Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 15, 2020
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Clarification in respect of option under section 115BAC of the Income-tax Act, 1961 - Concessional rate of tax in case of individual or a Hindu undivided family (HUF) - Option to change the scheme, where TDS has been deducted by the employer - Circular
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Clarification regarding short deduction of TDS/TCS due to increase in rates of surcharge by Finance (No.2) Act, 2019- - Circular
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Scope of the Scrutiny assessment - CBDT Instruction did not permit the Assessing Officers to extend the scope of scrutiny to the issues other than the ones which are authorised by the Board in this regard under CASS.
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Profit from sale of shares - LTCG or STCG - Benefit of Indexation - the STT is to be paid only if the shares were sold in the stock exchange and since the assessee has not sold the shares on the stock exchange, according to him, the question of payment of STT does not arise. - Shares were held for more than twelve months and hence, the gain on sale of shares is to be treated as long term capital gain
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TP Adjustment - Selection of comparable - An inclusion of certain entity in the list of comparables by the assessee in transfer pricing study report cannot act as estoppel against the assessee if, at a later stage, assessee seeks exclusion of the said comparable on account of functional disparity or it fails to qualify any of the filters applied.
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Disallowance u/s. 35(1)(ii) deduction claim - recipient concern was found as an accommodation entry provider - Disallowance based on statement recorded on oath during survey - if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine the parties
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Penalty levied u/s 271(1)(c) - Credit capital account with the narration ‘Gift received’ - There is no merit in the levy of penalty under section 271(1)(c) of the Act where the initiation of penalty proceedings is without recording of satisfaction
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Disallowance being credit card expenses - the impugned expense is only 0.07% of the total turnover. Thus, ultimately, the impugned expenses have been found to be incurred wholly and exclusively for the business of the assessee by the ld.CIT(A), which finding according to us is without any ambiguity and needs no interference.
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Exemption u/s 11 - Deduction u/s 10(23C) - allowability of depreciation - since the AO has failed to examine the claim of the assessee for exemption u/s 10(23C), 11, 12 and 13 and the Ld.CIT(A) has rightly examined the issue and allowed eligible exemption which is within the jurisdiction of the CIT(A).
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Validity of reopening of assessment - change of opinion - AO was explained during the course of original assessment vide letter dated 11.12.2012 to show that such loss is not speculative in nature. - similar claim of the assessee was duly accepted in proceedings u/s 143(3) for other assessment year - DR could not show us any tangible material - CIT(A) rightly quashed the notice.
Customs
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Paperless Customs – Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/Importers - Circular
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Confiscation - import of restricted item without required license - When the goods enter into territorial water of India that is the stage of completion of import into India and not the date of filling of Bill of Entry, therefore, if the appellant possess the license on or before date of import, the goods imported are covered by the license and same will not be liable for confiscation. - AT
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Absolute Confiscation - penalty - fact of SCN not recorded - There is no effective service of show cause notice on the appellant. Further, the impugned order has been passed without any jurisdiction. For assuming the jurisdiction to pass an adjudication order, service of show cause notice is must, as provided in law
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Export of job-worked goods to the overseas supplier, who had supplied the imported goods to the job worker in India - benefit of N/N. 32/97-Cus - No job work activity was done since the contract was cancelled - at the time of issuance of show-cause notice, the subject goods were not available in India and that at the time of importation of the subject goods, the conditions of the Notification were duly complied with. - Demand set aside - AT
Corporate Law
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Filings under section 124 and section 125 of the Companies Act 2013 r/w IEPFA (Accounting, Audit. Transfer and Refund) Rules 2016 in view of emerging situation due to outbreak of COVID— 19 - Circular
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Clarification on passing of ordinary and special resolutions by companies under the Companies Act, 2013 and rules made thereunder on account of the threat posed by Covid-19. - Circular
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Redemption of preference shares - failure of the company to redeem or to pay dividend - The preference shareholders are not remediless and for redemption of preference share can file application under Section 55(3) of the Companies Act, 2013. They may also file application under Section 245 of the Companies Act, 2013 as a class action suit and the NCLT while exercising the inherent power viz. Rule 11 of NCLT Rules, 2016 can pass appropriate order - AT
IBC
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Approval of Resolution plan - the Adjudicating Authority per se is not to be involved in the commercial wisdom area of the Committee of Creditors, particularly, in the approval of commercial side of Resolution Plan/Modified Resolution Plan - AT
Service Tax
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CENVAT Credit - imported capital goods which were used in construction of the mall - all these capital goods were directly used by the appellant for providing output service i.e. renting of immovable property service. Accordingly the cenvat credit on the capital goods is admissible. - AT
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Extended period of limitation - Non-payment of service tax - even when an assessee has suppressed facts, the extended period of limitation can be evoked only when ‘suppression’ is shown to be wilful with intent to evade the payment of service tax. - AT
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Valuation - inclusion of value of spare parts sold while servicing a motor vehicle - if a sale had taken place and it had been subjected to VAT, no Service Tax could have been levied - thus, the value of spare parts cannot be included in the assessable value for payment of Service Tax. - AT
Central Excise
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CENVAT Credit - input services - Services of GTA outward for transport of gold - On going through the relevant invoice of service, the service is not for GTA but it is for storage and handling charges at vaults for safe custody of gold which is excisable good and the same is cleared on payment of duty. Therefore, service related to storage of excisable goods is an input service. - AT
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Clandestine removal - Shortage in stock - The cogent explanation given by the appellant has not been found to be untrue by the Court below. Accordingly, the SCN is misconceived and further the Court below has erred in not considering the normal loss, that the same requires no treatment in the books of accounts. - AT
VAT
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Grant of stay - Having regard to the Advance Rulings issued by the competent authority under Section 67 of the said Act, and since based on the Advance Rulings of the respondents, petitioner did not to collect tax at 5% on the photo albums being sold by petitioner from 2005-06 onwards, the action of the 1st respondent in compelling the petitioner to pay 50% of the disputed tax and now proposing at 14.5% VAT on the sales appears to be arbitrary and illegal - HC
Case Laws:
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Income Tax
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2020 (4) TMI 410
Recovery proceedings - AO required the petitioner to deposit 20% of the disputed amount - projection of Tax on Returned Income - HELD THAT:- Issue notice. Status quo, as of today, in respect of demand/recovery shall be maintained in the meantime.
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2020 (4) TMI 409
Reopening of assessment in exercise of powers u/s 153A - Tribunal quashing the order u/s 153A stating that in absence of any incriminating material on issue which has already been examined and finalized in original assessment cannot be reexamined and reopened - HC held at such assessment cannot be reexamined or reopened in exercise of powers under section 153A - HELD THAT:- Delay condoned. Leave granted. Hearing expedited. Pleadings to be completed in the meanwhile.
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2020 (4) TMI 408
Reopening of assessment in exercise of powers u/s 153A - Tribunal quashing the order u/s 153A stating that in absence of any incriminating material on issue which has already been examined and finalized in original assessment cannot be reexamined and reopened - HELD THAT:- Application seeking exemption from filing certified copy of the impugned order is allowed. Issue notice.
