Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 16, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Liability of GST - rate of GST - pure agent services or not - The supplier of the applicant does not fulfil/satisfy all the conditions required for being a ‘Pure agent’ in terms of the provisions of Rule 33 of the CGST Rules, 2017 and therefore, the expenditure or costs incurred by the supplier of the recipient of supply cannot be excluded from the value of supply in terms of the provisions of Rule 33 of the said rules and is liable to GST on reverse charge basis. - AAR
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Classification of goods - Flavored Milk sold under trade name of Power Sip - The word “beverage”, though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product “flavored milk” can be consumed as it is and hence is a beverage with a basis of milk. Therefore, the product is appropriately classifiable under CTH 2202 99 30. - ‘flavoured milk’ is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975 as a “beverage containing milk”. - AAR
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Classification of supply of goods - Aluminium Foil Type Winding Inverter Duty Transformer - by devising certain clauses, it is sought to bring about a splitting up of the intended purchase of the Transformer, as a one whole, into a purchase of goods and a purchase of services. However, the intended purpose to present the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running Transformer. - out of the gross value of the supply, 70% shall be deemed to be on account of goods and 30% deemed to be on account of service. Accordingly, the effective rate came to 8.9%. - AAR
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Classification of goods - HSN Code - rate of tax - Flavored Milk - ‘flavoured milk’ is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975 as a “beverage containing milk” - AAR
Income Tax
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tay of demand - whether AO can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT? - Since the Assessing Officer is exercising quasi-judicial power by virtue of Section 220(6) of the Act, the implication of the clarification of the legal position by the Hon'ble Supreme Court is that the assessing officer can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT. Reference of course has to be made if he is of the view that deposit order of a higher amount than 20% pending appeal is warranted. - HC
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Condonation of delay of 248 days in filing cross-objections - it is apparent that the ITAT has not focused on the issue of whether there was sufficient cause for explaining 248 days delay in instituting cross-objections, but rather the ITAT has faulted the assessees for not raising the issue of non-compliance with jurisdictional parameters, either soon after they received notices under Section 153C of the IT Act or before the Assessing Officer in the first instance. - HC
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Applications u/s 119(2)(b) for condoning the delay and accepting the return - The department ought to have taken a justice-oriented approach instead of taking a highly pedantic approach in refusing to condone the delay on the part of the petitioner in filing the return for the assessment year 2015-16. - HC
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Addition u/s 56(2)(viib) - Thus the issue of shares at ‘face value’ by the amalgamated company (assessee) to the shareholders of amalgamating company in pursuance of scheme of amalgamation legally recognized in the Court of Law neither falls with scope & ambit of clause (viib) to S. 56(2), when tested on the touchstone of objects and purpose of such insertion i.e. to deem unjustified premiums charged on issue of shares as taxable income; nor does it fall in its sweep when such deeming clause is subjected to interpretative process having regard to the scheme of the Act. - AT
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Penalty u/s 271(1)(c) - failure on the part of legal heir of the deceased assessee to explain the source of part of the deposits - The mere failure on the part of the assessee/legal representative to explain the deposits in the bank accounts would not ipso facto lead to the conclusion that the assessee has either furnished inaccurate particulars of income or concealed the particulars of income. The explanation during the assessment proceedings by the legal representative of the deceased assessee is bona-fide as provided in Explanation 1(B) to section 271(1)(c) - AT
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Disallowance of expenses u/s 40A(3) - ertain payments in excess of ₹ 20,000/- by cash - The assessee was bound to procure the coal to keep the furnace going to sustain the production. Therefore, procurement of coal against cash payment was a business necessity. Further, the assessee has also paid CST on purchases and the C-Form issued to the supplier is also produced before the lower authorities. - Freight inward expenses find the same is mainly related to purchase of coal. - AT
Customs
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Rejection of refund claim - Customs Duty paid in excess - period of limitation - it is crystal clear that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the said Act of 1962 will not be applicable. Therefore, the Tribunal has erred in law and fact, solely relying on Section 27 of the said Act of 1962 while dismissing the application of the appellant-Company - HC
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Valuation of imported goods - The appellant had indeed declared the value of the goods incorrectly and on being pointed out agreed to reassessment of duty and waived his right to show cause notice and personal hearing. The appellant also undertook to pay the fine and penalty. Therefore, the Assessing Officer is not required to issue a speaking order. - AT
IBC
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The NCLAT being the duly constituted Appellate Tribunal, under the IBC, is free to regulate its procedure and the manner in which it wishes to hear matters, including issuing of directions for filing of written submissions and judgments. These procedural issues are to be regulated by the NCLAT on its own. This Court does not deem it appropriate to interfere with the same - The manner in which the Petitioner seems to be making repeated representations and submissions before the NCLAT clearly shows that the Petitioner is not being bonafide in his conduct. - HC
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Approval of resolution plan - change the main business of the ‘Corporate Debtor’ form printing business to running Data Centers - Thus, it can be seen from the Sections 30(2) & 31 and Regulations 37, 38 and 39 that there is nothing in the Code which prevents a ‘Resolution Applicant’ from changing the present line of business to adding value or creating ‘Synergy’ to the existing assets and converting an obsolete line of business to a more ‘viable and feasible’ option. - AT
Service Tax
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Recovery of CENVAT Credit - recipient of service - payment of service tax under wrong head - in terms of Rue 2 (l) of CCR, the appellant is entitled to take cenvat credit of any input service, which is received, by whatever name called, which is utilised in the manufacture of dutiable goods, or providing of taxable output service - credit allowed - AT
Central Excise
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CENVAT Credit - Input service distribution - unit exclusively engaged in the manufacture of exempted goods - On perusal of the order passed by the Tribunal, it is evident that the aforesaid order is cryptic and suffers from vice of non-application of mind. The Tribunal has not assigned any reasons in respect of its finding and has merely recorded the conclusions - Matter restored before the CESTAT - HC
VAT
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Refund of Input Tax Credit - failure to reverse the input tax credit in respect of the invisible loss ratio - The petitioner himself has come forward and given in writing that the invisible loss is at 5% - the order passed by the respondent accepting the same cannot be said to suffer from any error apparent on the face of the record. - HC
Case Laws:
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GST
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2021 (4) TMI 618
Reverse Charge Mechanism - Liability of GST - rate of GST - pure agent services or not - interest on late payment of invoices of imported goods - reimbursement of Stamp tax paid as a pure agent. Whether liability to pay GST on reverse charge arises if amount is paid as interest on late payment of invoices of imported goods? - If yes, then at what rate? - HELD THAT:- The foreign buyer has tolerated the act of receiving payment after a lapse of a period of 120 days from the date of the invoice in respect of the goods supplied by them to the applicant for which interest is to be paid by the applicant. We, therefore, find that the aforementioned act will be covered under the Supply of Services under Entry No.5(e) of the aforementioned Schedule-II which reads as (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act . However, since the payment of interest made by the applicant to the foreign buyer is connected to the goods imported by them and is with regard to the late payment of the value of goods imported by them from the foreign buyer, we find it absolutely necessary to refer to Section 15 of the CGST Act, 2017 which covers the valuation aspect in respect of supply of goods and services - Sub-section (2) of Section 15 pertains to all the things that shall be included in the value of supply. On going through the said sub-section, we find that as per Section-15(2)(d), value of supply also includes interest or late fee or penalty for delayed payment of any consideration for any supply. The payment of interest by the applicant will be covered under the supply of services under Entry No.5(2)(e) of Schedule-II of the CGST Act, 2017 and is liable to GST in view of the provisions of Section-15(2)(d) of the said Act. Whether liability to pay GST on reverse charge arises if amount is paid for reimbursement of Stamp tax paid as a pure agent by M/s.Enpay, Turkey on our behalf? - HELD THAT:- In the instant case, the supplier of goods i.e. M/s.Enpay, Turkey has incurred the expenditure on stamp duty/tax on behalf of the applicant against the Corporate Guarantee entered into by them with CITI Bank for which they have raised reimbursement invoice of said payment, to M/s.Enpay, India. After going through the aforementioned provisions and comparing the same to the issue in hand, it is found that, the expenditure or costs incurred by the supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if, and only if, the supplier i.e. M/s.Enpay, Turkey satisfies all the conditions envisaged in Rule 33(i) to (iii) as well as the conditions (a) to (d) envisaged in the Explanation to Rule 33 of the CGST Rules, 2017 - taking into consideration the provisions of Rule 33 of the CGST Rules, 2017, we find that the amount of stamp tax incurred by the supplier on behalf of the applicant, shall be excluded from the value of supply, if, and only if, the supplier i.e. M/s.Enpay, Turkey satisfies all the conditions envisaged in Rule 33(i) to (iii) as well as the conditions (a) to (d) envisaged in the Explanation to Rule 33 of the CGST Rules, 2017. The supplier of the applicant does not fulfil/satisfy all the conditions required for being a Pure agent in terms of the provisions of Rule 33 of the CGST Rules, 2017 and therefore, the expenditure or costs incurred by the supplier of the recipient of supply cannot be excluded from the value of supply in terms of the provisions of Rule 33 of the said rules and is liable to GST on reverse charge basis.
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2021 (4) TMI 617
Applicability or determination of liability to pay Tax - Solar HT XLPE LT XLPE Cables - availability of benefit of concessional rate of GST @ 5% - Entry Sr.No.234 of the Schedule-I to Notification No.1/2017-Integrated Tax (Rate) - non-submission of various details - HELD THAT:- In the event of non-submission of the aforementioned documents by the applicant, it would not be possible for us to take a decision in the matter since the issue in hand covers supply of goods such as cables for the Solar Power Generating System and after going through the subject portion mentioned in the amendment of the original purchase order dated 25.12.2018, there appears to be a distinct possibility of supply of services being involved in the instant case, along with the supply of goods and in such an eventuality, the nature of the transaction as well as the aspect of GST liability thereon are likely to be completely different. There is also every likelihood of such supply of goods i.e. XLPE cables for Solar Power Generating System being accompanied by services such as assembly, installation of the cables with all fittings and accessories etc. In the instant case, we are not in a position to take any decision on the issue, since the applicant has failed to provide the documents such as contract/agreement/tender. It is thus concluded that in view of non-submission of the documents such as contract/agreement/tender as mentioned above by the applicant and without going through the conditions/provisions envisaged in the aforementioned documents, it will not be possible for us to take a decision in the matter.
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2021 (4) TMI 616
Classification of goods - Flavored Milk sold under trade name of Power Sip - to be classified under Heading 0402, Sub Heading 04029990 or not - HELD THAT:- From the constituents of the product as furnished by the applicant, it is seen that the product consists of Standardized Milk (92.00%) without removal of Fat content thereon, which is sweetened with around 8% of sugar to which color 0.08% and flavor in kesar Badam Milk 0.120%, Rose milk 0.075% and Elaichi Milk 0.150% etc. are added and is supplied in tetra packs/ Bottle after necessary processes. The products are marketed as Power Sip i.e. Flavoured milk and are ready for consumption as stated by the applicant. Comparing the product and those covered under CTH 0402/0404, it is evident that the product in hand consisting of milk flavored with Badam/Elaichi/Kesar/Rose being ready for consumption beverages based on Milk is specifically excluded under CTH 0402, as seen from the Explanatory notes to HSN of the said chapter and hence not classifiable under CTH 0402. Also the product being not Whey , the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product. Therefore, the product is not classifiable under either CTH 0402 or 0404. Classifiable under the said tariff item 22029930 or otherwise? - HELD THAT:- Other non-alcoholic beverages, not including fruit or vegetable juice of Heading 20.09 are covered under 2202.99 - Other and as per the explanation at (B)(2), the group covers beverages ready for consumption such as those with a basis of milk. The word beverage , though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavored milk can be consumed as it is and hence is a beverage with a basis of milk. Therefore, the product is appropriately classifiable under CTH 2202 99 30. The flavoured milk is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975 as a beverage containing milk under HS Code 2202.
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2021 (4) TMI 615
Classification of service - rate of tax - Works Contract - Construction service provided by the applicant in the capacity of sub-contractor to the main contractor - taxable at the rate of 12% for the period prior to 25.01.2018 or not - N/N. 11/2017-CT (Rate) dated 28.06.2017 was amended by N/N. 01/2018-CT (Rate) dated 25.01.2018 - HELD THAT:- Notification No. 01/2018-CT (Rate) dated 25.01.2018 a new entry no. 3(ix) was inserted in the principal rate Notification No. 11/2017-CT (Rate) dated 28.06.2017 vide which Composite supply of works contract as defined in Clause (119) of Section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity was made taxable @12% . The said amended Notification came into effect from the date of issue of the Notification. The said Notification is also published on the date of Notification in the Gazette of India. Further, an amendment in the Notification is prospective in nature, unless clearly specified to be clarificatory. Also the effective date of a Notification is always date of issue of Notification unless it is specified date of effect of the Notification. The Notification always came into effect from the date it was published in the Gazette of India and the subject Notification was issued in the Gazette of India on 25.01.2018 i.e. on the date it was issued. Therefore, Notification No. 01/2018-CT (Rate) dated 25.01.2018 is applicable/ came into effect prospectively and from the date of issue i.e. from 25.01.2018. The GST rate 12% prescribed under Sr. No. (ix) vide Notification No. 01/2018-CT (Rate) dated 25.01.2018 is effective from the date of issue of said Notification i.e. 25.01.2018.
