TMI Tax Updates - e-Newsletter
April 17, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

1. Due dates for filing of Form GSTR-3B from the Tax Period of January, 2021

2. Shri Piyush Goyal chairs the first meeting of National Startup Advisory Council;

3. ₹ 98 crore heroin seized at IGI Airport by Custom officials

Notifications

Customs

1. 22/2021 - dated 15-4-2021 - ADD

Seeks to amend notification No. 14/2016-Customs (ADD), dated 21-04-2016, so as to extend the applicability of the said notification up to and inclusive of 20th October, 2021.

2. 44/2021 - dated 15-4-2021 - Cus (NT)

Sea Cargo Manifest and Transhipment (Second Amendment) Regulations, 2021

3. 42/2021 - dated 15-4-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

Income Tax

4. 32/2021 - dated 15-4-2021 - IT

Income-tax (10th Amendment) Rules, 2021 - Amends Rule 2DB. Other conditions to be satisfied by the pension fund

Money Laundering

5. S.O. 1648 (E) - dated 15-4-2021 - PMLA

Amendment in Notification No. S.O. 372(E), dated the 5th February, 2016

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD/DMP/P/CIR/2021/551 - dated 16-4-2021

Guidelines for warehousing norms for agricultural/agri-processed goods and non-agricultural goods (only base/industrial metals) underlying a commodity derivatives contract having the feature of physical delivery

IBC

2. IBBI/CIRP/2021 - dated 16-4-2021

Consideration of matters / issues by the committee of creditors on request by members of the committee.

Highlights / Catch Notes

GST

• AAR Unable to Decide Tax Liability on Solar HT XLPE and LT XLPE Cables Due to Lack of Documents.

  Case-Laws - AAR : Applicability or determination of liability to pay Tax - Solar HT XLPE & LT XLPE Cables - In the instant case, any decision on the issue cannot be taken, since the applicant has failed to provide the documents such as contract/agreement/tender. - it will not be possible to take a decision in the matter. - AAR
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• High Court Quashes Rejection of GST TRAN-1 Filing, Citing Rule 117 Extensions Until March 2020.

  Case-Laws - HC : Rejection of request for filing of GST TRAN-1 - Even according to the respondents, though Rule 117 of CGST Rules, 2017, originally stipulates that Form TRAN-1 is filed within 90 days, there was a periodical extension and the final extended date was 31.03.2020. In the present case, the impugned order itself came to be passed on 28.08.2019. - the communication impugned in the writ petition is quashed. - HC
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Income Tax

• Court Rules Jurisdictional Requirements for Section 147/148 Not Met; Notice Deemed 'Change of Opinion' and Dismissed.

  Case-Laws - HC : Reopening of assessment u/s 147 - the learned Single Judge was justified in coming to the conclusion that the jurisdictional requirements for invocation of Section 147/148 of the Act in the instant case were not satisfied and therefore, the impugned notice was only a case of 'change of opinion' and did not come within the scope and ambit of 'reason to believe'. - HC
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• Section 14A: Preventing Tax Deductions on Expenses Related to Exempt Income to Maintain Tax Integrity and Fairness.

  Case-Laws - HC : Disallowance u/s 14A r.w.r. 8D - The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. - HC
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• Assessment Reopened u/s 147 Due to Alleged Sham Transactions; Directors' Admissions Back Assessing Officer's Decision.

  Case-Laws - AT : Reopening of assessment u/s 147 - Sham transaction - accommodation entries - during the search directors of the company admitted of providing accommodation entry, which statement was not denied by the assessee except by making a bald statement that the statement given by the directors are general in nature. The ld. CIT(A) has made detailed analysis of the material available on record and justified the action of the AO in making the impugned order. - AT
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• CIT(A) cannot enhance income by computing book profits u/s 115JB if GTI and TI are nil.

  Case-Laws - AT : Power of CIT(A) enhancing the income of the assessee u/s. 251(1)(a) r.w.s. 251(2) - The Ld. CIT(A) is not empowered to enhance the assessment by computing book profits U/s. 115JB of the Act, as it is a separate code. - This issue whether book profits can be computed U/s. 115JB of the Act, when the GTI and TI of the assessee are Nil and no taxes payable, is adjudicated in favour of the assessee - AT
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• Company's Payment for SUPIMA Logo Deemed Royalty Under Indian Tax Law; Tax Deduction Required u/s 195.

  Case-Laws - AT : TDS u/s 195 - use of logo - license fee payment without deducting TDS SUPIMA, USA - Agreement clearly shows that the payment is made by the assessee to use the Logo of SUPIMA(R) and therefore, it is a payment of royalty. In so far as the other argument of the assessee is that the payment is made every year, in our opinion, whether the payment is made once or payment is made every year does not make any difference. - AO has rightly invoked Section 195 - AT
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• AO's Reliance on Investigation Wing Invalidates Section 68 Addition for Undisclosed Share Monies; No Independent Verification Conducted.

  Case-Laws - AT : Addition u/s 68 - undisclosed share application monies received from 5 companies - AO could have carried out independent verification of all the parties by issuing summons under section 131 of the Act. The assessing officer has not made any further investigation to controvert the claims of the assessee but proceeded to make the addition heavily relying on the information of investigation wing - No addition could be made - AT
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• Free Samples of Veterinary Medicines: Business Expense for Sales Boost and Product Testing, Tax Deductible u/s 37.

  Case-Laws - AT : Disallowing on account of expenses incurred in giving free samples of veterinary medicines - In fact these expenses are incurred wholly and exclusively for the purpose of increasing the sale of the company by making these samples available to the end user and also studying the effect of those products on animal and birds. - Expenses cannot be disallowed - AT
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Customs

• Court Questions Re-Export Ban on Maldivian Brass Scrap, Suggests Sale to Authorized Entities for Revenue Boost.

  Case-Laws - HC : Import of Brass Scrap(Melon) from Maldives - re-export of goods allowed or not - selling of goods allowed or not - by selling the goods in question to someone who is authorised to take the same, the Government will definitely be getting some revenue. I do not understand as to why, such a course of action is not being adopted. - HC
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Indian Laws

• Dishonored Cheque Not Enforceable Due to Unregistered Money Lending Under Goa Money-Lenders Act.

  Case-Laws - HC : Dishonor of Cheque - legally enforceable debt or not - there are various transactions of the loan as per the complainant's contention itself. If that would be the case, for his past transactions of money lending, he ought to have after coming into force of the said Act of money lending, registered with the Registrar of money-lending within 15 days. Such transactions cannot be termed as hand loan. He is also claiming that he has received 24% interest. As such, without registration or intimation to the Registrar as per the Goa Money-Lenders Act, the amount so advanced, cannot be termed as legally enforceable debt. - HC
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IBC

• Central Sales Tax & VAT Claims Rejected Due to Non-Filing Before Resolution Plan Approval in CIRP Process.

  Case-Laws - Tri : Seeking extinguishing of demand towards Central Sales Tax and VAT - Since the Respondents have not filed their claims relating to the earlier period till the date of approval of the Resolution Plan before the Resolution Professional during the CIRP period/ before the approval of the Resolution Plan, the claims of the Respondents, if it is filed now or in future, is not to be entertained by the Resolution Applicant / Corporate Debtor - Tri
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Service Tax

• Tribunal's Rs. 1,00,000 penalty u/s 78 overturned; Section 80 benefits overlooked, decision deemed unjust.

  Case-Laws - HC : Levy of penalty - There are no reason why the said benefit cannot be extended to the penalty imposed under Section 76, since both the Sections are to be read along with Section 80, which gives an overriding effect over Sections 76 to 78. The impugned order passed by the Tribunal which denied the said benefit to the petitioner qua the penalty imposed under Section 78 to the tune of 1,00,000/-, is therefore a gross injustice and deserve ₹ to be set aside on account of non-consideration of Section 80 of the Act. - HC
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• Interest on Revised Service Tax Barred by Limitation; No Fraud or Misrepresentation Found in Supplementary Invoices.