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2020 (4) TMI 407
Disallowance of interest u/s. 36(l)(iii) - interest paid on secured and unsecured loan - Whether appellant had no interest free funds out of which the appellant could give interest free loans? - HELD THAT:- For A.Y. 2010-11 disallowance has been correctly made by AO - Assessee s claim of interest free funds is not at all tenable as the same is claimed to be in the form of outstanding liability for goods and expenses. This fact is further highlighted by the fact that sundry debtors outstanding in the books are more than this outstanding liability. Hence, assessee s claim of interest free funds is not sustainable. Submission that these are purchase advances have not at all been proved. Furthermore, assessee itself started charging interest on these loans in subsequent years. Hence, order for A.Y. 2010-11 is duly sustained. For A.Y. 2013-14 also position is similar. No evidence whatsoever of subsequent purchases have been produced. Hence, claim that these parties are purchase advances is not at all proved. Furthermore, for a part plea of interest free advances is not sustainable on the same basis as in the earlier year as sundry creditors for goods and expenses cannot be claimed to be interest free funds available with the assessee. More so, as sundry debtors are much more than this. However, the assessee s plea of partner s current capital for A.Y. 2013-14 to the extent of ₹ 43,97,689/- needs to be examined. Assessing Officer has not given proper reason as to why this cannot be considered to be interest free funds available. Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] has duly expounded that when assessee has interest free funds, assessee can be given credit thereof and assessee need not show one to one nexus of interest free funds and deployment thereof. Hence, in my considered opinion assessee s appeal for A.Y. 2013-14 deserves to be set aside to the file of the Assessing Officer for limited purpose of examination of interest free funds in the shape of current capital amounting to ₹ 43,97,689/- is available to grant interest free advances. The Assessing Officer shall examine this aspect in the light of observation as above and if interest free funds in this regard are available, assessee deserves to be granted proportionate relief.
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2020 (4) TMI 406
Reopening of assessment u/s 147 - addition u/s 69C - Bogus purchases - HELD THAT:- Despite giving notice none appeared for the assessee and there is no adjournment application filed before us. After going through the assessment order and CIT(A), we find that the AO observed that summons u/s 131 was responded and the confirmation and explanation was given by describing state wise procedure for providing bogus purchase bill/accommodation entry. AO has taken cognizance of the documents/evidences produced by the assessee during the assessment proceedings. During the assessment proceedings no books of accounts were produced by the assessee and no explanation was offered as regards bogus purchase of ₹ 7,44,644/-. Therefore, AO has rightly made addition u/s 69C read with Section 4, 5 and 14 of the Income Tax Act, 1961. The CIT(A) also confirmed the addition after going through all the evidences produced by the assessee before the Revenue authorities. The assessee failed to establish the bogus purchases. Therefore, there is no need to interfere with the findings of the CIT(A). Hence, appeal of the assessee is dismissed.
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2020 (4) TMI 405
Scrutiny assessment - No approval of the concerned Commissioner before extending the scope of scrutiny - Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Reason for which the case was picked up for limited scrutiny relates to the AIR information on the cash deposits in the savings bank account. Assessing Officer did not obtain the written approval of the concerned Commissioner before extending the scope of scrutiny in respect of disallowance under Section 14A - It is on record that the CBDT Instruction No.7/2014, dated 26-09-2014 did not permit the Assessing Officers to extend the scope of scrutiny to the issues other than the ones which are authorised by the Board in this regard under CASS. It is pertinent to note that this case was for limited scrutiny and in respect of Section 14A disallowance, no scrutiny was made by the Assessing Officer. This can be seen from the assessment order itself. Therefore, the assessment order itself is bad in law and void ab initio. - Decided in favour of assessee.
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2020 (4) TMI 404
Addition on account of difference in trading - assessee has failed to reflect correct income as per memorandum of trading account as per provisions of section 145A - whether there any difference in valuation of the stock as compared to exclusive method, if inclusive method is adopted for valuation of the stock? - HELD THAT:- In the case of the assessee in assessment year 2008-09 and 2009-10 identical issue of valuation of the stock and addition under section 145A of the Act involved, respectfully following the finding of the Tribunal (supra), we are of the view that that no addition is required under section 145A of the Act following the inclusive method. The finding of the Ld. CIT(A) on the issue in dispute is upheld. - Decided in favour of assessee.
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2020 (4) TMI 403
Profit from sale of shares - Benefit of Indexation - special tax rate or exemption of long term capital gains - Whether genuineness of transactions and antecedents of that company was not established in course of assessment proceedings or before the Ld. CIT(A) to be genuine transactions? - M/s. TUIHL is very much an Indian company or foreign company - HELD THAT:- AO had proceeded to make the addition on the basis that the assessee had sold the shares of M/s. TUIHL which was a foreign company. However, during the appellate proceedings the assessee was able to produce documents to substantiate that it (M/s. TUIHL) was indeed is an Indian company which was duly registered with ROC, Kolkata since year 1981 and, therefore, is an Indian Company. We note that the remand report of the AO called for by the Ld. CIT(A) does not controvert this fact - basic premise on which the AO has made the addition fails and the Ld. CIT(A) is right in his conclusion that M/s. TUIHL is an Indian Company and its equity shares were in fact sold by the assessee. CIT(A) has noted the submission of the assessee that M/s. TUIHL is an Indian company and since the equity shares of the company s share was held for more than twelve months it has to be treated as a capital asset and the indexation benefit was available on the said asset. For that Ld. CIT(A) relied on section 2(29A), 2(42A) and 2(48A) of the Act and the Ld. CIT(A) noted that the STT is to be paid only if the shares were sold in the stock exchange and since the assessee has not sold the shares on the stock exchange, according to him, the question of payment of STT does not arise. CIT(A) has taken note that the assessee had held the shares of M/s. TUIHL for more than twelve months and hence, the gain on sale of shares is to be treated as long term capital gain and in view of the provision of sec. 48 of the Act he was of the opinion that the assessee had correctly deducted the index cost of acquisition from the sale proceeds of the shares. The Ld. CIT(A) has noted that the assessee was holding the shares of M/s. TUIHL as investment and, therefore, the gain on its sale is to be taxed under the head long term capital gain. It is also noted that in the instant case assessee has not claimed special tax rate or exemption of long term capital gains - Decided against revenue
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2020 (4) TMI 402
TP Adjustment - Rejection of benchmarking analysis performed by the Appellant - comparable selection - Some companies have been excluded by the DRP on the ground that they are loss making companies - HELD THAT:- While ascertaining whether the companies are persistent loss making or not, the quantum of loss suffered during the period under consideration is immaterial. The Tribunal in various decisions have only considered the period of loss and not the quantum of loss. Therefore, respectfully following the order of Tribunal in the case of John Deere [ 2016 (10) TMI 1238 - ITAT PUNE] we reject the objections raised by the learned DR on this issue and direct the TPO/Assessing Officer to include PSI Data Systems Ltd., SIP Technologies Exports Ltd. and TVS Infotech Ltd. in the final set of comparables as they are not persistent loss making companies. Exclusion of KALS and E-Zest - KALS being functionally different should be excluded from the list of comparables as compared to assessee engaged in the business of development and distribution of software used in banking and finance industry. E-Zest is a product company and hence, cannot be compared with the assessee engaged in software development services. See AMBER POINT TECHNOLOGY INDIA PVT. LTD. AND VICE-VERSA [ 2018 (1) TMI 1318 - ITAT PUNE] Inclusion of these companies, i.e. Acropetal Technologies Limited, Cepha Imaging Private Limited and Polaris Retail Infotech Limited - HELD THAT:- The exercise of conducting transfer pricing study is to ascertain arm s length price of international transactions of assessee with its AE. If in the process, the assessee has selected any wrong comparable, it is the duty of TPO to examine and reject the same before ascertaining arm s length price of the international transactions. An inclusion of certain entity in the list of comparables by the assessee in transfer pricing study report cannot act as estoppel against the assessee if, at a later stage, assessee seeks exclusion of the said comparable on account of functional disparity or it fails to qualify any of the filters applied. Our view is fortified by the decision of Tribunal in the case of DCIT vs Quark Systems Pvt. Ltd [ 2009 (10) TMI 591 - ITAT, CHANDIGARH] - Therefore, we admit the additional ground of appeal raised by the assessee and restore it to the file of TPO/Assessing Officer for de novo examination of the comparables.Appeal allowed for statistical purposes.
