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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 16, 2022 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax Indian Laws Articles e-DISPUTE RESOLUTION SCHEME, 2022 Highlights / Catch Notes GST Cancellation of registration of petitioner - non-furnishing of returns for continuous periods of six months - Petitioner is agreed to comply with the statutory requirement by depositing all the taxes, interest, penalty and late fee as may be due and comply with the formalities. - The delay in invocation of provision of sub-rule (1) of Rule 23 of the CGST Rules is condoned. Upon compliance as agreed by the Petitioner, within two weeks of receipt of the copy of this order, the application for revocation shall be considered by the competent authority in accordance with law. - HC Visit to Get Source Principles of parity - mistake while generating E-way bill - intent to evade or not - In view of the above and the mistake in question being bonofide this Court invoking the principle of parity, directs that the impugned orders are quashed. - respondents will be at liberty to consider the case of the petitioner for imposition of a minor penalty, while treating the mistake in question, to be a clerical mistake - HC Visit to Get Source Income Tax Loss arising on account of exchange fluctuation - The analysis done by the ITAT and the conclusion arrived at in respect of the subject claim of the appellant being the correct approach consistent with the exposition of this Court, needs to be upheld. In our opinion, the High Court missed the relevant aspects of the analysis of the ITAT concerning the fact situation of the present case. As a matter of fact, the High Court has not even adverted to the aforementioned reported decisions, much less its usefulness in the present case. - The impugned judgment and order of the High Court needs to be set aside and instead, the decision of the ITAT in favour of the appellant on the two questions examined by the High Court in the impugned judgment, needs to be affirmed and restored - SC Visit to Get Source Penalty u/s 271(1) (c) - The Tribunal came to a finding of fact that Revenue had no information of any undisclosed income in the hands of the assessee except the declarations made by the assessee. What also impressed the Tribunal was at no stage it was the case of the Revenue that the funds that were lying in the bank accounts held by the two entities JWL and SF with HSBC Bank, Zurich could have been brought to tax in India. These monies have been offered to tax in India because the assessee made voluntary declarations and considering that aspect the Tribunal felt that levy of penalty u/s 271 (1)(c ) of the Act, was not justified. - Order of ITAT sustained - HC Visit to Get Source Net profit estimation - Without there being sales of the stock it would not be possible to estimate the net profit. Moreover, there has been no rejection of the books of account of the Assessee which reflects the ‘Completed Services Contract Method’ of accounting consistently followed by the Assessee. This was lost sight of by the ITAT as well as the CIT (A). That this has been the consistent practice of the Appellant was easily verifiable from the returns already filed in the earlier AYs. - HC Visit to Get Source Reopening of assessment u/s 147 - Though in the instant case, the petitioner has written a letter in response to the reasons received by it, yet it has not filed any objections. In fact, in the said letter, a Power of Attorney, copy of ITR, Bank statement have only been enclosed and no specific objection has been raised. Consequently, this Court is in agreement with the preliminary objection raised by the learned counsel for the respondent revenue that the present writ petition is premature. - HC Visit to Get Source Revision u/s 263 by CIT - Wrong claim of carry forward of long term capital loss - the long term capital gain, which is exempted under section 10(38) of the Act, would not enter in the computation of total income of the assessee, therefore, assessee cannot set off its current year and previous year`s long term capital loss against such long term capital gain, which is exempted under section 10(38) of the Act, therefore, the stand taken by the ld PCIT is wrong. - AT Visit to Get Source Setting off the long term capital loss arising on sale of shares not subject to STT against long term capital gain arising from sale of Shares subjected to STT exempt from tax under section 10(38) - At this stage we would also like to make an additional mention that even if assume, without accepting, that the revenue’s contention is correct in setting off losses against exempt income [long term capital gain u/s 10(38)], there would be an absurd outcome. - the lower authorities are not justified in setting off losses against the exempted long-term capital gain thereby reducing the quantum of carry forward of losses claimed by the assessee - AT Visit to Get Source Unexplained investment - Assessee has brought on record certain evidence before the AO - the Assessing Officer ought to have investigated from both the parties for verifying the veracity of the transaction. The assessee has discharged its primary burden by furnishing the source of the investment. Under these facts it was open to Assessing Authority to make further investigation. In the absence of bringing any adverse material regarding creditworthiness of the Director and genuineness of the transaction addition made and sustained by the learned CIT(Appeals) is not justified - AT Visit to Get Source Disallowance of deduction u/s 54F - assessee has converted his capital asset into stockin- trade and accrued capital gains which he invested in construction of residential unit and claimed exemption under section 54F - the deduction u/s 54F of the Act claimed by assessee is allowable and therefore, we do not find any infirmity in the order passed passed by ld CIT(A). - AT Visit to Get Source Long-term capital gain - Determining the cost of acquisition as NIL - Admittedly, the primary onus lies upon the assessee to furnish the necessary details but in the event, the assessee fails to discharge the onus, it does not mean that the revenue can determine the income in arbitrarily manner. It is incumbent upon the revenue to calculate the income chargeable to tax in the manner provided under the statute. If the assessee failed to furnish the cost of acquisition, then the revenue was empowered to find out the same by exercising the authority provided under the statute under the provisions of section 131/133 (6) of the Act. But we find that the revenue has not exercised such powers. - AT Visit to Get Source Penalty u/s. 271(1)(c) - As the penalty proceedings are distinct and independent to the quantum proceedings, in our considered view, penalty cannot be levied merely on the reasoning that some addition was made by the AO during the quantum proceedings. There has to be independent verification by the revenue authorities with respect to the additions made during the quantum proceedings to arrive at the satisfaction that the assessee has concealed the particulars of income. But we find that, the authorities below have not done so. - AT Visit to Get Source Capital gain computation - cost of acquisition of the immovable property - The deduction on account of cost of acquisition is to be allowed with reference to the property sold or transferred by the assessee and since there is nothing on record to conclusively prove that the residential and commercial construction was also transferred by the assessee, we find ourselves in agreement with the authorities below that what was transferred or sold by the assessee was only the non-agricultural open land and the assessee, therefore, was not entitled for deduction on account of cost of acquisition of residential and commercial construction - AT Visit to Get Source Disallowance of commission paid - excessive expense on commission - the average rate of commission paid by the assessee to others in respect of rice was 20, but rate of commission paid to the employee, holding 17.05% shares in the company, was at 215 and the difference of rate of commission is at 195%. The said deference is not only excessive and the same is unrealistic in the market. The AO has rightly made the comparison of the average rate of commission paid by the assessee himself in the case of non related parties to come to the said conclusion. - AT Visit to Get Source Penalty u/s 271(1)(C) - Unexplained Expenditure on Stamp Duty and Registration Charges made out of Undisclosed Income - There was no dishonest intent of the assessee particularly in the given facts and circumstances where the assessee had sufficient income i.e. exceeding the amount invested in purchases of properties. Accordingly, we are of the view that the assessee inadvertently omitted to disclose the impugned cost in the income tax return without having any dishonest intent. Thus in such facts and circumstances, we hold that the penalty u/s 271(1)(c) of the Act, is not sustainable. - AT Visit to Get Source Long Term Capital Gains - Sale of society flat - proportionate portion of land in the society - As per the sale deed, it is clear that assessee gets a membership on the cooperative societies, it does mean that flat owners not only owns a super structure and also ownership right on the undivided share, therefore we are inclined to accept the findings of Ld. CIT(A) in distributing the sale proceeds into sale proceeds attributable to the land and super structure - AT Visit to Get Source Direct Taxes Qualifications for appointment of Chairperson and Members of Appellate Tribunal - Constitutional validity of Sections 9 and 32(2)(a) of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - It is true that the extent of judicial review that can be exercised in a given case is quite limited. Though a constitutional court can declare a provision to be unconstitutional, it should not give any direction to the Legislature to make an amendment in a particular way. The judicial restraint is, therefore, being hailed as a virtue. However, in a case where a direction has been given by the Apex Court to have the judicial independence, it is required to be followed by the High Courts as well as the Executive. - HC Visit to Get Source Case Laws: GST 2022 (4) TMI 701 Seeking grant of Anticipatory Bail - Section 70 132(1)(c) of the CGST Act, 2017 - HELD THAT:- It is evident that co-accused Rajat Maheshwari who is a partner in the firm has been granted anticipatory bail by this Court. Without expressing any opinion on the merits of the case, considering the nature of accusation, the applicant is entitled to be released on anticipatory bail in this case - The anticipatory bail application is allowed. 2022 (4) TMI 700 Inter-state sale - movement of the goods transported from the outside the State to the site of execution of work by the contractor - contract on turnkey basis - HELD THAT:- The Court is unable to find any errors having been committed by the Tribunal in coming to the conclusion. Indeed, if the goods moved from outside Orissa to Orissa on the strength of declaration of Form C , then it cannot be said that there was one indivisible contract and that it would amount to a sale within the State of Orissa. It was correctly noted by the Tribunal that although the execution of the works contract took place inside Orissa, the total materials were brought from outside the State by the contractee from the contractor. Application dismissed. 2022 (4) TMI 699 Power to carry out rectification of mistake - singular grievance of the petitioner is that a rectification should be carried out with regard to the date of cancellation of its registration, as reflected in the common portal concerning form GST REG-16 - Section 161 of the Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT:- The respondents are directed to carry out the rectification qua the date of cancellation of the petitioner s registration - the rectification so carried out, will also be incorporated in the portal. The writ petition is disposed off. 2022 (4) TMI 698 Cancellation of registration of petitioner - non-furnishing of returns for continuous periods of six months - HELD THAT:- The proper officer has been conferred with power to revoke cancellation of registration. It is also provided that application for revocation of cancellation of registration can be rejected after affording an opportunity to the Petitioner to have his say. It is apparent from the proviso extracted above that the application for revocation in Form GST REG-21 shall have to be made to the proper officer within a period of thirty days from the date of service of the order of cancellation of registration. Proviso to sub-rule( 1) of Rule 23 further requires returns to be furnished and amount due as tax in terms of such returns is to be paid along with amount payable towards interest, penalty and late fee in respect of the said returns. On compliance of such statutory requirement, application for revocation can be filed. The delay in invocation of provision of sub-rule (1) of Rule 23 of the CGST Rules is condoned. Upon compliance as agreed by the Petitioner, within two weeks of receipt of the copy of this order, the application for revocation shall be considered by the competent authority in accordance with law. Petition disposed off. 2022 (4) TMI 697 Search and seizure at the petitioner s premises - HELD THAT:- There would be a likelihood of bias, if the person, who carried out the search and seizure operation, is also empowered to conduct the adjudication proceedings. List the matter on 11.05.2022. 2022 (4) TMI 696 Principles of parity - mistake while generating E-way bill - intent to evade or not - HELD THAT:- The issue in question which is being sought to be raised in the present petition, has already been decided in ROBBINS TUNNELLING AND TRENCHLESS TECHNOLOGY (INDIA) PVT. LTD. VERSUS THE STATE OF M.P. AND OTHERS [ 2021 (2) TMI 381 - MADHYA PRADESH HIGH COURT] by a Coordinate Bench, where it was held that the respondents are not justified in rejecting the appeal of the petitioner on the ground that the mistake committed while generating the E-way bill, was not a clerical error or a small mistake. In view of the above and the mistake in question being bonofide this Court invoking the principle of parity, directs that the impugned orders are quashed. Respondents will be at liberty to consider the case of the petitioner for imposition of a minor penalty, while treating the mistake in question, to be a clerical mistake The writ petition is allowed. 