  Case-Laws - AT : Interest on differential amount of service tax - revision of price of storage charges - Extended period of limitation - There is no case of fraud, mis-representation or suppression of facts on the part of the appellant as they have disclosed the additional taxable turnover arising out of the issue of supplementary invoices and has also paid tax in time - Demand is barred by period of limitation - AT
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Case Laws:

• GST

• 2021 (4) TMI 658
  Applicability or determination of liability to pay Tax - Solar HT XLPE LT XLPE Cables - availability of benefit of concessional rate of GST @ 5% - Entry Sr.No.234 of the Schedule-I to Notification No.1/2017-Integrated Tax (Rate) - non-submission of various details - HELD THAT:- In the event of non-submission of the documents by the applicant, it would not be possible to take a decision in the matter since the issue in hand covers supply of goods such as cables for the Solar Power Generating System and after going through the details, there appears to be a distinct possibility of supply of services being involved in the instant case, along with the supply of goods and in such an eventuality, the nature of the transaction as well as the aspect of GST liability thereon are likely to be completely different. There is also every likelihood of such supply of goods i.e. DC cables for Solar Power Generating System being accompanied by services such as assembly, installation of the cables with all fittings and accessories etc. Even otherwise, as can be seen from the wordings, the supply of DC cables by the applicant is to be accompanied by services such as packing and forwarding transportation alongwith transit Insurance. In the instant case, any decision on the issue cannot be taken, since the applicant has failed to provide the documents such as contract/agreement/tender. It is thus concluded that in view of non-submission of the documents such as contract/agreement/tender by the applicant and without going through the conditions/provisions envisaged in the documents, it will not be possible to take a decision in the matter.

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• 2021 (4) TMI 648
  Rejection of request for filing of GST TRAN-1 - petitioner would state that though he made several attempts to file form GST TRAN-1, he could not do so due to technical glitches - HELD THAT:- There can be no doubt that the petitioner made effort to upload the details in the web portal. Even according to the respondents, though Rule 117 of CGST Rules, 2017, originally stipulates that Form TRAN-1 is filed within 90 days, there was a periodical extension and the final extended date was 31.03.2020. In the present case, the impugned order itself came to be passed on 28.08.2019. Therefore, applying the decision made in M/S. CHECKPOINT APPAREL LABELING SOLUTIONS INDIA PRIVATE LIMITED VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE, 1. THE COMMISSIONER OF GST CENTRAL EXCISE, THE SUPERINTENDENT OF CENTRAL TAX (CGST), THE NODAL OFFICER GST GRIEVANCES, GOODS AND SERVICE TAX NETWORK [ 2020 (8) TMI 209 - MADRAS HIGH COURT ], the communication impugned in the writ petition is quashed. The Writ Petition is allowed.

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• 2021 (4) TMI 619
  Revocation of cancellation of registration - non submission of reply to the SCN within the time specified therein - Rule 23 of the CGST Rules, 2017 - HELD THAT:- The appellant did not discharge their total interest liability rather he stated that since he had not paid any tax liability through cash hence no any interest liability arised as per press note released on 22nd December 2018 - in terms of proviso of Section 50 of CGST Act, 2017 amended vide Notification No.63/2020- C.T dated 25.08.2020 interest liability on net tax has been considered on prospective date i.e. with effect from 1st Sept 2020. The appellant has not been complied with the first proviso of Rule 23 of CGST Rules, 2017 - the cancellation of registration of appellant may not be considered for revocation - Appeal dismissed - decided against appellant.

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• Income Tax

• 2021 (4) TMI 655
  Reopening of assessment u/s 147 - eligibility to claim deduction under Section 80IA - jurisdictional requirements for invocation of Section 147/148 - HELD THAT:- In the instant case, on a reading of the contents of the order, we find that the reason set out does not have any nexus to the fact that there had been a failure on the part of the respondent/assessee in fully disclosing all material facts or that there was any basis for interfering on account of the said reason there had been any escapement of income. In fact, the primary jurisdictional requirement for reopening any assessment beyond a period of four years must be fulfilled strictly, otherwise it would be an arbitrary exercise of power. In the instant case, on perusing the reasons recorded dated 15.3.2016 we do not find anything to the effect that the assessee had not disclosed fully and truly all material facts or that the assessee had not disclosed the fact that he was a developer. In fact the assessment for the assessment year 2010-11 was made on the basis that the respondent/assessee was a developer. If that was so, the impugned proceeding initiated on the premise that the assessee was a works contractor and not the developer is only a change of opinion and therefore does not fulfill the essential requirements of Sections 147/148 of the Act. As speaking through the Hon ble Chief Justice, opined that the concept of change of opinion must be treated as an inbuilt limitation on the power of the Assessing Officer; that mere change of opinion on consideration of the very same material does not give any ground to invoke Section 147 of the Act. In order to reopen the concluded assessment, there must be tangible material to come to the conclusion that there is escapement of income from assessment. These are the tests, which have to be satisfied before issuance of notice under Section 147/148 of the Act. Having regard to the aforesaid observations and considering the same, in the light of the impugned notice dated 15.3.2016, we find that the reasons recorded do not also indicate that there was any tangible material which was the basis for issuance of the impugned notice. We hold that the learned Single Judge was justified in coming to the conclusion that the jurisdictional requirements for invocation of Section 147/148 of the Act in the instant case were not satisfied and therefore, the impugned notice was only a case of change of opinion and did not come within the scope and ambit of reason to believe . - Decided in favour of assessee.

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• 2021 (4) TMI 652
  Disallowance u/s 14A r.w.r. 8D - investment in the form of share application money by the company would only result in exempt income - HELD THAT:- As decided in M/S.QUEST GLOBAL ENGINEERING SERVICES PVT. LTD. [ 2021 (3) TMI 434 - KARNATAKA HIGH COURT] only expenses proportionate to earning of exempt income could be disallowed under Section 14A of the Act and the decision of MAXOPP INVESTMENT LTD [ 2018 (3) TMI 805 - SUPREME COURT] is an authority for the aforesaid proposition that the provision is relatable to earning of actual income. The object of Section 14A is to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. It is also clarified by us that while recording the conclusion in KINGFISHER FINVEST LTD. [ 2020 (10) TMI 518 - KARNATAKA HIGH COURT] that disallowance under Section 14A has to be made even taxpayer has not earned any exempt income, this court has misread the ratio of the decision of the Supreme Court in MAXOPP INVESTMENT LTD supra and therefore, the aforesaid view being contrary to the law laid down by the Supreme Court is not a binding precedent. - Decided in favour of assessee.

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• 2021 (4) TMI 650
  Reopening of assessment u/s 147 - purchase of a landed property - Before the first respondent petitioner did not appear and as a result, the first respondent was constrained to dismiss the petitioner s appeal and confirm the assessment order passed by the original authority - HELD THAT:- The petitioner had produced the copy of the sale deed dated 07.03.2013 before this Court. It is seen therefrom that the petitioner had purchased the property on 07.03.2013 for a sum of Rs. 84,80,000/- . But then the impugned order proceeded on the premise that it is worth of Rs. 8,46,00,000/-. If only the petitioner had produced the materials before the authority concerned, he would not be finding himself in the present position. In any event in the interest of justice and to give one more opportunity to the petitioner and since the petitioner had placed prima facie material to show that the impugned order is incorrect, the order impugned in the writ petition is quashed. The writ petition is allowed. The matter is remitted to the file of the first respondent. The first respondent will grant one more hearing to the petitioner.

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• 2021 (4) TMI 645
  Income deemed to accrue or arise in India - Consideration from sale of software licenses taxed as royalty - PE in India - Whether AO and the Hon ble DRP has erred in treating the consideration received from sale of software license taxable as Royalty both under the provisions of the Act as well as Article 12 of the Double Taxation Avoidance Agreement ( DTAA ) between India and Singapore? - HELD THAT:- The issue of software income is not a royalty income is settled by the Hon ble Apex Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] The Legal Principal and the factual matrix are identical in present Assessment year of the assessee to that of the issues discussed in case of Engineering Analysis Centre of Excellence Pvt. Ltd.. Besides this, the issue is covered in favour of assessee in previous year as well. Hence, the appeal of the assessee is allowed.