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2020 (4) TMI 401
Addition on account of payment made to Ms. Kamladevi K Agarwal as full and final consideration for handing over vacant possession of its property - authorities below have rejected the claim of the assessee mainly on the ground that since the assessee had made payment in question in the financial year 2009, the assessee is not entitled to claim expenditure in the assessment year under consideration - HELD THAT:- Appellant has not claimed the said payment/expenditure in its profit and loss account/computation of income and only capitalized the same amount in the schedule of fixed assets in its balance sheet - assessee had not claimed any depreciation. Since, there is no dispute with regard to the payment of ₹ 8,00,000/- to Ms. Kamladevi K Agarwal and since the assessee has only capitalized the same amount in the schedule of fixed assets, Ld. CIT (A) has wrongly upheld the findings of AO. Hence, we allow this ground of appeal and set aside the findings of the Ld CIT(A) and accordingly direct the AO to delete the addition of ₹ 8,00,000/-. Payment made to Bombay Municipal School for taking vacant possession of the school premises belonging to the appellant - HELD THAT:- As pointed out by the Ld. CIT (A), the assessee is owner of only 81% of the property and therefore any expense incurred on the property has to be shared in the ratio of 81:19 between the assessee and C.K. Thakkar, who also happens to be Director of the company. Since, the assessee had the share of 81% in the said property, the Ld. CIT (A) has rightly allowed the capitalization to the extent of 81% of the total amount paid which comes to ₹ 2,19,810/-. Hence, we do not find any merit in the contention of the assessee to interfere with the findings of the Ld. CIT (A). We therefore, dismiss this ground of appeal and confirm the findings of the Ld. CIT (A). Unexplained cash credit u/s 68 - HELD THAT:- The assessee furnished the confirmation from C.K. Thakkar as additional evidence. Moreover, the assessee has furnished the copy of certificate issued by the Chief Manager, NRI Branch, Bank of Baroda, Mumbai confirming that Sh. C.K. Thakkar who was maintaining NRE account no. 27920100000167 with the Bank and was having balance of ₹ 2,14,63,000/- in the said account. So far as the creditworthiness is concerned the assessee has furnished the copy of opening balance of ₹ 1.48 crore with the company, opening balance of ₹ 97,00,000/-with Ruby Home Holdings Pvt. Ltd., three solvency certificates issued by the Bank of Baroda each for about 2.2 crores, copy of affidavit of Bank Manger filed in the court confirming NRI deposits of high value in Bank, FCNR fixed deposit receipts, bank balance in NRO A/c of the lender, opening bank balance in A/c No. 27920100000167 and other documentary evidence to establish creditworthiness of the lender. As pointed out by the Ld. counsel, the Ld. CIT(A) has failed to consider the fact that even in the earlier years, the director had advanced unsecured loans to its company and no addition was made by the department. Moreover, the Ld. counsel did not point out any change in the material fact in the present case. Hence, we are of the considered view that the Ld. CIT(A) has wrongly confirmed the addition made by the AO u/s 68 - Decided in favour of assessee.
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2020 (4) TMI 400
Condonation of delay - delay in filing the appeal before Ld. CIT(A) - delay of 2 years to 3 years - Rectification u/s 154 - assessee has not offered to tax based on provision of Sec. 115JB, even though assessee has taxable book Profit - HELD THAT:- Since it was in bonafide belief that assessee is eligible to claim deduction u/s 80IB against the book profit and filed an appeal before Ld. CIT(A) for the AY 2010-11 and believed that it will get favourable decision. However, the issue was debatable and assessee was in bonafide belief that the rectification u/s 154 of the Act cannot be made. However, AO has passed the rectification order u/s 154 of the Act without following the submission of assessee. Assessee was in bonafide belief that Ld. CIT(A) will pass favourable order and with improper guidance from its counsels, failed to file the appeal before Ld. CIT(A) for all those AYs on time. Considering the overall situations and assessee has a debatable issue on merits and for the sake of justice, we are remitting this issue back to the file of Ld. CIT(A) to condone the delay in filing the appeal for all those assessment years and decide the issue on merits on issue of Sec 115JB as well as chargeability of interest u/s 234B and 234C. Accordingly grounds raised by the assessee for this assessment year is allowed for statistical purposes.
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2020 (4) TMI 399
Disallowance u/s. 35(1)(ii) deduction claim - recipient concern, M/s. Heribicure Healthcare Bio- Herbal Research Foundation was found as an accommodation entry provider - Disallowance based on statement recorded on oath during survey - HELD THAT:- As decided in RAJ KARAN DASSANI VERSUS ITO, WARD - 36 (1) , KOLKATA [ 2019 (5) TMI 840 - ITAT KOLKATA] AO got swayed away with the statement recorded on oath of Mr. Swapan Ranjan Dasgupta during survey conducted at the premises of M/s. Herbicure. We have reproduced Question no. 22 and 23 and answers given by Shri Swapan Ranjan Dasgupta, wherein he admits to provide accommodation entries in lieu of cash. This information we should say can be the tool to start an investigation when the assessee made the claim for weighted deduction. The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confmned that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta the claim of the assessee for weighted deduction u/s. 35(1)(ii) of the Act. The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon'ble Supreme Court in Kader Khan sons (supra). Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon'ble Supreme Court in Andaman Timber [ 2015 (10) TMI 442 - SUPREME COURT] We cannot sustain the order of the authorities below. Therefore, we set aside the impugned order and direct the AO to allow the deduction u/s. 35(1)(ii) - Decided in favour of assessee.