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2021 (4) TMI 614
Classification of supply of goods - Aluminium Foil Type Winding Inverter Duty Transformer - classifiable under Chapter Heading 8504 or not - parts of Transformer supplied / to be supplied for initial setting up of solar project falls under Sr. No. 234 in Schedule-I to Notification No. 01/20017-Central Tax (Rate) dated 28th June, 2017 or otherwise - rate of tax. HELD THAT:- The components of the solar power plant which are essential for setting up of the power plants would also be eligible for the benefits provided to the solar power plant. Accordingly, Aluminum Foil Type Winding Inverter Duty Transformer and their parts are an essential part/ device of Solar Power Generating System and are eligible for the benefit of Sr. No. 38 of Not. No. 01/2017-CT (Rate) dated 28.06.2017. A reading of the submitted both P.O. and technical specification leads us to infer that though the Buyer intends to purchase the Aluminium Foil type Winding Inverter Duty Transformers as a whole, by devising certain clauses, it is sought to bring about a splitting up of the intended purchase of the Transformer, as a one whole, into a purchase of goods and a purchase of services. However, the intended purpose to present the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running Transformer. The clauses mentioned in Technical Specification reveal that the Supplier is involved in the process right from the early engineering period to procurement and implementation stage - it is seen that the supply of the goods and the supply of service are inextricably linked with each other. It is not that the applicant has been assigned with the work of supply of goods only. But the applicant has been given the task of setting up the Aluminium Foil type Winding Inverter Duty Transformers . Thus, though the Purchase Order s are made separately, it is one indivisible contract for the setting up of the Aluminium Foil type Winding Inverter Duty Transformers. In fact the technical specification is single for both the supply of goods and Service - thus, the work order for supply of goods and service is one whole and not separate as per the technical specification submitted by the applicant. The applicant is liable for payment of GST in terms of Explanation inserted in Entry No. 234 of Not. No. 01/2017-CT (Rate) dated 28.06.2017 vide Notification No. 24/2018-CT (Rate) dated 31.12.2018 and in terms of Serial No. 38 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 in respect of services considering the total value of both the Purchase Order - Explanation stated that out of the gross value of the supply, 70% shall be deemed to be on account of goods and 30% deemed to be on account of service. Accordingly, the effective rate came to 8.9%.
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2021 (4) TMI 595
Classification of goods - HSN Code - rate of tax - Flavored Milk - to be classified under the Tariff heading 04029990 or otherwise? - HELD THAT:- The product consists of Standardized Milk (92.1%) without removal of Fat content thereon, which is sweetened with around 8% of sugar to which color 0.08% and flavor 0.02%, etc. are added and is supplied in tetra packs/ Bottle/ Tin container after necessary processes. The products are marketed as Amul Beverages i.e. Amul Kool Flavoured Milk , Amul Kool Caf Milk shakes Sports Drink and Smoothies and are ready for consumption as stated by the applicant. Comparing the product and those covered under CTH 0402/0404, it is evident that the product in hand consisting of milk flavored with Badam/Elaichi/Kesar/Rose/Vanila/Strawberry/Mango/Lemon/Orange/Choclate/Cocoa powder being ready for consumption beverages based on Milk is specifically excluded under CTH 0402, as seen from the Explanatory notes to HSN of the said chapter and hence not classifiable under CTH 0402 - Also the product being not Whey , the plausible CTH will be 0404 90 only and there again the Explanatory notes clearly states that this heading includes products which lack one or more natural milk constituents, to which natural milk constituents are added, whereas in the case at hand, the product do not lack any natural milk constituents nor any natural milk constituents is added to the product - Therefore, the product is not classifiable under either CTH 0402 or 0404. Whether classifiable under the said tariff item 22029930 or otherwise? - HELD THAT:- Other non-alcoholic beverages, not including fruit or vegetable juice of Heading 20.09 are covered under 2202.99 - Other and as per the explanation at (B)(2), the group covers beverages ready for consumption such as those with a basis of milk. The word beverage , though not defined under CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product flavored milk can be consumed as it is and hence is a beverage with a basis of milk. Therefore, the product is appropriately classifiable under CTH 2202 99 30. Thus, flavoured milk is classifiable under Tariff Item 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975 as a beverage containing milk under HS Code 2202.
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2021 (4) TMI 569
Clandestine Removal - seizure of unaccounted/excess goods - partner and manager of the assessee could not produce any documents or records related to the finished goods found in the premises - Confiscation of goods - redemption fine - penalty. HELD THAT:- Respondent no where raised any objection of search proceedings as well as Panchnama proceedings conducted by the investigating team from which it may be inferred that the entire proceedings were conducted in transparent and fair manner. During the proceedings the physical stock was also verified and it was found excess against the entries of stock register/books of accounts. The whole proceedings were done in the presence of two independent witnesses and in the presence of employees of the respondent/assessee and on later period the Partner of the Firm had also joined the search proceedings. During the proceedings, the statement of Accountant, Manager and Partner of the Firm were recorded under Section 70 of CGST Act before the proper officer. From the above facts, it is emerged that during the search proceedings the excess stock were found against the entries of stocks register and this fact have not been objected neither by the employees of the Firm nor by the Partner of the Firm himself. This fact has also been accepted by the adjudicating authority in his findings - the adjudicating authority s finding is based are on the submission of respondent/assessee only and he grossly ignored the statement of employees of the Firm which had endorsed rather admitted by the Partner of Firm himself and in the tax matter the statement has the evidential value under the evidence Act. In the various Supreme Court judgments it has been pronounced that the statement recorded before Tax Authority is merely not a statement recorded before Police Officer but it is a piece of evidence. The statement recorded under the said provisions constitute substantive piece of evidence and can be relied in adjudication proceedings - Even if such statement is retracted or diluted in subsequent statement, it can be appreciated in light of other circumstances and evidence. Levy of Redemption Fine - HELD THAT:- The adjudicating authority has erred by holding that the seized goods is not liable for confiscation and release the same contrary to this view it is found that the respondent assessee has contravened the provisions of Section 35 of CGST Act read with Rule 56 of CGST Rules, 2017. Therefore, seized goods is liable to confiscation in terms of Section 130 (1), (ii) (iv) of CGST Act and rules made thereunder. However, since the goods has already been ordered to release the said seized goods by the adjudicating authority therefore there are no option but to impose the fine under Section 130 (2) in lieu of confiscation of the said released goods. Levy of penalty on firm u/s 122(1) (xvi) and (xviii) of CGST Act, 2017 - HELD THAT:- It has established that the assessee did not maintained the proper books of account at the time of search proceedings hence he violated the provisions of Section 35 of CGST Act and Rules made thereunder - the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case. Levy of penalty on partner - HELD THAT:- It has been established that the Partner of the firm is the key person who deals all the affairs of the Assessee firm. Therefore, he can not be escaped from any offence of the firm and it can not be imagined that without his involvement such kind of violations of the provisions of the act or rules made thereunder would be happened. Further, the Partner has himself admitted the said offence in his statement recorded under the provisions of law. Appeal disposed off.
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Income Tax
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2021 (4) TMI 612
Reopening of assessment - Assessee has erroneously applied CBDT Circular No.09/2014 dated 23/04/2014 and claimed amortization expenses for the financial year 2014-15 - As submitted that since the assessee was entitled to deduction under Section 80IA of the Income Tax Act, 1961, there was no question of any escapement of tax as increase in income by not claiming amortization would not result in the assessee paying any further tax as the same was 100% deductible under Section 80IA - HELD THAT:- Commissioner of Income Tax should have looked into the fact as to whether there could not be an escapement of tax because of the fact of the deduction available to the petitioner under Section 80IA. It is to be noted that this was the last year of deduction that was available to the petitioner out of the ten consecutive years that is available. As the reassessment proceeding is based on the fact that there was an escapement of tax, this issue was required to be answered and taken care of by the Commissioner of Income Tax. This not having been done, the impugned order is quashed and set aside with a direction upon the Officer to pass a further reasoned order after granting an opportunity of hearing to the petitioner. The Commissioner of Income Tax is specifically directed to deal with all points including the point in relation to escapement of tax because of deduction available to the petitioner under Section 80 IA of the Act.
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2021 (4) TMI 610
Stay of demand - pre deposits demand - Deduction u/s 80P - HELD THAT:- This Court by relying on the observation of the Honorable Supreme Court THE MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. [ 2021 (1) TMI 488 - SUPREME COURT] has in several such matters have directed the appellate authority to decide the appeal without insisting for either pre- deposit or for payment of tax in pursuant to the Assessment Orders. In this view of the matter as the statutory appeal is pending for consideration before the 2nd respondent, the second respondent is directed to decide the appeal expeditiously and till disposal of the appeal, recovery in pursuant to the Assessment order at Exhibit P1 is deferred till disposal of the appeal by the 2nd respondent
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2021 (4) TMI 609
Stay of demand - whether assessing officer can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT? - HELD THAT:- As in M/S. LG ELECTRONICS INDIA PVT. LTD. [ 2018 (7) TMI 1905 - SC ORDER] clarified that in all cases arising under 220(6) of the Act, it will be open to the authorities on the facts of individual cases, to grant deposit orders of a lesser amount than 20% pending appeal. This was laid down by the Hon'ble Supreme Court since it was submitted that the administrative circular will not operate as a fetter on the Commissioner since he is a quasi-judicial authority. Since the Assessing Officer is exercising quasi-judicial power by virtue of Section 220(6) of the Act, the implication of the clarification of the legal position by the Hon'ble Supreme Court is that the assessing officer can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT. Reference of course has to be made if he is of the view that deposit order of a higher amount than 20% pending appeal is warranted. Thus the order impugned in this writ petition is liable to be set aside as it is absolutely non-speaking. It is true that as pointed out by the learned standing counsel, the stay petition filed by the petitioner is equally bald and bereft of details. But as observed in Kannammal's case [ 2019 (3) TMI 1 - MADRAS HIGH COURT] , the assessing officer ought to be pro-active. The statutory provision will come into play only if an appeal has been filed before the appellate authority. The case of the assessee would definitely be projected in the appeal memorandum. Therefore, in the light of the stand taken in the appeal memorandum, the Assessing Officer can pass order by applying the trinity principles. The petition under Section 220(6) of the Act will have to be filed only before the assessing officer after filing the statutory appeal. The learned standing counsel claim that at present the assessees are indiscriminately filing the stay petitions. They move the appellate authority, the assessing officer and also the Principal Commissioner of Income Tax simultaneously. The Principal Commissioner of Income Tax is only the reviewing authority. It is only when the assessing officer makes a reference or if the assessee is aggrieved by the order passed by the assessing officer, by virtue of Circular dated 29.02.2016, the Principal Commissioner of Income Tax will get the jurisdiction to exercise his power under Section 220(6) of the Act and not otherwise. Thus the order impugned in the writ petition is set aside and the matter is remitted to the file of the assessing officer to pass orders afresh in accordance with law. The petitioner is at liberty to file a supplementary petition containing additional particulars and contentions. The assessing officer is obliged to consider all the contentions that may be raised by the petitioner while passing order under Section 220(6)
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2021 (4) TMI 605
Assessment u/s 153C - compliance or non-compliance with the jurisdictional parameters necessary to initiate action under Section 153C - Jurisdiction to initiate proceedings under Section 153C - jurisdictional issue was not permitted to be raised before the ITAT, inter alia on the ground that there was a necessity of filing cross-objections expressly raising such a jurisdictional issue and because there was no sufficient cause shown for condoning the delay of 248 days in raising such jurisdictional issue by filing cross-objections - HELD THAT:- In the present case, it is not as if the issue of non-fulfillment of jurisdictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 as also the provisions of Section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed [ 2007 (1) TMI 549 - SUPREME COURT] we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross18 objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue. Condonation of delay of 248 days in filing cross-objections - Even otherwise in the context of the substantial question of law No.4, we think that sufficient cause was made out by the Appellants to seek condonation of delay of 248 days in filing cross-objections. The application for condonation of delay was accompanied by an affidavit and there was no necessity of filing an affidavit of a legal advisor or Chartered Accountant to the effect that they had tendered some incorrect advice to the assessees. Besides, if the impugned judgment and order made by the ITAT is perused, then, it is apparent that the ITAT has not focused on the issue of whether there was sufficient cause for explaining 248 days delay in instituting cross-objections, but rather the ITAT has faulted the assessees for not raising the issue of non-compliance with jurisdictional parameters, either soon after they received notices under Section 153C of the IT Act or before the Assessing Officer in the first instance. According to us, these were not relevant considerations at the stage of deciding whether sufficient cause was shown to explain 248 days delay in instituting cross-objections. The ITAT, in this case, has failed to advert to the principles laid down by the Hon'ble Supreme Court in N. Balakrishnan [ 1998 (9) TMI 602 - SUPREME COURT] and misinterpret the provisions of section 124 of the IT act. For all these reasons even the substantial question of law No.4 is required to be answered in favor of the assessee and against the Revenue. This is assuming that there was any necessity of filing the cross-objections to raise a jurisdictional issue only to support the order of CIT(appeals) that was entirely in favor of the assesses. In paragraph 27 of the impugned judgment and order made by the ITAT, there is a reference to the ITAT specifically inquiring with the departmental representative to produce the satisfaction note recorded by the Assessing Officer of the person searched. The order records that the departmental representative submitted that the assessment files are not immediately available, but in the event, the Tribunal was pleased to admit the cross-objections, then, the same will be produced as the files were split and were at the office of the Assessing Officer at Central Circle as also the Assessing Officer of the assessee. The impugned order of the ITAT also refers to verification of certain facts in the context of action under Section 153C of the IT Act. Having regard to the aforesaid, we agree with Ms. Linhares that the matter will have to be remanded to the ITAT for fresh consideration of appeals instituted by the Revenue after permitting the assessee to raise the issue of non-compliance with the jurisdictional parameters of Section 153C of the IT Act. Accordingly, we set aside the impugned judgment and order in so far as it concerns the present assessees and remand the matters to the ITAT with a direction to permit the assessee to raise the issue of compliance or non-compliance with the jurisdictional parameters necessary to initiate action under Section 153C of the IT Act.