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• 2021 (4) TMI 644
  Claim of exemption u/s 54 - assessee failed to comply with section 54 by not depositing the unutilized amount of capital gain in the Capital Gains Deposit Scheme, 1988 within the stipulated time of furnishing the return of income-tax u/s 139 - HELD THAT:- We have carefully considered the judgment passed in the matter of ITO vs. Nilima Abhijit Tannu [ 2019 (7) TMI 1073 - ITAT MUMBAI] where the same issue has cropped up and it was observed that when the unutilized portion of capital gain on sale of capital asset is required to be deposited before the date of furnishing of return of tax under Section 139, in such a situation Section 139 cannot be meant only Section 139 but it means all sub-Sections of Section 139. Tribunal has been pleased to hold that the assessee has fulfilled condition for deduction u/s 54F within extended time limit of filing of return under Section 139(4) and the claim of the assessee cannot be negated merely he did not deposit amount in the said scheme before the expiry of the time period provided under Section 139(1) of the Act. Thus, taking into consideration the entire aspect of the matter the ratio laid down in the matter Bhavnagar University vs. Palitana Sugar Mills (P.) Ltd. [ 2002 (12) TMI 563 - SUPREME COURT] as also in the matter of CIT vs. Shri K. Ramachandra Rao [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT] , and that if the intention is not to retain cash but to invest in construction or purchase any property and if such investment period stipulated therein, then Section 54F(4) is not attracted. It appears from the records that the assessee has complied with the requirement of the substantive provision of Section 139 and, therefore, is entitled to the claim of exemption under Section 54F. Hence, we find no reason to pass such order by the Revenue in disallowing the exemption as the claimed under Section 54F of the Act by the assessee. Assessee s appeal is allowed.

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• 2021 (4) TMI 642
  Reopening of assessment u/s 147 - Disallowing the appellant s claim of deduction under section 80IB(11A) - initiation of the proceeding after the expiry of 4 years from the date of completion of the relevant Assessment Year - HELD THAT:- Reopening of an assessment under section 147 is not permitted merely on the ground that there is change in the view of the Assessing Officer and subsequently he believes that earlier views was incorrect particularly when the assessment order itself records that the issue was raised and was decided in favour of the assessee. In that view of the matter the reassessment proceeding in such a case will be hit by the principle of change of opinion and thus liable to be quashed. Since the assessee had truly disclosed all the relevant material facts necessary for the assessment, the preconditions for invoking the proviso of Section 147 had not been satisfied. Hence the Ld. A.O had acted wholly without jurisdiction. We find no justification in interfering with the order passed by the Learned CIT(A) in holding the decision of reassessment proceeding under section 147 of the Act for Assessment Year 2005-06 by issuing notice under section 148 of the Act as bad in law in the absence of mentioning of any allegation against the assessee in failing to disclose fully and truly the material facts in the assessment proceeding under section 143 (3) - Merely by making a statement in the reasons recorded that the assessee s claim of 100% deduction under section 801B(11A) of the Act was incorrectly allowed cannot be said to be justified in reopening the assessment. Such order, passed by the Learned CIT(A), in our considered view is without any ambiguity so as to warrant interference. Hence the order is passed in the affirmative, i.e. in favour of the assessee and against the revenue.

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• 2021 (4) TMI 639
  Disallowance of deduction u/s. 80IC under the head interest and financial charges, common expenses of corporate expenses and common expenses of corporate and plastic division - AO was of the view that the interest expenditure required to be allocated proportionately in the ratio of sales for deduction u/s. 80IC of the Act for the industrial undertaking of the assessee - HELD THAT:- No error in the decision of ld. CIT(A) for allocating common interest financial charges on the basis of investment. Similar in respect of deleting addition of common head expenses and plastic/corporate division expenses made on sales basis, we do not find any infirmity in the decision of ld. CIT(A) after following the decision of the Co-ordinate Bench as cited above in this order. Taking into consider the finding of the Coordinate Bench in the case of assessee itself on the aforesaid issues, we do not find any reason to interfere in the decision of ld. CIT(A), therefore, this ground of appeal of the revenue is dismissed. Disallowance u/s. 14A - HELD THAT:- Respectfully following the decision of Co-ordinate Bench of the ITAT in the case of the assessee itself for A.Y. 2009-10 and A.Y. 2010-11 [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the appeal of the Revenue is dismissed. Regarding the appeal of the assessee, we direct the Assessing Officer to decide the issue afresh after examination/verification of the details filed by the assessee as per the direction laid down in the decision of the Co-ordinate Bench of the ITAT in the case of the assessee itself [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] and decision of Hon ble Gujarat High Court [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT ] Addition on account of foreign exchange fluctuation gain - HELD THAT:- We have gone through the decision of ITAT on the similar issue and identical facts and noticed [ 2016 (4) TMI 904 - ITAT AHMEDABAD ] the issue was decided in favour of the assessee Addition for late contribution to ESIC - HELD THAT:- In view of the decision of Hon ble Gujarat High Court in the case of Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ], we do not find any merit in the appeal of the assessee and the same stands dismissed.

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• 2021 (4) TMI 636
  Reopening of assessment u/s 147 - not supplying of reasons for reopening of the assessment - HELD THAT:- We are of the view that there is no merit in the contention of the assessee that reason for reopening was not furnished to him. Since it is evident from the material placed on record from the assessment record that assessee has been supplied reasons for reopening the assessment therefore the judicial pronouncements referred by the assessee of Hon ble Court of Bombay in the case of CIT Vs. IDBI Ltd. [ 2016 (10) TMI 166 - BOMBAY HIGH COURT] are distinguishable from the facts of the case of the assessee and not applicable to the case of the assessee. In the light of the above circumstances, we do not find any justification of the contention of the assessee that no reasons for reopening of the assessment under section 147 was furnished to the assessee, and therefore, we reject this ground of appeal. Addition on account of alleged quantum of sales without invoices based on the information supplied by the DGCEI - HELD THAT:- First appellate authority, in his final conclusion recorded a finding that during the appellate proceedings the appellant has submitted that the AO has rectified the mistake of quantum by taking gross profit @19.02% and has passed a rectification order under section 154 of the Act by taking the gross profit at 9.70%, and accordingly, this has resulted into a reduced addition of Rs. 17,20,563/- and not Rs. 33,73,722/- as made by the AO in his assessment framed under section 143(3)/147 of the Act. This means, the assessee himself has agreed in principle to the addition at the rate of 9.70% of GP. Even during the assessment proceedings, the assessee has not disputed or denied selling of products out of books of accounts without invoices. Therefore, we do not find any infirmity in the conclusion of the ld.CIT(A) to confirm the addition to the extent of 9.70% of GP to the income of the assessee on account of sales without invoice. Accordingly, his order is confirmed, and this ground of appeal is dismissed. Sham transaction - HELD THAT:- CIT(A) referred to statement recorded under section 131 on 1.5.2013 and answers given to question no.2, 5 and 6, in which they explained the modus operandi of the transaction and how the accommodation entries are given. Assessee has not disputed transaction between the assessee and the M/s. Vitale Bio Science Ltd. Transaction was unearthed on the basis of information received from the office of Dy. Commissioner of Income Tax, Cent.Cir.1(4), Ahmedabad in which it was mentioned that a search under section 132 of the Act was conducted in the case of M/s. VITALE Bio Science Ltd. and during the search directors of the company admitted of providing accommodation entry, which statement was not denied by the assessee except by making a bald statement that the statement given by the directors are general in nature. The ld. CIT(A) has made detailed analysis of the material available on record and justified the action of the AO in making the impugned order. We do not find any infirmity in the order both the authorities below accordingly, we reject this ground appeal. TDS u/s 195 - Addition u/s. 40(a)(i) on failure of the assessee to deduct tax at source on payment of commission to various persons outside India - assessee has not furnished form no. 15CA and 15CB - HELD THAT:- In the instant case, the Assessing Officer has not disproved the claim of the assessee that non-resident agents had procured order abroad and no services were rendered in India. The payments have been made directly to the non-resident abroad. The Assessing Officer has also failed to controvert the claim of the assessee that foreign agents were not having any business connection in India. In spite of scrutiny assessment, the Assessing Officer had merely referred non-submission of form no. 15C and 15CB but did not make any investigation/verification to disprove the material facts reported by the assessee as stated above in this order. The Assessing Officer has not brought any material on record to substantiate that income was accrued in India or deemed to accrue in India. Therefore, CIT(A) is not justified in confirming the action of the Assessing Officer. Therefore, this ground of appeal of the assessee is allowed. Difference of income shown in the 26AS - HELD THAT:- CIT(A) has restored the issue pertaining to the amount of Rs. 69,06,808/- to the file of the Assessing Officer with direction that if assessee has already offered the same amount in F.Y. 2011-12 then the same should be deleted. Therefore, the ld. CIT(A) has restricted the addition only to the extent of Rs. 2,79,660/- which was remained unexplained. After perusal of the aforesaid facts and findings of the ld. CIT(A) we consider that ld. CIT(A) has rightly restored the issue to the extent of Rs. 69,06,808/- to the file of Assessing Officer as per the claim made by the assessee for verification as the same was shown as income for F.Y. 2011-12 with direction to delete the same if it is found correctly reported by the assessee. In respect of remaining amount of Rs. 2,79,660/- the assessee has neither explained before the lower authorities nor furnished any explanation during the course of appellate proceedings before us, therefore, we do not find any infirmity in the decision of ld. CIT(A).