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2020 (4) TMI 398
Addition u/s 68 - share application money and unsecured loans - identity of the persons and genuineness of the transaction - HELD THAT:- Additional evidence is likely to prove that the assessee has allotted the shares to the applicants who have allegedly invested in the assessee company and advanced unsecured loans to the assessee company. All this information needs verification by the AO. Therefore, we deem it fit and proper to admit and remand the additional evidence to the file of the AO for de novo consideration in accordance with law. The assessee s grounds of appeal on this issue are treated as allowed for statistical purpose. Disallowance of expenditure - assessee submitted that he has submitted all the details before the CIT (A) but the CIT (A) has only allowed part of expenditure and what has been disallowed is also interest on working capital allowance, factory expenses, professional and consultancy charges etc. - expenditure is disallowed and added to the returned income, it would increase the income of the assessee and therefore, the said income is eligible for deduction u/s 80IB of the Act which is the alternate claim of the assessee to the claim of deduction u/s 10AA - HELD THAT:- Assessee s claim of expenditure is to be considered by the AO afresh. In view of the same, we deem it fit and proper to remand the issue to the file of the AO for de novo consideration afresh. Further, we also make it clear that if the expenditure is disallowed, which would in turn increase the income of the assessee, the same is allowable as deduction which is allowable to the assessee u/s 80IB of the Act. Disallowance of expenditure - assessee submitted that there is a disallowance of salaries and professional charges on the ground that there was no TDS made by the assessee and therefore, the disallowance was proposed to be upheld u/s 40(a)(ia) - submitted that the assessee has not been treated as assessee in default u/s 201(1) of the Act for such an amount and therefore, the disallowance u/s 40(a)(ia) is not to be upheld - HELD THAT:- Since we have set aside the entire issue to the file of the AO, we direct the AO to consider the assessee s arguments on this issue as well. Disallowance u/s 10AA - assessee submitted that the assessee in its return of income had claimed deduction u/s 10AA of the Act but alternatively has filed the revised computation of income making the alternative claim u/s 80IB of the Act - HELD THAT:- After hearing both the parties, we deem it fit and proper to admit the additional grounds on this issue and remand the same to the file of the AO with a direction to consider the assessee s claim of deduction u/s 80IB of the Act and if the assessee satisfies all the conditions for allowance of deduction u/s 80IB, we direct the AO to allow the same. In view of the same, the assessee s appeal is treated as allowed for statistical purposes.
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2020 (4) TMI 397
Penalty levied u/s 271(1)(c) - Credit capital account with the narration Gift received - HELD THAT:- AO has not recorded any satisfaction as to which limb of section 271(1)(c) of the Act has not been fulfilled and have not issued show cause notice in this regard and hence, initiation of penalty proceedings are bad in law. We find no merit in the levy of penalty under section 271(1)(c) of the Act where the initiation of penalty proceedings is without recording of satisfaction. Accordingly, we delete the same. Hence, grounds of appeal raised by the assessee are allowed.
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2020 (4) TMI 396
Deduction u/s 10AA - set off the brought forward loss and depreciation against the profit of the eligible unit - whether the deduction claimed under section 10AA of the Act has to be allowed first and thereafter set off brought forward losses and unabsorbed depreciation from remaining profit, if any, or not? - HELD THAT:- Similar issue was subject matter in appeal before the Tribunal in the case of JCIT v. Lotus Footwear Enterprises Ltd. (assessee s sister concern), wherein, the issue was decided in favour of the assessee by following the decision in the case of CIT v. Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] - we direct the Assessing Officer to first grant deduction under section 10AA of the Act and thereafter set off from the remaining profit if any the brought forward losses and unabsorbed depreciation. Thus, the ground raised by the assessee is allowed. Computation of tax payable and levy of interest under section 234D - HELD THAT:- Referring to submission of assessee that AO has not considered the amount as already paid by the assessee on account of excess refund granted to the assessee, accordingly, we direct the Assessing Officer to verify and decide the issue afresh in accordance with law after allowing an opportunity of being heard to the assessee.
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2020 (4) TMI 395
Exemption claimed u/s 54G - Proof of investment - purchase of new plant and machinery for setting up the business of the industrial undertaking in the new location - whether Appellant company had opened an account at Canara Bank, Langford Town branch, and the said capital gains were deposited in the said capital gains bank account and the said amount was subsequently utilized in the development of industry as per the provisions of section 54G? - HELD THAT:- As per section 54G, the assessee should invest the amount of capital gain arising from the transfer of the capital asset situated in urban area mentioned in section 54G within a period of one year before the sale of original asset and balance part may be invested within a period of three years after the sale / transfer of asset. Hence, the A.O. to give benefit of section 54G by verifying the investment so made by the assessee within a period of one year prior to sale of asset or within the period of three years after the sale or transfer of such capital asset. DR pleaded that the issue may be sent back to the files of the CIT(A) and he has to obtain a remand report from the Assessing Officer, because this issue has not decided by the CIT(A). In our opinion, if we remand back the issue to the files of the CIT(A), he has to call for remand report from the A.O. before deciding the same and no useful purpose would be served. Hence we prefer to remit the issue to the files of the Assessing Officer for fresh consideration. In our opinion, the Assessing Officer has to see whether the capital gain arising out of the transfer of assets mentioned in section 54G of the Act is utilized for the acquisition of assets for the purpose of its business, should be qualified for the purpose of exemption u/s 54G, as there is no requirement that the land and building should be used for the purpose of business of the industrial undertaking - we remit the entire issue in dispute to the files of the Assessing Officer to examine the issue afresh after giving an opportunity of being heard to the assessee. The assessee shall place necessary evidences to substantiate its claim and cooperative with the AO - Decided in favour of assessee for statistical purposes.
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2020 (4) TMI 394
Prior period expenses disallowance - expenses crystallized during which Financial Year - case of the assessee before the CIT(A) is this that though the said expenses pertain to prior period that is F.Y. 2008-09 there were some dispute between those parties and hence expenses were not claimed in the A.Y. 2009-10 - HELD THAT:- It is the settled principle that merely because the expense relates to earlier years the same cannot be said to be payable always in the same year unless and until it is crystallized. It appears from the record of the assessee is in the practice of claiming the prior period expenses as and when it is crystallized. Since in this particular case we have verified from the documents that the said expense of ₹ 46,52,291/- made to the parties during A.Y. 2010-11 upon resolving the dispute between those parties, the same actually been crystallized in A.Y. 2010-11 and such expenses are allowable in nature. In this aspect we relied upon the judgment passed in the matter of Deepak Fertilizers and Petrochemicals Corp. Ltd. vs. DCIT [ 2007 (9) TMI 290 - ITAT BOMBAY-G] where principle of consistency were followed. Thus, we find no justification in disallowing such expenses - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - TDS u/s 172 or 194C or 195 - payment of freight expenses to non resident shipping agencies agent - HELD THAT:- Payment made to the non-resident shipping company in foreign currency by such agents is reimbursement of actual expenses and thus no tax is required to be deducted at source on the same as it appears from the records which has been duly taken care of by the Learned CIT-A. As per CBDT circular No. 723 dated 19.09.1995 since agents acts on behalf of the non-resident ship-owner he therefore steps into the shoes of the principal. Accordingly provision of Sec.172 shall apply and provisions of Sec.194C and Sec.195 would not apply. Having regard to the this particular aspect of the matter the Learned CIT(A) has deleted such disallowance made under section 40(a)(ia) of the Act. Alternatively in the event the C F agents have declared terminal handling charges, documentation charges etc. as income and pay tax thereon disallowance under section 40(a)(ia) is not called for. In this