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TMI Tax Updates - e-Newsletter April 15, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise News A total of 61 applicants approved under Production Linked Incentive (PLI) Scheme For Textiles out of 67 applications received Shri Piyush Goyal reviews progress made under PM GatiShakti National Master Plan for holistic and integrated planning for infrastructure Recent Trade Agreements signed with UAE and Australia were very well received and did not elicit a single negative response from any sector - Shri Piyush Goyal India’s Services exports for the first time achieve the targeted $ 250 Billion during April-March 2021-22, exhibiting a positive growth of 21.31 per cent over the fiscal 2020-21 Notifications Customs 21/2022 - dated 13-4-2022 - Cus Seeks to prescribe BCD and AIDC on Raw Cotton for a specified period. 33/2022 - dated 13-4-2022 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver GST - States 8520-FIN-CT-1-TAX-0001/2022 - dated 5-4-2022 - Orissa SGST Amendment in Notification No. 8241-FIN-CTI-TAX-0043/2017, dated the 7th March, 2019 8516-FIN-CT-1-TAX-0001/2022 - dated 5-4-2022 - Orissa SGST Amendment in Notification No. 8229-FIN-CTI-TAX-0043/2017, dated the 7th March. 2019 8512-FIN-CT-1-TAX-0001/2022 - dated 5-4-2022 - Orissa SGST Seeks to provide for a concessional rate on intra state supply of bricks conditional to not availing the ITC 8508-FIN-CT-1-TAX-0001/2022 - dated 5-4-2022 - Orissa SGST Amendment in Notification No. 19829-FIN-ÇT1-TAX 0022/2017, dated the 29th June, 2017 F.1-11 (91)-TAX/GST/2022 (PART) - dated 1-4-2022 - Tripura SGST Notifying Registration threshold limit for brick manufacturers as ₹ 10 lakhs F.1-11 (91)-TAX/GST/2022 (PART) - dated 1-4-2022 - Tripura SGST Exclusion of taxpayers supplying bricks from composition scheme SEZ S.O. 1805 (E). - dated 12-4-2022 - SEZ Central Government de-notifies an area of 2.89 hectares, thereby making resultant area as 4.30 hectares at Village Chokkanahalli Taluka, Yelahanka Hobli, Bangalore North, in the State of Karnataka. S.O. 1804 (E) - dated 12-4-2022 - SEZ Central Government de-notifies an area of 4.4654 hectares, thereby making the total area of the Special Economic Zone as 13.5346 hectares at Village Mulavana, District Kollam in the State of Kerala Circulars / Instructions / Orders DGFT 03/2015-2020 - dated 13-4-2022 Amendments in Chapter 5 of the Handbook of Procedures 2015-20, related to Export Promotion Capital Goods Scheme to reduce 'Compliance Burden' and enhance 'Ease of doing Business' Highlights / Catch Notes GST Exemption from GST or not - renting out of immovable properties to the Social Welfare Department of Maharashtra Govt, for residential accommodation of girls from the backward class/Scheduled Tribes - it has been established that the activities related to residential accommodation of the girls or women, belonging to the Backward Class/Scheduled Tribes, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities - It will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243W of the Constitution, and thereby, are rightly eligible for exemption from GST - AAAR Visit to Get Source Profiteering - supply of construction services related to the purchase of Flat - where the project was launched after introduction of GST, booking/price of the flat has been made/finalised by the Applicant No. 1 in February 2018 and during the whole period the Respondent continued to pay the GST at same rate, and also in absence of any other legally enforceable document; the emails exchange between Applicant No. 1 and Respondent mentioned above in paragraph 8 are not relevant material in these proceedings of anti-profiteering under CGST/SGST Act, 2017. - NAPA Visit to Get Source Income Tax Reopening of assessment u/s 147 - Notice after expiry of four years from the end of the relevant assessment year - since the details of computer software has been disclosed and classified under the category of intangible asset in the note to Balance Sheet, it can be reasonably concluded that the duty of the assessee to disclose fully and truly all primary relevant facts has been met and it cannot extend beyond that. - HC Visit to Get Source Income accrued in India - Period of stay in India - This claim of the assessee has not been rebutted or denied by any of the lower authorities. Both the lower authorities have simply relied upon the provisions of section 5 and section 90 to state that since the assessee was a resident and ordinarily resident in India during the year, therefore, the provisions of DTAA would not apply in the case of the assessee. However, a perusal of section 90 read with Article 16 of the DTAA would show that section 90 did not bar in any manner the operation of the relevant provision of DTAA in respect of income earned by the assessee in other country, with whom the Central Government has entered into a DTAA. - AT Visit to Get Source Validity of reopening of assessment u/s 147 - Unexplained cash deposit in the bank account - Apparently, the explanation given by the assessee has been rejected without assigning any reason. To our mind, if the assessee's explanation of having the opening cash in hand was to be disbelieved, there should have been cogent reasoning behind the same. - the lower authorities had no justifiable reason to make the addition - AT Visit to Get Source Disallowance of expenditure as capital expenditure being 25% of royalty amount paid - it cannot be said that the Sweden Company had relinquished its command over the impugned technical know-how information in favour of the assessee in any manner. In the absence of any vested advantage to assessee or any indefeasible right, it is farfetched to hypothetically presume any component of capital expenditure implicit in the outgo towards royalty. - there is no scope of treating the royalty paid for the 'licensed information' as capital expenditure in the facts of the case - AT Visit to Get Source TDS u/s 195 - non-deduction of TDS on payment of export commission to Foreign entity in Italy - whether there is a business connection or not, must be determined based on facts and circumstances of the particular case. In our opinion there is nothing on record which indicates that SPA is carrying out its business in India owing to which any portion of its income can be attributed to its Indian operations. - AT Visit to Get Source Estimation of profit on the suppressed sale - Additional undisclosed income - the revenue has not brought any material on record suggesting that the assessee has made suppressed sales over and above the amount determined by the excise department. Thus in the absence of any information available on record, we hold that the AO has wrongly determined the gross profit by working out the suppressed sale more than the amount determined by the excise department. - AT Visit to Get Source Revision u/s 263 - capital gains computation on the sale by the assessee of 23 acres of his land - the cost adopted by him was neither enquired into in assessment nor, consequently, substantiated - This is even as the stamp valuation itself is guided by the consideration of fmv of the relevant property, making the provision complete and legally firm. It is for this reason that we stated the argument advanced by and on assessee’s behalf to be flawed, both in law and on facts. To conclude, s.50C is clearly applicable, and which forms another reason for upholding the revision. - AT Visit to Get Source Reopening of assessment u/s 147 - in absence of any allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for the completion of the assessment, no reassessment proceedings can be initiated after a period of four years from the end of the relevant assessment year when the original assessment has been completed u/s. 143(3) of the Act. - AT Visit to Get Source Difference of turnover - less turnover shown in income tax return as compared to service tax return - CIT(A) held that merely the assessee accepted the addition in earlier year to save the cost of litigation that does not give liberty to the Assessing Officer to make huge addition without pointing out specific defects in the books of assessee or reply received from contractee party. - the order of Ld. CIT(A) is also based on factual analysis of Fo-26AS as well. Appeal of the Revenue stands dismissed. - AT Visit to Get Source Reopening of assessment u/s 147 - It is also correct that after the assessment order was passed, the Commissioner of Income Tax had commenced revision proceedings under Section 263 of the Act on the very same issue of profit on sale of investment and the revision proceedings were dropped by an order dated 6th March, 2013. Therefore, the same issue cannot form a reason to believe for assessment officer to issue notice under Section 148. In our view, if only this fact has been brought to the notice of the Commissioner who accorded sanction under Section 151, certainly this sanction would not have been granted. - HC Visit to Get Source Validity of reopening of assessment u/s 147 - We are satisfied that there is prima facie material available on record before the assessing officer for issuing a notice for reassessment. Thus, the notice under Section 148 passed by the National Faceless Assessment Centre rejecting the petitioner’s objections against issuance of the notice, do not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction. - HC Visit to Get Source Customs Levy of penalty on Customs Broker u/s 112 (a) of the Customs Act, 1962 - It was alleged that the appellant dealt with unauthorized person instead of dealing with the actual IEC holder thereby violated KYC norms - There is no law which prohibits the importer to sell the goods to another after importing the same. It is also brought from evidence that the appellant has nothing to do with excess weight or undeclared goods in the consignment. - The penalty imposed is totally unwarranted. - AT Visit to Get Source Central Excise Extended Period of limitation - Revenue Neutrality - The issue involved is also of pure interpretation of provisions of levy of duty including profit in assessable value in clearance of goods to sister unit for captive use. In such facts of case, it cannot be said that the Appellant had any mala fide intentions to evade payment of duty, which otherwise was available to Appellant as Cenvat Credit in sister unit and that Appellant have not suppressed assessable value with intention to evade payment of duty. - AT Visit to Get Source Case Laws: GST 2022 (4) TMI 630 Exemption from GST or not - renting out of immovable properties to the Social Welfare Department of Maharashtra Govt, for residential accommodation of girls from the backward class/Scheduled Tribes - whether service in relation to any function entrusted upon the panchayat under Article 243G of the Constitution or any function entrusted upon the municipality under Article 243 W of the Constitution, or not - applicability of TDS provisions - applicability of TDS notification issued under section 51 would be applicable for deduction of TDS, as appellant is not registered under GST - refund of TDS - HELD THAT:- On perusal of the Article 243G and 243 W of the Indian Constitution along with the eleventh and twelfth Schedule to the Constitution, it is seen that panchayats and municipalities have been entrusted with the responsibilities of planning and implementation of the various schemes for ensuring social justice and development