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• 2021 (4) TMI 635
  Deduction u/s 80P(2) - as per AO assessee being a primary co-operative bank was hit by the provisions of Sec. 80P(4), and thus, was not eligible for claim of deduction under Sec. 80P(2)(a)(i) - contention of the assessee that it was a co-operative credit society providing banking/credit facilities only to its members and was not a co-operative bank providing banking/credit facility to the public at large did not find favour with the A.O. - HELD THAT:- We are persuaded to subscribe to the observations of the CIT(A) that as the assessee which is a co-operative credit society is not a primary co-operative bank, hence, it would not be hit by the provisions of Sec.80P(4) as had been made available on the statute vide the Finance Act, 2006 w.e.f 01.04.2007. Our said view is fortified by the fact that it is absolutely mandatory for a co-operative society to seek a licence from the Reserve Bank of India to form and operate as a co-operative bank. Further, a perusal of Circular No. 312 of the Reserve Bank of India reveals the process involved for conversion of a co-operative society into a primary co-operative bank. Admittedly, in the case before us as the assessee being a co-operative credit society is neither authorized nor had undertaken any of the banking business activities as are carried out by a primary co-operative bank, but had only provided financial assistance/credit to its members, therefore, it can safely be concluded that it cannot be held to be a co-operative bank. Apart from that, we find that as stated by the ld. A.R, and rightly so, the issue involved in the present appeal in squarely covered by the orders of the Tribunal in the assessee s own case for the preceding years [ 2018 (6) TMI 1746 - ITAT MUMBAI] and [ 2021 (1) TMI 1108 - ITAT MUMBAI] We are persuaded to be in agreement with the observations of the CIT(A) that the assessee would not be hit by the provisions of Sec. 80P(4) of the Act. We, thus, being in agreement with the view taken by the CIT(A) that the claim of the assessee under Sec. 80P(2)(a)(i) was in order, uphold the same. - Decided in favour of assessee.

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• 2021 (4) TMI 633
  Power of CIT(A) enhancing the income of the assessee u/s. 251(1)(a) r.w.s. 251(2) - CIT-A enhanced the assessment by computing book profits U/s. 115JB - HELD THAT:- CIT(A) cannot touch or delve on any issue which does not arise from the order of assessment and which was outside the scope of or an issue which is not a subject matter the order of the assessment. In the case on hand, the issue of computation of book profits U/s. 115JB of the Act was not an issue that was a subject matter during the course of assessment proceedings. This issue of computation of book profits U/s. 115JB of the Act, does not arise from the order of the assessment. Section 115JB of the Act, is a self contained code as per the CBDT Circular No. 13/2001, dt. 09/11/2001 and was outside the scope of the order of assessment passed by the Assessing Officer U/s. 143(3) of the Act on 21/12/2015. The Ld. CIT(A), in our view, is not empowered to enhance the assessment by computing book profits U/s. 115JB of the Act, as it is a separate code. Thus, we uphold this contention of the assessee and adjudicate this issue on powers of enhancement of the CIT(A), on the facts and circumstances of the case, in favour of the assessee. Thus, we quash the enhancement made by the Ld. CIT(A). MAT computation applicability - Section 115JB applicability to assessee company - admittedly, the gross taxable income and the total income as well as the tax payable are Nil - HELD THAT:- This issue whether book profits can be computed U/s. 115JB of the Act, when the GTI and TI of the assessee are Nil and no taxes payable, is adjudicated in favour of the assessee, by respectfully following the decision of the Hon ble Jurisdiction High Court own case on this issue. No other arguments are raised before us. - Decided in favour of assessee.

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• 2021 (4) TMI 629
  Unexplained cash credits addition u/s.68 - unexplained commission u/s.69C - as per assessee when books of accounts were rejected u/s.145(3) of the Act and profit is estimated, then same books of accounts cannot be considered for invoking provisions of section 68 to make addition - assessee has also challenged addition on merits by filling necessary evidences including confirmation letters from the creditors and argued that the assessee had discharged his burden to prove the identity, genuineness of the transactions and credit worthiness of the parties - HELD THAT:- It is an admitted fact that the AO has rejected books of account u/s.145(3) of the Act and estimated profit from the business by adopting 12.5% net profit on gross receipts - once books of account are rejected u/s.145(3) of the Act, no further additions can be made by relying upon same books of account either in respect of cash credits u/s.68 of the Act or unexplained commission expenses u/s.69C of the Act, because in order to invoke provisions of section 68 of the Act, it is essential that credit should be from the books of account of the assessee maintained for that year. Once, the books of account maintained by the assessee is treated as no longer in existence by rejecting those books u/s.145(3) of the Act, then for all purposes including for the purpose of section 68 of the Act, said books of account ceased to exist and hence, those books cannot be relied upon to make addition towards unexplained credit u/s.68 of the Act - See G.K. CONTRACTOR [ 2009 (1) TMI 840 - RAJASTHAN HIGH COURT] where it was clearly held that AO having estimated the profit by applying a higher net profit rate to total contract receipts after rejecting assessee s books of account by invoking the provisions of section 14(3), no separate addition can be made on account of cash credit u/s.68, even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of account . Thus to make additions u/s.68 or 69 essential condition is books of account should be maintained by the assessee for the relevant financial year. If books of account of the assessee are rejected and income is estimated by applying certain profit rate, it would take care of all expenses necessarily to be incurred for earning profit and hence, when profit is estimated no separate addition can be made towards unexplained commission u/s.69 - CIT(A) after considering relevant facts has rightly held that the AO is erred in making addition towards cash credit u/s.68 of the Act and unexplained commission u/s.69C of the Act, when the books of account were rejected u/s.145(3) of the Act. Once loans taken by the assessee are genuine which are supported by necessary evidences and further said loans were repaid in subsequent financial year by cheques then said loans cannot be considered as unexplained cash credit u/s.68 of the Act. Therefore, we are of the considered view that the AO was erred in making additions towards cash credit u/s.68 of the Act and unexplained commission u/s.69C - Decided against revenue.

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• 2021 (4) TMI 628
  TDS u/s 195 - use of logo - license fee payment without deducting TDS SUPIMA, USA - AO observed that the assessee has made a payment to SUPIMA, USA for use of the mark SUPIMA(R) at the time of sale of the products as it give credibility to the product. Thus, the assessee s contention is that they do not derive any benefit out of its self-contradictory - HELD THAT:- The assessee-company is manufacturing cotton yarn. It imports long staple cotton from America known as PIMA cotton and producing cotton garments. The assessee entered into a contract with SUPIMA license agreement dated 01.01.2015 as per Article I II clearly shows that SUPIMA(R) has granted a license to the assessee. From the above Article I II, it is very clear that the SUPIMA is the owner of the trade mark. This Logo for using in connection with apparel, home furnishing, fabrics, yarn, threads and the like further SUPIMA has granted license to the assessee to use trade mark SUPIMA(R) for the goods produced by the assessee. The payment made by the assessee in connection with the license obtained from the SUPIMA(R) at USA. Therefore, the payment made by the assessee is in the nature of royalty as defined under Explanation 2(1) to Section 9(1)(vi) of the Act and the assessee is liable for TDS u/s. 195 of the Act. The assessee without deducting the TDS payment made therefore, the AO has rightly invoked Section 195 of the Act for non deduction of TDS and the same is confirmed by the Ld. CIT(A). Agreement clearly shows that the payment is made by the assessee to use the Logo of SUPIMA(R) and therefore, it is a payment of royalty. In so far as the other argument of the assessee is that the payment is made every year, in our opinion, whether the payment is made once or payment is made every year does not make any difference. Whenever, the assessee makes payment is under obligation to deduct TDS. In this case, the assessee failed to deduct the TDS and therefore, the AO has rightly invoked Section 195 of the Act. Hence, we find no reason to interfere in the order passed by the Ld. CIT(A). Though the AO and Ld. CIT(A) has considered the DTAA between India and USA, the ld. counsel for the assessee has not made any submissions in respect of the above and therefore, no finding is required. - Decided against assessee.