2022 (4) TMI 695 Short assessment - wrongful availment of input tax credit - non-compliance of provisions of Section 42(3) read with Rule 36 of the CGST Rules - HELD THAT:- On a perusal of the provisions of Section 42(3) of the Act as well as the observations in the impugned order, it is said that the petitioner has an effective remedy before the appellate authority. The circumstances of the case, including the grant of opportunity for hearing before issuing the impugned order, does not warrant an interference of this Court under Article 226 of the constitution of India. Petition dismissed. Income Tax 2022 (4) TMI 694 Loss arising on account of exchange fluctuation - loan between the appellant and Commonwealth Development Corporation - loan was obtained in foreign currency however, while repaying the loan, due to the difference of rate of foreign exchange, the appellant had to pay higher amount, resulting in loss to the appellant - ITAT deleted the dislaoowance - HELD THAT:- Transaction of loan between the appellant and Commonwealth Development Corporation, the same was in the nature of borrowing money by the appellant, which was necessary for carrying on its business of financing. It was certainly not for creation of asset of the appellant as such or acquisition of asset from a country outside India for the purpose of its business. In such a scenario, the appellant would be justified in availing deduction of entire expenditure or loss suffered by it in connection with such a transaction in terms of Section 37 - For, the loan is wholly and exclusively used for the purpose of business of financing the existing Indian enterprises, who in turn, had to acquire plant, machinery and equipment to be used by them. It is a different matter that they may do so because of the leasing and hire purchase agreement with the appellant. That would be, nevertheless, an activity concerning the business of the appellant. In that view of the matter, the ITAT was right in answering the claim of the appellant in the affirmative, relaying on the dictum of this Court in India Cements Ltd. vs. Commissioner of Income Tax, Madras [ 1965 (12) TMI 22 - SUPREME COURT] The analysis done by the ITAT and the conclusion arrived at in respect of the subject claim of the appellant being the correct approach consistent with the exposition of this Court, needs to be upheld. In our opinion, the High Court missed the relevant aspects of the analysis of the ITAT concerning the fact situation of the present case. As a matter of fact, the High Court has not even adverted to the aforementioned reported decisions, much less its usefulness in the present case. Claim raised for the first time before the ITAT - whether since the appellant in its return had taken a conscious explicit plea with regard to the part of the claim being ascribable to capital expenditure and partly to revenue expenditure, it was not open for the appellant to plead for the first time before the ITAT that the entire claim must be treated as revenue expenditure - ITAT allowing the additional claim holding that the capitalisation of the said sum is to be treated as revenue expenses - In the first place, the ITAT was conscious about the fact that this claim was set up by the appellant for the first time before it, and was clearly inconsistent and contrary to the stand taken in the return filed by the appellant for the concerned assessment year including the notings made by the officials of the appellant. Yet, the ITAT entertained the claim as permissible, even though for the first time before the ITAT, in appeal under Section 254 of the 1961 Act, by relying on the dictum of this Court in National Thermal Power Co. Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] - Further, the ITAT has also expressly recorded the no objection given by the representative of the department, allowing the appellant to set up the fresh claim to treat the amount declared as capital expenditure in the returns (as originally filed), as revenue expenditure. As a result, the objection now taken by the department cannot be countenanced. The impugned judgment and order of the High Court needs to be set aside and instead, the decision of the ITAT in favour of the appellant on the two questions examined by the High Court in the impugned judgment, needs to be affirmed and restored As a result of allowing the entire claim of the appellant being revenue expenditure, suitable amends will have to be effected in the final assessment order passed by the assessing officer for the concerned assessment year, thereby treating the consequential benefits such as depreciation availed by the appellant-assessee in relation to the stated amount towards exchange fluctuation related to leased assets capitalised as unavailable and nonest. 2022 (4) TMI 693 Disallowance u/s 36(1)(ii) of bonus paid to Directors - As per AO bonus was paid to avoid payment of dividend distribution tax - HELD THAT:- In the present case, there is not even an iota of word that the amount paid is commission for services rendered or bonus. There are only two directors in the company. The entire amount has been paid to both of them. It is not the case of the appellant that there has been any term of employment nor is there any case that any special services has been rendered by these two directors. On the similar analogy, the judgment in Career Launcher Ltd. [ 2012 (4) TMI 440 - DELHI HIGH COURT] is also distinguishable wherein as concluded that as long as the bonus or commission is paid to the directors for services rendered and as part of their term of employment, it has to be allowed. There is no substantial question of law in the present cases. The assessing officer and CIT (A) have given a concurrent finding that the assessee has paid the bonus in lieu of the dividend and therefore, the above sum is disallowed under Section 36 (1) (ii) of Act. The ITAT also after considering the findings of the assessing officer and the CIT (A) had inter alia held that the payment of bonus or commission is not allowable as deduction under Section 36 (1) (ii) of the Act in the hands of the assessing company. In the absence of any substantial question of law, the appeals are liable to be dismissed. Hence, the present appeals along with the pending applications are dismissed. 2022 (4) TMI 692 Penalty u/s 271(1) (c) - concealment of income and filing of inaccurate particulars of income pertaining to the amounts in the HSBC, Zurich accounts - ITAT deleted penalty levy - assessee has suo-moto and voluntarily offered additional income to tax and that the income which was offered for tax by the assessee in the revised returns of income was in any case, not chargeable to tax in India - whether ITAT erred taking cognizance of the non-est revised returns of income filed beyond the time allowed u/s 139(5) of the Act to hold that the assessee voluntarily disclosed the impugned income and then proceeding on that incorrect premise to delete the aforesaid penalty? - HELD THAT:- Indisputable fact is that during the period when the assessee was non resident, from Assessment Year 2000-2001 to the year in question, the assessee was in employment with a U.S. Company and was resident of United States of America. In the year 2011 the assessee decided to settle down in India and after returning to India, filed an affidavit dated 07.09.2011 offering to tax income of ₹ 73,18,600/- being peak balance lying in the accounts of these two entities JWL and SF and for this purpose filed revised return on 20.9.2011. Immediately thereafter, assessee realized that he had committed a mistake in calculating peak balance lying in bank accounts held by these two entities JWL and SF and therefore, made supplementary affidavit on 7.11.2011 offering to tax additional income of ₹ 1,03,49,908/-. Consequent thereto, second revised return dated 15.11.2011 was filed showing total additional income of ₹ 1,76,68,508/- on account of funds lying in the bank accounts held by JWL and SF with HSBC Bank, Zurich. Tribunal found that second affidavit of 7.11.2011 declaring additional amount due to mistake in calculating bank peak balance was filed not because of any issue of summons and declaration was purely because of the mistake committed in earlier calculation. The Tribunal came to a finding of fact that Revenue had no information of any undisclosed income in the hands of the assessee except the declarations made by the assessee. What also impressed the Tribunal was at no stage it was the case of the Revenue that the funds that were lying in the bank accounts held by the two entities JWL and SF with HSBC Bank, Zurich could have been brought to tax in India. These monies have been offered to tax in India because the assessee made voluntary declarations and considering that aspect the Tribunal felt that levy of penalty u/s 271 (1)(c ) of the Act, was not justified. Revenue as relied on Mak Data P.Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] to submit that just because the assessee voluntarily disclosed his income, it can not be said that there was no concealment. Facts in the case at hand, are different in as much as in Mak Data Pvt. Ltd. (supra), the Apex Court came to conclusion that the surrender in that case was not voluntary. In the case at hand, the Tribunal has correctly come to a conclusion that the declaration was voluntary. Tribunal has not committed any perversity or applied incorrect principles to the given facts - No substantial question of law. 2022 (4) TMI 691 Disallowance u/s 40A(2) - Grant of bonus to the Directors (Relatives) - Non justifiable kind of services rendered to earn such a huge amount of bonus to a person specified under Section 40A(2)(b) - no business correlation in terms of business output or growth of business relating to the payment was shown by the Respondent/assessee - HELD THAT:- This Court finds that the disallowances made for similar reasons for the Assessment Years 2013-14 and 2014-15 were directed to be deleted by the DRP as well as CIT(A) and the Appellant had accepted the said decisions. Undoubtedly, the principles of res-judicata and estoppel are not applicable in taxation matters. However, it has been held that a departure from a finding during the past years would result in a contradictory finding. This Court in AMD Metplast Pvt. Ltd. [ 2011 (12) TMI 320 - DELHI HIGH COURT] as well as in CIT v. Career Launcher India Ltd.[ 2012 (4) TMI 440 - DELHI HIGH COURT] has upheld grant of bonus by companies to its directors. Consequently, this Court is of the view that there is no bar on payment of bonus and the issue whether bonus is to be granted or not is essentially a question of fact. In the present case, none of the authorities below have opined that grant of bonus to the Directors would either endanger the existence of the corporate entity or was prohibited under The Payment of Bonus Act, 1965 or was not proportionate to the services rendered by the respondent-Director. In the previous assessment years similar payment of bonus to the respondent-Director has been upheld. Consequently, this Court is of the view that consistency of approach, uniformity and certainty must be maintained. Accordingly, this Court is in agreement with the Tribunal s decision that as no distinguishing feature had been brought to its notice, the direction to delete the disallowance in the previous Assessment Years must be followed. In view of the above, no substantial question of law arises for consideration 2022 (4) TMI 690 Net profit estimation - percentage completion method for calculating the profits of the Assessee - tribunal determining the net profit @ 6.45% on the value of unsold closing stock - HELD THAT:- There is merit in contention of the Assessee that there cannot be an estimate of net profit on the basis of the value of unsold closing stock . Without there being sales of the stock it would not be possible to estimate the net profit. Moreover, there has been no rejection of the books of account of the Assessee which reflects the Completed Services Contract Method of accounting consistently followed by the Assessee. This was lost sight of by the ITAT as well as the CIT (A). That this has been the consistent practice of the Appellant was easily verifiable from the returns already filed in the earlier AYs. The questions framed by this Court are answered in favour of the Assessee and against the Department by holding that the ITAT was not justified in following the percentage completion method for calculating the profit of the Assessee for the AY in question and determining the net profit @ 6.45%. The ITAT also erred in declining the Appellant Assessee an opportunity of producing its books of account. The impugned order of the ITAT and the corresponding orders of the CIT (A) and the AO on this point are hereby set aside.- Decided in favour of assessee. 2022 (4) TMI 689 Reopening of assessment u/s 147 - mandation of filling objection prior to the filing the present writ petition - Non filing of objection against reopening by assessee - HELD THAT:- This Court is of the view that the present writ petition is not maintainable inasmuch as the petitioner has not followed the procedure laid down in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] prior to the filing of present writ petition. It is pertinent to mention that in the said judgment, it has been held by the Supreme Court that if an assessee is aggrieved by a reassessment notice, he is entitled to file objections before the Assessing Officer, who is bound to dispose of the same by way of a speaking order. Consequently, this Court is of the view that since the alternative effective remedy has not been resorted to, the present writ petition is not maintainable. Though in the instant case, the petitioner has written a letter in response to the reasons received by it, yet it has not filed any objections. In fact, in the said letter, a Power of Attorney, copy of ITR, Bank statement have only been enclosed and no specific objection has been raised. Consequently, this Court is in agreement with the preliminary objection raised by the learned counsel for the respondentrevenue that the present writ petition is premature. 2022 (4) TMI 688 Renewal u/s 80G(5)(vi) - Whether the Tribunal was justified in directing the Commissioner of Income Tax to grant renewal without any material to show that the activities of the respondent/Trust are charitable in nature? - HELD THAT:- This court is of the opinion that after considering the submissions made by the parties and analysing the entire materials placed before it, the Tribunal being the fact finding body, allowed the assessee's appeal. Moreover, the issue involved herein is question of fact and the same does not involve any principle of law, warranting interference - See METROARK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CALCUTTA [ 2004 (1) TMI 397 - SUPREME COURT] as held the law on the subject is clear. The Tribunal is the final fact-finding authority. Unless it is shown that there is something perverse in its finding, this Court would not interfere. No authority is required for this purpose. That apart, it is settled law that a court of appeal interferes not when the judgment under attack is not right, but only when it is shown to be wrong [Refer: Dollar Co. v. Collector of Madras[ 1975 (5) TMI 87 - SUPREME COURT] ] - Tax case Appeal filed by the Revenue stands dismissed. 2022 (4) TMI 687 Revision u/s 263 by CIT - Wrong claim of carry forward of long term capital loss - As per AO exempt income does not form part of the total income, therefore, it should not be considered for set off losses - PCIT observed that provision of section 74(1)(b) and 74(1)(c) of the Act clearly provide that loss relating to any long term capital asset shall be set off against income relating to any other long term capital asset, assessable for that assessment year and if the loss cannot be wholly so set off, then the amount of loss not so set off shall be carried forward to the following assessment year and so on - HELD THAT:- Assessee earned long term capital gain to the tune of ₹ 35,49,832/- which is exempted under section 10(38) of the Act, therefore, current year long term capital loss and previous year`s long term capital loss should not be set off against such exempted long term capital gain (LTCG) under section 10(38) of the Act. We note that provisions of law as envisaged in section 74(1)(b) and 74(1)(c) of the Income Tax Act are clear and unambiguous leaving no scope for more than one interpretation. The provisions of section 74(1)(b) and 74(1)(c) of the I.T. Act clearly provide that loss relating to any long term capital asset shall be set off against income relating to any other long term capital asset, assessable for that assessment year and if the loss cannot be wholly so set off, then the amount of loss not so set off shall be carried forward to the following assessment year and so on. However, we note that current year`s long term capital gain earned by the assessee was exempt under section 10(38) of the Act. Therefore, the long term capital gain, which is exempted under section 10(38) of the Act, would not enter in the computation of total income of the assessee, therefore, assessee cannot set off its current year and previous year`s long term capital loss against such long term capital gain, which is exempted under section 10(38) of the Act, therefore, the stand taken by the ld PCIT is wrong. Assessing officer, having examined the assessee`s claim has not allowed the assessee`s current year and previous year`s long term capital loss against such long term capital gain, which is exempted under section 10(38) of the Act. Hence, view taken by the assessing officer is sustainable in law. We note that assessee is trading in shares and securities, which were exempted from tax under section 10(38) of the Act, therefore the capital gain exempted from tax, will not form part of total income and it is also not considered for set off of long term capital losses. Therefore, stand taken by the assessing officer that assessee should not utilize the exempt income to set off the losses, is correct. Since the exempt income does not form part of the total income, therefore, it should not be considered for set off losses and therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue - Decided in favour of assessee. 