of the weaker section of the society, which clearly includes the girls and women from the backward class/Scheduled Tribes. Thus, any welfare measure undertaken by the panchayats and municipalities for the social development of the gills belonging to the backward classes/Scheduled Tribes, including the residential accommodation of the girls or women, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities. It can be safely interpreted that entry at SI. No. 3 of the Exemption Notification No. 12/2017/C.T. (Rate) dated 28.06.2017 has a very wide connotation and coverage. Since, it has been established that the activities related to residential accommodation of the girls or women, belonging to the Backward Class/Scheduled Tribes, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities, therefore, it can be safely concluded that in the instant case, pure services, i.e., renting out of immovable properties, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243W of the Constitution, and thereby, are rightly eligible for exemption from GST in terms of the aforesaid exemption entry at SI. No. 3 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. Once, it has been concluded that the impugned activity undertaken by the Appellant is eligible for exemption from GST, there is no point discussing the aggregate turnover of the Appellant which include the rental income received from Social Welfare Department, Govt, of Maharashtra as the issue before us was to determine whether the services provided to the Social Welfare Department, Government of Maharashtra for residential accommodation of underprivileged girls is exempt from GST and not the liability of the Appellant to take GST registration attributing to his annual aggregate turnover - Further, once the subject transaction has been held to be exempt from the levy of GST, there is no question of application of the TDS provisions made under Section 51 of the CGST Act, 2017. Thus, it is concluded that the impugned services of the renting out of immovable properties provided by the Appellant to the Social Justice Department of the Government of Maharashtra will be exempt from the levy of GST in terms of SI. No. 3 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, and accordingly, the TDS provisions made under section 51 of the CGST Act, 2017, will not be applicable therein. 2022 (4) TMI 629 Profiteering - supply of construction services related to the purchase of Flat - benefit of input tax credit (ITC), has been passed or not, by way of commensurate reduction in the price of the apartment purchased by him - violation of Section 171 of the CGST Act, 2017 - HELD THAT:- In the given facts, where the project was launched after introduction of GST, booking/price of the flat has been made/finalised by the Applicant No. 1 in February 2018 and during the whole period the Respondent continued to pay the GST at same rate, and also in absence of any other legally enforceable document; the emails exchange between Applicant No. 1 and Respondent mentioned above in paragraph 8 are not relevant material in these proceedings of anti-profiteering under CGST/SGST Act, 2017. There are no reason to differ from the Report of the DGAP and therefore the findings that the provisions of Section 171 of the CGST Act 2017 have not been contravened in this case has been agreed. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 05.03.2020 the order was to be passed on or before 04.09.2020. However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date. Thus, the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Therefore, the allegation that the Respondent has not passed on the benefit of ITC in this case is not found sustainable. Accordingly, the application filed by Applicant No. 1, requesting action against the Respondent for alleged violation of the provisions of Section 171 of the CGST Act is dismissed being not maintainable. Application dismissed. Income Tax 2022 (4) TMI 640 Validity of Reopening of assessment u/s 147 - independent application of mind by AO - assessing authority has proceeded on the basis of certain information received from the Investigating Wing - cash purchases of shops - HELD THAT:- From the reason recorded by the assessing authority, it is evident that the assessing authority was having some information from the DDT (Inv.)-1(3), Ghaziabad. He independently verified the information received from the return of income of the assessee and also perused the statement recorded on oath and then he came to an independent conclusion that the assessee had made huge cash for purchase of units/shop etc. in Red Mall to M/s Celebrations City Projects (P) Ltd. during the Financial Year 2015-16. The reason to believe recorded by the assessing authority is not on the basis of any books of account or document seized by Income Tax Authorities in the search conducted on M/s Celebrations City Projects (P) Ltd. Even if it is presumed that copies of certain statements on oath recorded during the course of search by the Investigating Wing, were forwarded to the respondent no.1 alongwith the report, it cannot be said to be either the books of account or document seized so as to fall it within the ambit of clause (b) of sub-section (1) of Section 153C of the Act, 1961. Perusal of the reason recorded by the assessing authority as aforequoted reveals that the assessing authority has proceeded on the basis of certain information received from the Investigating Wing and after independent verification, he came to the conclusion that the assessee had made huge cash of ₹ 1,18,84,000/-, which caused him to issue notice to the petitioner under Section 148 of the Act, 1961. It is also admitted case of the petitioner that no assessment was made by the assessing authority for the Assessment Year 2016-17. As per Explanation 2(b) appended to Section 147 of the Act, 1961, if a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the assessing officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; then it shall be deemed to be a case where income chargeable to tax has escaped assessment. We find that neither the impugned notice issued by the respondent no.1 under Section 148 of the Act, 1961 suffers from any illegality nor the impugned order rejecting the objection of the petitioner suffers from any infirmity, which, under the circumstances, cannot be interfered with. - Decided in favour of revenue. 2022 (4) TMI 639 Validity of Reopening of assessment u/s 147 - eligibility of reasons to believe - Notice issued after expiry of four years from the end of relevant assessment year - HELD THAT:- We have to note that reasons as quoted above clearly provides that information regarding first item, i.e., WIP has been obtained from the balance-sheet of the Company and 2nd item, ground rent, has been obtained from Profit and Loss account and computation of income of Petitioner. Therefore, information has been obtained from the primary facts and documents filed by Petitioner. This not a case where Petitioner can be accused as having merely produced its books of accounts or other evidence during the course of assessment proceedings on the basis of which material evidence could not have been deduced by the Assessing Officer with the exercise of due diligence. Section 139 of the Act provides for mandatory obligations to furnish with its return of income the report of audit. Petitioner fulfilled its obligations. Petitioner had filed return of income alongwith audited Profit and Loss Account and balance-sheet as required under Section 139 of the Act. Balance-sheet being a part of the return of income under Section 139 of the Act, Petitioner cannot be stated to have not disclosed material facts. Petitioner having filed balance-sheet alongwith computation of income with its annual returns, there was nothing more to disclose and a person cannot be said to have omitted to disclose or failed to disclose when he had no knowledge. This not a case where Petitioner can be accused as having merely produced its books of accounts or other evidence during the course of assessment proceedings on the basis of which material evidence could not have been deduced by the Assessing Officer with the exercise of due diligence. Section 139 of the Act provides for mandatory obligations to furnish with its return of income the report of audit. Petitioner fulfilled its obligations. Petitioner had filed return of income alongwith audited Profit and Loss Account and balance-sheet as required under Section 139 of the Act. Balance-sheet being a part of the return of income under Section 139 of the Act, Petitioner cannot be stated to have not disclosed material facts. Petitioner having filed balance-sheet alongwith computation of income with its annual returns, there was nothing more to disclose and a person cannot be said to have omitted to disclose or failed to disclose when he had no knowledge. This is subject to the rider that there must be cogent and clear indication in the reasons supplied, that in fact there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. If the factum of failure to disclose can be culled from the reasons in support of the notice seeking to reopen assessment, that will certainly not be fatal to the assumption of jurisdiction under sections 147 and 148 of the Act. The Court in CROMPTON GREAVES LTD. [ 2014 (12) TMI 936 - BOMBAY HIGH COURT] held However, if from the reasons, no case of failure to disclose is made out, then certainly the assumption of jurisdiction under sections 147 and 148 of the Act would be ultra vires, being in excess of the jurisdictional restraints imposed by the first proviso to Section 147 of the Act . Having considered the reasons we are satisfied that even the reasons does not indicate there was failure to disclose truly and fully material facts. In fact there was nothing to indicate non-disclosure. Reasons itself rely on the balance-sheet and computation of income filed.- Decided in favour of assessee. 2022 (4) TMI 638 Stay of demand - condition of deposit of 20% as a pre-condition for grant of stay - appeal filed by the petitioner before the first Appellate Authority is pending and thus the Appellate Authority be directed to dispose of the said appeal expeditiously without directing the petitioner to deposit the amount of 20% of the tax demand - HELD THAT:- Perusal of the order passed by the Assessing Officer on 24.5.2019 clearly indicates that the Assessing Officer has dealt with all the issues raised by the petitioner as to why the Assessing Officer shall exercise his discretion not to impose any condition of deposit of 20% as a pre-condition for grant of stay. The petitioner was not satisfied with the order passed by the Assessing Officer and filed Review Petition, which also came to be rejected by the learned Commissioner of Income Tax by passing a detailed reasoned order dated 26.8.2019. Assessing Officer was justified in not exercising the discretion to grant unconditional stay or stay on payment of lesser amount than 20% of the tax demand. The Assessing Officer while rejecting the said case of the petitioner has recorded reasons in great detail. The Commissioner of Income Tax while rejecting the Review Application has recorded reasons as to why the order passed by the Assessing Officer shall not be interfered with. We do not find any infirmity in the order passing by the Assessing Officer as well as by the Commissioner of Income Tax while rejecting the request of the petitioner for granting unconditional stay during the pendency of the appeal filed by the petitioner. We are not inclined to accept the submission of the petitioner that since the appeal is pending for quite some time, instead of directing the petitioner to comply with the order passed by the Assessing Officer which is not recalled by the order passed by the Commissioner of Income Tax, the Appellate Authority shall be directed to dispose of the appeal expeditiously. The Appellate Authority has not fixed any date for hearing of the appeal in view of the petitioner not having complied with the conditional order passed by the Assessing Officer. Though this petition was filed by the petitioner on 26.9.2020, no interim relief has been granted by this Court in favour of the petitioner. In our view, the petition is devoid of merit and is accordingly dismissed. Time to deposit 20% of the tax demand is extended by four weeks from today. 