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• 2021 (4) TMI 627
  Addition based on seized document in search - undisclosed sales receipts on the sale of plots in the project N.R. Estate - assessee s sole grievance is that opportunity of cross examination was not provided and the additions were made merely on the basis of third party information gathered at the back of appellant - whether the Ld. A.O was justified in applying the estimated rate per sq. feet of land for the plots sold by both the assessee(s) as against the sales shown in the regular books of accounts duly evidenced by registered sale deeds ? - HELD THAT:- We observe that in the alleged seized diary found from the premises of Mr. Kamal Goyal there was information of few plots of land and the rate of sale per sq.feet was ranging from Rs. 1150/- to Rs. 1131/- per sq.ft but the Ld. A.O failed to record the basis for adopting Rs. 500/- Rs. 900/- and Rs. 1300/- for Assessment Year 2009-10, 2011-12 and 2013-14 and the same is purely an estimate. Even the Ld. A.O has failed to take any valuation report from Departmental Valuation Officer to support the rate adopted by him. No incriminating material was found from the premises of M/s N.R. Finance Pvt. Ltd and similarly no evidence was gathered in the case of M/s N.R. Company to show that any consideration over and above the disclosed sale consideration in the books of accounts has been received. It is not in dispute that the sales recorded in the books of assessee are duly supported by registered sale deed signed by both the buyers and sellers and stating the consideration paid/received before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. Revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of N.R. Estate was sold and it is also pertinent to note that even after specific request assessee was not offered any opportunity to cross examine Mr. Kamal Goyal which itself defies the principal of natural justice. The contents of the seized diary showing few transactions of sale of plot at N.R. Estate are totally different with the actual transaction which took place for plot numbers mentioned in the seized diary. Besides the mismatching of dates and names even the actual plot size do not tally The information contained in the seized diary which has been heavily relied upon by the Ld. A.O seems to be clueless showing no nexus with the actual transaction took place. There is no mention of the assessee firms name in the diary. The broker Mr. Kamal Goyal has also not uttered a word about having entered into any transaction with the assessee(s) except the notings made in the seized diary. Ld. A.O has failed to bring any clinching evidence to support the estimated rate adopted by him. All these facts collectively indicate only one thing that the alleged document i.e. few pages of the seized diary showing some incomplete information about sale of plots at N.R. Estate is merely a dumb document which under no circumstances can be used against the assessee to make the additions.`See VATIKA LANDBASE PVT. LTD. [ 2016 (2) TMI 835 - DELHI HIGH COURT] ` Thus we find merit in the finding of Ld. CIT(A) and submission made by both the assessee(s) and are of the considered view that the additions made by Ld. A.O applying the estimated rate of per sq. feet of land sold by both the assessee(s) seems to be purely a guess works and is merely made on surmises and conjectures and the impugned additions has thus been rightly deleted by Ld. CIT(A). Additional evidence in the form of registered sale deeds without giving any opportunity to the Ld. A.O as provided under Rule 46A of the I.T. rules and also not calling of Remand Report - HELD THAT:- We find that evidence indicated by the Ld. Departmental Representative is registered sale deeds. There is no dispute to the fact that registered sale deed is available on public domain. The transaction of purchase and sale of immoveable property are registered before the registering authority appointed by the Government and the documents are available on public domain. These documents could have been called for by the Ld. A.O without informing the assessee(s). In these given facts and circumstances of the case and also under the provisions of I.T. Act which provides co-terminus power to Ld. CIT(A) as are there with the Ld. A.O, we are of the considered view that the alleged additional evidence cannot be categorized as additional evidence for the issue raised in the instant appeals. We accordingly dismiss the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and 2013-14. Excess development charges claimed by the assessee - HELD THAT:- From perusal of the finding of Ld. CIT(A) we find no inconsistency since sale consideration received from sale of extra land to M/s N.R. Finance Pvt. Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and Assessment Year 2013-14 raising the issue that no opportunity was not given to cross examine the broker Mr. Kamal Goyal about the contents appearing in the seized diary - In the preceding paras we have already made specific observation that the action of Ld. A.O of making additions based on the third party information without providing opportunity of cross examination defies the principal of natural justice which the assessee is duly eligible for. There is sufficient merit in the assessee s cross objection since the specific request was made to Ld. A.O for providing cross examination but the same was denied. Thus even on this legal issue itself the assessee deserves to succeed and the additions made by Ld. A.O based on the seized document found from the premises of broker Mr. Kamal Goyal deserves to be deleted. In the result Grounds raised by the assessee in Cross Objections for Assessment Years 2012-13 and 2013-14 are allowed in the case of M/s N.R. Finance Pvt. Ltd.

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• 2021 (4) TMI 626
  Addition u/s 68 - undisclosed share application monies received from 5 companies - AR submitted that the transactions with the investing companies were genuine and assessee has complied the conditions stipulated in section 68 - HELD THAT:- All the transactions were routed through the banking channel which proves that the transaction is genuine. Since assessee has submitted all the relevant document to prove the genuinity of the transaction which led him to come to the conclusion that assessee has discharged the initial onus cast upon him to establish the identity, creditworthiness and genuineness of the transactions. He observed that the onus now shifted to the AO. AO could have carried out independent verification of all the parties by issuing summons under section 131 of the Act. The assessing officer has not made any further investigation to controvert the claims of the assessee but proceeded to make the addition heavily relying on the information of investigation wing and merely on the fact that these transactions involving Shri Praveen Kumar Jain. We notice that Ld DR in her submission brought to our notice from the information contained in bank statements of the parties filed in the paper book. She brought to our notice that the amounts transferred by the parties to the assessee were received from another concern and transferred on the same day. She does not dispute the fact that all the transactions were routed through banking channel and assessee has submitted all the information which were before the assessing officer. The assessing officer should have investigated all the information and could have controverted the submissions made by the assessee or could have found the sources of the money transferred and he could have traced whether any involvement of cash deposits. It is not the case of the assessing officer that unaccounted money were transferred in the above transactions. Further we notice that she brought to notice commonness of email ID and commonness in board s resolutions passed by these companies. These commonness could be the employment of common company secretary or accountant. These evidences will not make any difference to the genuine transaction. We notice that Ld CIT(A) allowed the appeal of the assessee by relying on the case of coordinate bench decision in the case of M/s Arceli reality Ltd[ 2017 (4) TMI 1268 - ITAT MUMBAI] in which similar issue was considered. Facts of the above case is similar to the facts in the present case and we are in agreement with the findings of the coordinate bench in the above paragraph. Therefore the appeal filed by the revenue is accordingly dismissed.

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• 2021 (4) TMI 621
  Disallowing on account of expenses incurred in giving free samples of veterinary medicines - AO observed on the basis of details furnished by the assessee that these expenses are mostly incurred to give free samples to veterinary doctors and these veterinary doctors are further supposed to distribute the same to their patients so that the business of the assessee flourishes - HELD THAT:- The sample distributed for marketing these products by the assessee is not in violation of any guidelines issued by the Veterinary Council of India or Medical Council of India. Besides the said regulations are applicable to the doctors and their associate professionals and not to the company engaged in manufacturing of these veterinary products. In fact these expenses are incurred wholly and exclusively for the purpose of increasing the sale of the company by making these samples available to the end user and also studying the effect of those products on animal and birds. Moreover the case of the assessee is supported by the decisions as referred and relied before the ld CIT(A) by the assessee. In the case of Max Hospital Vs MCI [ 2014 (1) TMI 1829 - DELHI HIGH COURT] has held that regulations issued by MCI are applicable to medical professional and not to the pharmaceutical companies. Hon ble Apex Court in the case of Eskayel Pharmaceutical s India Ltd [ 2000 (7) TMI 1 - SUPREME COURT] has held that physician samples are must in order to ascertain the efficiency and efficacy of the medicine and introduce the same in the market for circulation. We are in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. Accordingly, we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.

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• Customs

• 2021 (4) TMI 646
  Attachment of petitioner s Bank accounts - import of Brass Scrap(Melon) from Maldives - re-export of goods allowed or not - selling of goods allowed or not - HELD THAT:- As rightly pointed out by the learned counsel appearing for the petitioner, even while holding that the goods are liable for confiscation for the very same breath, the assessing authority had held that the goods can be reexported - Therefore, no final order of confiscation has been passed so far. It is not as if the import of the goods is totally prohibited. They would only come under the restricted category. Therefore, the goods can be sold to someone who is authorised to take the goods. Therefore, by selling the goods in question to someone who is authorised to take the same, the Government will definitely be getting some revenue. I do not understand as to why, such a course of action is not being adopted. The respondents 1 and 2 are directed to sell the petition mentioned goods and appropriate the sale proceeds against the petitioner s liability. If the goods in question fetch more amount than the petitioner s liability, then after due adjustment, the balance amount will have to be paid to the petitioner and the attachment of the bank account will be raised - petition disposed off.