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2021 (4) TMI 596
Applications u/s 119(2)(b) for condoning the delay and accepting the return for the assessment years 2015-16 and 2016-17 - petitioner says that since the order passed under the provision of Section 119(2)(b) does not come within the ambit of the orders specified in Section 245 of the said Act, the said order is also not appealable - HELD THAT:- The department ought to have taken a justice-oriented approach instead of taking a highly pedantic approach in refusing to condone the delay on the part of the petitioner in filing the return for the assessment year 2015-16. The order dated 25th August, 2020 passed by the Principal Chief Commissioner of Income Tax (International Taxation), being the respondent no.1, in respect of the assessment year 2015-16 is set aside. The Principal Chief Commissioner of Income Tax (International Taxation), being the respondent no.1, is directed to reconsider the petitioner s application made for condoning the delay and accepting the return for the assessment year 2015-16. The petitioner should communicate this order to the Principal Chief Commissioner of Income Tax (International Taxation), immediately. The Principal Chief Commissioner of Income Tax (International Taxation), being the respondent no.1, should decide the matter within a period of two months from the date of being approached.
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2021 (4) TMI 593
Reopening of assessment u/s 147 - Addition u/s 68 on Unexplained cash Credit - Whether jurisdiction to the AO would lie under s.153C of the Act, if any and invocation of jurisdiction under s.147 of the Act in the case of assessee, arising from search in Venus Group, is contrary to scheme of the Act and thus devoid of legitimacy? - HELD THAT:- The debate on scope of conferment of powers under S. 153C prior to its amendment by Finance Act, 2015 was subjected to judicial scrutiny. The Courts have consistently held that the expression belongs to with reference to person other than searched person implies something more than idea of casual association and Section 153C of the Act could not be invoked in the pre amendment era unless the AO of the searched person is satisfied for cogent reason that the seized documents belong to the person other than searched person. In the instant case, no such satisfaction per se is found to have been formed by the AO of the searched person(Venus Group) and in the absence of such express satisfaction, the AO of the assessee was not vested with jurisdiction to exercise powers conferred under s.153C - AO of the Assessee was thus ousted from exercise of jurisdiction under S. 153C. In the circumstances, the AO of the Assessee has rightly resorted to S. 147 of the Act on fulfillment of stipulated conditions. The loose papers seized together with cash diary recorded by/ for the searched person are admittedly not belonging to the assessee per se although certain entries showing therein are claimed to be pertaining to / relatable to the assessee. Noticeably, the AO of assessee has explicitly stated in para 4.2 and para 9.4 of the impugned re-assessment order that seized material belongs to searched person i.e. Venus Group. In the backdrop of these facts, the plea canvassed on behalf of the assessee for availability of jurisdiction under s.153C of the Act in supersession to Section 147 of the Act does not merit acceptance. Borrowed satisfaction of the AO merely on the basis of certain information received from other AO - Satisfaction of the AO on the reasons cited suffers from the vice of non-application of mind and a mere borrowed satisfaction - On perusal of the reasons recorded for reopening of the assessment, it becomes crystal clear that certain seized papers were found from the possession of the third party i.e. searched person which alleged certain surreptitious unaccounted cash transactions between the assessee and the searched person. The AO has clearly indicated that the seized documents were duly analyzed by him. Furthermore, from para 10 of the reasons recorded, it is noticed that on receipt of the information from the AO of the searched person, a pre-verification exercise of records of the assessee was also carried out to ascertain the facts indicated in the seized material. It is only after verification of the seized documents qua the records of the assessee, the action was initiated under s.147/ s. 148 of the Act. Thus, these facts clearly suggest that the AO exerted himself on the information received from the AO of searched person and formed his own and independent prima facie belief on purported escapement of income. It is noticed that the AO has set out the facts in great length in the reasons recorded which overtly indicate the requisite application of mind reasonably expected from AO at the stage of commencement on proceedings under s.147 of the Act. In the circumstances, when seen holistically, the belief of the AO is clearly an independent belief and cannot be labeled as a borrowed satisfaction or a satisfaction without any application of mind. Change of opinion - action taken under s.147 of the Act is actuated by re-visiting an opinion already formed on the subject matter of dispute at the time of original assessment and thus vitiated on the grounds of change of opinion / review of assessment - As seen in the instant case, a search and survey was conducted at the premises of Venus Group and certain documents were seized. These documents alleged that certain clandestine transactions have been entered between the assessee and Venus Group which remained unrecorded in the regular books maintained by both the parties. Such seized material gathered in the course of search proceedings subsequent to original assessment proceedings added an entirely new dimension to the set of transactions towards credits/advances recorded in regular books by the Assessee and subjected to scrutiny earlier. The facts revealed in the seized documents/ statements claiming to reveal untruthfulness in the entries recorded by AO in regular books did not present to the mind of the AO in the course of original proceedings. The AO simply could not be expected to put blinkers on his eyes and ignore information just for the reason that the transactions through banking channel as recorded in books were earlier subjected to scrutiny. Certain element of subjectivity involved in formation of belief thus cannot overstretched at the threshold stage. Hence, the plea of the assessee that the finality of assessment earlier made under s.143(3) of the Act cannot be disturbed is totally misplaced in the wake of new facts coming to the light of the AO at the time of invoking jurisdiction. Hence, the objection of the assessee canvassed on point of jurisdiction fails on all counts. Thus, we see no error in the action of the CIT(A) in upholding the jurisdiction. Additions towards alleged unexplained cash credit u/s 68 - CIT-A deleted the addition - No doubt, the documents found possessed from the custody of a searched person may possibly operate as an estoppel against that searched person, if the circumstances so warrant, but it is unconceivable to bind a third party for such entries/diary without demonstrating cogent nexus. The whole action is in the realm of conjectures and surmises mainly on the basis of some scanty and sketchy statement yielded from the accountant of the searched person. The revenue has alleged underhand cash transactions. Hence, the primary onus in the instant case, squarely lied upon the Revenue and that to justify it with direct or circumstantial evidences. The onus rested upon the revenue has not been discharged at all and thus did not shift on to assessee. Consequently, in the absence of any credible proof of receipt of cash from assessee, the apparent has to be taken as real i.e. Sunderdeep Builders have repaid ₹ 4 Crore through banking channel in discharge of its existing outstanding liability as a matter of course. The CIT(A) has correctly appreciated the facts and circumstances in its entirety and has come to a rightful conclusion in this regard and thus exonerating the assessee from unvouched and unsupported tax liability. The CIT(A) has rightly observed that the allegation of accommodation entry is not sustainable by appreciating the fact that during the F.Y. 2008-09 relevant to AY 2009-10, there was opening receivable by the assessee from M/s. Sunderdeep Builders (Prop.-Rajesh Sunderdas Vaswani) pegged at ₹ 1 Crore which was given as a loan / advances by the assessee company through regular books of accounts prior to F.Y. 2008-09. - On holistic appreciation of factual position, we see no error in the conclusion drawn by the CIT(A).
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2021 (4) TMI 592
Addition u/s 56(2)(viib) - difference of net asset value credited in the books - excess consideration received qua face value of shares issued on account of amalgamation - CIT-A deleted the addition - whether the shares received by the amalgamating company in consideration of vesting of its assets, liabilities and undertaking in the amalgamated company pursuant to scheme of amalgamation is hit by the deeming provisions of Section 56(2)(viib) of the Act in the facts of the present case? - HELD THAT:- It may be possibly argued that Section 56(2)(viib) does not oust its applicability in the event of shares issued pursuant to amalgamation. The amalgamation is a compromise or arrangement between the parties, which inter alia includes the amalgamated company issuing the shares and the shareholders of the amalgamating company, which is supervised by the Court, in terms of the Companies Act - there is an agreement or arrangement between the amalgamated company issuing the shares and the shareholders of the amalgamating company. The clause contemplates the issue of shares and the receipt of consideration from a resident person and it is fulfilled on amalgamation. This perspective seeks to cover the issue of shares arising from amalgamation with equal measure. We may also look at the scheme of the Act in totality for contextual understanding of the issue. The Legislature has contemplated that there arises transfer of shares by the shareholders of amalgamating company in consideration of the allotment of shares by the amalgamated company and consequently with a view to neutralize tax effect, the Act provides for suitable exclusion/ exemption, from the ambit of expression transfer , under section 47(vii) which is also of deeming nature. In other words, as per the provisions of the Act, the consideration for issue of shares by the amalgamated company, in so far as the shareholder is concerned, is the shares held in the amalgamated company by way of transfer (except for the saving clause in s.47(vii) of the Act). A bare issue of shares contemplated in S. 56(viib) thus cannot be equated with a situation of transfer gathered from an intent implicit in S. 47(vii). Thus, the consideration and the issue of shares envisaged by section 56(2)(viib) is not found compatible with scheme enacted, when seen from the perspective of revenue. Thus the issue of shares at face value by the amalgamated company (assessee) to the shareholders of amalgamating company in pursuance of scheme of amalgamation legally recognized in the Court of Law neither falls with scope ambit of clause (viib) to S. 56(2), when tested on the touchstone of objects and purpose of such insertion i.e. to deem unjustified premiums charged on issue of shares as taxable income; nor does it fall in its sweep when such deeming clause is subjected to interpretative process having regard to the scheme of the Act. We see no error in the conclusion drawn by the CIT(A) in this regard. The CIT(A) in our view, has rightly found inapplicability of S. 56(viib) in the facts of the present case.