2022 (4) TMI 637 Reopening of assessment u/s 147 - Purchase of flat - complaint filed by the assessee with Maharashtra RERA, assessee has himself mentioned that he had purchased the said flat for a consideration for undone flat - HELD THAT:- We have to note that petitioner had applied to the Income Tax Authorities under the Right To Information Act, 2005 (RTI Act) to find out the basis of information that Assessing Officer had received and in the order under Section 7(1) of the RTI Act, to a query raised by petitioner as to whether the verification of the complaint was done by ACIT 24(1), it is stated negative in reference of authenticity as per case records. We have to note that the order under Section 7(1) of the RTI Act has also been passed by the same Circle 24(1) which has proposed to reopen petitioner s assessment. In our view, the Assessing Officer had enough time to find the veracity or authenticity of the complaint if he had any doubt and he could not have dismissed the objections by just a wave of his hand. We cannot accept the statement of Mr. Sharma because even though the police complaint was available with the Assessing Officer he chose not to rely upon the police complaint in the reasons recorded for re-opening. Even in the order on objections there is no reference to this police complaint. Even in the affidavit in reply to the petition there is no reference to this police complaint. Mr. Sharma states that respondent cannot be precluded from issuing fresh reasons to the notice by relying upon even this police complaint. We cannot express our opinion on this. In such a case firstly the notice issued under Section 148 of the Act has to go. The reason to believe must be that of the Assessing Officer. Neither the court nor the advocate can supplement it or add to it or improve upon it. If the Revenue can do so, if permissible in law and in accordance with law, Revenue may do what it is adviced and of course petitioner may raise whatever objections he has. We repeat we have not expressed any opinion on this. One more point which we find strange is in the affidavit in reply filed through one Mr. Milind Jagtap, Assistant Commissioner of Income Tax Circle 24(1), Mumbai affirmed on 7th August, 2020, it is stated in paragraph no.7 that the assessee during the course of re-assessment proceedings had enough opportunity to produce the copy of amended complaint made before the Maha RERA Authorities and the assessment proceedings would have been finalized by taking cognizance of the same. However, assessee has failed to do for the reasons best known to him. We have stated it is rather strange because in the order disposing the objections the Assessing Officer acknowledges having received the amended copy of the RERA complaint. We are satisfied that the notice issued under Section 148 of the Act has to go. We hereby quash and set aside the notice - Decided in favour of assessee. 2022 (4) TMI 636 Reopening of assessment u/s 147 - Notice after expiry of four years from the end of the relevant assessment year - change of opinion - Depreciation on computer software - HELD THAT:- Coming to the reasons, the reasons recorded clearly indicate that re-opening is proposed on the basis of change of opinion which is not permissible and the reasons do not disclose that there were non disclosure of material fact by petitioner though there is general statement made that petitioner s income has escaped assessment on account of failure on the part of petitioner to disclose truly and fully all material facts. In our view, it is only made with an attempt to overcome restrictions in re-opening as per proviso to Section 147 of the Act. AO admits that in the Note 8 list of fixed assets show that during the year computer software was added and classified under the category intangible asset. According to the AO because it is intangible asset, assessee could have claimed depreciation only at 25% and not 60%. We ask ourselves what is not disclosed? - AO states it has been disclosed in the note to the Balance Sheet and it has been shown as intangible asset and after considering allowed depreciation during the original assessment proceeding at 60%. During the assessment proceedings petitioner even provided, vide letter dated 1st July, 2014, details of addition to fix assets with copies of invoices for the purchase of fixed assets. The details include the software which is the subject matter of the re-opening. Once all the primary facts are before the assessing authority, he requires further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. The explanation does not have the effect of enlarging the section, by casting a duty on the assessee to disclose inferences, to draw proper inferences being the duty imposed on the Income Tax Officer. Therefore, since the details of computer software has been disclosed and classified under the category of intangible asset in the note to Balance Sheet, it can be reasonably concluded that the duty of the assessee to disclose fully and truly all primary relevant facts has been met and it cannot extend beyond that. Once the details have been provided to the Assessing Officer during the assessment proceedings, certainly it has to be taken as having been subject of consideration during the assessment proceedings. In any case from the reasons recorded itself we are satisfied that there has been no failure on the part of assessee to disclose material facts. Reasons recorded the Assessing Officer admits that it is his change of opinion based on the same primary facts which have been considered by the Assessing Officer to complete original assessment and we say this because in paragraph no.4 of the reasons it is stated Assessee has claimed and department allowed depreciation @ 60 percent - Decided in favour of assessee. 2022 (4) TMI 635 Exemption u/s 11 - denial of exemption as Form No.10 was not filed within the stipulated time - HELD THAT:- Intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under section 11, therefore, compliance of the requirements of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment order will have to be reopened. We find that the Assessing Officer did not consider this part of the judgement hence, the order of the assessing authority is erroneous. It is also noticed that Ld.CIT(A) on this issue has merely affirmed the view of the AO without adverting to the submissions of the assessee. This approach of the authorities below is contrary to the binding precedents. Undisputedly, the assessee had filed Form No.10 before the completion of assessment. Setting off of the earlier year excess utilization of funds - As per Assessing Officer, accumulation of income in excess of 15% of the income is allowed subject to certain conditions noticed and AO noticed that the application of income fall short of benchmark of 85% - As in RAGHUVANSHI CHARITABLE TRUST AND OTHERS [ 2010 (7) TMI 158 - DELHI HIGH COURT] answered the question in favour of the assessee that whether a trust can be allowed to carry forward the deficit of current year and to set off of same against the income of subsequent years; in favour of the assessee and further question whether adjustment of deficit of current year against the income of subsequent year would amount to application of income of the trust for charitable purposes in the subsequent year within the meaning of section 11(1)(a) of the Act in favour of the assessee. Thus we direct the AO to allow the claim of the assessee regarding set off of excess utilization of funds and accumulation of income. Thus, Ground raised by the assessee are allowed. 2022 (4) TMI 634 Validity of reopening of assessment u/s 147 - Unexplained cash deposit in the bank account - It was the assessee's contention before the Assessing officer as well as the Ld. CIT(A) that the source of cash deposits was the balance of cash brought forward from earlier assessment years and that the same was duly reflected in the balance sheet which had been filed by the assessee along return of income - HELD THAT:- The assessee has filed paper books for both the years under consideration and we note that for assessment year 2010-11, the assessee had filed copy of the balance sheet for the years ending 31.3.2010 and 31.3.2011. The balance sheet as at 31.03.2010 shows the closing cash balance in hand amounting to ₹ 12,61,473.32 and during this year i.e. 2011-12, the assessee had made deposits in bank account amounting to ₹ 13,40,000/-. During this year, the assessee had also made cash withdrawals of ₹ 3 lacs of which the Assessing officer had given due credit and had proceeded to add the remaining amount of ₹ 10,40,000/- only to the income of the assessee. It is not in doubt that these balance sheets were filed before the Assessing officer during the course of assessment proceedings as well as the before the Ld. CIT(A) but the same were not considered by them while deciding on the merits of the case. Apparently, the explanation given by the assessee has been rejected without assigning any reason. To our mind, if the assessee's explanation of having the opening cash in hand was to be disbelieved, there should have been cogent reasoning behind the same. Therefore, we accept the assessee's contention that as on 31.3.2010 the assessee had a closing balance of cash in hand of ₹ 12,61,473.32 which ought to have been considered for the purposes of explaining the source of cash deposits in the bank accounts. Disbelieving the assessee's contention having earned tuition income - Again it remains undisputed that the Department has accepted that the assessee had earned tuition fee in preceding assessment years, as is evident from the copies of the assessment order passed u/s. 143(3) of the Act read with section 147 of the Act for assessment year 2010-11. Not only this, the assessee's returned income was also accepted in assessment year 2012-13 also in order passed u/s. 143 read with section 147 of the Act. Therefore, in our considered opinion, the lower authorities had no reason to disbelieve the assessee's claim of having earned tuition income in this assessment year as well for the simple reason of rule of consistency Therefore, we do not concur with the findings of the authorities below on the issue of not accepting the assessee's of having received income from tuition fee. Thus, in assessment year 2011-12, on merits, we hold that the lower authorities had no justifiable reason to make the impugned additions - Decided in favour of assessee. 