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• 2021 (4) TMI 634
  Maintainability of appeal - requirement with the condition of pre-deposit - Smuggling - Absolute Confiscation - prohibited sandal woods - Section 129E of the Customs Act - HELD THAT:- The pre-deposit of entire 10% of the demand under challenge has been made which includes 7.5% thereof as was required to be deposited at the time of filing appeal before Commissioner (Appeals) and 2.5% thereof as is required at the time of filing appeal before this Tribunal. Further, keeping in view that there is no denial to the submission that no defect memo was given to the appellant nor any opportunity of being heard was ever provided, the same is held to be the non-compliance of principal of natural justice specifically that no one shall be condemned unheard . Hon ble Gujarat High Court in the matter of M/S. KLJ PLASTICIZERS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2018 (9) TMI 1581 - GUJARAT HIGH COURT] has held it is the settled law that the opportunity of personal hearing irrespective of the demand thereof has to be given by the courts/quasi judicial authorities to the parties to a Lis before them. The matter remanded to Commissioner (Appeals) with the directions to decide based upon the merits of the present case - appeal allowed by way of remand.

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• Corporate Laws

• 2021 (4) TMI 653
  Recovery of money in disguise - inaction of State to recover - whether writ of mandamus will lie in resolving a private dispute, intending to recover money in disguise alleging State inaction, already lent out to the beneficiary/erstwhile lessees/proforma respondent nos. 1 and 2 tea garden companies, when affidavit of report of debt for and on behalf of creditors/writ petitioners had already been filed before the Official Liquidator pursuant to a winding up order? HELD THAT:- The execution of fresh lease was intended to be stalled pending realization of unpaid amount, given as loan amount to the erstwhile lessees in connection with the transaction already entered into between the parties - Without any controversy, writ petitioners are neither assignee, nor representative in interest of the erstwhile lessees being proforma respondent nos. 1 and 2. Surprisingly, though, the writ petitioners endeavoured to maintain an action proposing issuance of mandamus simply to frustrate execution of lease afresh upon respondent nos. 5-7, but no steps were taken before any court of law in civil jurisdiction to challenge the previous determination of lease of erstwhile lessees alleging illegalities, if there be any. Winding up order having passed against the proforma respondents, followed by submission of affidavit of report of debt before the Official Liquidator, in consequence of the proforma respondents/companies going into liquidation, the dues payable by the said companies (in liquidation) become a subject matter of Official Liquidator. Since, for and on behalf of the writ petitioners an affidavit of report of debt for creditors/writ petitioners has already been submitted before the Official Liquidator, the Court is of the view that there is hardly any scope to interpret the word existing liability of the erstwhile lessees/companies in its true context, contrary to the definition of Section 3 (10) (11) of the Insolvency and Bankruptcy Code, 2016, as proposed by either of the parties to this case, being an unnecessary academic exercise - The Court shares the same view, as proposed by the respondents, that it was a private dispute simply to recover money from the beneficiary tea garden company, already going into liquidation, and for such purpose, the grievance so raised by the writ petitioners, would not be sufficient enough to be considered responding to the proposed prayer for issuing mandamus for the purpose. Petition dismissed.

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• 2021 (4) TMI 631
  Approval of scheme of arrangement - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme, the documents produced on record, the representation made by the Regional Director, Registrar of Companies, Official Liquidator and Income Tax Authority and the reply thereof by the petitioner companies, this Tribunal is of the opinion that the requirements of the provisions of Sections 230 and 232 of the Companies Act, 2013 are satisfied. The reply given by the petitioner companies to the representation of the Regional Director, Registrar of Companies, Official Liquidator and Income Tax Authorities satisfies the observations of the Regional Director, Registrar of Companies, Official Liquidator and Income Tax Authorities. The Scheme appears to be genuine and bona fide and in the interest of the shareholders and creditors. The scheme of arrangement sanctioned - Application allowed.

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• 2021 (4) TMI 630
  Oppression and Mismanagement - basic bone of contention in the application is that the deceased father of the Petitioner was illegally removed from the office of the Managing Director on 3rd July, 1986 by father of the Respondent No.3 and late Pramod Kumar Roy and since then the company is functioning without Managing Director - HELD THAT:- The original case [CP No.80/2000] T.P.No.26/GB/2016 filed by Late Kamakhya Kumar Roy under Section 397/398 of the Companies Act, 1956 (Sections 241-242 of the Companies Act, 2013) needs to be heard without further loss of time. We do not find any reason not to substitute Shri Sajay Kumar Singh in place of his deceased father to continue this case filed under Section 397/398 of the Companies Ac, 1956. This Tribunal is also having power to waive all or any of the requirements specified in Clause (a) or Clause (b) of Section 244 of the Companies Act to maintain an application under the above Section. The prayers made to declare the petitioner that he has no locus standi to maintain the petition is rejected.

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• Insolvency & Bankruptcy

• 2021 (4) TMI 643
  Approval of Resolution Plan - grievance of the Appellant is that the Appellant is a Financial Creditor of the Corporate Debtor who filed claim before the Resolution Professional but the same was rejected on the ground of delay - HELD THAT:- The IBC was enacted to consolidate and amend the laws relating to reorganization and insolvency resolution of Corporate Persons, Partnership Firms and Individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India and for matters connected therewith or incidental thereto. The IBC has various provisions which are time bound. Stakeholders in IBC cannot act or proceed in such matters in a manner to convert it into any other Ordinary Civil Proceeding or cause destructive delays which plagued the process under Sick Industrial Companies (Special Provisions) Act, 1985. In the present matter, the CIRP started on 08th November, 2019. Already more than one year has passed - the claim were not filed within time specified in the Public Notice or within 90 days from insolvency commencement date, which was 06.02.2020. Till 06.02.2020 there was no lockdown. Even thereafter another 35 days were taken to file claim. When the claim was filed, if it was not decided within reasonable time, still matter was not taken up with the Adjudicating Authority. In the present matter as there is already a Resolution Plan, giving directions to the Adjudicating Authority would further delay the CIRP, which is already delayed - Appeal dismissed.

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• 2021 (4) TMI 638
  Extension of Liquidation Proceedings by one year in terms of Regulation 44(2) of the IBBI (Liquidation Process) regulations, 2016 - HELD THAT:- The assets of the Company have not been liquidated yet as the land on which the Hotel building is situated does not belong to the Company and the main entrance area of the Hotel belongs to a third party. It is further submitted that more time will be required to appoint an amin for the demarcation of the assets of the Company and that of the other parties, as was suggested by the sole secured creditor in the 2nd Stakeholders Consultative Committee Meeting - That additional time is also required to file as application Regulation 38(1) of the Liquidation Process Regulations. Liquidation is required to be completed within 1 year. Liquidation order was passed on 06/09/2019. It should have been completed on 05/09/2020 - Considering the submissions made today, Liquidation period is extended by another 6 months only. This 6 months extension is excluding 160 days exclusion from 25/03/2020 till 31/08/2020 allowed earlier for lockdown/ shutdown/ Covid Pandemic. Application allowed.

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• 2021 (4) TMI 637
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Contract of Guarantee - bankruptcy process against the Respondents/Personal Guarantors - Section 60 (2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Financial Creditor had filed the petition under Section 7 of IBC against the Corporate Debtor and Corporate Debtor is in Liquidation. The Liquidation proceedings is going on - Now the Financial Creditor has filed application to proceed against the Guarantors to the Corporate Debtor in Liquidation. Hence it is essential to bring here the provisions of Section 95 of IBC Part III, Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms for disposal of this I.A. It is clear that if the FC desires to file an Application Initiating Insolvency Resolution Process against the Guarantors, the FC needs to file proper application under Section 95 of IBC 2016 before this Bench complying the related provisions including 14 days notice, servicing of the Application to the Debtor etc. Application disposed off.

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• 2021 (4) TMI 632
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The petitioner has filed all the documents and the petition is complete in all respect. Service is complete and the default occurred on 16.08.2019 - The Adjudicating Authority is only required to consider whether there is any default and the debt is due and payable. In the instant case, the applicant has placed on record enough documents evidencing the default and hence, the present application deserves to be admitted. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant - The documents produced by the operational creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the operational debt . Petition admitted - moratorium declared.