2022 (4) TMI 686 Late filing fee under section 234E - Whether fee under section 234E of the Act can be levied while processing of statements of tax deducted at source under section 200A(1) of the Act for the period prior to 1st June 2015, and thus whether clause (c) to section 200A sub section (1) of the Act, as substituted by Finance Act, 2015, is retrospective in nature? - HELD THAT:- Whether clause (c) of section 200A(1), as substituted by Finance Act, 2015, w.e.f. 01.06.2015, whereby the A.O. was enabled to compute the fee under section 234E of the Act while processing of statement of tax deducted at source, is prospective in nature has came up for adjudication before the Hon ble High Courts of various States. The first decision was rendered by the Hon ble Karnataka High Court in Fatheraj Singhvi v/s Union of India, [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] whereby the Hon ble High Court held that such an amendment is prospective in nature and thus intimation issued under section 200A of the Act for computation and intimation of payment of fee under section 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. Also see M/S. OLARI LITTLE FLOWER KURIES [ 2022 (2) TMI 1061 - KERALAHIGH COURT] Thus the impugned orders passed by the learned CIT(A) is not sustainable and the late fee levied under section 234E vide intimation issued under section 200A of the Act, for the period prior to 01.06.2015, is directed to be deleted for the assessment years under consideration in present appeals. - Decided in favour of assessee. 2022 (4) TMI 685 Capital gain computation - FMV determination of property - objection filed by the assessee on the issue of valuation of the property dismised as the issue is not emanating from order passed by the Assessing Officer u/s.154 - AO has referred valuation of the property to determine fair market value of the property as per request of the assessee, however, completed assessment without waiting for report of the DVO - HELD THAT:- We find that when the Assessing Officer has referred valuation of the property to the DVO, the A.O. ought to have waited for report of the DVO to determine fair market value of the property - when the AO has revised fair market value of the property, as per valuation report of the DVO, then in our considered view, the issue of fair market value of the property sold by the assessee is merged with rectification order passed by the Assessing Officer u/s.154/155 and thus, when the assessee has challenged value determined by the Assessing Officer on the basis of report of the DVO, the learned CIT(A) ought to have dealt with objection filed by the assessee. In this case, the learned CIT(A), without considering objection filed by the assessee on the issue of valuation of the property has simply dismissed appeal filed by the assessee on technical reasons by holding that the issue is not emanating from order passed by the Assessing Officer u/s.154 of the Act. Therefore, we are of the considered view that there is an error in the order passed by the learned CIT(A), inasmuch as not considering the issue raised by the assessee and thus, we set aside order passed by the learned CIT(A) and restore the issue back to the file of the AO and direct the A.O. to deal with objections filed by the assessee on the issue of fair market value determined by the DVO before invoking provisions of section 50C - Assessee Appeal allowed for statistical purposes. 2022 (4) TMI 684 Setting off the long term capital loss arising on sale of shares not subject to STT against long term capital gain arising from sale of Shares subjected to STT exempt from tax under section 10(38) - whether the assessee was legally correct in claiming carry forward of full amount of losses without setting of such losses against the Long-Term Capital Gain exempted u/s 10(38)? - HELD THAT:- Having considered the scheme of law as also the interpretation taken in various legal precedents discussed above including the binding decision of Hon ble Jurisdictional High Court of Gujarat in Kishorbhai Bhikhabhai Virani [ 2015 (2) TMI 807 - GUJARAT HIGH COURT ] we are inclined to hold that the assessee has rightly claimed the carry forward of Long-Term Capital Loss (STT not paid) and Short-Term Capital Loss without setting off against the exempted Long-Term Capital Gain (STT paid) u/s 10(38). At this stage we would also like to make an additional mention that even if assume, without accepting, that the revenue s contention is correct in setting off losses against exempt income [long term capital gain u/s 10(38)], there would be an absurd outcome. We find that the lower authorities are not justified in setting off losses against the exempted long-term capital gain thereby reducing the quantum of carry forward of losses claimed by the assessee. We therefore direct the Ld. AO to allow full carry-forward of losses as claimed by the assessee without set-off against exempted long-term capital gain. Appeal of assessee allowed. 2022 (4) TMI 683 Exemption u/s 11 - rejection of approval u/s 12AA(1)(b)(ii) - assessee has not furnished the requisite details in response to the query raised through email - HELD THAT:- Admittedly, the assessing after making the application for the registration under section 12AA of the Act should be vigilant enough to pursue the same. As such the job of the assessee does not come to an end on making the application for registration, rather after making the application, the job of the assessee begins to satisfy the learned CIT exemption in order to get the registration under section 12AA of the Act which is possible after making necessary compliances to the enquiries raised by the learned CIT exemption. Admittedly the assessee is carrying out charitable activities which is evident from the fact that the learned CIT exemption on a later date has granted registration under section 12AA to the assessee which is effective from the assessment year 2020-21 - assessee shall not be eligible for the benefit of exemption under section 11 of the Act for the assessment year 2019-20 for the reason that the registration application was rejected by the learned CIT exemption due to procedural lapse i.e. non-compliance of the notice issued by the learned CIT exemption. To our understanding, the assessee should not suffer merely on account of non-compliance particularly in a situation when its activities are genuine. Accordingly, in the interest of justice and fair play, we set aside the issue to the file of the learned CIT exemption for fresh adjudication - Appeal filed by the assessee is allowed for statistical purposes. 2022 (4) TMI 682 Reopening of assessment u/s 147 - Unexplained investment Addition u/s 69 - HELD THAT:- Admittedly in this case the assessee has not filed the return of income and the assessee has also admitted the fact that it had made investment in company, namely, Brahaspati Iron Steel Co. Pvt. Ltd. Therefore non filing of return of income and having an information regarding investment made by the assessee would be sufficient for the AO to reopen the assessment for verifying the genuineness of the investment and source of such investment - no reason to interfere in the finding of the learned CIT(Appeals) in respect of the reopening of the case. Hence, ground of the assessee s appeal are dismissed. Unexplained investment - Assessee has brought on record certain evidence that goes to prove that the amount was received from one of its Director, who herself is an income-tax assessee and filed her return of income. AO should have very well verified from the return of the concerned Director regarding source of such amount given to the assessee company. AO has also not stated as to what action was taken in the case of Director of the company. There is no dispute with regard to the fact that the impugned transaction was executed between two parties i.e. assessee company and its Director. Director is the giver of the amount in the transaction and the assessee company is the recipient of the amount. Hence, the Assessing Officer ought to have investigated from both the parties for verifying the veracity of the transaction. The assessee has discharged its primary burden by furnishing the source of the investment. Under these facts it was open to Assessing Authority to make further investigation. In the absence of bringing any adverse material regarding creditworthiness of the Director and genuineness of the transaction addition made and sustained by the learned CIT(Appeals) is not justified - Decided partly in favour of assessee. 2022 (4) TMI 681 Rectification of mistake u/s 154 - agriculture income v/s business income - HELD THAT:- Assessee is engaged in agriculture produce and the same was sold during the year under consideration. However the AO has not treated as agriculture income. The assessee has filed application under Section 154 mentioning therein that the assessee company has shown income which is exempt from tax. The prayer of the assessee is that application filed by the assessee under section 154 of the Act was not properly disposed off without providing adequate opportunity to the assessee. In the interest of equity and justice, the appeal of the assessee is remand to the file of the CIT (A) to decide it afresh by providing adequate opportunity of hearing to the assessee. We don t have any hesitation to condone the delay of 4 years for filing the application under section 154 of the IT Act due to reasonable cause and genuine in nature and we consider accordingly, it is a fit case for remand for proper adjudication of the case by following the established procedure laid down. under rules 46A(1), (2) and (3) of the Rules which we order accordingly. The impugned order passed by the Lower authority is hereby quashed and set aside. The appeal is remanded to the Commissioner of Income-tax. 2022 (4) TMI 680 Transfer of case u/s 127 - transferring the jurisdiction from AO, Delhi to AO, Gurugram - HELD THAT:- In the absence of the transfer order, as claimed to have been passed by the concerned Ld. Pr.CIT, Delhi on 27.09.2018, assessment order therefore, passed by the Assessing Officer is held to be without authority of law. It is incumbent upon the Revenue to demonstrate the validity of the order passed by the AO at Gurugram in the case of the assessee. The Revenue has on this ground grossly failed to furnish the order passed by the Ld. Pr. CIT u/s 127 of the Act conferring jurisdiction on AO who passed the impugned order. Hence, the assessment order is hereby quashed for want of necessary jurisdiction. However, the Revenue would be at liberty to file an appropriate application if the order of Ld. Pr.CIT, Delhi is traced/ retrieved for recalling of the present order. The appeal of the assessee is allowed. 2022 (4) TMI 679 Validity of order u/s 143(3) - time limit for issue of notice u/s 143(2) - mandation of issuance of notice under section 143(2) within the prescribed time limit - notice u/s 143(2) by the AO should have been issued on or before 31st March, 2009 but the AO issued the notice under section 143(2) on 28th August, 2009 and served on the assessee on 02.09.2009 which was beyond the time limit prescribed under the IT Act, 1961 - HELD THAT:- We do not agree with this contention of the ld. D/R because in the case in hand what is absent is the issuance of notice under section 143(2) within the prescribed time limit and not the service of the notice issued by the AO is disputed by the assessee. Only in the case where the notice issued under section 143(2) was disputed by the assessee on the point of service of the said notice but the fact of issuance of notice is already available on record, in such a case if the assessee has participated in the assessment proceedings in response to the notice under section 143(2), then subsequently the assessee cannot take the objection of notice issued under section 143(2) was not properly served on the assessee. Since it is a case of non-issuance of notice within the prescribed time under section 143(2), therefore, the initiation of scrutiny proceedings itself was without jurisdiction conferred by the provisions of section 143 - See M/S. TRAVANCORE DIAGNOSTICS (P) LTD [ 2016 (11) TMI 76 - KERALA HIGH COURT] Thus when the AO has passed the assessment order without properly issuing notice as prescribed under section 143(2), then the assessment order is not sustainable in law and the same is invalid - Appeal of assessee allowed. 