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2021 (4) TMI 591
Addition u/s 68 - assessee-company engaged during the year in raising capital by way of share capital and premium on share capital - onus upon assessee to prove identity of the Creditors/Investors, their creditworthiness and genuineness of the transaction - HELD THAT:- A.O. on going through the bank statements of both the Investors found that there is receipt of funds from some source. Thus, even the A.O. did not doubt the creditworthiness of both the Investors in the assessment order. Thus the A.O. did not doubt their source at all. The A.O. did not make any enquiry from the income tax record of both the Investor Companies. It is well settled Law that A.O. cannot ask the assessee to prove source of the source. We rely upon Judgment of Hon ble Delhi High Court in the case of CIT vs., Dwarakadhish Investment P. Ltd., [ 2010 (8) TMI 23 - DELHI HIGH COURT] , Rohini Builders[ 2001 (3) TMI 9 - GUJARAT HIGH COURT] , It may also be noted here that when the statement of one of the Director of the Investor Company was recorded, he has explained not only the source of making investment in assessee company, but, also explained the reason why it has made an investment in assessee company at premium. The assessee has explained before the authorities below the reasons for allotting the shares at premium because the assessee has purchased an immovable property in assessment year under appeal and Delhi Government has issued a Notification in the Master Plan which was about to be implemented through which the Government proposes to develop dwelling houses in low density area which would benefit the assessee and the Investors. All these explanation of assessee and Investors have not been doubted by the A.O. The Ld. CIT(A) in his findings have also categorically found that the enquiry report have not been confronted to assessee, therefore, it cannot be read in evidence against the assessee. No material is produced before us to contradict the finding of fact recorded by the Ld. CIT(A). Considering the above evidence and material on record, it is clear that A.O. did not make any enquiry on the documentary evidences filed by assessee and did not doubt the documentary evidences filed by assessee, therefore, initial onus upon the assessee to prove creditworthiness and genuineness of the transaction have been discharged by the assessee. A.O. merely doubted the capacity of the Investors because they have reported low income in their return of income. This cannot be the sole basis to doubt the explanation of assessee. It may be a suspicion of the A.O. without bringing any evidence on record. Rather the documentary evidences produced on record clearly supports the explanation of assessee. Therefore, there were no basis for the A.O. to hold that assessee failed to prove creditworthiness of the Investors. As in the case of ACIT, Central Circle-13, New Delhi vs., M/s. Supreme Placement Services (P) Ltd., New Delh [ 2021 (3) TMI 720 - ITAT DELHI] has dismissed the Departmental appeal. Considering the totality of the facts and circumstances of the case, we do not find any infirmity in the Order of the Ld. CIT(A) in deleting the addition. We, therefore, confirm the Order of the Ld. CIT(A) and dismiss the appeal of the Department.
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2021 (4) TMI 590
Penalty u/s 271(1)(c) - undisclosed interest income on the undisclosed deposits in HSBC Bank, Geneva - as per revenue assessee has deliberately concealed interest income in HSBC, Geneva - CIT-A deleted the addition - HELD THAT:- In assessee s own case for Assessment Year 2014-15 . [ 2020 (10) TMI 1238 - ITAT DELHI] wherein an identical addition on account of interest has been deleted on the ground that the ITAT had earlier deleted the addition on account of investment in the bank accounts itself. Since, we have upheld the deletion of the quantum addition by the Ld. CIT(A) in the foregoing paragraphs, there is again no reason to deviate from the findings of the Ld. CIT(A) in deleting the penalty imposed against the quantum addition. We uphold the deletion of penalty by the Ld. CIT(A). - Decided against revenue.
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2021 (4) TMI 587
Receipt on sale of carbon credit - Capital Receipt OR revenue receipt - HELD THAT:- CIT(A) has allowed claim of the assessee for exclusion of receipt from sale of CERs (carbon credit) as capital receipt by following the decision in the case of M/s. My Home Power Ltd. [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] held that carbon credit not being an offshoot of business, but an offshoot of environmental concern, amount received on transfer had no element of profit or gain. The Hon'ble Jurisdictional High Court of Madras in the case of Ambika Cotton Mills Vs ACIT [ 2014 (3) TMI 428 - ITAT CHENNAI] had considered an identical issue and held that sale of carbon credit is to be considered as capital receipt. The Hon'ble High Court of Madras in the case of M/s. S.P. Spinning Mills Pvt.Ltd. [ 2021 (1) TMI 1081 - MADRAS HIGH COURT] had once again reiterated its earlier findings in the case of Ambika Cotton Mills Vs ACIT [ 2014 (3) TMI 428 - ITAT CHENNAI] and held that receipt by way of sale of carbon credit will not fall within the definition of total income and the same cannot be included u/s. 80IA of the Act. The sum and substance of ratios of the Hon ble High Courts are that receipt by way of sale of carbon credit is a capital receipt and cannot be included in taxable income. The learned CIT(A) after considering relevant facts and also by following certain judicial precedents has rightly directed the Assessing Officer to treat sale of carbon credit as capital receipt and not liable for tax. Appeal filed by the revenue is dismissed.
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2021 (4) TMI 586
Penalty u/s 271(1)(c) - failure on the part of legal heir of the deceased assessee to explain the source of part of the deposits - penalty levied for furnishing inaccurate particulars of income or for concealing particulars of income - as argued Assessing Officer has not initiated the penalty proceedings for a definite default or a correct charge against the assessee - HELD THAT:- Assessing Officer has recorded the satisfaction by citing a definite charged against assessee for concealment of particulars of income. In the show cause notice issued u/s 274 r.w.s. 271 dated 31.12.2010 the Assessing Officer has initiated penalty proceedings on the charge you have concealed the particulars of your income or furnished inaccurate particulars of such income . It is clear from the show cause notice that the Assessing Officer not specified the charge for which the penalty proceedings were initiated. Even the Assessing Officer was not sure about default/ charge at the time of issuing the show cause notice. Finally, the Assessing Officer has levied the penalty u/s 271(1)(c) by recording his finding that the assessee has filed inaccurate particulars and concealed income. The Assessing Officer has levied the penalty on both charges i.e. inaccurate particulars of income and concealment of income. In the bank account, the Assessing Officer made the addition. Hence, the addition was not made because of the reason that the assessee has concealed the particulars of income but it is only because of the reason that the legal representative/the widow of the deceased assessee could not explain the source of part of the deposits made in the bank account by deceased assessee. The Assessing Officer has accepted the contract receipt and garment business receipt and therefore, it cannot be ruled out that the deposit which could not be explained by the widow of the deceased assessee may be available as cash opening balance as the assessee was doing the business. Therefore, merely because the legal representative of the assessee failed to explain the deposits in the bank account would not ipso facto lead to the conclusion that it represents an undisclosed income or concealed income. The particulars regarding deposits as well as the contract receipt and business receipt were all explained and available with the Assessing Officer and therefore it is not a case of concealment of particulars of income but it may be a case of furnishing inaccurate particulars of income. Assessing Officer has recorded the satisfaction for initiation of penalty on incorrect charge and the penalty was also levied for an incorrect charge of inaccurate particulars of income and concealment of particulars of income which is not possible in the case of the assessee when the addition was made in respect of only one issue i.e. the source of deposit in the bank account. Thus initiation of penalty by the Assessing Officer without specifying the charge in the show cause notice and finally levying the penalty u/s 271(1)(c) against the incorrect charge renders the impugned order by the Assessing Officer as not sustainable in law and liable to be quashed. Even on the merits of levy of penalty it is pertinent to note that the assessee has furnished all relevant details which were verified and examined by the Assessing Officer and the addition was made by the Assessing Officer due to the reason that the legal heir of the deceased assessee could not explain the part of the deposits made in the bank accounts. The mere failure on the part of the assessee/legal representative to explain the deposits in the bank accounts would not ipso facto lead to the conclusion that the assessee has either furnished inaccurate particulars of income or concealed the particulars of income. The explanation during the assessment proceedings by the legal representative of the deceased assessee is bona-fide as provided in Explanation 1(B) to section 271(1)(c) - Decided in favour of assessee.
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2021 (4) TMI 584
Disallowance of expenses u/s 40A(3) - assessee has made certain payments in excess of ₹ 20,000/- by cash other than by account payee cheque or bank draft or pay order and, therefore, has violated the provisions of section 40A(3) - CIT(A) upheld the action of the AO in respect of payment on account of freight charges, on account of purchase of coal and on account of machinery repairs - HELD THAT:- So far as the purchase of coal for ₹ 13,16,786/- is concerned, I find, out of the total purchase of ₹ 13,70,16,762/-, the cash purchases are only to the tune of ₹ 13,16,786/-. - we find merit in the submission of the ld. Counsel that at certain times the coal has to be purchased through the agents which was supplied through the truck drivers of the suppliers. The assessee was bound to procure the coal to keep the furnace going to sustain the production. Therefore, procurement of coal against cash payment was a business necessity. Further, the assessee has also paid CST on purchases and the C-Form issued to the supplier is also produced before the lower authorities. The purchases are reflected in the VAT returns of the assessee and the VAT authorities have not found any discrepancy in the VAT/CST assessment for F.Y. 2015-16. Further, the purchase of coal has not been disputed or doubted by the lower authorities for which the genuineness of the purchase is also not in doubt. Agra Bench of the Tribunal in the case of New Kalpana Ent. Udyog [ 2020 (3) TMI 672 - ITAT AGRA] under somewhat identical circumstances, have held that the payment made to the coal agents for purchase of coal and payment made to truck drivers for freight should not be disallowed u/s 40A(3) r.w. Rule 6DD of the IT Rules - we hold that the order of the CIT(A) sustaining the disallowance u/s 40A(3) of the Act is not justified. Accordingly, the same is directed to be deleted. Freight inward expenses find the same is mainly related to purchase of coal. As find, merit in the argument of the ld. Counsel that the assessee had to pay the cash to the truck drivers for expenses of freight on purchase of coal as a compulsion and exigency of transaction. Further, the lower authorities have not disputed the genuineness of the payment on account of freight charges since no disallowance has been made - we also find merit in the argument of the ld. Counsel that as per the proviso to section 40A(3) in the case of payment made for plying/hiring or leasing goods carriages, the provisions of sub-section (3) and 3A shall have effect as if for the words twenty thousand rupees , the words thirty five thousand rupees have been substituted. From the details furnished by the ld. Counsel, find, most of the payments are below ₹ 35,000/-. In view of the above and in view of the decision of the Agra Bench of the Tribunal in the case of New Kalpana Ent. Udyog vs. ITO (supra) in the preceding paragraph direct the AO to delete the addition. Machinery repair - out of the total machinery repairs of ₹ 27,49,934/- only ₹ 1,72,408/- had been incurred by the assessee in cash. In my opinion, the explanation of the assessee that certain expenses had to be incurred in cash due to certain breakdown of the machinery that requires immediate repairs by replacement of parts to make the machine functional to avoid production loss, is a commercial expediency and the genuineness of the expenditure has not been doubted. I, therefore, hold that due to the extraordinary nature of the expenditure the technicalities should not stand in the way and the disallowance u/s 40A(3) is uncalled for. Disallowance on account of mobile phone - find merit in the argument of the ld. Counsel that the phone was shown in the balance sheet as a capital asset and was not claimed as an expenditure. The Hyderabad Bench of the Tribunal in the case of Kalyan Constructions [ 2018 (8) TMI 194 - ITAT HYDERABAD] has held that provisions of section 40A(3) do not apply to purchase of an asset. Respectfully following the said decision, I hold that the disallowance u/s 40A(3) of the Act on account of purchase of mobile phone shown in the balance sheet as an asset is uncalled for. Accordingly, the order of the CIT(A) sustaining the disallowance u/s 40A(3) on account of purchase of mobile phone for ₹ 32,400/- is set aside and the AO is directed to delete the addition. Appeal filed by the assessee is partly allowed.