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• 2021 (4) TMI 624
  Seeking extinguishing of demand towards Central Sales Tax and VAT - Extinguishing of demand prior to 20th September, 2018 - HELD THAT:- In the approved Resolution Plan, it was clearly stated that barring aside the claims admitted and forming part of the Resolution Plan any other claim and/or demand prior to the effective date shall stand extinguished. The Hon ble Supreme Court of India in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] upholding the constitutional validity of the Insolvency and Bankruptcy Code (Amendment) Act, 2019 has held that Ultimately it is the commercial wisdom of the requisite majority of the CoC that must prevail on the facts of any given case, which include distribution of assets. It is, therefore, not possible that the AA and consequently the NCLAT would be vested with the discretion that it vested in the CoC. Since the Respondents have not filed their claims relating to the earlier period till the date of approval of the Resolution Plan before the Resolution Professional during the CIRP period/ before the approval of the Resolution Plan, the claims of the Respondents, if it is filed now or in future, is not to be entertained by the Resolution Applicant / Corporate Debtor - application disposed off.

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• 2021 (4) TMI 623
  Dissolution of the Corporate Debtor - section 54 of the Insolvency and Bankruptcy Code, 2016 read with regulation 45(3) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is informed by the liquidator that he has not formed the Stakeholders Consultation Committee and no Stakeholders Consultation Committee meeting has taken place during the liquidation period. The reason for not forming/or conducting the meeting could not be clarified by the liquidator, when 5 Operational Creditors are there besides the promoters/ shareholders of CD. It is also reported, during the hearing that, a Fix Deposit of Rs. 5,25,000.00(Face value) with interest accrued therein of the CD lying with HDFC Bank even the Bank Guarantee/claim period of Letter of Guarantee (LG) is over. This deposit given as margin/security is not released reportedly for want of original Bank guarantee. It is not understood how the Bank is not releasing the Deposit of CD under Liquidation/Dissolution, when sufficient provision/guidelines are available with the Bank to release the deposit after giving 15/30 days formal notice to the beneficiary of the LG, when the validity of claim period is over. What has prevented the HDFC from not releasing the FD when the claim period mentioned in the LG is over. The liquidator is to form Stakeholders Consultation Committee within 10 days of this order as per Regulation of liquidation process 31 A and make all attempts to ensure maximization of value of assets of CD / liquidation estates including Trade Receivables - The liquidator is to take up the matter with HDFC Bank for release of the FD with interest within 10 days from today. The liquidator may execute/ complete formalities, if asked for by the Bank, for release of the FD of the CD under Liquidation. Application disposed off.

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• 2021 (4) TMI 622
  Seeking modification of list of stakeholders and incorporate claims filed by the financial stakeholders - Section 60(5) (c) read with Regulation 31(3) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- We are not much convinced about the reasons for delay in filing the claim, as the clam is filed around 14 months after i.e. on 31.12.2020, when the last date of filing the claim was 19.10.2019. Moreover, the claimant is the same FC which had filed Application under Section 7 of IBC. The reason mentioned by the Liquidator i.e. due to Covid period lockdown, the liquidation process could not be completed is not convincing. The fact is that the Covid Pandemic Lockdown started on 23.03.2020 i.e. after six months of liquidation order passed and no claim is filed during that six months also. Liquidation is to be completed within one year. The Liquidator also could not clarify the reason for not filing the petition under Section 54 of IBC even after completion of one year when no claim is received even by 30.12.2020 and the CD under liquidation is having reportedly no realizable asset except cash and bank balance. The Liquidator is directed to call for the Stakeholders Consultation Committee meeting within 10 days from today with a view to ensuring the maximization / realisation of value of assets of the CD under liquidation and distribute the proceeds of the assets as per Section 53 of IBC - application disposed off.

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• 2021 (4) TMI 620
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues or not - Operational Creditor - existence of debt and dispute or not - Time Limitation - HELD THAT:- In the case of Babulal Vardharji Gurjar Vs Veer Gurjar Aluminium Industries Pv. Ltd. Anr. [ 2020 (8) TMI 345 - SUPREME COURT ] it was held that an application under the Insolvency and Bankruptcy Code seeking CIRP in respect of the Corporate Debtor having been filed after a period three years from the date of default is barred by limitation. The petition dismissed as being barred by limitation.

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• Service Tax

• 2021 (4) TMI 656
  Sabka Viswas Legacy Dispute Resolution Scheme, 2019 - mistake in indicating the category as arrears and sub-category appeal not filed or appeal having attained finality whereas it should have indicated the category as litigation - Section 127 of the Finance Act, 2019 read with Rule 6(2) of the Sabka Vishwas (Legacy Dispute Resolution) Schemes Rules, 2019 (SVLDRS Rules, 2019) - HELD THAT:- The Court is of the view that the very fact that the Designated Committee granted registration number for the correctly filed SVLDRS-1 on 14th January, 2020 shows that the earlier objections were waived. Having processed the subsequently filed SVLDRS-1 and indicating those details in the SVLDRS-3 issued, there appears to be no justification for Opposite Parties to not accept NHSPL s calculation of tax amount due as Rs. 1,71,203.10 - a direction is issued to the Opposite Party No.2 i.e. Designated Committee to accept the SVLDRS-1 filed by NHSPL by issuing the SLVDRS-3 and since the payment of the admitted tax has already been paid to issue discharge in Form SLVDRS-4 to NHSPL. As far as the second writ petition filed by NC is concerned, in the counter affidavit again there is no explanation why the Designated Committee issued SVLDRS-2 and SVLDRS-2A without issuing SVLDRS-3. It is also not in dispute that the pre- deposit amount indicated therein is Rs. 33,86,126/- whereas it should be Rs. 39,41,880/- as indicated by NC in SVLDRS-1. The only defence put forth is that this was accepted by NC. This is incorrect since NC did write to the authorities on 29th June 2020 which fact is not disputed by the Opposite Parties in the counter affidavit. Petition disposed off.

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• 2021 (4) TMI 649
  Levy of penalty u/s 76 of FA - Reasonable cause for the failure or not - photography services - cost of material consumed in process of rendering service to be included in assessable value or not - HELD THAT:- The appellant is justified in his belief and he was supported by a reasonable ground to the effect that he was not liable to pay the service tax on cost of such material. The benefit of this belief for him is receiving a favourable consideration at the instance of the Tribunal while granting the relief qua the penalty imposed under Section 78. There are no reason why the said benefit cannot be extended to the penalty imposed under Section 76, since both the Sections are to be read along with Section 80, which gives an overriding effect over Sections 76 to 78. The impugned order passed by the Tribunal which denied the said benefit to the petitioner qua the penalty imposed under Section 78 to the tune of 1,00,000/-, is therefore a gross injustice and deserve Rs. to be set aside on account of non-consideration of Section 80 of the Act. No doubt penalty can be imposed under the Act, for contravention of the law, if law provides and no mens rea need to be established, the effect of Section 80, has been completely overlooked - Penalty set aside - petition allowed - decided in favor of petitioner.

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• 2021 (4) TMI 647
  Maintainability of petition - mandatory requirement with the compliance with the pre-deposit - Sabka Vishwas Legacy Dispute scheme - CENVAT Credit - Renting of Immoveable Property Service - HELD THAT:- On reading of Clause-2(ii) and (iii) of the Circular bearing No.1074/07/2019-CX dated 12.12.2019 and an entire reading of Section 124(2) read with Board Circulars would make it clear that the pre-deposit made at any point of time subsequent to the issuance of show cause notice ought to be taken note of and credit extended while indicating the amount payable by the assessee in the estimate in SVLDRS-3. As it is specifically clarified that manual processing of declaration would be allowed subject to conditions mentioned in the communication dated 08.01.2021, the objection at para-9 has been addressed - the respondent No.1 is directed to reconsider the explanation of the petitioner in Form No. SVLDRS-2A and order as regards the application under SVLDRS-1 and issue Discharge Certificate in SVLDRS-4, if eligible, as per law.

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• 2021 (4) TMI 640
  Interest on differential amount of service tax - revision of price of storage charges - Section 75 of the Finance Act, 1994 - Extended period of limitation - HELD THAT:- There is no case of fraud, mis-representation or suppression of facts on the part of the appellant as they have disclosed the additional taxable turnover arising out of the issue of supplementary invoices and has also paid tax in time and also disclosed such turnover in their books of accounts and returns filed with the Department. In this view of the matter, the demand for the period July, 2012 to March, 2013 is barred by limitation. The appeal is allowed in part.