2022 (4) TMI 633 Delayed deposit of employees contribution to ESI/PF - Addition u/s 36(1)(va) read with section 2(24)(x) - Deposits before the due date of filing of return u/s 139( 1) - HELD THAT:- As relying on case of LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] we direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139( 1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee. 2022 (4) TMI 632 Income accrued in India - Period of stay in India - Salary earned by the assessee in the USA from his foreign employer - taxability of global income of any individual resident - resident and ordinarily resident in India - exemption claimed under Article 16(1) of the Double Taxation Avoidance Agreement (DTAA) between India and USA - whether salary income of the assessee was taxable in USA and not in India? - HELD THAT:- Article 16 of the DTAA with USA, the salary income of a resident earned by him in other State shall be taxable in that State if such a resident is present in that other State for a period not exceeding 183 days in the relevant taxable year. The case of the assessee is that his total stay during the year was 165 days only, therefore, the salary income earned by him as per the aforesaid provisions of Article 16 was taxable in USA and not in India. This claim of the assessee has not been rebutted or denied by any of the lower authorities. Both the lower authorities have simply relied upon the provisions of section 5 and section 90 to state that since the assessee was a resident and ordinarily resident in India during the year, therefore, the provisions of DTAA would not apply in the case of the assessee. However, a perusal of section 90 read with Article 16 of the DTAA would show that section 90 did not bar in any manner the operation of the relevant provision of DTAA in respect of income earned by the assessee in other country, with whom the Central Government has entered into a DTAA. In view of this, the impugned order of the ld. CIT(A) on this issue is not sustainable and the same is accordingly set aside. The additions made by the Assessing Officer on this issue are accordingly ordered to be deleted. - Decided in favour of assessee. 2022 (4) TMI 628 Validity of reopening of assessment u/s 147 - Reassessment on the basis of information received from the ADIT (Inv.) Kolkata and ACIT New Delhi and the ITO Kolkata, regarding routing of funds in the garb of share premium - HELD THAT:- We find that the facts regarding the petitioner s dealings with shell companies for routing its own unaccounted money into its books of accounts had not been truly and fully disclosed by the petitioner during the original assessment and scrutiny assessment, though the information was embedded in the records produced before the A.O. and could be found out on a detailed scrutiny and investigation. On the basis of information received subsequently, the A.O. has formulated a reason to believe that the petitioner s income has escaped assessment and this reason cannot be said to have been formulated on the basis of information already available before the A.O. Therefore, the submission to this effect made by the learned Counsel for the petitioner cannot be accepted. Whether initiation of the proceedings u/s 147 / 148 of the Act is based on a review of the existing material, which is not permissible in law? - From the discussion made above, it is clear that the fact that the petitioner had routed its undisclosed funds through entry providers and absorbed it in its books of accounts by way of accommodation entries of pre-arranged share application money and share premium with the help of a syndicate of operators and thus an unaccounted money of the petitioner was routed to its books of accounts, had not been examined by the AO during the original assessment for want of a full and true disclosure of facts by the petitioner. Therefore, the A.O. did not examine the aforesaid issues and he did not form an opinion regarding the same during the original assessment proceedings. Keeping into view the scope of power of judicial review while scrutinizing a notice issued under Section 148 of the Act as explained in Raymond woolen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] and Phool Chand Bajarang Lal [ 1993 (7) TMI 1 - SUPREME COURT] and Srikrishna[ 1996 (7) TMI 2 - SUPREME COURT] , we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not and the sufficiency or correctness of the material need not be considered at this stage. In the instant case, the notice under Section 148 of the Act has been issued by the assessing officer after receipt of information and conducting an investigation and after forming a reason to believe that the petitioner did not truly and fully disclose all the material facts because of which income amounting to ₹ 95,00,000/- has escaped assessment. We are satisfied that there is prima facie material available on record before the assessing officer for issuing a notice for reassessment. Thus, the notice under Section 148 passed by the National Faceless Assessment Centre rejecting the petitioner s objections against issuance of the notice, do not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction. 2022 (4) TMI 627 Reopening of assessment u/s 147 - assessment of profit from sale of investment - AO held properties sold should have been treated as business income and not capital gains - HELD THAT:- The reasons to reopen is recorded after the notice has been issued. On this ground alone, the notice has to be quashed and set aside. It is also Petitioner s case that the same issue which is mentioned in the reasons for reopening was a subject matter of consideration during the assessment proceedings and the assessment order dated 20th December, 2010 in fact even discussed this item. Therefore, reopening is based on change of opinion which is not permissible. Revision u/s 263 on Assessment of profit on sale of investment - We are in agreement with her in as much as in the assessment order dated 28th December, 2010, the assessing officer has recorded that assessee has in the profit and loss account shown profit on sale of investment. He has also recorded that assessee has carried out activities only in respect of capital gains. In fact, by this conclusion he has disallowed certain expenses and has added it back to total income by assessee as per Section 37(1) of the said Act. Therefore, issue raised by the assessing officer to reopen has been in the active consideration of the assessing officer who passed the original assessment order dated 28th December, 2010. Therefore, it is a clear case of change of opinion and it is not permissible to reopen based on change of opinions. It is also correct that after the assessment order was passed, the Commissioner of Income Tax had commenced revision proceedings under Section 263 of the Act on the very same issue of profit on sale of investment and the revision proceedings were dropped by an order dated 6th March, 2013. Therefore, the same issue cannot form a reason to believe for assessment officer to issue notice under Section 148. In our view, if only this fact has been brought to the notice of the Commissioner who accorded sanction under Section 151, certainly this sanction would not have been granted. - Decided in favour of assessee. 2022 (4) TMI 626 Reopening of assessment u/s 147 - broken period interest should be treated as capital expenditure and not revenue expenditure - HELD THAT:- Having read the reasons, we are satisfied that reasons do not disclose any such non-disclosure. The reasons relied purely on the Judgment of Vijaya Bank Ltd. [ 1990 (9) TMI 5 - SUPREME COURT] and CBDT Circular and disallowance made in the assessment year 2010-11 for reopening. As regards, Judgment of Apex Court in Vjaya Bank [ 1990 (9) TMI 5 - SUPREME COURT] this Court has, in the case of American Express International Banking Corporation. [ 2002 (9) TMI 96 - BOMBAY HIGH COURT] distinguished Vijay Bank (supra) and held that broken period interest should be treated as revenue expenditure and not capital expenditure. An SLP against this Judgment in American Express International Banking Corporation (supra) was also dismissed by the Supreme Court. We note that during the assessment proceedings, Petitioner was called upon to, by a letter dated 16th September, 2010 from DCIT, to file complete details of broken period interest as on 31 st March, 2008 and also explain as to why the same should not be taken into income and taxed accordingly. Petitioner filed its response by a letter dated 11th October, 2010 and informed DCIT that Petitioner has been consistently treating the broken period interest as revenue item - Thus where a query is raised and answer is given, even if there is no discussion in the assessment order, it should be treated as having been considered by the Assessing Officer during assessment proceedings. Even reliance on the disallowance made for assessment year 2010-2011 is of no assistance to revenue because ITAT has, in its order pronounced on 12th January, 2018, relying upon American Express International Banking Corporation (supra) and other Judgments, has held that broken period interest has to be treated as revenue expenditure and not capital expenditure. Therefore, the basis for forming reasons to believe has to fail. - Decided in favour of assessee. 2022 (4) TMI 625 Reopening of assessment u/s 147 - eligibility of reason to believe - petitioner had claimed deduction on account of notional foreign exchange loss on non payment of imports - HELD THAT:- As evident from the reasons for reopening that the Assessing Officer had all material facts before him when he made the original assessment. In the reasons for reopening there is not even a whisper as to what was not disclosed. There is a specific averment in the petition that, the petitioner had truly and fully disclosed all material facts at the time of original assessment. The respondents have not traversed the said fact in their affidavit-in-reply. This is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Officer. The same is not permissible in view of proviso to section 147 of the Act. - Decided in favour of assessee. 