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2021 (4) TMI 581
TP Adjustment - assessee included voluntary addition for computing ALP of the transaction - HELD THAT:- Under section 92C of the Act, when assessee enters into an international transaction with its associated enterprise, the arms length price of the transaction is to be computed as per section 92C by the Ld.TPO, in the hands of assessee - section provides computation of income from international transaction having regards to the arm s length price. Such income if any, so computed by the Ld.TPO in respect of the international transaction between assessee and the associated enterprise is notional income in the hands of assessee which is as per section 92C(4) of the Act. However in the present case, it is not the Ld.AO/TPO but the assessee who was offered voluntarily additional income for computing ALP of the transaction in the revised return during the transfer pricing proceedings. Therefore, in our view such additional income cannot be ignored for computing the proposed adjustment in respect of the international transaction by the Ld.AO/TPO. Disallowance u/s 10A regarding the voluntary income offered by assessee for computing the transfer pricing adjustment - HELD THAT:- As the first proviso to section 92C(4) of the Act is evidently applicable only to situations where adjustment to the ALP is made by the Assessing Officer/TPO/Ld. DRP and not to the voluntary adjustment made by the assessee itself. We note that, various Hon ble High Courts and the coordinate Benches of the Tribunal have allowed revised enhanced deduction u/s 10A of the Act on the additions to the income made during the revised return/course of assessment. Further, we also note that, if the legislature intended to treat the adjustments made by the Assessing Officer at par with the voluntary adjustment made by the assessee, the same would have been expressed, and section 92C(4) would not have referred to computation of income made by the Assessing Officer in terms of the ALP determined u/s 92C(3) based on enhanced income. We therefore find merit in the arguments advanced by the Ld.Counsel in this regards. It is an admitted fact that the voluntary TP adjustment has been made through a disclosure in Form 3CEB and is not an adhoc addition in the revised return of income. The Ld.Counsel submitted that this fact is verifiable, as the amount voluntarily disclosed is supported by invoices issued to the AE, against which money has been received in India. The observations of the DRP that, the voluntary TP adjustment offered by assessee has been allocated as in eligible expenditure to STPI units, eligible for deduction under section 10A of the Act. The relevant computation of deduction u/s.10A has been reproduced by the DRP in para 3.1.1.4 which has been reproduced herein above. We note that submission needs to be verified by Ld.AO. On one hand Ld.Counsel submitted additional income is supported by invoices raised by assessee on AE, on the other hand, assessee has declared the additional income offered as inadmissible expenditure. We accordingly, direct the Ld.AO to verify the claim in the light of supporting documents. AO shall verify the basic requirements that needs to be qualified for the voluntary TP adjustment to be eligible for deduction under section 10 A of the act, even though assessee has located it as inadmissible expenses to the respective STPI units. In the event assessee is able to establish the foreign exchange having received in India to the extent of voluntary TP adjustment made by assessee, the deduction cannot be denied on such voluntary adjustment. In support we rely on the decision of Hon ble Supreme Court in case of CIT vs Yokogawa,[ 2016 (12) TMI 881 - SUPREME COURT] and case of Karle International Pvt.Ltd [ 2020 (9) TMI 968 - KARNATAKA HIGH COURT] and to grant deduction in accordance with law having regard to the ratio laid down by various (High Courts) and coordinate benches of this Tribunal in the decisions relied on hereinabove. Assessee is directed to file all relevant information/details in support of its claim based on which the Ld.AO shall carry out necessary verification. Comparable selection - exclusion of Larsen and Toubro Infotech Ltd. and ICRA Techno Analytics Ltd. - HELD THAT:- Assessee is engaged in provision of software development and related services, thus companies functionally dissimilar with that of assessee need to be deselected from final list. High turnover comparable too need to be removed. We direct Ld. AO/TPO to exclude Larsen and Toubro Infotech Ltd., on the issue of application of upper turnover filter from the finalist. ICRA Techno Analytics Ltd. (seg) - As assessee before us is a captive service provider who performs software development services only for its AE under a specified contract the comparable alleged for exclusion is in diversified activities for which segmental details are not available.Under such circumstances we do not find it to be a fit comparable for computing ALP of the international transaction with a captive service provider. Respectfully following the above view, we direct Ld.TPO to exclude this comparable from final list. Negative working capital adjustment granted by Ld. AO - Rule 10B(3) of the Income-tax Rules, 1962, supports the said action of the Ld.TPO in granting working capital adjustment. In the following decisions rendered by coordinate bench of this Tribunal in case of, TNT India (P.) Ltd. [ 2011 (3) TMI 560 - ITAT BANGALORE] AND APIGEE TECHNOLOGIES (INDIA) PVT. LTD [ 2015 (9) TMI 1547 - ITAT BANGALORE] it has been held that positive adjustment towards working capital differences between the assessee and the comparables should be considered and appropriate adjustment granted in arriving at the profit margins of comparable companies for the purpose of comparison. Respectfully following the same, we direct the Ld.AO/TPO to grant positive working capital adjustment in actuals for determined in the profit margin of comparables. Non grant setting off of business loss pertaining to Noida unit against income chargeable to tax under the head profits and gains from business and profession after the claim of deduction under section 10 A for Bangalore and Pune units - HELD THAT:- As relying on M/S. KARLE INTERNATIONAL PRIVATE LTD, [ 2020 (9) TMI 968 - KARNATAKA HIGH COURT] we are of the opinion that assessee has to be allowed inter-unit set off of loss. Disallowance deleted made under section 40(a)(ia) of the Act for non-deduction of TDS towards purchase of software - HELD THAT:- As decided in own case we are of the considered once the assessee has capitalized the payment in question, then even the assessee has not deducted tax at source on such payment, the provisions of section 40(ia) cannot be invoked for disallowance of the claim of depreciation. Grant of sublease expenses as deduction under section 57 (iii) from the sublease income under the head income from other sources - HELD THAT:- We direct the Ld. AO to examine as to whether the sum claimed as deduction has also been claimed as deduction while computing profits of the STPI unit. The AO shall verify this aspect then decide on whether the claim of assessee for deduction can be allowed after affording proper opportunity of being heard in accordance with law. Computation of deduction u/s 10A - Reduction of communication expenses, insurance expenses and expenditure incurred in foreign currency from export turnover - HELD THAT:- Respectfully following the view taken in HCL TECHNOLOGIES LTD. [ 2018 (5) TMI 357 - SUPREME COURT] we are of the view that communication expenses, insurance expenses and expenditure incurred in foreign currency are to be excluded both from the export turnover and total turnover.
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2021 (4) TMI 580
Disallowance of commission - Non - appearance of the said commission agents in person before the Ld. AO - AO Disallowed the commission payments claimed by the assessee based on the assessment order for the Assessment Year 2011-12 - On appeal, the Ld. CIT(A) deleted the additions made in that year - HELD THAT:- CIT(A) had deleted the addition based on the findings of his predecessor for the Assessment Year 2011-12 [ 2018 (11) TMI 1843 - ITAT KOLKATA] wherein held is empowered under the law to take necessary action against these commission agents for non-compliance to the summons issued to Section 131 of the Act. The Statute provides for relevant remedial measures thereon. The Ld. AO without resorting to such measures, cannot proceed to disbelieve the claim of commission paid by the assessee when the same are supported by various documents and confirmed by the said parties. In the instant case, the primary onus has been duly discharged by the assessee proving the claim of commission payments made by the assessee. There is absolutely no reason for the Ld. AO to doubt the veracity of the said transactions. Admittedly none of the commission agents were relatives of the assessee or interested parties with the assessee so as to allege some mala fide on the part of the assessee. Hence, in our considered opinion, there is no case made out by the Ld. AO to treat the commission transactions as ingenuine transactions in these facts and circumstances.. Non - appearance of the said commission agents in person before the Ld. AO would not make the transaction of payment of commission as ingenuine. Hence, we hold that the Ld. CIT(A) had rightly deleted the disallowance of commission made by the Ld. AO The ld. D/R could not distinguish these case law on facts. Hence we find no infirmity in the order of the ld. CIT(A) on the issue of addition of commission payments and uphold the same and dismiss this ground of the revenue for both the Assessment Years. Unsecured loans - Unexplained cash credit U/s. 68 - HELD THAT:- As decided in assessee's own case confirmation and details chart were field before the AO at the time of both the remand proceedings. The AO did not made any specific addition on unsecured loans and only addition of difference of opening and closing balance were made by him. There is no adverse comments made by the AO on merit on the loans and no specific negative observation were made on the addition as made by him in the assessment order. In view of above; the AO is directed to delete the addition. Unexplained cash deposits in banks - HELD THAT:- The Ld. CIT(A) has given a factual finding that all these cash deposits in bank, were recorded in the regular books of accounts and the details of the same furnished to the Assessing Officer. As these deposits are part of the regular books of accounts, the addition was deleted by the Ld. CIT(A). We find not infirmity in the same. Thus, we uphold this factual finding of the Ld. CIT(A), which is not controverted by the Ld. D/R and dismiss this ground of the revenue for both the Assessment Years. Unexplained trades payable - Trade payables arise on account of credit purchases of goods or services. The purchases and sales of the assessee were not disturbed. The arbitrary addition has be made of the trade creditors. Even credit purchases made from ITC Limited, were added. This is highly arbitrary - HELD THAT:- As decided in own case name and addresses were again filed along with the written submissions twice at the time of remand report stage. These creditors also appeared in earlier years and their addresses were available in the list for the assessment year 2011-12 and 2013-14 yet no verification was made it the time of assessment and no adverse comment have been made in the remand report. The AO did not made any specific addition on trade payables and only addition of difference of opening and closing balance were made by him. There is no adverse comments made by the AO on merit on the trade payables and no-specific negative observation were made on the addition as made by him in the assessment order. In view of above, the AO is directed to delete the addition. Addition on account of estimation of profit - HELD THAT:- As decided in own case AO did not mentioned in his order what are the mistakes in the books of accounts of the appellate company, the AO has also not pointed out the issues of deviation from the method of accounting provided in section 145(1) or income has not been computed in accordance with the standard notified under section 145(1) of the act. There was nothing on record to show that the assessing officer come to the conclusion that the books of accounts maintained by the appellate were incorrect, incomplete, unreliable and consequently liable for rejection. The gross profit of the appellate company for the year 2013-14 was 4.30 % as against the gross profit of 4.08% in the preceding year i.e. 2011-12 and it was 4.10% in the year 2014-15. The AO has also separately added ₹ 69,70,413/- as income from other sources which was part of the business receipts. In fact, in the comparative statement filed before the AO as called for by him, the computation of net profit and gross profit have been made by including such income. The AO should have started his computation or the return income and further add all the addition/disallowance made by him in the assessment order. Keeping in view of above, the AO is directed to delete these addition Addition on account of current liabilities - HELD THAT:- The elaborate submissions have been made in the written submissions filed twice and all the details and evidences were filed. No adverse comment has been made in the two remand reports. Details of each and every item and head wise detail of the current liabilities was filed. Each and every head of the current liability was explained in the written submissions filed twice. There is no adverse comment of the AO. No such additions were ever made. The details of other current liabilities were again filed along with the written submissions twice at the time of remand report stage. The AO did not made any specific addition on trade payables. There is no adverse comments made by the AO on merit on the other current liabilities and no specific negative observation were made on the addition as made by him in the assessment order. In view of above, the AO is directed to delete the addition.
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2021 (4) TMI 576
Depreciation @ 60% on STBs - HELD THAT:- As decided in own case [ 2020 (5) TMI 190 - ITAT CHANDIGARH] wherein held that Transaction of acquiring of STBs by the assessee was a loan/financial transaction meaning thereby the STBs were purchased by the assessee to put to use in its business. STBs are further given to the consumers on hire purchase agreement which are deemed to be sold to the consumers after three years from the date of delivery/installation - assessee had put the STBs in its business from the date it acquired/purchased the same. In view of this, the assessee is entitled to deprecation irrespective of the date of installation of STBs in the premises of the consumers. This issue is accordingly allowed in favour of the assessee. Addition of the total interest claimed by the assessee - HELD THAT:- As decided in own case [ 2020 (5) TMI 190 - ITAT CHANDIGARH] Counsel has demonstrated that there were sufficient own funds available with the assessee company in the form of share capital and reserves to meet the advance given - During the year relevant to the assessment year under consideration, the assessee has shown capital work in progress amounting to ₹ 2,32,75,003 but had not capitalized the interest on the same for the reason that the appellant had huge interest free reserves and own funds. As pointed out by the ld. CIT(A), ld. AR demonstrated during the appellate proceedings that the assessee had share capital and reserves to the tune of ₹ 145.34 crore and ₹ 63.52 crore respectively to meet the capital work in progress. Since, there is no material change in the facts of the present case, the Ld. CIT(A) has rightly deleted the addition made by the AO by following the decision of the coordinate Bench. In our considered view, the findings of the ld. CIT(A) are in accordance with the decision of the coordinate Bench rendered in the assessee's own appeals for the assessment years 2012-13 to 2015-16. Addition u/s. 14A - Sufficiency of own funds - HELD THAT:- As decided in own case [ 2020 (5) TMI 190 - ITAT CHANDIGARH] no disallowance is attracted u/s. 14A of the Act in case the assessee has not earned any income not forming part of the total income. This issue is accordingly decided in favour of the assessee Depreciation on the custom duty component and all incidental costs for acquiring assets from CISCO - AO observing that since the assessee has claimed depreciation it cannot claim deduction u/s. 37 of the Act for the amount of lease rent paid to CISCO - HELD THAT:- As decided in own case The assessee is entitled only to claim interest paid as part of the said lease rentals as expenditure u/s. 36(1)(iii) of the Income Tax Act. The assessee, in view of the discussion made above, is not entitled to claim the principal component of alleged lease rent paid as 'revenue expenditure' u/s. 37(1) of the Act. However, the assessee is also entitled to claim depreciation on the said assets purchased from borrowed capital. - Decided against assessee.
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2021 (4) TMI 573
Excess depreciation on plant and machinery - assessee company derives income from the business of Sea foods/Prawn culture/Production and export - HELD THAT:- As perused the observations of the coordinate bench of the Tribunal in the case of M/s Bikanervala Foods Pvt. Ltd [ 2018 (5) TMI 626 - ITAT DELHI] wherein the Tribunal observed that additional depreciation is allowable u/s.32(1)(iia) of the Act even if the assessee is engaged in processing of food products on items directly not linked to manufacturing activities. As per our considered opinion, prawn is a part of food. Respectfully following the above observations of the coordinate bench of the Tribunal, we held that the assessee is eligible for claiming addition depreciation. Accordingly, we allow the sole ground raised by the assessee. Consequently, appeal of the assessee is allowed.