2022 (4) TMI 678 Deduction u/s 54 - assessee has failed to deposit the net sale consideration before the due date of filing of return of income under section 139(1) - Whether deduction u/s 54 is to be allowed even if the investment in Capital Gain scheme is made within the due date prescribed u/s 139(4)? - HELD THAT:- No support to the contention of the learned A.R. that the expression furnishing the return of income under sub-section (1) of section 139 under section 54(2) of the Act should be construed to even include due date of filing return of income under section 139(4) of the Act. We are further of the view that such a construction, as proposed by the learned A.R., will render the time limit provided for filing return of income under section 139(1) of the Act completely otiose and will also be contrary to intention of the statute. Thus, we are of the view that the benefit under section 54 of the Act is not available to the assessee due to failure to deposit the amount of capital gain, which was not utilized for the purpose of purchase of new residential house, in account under Capital Gains Scheme on/or before the due date of filing of return of income under section 139(1) of the Act. As per assessee has utilized the amount for the purchase of new asset and paid the amount vide cheque dated 13.02.2015 and the amount has been utilised for the purchase of new asset prior to the due date of filing return of income under section 139(4) - It is pertinent to note that for claiming any benefit under section 54 of the Act, it is first of all required under sub section (1) that capital gains arising from transfer of long term capital asset should be utilized for the purpose of purchase of new residential house within a period of either one year before or two years after the date of transfer of earlier asset or the same has been utilized for construction of residential house within a period of three years from the date of such transfer. In the present case, it is relevant to note that the assessee sold the earlier house property on 31.01.2013, thus, the time period for utilization of the capital gains arising from such transfer was available till 31.01.2015, in case of purchase of new residential house and till 31.01.2016, in case of construction of the new residential house, under section 54(1) of the Act. It is an undisputed fact that in the present case, the assessee has not utilized the amount for the purpose of construction of the residential house and the initial amount of ₹ 50,00,000 and subsequent payment of ₹ 24,25,000 was made in respect of purchase of new residential house. Thus, in view of the above, the assessee was required to utilize the capital gains till 31.01.2015 i.e., within the period of two years from the date on which the earlier asset was sold, for the purpose of claiming benefit under section 54 of the Act. However, in the present case, though the first payment of ₹ 50,00,000 was made within a period of two years and thus not in dispute, the second payment of ₹ 24,25,000 was made vide cheque dated 13.02.2015, i.e. beyond the period of two years as per section 54(1) of the Act, for the purchase of new residential house. Thus, even if the provisions of section 54(2) of the Act are liberally construed, in view of judicial precedences relied upon by the learned A.R. in the present case, the assessee does not satisfy the conditions of section 54(1) of the Act in respect of amount of ₹ 24,25,000 utilized for the purpose of purchase of new asset beyond the period of two years from date of transfer of original asset. Thus, in view of the above, we do not find any merit even in the alternative claim made by the assessee under section 54 of the Act. Consequently, the order passed by the CIT(A) is upheld. The grounds raised by the assessee are dismissed. 2022 (4) TMI 677 Disallowance of deduction u/s 54F - assessee has converted his capital asset into stockin- trade and accrued capital gains which he invested in construction of residential unit and claimed exemption under section 54F - As per AO assessee has failed to substantiate his claim with supporting evidence to prove that both the properties are same on which the construction of residential house was carried out. Also assessee has failed to prove that he does not have any other residential property - whether the assessee can claim deduction u/s 54F in more than one year when he invests sale considerations received from sale of different capital assets in construction of one residential unit over the years when all other conditions are satisfied? - HELD THAT:- Deduction under section 54F of the Act is available in respect of capital gains arising from sale of more than one long term capital assets, not being residential house, against the construction or purchase of one residential house. We note that jurisdictional Bench of ITAT, Ahmedabad [ 2018 (12) TMI 822 - ITAT AHMEDABAD] has held that deduction u/s 54F is allowable on identical facts. Thus, the deduction u/s 54F of the Act claimed by assessee is allowable and therefore, we do not find any infirmity in the order passed passed by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 2022 (4) TMI 676 Assessment u/s 153C - Proof of incriminating material for the issuance of notice u/s 153C - whether seized documents were in the nature of accommodation entries only for routing the undisclosed income? - HELD THAT:- On a thorough and careful reading of the assessment order, we are unable to locate any observation of the Assessing Officer to demonstrate that the disputed additions were made with reference to any seized/incriminating materials found as a result of search and seizure operation. In fact, in course of hearing of these appeals before us, learned Departmental Representative fairly accepted the aforesaid factual position. Now, it is fairly well settled that where on the date of search and seizure operation assessment for the concerned assessment years have not abated, additions, if any, have to be made strictly with reference to seized/incriminating material found as a result of search and seizure. In this context, we rely upon the decision of the Hon ble Jurisdictional High Court in case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and SINHGAD TECHNICAL EDUCATION SOCIETY [ 2017 (8) TMI 1298 - SUPREME COURT] - Decided in favour of assessee. 2022 (4) TMI 675 Revision u/s 263 by CIT - assessee had not filed the relevant documents to come to an exact conclusion in respect of the claim of deduction under Section 80IA - contribution to guidance and the claim of deduction u/s.80IA of the Act allowed by AO in assessment year 2013-14, is to be withdrawn - HELD THAT:- We noted that the AO during the course of assessment proceedings, in both the years has applied his mind to the facts of the case by issuing show cause notice and calling for the information and examining the same. The AO, in both the years, allowed the claim of deduction u/s.80IA of the Act, after going through all the details and formed an opinion on the basis of details filed by the assessee in regard to various incomes i.e., including interest income in assessment year 2013-14. As regards to assessment year 2014-15, the AO has subsequently disallowed the claim of deduction u/s.80IA of the Act, in respect to flat maintenance charges, water charges, rent, grant received from transfer to income, interest on water charges and maintenance charges and miscellaneous income and lease premium. As the AO has applied his mind to the facts of the case and reached to a conclusion that the assessee has claimed deduction based on some evidences that means, he has taken a possible view. It is to be noticed that the Hon ble Madras High Court in the case of Arul Mariammal Textiles Ltd.,[ 2018 (8) TMI 1729 - MADRAS HIGH COURT ] has categorically held that interest on margin money by way of fixed deposits kept with the assessee s banker so as to enable bank to open a foreign letter of credit which was essential for purpose of import of critical components for carrying on business of the assessee, was eligible for claim of deduction u/s.80IA of the Act We noted that the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] as categorically held that once the AO after making due enquiries adopted one of the view and granted partial relief, CIT is not permitted to exercise power u/s.263 of the Act because when two views are possible and CIT does not agree with the view taken by the AO, the assessment order cannot be treated as erroneous as well as prejudicial to the interest of Revenue unless the view taken by the AO is unsustainable in law. Hence, keeping in mind entirety of facts, we are of the view that in both the years, the PCIT erred in revising the assessments u/s.263 of the Act without holding the assessments framed by the AO u/s.143(3) of the Act after due enquiry and investigation as erroneous as well as prejudicial to the interest of Revenue. In such circumstances, we set aside the revision orders passed by PCIT in both the assessment years and allow the appeals of assessee. 2022 (4) TMI 674 Long-term capital gain - Nature or land sold - Whether the assessee has transferred the agricultural land within the meaning of the provisions of section 2(14) of the Act and therefore the same is not subject to the capital gain? - HELD THAT:- Merely showing the land as agricultural land in the revenue records and furthermore the use of the land in the remote past is not decision factor to hold the land as agricultural land after considering the future use of the land which is for non-agricultural operations. As such the future use of the land will change the character of the land from agricultural to non-agricultural at the time of sale. In fact purpose of providing exemption to the agricultural land from the capital gain was to encourage cultivation of land and agricultural operations. Accordingly, a restricted meaning has to be given to the expression agricultural land as contemplated under section 2(14)(iiib) of the Act. Coming to the facts of the case, there is no ambiguity that the land at the time of transfer was not the agricultural land and the same was transferred for the purpose of residential project. Thus there was no use of the impugned land in the future for the purpose of agricultural activities. Therefore, to our mind the assessee is not entitled for claiming the land as agricultural land so as to get out of the purview of the provisions of capital gain. Thus we reject the contention of the learned AR for the assessee. Determining the cost of acquisition of the impugned land which was acquired by way of inheritance - Whether the assessee is entitled for the deduction of cost of acquisition based on the valuation report as on 1 April 1981 for the property acquired by way of inheritance? - Assessee is very much entitled against the full value of consideration from the transfer of capital asset, the deduction for the cost of acquisition of the capital asset. In other words, the same cannot be made nil merely on the reasoning that the assessee has not furnished any detail for the same. Admittedly, the primary onus lies upon the assessee to furnish the necessary details but in the event, the assessee fails to discharge the onus, it does not mean that the revenue can determine the income in arbitrarily manner. It is incumbent upon the revenue to calculate the income chargeable to tax in the manner provided under the statute. If the assessee failed to furnish the cost of acquisition, then the revenue was empowered to find out the same by exercising the authority provided under the statute under the provisions of section 131/133 (6) of the Act. But we find that the revenue has not exercised such powers. Assessee should also be entitled to adopt the value of the property, in a situation when the asset became the property of the previous owner before April 1, 1981, in terms of section 55(2)(b)(ii) of the Act. As such the assessee has the option to take actual cost or the fair market value of the asset (other than a depreciable asset), as on April 1, 1981 as the cost of acquisition. In such a situation, the period of holding shall be determined under section 2(42A) of the Act by including period for which such an asset was held by the previous owner. Accordingly, we hold that the assessee is entitled for the deduction towards the cost of acquisition of the impugned property against the full value of consideration for the amount shown in the valuation report as on 1 April 1981 as per the provisions of law. Hence, the ground of appeal of the assessee is partly allowed. 2022 (4) TMI 673 Penalty u/s. 271(1)(c) - unexplained cash credit - HELD THAT:- The assessee has furnished all the necessary details with respect to the credit entries which are placed on pages 12 to 44 of the paper book. Accordingly we hold that there was nothing which could lead to form believe that the assessee has concealed the particulars of income. In holding so we draw support and guidance from the judgment of Hon ble Gujarat High Court in the case of Commissioner of Income-tax v. Bhuramal Manickchand [ 1980 (8) TMI 41 - CALCUTTA HIGH COURT] Penalty proceedings are distinct and independent to the quantum proceedings. Therefore, any addition made during the quantum proceedings cannot lead to the penalty until and unless the independent verification carried out by the authorities below during the penalty proceedings. For example, if any addition has been made under the provisions of section 68 of the Act in the absence of non-reply from the loan party during the quantum proceedings. Now, during the penalty proceedings the same exercise has also to be carried out by the revenue authorities. As such the revenue authorities cannot rely the basis enumerating from the quantum proceedings for levying the penalty. Thus order of the authorities below for levying the penalty under the provisions of section 271(1)(c) of the Act on account of concealment of income with respect to unexplained cash credit under section 68 rejected. Addition of short-term capital gain and disallowance of long-term capital loss and treating the long-term capital gain as income from other sources - Documents filed by the assessee during the penalty proceedings cannot be brushed aside for levying the penalty on the reasoning that such documents were not filed during the quantum proceedings. In the given case, the assessee has disclosed the capital gain income but failed to file the necessary documents during the assessment proceedings which were admittedly filed during the penalty proceedings in support of his transactions for the transfer of lands. As long-term capital loss declared by the assessee for ₹58,000 against the sale of properties. The property was sold at a price of ₹3 Lacs and the capital loss was calculated after claiming the index cost of acquisition of the property. But, the AO disallowed the loss shown by the assessee and treated the sale consideration of ₹3 Lacs as income from other sources. The action of the AO was based on the reasoning that the assessee failed to furnish the supporting documentary evidence. Indeed, the assessee before the learned CIT-A during the assessment proceedings has furnished the balance sheet for the year 2002-03 wherein such investment was shown. Once the assessee has filed the supporting documents, the onus is shifted upon the revenue to disprove the contention of the assessee based on the documentary evidence. However, we note that the learned CIT-A without giving any cogent reason has not considered the financial statement filed by the assessee for the year 2002-03 As the penalty proceedings are distinct and independent to the quantum proceedings, in our considered view, penalty cannot be levied merely on the reasoning that some addition was made by the AO during the quantum proceedings. There has to be independent verification by the revenue authorities with respect to the additions made during the quantum proceedings to arrive at the satisfaction that the assessee has concealed the particulars of income. But we find that, the authorities below have not done so. Addition of capital contribution made by the assessee - Penalty has been levied by the revenue authorities merely on the reasoning that there was the quantum addition made during the quantum proceedings. The penalty proceedings being distinct and independent to quantum proceedings, the additions made during quantum proceedings cannot be subject to the penalty until and unless the necessary verification is a carried out by the revenue authorities. In view of the above and after considering the facts in totality, we are not convinced with the finding of the authorities below for levying the penalty under the provisions of section 271(1)(c) of the Act. - Decided in favour of assessee. 