regard the assessee relied upon the judgement passed by the Hon ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] - In that view of the matter the order passed by the Learned CIT(A), in our considered opinion, just and proper and without any ambiguity so as to warrant interference. Thus, the order is passed in the affirmative i.e. in favour of the assessee and against the Revenue. Disallowance in respect of interest and insurance expenses claimed on vehicles - part disallowance in respect of depreciation and incidental expenses claimed on vehicle - HELD THAT:- It is the settled principle of law that though cars are brought by a company the name of its director, the company is eligible for claiming depreciation on the same. In this regard, the assessee relied upon the judgement passed in the matter of CIT vs. Aravalli Finlease. [ 2011 (8) TMI 814 - GUJARAT HIGH COURT] which we have carefully perused. CIT(A) deleted additions made in respect of Interest ₹ 82,121/- and Insurance ₹ 23,370/- ; However, addition in respect of Depreciation ₹ 1,36,000/- and car expense ₹ 28,995/- has been partly deleted to extent of 75% i.e. 25% which according to us is unambiguous taking into consideration of the assesses books of accounts maintained in regard to the said asset as it appears from the records and thus we uphold the same. Hence, this ground of appeal preferred by the Revenue is dismissed. Disallowance of expenses for web designing and development - HELD THAT:- Assessee has also deducted tax at source while releasing such payments. Thus, it becomes amply clear that the underlying expenses have been incurred for day-to-day running of the business of the assessee. No asset has come into existence on account of incurring such expenditure, and such expenditure has not resulted into any enduring benefit to the assessee. More so, expenses have been incurred wholly and exclusively in connection with the business of the assessee. In view of the above, the underlying expenses are undoubtedly revenue. In this regard, the Learned AR relied upon the judgement passed by the Hon ble jurisdictional High Court in the matter of PCIT vs. Zydus Wellness Ltd [ 2017 (4) TMI 920 - GUJARAT HIGH COURT] - We have perused the judgement and find that since the underlying expenses has undoubtedly revenue in nature, the impugned disallowance has been rightly deleted by the Learned CIT(A) relying upon the ratio laid down by the judgement as aforesaid. Hence, we find no merit in the ground of appeal preferred by the Revenue. The same is, thus, dismissed. Disallowance for market survey and production of TV commercial - HELD THAT:- expenditure in question has not resulted into any enduring benefit to the assessee. Further that such expenses have been incurred wholly and exclusively in connection with the business of the assessee as it appears from the records being revenue in nature, and relying upon the judgement passed by the jurisdictional High Court in the matter of PCIT vs. Zydus Wellness Ltd. [ 2017 (4) TMI 920 - GUJARAT HIGH COURT] we find no ambiguity in the order passed by the Learned CIT(A). Hence, we reject the ground of appeal preferred by the Revenue. Disallowance of expenses paid to Triton Communication for making advertisement film - HELD THAT:- These expenses have been incurred wholly and exclusively in connection with the business of the assessee - underlying expenses are undoubtedly revenue in nature and hence, the disallowance has rightly been deleted. Thus, we reject the ground of appeal in the absence of any ambiguity being found in the order passed by the Ld. CIT(A). Disallowance being credit card expenses - HELD THAT:- These expenses have been incurred in relating to the business of the assessee. Whenever directors go out for business promotion it is not always convenient for them to pay various expenses in cash and thus the expenses are made through credit card. We have also carefully considered the ledger of credit card of those concerned expenses which appear at Page 254 to 255 of the Paper Book on record before us. Assessee s turnover is ₹ 16,64,10,392/- for the year under consideration which appears at Page 54 of the Paper Book. Accordingly, the impugned expense is only 0.07% of the total turnover. Thus, ultimately, the impugned expenses have been found to be incurred wholly and exclusively for the business of the assessee by the ld.CIT(A), which finding according to us is without any ambiguity and needs no interference. The same have been deleted by the Ld. CIT(A). Hence, we reject this ground preferred by Revenue. Under-invoicing of sales made to sister concern - HELD THAT:- Pick and choose method has been adopted by AO and various factors affecting the price have been completely overlooked; - Apart from that Assessee s exports to its sister concern for AY 2010-11 are of ₹ 2,42,67,490/- whereas AO has worked out under-invoicing of exports to a huge sum of ₹ 13,44,47,290/- i.e. almost 5.54 times of exports to sister concern shown by the assessee. We also find that the total turnover for Asst. Year 2010-11 is ₹ 16,64,10,392/- as appears at Page No. 54 of the Paper Book. After addition of ₹ 13,44,47,290/- in respect of alleged under invoicing the Gross Profit rate and Net Profit rate shall be 64,79% 46.38% which is not possible. In fact, a survey was took place on 22.02.10 which is at the fag end of the year. The assessee are duly audited all books of accounts. After taking into consideration the entire aspect of the matter, we find the Ld. CIT(A) has rightly deleted the impugned disallowance.
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2020 (4) TMI 393
Exemption u/s 11 - Deduction u/s 10(23C) - allowability of depreciation - scrutiny u/s 143(3) - HELD THAT:- CIT(A) has applied the provisions of section 10(23C) correctly and allowed the exemption and given a finding that the taxable income would be Rs.Nil since, the assessee had applied the income to the extent of 85% as required u/s 10(23C) - Hon ble Supreme Court in the case of CIT Vs. Rajasthan and Gujarathi Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] held that the depreciation allowable on the assets treated as application of income also in the years in which the assets were acquired. As on the date of passing the order of the Ld.CIT(A), the decision of Hon ble Supreme Court is available, hence, the Ld.CIT(A) is bound to consider the decision of Hon ble Apex court also. The department could not find any mistake in the order of the Ld.CIT(A) except arguing that the Ld.CIT(A) has travelled beyond his jurisdiction while deciding the consequential order. We observe from the consequential order that since the AO has failed to examine the claim of the assessee for exemption u/s 10(23C), 11, 12 and 13 and the Ld.CIT(A) has rightly examined the issue and allowed eligible exemption which is within the jurisdiction of the CIT(A). Hence, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.
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2020 (4) TMI 392
Addition u/s 68 - unexplained cash credit - HELD THAT:- Bank transactions raise suspicion towards the genuineness of the transaction similarly in the case of Victory Portfolio Limited the income shown in its P L account raises suspicion thereby creating doubt on the genuineness of the transaction. In the case of World Broadband Communications Ltd. there is no evidence except the PAN details. Assessee should furnish satisfactory documentary evidences to establish the genuineness of the transactions along with the creditworthiness of the lender, we, therefore, restore this issue to the files of the AO. The assessee is directed to furnish relevant satisfactory demonstrative evidences to discharge its onus under section 68 of the Act. Addition u/s 14A r.w.r 8D deleted on finding that there is no exempt income. As there is no exempt income no addition is to be made u/s 14A of the Act and the CIT(A) has rightly deleted the same, therefore, no interference is called for. Reconciliation of Receipts as per TDS (26AS) and Books - HELD THAT:- Advances received from various parties and whereas before us the counsel has furnished a reconciliation statement as above. We are of the considered view that reconciliation statement so filed before us needs to be examined/verified by the AO. We accordingly restore this issue to the files of the AO. The assessee is directed to reconcile the entire difference with satisfactory explanation and if the reconciliation is not accepted by the AO then the entire difference of ₹ 1,03,08,430/- shall be treated as the unaccounted receipts of the assessee. Ground treated as allowed for statistical purposes. Condonation of delay - delay of 1223 days - HELD THAT:- Assessee sated that the Director s of the company directed the CA to file Cross Objection on receiving the memo of the appeal filed by the Revenue. It is the say of the counsel that the CA did not file the CO on time which caused the delay in filing and the delay should be condoned. As perused the order sheet entries in revenue s appeal, we find that counsel Mahavir Singh, Advocate is appearing in this case from 28.02.2019 till 05.08.2019 and it is only on 04.10.2019 the Cross Objection was filed. On these demonstrative facts, we do not find any merit in the contention of the counsel. The arguing counsel Mahavir Singh, Advocate was very much aware of the appeal of the revenue since 28.02.2019 and yet did not care to file any cross objection which needs to be filed within 30 days from the date of the appeal filed by the Revenue.