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2021 (4) TMI 572
Disallowance of interest u/s 14A - HELD THAT:- This issue is no longer res-integra and has already been decided in the earlier years in the assessee s own case by the Tribunal as well as by the Hon ble High Court of Uttarakhand [ 2013 (12) TMI 1711 - UTTARAKHAND HIGH COURT ]. We have also perused the impugned order of the CIT(A), wherein the factual aspects of the dispute have been outlined. The submissions of the assessee, noted by the CIT(A) and which have not been controverted before us, clearly establish that the interest free funds available with the assessee bank were in excess of the investments in the tax free securities in question and, therefore, the disallowance out of interest made by the Assessing Officer has been rightly deleted by the CIT(A). In this view of the matter, we hereby affirm the order of CIT(A) and Revenue fails on this aspect. Allowability of claim of deduction u/s 36(1)(viia) and Section 36(1)(viii) - HELD THAT:- As it is seen that the controversy regarding the quantum of eligible deduction allowable to a banking company under Section 36(1)(viia) and 36(1)(viii) of the Act has been decided by the Delhi Bench of the Tribunal in Tourism Finance Corporation of India Limited (supra), which has since been applied by the first Appellate Authority. No decision to the contrary has been brought to our notice, rather, the spirit of the judgment of Hon ble Supreme Court in the case of Catholic Syrian Bank Ltd. [ 2012 (2) TMI 262 - SUPREME COURT ], in our view, clearly supports the conclusion drawn by the learned CIT(A). Moreover, there is also no controversion to the assertions of the learned Representative for the respondent-assessee that in Assessment Years 2012-13 and 2014-15, the Assessing Authority itself has accepted the stand of the assessee and that such assessments have since become final. In this view of the matter, we hereby affirm the order of learned CIT(A) on this issue. Thus, the Revenue fails on this aspect.
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2021 (4) TMI 570
Disallowance being 35% of the remuneration paid to one of the director Ms. Pallavi Luthra of the assessee u/s 40A(2)(b) - HELD THAT:- Referring to submissions made by the assessee highlighting qualifications and work assigned to her, it is surprising to note that the Revenue has accepted working of Ms. Pallavi Luthura as a Director and allowed 65% of the amount paid to her but it is beyond comprehension as to how they had reached the conclusion that out of the 100% of the work assigned to Ms. Pallavi Luthura by the assessee company, 35% of the same was found ingenuine. The entire disallowance is on the basis of conjectures and surmises. AO also brought on record the fact that Ms. Pallavi Luthura was Director having 50% of the shareholding in another company called Cloud Cuckoo Farm during the year under assessment but assessee stated that Cloud Cuckoo Farm s profit is nil and brought on record its balance sheet in additional evidence. Again, it is surprising to disallow 35% of the remuneration, particularly when genuineness of the job profile has not been questioned, merely on the ground that Ms. Pallavi Luthura was a Director in Cloud Cuckoo Farm. It is also a matter of fact on record that Ms. Pallavi Luthura was a whole time director in the assessee company and was paid remuneration for the work assigned to her during the year under assessment. Merely on the basis of conjectures and surmises, provisions contained u/s 40A(2)(b) cannot be allowed to be invoked particularly when genuineness of the services rendered are not in dispute. So, we are of the considered view that AO as well as ld. CIT (A) have erred in disallowing the remuneration to the tune of 35% paid to Ms. Pallavi Luthura by the assessee company, hence ordered to be deleted. Appeal filed by the assessee is allowed.
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Customs
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2021 (4) TMI 608
Validity of SCN issued - SCN issued inspite of certificate of origin issued by the Ministry of Foreign Affairs - the case is that the show cause notices make holes in the authenticity of the certificate of origin that has been issued and other document that has been issued by the suppliers of Bangladesh - HELD THAT:- Subsequent to the judgement of the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , the D.R.I. has lost its authority to issue any show cause notice under Section 28 of the Customs Act, 1962 - there appears to be a prima facie case for staying the show cause notice following the judgement in M/s. Canon India Pvt. Ltd. Let affidavit-in-opposition be filed within four weeks, reply thereto, if any, two weeks thereafter. Let the matter appear in the combined monthly list of July, 2021.
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2021 (4) TMI 603
Seeking Mandamus forbearing the respondents i.e. the Commissioner and Assistant Commissioner of the Customs Department/R1 R2 as well as the Regional Manager of the MSTC Limited, Chennai/R3 from auctioning and selling the property - HELD THAT:- An order has been passed on 29.03.2021. The order is to the effect that 50% of the property does vests with the petitioner and his wife and the auction proposed is only in regard to the remaining portion that vests with the petitioner's brother and his wife. With this, the Mandamus sought for is achieved and the writ petition is disposed recording the aforesaid submissions and confirmation of the learned Counsel for R1 R2. Learned counsel for the petitioner at this juncture refers to the Customs (Attachment of property of Defaulters for Recovery of Government Dues) Rules, 1995 stating that where the property is jointly owned by the defaulters along with a third party, the same can only be attached to the extent of the defaulters' share and in any event, cannot be alienated. Let the aforesaid submission be putforth to the Customs authorities for their consideration, prior to proceeding with the proclamation, if at all. Petition closed.
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2021 (4) TMI 598
Rejection of refund claim - Customs Duty paid in excess - period of limitation - refund application filed on 06.01.2010 by appellant before the Deputy Commissioner of Customs, Refund Section, Bangalore - compliance with the period of limitation specified under Section 27 of the Customs Act, 1962 or not - HELD THAT:- In the present case, duty of customs payable on the transaction in question under the statute is ₹ 4,743/-, which has been admitted by the respondent and on account of erroneous calculation, the duty has been paid in excess to the tune of ₹ 42,26,975/-. The Authorities have turned down the claim of appellant on the ground of limitation. The claim of the appellant could have been corrected and the Tribunal has erred in observing that the payment of excess duty requires to be rectified under Section 154 of the said Act of 1962. The Authorities ought to have refunded the said excess amount to the appellant- Company either upon their application or on an application made by the importer. In the case of Mafatlal Industries Ltd. [ 1996 (12) TMI 50 - SUPREME COURT] , it has been held that in order to claim excess duty paid, which falls outside the purview of the said Act of 1962, the limitation provided under Section 27 is not applicable. Hence, the appellant-company is certainly entitled for refund of duty. Thus, it is crystal clear that when the customs duty is paid in excess, the department is liable to refund the same and the limitation provided under Section 27 of the said Act of 1962 will not be applicable. Therefore, the Tribunal has erred in law and fact, solely relying on Section 27 of the said Act of 1962 while dismissing the application of the appellant-Company - this Court is of the considered opinion that the appellant was not at fault in the matter at all. M/s. BEML was directed to file refund application at the first instance. If the department would have advised the appellant to file an application for refund, then there would not have been any delay. The substantial questions of law are answered in favour of the appellant and against the revenue.
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2021 (4) TMI 575
Advance Authorization scheme - Export of goods under Assorted Utensils Table Kitchen articles made from non-magnetic stainless steel grade 201, of relevant thickness and country of destination being Gambia - It appeared to Revenue that the goods under export are not as per the conditions of the Advance license - HELD THAT:- The impugned order relates to the mis-use of Advance license procedure. Further, in view of the redemption certificate(s) issued by the Ministry of Commerce in respect of the two Advance Licences in question, certifying that the appellant have discharged their obligation, the issue no longer survives. Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 571
Valuation of imported goods - small printer part, big printer part and data cable - redetermination of value based on contemporaneous import data of the goods that were actually imported - SCN waived by importer itself - Confiscation of goods - redemption fine and penalty - HELD THAT:- The issue of re-determination of the duty under Section 17 when the importer gives in writing that he does not want the show cause notice and accepts the re-determination was decided by this Bench and the batch of appeals in the case of Commissioner of Customs versus Hanuman Prasad Sons [ 2020 (12) TMI 1092 - CESTAT NEW DELHI] where it was held that The Commissioner (Appeals) completely failed to advert to the crucial aspect that the importers had themselves accepted the enhanced value. The Commissioner (Appeals) in fact, proceeded to examine the matter as if the assessing officer had enhanced the declared value on the basis of other factors and not on the acceptance by the importers. This casual observation is not based on the factual position that emerges from the records of the case. The appellant had indeed declared the value of the goods incorrectly and on being pointed out agreed to reassessment of duty and waived his right to show cause notice and personal hearing. The appellant also undertook to pay the fine and penalty. Therefore, the Assessing Officer is not required to issue a speaking order. The reassessment of the duty is final as it was uncontested. Considering the declared value was only about 2% of the actual value as re-determined, it is found that the Adjudicating Authority was correct in confiscating the goods under Section 111 (m). Quantum of redemption fine - HELD THAT:- Second proviso to Section 125 places an upper limit of fine that it should not exceed the market price of the goods confiscated. In this case, the assessable value of the goods which are confiscated is ₹ 9,21,951/- and the penalty imposed was only ₹ 2 lakhs, which was further reduced to ₹ 1 lakh by the First Appellate Authority. The amount of fine imposed is, therefore, only about 11% of the assessable value which given the facts and circumstances of the case is just and fair. Penalty u/s 112 (a) of Customs Act - HELD THAT:- The penalty imposable under Section 114AA can be upto five times the value of the goods - In the present case, the actual duty was re-determined as ₹ 1,60,327/-, whereas the duty which would have been paid as per the assessee declaration was only ₹ 2,634/-. Thus, the duty sought to be evaded was over ₹ 1,50,000/- and the penalty imposed under Section 112 (a) read with Section 114AA was only ₹ 90,000/-, which was further reduced to ₹ 40,000/- by First Appellate Authority. This is a fair amount of penalty - Penalty upheld. Appeal dismissed - decided against appellant.
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Corporate Laws
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2021 (4) TMI 578
Seeking permission to avail loans and credit facilities to carry on the business of the Applicant - covid-19 lockdown situation - HELD THAT:- It is common knowledge that the whole world is still reeling under the adverse effects of the pandemic for over a year. The pandemic undeniably has had adverse effect on all walks of life including trade, commerce and business operations. It would accordingly not be unusual to assume that the impact thereof has also been felt by the Company. As can be discerned from the earlier orders of the CLB as well as of the Hon ble High Court of Bombay, the interest of the Company has to be of paramount consideration and needs to be protected. The CLB as well as the Hon ble High Court have at different times have felt the need for infusion of funds into the Company, so that the operations of the Company can be carried out. The Company can incur fresh indebtedness/loans for the purpose of carrying on its business operations and avail the credit facility offered by the Janata Sahakari Bank. It is understood that the pickles and condiments offered by the Company have substantial market share and are sought after by customers - it is convincing and confident that once the Company resumes its operations it can take care of its liabilities and service its debts. Application allowed.
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Insolvency & Bankruptcy
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2021 (4) TMI 613
Applicability of Resolution Plan - creditor including the Central Government, State Government or any local authority - applicability of plan once it is approved by an adjudicating authority under subsection (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016 - amendment to Section 31 by Section 7 of Act 26 of 2019 - clarificatory/declaratory or substantive in nature? - whether after approval of resolution plan by the Adjudicating Authority a creditor including the Central Government, State Government or any local authority is entitled to initiate any proceedings for recovery of any of the dues from the Corporate Debtor, which are not a part of the Resolution Plan approved by the adjudicating authority? HELD THAT:- One of the principal objects of I B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an ongoing concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. The word other stakeholders would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation. It is a cardinal principle of law, that a statute has to be read as a whole. Harmonious construction of subsection (10) of Section 3 of the I B Code read with subsections (20) and (21) of Section 5 thereof would reveal, that even a claim in respect of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority would come within the ambit of operational debt . The Central Government, any State Government or any local authority to whom an operational debt is owed would come within the ambit of operational creditor as defined under subsection (20) of Section 5 of the I B Code. Consequently, a person to whom a debt is owed would be covered by the definition of creditor as defined under subsection (10) of Section 3 of the I B Code. Thus, the 2019 amendment is declaratory and clarificatory in nature. We also hold, that even if 2019 amendment was not effected, still in light of the view taken by us, the Central Government, any State Government or any local authority would be bound by the resolution plan, once it is approved by the Adjudicating Authority (i.e. NCLT). The questions framed are as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.