2022 (4) TMI 672 Capital gain computation - cost of acquisition of the immovable property sold as claimed by the assessee at ₹ 250/- per sq. yard being the fair market value as on 01.04.1981 - HELD THAT:- A perusal of the relevant findings/observations recorded by the learned PCIT in the order passed under Section 263 clearly shows that the similar issue was examined by him in the light of the submissions made on behalf of the assessee as well as the fresh valuation report of another Govt. approved Registered Valuer submitted by the assessee. After taking into consideration this relevant documentary evidence, the learned PCIT arrived at a conclusion that the value of land in question as on 01.04.1981 taken by the Assessing Officer cannot be taken at ₹ 80/- per sq. yard as the same was not proper considering the location of land, its distance from Airport, Railway line etc. He found that the value adopted by the Assessing Officer at ₹ 250/- per sq. yard was neither less nor more and it was reasonable considering the location and other factors like proximity distance from Airport, Railway line etc. In this regard, he also derived support from the valuation report of another approved valuer submitted by the assessee wherein the rates of ₹ 350/- per sq. yard, ₹ 400/- per sq. yard and ₹ 210/- per sq. yard were quoted as comparable instances. In our opinion, the similar issue thus has already been decided on merit by the learned PCIT in the case of Shri Yogeshbhai Laxmanbhai Makwana, one of the co-owners of the property in question, after taking into consideration all the relevant aspects and we do not find any justifiable reason to take a different view in the matter. We accordingly direct the Assessing Officer to adopt the rate of ₹ 250/- per sq. yard as the cost of acquisition as on 01.04.1981 being the fair market value of the property in question while computing the Long Term Capital Gain and allow Ground No.2 of the assessee s appeal. Area of land to be taken into consideration for determining cost of acquisition to be deducted while computing Long Term Capital Gain - HELD THAT:- We are of the view that what is to be considered for the purpose of computing the cost of acquisition which is deductible while computing the Long Term Capital Gain is the area of 5954 sq. yard of land which is actually transferred by the assessee and other co-owners to the purchaser and not the total area of land of 8470 sq. yards as originally acquired by them. In that view of the matter, we uphold the impugned order of the learned CIT(A) on this issue and dismiss Ground No.3 of the assessee s appeal. Whether the property sold by the assessee was comprising of any residential or commercial construction as claimed by the assessee? - HELD THAT:- As already noted that the findings recorded by the Assessing Officer as well as by the learned CIT(A) on the basis of the relevant documentary evidences especially the banakhat and final sale deed are sufficient to show that what was transferred by the assessee was only the non-agricultural open land and there was no transfer of any residential or commercial construction. The deduction on account of cost of acquisition is to be allowed with reference to the property sold or transferred by the assessee and since there is nothing on record to conclusively prove that the residential and commercial construction was also transferred by the assessee, we find ourselves in agreement with the authorities below that what was transferred or sold by the assessee was only the non-agricultural open land and the assessee, therefore, was not entitled for deduction on account of cost of acquisition of residential and commercial construction. Ground No.4 of the assessee s appeal is accordingly dismissed. Claim for deduction under Section 54 on account of investment made in residential house - HELD THAT:- As agreed by the learned representatives of both the sides, this issue is consequential to the issue involved in Ground no.4 of this appeal and since the same has already been decided by us against the assessee by holding that what was transferred by the assessee was the non-agricultural open land without there being any construction of residential house thereon. Following this conclusion drawn by us, we hold that the assessee is not entitled for exemption under Section 54 of the Act, but he is entitled for exemption under Section 54F as allowed by the authorities below. Ground No.5 of the assessee s appeal is accordingly dismissed. 2022 (4) TMI 671 Application of 40(a)(ia) on the evidential documents of identification and copy of ITR - HELD THAT:- In the case at hand, firstly, so far as payment of interest / finance charges to M/s Magma Leasing Finance Ltd is concern, a copy of ITR filed for AY 2010-2011 along-with a letter of confirmation of receipt is placed to substantiate the compliance of aforesaid provision, however in the absence of certificate from an accountant proving the twofold facts, as to whether the amount of interest in question is accounted as income and taxes due thereon has been paid to the credit of Government Treasury remained unestablished. Secondly so far as SREI Infrastructure Finance Ltd is concern, in support of assessee s claim, the reliance was placed on copy of PAN and a certificate of lower deduction obtained by the said NBFC from the Income Tax Authority and contended the due compliance of first provision to section 201(1) vis- -vis second proviso to section 40(a)(ia) however the assessee failed to substantiate how these documents alone testify the twofold establishment of aforesaid provision of law, therefore the appellant disentitled himself from immunity of being held as the assessee-in-default within the meaning of Section 201(1) of the Act and resultantly, un-distanced from application of provisions of section 40(a)(ia) of the Act. Thus, in the light of aforesaid observations, the ground number 1 is dismissed. Ad-hoc disallowance of business expenses - As per assessee AO had in a most arbitrary manner disallowed portion of expense applying ad-hoc percentile and which has been sustained by the Ld CIT(A), despite of the fact that, all these business expenditure debited to profit loss account and claimed in the return of income has all the valid characteristic laid in section 37(1) - HELD THAT:- We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis- -vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to substantiate its conclusion as logical. We couldn t also see remotely there is any mention of rationale in arriving at the percentile of disallowance in the present case, consequently we find substantial force in the claim of the assessee that devoid of any specific infirmity qua the assessee s claim for deduction of the aforementioned expenditure by the lower tax authorities, and for the reason, the ad-hoc disallowance carried out in a most arbitrary manner could by no means be held to be justified. Thus we, do not find favour with the view taken by the lower tax authorities, consequently we vacate the ad-hoc disallowance in its entirety and thereby allow the ground number 2 of the appeal. 2022 (4) TMI 670 Revision u/s 263 - AO allowing the claim of the assessee for loss on sale of shares as well as loss on future trading - HELD THAT:- As found by the learned CIT on examination of the relevant assessment records, the relevant details to ascertain the exact nature of transactions effected by the assessee in shares or future trading were not called for by the Assessing Officer during the course of assessment proceedings and there is nothing brought on record on behalf of the assessee to rebut or controvert this finding of fact specifically recorded by the learned CIT during the course of proceedings u/s 263 - It is thus clear that the claim of the assessee for loss on sale of shares and loss on future trading was allowed by the Assessing Officer without making the necessary inquiry which was called for in the facts and circumstances of the case and there was an error in the order of the Assessing Officer passed under Section 143(3) of the Act on this aspect of the matter as rightly pointed out by the learned CIT which was prejudicial to the interest of the Revenue. Understatement of closing WIP shown by the assessee in respect of Andhra Project - As assessee has contended that the said amount received during the year under consideration represented the liability of the assessee and there being nothing to show that the same represented income of the assessee for the year under consideration from Andhra Project, the learned CIT was not justified in treating the same as an income of the assessee for the year under consideration. We are inclined to accept this contention of the learned Counsel for the assessee. Moreover, this amount treated by the learned CIT as an income of the assessee for the year under consideration from Andhra Project has already been included by the assessee in the amount declared as his income from Andhra Project in the immediately succeeding year, i.e. AY 2010-11, and the addition of the same again in the year under consideration has clearly resulted in double addition which is not justified. After treating the amount as an income of the assessee for the year under consideration for Andhra Project, the balancing figure was treated by the learned CIT as a closing WIP in respect of Andhra Project as on 31.03.2009. Having held that the said addition made in the year under consideration is not sustainable, the balancing figure representing closing WIP in respect of Andhra Project and the amount understated on account of closing WIP in respect of Andhra Project would consequently be increased to that extent. Once this amount is treated as closing WIP of Andhra Project as on 31.03.2009 and added to the total income of the assessee for the year under consideration, it follows that the same would be taken as opening WIP in respect of Andhra Project for the immediate succeeding year, i.e. AY 2010-11. AO allowing wrongly the claim of the assessee for depreciation in respect of the block of asset of plant and machinery pertaining to Andhra Project and Earth-work project - As rightly contended by the learned Counsel for the assessee, even the maintenance work and labour work carried out by the assessee in respect of Earth-work project during the year under consideration involved use of plant and machinery and the assumption of the learned CIT, to the contrary, is without any basis. Moreover, as further contended by the learned Counsel for the assessee, the plant and machinery pertaining to Andhra Project as well as Earth-Work Project were kept ready for use by the assessee and, keeping in view the passive use, the assessee was entitled to claim depreciation in respect of the said plant and machinery. It is also pertinent to note here that, as per the concept of block of assets, individual item of plant and machinery losses its identity once it enters the block and the user condition is not required to be satisfied vis- -vis every item of plant and machinery for claiming the depreciation in respect of the entire block. In our opinion, the claim of the assessee for depreciation on plant and machinery pertaining to Andhra Project and Earth-work Project thus was rightly allowed by the Assessing Officer in the order passed under Section 143(3) of the Act and there was no error in the said order calling for any revision by the learned CIT under Section 263 of the Act. 2022 (4) TMI 669 Income deemed to accrue or arise in India - payment received from the Indian distributors/resellers towards sale of software license as Royalty - AO held that the revenue received by the assessee from sale of softwar is to be treated as income from Royalty to be taxed @ 15% as per Article 12 of India-USA DTAA - HELD THAT:- As decided in own case [ 2022 (2) TMI 820 - ITAT DELHI] consideration received by the assessee cannot be brought to tax as per India-USA DTAA. Since, the facts of the instant case are identical to the facts of the case decided by the Tribunal in assessee's own case for the immediately preceding assessment year, therefore, respectfully we hold that the payment received by the assessee on sale of software to India resellers/distributors is not in the nature of Royalty chargeable to tax u/s. 9(1)(vi) of the I.T. Act and under Article 12 of the India-USA DTAA. The ground of the assessee are accordingly allowed. 2022 (4) TMI 668 Estimation of income from contract business - Estimation of profits of the assessee at more than 40% - Application of specified rate of 8% of gross receipts - applicability of presumptive provisions of section 44AD - HELD THAT:- There is no dispute that the assessee's has earned a revenue as contract receipts and this fact is also supported by Form 26AS which shows that tax is being deducted at source on these receipts. The assessee is required to maintain books of accounts as the presumptive provisions of section 44AD is not application basis the turnover exceeding ₹ 1 crore which the assessee failed to do so. There is no hard and fast rule for estimating income from the civil construction business. However, section 44AD prescribes estimation from contract business in cases specified there at the rate of 8% of gross receipts. Though the assessee does not fall within the prescription of section 44AD, the presumptive rate of net profit of 8% incorporated in section 44AD reflects a legislative approved rate of net profit, that can be considered as fair and reasonable to estimate income from contract business in cases like that of the assessee, where the books of accounts are not maintained and when the details furnished are not found acceptable to the AO. The Hon'ble Delhi High Court in the case of Subodh Gupta [ 2014 (12) TMI 479 - DELHI HIGH COURT] has upheld the estimation of profits at 8% is reasonable when no evidence to the contrary is produced by the revenue. Therefore, considering the judicial precedence and overall facts and circumstances of the case, we are of the considered view that it would be fair and proper that the income from contract business of the assessee be estimated at 8 percent of the gross receipts.- Decided in favour of assessee. 2022 (4) TMI 667 Disallowance of commission paid - excessive expense on commission - AO partly disallowed the commission paid to three parties on the ground that, such disallowed portion was excessive, more than average rate and the same were paid to related parties - HELD THAT:- In so for commission paid to NRG Consultant Pvt. Ltd. is concerned, we found that, there was no marital available on record to suggest that, the said entity is either the Director or the share holder of the assessee to bring to the purview of related person . The basic requirement of applicability of Section 40A (2) of the Act is that, payment should be made to a related person i.e. to a person referred to in Clause (b), of sub-Section (2) of Section 40A of the Act. By respectfully following the ratio laid down in the case of Hero MotoCorp [ 2013 (8) TMI 57 - ITAT DELHI] and V. S. Dempo Co. (P.) (Ltd.) [ 2010 (10) TMI 711 - BOMBAY HIGH COURT] we hold that, in the absence of any material on record to show that NRG Consultant Pvt. Ltd. is a related person , the commission paid to NRG Consultant Pvt. Ltd. cannot be disallowed under section 40A(2) of the Act. Accordingly the said issue regarding the payment of commission made by the Assessee to NRG Consultant Pvt. Ltd. is allowed and decided in favour of the assessee. Payment of commission made to Trust Commodities Pvt. Ltd. and Miss. Seema Verma - The average rate of commission paid by the assessee to others in respect of Soybean meal was 12.5, but the rate of commission paid to Trust Commodities Pvt. Ltd. was 45 and the difference of rate of commission is 32.5%. Further, the average rate of commission paid by the assessee to others in respect of rice was 20, but rate of commission paid to Ms. Seema Verma was at 215 and the difference of rate of commission is at 195%. The said deference is not only excessive and the same is unrealistic in the market. The AO has rightly made the comparison of the average rate of commission paid by the assessee himself in the case of non related parties to come to the said conclusion. Further, the Ld. CIT(A) has also given specific opportunity to the counsel of the assessee to explain the reason for commission being extraordinary in excess over the average expenditure, but no substantive reason was furnished by the assessee even before CIT(A) proceedings. In our opinion, the said commissions paid to those two entities are not only excessive and also unrealistic compared to average rate of commission paid by the assessee itself. We uphold the disallowance made in respect of the payment of commission made by the Assessee to Trust Commodities Pvt. Ltd. and Miss. Seema Verma and decide the said issue in favour of the Revenue. Accordingly the Grounds of Appeal No. 1 to 3.2 are partly allowed. Whether CIT(A) has erred confirming the addition that was made against the principles of natural justice without confronting/cross examining to the third parties? - There is no iota of evidence to suggest that, the assessee has sought for cross examination of any of the parties before the lower authorities. Further assessee has became absolutely silent about its rights without seeking for cross examination of any of the parties concerned before the Lower Authorities, now at this stage assessee cannot take such plea before us. Accordingly Ground No. 4 is dismissed. 