2022 (4) TMI 624 Reopening of assessment u/s 147 - assessee has claimed deduction on account of notional foreign exchange loss - change of opinion - HELD THAT:- As held by this Court time and again and particularly in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. There can be no doubt in the present case that the very issue of foreign exchange loss was a subject matter of consideration of the Assessing Officer. It would therefore, follow that reopening of assessment by the impugned notice dated 31.03.2021 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee. 2022 (4) TMI 623 Penalty proceedings initiated u/s 221(1) - reopening of assessment u/s 147 - petitioner also filed application under Section 220(6) of the Act to seek for a stay - HELD THAT:- Mere filing of an appeal before the Appellate Authority against the order passed under Section 147 of the Act would not preclude the Assessing Authority to make a demand and also to initiate penalty proceedings. In this case, during the pendency of the appeal, the petitioner also has filed an application for stay u/s 220(6) and the said application having been considered was, in fact, rejected for grant of blanket stay only. AO has stated that, as a condition precedent if the petitioner comes forward to pay 20% of the demand, stay would be granted. The Assessing Officer would further be stated that, if at all the petitioner in order to get further ease in making payment of 20% of the demand by way of installment, that also would be considered, provided, if the assessee comes forward to make application to that effect. On seeing the said order dated 08.12.2021 passed under Section 220(6) of the Act, wherein the provision wrongly quoted as 226 of the Act, it is a reasoned order, where, the Assessing Officer, considering the facts and circumstances of the case, has used his discretion, of course, with condition which is a mandatory one that to be imposed by the Assessing Officer while exercising his discretion under Section 220(6) of the Act. On the factual matrix of the case as well as the reasonable disposal of the stay application by the Assessing Officer, this Court feels that, the judgment cited by the learned counsel appearing for the petitioner may not apply to the facts of the present case. Petitioner seems to have filed further application before the Principal Commissioner to seek for a stay and according to the learned counsel for the petitioner, it is still pending, therefore, he can very well pursue the said application. Insofar as initiating proceedings for penalty under Section 221(1) of the Act, it has made clear that, if there is any due of tax who is in default or deemed to be in default in arrears, the Assessing Officer may direct in case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct by way of penalty, but only condition is that, the penalty does not exceed the amount of tax in arrears. The proviso to Section 221 (1) says that, before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard. Only in order to comply with the said proviso under Section 221(1) of the Act, now the present notice, which is impugned herein, has been issued by the respondents. Therefore, the said notice in the legal scrutiny cannot be construed as a notice issued without jurisdiction or in violation of the principles of natural justice, hence, this Court has no hesitation to hold that, the impugned notice does not require any interference from this Court at this stage. 2022 (4) TMI 622 Addition u/s 69A - cash deposited during the demonetization period - cash sales with old currency notes - HELD THAT:- As per provisions of section 69A where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the money and the value of the bullion, jewellery or other valuable article will be deemed to be the income of the assessee of such financial year. There is no dispute that the assessee is maintaining books of account and such sales has been recorded in the books of account and from the books of account itself the CIT(A) has observed that the sales recorded by the assessee during the demonetization period was with the illegal currency therefore, section 69A could not have been invoked as section 69A clearly states that such income will be deemed to be income of the assessee where the assessee is found to be owner for a valuable not recorded in the books of account. In view of the above, the additional ground of the assessee is accepted and the assessment order passed by the Assessing Officer is quashed. 2022 (4) TMI 621 Difference of turnover - less turnover shown in income tax return as compared to service tax return - Difference of Receipt/turnover as per the income tax and as per the service tax return and as assessee has shown total receipts/turnover - HELD THAT:- The turnover reported in service tax return is not actual one as proper classification of services were not mentioned in the service tax return and his claim was proved from various other supporting documentary evidences. The difference of turnover was derived by grossing up the turnover mentioned in service tax return of first half by 50% and considered fully as works contract service liable to partial reverse charge. We find that the submission of the assessee were brushed aside by the Assessing officer and preferred calculating the turnover on the basis of service tax paid and ignoring for 26AS which is an authentic document to substantiate the actual turnover of the assessee. In the direction U/s 144A of the Act from the Addl.CIT, it was clearly directed that instead of applying statistical ratios emphasis should be given on invoices shown by the assessee and the corresponding entries in the company s ledger. We find that all those evidences were placed before the Assessing Officer and before the ld. CIT(A). Before, Ld. CIT(A) the assessee has shown total 151 invoices, which were raised by the assessee company and the said company has paid ₹ 7,85,15,834/-. The assessee has shown the same at ₹ 7,84,40,700/- and the difference is not much. CIT(A) restricted the addition to the extent of profit on such differences. The profit on such differences can be made @ 10% which will be ₹ 7,513/- and accordingly, the addition was restricted to that extent. In response to notice U/s 133(6) of the Act alongwith reply of M/s Aarti Industries, We find the in Form 26AS were furnished, the Assessing officer ignored all those details. He also ignored reconciliation and written submission filed by the assessee. The direction of Addl.CIT under section of the Act were also overlooked and given two folds justification in support of his calculation of turnover of assessee. First relates to service tax return and other is that in earlier year i.e. A.Y. 2014-15, the addition on account of less turnover shown in income tax return as compared to service tax return were made and no objection was raised by the assessee on such proposed addition and no appeal was filed by the assessee. The said justification of the assessee was also not accepted by the ld. CIT(A). CIT(A) held that merely the assessee accepted the addition in earlier year to save the cost of litigation that does not give liberty to the Assessing Officer to make huge addition without pointing out specific defects in the books of assessee or reply received from contractee party. All the payments were received from M/s Aarti Industries Ltd. either by way of account payee cheques or RTGS only. There is no occasion for earing any out of book receipts from M/s Aarti Industries. And deleted the substantial part of the addition. We find that the order of Ld. CIT(A) is also based on factual analysis of Fo-26AS as well. Appeal of the Revenue stands dismissed. 2022 (4) TMI 620 Addition u/s 36(1)(iii) - Interest on business advances - whether assessee has given utilisation of loan for business purpose and also has shown interest free loan and advances to related entities? - HELD THAT:- These advances were business advances and is covered under commercial expediency; and secondly, if the assessee had huge interest free funds which far exceeds the advances given, therefore, no deduction u/s 36(1)(iii) can be made. Here, in this case, on both the count, we hold that no disallowance can be made as these loans and advances were purely business advances which are not being rebutted by the AO except for making the disallowance on conjectures and hypothesis and what the businessman do first; and secondly, if assessee had surplus interest free funds then it can be presumed that the borrowed funds which have been utilized for some other business purpose, proportionate disallowance could be made. Accordingly, this ground raised by the Revenue is dismissed. Disallowance u/s 14A is concerned it is an admitted fact that in AY 2014-15, no exempt income has been accrued to the assessee, therefore, no disallowance u/s 14A can be made. It is an admitted fact that here, the assessee has received exempt dividend income of ₹ 6,31,308/-, out of which the assessee had made suo moto disallowance of ₹ 5,45,245/-. Ld. CIT (A) restricted the disallowance to the extent of exempt income, therefore, we do not find any reason to interfere in such a finding in the light of the judgment of Hon ble Delhi High Court in the case of Joint Investments Pvt. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] and Cheminvest Ltd.[ 2015 (9) TMI 238 - DELHI HIGH COURT] therefore, this ground is dismissed. 2022 (4) TMI 619 TDS u/s 195 - non-deduction of TDS on payment of export commission to Foreign entity in Italy - expenses incurred in foreign currency on payments made to parties outside India - HELD THAT:- The foreign entity (SPA) does not have a permanent establishment (PE) or business connection (BC) in India. Reliance placed by the Revenue on the judgment of the Hon ble Supreme Court in R.D. Aggarwal Co. [ 1964 (10) TMI 9 - SUPREME COURT] and in Fried Krupp Industries [ 1980 (5) TMI 17 - MADRAS HIGH COURT] and also on CBDT Circular 23/1969 (which stands withdrawn w.e.f. 22.10.2009) is misplaced. In both these cases the Honb le Courts observed that whether there is a business connection or not, must be determined based on facts and circumstances of the particular case. In our opinion there is nothing on record which indicates that SPA is carrying out its business in India owing to which any portion of its income can be attributed to its Indian operations. We firmly hold that there is no change in the facts and circumstances of the assessee s case in the assessment year 2014-15. The facts and circumstances remain the same as in the preceding years. Accordingly, there is no justification to interfere with the order of the Ld. CIT(A). We note that the Revenue is not in appeal against the orders of the coordinate bench in earlier years. Decided cases must be put to rest. In the absence of any change in the factual matrix and the legal position in the assessment year 2014-15, respectfully following the decisions of the coordinate bench in assessee s own case in earlier years [ 2019 (3) TMI 1969 - ITAT DELHI] and [ 2019 (1) TMI 537 - ITAT DELHI] , we reject the appeal of the Revenue. 2022 (4) TMI 618 Validity of Reopening of assessment u/s 147 - absence of sanction from the appropriate authority - reopening after a period of four years from the end of the relevant assessment year - Whether proceedings have been initiated by the AO without application of independent mind on the material? - HELD THAT:- A perusal of clause (b) of explanation-2 clearly shows that the same is applicable in a case where a return has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return - perusal of the paper book filed on behalf of the assessee shows that the original assessment has been completed u/s 143(3) on 03.12.2010 by the Income Tax Officer, Ward-13, New Delhi for the impugned assessment year. Therefore, it is clear that the AO without application of mind and on the basis of report of the Investigation Wing and without verifying the assessment records wherein, the original assessment was completed u/s 143(3), has reopened the assessment. Therefore, the very initiation of proceedings by invoking clause (b) of Explanation-2 of section 147 renders the reassessment proceedings invalid and consequently, such reassessment proceedings have to be quashed on account of non-application of mind before reopening of the assessment. AO after analyzing the various details filed by the assessee, passed the order u/s 143(3) of the Act without drawing any adverse inference in respect of amount of ₹ 15 lakhs brought from M/s Shalini Holdings Ltd. find the AO in the reasons recorded had merely stated that there is failure to disclose fully and truly all material facts necessary for the completion of the assessment for the AY 2008-09, However, he has not specifically mentioned which particular has not been disclosed by the assessee. This in our opinion does not satisfy the statutory pre-conditions provided in section 147 of the Act. As held in various decisions that the reasons must indicate how and why the assessee has failed to make the full and true disclosure of all material facts necessary for completion of assessment and mere repetition or quoting the language of the proviso is not sufficient. The basis of the averment or statement should be either stated or should be apparent or explained from the record. However, in the instant case, as mentioned earlier, the reasons do not satisfy which material facts the assessee failed to disclose during the original proceedings. AO has invoked clause (b) of Explanation-2 of section 147 of the Act, which is not applicable in the instant case and further considering the fact that the AO has merely stated that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment without specifying which material, the assessee has not disclosed, especially when every issue was examined during the course of original assessment u/s 143(3) by calling information u/s 133(6), which was complied with by the investing company, thus hold that the reassessment proceedings initiated by the AO and upheld by the Ld. CIT(A) is not in accordance with law - Decided in favour of assessee. 