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2021 (4) TMI 611
Seeking directions to NCLAT, Delhi, to Hear and Decide the petitioner s representation / appeal on Legal interpretation and Legal procedures issues, as per relevant laws and rules - case of the Petitioner is that the Insolvency and Bankruptcy Code, 2016, does not permit NCLAT to direct the filing of written submissions and judgments in a matter, however the NCLAT has vide the impugned orders, directed for the same. HELD THAT:- The NCLAT being the duly constituted Appellate Tribunal, under the IBC, is free to regulate its procedure and the manner in which it wishes to hear matters, including issuing of directions for filing of written submissions and judgments. These procedural issues are to be regulated by the NCLAT on its own. This Court does not deem it appropriate to interfere with the same - The manner in which the Petitioner seems to be making repeated representations and submissions before the NCLAT clearly shows that the Petitioner is not being bonafide in his conduct. The Petition is dismissed with costs of ₹ 10,000/- to the High Court of Delhi (Middle Income Group) Legal Aid Society .
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2021 (4) TMI 594
Approval of resolution plan - main objection of the Applicants is that the Resolution Applicant intends to change the main business of the Corporate Debtor form printing business to running Data Centers - change in the nature of the business of the Corporate Debtor is permitted or not. Whether the Resolution Plan approved under Section 31 by the Learned Adjudicating Authority is in contravention with the scope and objective of the Code which is Resolution , maximization of value of assets of the Corporate Debtor and promoting entrepreneurship , availability of credit and balancing interest of all stakeholders ? HELD THAT:- The Jurisdiction of NCLAT being in continuation of the proceedings envisages that any Appeal against an Order approving the Resolution Plan shall be in the manner and on the grounds specified in Section 61(3) of the IBC. Pertinently, the grounds, be it under Section 30(2) or under Section 61(3) are regarding testing the validity of the Resolution Plan approved by the CoC. The enquiry in such an Appeal would be limited to the power authorized to the RP under Section 30(2) of the IBC, or at best, by the Adjudicating Authority under Section 31(2) read with Section 31(1). This Tribunal can examine the challenge only in relation to the grounds specified in Section 61(3), which is limited. The Hon ble Supreme Court in K. Sashidhar [ 2019 (2) TMI 1043 - SUPREME COURT ] has laid down the role of the CoC in accepting or rejecting the Resolution Plan as well as the role of the Adjudicating Authority while considering the Application from approval or rejection of the Resolution Plan. There is an intrinsic assumption that the Financial Creditors are fully informed about the viability of the Corporate Debtor and the feasibility of the Resolution Plan. The opinion expressed after due deliberations in the CoC meeting through voting, is a collective business decision. The legislature, consciously, has provided only limited grounds to challenge the commercial wisdom or their collective decision by the Adjudicating Authority. The submission of the Appellant that interest of all stakeholders is ignored, is not sustainable, keeping in view, the substantial amounts earmarked for workmen and employees in the aforenoted table and also what Schedule V of the Plan has envisaged to balance the interests of all stakeholders. Thus, it can be seen from the Sections 30(2) 31 and Regulations 37, 38 and 39 that there is nothing in the Code which prevents a Resolution Applicant from changing the present line of business to adding value or creating Synergy to the existing assets and converting an obsolete line of business to a more viable and feasible option. Appeal dismissed.
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2021 (4) TMI 589
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - service of notice - Operational Creditors - pre-existing dispute or not - HELD THAT:- The notice under Section 8 was sent on 22nd May, 2019. Before that on 7th November, 2017 there is email (Annexure A31) dated 09th November, 2017 at page 216 which is stated to have been sent by CEO of the Corporate Debtor to the Operational Creditor - There are notices at Annexure A33 and A34 which according to the Appeal were sent by Advocate of Corporate Debtor in March and April, 2018 in which notices, the Corporate Debtor raised various issues including that Operational Creditor failed to complete the project in time and whatever Operational Creditor worked-the project was found not working. Thus there is already pre-existing dispute between the parties with regard to services rendered. This being so, the submissions of the Learned Counsel for the Appellant that these disputes raised were concocted or that they were irrelevant cannot be decided in summary proceeding under Section 9 of IBC. There is no substance in the Appeal - appeal dismissed.
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2021 (4) TMI 588
CIRP process - possession of Land during the CIRP process - Restraint on Respondent from taking any steps in further of the notice - termination of lease agreement till the completion of the corporate insolvency resolution process - co-operation in concluding the corporate insolvency resolution process. HELD THAT:- R1 s action in seeking possession of the leased land, during the currency of CIRP, is hit by Section 14(1)(d) of the Code. The judgement of the Hon ble Supreme Court in Rajendra Bhutta s case [2020 (3) TMI 34 - SUPREME COURT] is the comprehensive answer to all the contentions raised by R1 where it was held that Section 14(1)(d) of the Insolvency Bankruptcy Code, when it speaks about recovery of property occupied , does not refer to rights or interests created in property but only actual physical occupation of the property. The dismissal of the Writ Petition filed by R2 does not have any bearing on these proceedings - application allowed.
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2021 (4) TMI 585
Attachment order in respect of the properties of Corporate Debtor - conflict between the IBC and PMLA or not - It is argued that Section 238 of IBC cannot preclude action under PMLA and because of this Section 32A of IBC was required to be introduced and the amendment does not affect action pre approval of resolution plan - HELD THAT:- The Application under Section 7 of IBC came to be admitted on 16.07.2018. It appears that the Resolution Professional approached the Appellant for release of the Provisional Attachment of the assets and properties of the Company and handover the charge to the Resolution Professional but this was not accepted and ultimately the Resolution Professional moved Ld. Adjudicating Authority (NCLT, Mumbai Bench, Mumbai) which after hearing the parties passed the present Impugned Orders. Power of Adjudicating Authority under Section 60(5) of IBC - HELD THAT:- Under Section 25 of IBC, the Resolution Professional is inter alia duty bound to represent and act on behalf of the Corporate Debtor with third parties, to exercise rights for the benefit of the Corporate Debtor in judicial, quasi-judicial and arbitration proceedings. The Judgment of Hon ble Supreme Court in M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA OTHERS [ 2019 (12) TMI 188 - SUPREME COURT] has observed that for such actions the Resolution Professional cannot move the NCLT/Adjudicating Authority under Section 60 (5). There cannot be any shortcut on such counts. Under Section 18(1) (f) the IRP when it takes control and custody of any asset over which Corporate Debtor has ownership rights as recorded in the balance-sheet of the Corporate Debtor, it can include asset regarding which there may be a dispute pending regarding ownership in a court of law. Such issue of Ownership only a Civil Court can decide. The Government has amended Section 11 of IBC by adding additional explanation as per Insolvency and Bankruptcy Code Amendment Act, 2020 published on 13.03.2020. Section 11 of IBC relates to persons who are not entitled to make application. Explanation 2 was added to clarify that nothing in the Section shall prevent a Corporate Debtor referred to in clause (a) to (d) of the Section from initiating Corporate Insolvency Resolution Process against another Corporate Debtor - while Section 14 protects Corporate Debtor from actions, the Resolution Professional can pursue claims for the benefit of the Corporate Debtor - The observations of the Hon ble Supreme Court in the matter of Embassy Properties do not appear to be helpful to the Appellant with regard to the facts involved and the law. Section 32A of IBC - HELD THAT:- The argument of the Learned Counsel for the Appellant is that Section 32 A of the Code is not helpful in the present case as the matter has not reached the stage of acceptance of Resolution Plan or the stage of liquidation. Secondly it is argued that PMLA is a special legislation with the aim of dealing with money laundering and that Section 71 of PMLA gives the provisions of the Act effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Reliance is placed on Judgment in the matter of THE DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT DELHI, UNION OF INDIA VERSUS AXIS BANK ORS., STATE BANK OF INDIA ORS. IDBI BANK LTD., PUNJAB NATIONAL BANK [ 2019 (4) TMI 250 - DELHI HIGH COURT] to submit that Hon ble High Court has held that IBC and PMLA operate in different fields and that the former cannot take primacy over the later - The reasons for bringing about such amendment are a matter of record. The aim of IBC is to find resolution to ailing corporate debtors and it was getting affected due to apprehension amongst potential resolution applicants. Aims and Objects to be achieved in IBC - HELD THAT:- Under Section 20 of IBC, there is responsibility of IRP to make every endeavour to protect and preserve the value of the property of the Corporate Debtor and manage the operations of the Corporate Debtor as a going concern. When IRP is appointed as RP or is replaced by RP, even the RP has similar responsibility and powers as can be seen in Section 23 and 25 - Even on the stage of liquidation, under Section 34(2) of IBC all Powers of Directors etc. vest in the Liquidator. Under Section 35(1)(b), it is the duty of the liquidator to take into custody all the assets and properties of Corporate Debtor and also to carry on business of the Corporate Debtor for its beneficial liquidation as may be considered necessary by the Liquidator. Regulations to be complied - HELD THAT:- Once CIRP starts, there may be a contingency of the admission order getting set aside in Appeal. There may be another contingency where under Section 12A of IBC withdrawal of the Application admitted under Section 7, 9 or 10 takes place. Apart from these two contingencies, the CIRP is bound to end into either in Resolution Plan getting accepted or the Corporate Debtor going into liquidation. These two contingencies are taken care of by Section 32 A which has been recently added in IBC. If the first two contingencies happen, the normal laws would naturally get attracted as there would be a reversal to management going back to earlier hands. However, when CIRP is pending and progressing with target of Resolution, whether the attachment or seizure can be made or continued of the properties of Corporate Debtor is required to be considered. Active Attachments, seizure etc. - HELD THAT:- If the aims and objects of IBC are to be achieved, and maximisation of value is material so as to reach a resolution, above acts in time bound manner are to be performed and there cannot be obstructions of attachments and seizures existing. If the property is under attachment or seizure, or possession is taken over, keeping the corporate debtor a going concern would be serious issues. Without the properties in possession of IRP/RP getting valuation done during CIRP or even liquidation stage, would be issues. Attachment remaining in force would affect value of the property and prospective applicants may not respond in the manner in which they would, if the property is not under active attachment or seizure. Section 14 of IBC applies - HELD THAT:- After the attachment when matter goes before the Adjudicating Authority under PMLA, proceeding before Adjudicating Authority for confirmation would be civil in nature. That being so, Section 14 of IBC would be attracted and applies. In present matter, the Provisional Attachment took place on 29th May, 2018 and corrigendum was issued on 14th June, 2018. The CIRP started on 16th July, 2018. Once moratorium was ordered, even if the Appellant moved the Adjudicating Authority under PMLA, further action before Adjudicating Authority under PMLA must be said to have been prohibited. Even if confirmation has been done as stated to have been done on 20th November, 2018, the same will have to be ignored. Section 14 of IBC will hit institution and continuation of proceedings before Adjudicating Authority under PMLA. The CIRP will of course not affect prosecution before Special Court, till contingencies under Section 32A of IBC occur. There is no conflict between PMLA and IBC and even if a property has been attached in the PMLA which is belonging to the Corporate Debtor, if CIRP is initiated, the property should become available to fulfil objects of IBC till a resolution takes place or sale of liquidation asset occurs in terms of Section 32A - there are no substance in these Appeals. Appeal dismissed.
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2021 (4) TMI 583
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - assignment of the debt of the Corporate Debtor - legal or enforceable and recoverable claim to initiate any present proceeding or not, since cause of action accrued on 23.06.1998 - applicability of section 25(3) of the Contract Act - whether the said section is an exception to the provisions of Section 18 of the Limitation Act? HELD THAT:- The date of default mentioned in the present Petition is 1998 (23/06/1998 as per the Corporate Debtor) and the Petition has been filed on 04/03/2019, after a period of more than 20 years - Since the Assignment Agreement dated 27/09/2013 is much beyond 3 years after the date of default, the contention that Section 25(3) of the Contract Act would be an exception to the provisions of Section 18 of the Limitation Act, would not have any relevance as far as triggering of date of default is concerned. This argument may be appropriate in a recovery proceeding. This proceeding not being a recovery proceeding, this argument cannot be accepted. The date of default mentioned in the Petition relates to pre-assignment era and the said default cannot be related to post assignment proceedings - The Hon ble Supreme Court in Babulal Vardharji Gurjar s case [ 2020 (8) TMI 345 - SUPREME COURT ] on the applicability of Section 18 of the Limitation Act while referring to Para No. 21 of the decision in Jignesh Shah case [ 2019 (9) TMI 1121 - SUPREME COURT ] categorically held that the same relates to the suits or other proceedings wherever it could apply and where the period of limitation gets extended because of acknowledgement of liability. This is not a suit for recovery and hence Section 18 of the Limitation Act will in no manner impact the limitation within which winding up proceedings is to be filed. The debt is grossly barred by limitation and cannot be held to be due for the purpose of the Petition under section 7 of the Code - petition dismissed.