2022 (4) TMI 666 Penalty u/s 271(1)(C) - Unexplained Expenditure on Stamp Duty and Registration Charges made out of Undisclosed Income - HELD THAT:- The word conceal refers to the deliberate act on the part of the assessee. In the light of the above discussion and on analyzing the present facts of the case we note that undeniably the impugned cost was incurred towards the purchase of the land which were duly disclosed in the income tax return. Likewise, all the relevant property papers were duly filed by the assessee during the assessment proceedings which contains the details of the registration and stamp duty charges. The expenses which are in dispute for the imposition of the penalty have direct nexus with the cost of the properties purchased by the assessee which were duly disclosed. Thus it is transpired that there was no malafide intent on the part of the assessee to conceal the particulars of stamp duty and registration charges as the information for the same was available in the public domain which is directly connected with the purchase of disclosed properties. Since the purchases of properties have been disclosed in the income tax return, it cannot be inferred that the assessee had no mala-fide intent in not disclosing the connected expenses being stamp duty and registration charges. There was no dishonest intent of the assessee particularly in the given facts and circumstances where the assessee had sufficient income i.e. exceeding the amount invested in purchases of properties. Accordingly, we are of the view that the assessee inadvertently omitted to disclose the impugned cost in the income tax return without having any dishonest intent. Thus in such facts and circumstances, we hold that the penalty u/s 271(1)(c) of the Act, is not sustainable. - Decided in favour of assessee. 2022 (4) TMI 665 Disallowance made in respect of PF ESI in respect employee s contribution u/s. 36(1)(va) r.w.s. 2(24)(x) - assessee has not remitted the employees contribution on the due date as prescribed by the PF ESI Act, the contribution made belatedly cannot be allowed - HELD THAT:- We find that the CIT(A) erred in referring to the Amendment brought in by Finance Act 2021 w.e.f. 01.04.2021 which inserted an Explanation to section 36(1)(va) and section 43B of the Act and erred in holding it as clarificatory and so, retrospective in nature. Whereas we note that it is only prospective in nature and cannot disturb the binding judicial precedents in favour of assessee. However, we find that any way this issue is no longer res integra as held by this Tribunal in the case of Lumino Industries Ltd. [ 2021 (11) TMI 926 - ITAT KOLKATA] wherein assessee s favour view was taken by the Tribunal after holding that the amendment brought in by Finance Act, 2021 w.e.f 1.04.2021 is prospective in operation and so will be in force from AY 2021-22 onwards and not retrospective. AO to allow the deduction subject to verification as to whether the assessee has made the employee s contribution before the due date of filing of return of income. If the employees contribution was deposited before the due date of filing of return of income, then the AO to allow the deduction in respect of employees contribution towards PF and ESI. Therefore, we set aside the orders of the authorities below and restore back the matter to the file of AO to act accordingly. Appeal of the assessee is allowed for statistical purposes. 2022 (4) TMI 664 Exemption under section 54F - property sold was jointly owned by the assessee with his late father in the ratio of 27:73 - HELD THAT:- Undisputedly, the assessee was joint owner of property having 27% share. The 73% share in property was that of assessee s father.We find that the issue of exemption under section 54F of the Act had cropped up in the appeal of assessee s fathers [ 2019 (12) TMI 1588 - ITAT MUMBAI] as decided there exist 2 penthouses at the site developed by the developer as per the terms of agreement in modified development agreement - development agreement was entered by the assessee along with his son with share of 73:27 between them and it is clear that there exist 2 penthouses and two individual assessee. Therefore, each assessee will get separate exemption u/s 54F - This benefit is legally available to both the assessee. There are catena of cases in which courts have held that when there exists two portion of flats with one kitchen then the whole combined portion of the area will be treated as one single unit for the purpose of granting exemption u/s 54 as well as 54F. Accordingly, we direct the AO to grant exemption u/s 54F of the Act to each assessee and as per their choice. On record, assessee prefers to get penthouse occupied by his daughter as exemption u/s 54F and by legally AO should allow this penthouse as exemption u/s 54F Thus we hold that the assessee is eligible for exemption under section 54F of the Act, hence, ground of appeal by assessee is allowed for parity of reasons. Long Term Capital Gains - Sale of society flat - proportionate portion of land in the society - AO rejected the contention of assessee that sale consideration includes consideration for land - as argued agreement entered into by the assessee with the buyers of flats does not state that ownership of the land has been transferred to the buyers - HELD THAT:- CIT(A) allowed assessee s claim of Long Term Capital Gains is to be charged on sale of land. We find that there is no contrary material to dislodge the findings of CIT(A). Further this issue has been considered by the Co-ordinate Bench in the case of Late Shri Sunil Dutt, father of the assessee. The assessee and Late Shri Sunil Dutt were having joint ownership of the property in the ratio of 27:73. As per the proportionate area of flats occupied by him in respect of the total area of the building i.e. undivided share, the owner of the flat will get an automatic membership in the cooperative society in proportion to the undivided share. Since cooperative society owns the total area of the land and being a member of the society, he gets the ownership of the undivided share. As per the sale deed, it is clear that assessee gets a membership on the cooperative societies, it does mean that flat owners not only owns a super structure and also ownership right on the undivided share, therefore we are inclined to accept the findings of Ld. CIT(A) in distributing the sale proceeds into sale proceeds attributable to the land and super structure - Decided against revenue. 2022 (4) TMI 663 Disallowance u/s 14A - expenditure incurred for exempt income - HELD THAT:- As decided in M/s. Leena Kasbekar 2017 (8) TMI 845 - ITAT MUMBAI we find that in the absence of any direct nexus between the expenditure claimed against the exempt income, the AO cannot invoke the provisions of Section 14A read with Rule 8D of the Income Tax Rules, 1962. This finding is squarely applicable on the issue before us. Therefore, since no expenditure has been claimed to reduce any tax liability, there remains no basis to make any disallowance of expenditure against exempt income. We, therefore, delete the disallowance u/s 14A. - Appeal of assessee allowed. 2022 (4) TMI 662 Delayed employees contribution to PF ESI - AO invoked the provisions of Section 36(1)(va) of the Act and disallowed the amount - CIT-A held that the amendment brought in by the Finance Act, 2021 inserting Explanation to Section 36(1)(va) of the Act stated is retrospective in nature and therefore provision of Section 43B of the Act will not apply on the employees contribution towards PF ESI and the same deserves to be disallowed - HELD THAT:- As assessee has remitted the PF ESI dues before the date of filing of return of income u/s. 139(1) of the Act and the same was deposited , which fact is discernable from a perusal of the Tax Audit Report (TAR) and on a perusal of the same it is seen that the assessee has deposited employees contribution before the due date of filing of the return. See LUMINO INDUSTRIES LTD. [ 2021 (11) TMI 926 - ITAT KOLKATA] Therefore allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the amendment is not applicable to this assessment years (Assessment Year 2019-20) under consideration. - Appeal of assessee allowed. 2022 (4) TMI 642 Nature of expenditure - Replacement of parts in machineries treated as capital in nature - reference to Technical Write Up, Details of spares consumed at regular intervals for various Asst. years - HELD THAT:- We need not labour ourself in coming to a conclusion that the Replacement of parts in machineries treated as Not Capital but Revenue in nature for a power generating company, these bucket spares are in the nature of consumables spares only notwithstanding its high cost. The buckets are designed with special profile of airfoil cross section for efficient energy conversion.Due to high working temperature of around 800' C and high speed of the turbine (5100 RPM), this component is the most critical in the turbine and failure of this component may lead to catastrophic damage to the machine. As seen from the Original Equipment Manufacturer namely BHEL/General Electric, USA have very categorically prescribed the operating life of the above bucket which helps to ensure trouble free operation and to avoid any catastrophic damage to the machine - also stated that by replacement of the buckets on completion of 48000 hours of continuous operation the power generation capacity is neither increased nor is the power plant efficiency or life of the plant gets increased. Replacement of parts is Capital or Revenue is No more Res integra based on the observation made by the Hon ble Supreme Court in the case of CIT V/s. Saravana Spinning Mills[ 2007 (8) TMI 16 - SUPREME COURT] and CIT V/s. Sri Mangayarkarasi Mills (P) Ltd. [ 2009 (7) TMI 17 - SUPREME COURT] wherein held that when certain parts of an air-conditioner or a T.V. is replaced, it does not amount to replacement of entire unit. Applying the same logic to the facts of the assessee s case, it can be said that there is no replacement of the gas turbine as a whole but certain repair and replacement to some of the parts of the gas turbine, which does not result in bringing into existence a new asset of enduring nature, rather, the repair and maintenance are of recurring nature and essentially required for smooth running of business of the assessee i.e, generation of power. Replacement of spares in the machineries would be allowable as Revenue expenditure only and addition made by the AO is directed to be deleted. Thus the Department ground is rejected. Claim of deduction u/s.80IA - initial assessment year - additional claim of deduction in respect of profit of 250MW Power Station denied on the ground that assessee neither obtained or filed audit report nor claimed deduction under s.80IA of the Act at the time of filing of original return of income - HELD THAT:- The issue is now settled by the Circular No.1/2016 issued by the CBDT that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that sub-section. The Circular further clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 80IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. Thus the Assessing Officers are directed to allow deduction u/s 80IA in accordance with this clarification and Standing Counsels/D.R.s are suitably instructed pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year' as mentioned in subsection (5) of section 80IA Following this Circular the SLP filed by the department was also dismissed against High Court's ruling that loss in year earlier to initial assessment year already absorbed against profit of other business cannot be notionally brought forward and set off against profits of eligible business as no such mandate is provided in section 80-IA(5) reported in Assistant Commissioner of Income-tax, Tirupur -Vs- Velayudhaswamy Spinning Mills (P.) Ltd. [ 2016 (11) TMI 373 - SC ORDER] - Following the same we hereby reject the Grounds of appeal filed by the Revenue and allow the claim of deduction u/s.80IA in favour of the assessee. Disallowance under s.14A r.w.r. 8D - HELD THAT:- The issue is now settled by the Hon ble Supreme Court in the case of Maxopp Investment Ltd. Vs- Commissioner of Income Tax, New Delhi [ 2018 (3) TMI 805 - SUPREME COURT] wherein it clearly held that Rule 8D is prospective in nature and could not have been made applicable in respect of assessment years prior to 2007 when this rule was inserted w.e.f. March 24, 2008 vide Income Tax (Fifth Amendment) Rules, 2008. Further jurisdictional High Court in the case of Principal Commissioner of Income-tax-4 Vs- Sintex Industries Ltd. [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT] wherein it is clearly held that the Expenditure incurred in relation to income not includible in total income (Administrative expenses) - Whether where assessee already had its own surplus fund against which minor investment was made, no question of making any disallowance of expenditure in respect of interest and administrative expenses under section 14A arose and, therefore, there was no question of any estimation of expenditure in respect of interest and administrative expenses under rule 8D - Thus we clear in our mind the direction given by the Ld CIT[A] to apply Rule 8D is not proper and there being the surplus funds were invested by the assessee and there were no administrative expenses, the disallowance made u/s.14A is unwarranted and liable to be deleted. Thus the Cross Objection filed by the assessee is allowed by deleting the addition made u/s.14A Depreciation on Managing Director s residence - HELD THAT:- As the building is used for official-cumresidential purpose by the Managing Director, with all office facilities we find that 10% depreciation can be granted on this Building and direct the AO to allow the same. Accordingly the CO filed on this ground is allowed. Disallowance of contribution made to various organizations - CIT[A] granted relief in cases were the assessee has submitted Certificate of Registration of 80G in respect of payments made to SVADES and DEEP and balance amount was confirmed - HELD THAT:- In our considered view the CIT[A] has granted appropriate relief to the assessee, which does not require any further inference. Accordingly the CO filed on this ground is dismissed. Claim of deduction under 43B - interest payable to Power Finance Corporation which was not paid as per the provisions of section 43B of the Act disallowed - HELD THAT:- CIT(A) correctly by his detailed order has held that the AO was correct in not allowing the deduction of interest amounting to ₹ 2,49,82,597/-. However, the AO is directed to allow this as a deduction in AY 2008-09. Similarly, the interest payment disallowed in the earlier year, which was actually paid in the PY corresponding to AY 2007-08 