2022 (4) TMI 617 Validity of Reopening of assessment u/s 147 - notice in the name of company amalgamated - assessment in name of non-existing company - Addition u/s 68 - HELD THAT:- The company Savera Marketing Pvt. Ltd. ceased to exist as it was amalgamated with M/s. Shark Packaging (India) Pvt. Ltd. under a scheme of amalgamation approved by the Hon ble Delhi High Court - Amalgamated company namely, M/s. Shark Packaging (India) Pvt. Ltd. vide letter dated 18.06.2011 to the Ld. AO intimated him that M/s. Savera Marketing Pvt. Ltd. ( the assessee) has merged with M/s. Shark Packaging (India) Pvt. Ltd. pursuant to the order dated 21.01.2011 of the Hon ble Delhi High Court and requested him to cancel the PAN allotted to the assessee, M/s. Savera Marketing Pvt. Ltd. Despite this information the Ld. AO proceeded to issue notice under section 148 dated 25.03.2013 in the name of non existing company and continued the reassessment proceedings by issue of statutory notices under section 143(2) and 142(1) also in the name of non-existing company culminating in passing of reassessment order under section 147 read with section 143(3) of the Act on 10.03.2014 We have no hesitation in holding that Ld. AO was not within his jurisdiction to frame the reassessment in the name of non-existing entity and such reassessment order dated 10.03.2014 is nullity and not sustainable in the eye of law. - Decided in favour of assessee. 2022 (4) TMI 616 Estimation of profit on the suppressed sale - Additional undisclosed income - bogus/ suppressed sales - cash found during the course of search proceedings by the excise department - AO worked out the undisclosed sales applying GP rate of 10.32% on the cash seized thereafter worked out the GP rate of @25% on the said bogus/ suppressed sales - CIT-A deleted the addition - HELD THAT:- The assessee was engaged in making clandestine sale in order to avoid the excise liability. The assessee from such activity has generated the income which was the cash found during the course of search by the excise department. Thus, it is inferred that such cash was generated by the assessee from the unaccounted business sales carried out by it. It is also a fact on records that the assessee has duly complied with his commitment made before the revenue for disclosing the income of the unaccounted cash. The revenue has not brought anything on record pointing out the amount of suppressed sale exceeds what has been determined by the excise department. Thus in the absence of any contrary information, we hold that the amount of suppressed sale stands at ₹ 6,40,52,547/- which contains the amount of gross profit of the assessee not offered to tax. Be that as it may be, the income of the assessee cannot exceed the amount of cash found during the course of search by the excise department. It is for the reason that the maximum amount which was found unaccounted can only be brought to tax until and unless there is any other material found during the search suggesting that there was any other income other than the income embedded in the suppressed sales. Furthermore, the revenue has not brought any material on record suggesting that the assessee has made suppressed sales over and above the amount determined by the excise department. Thus in the absence of any information available on record, we hold that the AO has wrongly determined the gross profit by working out the suppressed sale more than the amount determined by the excise department. Thus the appeal filed by the revenue is hereby dismissed and the CO filed by the assessee is allowed. 2022 (4) TMI 615 Income taxable in India - taxing of the sale of software and subscribers as royalty income - AO had held the receipt to be royalty and taxed it @10% on the gross basis as per Article 12 in India-Netherland treaty - As submitted by assessee that payment received by the assessee did not constitute royalty and was therefore not taxable in India for the reason that the payment was for the use of a copyrighted article and not use of copyrights, the Distributors do not have the right to copy, distributors/customers do not own any of the IPR in and to the software and the software is embedded in the storage equipment and sold as a consolidated product and cannot be used separately - HELD THAT:- As decide in own case [ 2021 (9) TMI 1372 - ITAT DELHI] no addition is required to be made. Thus the grounds of assessee are allowed. Tax payable on interest income - contention of the assessee that the AO has considered it to be an interest income as referred in Section 115A(1)(a)(iiaa) of the Act and taxed it @ 40% as against the rate of 5% as envisaged under the provisions of Section 115A(1)(a)(iiaa) - HELD THAT:- In view of the agreement of Learned AR and Learned DR for restoring the matter back to the file of AO for necessary verification, we restore the issue to the file of AO for carrying out necessary verification and thereafter to bring it to tax in accordance with law. Needless to state that the AO shall grant adequate opportunity of hearing to the Assessee. Assessee is also directed to promptly furnish all the required details called for by the authorities. Thus the ground of the assessee is allowed for statistical purposes. 2022 (4) TMI 614 Revision u/s 263 - capital gains computation on the sale by the assessee of 23 acres of his land - cost of acquisition to be adopted - land being in his (including his predecessor s) possession since prior to 1.4.1981, and it was only the formal transfer of title that was completed in 1987 - section 50C applicability - HELD THAT:- The cost, upon indexation, amounts as claimed, so that the assessee had per his return claimed excess cost. The difference though nominal, which is only incidentally so, validates the invocation of s.263. The assessee s consent is again only incidental as the cost adopted by him was neither enquired into in assessment nor, consequently, substantiated. The consent by the assessee was itself given in the s.263 proceeding, so that relying thereon, even as he challenges the said proceedings, is itself anomalous. The consent is even otherwise irrelevant inasmuch as there is no estopple against law. Further, the enquiry into cost only follows that into the manner and year of acquisition in the s.263 proceedings. Lack of enquiry, as explained by the Apex Court in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] is per se a sufficient ground for assuming jurisdiction u/s. 263. Applicability of section 50C - We are unable to on the basis of the clear language of s. 50-C, draw any distinction between a genuine or a non-genuine agreement, or, those whose genuineness can be doubted and others. Rather, a non-genuine agreement, where so, has no sanctity in law, and any benefit there-under cannot be availed of under law. This is particularly so as the subject matter of s.50C is the transfer consideration (for the purpose of computing capital gains u/s. 48) and, inasmuch as it deems the same by adopting the value declared or assessed by the State for the purpose of levy of stamp duty on the transfer of immovable property, it fairly provides for a mechanism for an assessee to contest the said adoption in his case. This is even as the stamp valuation itself is guided by the consideration of fmv of the relevant property, making the provision complete and legally firm. It is for this reason that we stated the argument advanced by and on assessee s behalf to be flawed, both in law and on facts. To conclude, s.50C is clearly applicable, and which forms another reason for upholding the revision. If the amendment to s. 50C by way of first and second provisos thereto, by Finance Act, 2016, w.e.f. 1.4.2017, is prospective or retrospective? - The section, as originally cast, did not contemplate a situation where the transfer of an immovable property (IP) is not accompanied by, for any reason, execution of transfer deed. This led to an anomaly inasmuch as for such transfers it is only the stated consideration that would hold. This was met by adding the words or assessable after the word assessed in s. 50C(1) by Finance (No.2) Act, 2009, w.e.f. 01/10/2009, so that the stamp valuation as would have been applicable in respect of the transfer would get substituted as the deemed consideration. This amendment, made clearly to overcome an unintended consequence of a category of transfers, falling in the same class, escaping s.50C which seeks to provide a uniform basis for all transfers of IPs, was held as clarificatory and, thus, retrospective, by Hon'ble Calcutta High Court in Bagri Impex (P.) Ltd. [ 2013 (2) TMI 237 - CALCUTTA HIGH COURT] - The amendment by Finance Act, 2016 falls in the same series. That is, to cure the hardship caused by the transfer not taking place in the year of the (transfer) agreement fixing the value of the transfer. The same, therefore, is, to our mind, also retrospective, even as held by the Tribunal in Hansaben Bhaulabhai Prajapati [ 2017 (11) TMI 510 - ITAT AHMEDABAD] relied upon by the assessee. This gets also supported by the stipulation of the Agreement being accompanied or preceded by receipt of consideration, or part thereof, by cheque or electronically which is clearly to eschew back-dated documents. We, thus, have no doubt that the amendment by Finance Act, 2016 is retrospective, and that s.50C shall apply. Provision as it reads provides for reference to the VO in case of claim of the guideline value being in excess of the fmv as on the date of transfer, which in the instant case continues to be 28.10.2011, and not the date of the Agreement. That, however, makes the provision incoherent and internally inconsistent. When the guideline value as on the date of agreement substitutes that on the date of transfer, it is this value that would in a given case be liable to be disputed before the VO. There is nothing in the proviso to suggest restricting the exception only to cases governed by proviso to s.50C(1), and s.50C(2) is without prejudice to the entire s.50C(1). The assessee s challenge to the revisionary proceedings fails for being barred by time and, besides, is, even on merits, misconceived. As apparent from the facts discovered and found in the set-aside proceedings, as well as issues arising qua the applicability or otherwise of s.50C, discussed in detail in the instant order, prove the assessment subject to revision as being a clear case of non-application of mind by the assessing authority. The assessee s case on quantum, which is the same as found acceptance by the assessing authority at the time of the earlier assessment, is, in the main, that he was bound by the court order, which overlooks the fact that the court has only endorsed the agreement entered into by him and, two, the argument would be valid where the court had opined on the fmv which is the subject matter of s. 50C, of the subject land. The assessee s CO is supportive. The reference to the VO, sought initially by the assessee, stands abandoned in view of the stamp valuation as on the date of agreement, as against the date of transfer, having found acceptance in first appeal, which we have upheld. The AO shall, in computing the capital gains u/s. 48 on the subject land the cost of acquisition of which stands agreed to at ₹ 81,70,805, in case he has not already done so in compliance with the directions vide the impugned order, adopt the stamp valuation as of September, 2005 as its deemed sale consideration. Further, inasmuch as the sale deed in favour of OC was, despite being called for during hearing, not produced and, further, the assessee s Application before the Hon ble High Court making for sale at a total of 23.5 (instead of 23) acres of his land during the year, the AO shall bring the capital gains to tax accordingly. As explained by the Apex Court in CIT v. Walchand Co. (P.) Ltd.