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2021 (4) TMI 582
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- The CD has defaulted in making repayment of credit facilities to the Petitioner Bank and the date of default is 30.03.2018. The statement of accounts as on 19.12.2019 along with the Banker's Book Evidence Certificate annexed with the Petition confirms the default is ₹ 11,88,32,338.00. The petitioner Bank has filed the petition within the period of limitation, as the default has occurred as on 30.03.2018 and the application has been filed on 08.01.2021. The acknowledgment of debts have been submitted by the CD to the FC on 27/01/2015, 28/06/2017 and 19/07/2019. Charges have been filed with ROC on 25/03/2013 and thereafter charges have been modified on 21/04/2014 - The date of mortgage of the property is on 02-04-2013, SARFAESI proceeding has been initiated by the Financial Creditor and notice dated has been served on the CD. It is settled legal position that the pendency of SARFAESI proceeding or other dispute does not prevent a Financial Creditor to trigger the C.I.R.P, because the nature of remedy being sought for under the provisions of the I.B Code is Remedy in Rem in respect of the CD. The Respondent Company has violated the terms and conditions of the sanction letters and as such also made the accounts irregular, consequence thereof the said accounts were classified as Non Performing Asset w.e.f. 30.03.2018 - The Financial Creditor has issued Demand Notice dated 06.01.2020 in respect of unpaid debts, due from the CD i.e. M/s. Cleanopolis Energy Systems India Private Limited under the Insolvency and Bankruptcy Code, 2016 - The present I.B Petition is filed by the duly authorized official of the Applicant Bank in a prescribed format under section 7 of the I.B Code annexing copies of loan documents confirming the existence of debt due, payable and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP). Petition is complete and deserves to be admitted - petition admitted - moratorium declared.
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2021 (4) TMI 577
Approval of Resolution Plan - Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT:- Upon perusal of the approved Resolution plan, the Bench has observed that out of ₹ 150.70 crores of total Debt amount to various creditors, stakeholders the SRA proposed to pay ₹ 30.07 crores as the Final Resolution Amount i.e. approx. 20% of the total Resolution debt amount. Even out of this ₹ 12 crores will be generated through sale of assets of Non-Core Business of the CD thereby the SRA will bring in only ₹ 18 crores i.e 12% of the total outstanding Resolution Debt amount or approx. 60% of the Resolution Plan value. In case the SRA could not realise, monetise the said amount of ₹ 12 crores, how the shortfall will be met, alternate funding mechanism (time frame within which period the said amount will be paid) etc, are not provided in the CoC approved plan. However, the CoC after exercising its commercial wisdom approved the Resolution plan with requisite majority. The Resolution Plan has been approved by the CoC in the 12th meeting held on 09.11.2019 with 73.15% votes. In K Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon ble Court observed that the role of the NCLT is no more and no less - In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - the resolution plan is approved. application allowed.
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2021 (4) TMI 574
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - amount paid towards interest as on 31.03.2019 - time limitation complied or not for amount paid towards interest - applicability of section 18(1) 19 of Limitation Act, 1963 - HELD THAT:- In the present case evidently there has been payment of TDS on interest on 31.03.2014, an amount of ₹ 60,493/- was paid on 31.03.2017, an amount of ₹ 2,40,000/- was paid towards TDS on interest on 31.03.2018, and finally as last tranche of payment of ₹ 60,493/- as TDS on interest was made on 31.03.2019. If the date of default is construed as 1.01.2015, then the three year limitation would end on 01.01.2018, but since the interest was made within three years of limitation period and such payments continued to be made by the Corporate Debtor intermittently and the last tranche was made on 31.03.2019, this bench is of the considered view that the period of limitation has been extended as envisaged under Sec 18 Sec.19 of the Limitation Act, 1963 - Perusal of Section 19 shows that where payment is made on account of debt or interest before expiration of the prescribed period by the person liable to pay, fresh period of limitation of time can be computed when the payments are made. The date of NPA will not shift, it will remain the foundation of debt and period of limitation gets triggered from that date. But if the prescribed period is computed in accordance with the Limitation Act, section 18 and 19 are attracted. The Corporate Debtor failed to pay the amounts due as on 31.12.2014 and again on 31.03.2019 on the date of payment of TDS on interest by the Corporate Debtor,the limitation for filing a petition therefore starts on 31.03.2019 and extends for period of three years from 31.03.2019.Therefore, the petitioner s claim under Sec 3(6)(a) of the Code is established, further there is clear evidence of debt and default of non-payment of monies by Corporate Debtor - an investment is payable on demand. Payment of TDS on interest is not only an acknowledgment of debt which constitutes a confirmation of debt by Corporate Debtor that is liable to pay the principal sum borrowed and further extends the limitation of liability from the date of payment of last tranche of monies to the Income Tax department as reflected in Form 26 AS. Thus, the essential ingredients of the Section 7 of IBC are satisfied and the Petition deserves admission. Application admitted - moratorium declared.
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PMLA
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2021 (4) TMI 607
Seeking release of public amenities such as road, garden, STP plant, club, electricity grid, etc. from the purview of attachment order - property involved in money- laundering - Proceeds of crime - HELD THAT:- The petitioners are having remedy to appear in the proceedings pending before the adjudicating authority and they can put their claim before the adjudicating authority. The order passed by the adjudicating authority is appellable u/s. 26 of the PMLA Act, therefore, the petitioners are not remedy-less against the impugned order. They are having alternative and efficacious remedy. The PMLA Act is a complete code in itself. This petition is disposed of with liberty to the petitioners to remedy available to them in law.
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Service Tax
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2021 (4) TMI 579
Recovery of CENVAT Credit - recipient of service - payment of service tax under wrong head - appellant was liable to pay service tax under the BAS but instead they have paid under the head Advertisement Services - period March, 2010 to March, 2014 - HELD THAT:- The SCN is wholly mis-conceived as the Department has attempted to classify the service in dispute in the hands of the receipt of service - It has been held by the Hon ble Supreme Court in the case of SARVESH REFRACTORIES (P) LTD. VERSUS COMMISSIONER OF C. EX. CUSTOMS [ 2007 (11) TMI 23 - SUPREME COURT] that cenvat credit cannot be denied questioning the assessment of service classification of the service provider, at the end of the recipient of service. Thus, in terms of Rue 2 (l) of CCR, the appellant is entitled to take cenvat credit of any input service, which is received, by whatever name called, which is utilised in the manufacture of dutiable goods, or providing of taxable output service - credit allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (4) TMI 604
CENVAT Credit - Input service distribution - unit exclusively engaged in the manufacture of exempted goods - HELD THAT:- The Division Bench of this Court in 'CCE vs. ECOF Industries Pvt. Ltd' [ 2011 (2) TMI 1130 - KARNATAKA HIGH COURT] has held that the registered input service distributor is entitled to distribute credit, subject to the conditions mentioned in Rule 7 of Cenvat Credit Rules, 2004. The aforesaid decision which has a bearing on the controversy involved in the appeal has also not been considered. Therefore, the substantial question of law framed in this appeal is answered in favour of the assessee. On perusal of the order passed by the Tribunal, it is evident that the aforesaid order is cryptic and suffers from vice of non-application of mind. The Tribunal has not assigned any reasons in respect of its finding and has merely recorded the conclusions. The matter is remitted to the Tribunal for decision afresh and in accordance with law - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (4) TMI 606
Doctrine of Bias - Levy of Entry Tax and penalty - entry of all goods (other than motor vehicles) into a local area within the state of Goa - tax or penalty in respect of the import of CAB into the State of Goa under the Entry Tax Act - validity of provisions of Section 3 of the Entry Tax Act insofar as it is invoked as a charging provision for the levy of tax on entry of goods into a local area within the State of Goa - HELD THAT:- Shri Ashok Rane, ought not to have taken up and disposed of the petitioner's appeal against the order dated 29.03.2014 for the Assessment Year 2010-11. The Tribunal, with respect, erred or rather failed to exercise jurisdiction vested in it, in not upholding the petitioner's contention based on the Doctrine of Bias, in the peculiar facts and circumstances of the present case. The impugned orders dated 14.01.2019 made by Shri Ashok Rane as the First Appellate Authority and the order of the Tribunal dated 27.02.2020 upholding the same, are liable to be set aside and are hereby set aside. The petitioner's appeal against the order dated 29.03.2014 is now restored to the file of the First Appellate Authority, which shall dispose of such appeal on its own merits and in accordance with law as expeditiously as possible and in any case within two months from the date of production of an authenticated copy of this order. In this case interim relief was declined. Therefore if the Respondents have encashed the bank guarantees or the petitioner has paid the tax, the same shall abide by the orders that may be made by the First Appellate Authority - The parties to appear before the First Appellate Authority (other than Shri Ashok Rane) on 26.04.2021 at 11.00 a.m. and file the authenticated copy of this order. The First Appellate Authority to dispose of both the appeals i.e. appeals against assessment orders for 2008-09 and 2010-11 since common issues of law and fact are involved. Rule is made absolute in the aforesaid terms.
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2021 (4) TMI 602
Restoration of penalty - at the time of interception, the e-sugam was not tendered and was furnished subsequently - Section 64(1) of Karnataka Value Added Tax Act, 2003 - HELD THAT:- It is well settled in law that a penalty is attracted only if there is an attempt to evade the tax payable under the Act and not merely because the documents accompanying the goods are not in the prescribed format/form - On perusal of Section 53(12)(a) of the Act, it is evident that penalty can be levied only in case where sufficient cause is not shown. In the instant case, the First Appellate Authority namely, the Joint Commissioner of Commercial Taxes based on the material available on record, recorded a finding that goods belonging to a registered dealer of the State whose bonafides are not doubted were moving for the purpose of sale to a registered dealer in the State and the movement of goods was duly supported by invoices which disclose the particulars of the transaction which shows the movement of the goods. It is further been held that the movement of the goods has not been even doubted by the respondents and there is no material on record to indicate an attempt to evade the tax. Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 601
Denial of downloading and issuance of 'C' declaration forms - post GST situation - purchase of High Speed Diesel from suppliers in other States - inter-state trade - Central Sales Tax Act, 1956 read with the Central Sales Tax (Registration and Turnover) Rules, 1957 - HELD THAT:- The issue decided in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where it was held that respondents are directed to permit these petitioners to download 'C ' forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of 'C' declaration forms. Petition allowed.
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2021 (4) TMI 600
Invocation of extended period of limitation - suppression of information relating to determination of value of tipper lorry - determination of value for tipper lorry - overlapping demands or not - HELD THAT:- In terms of the directions issued, the erstwhile counsel for the appellant-company has intimated the Insolvency Resolution Professional by sending notices by speed post as well as by e-mail and a memo of compliance dated 15.03.2021, complying the order dated 11.02.2021, has been filed. The said memo is taken on record. The appeals are dismissed for default.
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2021 (4) TMI 599
Rectification of Mistake - error apparent on the face of record or not - Refund of Input Tax Credit - failure to reverse the input tax credit in respect of the invisible loss ratio - HELD THAT:- This Court called upon the assessing officer to make available the copy of the letters given by the petitioner herein. In response to the aforesaid direction, the assessing officer immediately made available a copy of the petitioner's letters in which the petitioner himself has accepted the invisible loss ratio in his case at 5%. Of course, the petitioner's counsel would still insist that when a specific mandate has been issued by this Court that the assessing authority should examine the manufacturing process before arriving at invisible loss ratio and that the said mandate cannot be given go by by receiving a waiver letter from the petitioner. The respondent cannot be faulted for having acted on the petitioner's letters. In any event, there is no waiver of any right as such. The issue is regarding the working out of the exact ratio of invisible loss. The petitioner himself has come forward and given in writing that the invisible loss is at 5% - the order passed by the respondent accepting the same cannot be said to suffer from any error apparent on the face of the record. Petition dismissed.
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2021 (4) TMI 597
Validity of assessment order - non-service of orders - change of place of business intimated to the department or not - attachment of Bank Accounts of petitioner - HELD THAT:- It cannot be appreciated as to how an officer in 2020 could compare and verify a signature dated 20.06.2012 as it is very likely that there had been a wholesale change in the composition of that office in the intervening period of eight years. Thus, in a matter of this nature, the benefit of doubt should certainly be given to the petitioner. This is particularly so since there is no allegation of malpractice foisted upon the petitioner by the officer nor is such an argument. As far as the TNVAT appeals are concerned, 100% of the disputed taxes are said to have been paid and as far as CST appeals are concerned 25% of the disputed taxes are said to have been paid. The impugned order is hence set aside and directions issued to the first respondent to receive the appeals as maintainable - writ petitions are disposed off.
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