should be allowed as deducting in this year. 2022 (4) TMI 641 Income from house property - Addition in respect of society maintenance charges - contentions of the Ld. AR are that the claim has to be allowed in addition to the deduction u/s 24 of the Act as these are society maintenance charges, which are mandatorily incurred irrespective of the property let out or vacant - HELD THAT:- As observed that the assessee has paid society maintenance charges which is stated to be the obligation of the lessee and the same is duly included in the rent received by the assessee. In our considered view, this issue is squarely covered by the decisions of the Tribunal in the cases of Sharmila Tagore [ 2004 (6) TMI 591 - ITAT MUMBAI] and Bombay Oil Industries [ 2000 (11) TMI 1225 - ITAT MUMBAI] Respectfully following the decisions we hold that assessee is entitled for deduction u/s 23 apart from the standard deduction u/s 24(a) of the Act. We direct the AO to verify the claim of deduction of the assessee of the said society maintenance charges paid by the assessee but stated to be obligation of the lessee and stated to be duly included in the gross rent received by the assessee before allowing the claim of the assessee. - Decided in favour of assessee. Benami Property 2022 (4) TMI 661 Qualifications for appointment of Chairperson and Members of Appellate Tribunal - Constitutional validity of Sections 9 and 32(2)(a) of the Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - prayer is to declare Section 32(2)(a) of the Act of 1988 to be unconstitutional and to suitably amend the provision so as to make a person who had served as a Judge or the member of the Bar to be eligible to be appointed as Judicial Member of the Appellate Tribunal - HELD THAT:- The principle laid down in the case of Union of India v. R.Gandhi, President, Madras Bar Association,[ 2010 (5) TMI 393 - SUPREME COURT] has application to all the Tribunals and was not rendered on the fact situation alone. It is for that reason a specific direction was given that administrative support for all the Tribunals should be from the Ministry of Law and Justice. The principal issue decided qua the basic structure of constitution ensures the separation of powers and independence of the Judiciary from the clutches of the Executive. The matter was examined by the Division Bench of this court in the case of Shamnad Basheer v. Union of India and others [ 2015 (3) TMI 943 - MADRAS HIGH COURT] and considering the issue that the proceedings before the Tribunal would be judicial in nature, the necessity for appointment of a member from the judiciary or the bar was realized. It was for the reason that prior to constitution of the Tribunal, the adjudication of the issue was by the courts. Therefore, with the constitution of the tribunals, they would be discharging the work earlier discharged by the courts and adopting the Westminister policy which prescribes the qualification akin to that of the judicial officer who has been dealing with such matters prior to the constitution of the tribunal. The necessity and importance of a judicial member and, that too, a person who served as a Judge or a member of the Bar was felt and, accordingly, the Division Bench of this Court held certain provisions of the Trademarks Act, 1999 and the Patents Act, 1970 to be unconstitutional. It is true that the extent of judicial review that can be exercised in a given case is quite limited. Though a constitutional court can declare a provision to be unconstitutional, it should not give any direction to the Legislature to make an amendment in a particular way. The judicial restraint is, therefore, being hailed as a virtue. However, in a case where a direction has been given by the Apex Court to have the judicial independence, it is required to be followed by the High Courts as well as the Executive. In view of the position aforesaid, we hold Section 32(2)(a) of the Act of 1988 to be unconstitutional.The respondent is directed to frame the provision keeping in mind the directions of the Apex Court in the case of Union of India v. R.Gandhi, President, Madras Bar Association [ 2010 (5) TMI 393 - SUPREME COURT] . The amended provision may be brought in immediately. Customs 2022 (4) TMI 660 Levy of penalty u/s 112(a), 114AA and 116 of the Customs Act, 1962 - confiscation of Cement Block - HELD THAT:- Clearly, in the present matter Appellant has not acted in a responsible manner, thus any act or omission to do any act, which renders the goods liable to confiscation attracts penalty. In this background the charges under Section 112(a), 114AA of the Customs Act as well as Section 116 of the Customs Act are upheld. The impugned order under challenge, is upheld - appeal dismissed. Corporate Laws 2022 (4) TMI 659 Sanction of scheme of Arrangement involving amalgamation - Sections 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Since all the requisite statutory compliances have been fulfilled, petition is made absolute in terms of the prayer clauses of the said Company Scheme Petition. The Scheme is hereby sanctioned with the Appointed Date of 1st April, 2020. Application allowed. 2022 (4) TMI 658 Sanction of scheme of Arrangement - Section 230(4) read with Section 108 of the Companies Act, 2013 read with Rule 20 and other applicable provisions of the Companies (Management and Administration) Rules, 2014 and in accordance with Regulation 44(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed. 2022 (4) TMI 657 Sanction of Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard ot issuance of various notices also issued. The scheme is approved - application allowed. Insolvency & Bankruptcy 2022 (4) TMI 656 Validity of approved Resolution Plan - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The resolution plan presented by the resolution applicant Amit Metaliks in relation to the corporate debtor VSP Udyog was assailed before NCLAT and thereafter before Hon ble Supreme Court, which was found compliant of the provisions under IBC, and the Hon ble Supreme Court vide its judgment dated 13.05.2021 in the matter of India Resurgence ARC Private Limited [ 2021 (6) TMI 684 - SUPREME COURT ] held that the business decision taken in exercise of the commercial wisdom of Committee of Creditors cannot be interfered with unless creditors belonging to a class being similarly situated are denied fair and equitable treatment. The statement of the Ld. Sr. Counsel for the Respondents that the Successful Resolution Applicant is not interested in seeking a fresh electricity connection from the Appellant / DVC and therefore, the provisions made in the approved resolution plan regarding waiver of charges etc. for a fresh connection from the Appellant-DVC will not be of concern to DVC. The Ld. Sr. Counsel for the Appellant has stated that the Successful Resolution Applicant is free to take a new connection from any other discom under WBERC Regulations - any provision in the approved resolution plan with relates to any waiver or relief with regard to a new connection from the Appellant/DVC need not be gone into and hence, insofar as the rights of the Successful Resolution Applicant about taking a new connection from the Appellant/DVC is concerned, it is not significant and the Successful Resolution Applicant is at liberty to take a new electricity connection from any discom under WBERC Regulations. In view of the fact that the resolution plan of the corporate debtor VSP Udyog has been affirmed by Hon ble Supreme Court in the matter of India Resurgence (Supra), the challenge to the approval of resolution plan cannot be sustained - appeal disposed off. 2022 (4) TMI 655 Condonation of delay of 236 days in filing the miscellaneous application - HELD THAT:- In the present case it is seen that inspite of Liquidator intimating to the Applicant to file its claim, the Applicant has not preferred to file its claim before the Liquidator on time and has filed this Application seeking condonation of delay of 236 days in filing the miscellaneous application seeking to set aside the rejection of claim order passed by the Respondent. Further, the reasons ascribed to the same was that due to pandemic, they are unable to file the Application. The averments made in the Counter, it is seen that all the properties of the Corporate Debtor are sold and the sale proceeds have been realized and distributed to the stakeholders under Section 53 of IBC, 2016 and pursuant thereto, the Liquidator has also filed an Application seeking dissolution of the Corporate Debtor, which is pending adjudication before this Tribunal. Hence, the delay cannot be condoned since the realization has already been made - Application dismissed. 2022 (4) TMI 654 Validity of Resolution Plan - placing of Resolution Plan of the Corporate Debtor before the Committee of Creditors - direction to Committee of Creditors of the Corporate Debtor to consider the Resolution Plan - backing of settlement proposal mooted by the promoters through Section 12A application - whether the Resolution Plan of the Applicant can be placed before the CoC for its consideration? - HELD THAT:- The Applicant instead of providing the documents as sought for by the RP, has replied by way of an email on 29.10.2020 that it has made its stand clear with regard to Section 29A of IBC, 2016 compliance in the previous correspondence, therefore not required to provide any further information. Even after subsequent communication, instead of providing the information as sought for by the RP, the Applicant has sought to set up a meeting with the members of the CoC. It is to be seen that it is the duty of the Resolution Professional under Section 25(2)(h) of IBC, 2016 to invite the prospective Resolution Applicant, who fulfil the criteria laid down by the RP with the approval of the CoC and as per Section 30(1) of IBC, 2016 the Resolution Applicant is required to submit an affidavit that he is eligible under Section 29A of IBC, 2016 along with Resolution Plan. Further Regulation 36A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 states that the RP shall specify the criteria for the prospective Resolution Applicant as approved by the CoC in accordance with clause of Section 25(2)(h) of IBC, 2016. Thus, it is seen that as per Regulation 36A(9) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the RP is at liberty to seek any additional clarification or additional information or document from the prospective Resolution Applicants for conducting due diligence under Sub - Regulation 8 of Regulation 36A in relation to provisions of clause (h) of sub-section (2) of 25 and provisions of Section 29A of the Code and other requirements as specified in the Invitation for Expression of Interest and the Resolution Applicant is duty bound to provide such information as sought by the RP - Thus, it is required to be noted that the RP is at liberty to seek additional information to conduct due diligence to find out the criteria mentioned in Information Memorandum and also to conduct due diligence that the prospective Resolution Applicant is not hit by Section 29A of IBC, 2016. In any case, at this point of time, the Resolution Plan submitted by one Earth Element has already been approved by the CoC in compliance with the provisions of IBC, 2016 and it has been stated that the plan approved by the CoC is far superior in value to the plan submitted by the Applicant. Further, we have also not found any legal infirmity in the action taken by the RP in conducting due diligence under Section 29A of IBC, 2016 as stipulated under Regulation 36A(8) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and also the Applicant has failed to place on record the additional document as sought for by the RP under Regulation 36A(9) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Application dismissed. 2022 (4) TMI 653 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The contention of the Learned Counsel for the Operational Creditor is that the Corporate Debtor has committed default in the payment of the sum which is due and payable by the Corporate Debtor to the Operational Creditor. This Adjudicating Authority in order to come to the conclusion that the Corporate Debtor has committed default in paying the debt amount which is due to the Operational Creditor, as to the facts of the present case has to examine in detail the clauses contained in the O M Agreements dated 23.08.2013 entered into between the parties. It is seen that the Corporate Debtor has enclosed all communications which were exchanged between the parties. On the perusal of the said documents, it is sufficiently made clear that the Corporate Debtor has raised a 'dispute' in relation to the delay in procurement of MVRE bags, delay in completion of the work on the basis on which the work has been progressed in relation to the Operational Creditor - it is noted from the application that the Corporate Debtor has not replied to the demand notice sent by the Operational Creditor. However, it is seen that the Corporate Debtor has raised various disputes and deficiencies in the work carried out by the Operational Creditor and that the series of letters exchanged between the parties show that there is a dispute between the parties in relation to work done by the Operational Creditor. This Tribunal being an Adjudicating Authority under the IBC, 2016 and the proceedings before this Tribunal being summary in nature, this Tribunal unlike a Civil Court cannot indulge in the luxury of taking evidence and that the debt and default on the part of the Corporate Debtor is required to be proved by the Operational Creditor beyond reasonable doubt - there exists a dispute between the parties and the said dispute required further investigation and hence the Application filed by the Applicant/Operational Creditor under Section 9 of the IBC, 2016 stands dismissed. Application dismissed. 