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2020 (4) TMI 391
Validity of reopening of assessment - change of opinion - Whether no tangible information has come into the possession of AO pursuant to the assessment made u/s 143(3) which is rationale and bear a direct nexus to the material on which recent belief is based? - HELD THAT:- Section 147 of the Act has been made without any tangible material, but on pursuant of the same material which were available before the Assessing Officer at the time of framing of the original assessment. AO was explained during the course of original assessment vide letter dated 11.12.2012 to show that such loss is not speculative in nature. Further it was also pointed out to the Assessing Officer that similar claim of the assessee was duly accepted in proceedings under Section 143(3) of the Act for assessment year 2009-10. Departmental Representative could not show us any tangible material. The Hon ble Supreme Court in the case of Kelvinator of India Ltd. Vs. CIT [2010 (1) TMI 11 - SUPREME COURT] has held that even the change of opinion can be arrived for re-opening provided there is a beneficial material coming into the possession of the Assessing Officer showing that there was an escapement of income from assessment and such tangible material must have an alive link with the formation of the belief. In the present case such criteria is absent. Thus, we do not find any infirmity in the order of the learned CIT (Appeals) and the same is confirmed. Hence, appeal of the Assessing Officer is dismissed.
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2020 (4) TMI 390
TP Adjustment - comparable selection - HELD THAT:- Assessee is into carrying out software development activities and has a blend of software engineers, game designers and game managers and mainly in the business of software and Software Development Services, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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Customs
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2020 (4) TMI 389
Confiscation - redemption fine - penalty - import of restricted item without required license - 20MM Used Tyre Rubber Shreds - HELD THAT:- There is no dispute about the dates that the goods were shipped under Bill of Lading dated 04.08.2016. Bill of Entry on arrival of the goods was filed on 08.09.2017. At the time of filling of Bill of Entry the appellant was in possession of license issued by DGFT - at the time of import the appellant should possess a valid license, if it is required as per the policy. In the present case though the Bill of Entry date is 08.09.2017 but it is not coming out from the documents that what is the date of import of the goods. When the goods enter into territorial water of India that is the stage of completion of import into India and not the date of filling of Bill of Entry, therefore, if the appellant possess the license on or before date of import, the goods imported are covered by the license and same will not be liable for confiscation. Though in the policy the date of reckoning the import is given is as per the date of Bill of Lading but the import gets completed only when goods enters into India. Therefore, the contention of the lower authorities that the appellant was not possessing the license on the date of Bill of Lading is not correct. However, to finally decide the issue, the date import is very relevant which is not available on record. Matter remanded to the adjudicating authority for passing a fresh order after verifying the date of import - appeal allowed by way of remand.
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2020 (4) TMI 388
Absolute Confiscation - penalty - fact of SCN not recorded - HELD THAT:- As the fact of service of show cause notice is not recorded in the impugned order, this Tribunal directed learned AR to file evidence of issue and service of show cause notice dated 25.09.2015, issued by the Additional Director General, DRI, DZU, New Delhi. As per the report dated 03.06.2019 issued by the office of DRI, the show cause notice was served on one Shri Rohit Bhasin, who is said to be authorised by the appellant Shri Surinder Khanna to receive the show cause notice, at Karol Bagh - As per the copy of receipt issued by Rohit Bhasin dated 25.09.2015, it is stated that he has received the notice on behalf of the appellant who has authorised him, as he is outside India. However, no such authorisation has been given nor Revenue has taken any other steps for service of notice. There is no effective service of show cause notice on the appellant. Further, the impugned order has been passed without any jurisdiction. For assuming the jurisdiction to pass an adjudication order, service of show cause notice is must, as provided in law - In the present case, there is no proper authorisation neither Rohit Bhasin is a relative of the appellant, nor there being any proper authorisation to receive the show cause notice - Accordingly, the impugned order is set aside so far as this appellant is concerned - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 387
Export of job-worked goods to the overseas supplier, who had supplied the imported goods to the job worker in India - benefit of N/N. 32/97-Cus dated 01.04.1997 - in the present case, since, no job work activities were undertaken on the imported goods, the Department had entertained the belief that the conditions of Notification dated 01.04.1997 had not been fulfilled - HELD THAT:- It is an admitted fact on record that the subject goods were imported by the appellant for the purpose of carrying the job work activities and for re-exportation of the job worked goods, pursuant to the contract entered into between it and the overseas supplier. However, due to certain unavoidable circumstances, the contract was cancelled by the overseas supplier, resulting in the return of the goods to the supplier - In view of the fact that at the time of issuance of show-cause notice, the subject goods were not available in India and that at the time of importation of the subject goods, the conditions of the Notification were duly complied with. The adjudged demands confirmed on the appellant, cannot be sustained inasmuch as the duty demand along interest is confined to irregular importation of goods, which has not been specifically alleged by the department - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (4) TMI 386
Redemption of preference shares - failure of the company to redeem or to pay dividend - NCLT has dismissed the application of Appellant solely on the ground that the Appellant being preferential shareholders has no locus standi to file application for redemption of shares under Section 55(3) of the Companies Act, 2013 or even under Section 245 of the Companies Act, 2013 - HELD THAT:- Section 55(3) of the Companies Act, 2013 clearly states that the Company, when not in a position of redeem its preference shares, may with the consent of 3/4th in value of such preference shares and the approval of the Tribunal ( on a petition filed in this behalf), issue further redeemable preference shares equal to the amount due (including dividend, if any) in respect of such unredeemed shares. However, there is a proviso - In ordering such further issue, the Tribunal shall forthwith order redemption of preference shares held by such persons who do not consent to such further issue. The Section stipulates that the Company only with the requisite consent of preference shareholders and filing a petition in this behalf before the Tribunal and its consequent approval can issue further redeemable preference shares with regard to the unredeemed preference shares. The Section though requires prior consent of the shareholders, does not provide for any action that can be taken by the concerned preference shareholders prior to filing of such petition by the Company. Thus, remedies available to such preference shareholders are only by way of either consenting or dissenting with such further issue - However, intention of the legislature while promulgating Section 55 of the Companies Act, 2013 was clearly to compulsorily provide for redemption of preference shares by doing away with the issue of irredeemable preference shares. Therefore, even there being no specific provision stipulated under the Act 2013 through which relief can be sought by preference shareholders in case of non-redemption by the Company or consequent non-filing of petition under Section 55 of the Act, the intention of the legislature being clear and absolute, Tribunal s inherent power can be invoked to get an appropriate relief by an aggrieved preference shareholder(s). The preference shareholders are not remediless and for redemption of preference share can file application under Section 55(3) of the Companies Act, 2013. They may also file application under Section 245 of the Companies Act, 2013 as a class action suit and the NCLT while exercising the inherent power viz. Rule 11 of NCLT Rules, 2016 can pass appropriate order - The matter is remitted back to NCLT, Chennai Bench to decide the application as per law.