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• 2021 (4) TMI 625
  Restriction on utilisation of CENVAT Credit - recovery of arrears - vires of Rule 8(3A) of CCR - HELD THAT:- The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of CENVAT Credit during the period of default which provision has been declared ultra vires/invalid by Court, hence, the demand cannot be sustained and the appeal, thus, succeed on this count. In the instant case no show cause notice U/s 11A of the Central Excise Act, 1944/Rule 14 of the CENVAT Credit Rules, 2004 have been issued by the department for recovery of the disputed demand which course is clearly impermissible in law in view of the judgments in the case of SANGHI POLYESTERS LTD. VERSUS SUPERINTENDENT OF C. EX., HYDERABAD [ 2009 (11) TMI 284 - ANDHRA PRADESH HIGH COURT] , M/S SHREEMATHA PRECISION COMPONENTS, M/S JINALLOY STEEL INDUSTRIES VERSUS THE COMMISSIONER OF CENTRAL EXCISE, THE SUPERINTENDENT OF CENTRAL EXCISE [ 2015 (9) TMI 351 - KARNATAKA HIGH COURT] , and UNIROLS AIRTEX REP. BY ITS PROPX:MEENA BOOPALAN VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE [ 2013 (8) TMI 614 - MADRAS HIGH COURT] . Show Cause Notice under section 11A of the Act read with Rule 14 of the CENVAT Credit Rules, 2004 is the foundation of any proceeding and thus mandatory for demand of duty, penalty and no demand can be confirmed without issuance of Show Cause Notice. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (4) TMI 641
  Clandestine removal - MS Ingots - Iron Ore - stock of finished goods lying in factory without entry in production register - corroborative evidence proving the allegations against the appellant or not - penalty - HELD THAT:- There was no better evidence before Commissioner (Appeals) than it was before Assistant Commissioner. Commissioner (Appeals) has held that the verification of stock of Ingots was conducted in presence of the Authorized Signatory of the appellant, who neither had objected the method of physical verification nor made any complaint. He had rather admitted the same and also in the excess stock of 56.300 MT of MS Ingots valued at Rs. 11,09,110/-. The statement of said Authorized Signatory Shri Kumar Chakraborty is perused. It shows that there is no admission for the alleged excess stock. None as his answers recorded in the statement amount to admission except that no satisfactory reason has been cited is alleged against said Shri Chakraborty. No doubt there is no retraction as in impressed upon by the Department, but once there is no admission retraction is not required. It is otherwise apparent from record that the appellant requested for the opportunity of cross-examining the witnesses the said opportunity has been denied cross examination is the basic rule of ensuring fair trial the denial thereof in the case which lacks any cogent evidence adversely affects the Department. Department has not bring for any such evidence which may prove their allegations. In absence thereof, however, in view of the acknowledge that the notice shortage is just of one day production even if recording as required under Rule 10 is missing, but the same does not warrant the application of Rule 25 (1) (b) of Central Excise Rules, 2002. Thus, neither the MS Ingots as well as the Iron Ore are liable for confiscation nor present is the case of imposition of penalty - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (4) TMI 654
  Validity of assessment order - opportunity of being heard prior to framing of an assessment or not - attachment of properties of the partners of the firm - recovery of arrears of tax and penalty due to the Government - HELD THAT:- The proviso to Section 24(3) specifically requires that the dealer be afforded reasonable opportunity of being heard prior to framing of an assessment - Such reasonable opportunity, Courts have been consistently held, must include an opportunity of personal hearing. Admittedly, in the present case, the petitioner has not been heard personally prior to the impugned orders having been passed. The petitioner will appear before the respondent on Thursday, the 15th of April 2021 at 10.30 a.m without expecting or anticipating any further notice in this regard - Petition allowed.

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• Indian Laws

• 2021 (4) TMI 657
  Dishonor of Cheque - Rebuttal of presumptions under Sections 118 and 139 of NI Act - genuine document supported by consideration or not - HELD THAT:- As rightly noticed by the learned Magistrate, it appears that his scribe has strained very much to adjust the space by modulating the size of letters in accordance with the space available above the signature of the first respondent, which is shown in the stamp paper. Moreover, though four signatures of the first respondent are shown in the stamp paper, which, according to the appellant, are that of the first respondent, the first respondent admits only one. On the very face of the document, three signatures are in one ink and another signature on the top, that is found against the name of the first respondent, is in different ink. If the document was signed by the first respondent in a single stretch, two pens might not have been used for the purpose. Similarly, the size of the letters, the attempt of the scribe to fill the gap and the different fonts used for the purpose etc., give an insight that it is not a genuine document executed by the first respondent in the manner alleged by the appellant. The learned Magistrate was not expected or justified in drawing a presumption in favour of the appellant so as to convict the first respondent. If only the appellant/complainant has discharged his initial burden, the first respondent is expected to rebut the presumption - thus, the appellant has not put up a genuine, convincing case; the learned Magistrate cannot be found fault with for acquitting the first respondent, in spite of the fact that appreciation of evidence is not up to the expectation. Whatever it may be, overwhelming reasons are not made out to interfere with the judgment of acquittal passed by the learned Magistrate, under Section 378(4) of the Cr.P.C. Appeal dismissed.

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• 2021 (4) TMI 651
  Dishonor of Cheque - acquittal of accused - dishonoured cheque were towards the discharge of a liability or not - legally enforceable debt for attracting presumption, present or not - rebuttal of presumption or not - applicability of Money Lenders Act - HELD THAT:- The evidence on record clearly leads to the conclusion that though the endorsement on the cheque return memo states that the signatory to the account had changed, the real fact borne from the evidence is that concerned cheque was dishonoured as there were no sufficient funds in the account nor was any arrangement made to cover the said cheque. Whether the Judgment passed by the learned JMFC contrary to law and resulted in gross miscarriage of justice by acquitting the respondents/accused? - HELD THAT:- It appears that the cheque bears a word Self in place of payee s name. The learned trial Judge held that even self cheque would come within the ambit of Section 138 of the NI Act and held that the complainant is the holder in due course. Whether the cheques have been issued for the discharge in whole or in part of any debt or other liability? - HELD THAT:- It is now well settled that the complainant is required to establish the case beyond reasonable doubt whereas the accused can discharge the burden on preponderance of probabilities. This can be done on the basis of cross examination of the witnesses of the complainant and any other material available on the record and it is not necessary for this purpose the accused should enter into the witness box - The question really is about the extent to which such presumption can operate and can the benefit of such presumption be availed then the case set up by the complainant is found to be not substantiated. Application of Money Lenders Act - HELD THAT:- A common proposition emerges that when offence under section 138 is in respect of a company section 141 comes into play. It is a penal provision creating vicarious liability and must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in the complaint that the director (arrayed as an accused)in charge of and responsible to the company for the conduct of the business of the company. The complaint should spell out as to how and in what manner the accused was in charge of or was responsible to the company for the conduct of its business. It is matter of record that on all the 12 cheques the signatories are not the same. On six cheques as shown in the chart are issued under the signature of Fredrick and S. Kumar and six under the signature of Fredrick and Kurien. However, in all the 12 complaints all the three persons were made as respondents/accused. Apart from this there is no specific averments who is the director responsible for the affairs of the accused no.1 company. Thus it transpires that complainant himself is not sure as to who were the directors and responsible person - the acquittals of the respondents herein is perfectly justified. It reveals from the record that accused nos.3, 4,5 and 6 are not the signatories to the cheques in dispute. There are no specific averments against these accused that they are connected or responsible to the affairs of the company. The signatories were already resigned and or authority thereof is withdrawn by the company which is made clear giving reply to the notice inspite of that all the nine respondents are arrayed as accused. So far as application of money-lending Act is concerned, in view of Section 6 of the Goa Money-Lenders Act, 2001, every person who is engaged in business of money lending, should apply for licence to the Registrar of money-lending before the prescribed date and in prescribed form annually - there are various transactions of the loan as per the complainant s contention itself. If that would be the case, for his past transactions of money lending, he ought to have after coming into force of the said Act of money lending, registered with the Registrar of money-lending within 15 days. Such transactions cannot be termed as hand loan. He is also claiming that he has received 24% interest. As such, without registration or intimation to the Registrar as per the Goa Money-Lenders Act, the amount so advanced, cannot be termed as legally enforceable debt. Criminal Misc. Applications are allowed.

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