2022 (4) TMI 652 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether Ms. Anita Patole was duly authorised to depose on behalf of the applicants in the present application filed under Section 7 of the Code for initiation of CIRP against the Corporate Debtor? - applicability of time limitation - HELD THAT:- As per the notification dated 15.01.2003 issued by the Ministry of Finance and Company Affairs (Department of Economic Affairs), the UTI Trustee Company Private Limited, in its capacity as trustee of UTI Mutual Fund was notified as the specified company for the purpose of the Unit Trust of India (Transfer of Undertaking and Repeal) Ac, 2002. Further as per the Extracts of the Minutes of the meeting of the Board of Directors of Applicant No. 2 held on 07.04.2003, the UTI Asset Management Company Private Limited was empowered to institute/defend Legal Actions (both Civil and Criminal)'either by itself or through Lead Institutions etc. Therefore, it is clear that Ms. Anita Patole was duly authorised by the concerned authority to file the affidavit in support of Application under Section 7 of the Code on behalf of Applicant No. 2. Whether the present application has been filed within limitation? - HELD THAT:- The Respondent has also laid down three scenarios i.e. in case the default is considered from default of interest amount then the date of default is 31.12.1996, in case the default is considered from the default of principal amount then the date of default is 14.06.1996 and in case the date of default is considered as per the Restructuring Scheme then the date of default is 01.01.1999, therefore, the petition is time barred. The Financial Creditors have rebutted this contention of the Respondent/Corporate Debtor by contending that the Respondent has time and again defaulted in payment of the due amount therefore, there is a continuous default by the Corporate Debtor. It has also been contented that no proceedings could be taken due to BIFR Reference and as soon as the BIFR reference was abated, the legal bar ended and Financial Creditors filed the present petition enforcing their right. Section 238A of the Code came to be inserted vide the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, with effect retrospectively from 06.06.2018. Combined reading of Section 238A of the Code and Article 137 of the Limitation Act, 1963 reveals that the period of limitation for computation under the code will be 3 years from when the right to initiate accrues i.e. in the present case the date of default. Furthermore, Section 18 and Section 19 state that a fresh period will be computed from the time when the acknowledgment was so signed and when the last payment was made before the expiration of the prescribed period respectively. It is settled proposition of law that provisions of the Limitation Act, 1963 are applicable during computing limitation under the Insolvency and Bankruptcy Code, 2016 - Admittedly, in the instant case the Corporate Debtor was referred to SICA on 08.12.2000. While SICA came to be repealed, Section 7 of the Code was enforced w.e.f. from 01.12.2016. It is therefore, clear that on account of statutory bar the period commencing from 08.12.2000 to 01.12.2016 stands excluded under the aforesaid provisions rendering the Financial Creditors ineligible to file for recovery of outstanding debt or take any other appropriate remedy in law through the ordinary mode i.e. by way of filing of suit etc. Therefore, for the purpose of limitation such period has to be excluded and the petition has been filed well within limitation. Upon a detailed consideration of the application and documents filed by the Applicant, it is apparent that the payment of the claim amount has been defaulted by the Corporate Debtor. Hence, this Adjudicating Authority is inclined to commence CIRP against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Application admitted - moratorium declared. 2022 (4) TMI 651 Revival of Resolution Plan - petition already closed due to settlement and there was no Insolvency Resolution Process pending against the Corporate Debtor - HELD THAT:- There is no dispute between the parties that the Application under Section 9 filed by the Operational Creditor was closed on 20th December, 2021 on the ground that CIRP of the Corporate Debtor has already been initiated in CP(IB) No. 813/2020. After the aforesaid Order dated 20th December, 2021, the Operational Creditor filed the I.A. No. 6010 of 2021 for modification of the Order but till the time modification came to be considered by the Adjudicating Authority, Adjudicating Authority was aware that CIRP in CP(IB) No. 813/2020 has already been closed hence there was no impediment in reviving the Application. It is true that I.A. 6010/2021 only praying for liberty to revive but on account of actual happening of settlement in CP(IB) No. 813/2020, no error has been committed by the Adjudicating Authority in reviving the CP(IB) No. 315/ND/2021. The Appeal is dismissed. PMLA 2022 (4) TMI 650 Smuggling - gold jewellery - Constitutional Validity of Section 45 of the PMLA - Section 135 of the Customs Act, Section 12 of the Passport Act and also under the penal provision of Prevention of Money Laundering Act - HELD THAT:- It is needless to say that for registration of a crime under the PMLA, the only prerequisite is registration of a predicate/scheduled offence as prescribed in various paragraphs of the schedule appended to the Act nothing more than it. In other words, for initiating or setting the criminal law in motion under the PMLA, it is only that requirement of having a predicate/scheduled crime registered prior to it. Once an offence under the PMLA is registered on the basis of a scheduled offence, then it stands on its own and it thereafter does not require support of predicate/scheduled offence. It further does not depend upon the ultimate result of the predicate/scheduled offence. Even if the predicate/scheduled offence is compromised, compounded, quashed or the accused therein is/are acquitted, the investigation of ED does not get affected, wiped away or ceased to continue. It may continue till the ED concludes investigation and either files a complaint or closure report before the Court of competent jurisdiction. Besides the bar imposed in Section 45(1)(ii) of the PMLA, it is the bounden duty of the court to decide while disposing of an application for bail the prima facie material available to fortify commission of offence, gravity of offence, severity of punishment, opportunity of the petitioner of fleeing away and tempering with the evidence if the bail is granted to him. The complaint under the PMLA was registered on 5th May, 2021 vide ML Case No.1 of 2021. The petitioner was not found in his residence at Hyderabad. Finally he was apprehended from Lonavala on 28th November, 2021 - there is always a possibility that the petitioner may flee away in order to evade trial of the case. The petitioner having financial influence, there is every chance that the witnesses may be influenced by the petitioner. Therefore, the established tests for granting or refusal of a application for bail under Section 439 of the Cr.P.C also runs against the petitioner. Section 2(p) of the PMLA defines money laundering which has the meaning assigned to it in Section 3. Section 3 States that a person is guilty of the offence of money laundering, if he directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property - The petitioner with the help of his son, wife and brother adopted the procedure contained in 113(k) of the Customs Act to divert gold jewellery schedule for exportation in domestic market. The petitioner is not inclined to be released on bail - bail application dismissed. Service Tax 2022 (4) TMI 649 Constitutional Validity of Section 65B(44) of Finance Act - conclusion of proceedings in a time bound manner - time limitation - HELD THAT:- The petition is disposed of with a direction to Commissioner to treat the writ petition before this court as reply to the show cause notice dated 21.10.2021 and to conclude the proceedings expeditiously not later than eight weeks from the date of receipt of copy of the order passed today. Needless to state that the petitioner shall cooperate in the proceedings and shall not seek any unnecessary adjournment. The writ petition is disposed of. CST, VAT & Sales Tax 2022 (4) TMI 648 Refund of Compounding fee - no inspection or fault found with the records maintained by the petitioner nor there was any revision of assessment of the earlier period - TNVAT Act - HELD THAT:- Admittedly, the third respondent detained the petitioner's goods on 25.05.2016 for the reason that goods were taken to the un-registered place of business and the goods were released on 27.05.2016 after payment of the compounding fee of ₹ 4,44,191/-. As against the order of the third respondent collecting compounding fee, the petitioner preferred revision before the second respondent and the said revision was dismissed on 11.03.2019. Since the first respondent has no power to condone the delay in filing the second revision, the first respondent issued the impugned notice dated 10.09.2020 and returned the revision papers to the petitioner - this writ petition has been filed after a lapse of two years and the reason for the delay in filing this writ petition has not been explained by the petitioner. Hence, this writ petition suffer on the ground of delay and latches. The writ petition is accordingly dismissed. 2022 (4) TMI 647 Levy of purchase tax - equivalent paddy out of which rice obtained and sold to Project Director, World Food Programme - exemption as per Entry-30HH of List-a of the Schedule of rates under the OST Act - rice which is a notified first post goods - HELD THAT:- The State Government has admittedly issued a Notification under Section 3-B subjecting paddy to 4% purchase tax. Entry 149 of the rate list appended to the OST Act specifies 4% tax on the sales of the rice permitting set off of the purchase tax paid on paddy against such sale. However, in the present case, the sale to the World Food Programme (WFP) Project falls under Entry 30HH of the Tax Free List, and therefore no such exemption would be sought for and made available to the Petitioner. The argument that no purchase tax can be levied on paddy does not impress the Court. There is no complete ban on the imposition of purchase tax. In fact Section 3-B expressly permits levy of purchase tax on certain classes of goods. The view taken by the Tribunal in the present case, which is in favour of the Department and against the Assessee, does not appear to suffer from any illegality - the purchase tax is indeed leviable on the equivalent paddy out of which rice was sold to WFP, which sales may be exempt under Entry 30HH of List-a of the Schedule of rates under the OST Act. Also, even though rice may be a notified first point goods being exempted by a notification under Section 6 of the OST Act, the equivalent paddy would still be exigible to purchase tax at 4%. Whether in the facts and circumstances of the case rice which is a notified first post goods being exempted by notification under Section 6 of the OST Act under Entry- 30HH of List-a whether paddy used as input is subject to levy of purchase tax? - HELD THAT:- The amount involved being in substantial, the Court leaves the question open for consideration in some other appropriate case. The revision petition is disposed of. 2022 (4) TMI 646 Maintainability of appeal - benefit of rebate claim - Section 8 of LEAT Act read with Section 46 of VAT Act - HELD THAT:- An appeal under the provisions of Section 53 of VAT Act only lies if the case involves a substantial question of law. In the present case, the Assessing Authority while taking note of the facts which reflect in Para 5 of the order of Assessing Authority, passed an order of imposition of the tax under the provisions of LEAT Act and VAT Act amounting to ₹ 11,05,906/-. The same later on was reduced by Lower Appellate Authority, vide its order dated 10.11.2014. Both the authorities took into consideration the entire material produced before them, including the statement of customer of appellant as well, and passed order of imposition of tax under the aforesaid Act. The submission of appellant that the order of Lower Appellate Authority dated 10.11.2014 does not survive anymore, inasmuch as the same merged with the order of Appellate Board dated 15.02.2021 and thus, the rebate which was granted to appellant by the Lower Appellate Authority has also been taken away, is misconceived. The Appellate Board has dismissed the appeal preferred by appellant vide order dated 15.02.2021 as a result of which, the order of Lower Appellate Authority dated 10.11.2014 has been confirmed. Therefore, the rebates which were made available to the appellant by the Lower Appellate Authority i.e. Deputy Commissioner Commercial Tax in its order dated 10.11.2014 are still available to appellant having not been interfered with by the Appellate Board in its order. The appeal being devoid of merits stands dismissed at admission stage sans cost. 2022 (4) TMI 645 Input Tax Credit - purchase effected from the bogus dealer - main ground for rejecting the input tax credit claimed by the assessee is the report said to have been furnished by the Enforcement Officer - periods September 2011, December 2011, February 2012, March 2012 to June 2012 - HELD THAT:- The report of the Enforcement Officer said to have been uploaded in the departmental website alleging the bill trading activity by the selling dealers namely M/s. Rajguru Impex and Karnataka Metal Stores is the foundation for the case on hand. The authorities have not co-related the purchases made by the assessee with the alleged invoices of the selling dealers qua movement of goods. No attempt has been made by the Authorities to verify whether the said transactions based on which the input tax credit claimed was genuine or not. Merely placing reliance on the report of the Enforcement Authority, the input tax credit has been denied as no tax was paid by the selling dealer. Independent application of mind by the Prescribed Authority is sine qua non for taking decision. Further, it is well settled legal principle that the assessee claiming input tax credit is required to satisfy the authorities that he has purchased the goods from the registered selling dealers who have issued the invoices and collected the tax. The Department cannot deny the input tax credit merely for the reason that the selling dealer has not deposited the tax. Action has to be initiated against the selling dealer. The attempt made by the Department in denying the input tax credit as no tax was paid by the selling dealers may not be appreciated for the reason that the entitlement of the claim of input tax credit by the registered dealer cannot be stretched to the extent of compliance made by the selling dealers in depositing the tax amount in full or part thereof. There are no perversity or irregularity in the order of the Tribunal impugned. Accordingly, the substantial questions of law answered in favour of the assessee and against the Revenue. 2022 (4) TMI 644 Maintainability of petition - best judgement assessment - suppression of facts or not - time limitation - periods October 2015 to June 2017 - HELD THAT:- The statutory authority has found in Ext.P2 that the assessee had deliberately concealed the fact of payment of freight taxable at their end and concluded that there was an intent to evade service tax and hence the extended period of limitation can be invoked. The consideration in the impugned order of assessment is a mixed question of law and fact and can be revisited only by an appreciation of the various disputed facts. Section 73 provides for a time limit of thirty months to serve notice when there is a short levy or otherwise of service tax. This period will not apply if, there is fraud, collusion, wilful misstatement, suppression of facts, in which case the period will extend to five years. In the impugned order, the assessing officer had concluded that there was suppression and hence the period of thirty months will not apply. In the light of the disputed questions of fact, which are clearly evident from the impugned order of assessment, this is not a fit case to interfere in exercise under Article 226 of the Constitution of India. The writ petition is liable to be dismissed. The writ petition is dismissed. Indian Laws 2022 (4) TMI 643 Dishonor of Cheque - compromise has been arrived at between the parties and payment has been made - Section 138 of N.I. Act - HELD THAT:- It reveals that complainant has expressed that without any threat, inducement or pressure, she voluntarily entered into a compromise with the applicant with a view to improve their mutual relationships and to foster tranquility and peace between them as also in the society. As per the law laid down in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] , the applicant is required to pay 15% (application for compounding of offence has been filed in this case) of the cheque amount by way of cost to be deposited in pursuance of the compromise. This offence of Section 138 of Negotiable Instrument Act, is compoundable with the permission of this Court, as per the law laid down in the case of Damodar S. Prabhu and this Court does not find any reason for refusing the prayer of the complainant as well as applicant for granting permission to compound the offence. Hence, permission is granted. The impugned orders passed by the Courts below are hereby set aside - revision allowed.
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