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Insolvency & Bankruptcy
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2020 (4) TMI 385
Approval of Resolution plan - initiation of CIRP - approved Resolution Plan has been alleged to be discriminatory and threatening the livelihood of 1184 workers of the paper unit and solvent extraction industrial units of Murli Industries Ltd. (Corporate Debtor) by not paying outstanding wages and compensation for retrenchment as per the provisions of Industrial Disputes Act, 1947. Whether the approval of Resolution Plan and the distribution/payment to various stakeholders therein was in accordance with the provisions of I B Code? - HELD THAT:- When the Adjudicating Authority is satisfied that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this subsection, satisfy that the resolution plan has provisions for its effective implementation - Where the Adjudicating Authority is satisfied that the Resolution Plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the Resolution Plan. Scope and ambit of jurisdiction of Adjudicating Authority and Appellate Tribunal while approving Resolution Plan - Whether a conditional Resolution Plan can be approved? - HELD THAT:- The Adjudicating Authority and Appellate Authority cannot go into the feasibility and viability of the Resolution Plan which requires commercial wisdom of the Committee of Creditors. The Adjudicating Authority and Appellate Authority has to go by the various propositions of law stated above accordingly to which they have to go by the commercial wisdom of committee of creditors while approving the Resolution Plan. The given Resolution Plan is conditional but since according to the express directions given by Supreme Court in the various cases stated above. The Adjudicating Authority per se will have to go the Commercial wisdom of Committee of Creditors. Whether those claims that are not dealt under the resolution plan can be held to be extinguished under the provisions of the I B Code? - HELD THAT:- A successful Resolution Applicant cannot suddenly be faced with undecided claims after the Resolution Plan submitted by him has been accepted as this would amount to an extra amount coming up for payment after the debts have been dealt by the Resolution Applicant and the Resolution Plan has been approved. This would throw into uncertainty amounts payable by a prospective Resolution Applicant who successfully takes over the business of the Corporate Debtor - All claims must be submitted to and decided by the Resolution Professional so that a prospective Resolution Applicant knows exactly who has to be paid in order that it may then take over and run the business of the Corporate Debtor. Therefore, claims that are not submitted or are not accepted or dealt with by the Resolution Professional and such Resolution Plan submitted by the Resolution Professional is approved then those claims would stand extinguished. Whether the Adjudicating Authority has power to modify its own order? - HELD THAT:- An error cannot be said to be apparent on the face of the recorded if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long-drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no court would permit it to remain on record. This does not include the power to modify any substantial part of the judgment which determines rights of one party or the other. Whether the initiation of CIRP was vitiated in view of the pendency of winding up petition before the Hon ble High Court of Bombay, Nagpur Bench? - HELD THAT:- The Hon ble High Court of Bombay had granted leave to the Respondents to initiate CIRP vide order dated 02.11.2018 and put the matter to rest by retrospectively validating the CIRP. Overriding effect has also been given to the I B Code over any other law in force and therefore, the Adjudicating Authority had rightly initiated The Resolution Plan as approved by the Adjudicating Authority is in accordance with Insolvency and Bankruptcy Code, 2016 and various propositions of law as laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ]. The Hon ble Supreme Court has reiterated the issue on commercial wisdom of Committee of Creditors, hence the Adjudicating Authority per se is not to be involved in the commercial wisdom area of the Committee of Creditors, particularly, in the approval of commercial side of Resolution Plan/Modified Resolution Plan - there are no ground to interfere with the impugned order dated 22nd July, 2019 passed by the Adjudicating Authority - order of NCLT upheld.
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2020 (4) TMI 374
CIRP Process - the amount in terms of the earlier order dated 21st January, 2020 has been paid. Mr. Joy Saha, learned Senior Counsel appearing on behalf of Committee of Creditors has also accepted the same - HELD THAT:- According to the Appellant, it has already paid the amount - In view of the above development, we allow the Resolution Professional / Liquidator to hand over the records, control etc. to the Appellant ( Successful Resolution Applicant Liberty House Group Pte. Ltd.). Parties will also ensure to implement the plan in its letter and spirit. The detailed affidavit(s) be filed by the Appellant and the Committee of Creditors within a week. Rest of the issues will be decided on the next date. Post the case for orders on 3rd March, 2020 before the 1st Bench on the top of the list.
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Service Tax
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2020 (4) TMI 384
Refund of Service Tax - exempt service - construction service provided to AIIMS, Jodhpur - refund claimed on the ground that by virtue of Section 102 of Finance Act, 2016, the service provided to government institution was made exempt with retrospective effect - rejection on the ground of unjust enrichment - HELD THAT:- The appellant, though initially recovered the amount of service tax on the service which was exempted as per Section 102 of Finance Act, 2016 but subsequently the amount of service tax was returned and certificate to this effect was produced by the learned Counsel, however, this is subsequent development. The said certificate was not produced before the Adjudicating Authority. However, the same was produced before the Commissioner (Appeals) but from the findings of Commissioner (Appeals), the said certificate was not considered. This being the factual aspect, the issue needs to be verified by the Adjudicating Authority - appeal allowed by way of remand.
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2020 (4) TMI 383
CENVAT Credit - imported capital goods which were used in construction of the mall - The case of the department is that since the appellant are providing renting of immovable property services, all the capital goods on which credit is taken was used for construction of mall and not for providing the services of renting of immovable property - litter bin, capital goods or not - HELD THAT:- The identical issue has been decided in respect of capital goods used for construction of building which is rented out in the case of City Centre Mall Nashik Pvt. Ltd. vs Commissioner of Central Excise Service Tax, Nashik [2017 (11) TMI 301 - CESTAT MUMBAI] where it was held that merely by installation of duty paid capital goods, it can not be said that it is immovable goods all the capital goods were used in the shopping mall to facilitate the shop owners for operation of the mall, who have been given the shops on rent by the appellant. Therefore all these capital goods were directly used by the appellant for providing output service i.e. renting of immovable property service. Accordingly the cenvat credit on the capital goods is admissible. The appellant is entitled for Cenvat Credit on capital goods used in construction of mall which was given on rent by providing renting of immovable property service. Litter bin - HELD THAT:- The item does not fall under capital goods. However, the same was used as input. Accordingly, the credit under the head input is allowed - Taking credit considering the litter bins as capital goods is a procedural lapse and on that account, credit cannot be denied. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 382
Extended period of limitation - Non-payment of service tax - scope of the term suppression of facts - allegation that the Appellant had not paid service tax on receipts from taxable service provided by it at Meghnagar mines during the period 1 June, 2007 to 31 March, 2011 - whether the Department was justified in invoking the extended period of limitation of five years, because admittedly the Show Cause Notice was issued on 3 October, 2012 for the period 1 June, 2007 to 31 March, 2011? - HELD THAT:- In the present case, the Department has invoked the extended period of limitation of five years for the reason that the Appellant by not getting themselves registered with the Department and failing to declare the receipts from taxable services rendered to MPSMC appears to have done so with intention of suppressing their value of taxable services rendered and to avoid detection by the Department that they were not paying appropriate service tax . There is no charge in the Show Cause Notice that suppression by the Appellant was wilful , nor does the Show Cause Notice mentions that suppression was with an intent to evade payment of service tax. It is correct that Section 73 (1) of the Act does not mention that suppression of facts has to be wilful since wilful precedes only mis-statement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under Section 73(1) of the Act, suppression of facts have still to be wilful with an intent to evade payment of service tax - It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be evoked only when suppression is shown to be wilful with intent to evade the payment of service tax. The demand made for period within one year from the relevant date is justified but taking recourse to the extended period of limitation provided for in the proviso to Section 73 (1) of the Act is not justified - The demand made for the period within the normal period of one year is confirmed but this would have to be determined by the Commissioner afresh within a period of three months after providing an opportunity to the Appellant. The Commissioner shall also determine whether interest or penalty has to be imposed for this period - Appeal allowed by way of remand.