[ 1967 (3) TMI 2 - SUPREME COURT] the Tribunal shall deal with and determine questions which arise out of the subject matter of the appeal in the light of the evidence, and consistently with the justice of the case. 2022 (4) TMI 613 Penalty levied u/s. 271(1)(c) - HELD THAT:- The re-assessment proceedings under Section 147/148 of the Act have been held to be void-ab-initio and the additions made in quantum proceedings [ 2020 (8) TMI 896 - ITAT MUMBAI] stand deleted. Penalty order has no legs to stand. We do not find any infirmity in the order, passed by the CIT(A) deleting penalty levied under Section 271(1)(c) of the Act. - Decided in favour of assessee. 2022 (4) TMI 612 Disallowance of expenditure as capital expenditure being 25% of royalty amount paid - account of use of technical know-how and technical process of licensor - HELD THAT:- All the features of the agreement make it unequivocal that what the assessee, in essence, has acquired under the agreement is a mere right to use the licensed technical know-how in question. A mere access to the technical knowledge by virtue of such license agreement, in our view, could not permit the revenue authorities to artificially assume certain part of the expenditure as advantage of capital nature or something akin to acquisition of any asset or advantage of enduring nature for the benefit of its business. In the case in question, it cannot be said that the Sweden Company had relinquished its command over the impugned technical know-how information in favour of the assessee in any manner. In the absence of any vested advantage to assessee or any indefeasible right, it is farfetched to hypothetically presume any component of capital expenditure implicit in the outgo towards royalty. We find considerable merit in the plea of the assessee for claiming the entire royalty expenditure for use of technical know-how as revenue expenditure. We also find that the judgment rendered in the case of CIT vs. Southern Switchgear Ltd [ 1983 (3) TMI 18 - MADRAS HIGH COURT] as affirmed by SC [ 1997 (12) TMI 106 - SC ORDER] weighed in the mind of CIT(A) is in different factual backdrop with real difference. In that case, the assessee was entitled to use the benefit flowing from license even after the termination of license agreement. This feature is the dividing line for inapplicability of decision in Southern Switchgear. Hence, there is no scope of treating the royalty paid for the 'licensed information' as capital expenditure in the facts of the case. Appeal of assessee allowed. 2022 (4) TMI 611 Capital gain on sale of land - Nature of land - whether sold land is a 'capital asset' or 'agricultural land'? - whether land within area of 8 Kms from the municipal limits of Bhavnagar, is not considered 'agricultural land' for the purpose of Section 2(14)? - HELD THAT:- We are of the confirmed view that distance cannot be measured on the basis of Goggle Map. As in the present case, AO has measured the distance with the help of Goggle Map, therefore, we set aside this matter to the file of the AO to measure the distance of the land from the outer limit of Bhavnagar Municipality without political/jurisdictional map as in the relevant assessment year when assessee claimed benefit of agricultural land. Thereafter, AO shall decide the matter as per law. Appeal filed by the Assessee is allowed for statistical purposes. 2022 (4) TMI 610 Disallowance of payment of labour charges made to various labour contractors - AO observed that the assessee-company has not made payments to some of the labour contractors, because there was no verifiable evidence to support the claim of the assessee - CIT-A restricted addition to 10% - assessee company is engaged in executing contracts and subcontracts - HELD THAT:- AO without considering vital aspects has rejected claim of the assessee in a very brief and summary manner. Ld. CIT(A) while granting substantial relief to the assessee, has recorded a finding that assessee-company carried out contract works at various remote locations across the country; that gross profit during the year was higher at 26.42% as against the GP admitted in the preceding two assessment years 2008-09 and 2009- 10 at 24.17% and 17.40% respectively; that all these details were also submitted to the AO during the assessment proceedings. No such disallownaces were made in the earlier year or in the subsequent years on account of low GP rate. TDS was deducted on all payments made to contractors and their PAN were furnished except four parties; substantial payments have been made through account payee cheques. AO has not pointed out any defects in the books of accounts nor doubted nature of the work carried out by the assessee. All these vital aspects about the genuineness of the payment were not considered by the AO while making outright rejection. Therefore, considering the nature of business of the assessee, higher GP rate declared during the year, and the fact that the AO has not pointed out any discrepancies in the books of accounts maintained by the AO, the ld.CIT(A) has justified in restricting the addition to 10% of the impugned addition. - Decided against revenue. Disallowance of interest expenditure - HELD THAT:- We find that the ld.AO has made the impugned addition on some presumption and assumption that the assessee-company would have diverted interest bearing funds to non-business purpose. Such observation was not based on some material evidence. Though the assessee has furnished sufficient details to prove the case that it has sufficient interest free funds to make such investment and advances, and made for the business purpose, but the AO has not appreciated the same in right perspective. Therefore, we are in agreement with the reasoned finding of the ld.CIT(A), which is based on the appreciation of facts and figures provided by the assessee during the assessment proceedings as well as appellate proceedings. Thus, we are not inclined to disturb his order on this issue. We uphold the same. This ground is rejected. Disallowance under section 14A of the Act r.w Rule 8D - HELD THAT:- As pointed out by the assessee, when similar claim of the assessee for assessment year 2013-14 was agitated by the Revenue before the Tribunal, the Tribunal restricted the disallowance to the extent of exempt income. This decision is based on various judicial decisions, more particularly, the decision in the case of Chudgar Ranchodlal Jethalal [ 2015 (4) TMI 437 - ITAT AHMEDABAD] uphold the claim of the assessee by holding that disallowance under section 14A cannot be in excess of exempt income. DR has not disputed the same, nor pointed out any disparity of the facts or non-applicability of ratio of that decision in the instant case. Therefore, applying principle of consistency on the similar set of facts and circumstances, we are not inclined to deviate from the view taken by the ld.CIT(A) on this issue. Accordingly, we uphold order of the ld.CIT(A), and reject this ground of Revenue. 2022 (4) TMI 609 Deduction of employees contribution paid before the due date of filling of the return - HELD THAT:- As relying on LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] if employees contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowance stand deleted in all the appeals. - Decided in favour of assessee. 2022 (4) TMI 608 Delayed deposit of employees contribution to PF and ESI u/s 36(i)(va) - contributing/depositing the same before the due date of filing of return of income u/s 139(1) - HELD THAT:- We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. This issue is squarely covered by the decision of CIT, Kolkata vs. M/s Vijay Shree Limited [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] which has been further followed by case of Harendra Nath Biswas [ 2021 (7) TMI 942 - ITAT KOLKATA] . We do not accept the Ld. CIT(A) s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee 2022 (4) TMI 607 Exemption u/s 11 - cancellation of registration granted u/s 12AA - assessee society had invested in equity shares with IGL and in Zoom Enterprises Ltd.which investment was not as per the provision of section 11(5) - HELD THAT:- Appellant-society has been granted registration with the stipulation that the provisions of section 11 and 12 of the Act shall apply in the case from the assessment year 2020-21, which means the relevant financial year will be 2019-20 for which the provisions of section 11 and 12 would apply in the case of the appellant-society - A perusal of the impugned order of the Ld. CIT(E) reveals that the Ld. CIT(E) has taken cognizance of the balance sheet of the appellant-society as on 31.03.2018 which shows that the alleged investments made in equity shares were made as on 31.03.2018, which was prior to the grant of registration to the appellant-society. There is no allegation that the appellant-society has committed any violation of the provisions of section 11 and 12 of the Act after grant of registration. The order of cancellation of registration of the appellant-society, on the basis of the investments made prior to grant of registration when there was no such condition imposed on the appellant-society to comply the provisions of section 11 and 12 of the Act, cannot be held to be justified. The impugned order of the ld. CIT(E) is set aside and the registration of the appellant-society is ordered to be restored and the appeal of the appellant-society stands allowed. 2022 (4) TMI 606 Disallowance u/s. 36(1)(va) - Employee s contribution to PF/ESI paid belated under the relevant Act, although same paid within due specified u/s.139(1) - HELD THAT:- We find that the issue raised in the instant appeal regarding disallowance of employees contribution towards Provident Fund and ESI without following the provisions of section 2(24)(x) read with section 36(1)(va of the Act is squarely covered in favour of the assessee by the judgment in the case of Vijay Shree Ltd [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] and in LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139 (1) - Decided against revenue. 