Court has considered the entire material on record and detailed orders are passed and dismissed the petition. Except the contention that the petitioner s father is unwell, there is no other additional ground addressed by the learned counsel for the petitioner. As per the records, seized drug is 150 gms which is 15 times more than the commercial quantity and worth of Rs. 15.00 lakhs. The alleged offence is a heinous one. If the petitioner is granted bail, there is every possibility of tampering the witnesses and absconding the case is not ruled out. The petitioner has not made out any fresh ground for considering the bail petition - Petition dismissed.

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