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2020 (4) TMI 381
Extended period of limitation - CENVAT credit - exempt service or not - activity of trading - case of appellant is that the activity of trading is not a service and not an exempted service - non-maintenance of separate records for the receipt and utilization of the input services - period 2009-10 to 2012-13 - HELD THAT:- The merits of the tax liability prior to 1 July 2012 need not be decided, as it has not been pressed by the learned Counsel for the Appellant. Extended period of limitation - HELD THAT:- The Appellant had contended that audit had been done and the amount was reflected in the Books of Account and the Balance Sheet. Thus, the extended period of limitation could not have been invoked - The matter would have to be remanded to the Adjudicating Authority to re-determine the amount of Service Tax for the normal period. The imposition of penalty was also set aside as there was no malafide on the part of the Appellant. The submissions of learned Counsel for the Appellant that trading activity would not be a service after 1 July 2012 is an issue which can also be examined by the Commissioner - Appeal allowed by way of remand.
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2020 (4) TMI 380
Valuation - inclusion of value of spare parts sold while servicing a motor vehicle - Section 67 of the Finance Act 1994 - HELD THAT:- A bare perusal of the Circular dated 23 August 2007 indicates that Service Tax would not be leviable on a transaction treated as sale of goods and subjected to levy of Sales Tax/ VAT and whether a given transaction between the service station and the customers is a sale or not is to be determined taking into account the real nature and material facts of the transaction. The Circular also clarifies that payment of VAT or Sales Tax on a transaction indicates that the said transaction is treated as sale of goods. The decision in Semtech Industries [ 2014 (4) TMI 995 - CESTAT NEW DELHI ] clearly holds that when invoices are issued showing the value of the goods used and the service charges separately, service tax would be chargeable only on the service/ labour charges and the value of goods used for repair would not be includable in the assessable value of the service. It is not in dispute that while raising the invoices, the Appellant had separately shown the cost of the goods and the cost of service. The invoices also shows that VAT had been charged for the sale of spare parts. Thus, if a sale had taken place and it had been subjected to VAT, no Service Tax could have been levied - thus, the value of spare parts cannot be included in the assessable value for payment of Service Tax. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (4) TMI 379
CENVAT Credit - Education Cess and Secondary and Higher Education Cess - to be included for the purpose of computing the Cenvat Credit on the input supplied by 100% EOU or not - Sub-rule (7) clause(a) of Cenvat Credit Rules, 2004 - period prior to amendment by Notification No. 22/2009-CE(N.T.) in Rule 3(7) - Whether the appellant on the input service procured from 100% EOU is eligible for Cenvat Credit by applying the formula taking into consideration the Education Cess and Secondary and Higher Education cess also? HELD THAT:- This tribunal dealing with the same issue in M/S. JAI CORP. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VAPI [ 2014 (11) TMI 706 - CESTAT AHMEDABAD] held that amended rule 3(7)(a) is applicable even before amendment also. The appellant is entitled for the Cenvat Credit in respect of Education Cess and Secondary and Higher Education Cess - However, the Adjudicating Authority has liberty to calculate correctly the amount of the Cenvat Credit after taking into account Education Cess and Secondary and Higher Education Cess as per the formula prescribed in the Rule - Appeal allowed by way of remand.
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2020 (4) TMI 378
CENVAT Credit - input services - Management, maintenance and Repair of AC - Services used for Maintenance of Garden - GTA outward for transport (cargo handling of gold) - HELD THAT:- As per explanation made by learned counsel, all these services are used in or in relation to the activity of manufacture of final product. There are direct judgments under which these services were held to be input services - In the case of M/S IPCA LABORATORIES LTD. VERSUS CGST, CENTRAL EXCISE CUSTOMS, INDORE [ 2019 (4) TMI 988 - CESTAT NEW DELHI] , the Tribunal held that the garden service is an input services. Services of GTA outward for transport of gold - HELD THAT:- On going through the relevant invoice of service provided to M/s Brinks India (P) Ltd., the service is not for GTA but it is for storage and handling charges at vaults for safe custody of gold which is excisable good and the same is cleared on payment of duty. Therefore, service related to storage of excisable goods is an input service. All the three services are falling within the definition of input service provided under Rule 2(l) of Cenvat Credit Rules, 2004 - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 377
CENVAT Credit - input - MS pipes (Black) - denial on the ground that the activity not amounting to manufacture - HELD THAT:- The fact that although this MS pipe (Black) is not input for the appellant on which they have taken cenvat credit (without any process) has been cleared on payment of duty. Hon ble High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] has held that if the activity does not amount to manufacture and goods have been cleared on payment of duty, the same shall amount to reversal taken of cenvat credit on the said goods - In the present case, as the appellant has paid the duty which shall amount to reversal of cenvat credit demanded by the Revenue in the impugned matter. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 376
Clandestine removal - Shortage in stock - Abnormal loss or normal loss on stock verification - the demand has been raised on account of alleged shortage in the quantity of copper metal of 1.290 MT, sulphuric acid of 1.075 MT and also alleged shortage of 54.411 MT of copper in the smelter plant - Extended period of limitation - HELD THAT:- The discrepancy (shortage) is a normal loss arising due to various factors like handling loss, evaporation loss (moisture content), calculation error (as admittedly ore is estimated as regards the quantum of production and quantum received in the concentrate plant). The cogent explanation given by the appellant has not been found to be untrue by the Court below. Accordingly, the SCN is misconceived and further the Court below has erred in not considering the normal loss, that the same requires no treatment in the books of accounts. Further, there is no single instance of clandestine removal on the part of the appellant. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (4) TMI 375
Grant of stay on collection of 50% of the disputed tax - HELD THAT:- Admittedly, the appeal preferred by the petitioner before the Telangana Value Added Tax Appellate Tribunal challenging the revision order dt.09-05-2019 for the assessment years 2013-14 and 2014-15 is pending consideration before the said Tribunal and the petitioner had already deposited 25% of the disputed tax. Having regard to the Advance Rulings issued by the competent authority under Section 67 of the said Act, and since based on the Advance Rulings of the respondents, petitioner did not to collect tax at 5% on the photo albums being sold by petitioner from 2005-06 onwards, the action of the 1st respondent in compelling the petitioner to pay 50% of the disputed tax and now proposing at 14.5% VAT on the sales appears to be arbitrary and illegal - Petition disposed off.
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