2022 (4) TMI 602 Reopening of assessment u/s 147 - notice after the expiry of four years - addition u/s 68 - assessee has received accommodation entry - HELD THAT:- Assessee, during the course of original assessment proceedings, vide various replies has given, the details of such unsecured loan. A perusal of the reasons recorded show that there is not even a whisper in the reasons recorded of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. As per first proviso to section 147 where an assessment u/s. 143(3) has been made for the relevant assessment year, no action shall be taken u/s. 147 of the Act after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year for the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Since the original assessment has been completed u/s. 143(3) and the reopening has been made after a period of four years from the end of the relevant assessment year and in the reasons recorded there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, we are of the considered opinion that the reassessment proceedings initiated by the AO and upheld by the CIT(A) are not in accordance with the law. Thus in absence of any allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for the completion of the assessment, no reassessment proceedings can be initiated after a period of four years from the end of the relevant assessment year when the original assessment has been completed u/s. 143(3) of the Act. We, therefore, hold that the re-assessment proceedings initiated in the instant case by the AO is not in accordance with the law - Decided in favour of assessee. Customs 2022 (4) TMI 605 Levy of penalty on Customs Broker u/s 112 (a) of the Customs Act, 1962 - It was alleged that the appellant dealt with unauthorized person instead of dealing with the actual IEC holder thereby violated KYC norms - HELD THAT:- In the present case, it is not disputed that M/s.Vaaraahi Traders are licensed to import goods and that their IE Code is valid. The case set up by the department is that the goods imported are for the use / purchase of Shri A. Govindaraj and not for the use of M/s.Vaaraahi Traders. There is no law which prohibits the importer to sell the goods to another after importing the same. It is also brought from evidence that the appellant has nothing to do with excess weight or undeclared goods in the consignment. The penalty imposed on the allegation that the goods imported are not for use of the importer but for the use / sale to another person would not attract ingredients of section 112 (a) of the Customs Ac, 1962. The penalty imposed is totally unwarranted. The impugned order to the extent of imposing penalty of ₹ 50,000/-under Section 112 (a) of the Customs Act is set aside - Appeal allowed - decided in favor of appellant. Corporate Laws 2022 (4) TMI 631 Suit seeking mandatory and permanent injunction against the defendants - seeking restraint from passing off and violating the registered trademark and trade names of the defendant no. 4 Company - seeking declaration in respect of the properties purchased by the defendants from the income and revenue of the defendant no.4 Company - Order VII Rule 10 of the CPC - HELD THAT:- Admittedly, some of the reliefs claimed in the plaint, which pertain to enforcement of intellectual property rights, can only be granted by a Civil Court and cannot be a subject matter of proceedings under the Companies Act, even as per the contesting defendants. Even if the contention of the contesting defendants is accepted that there is similarity of reliefs sought in the present suit with the relief sought under the Company Petition, whereby the defendants are sought to be injuncted from continuing or carrying out the competing businesses, it may be relevant to note that the defendants no.5 and 6, in respect of whom the present reliefs are sought, were not parties to the proceedings before the NCLT. Furthermore, there cannot be a partial rejection of a suit under the provisions of Order VII Rule 11 of the CPC. In any event, the proceedings before the NCLT had been instituted by the defendant no.7 and not by the plaintiffs herein. Just because one of the shareholders has chosen to invoke their grievance under the provisions of the Companies Act, cannot imply that another shareholder with similar grievance cannot invoke their grievance before a Civil Court, if the jurisdiction of the Civil Court is otherwise made out. In respect of the contention of the contesting defendants that the present suit, filed as a derivative suit, is not maintainable as the plaintiffs are majority shareholders in the defendant no. 4 Company, it may be relevant to note that a derivative action on behalf of a company is filed to redress a wrong done to a company by the persons in control of the company. In the normal circumstances, the company itself would have filed a suit, but is unable to do so on account of the wrong doers being in control of the company. Therefore, the concept of derivative action was derived by courts in the United States of America, where shareholders/persons file an action to redress or undo the wrong done to the company, on behalf of the company. Therefore, in reality, company is the actual plaintiff. It cannot be said that the present action is not maintainable in this regard because the plaintiffs are majority shareholders in the defendant no.4 Company. In the opinion of this Court, even though the plaintiffs have given a tentative value of ₹ 50,00,00,000/- in the plaint, that is only an estimate and cannot be a basis for the plaintiffs to be asked to pay ad valorem Court fees on the said figure. Since in the present case also, the plaintiffs have already given an estimate, they can avail the benefit the making up the deficiency once the accounts are settled and the amount is determined. In this regard, the contesting defendants reliance placed on the provisions of Order XII Rule 6 of the CPC is misplaced as there is no clearcut admission on behalf of the plaintiffs - Furthermore, the plaintiffs have undertaken to deposit such Court fees, as be directed by this Court to be paid in respect of the reliefs being sought in the present suit. Thus, the plaintiffs would only be liable to pay the Court fees upon the final determination that is arrived by the Court, of the amounts payable after rendition of accounts. The present suit cannot be rejected under the provisions of Order VII Rule 11 of CPC on account of deficiency of Court fees - Application dismissed. Insolvency & Bankruptcy 2022 (4) TMI 604 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - HELD THAT:- Upon perusal of the Documents on record and the Report of the RP, the Bench is of considered view that the Personal Guarantee of the Respondent is continuing in nature. Further, the Respondent has neither disputed the Deed of Guarantee nor denied the outstanding claimed by the Applicant/Financial Creditor. Upon bare perusal of the Report filed by the RP, this Bench has gone through the observations made by the RP with respect to the examination of the Application. The Report of the RP has recommended the admission of the Application filed by the Financial Creditor against the Personal Guarantor. There is Guarantee given by the Personal Guarantor against the default made by the Corporate Debtor for payment of debt amount and the amount of default has been above the threshold limit. Therefore, we do not have any objection on record against the application filed for initiation of IRP against the Personal Guarantor to the Corporate Debtor. The Application is complete and has been filed under the proper form. The debt amount is more than Rupees One Thousand and the default of the Personal Guarantor to the Corporate Debtor has been established. Application admitted - moratorium declared. Central Excise 2022 (4) TMI 603 Valuation - clearance of entire stock transfer of Ethyl Alchohol to Appellant s Sister Unit - inclusion of margin of profit in the cost of production or not - any under valuation resulting in a short payment of duty or otherwise? - period from November 1997 to March 2000 - invocation of extended period of limitation - Revenue Neutrality - HELD THAT:- It is found that whether assessable value for clearance of Ethyl Alcohol was inclusive of profit or not can decide the entire issue on merits of the case. When revenue is making such an allegation, the burden is on revenue only to establish this factor with sufficient evidences. Revenue has only assumed that the element of profit was not included in the assessable value, without producing any evidence in support of their allegation. The cost of production and element of profit depends on various factors prevailing in the market from time to time. Revenue has assumed and adopted cost of production ₹ 17 per Ltr for the entire period in question without showing how and which data they have relied upon to formulate such value and the charges of under valuation framed against Appellant. Certificate submitted from Chartered Accountant shows that element of profit was included in assessable value in clearance of Ethyl Alcohol to Appellant s sister unit. Certificate of Chartered Accountant could not be brushed aside, without any other reliable contra evidence. Thus, Revenue has not adduced any positive, clinching, sufficient evidence to prove case on merits in facts of this case. Extended Period of limitation - Revenue Neutrality - HELD THAT:- It is a settled legal position that Revenue cannot invoke larger period of limitation in cases involving Revenue Neutral Situation, because an assessee would not have any intent to evade payment of duty in a Revenue Neutral situation. Appellant has discharged substantial excise duty liabilities on its final product from PLA during relevant period. Cenvat of amount of duty under dispute could have been utilized by the Appellant - Show Cause Notice and demand against an assessee would not be justified, if assessee himself was entitled to avail Cenvat credit of disputed duty demanded when assessee is in a position to utilize Cenvat credit for payment of duty on clearance of their final products. The issue involved is also of pure interpretation of provisions of levy of duty including profit in assessable value in clearance of goods to sister unit for captive use. In such facts of case, it cannot be said that the Appellant had any mala fide intentions to evade payment of duty, which otherwise was available to Appellant as Cenvat Credit in sister unit and that Appellant have not suppressed assessable value with intention to evade payment of duty. There is nothing on record to show that suppression of facts or wilful misstatement were made by Appellant to evade payment of excise duty - charge of suppression or willful misstatement with intention to evade payment of duty cannot be sustained against the Appellant. Hence extended period for demand cannot be invoked. No mala fides can be attributed to Appellant for such issue of interpretation and hence extended period of time limitation is not invocable in the facts of this case. Appeal allowed - decided in favor of appellant.
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