TMI Tax Updates - e-Newsletter
April 21, 2021

Case Laws in this Newsletter:

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

Articles

1. STAKEHOLDERS’ CONSULTATION COMMITTEE

   By: DR.MARIAPPAN GOVINDARAJAN

2. TAXABILITY OF LICENSING SERVICES IN GST: APPELLATE RULING

   By: Dr. Sanjiv Agarwal

News

1. India’s Trade Performance resilient during 2020-21;

2. MoU between the India and Bangladesh on the establishment of a framework of cooperation in the area of trade remedial measures

3. Container shortage eases in the country;

4. Cabinet approves Memorandum of Understanding between the Institute of Chartered Accountants of India and Chartered Accountants Australia and New Zealand

5. Cabinet approves Mutual Recognition Agreement between the Institute of Chartered Accounts of India and the Certified Practising Accountant, Australia

6. MoU between Competition Commission of India (CCI) and Administrative Council for Economic Defense of Brazil (CADE)

7. Cabinet approves Amendments to the Finance Bill, 2020

Notifications

GST - States

1. 95/2020 – State Tax - dated 9-2-2021 - Chhattisgarh SGST

Seeks to extend the time limit for furnishing of the annual return specified under section 44 of Chhattisgarh Goods and Services Tax Act, 2017 for the financial year 2019-20 till 28-02-2021

2. 12/GST-2 - dated 19-4-2021 - Haryana SGST

Amendment of notification no.103/GST-2, dated 15.12.2020 to waive penalty payable for non-compliance of provisions of Notification No.18/GST-2, date 31.03.2020

3. 11/GST-2 - dated 15-4-2021 - Haryana SGST

Corrigendum to Notification No.07/ST-1/H.A. 6/2003/S.59/ 2021 dated the 10th March, 2021

Income Tax

4. 33/2021 - dated 19-4-2021 - IT

Central Government specifies the sovereign wealth fund, namely, the Norfund, Government of Norway

Highlights / Catch Notes

Income Tax

• Tribunal rules Key Man insurance premium as business expense u/s 37, but lacks evidence and justification.

  Case-Laws - HC : Eligibility of deduction of entire sum paid to the insurance company as premium on Key Man insurance policy u/s 37 - In the case on hand, with regard to the insurance premium paid by the assessee is concerned, the Tribunal, without giving any acceptable finding, came to the conclusion that the sum should be treated as business expenditure. That apart, the assessee also failed to produce any documentary evidence to justify their claim under Section 37(1) . - HC
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• High Court Rules Extensive Inquiry Not Needed in Reopening Tax Assessment; Competent Authorities to Decide Merits.

  Case-Laws - HC : Reopening of assessment u/s 147 - When factually, the Deputy Commissioner of Income Tax formed an opinion by assigning reasons that the issue involved during the original assessment was different from that of the reasons for reopening of assessment, then there is no reason for the High Court to go into the further details by conducting a roving enquiry and it is for the Competent Authorities to adjudicate the issues on merits and by affording opportunity to the writ petitioner in the manner prescribed under the Statute. - HC
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• Assessing Officer misapplies Section 40A(2), contradicts TPO's arm's length findings on professional fee expense disallowance.

  Case-Laws - AT : TP Adjustment - Disallowance on professional fee u/s 40A(2) and alternatively u/s 37 - the A.O. has erred in invoking the provisions of section 40A(2) of the I.T.Act to disallow the claim of expense as excessive and not legitimate to the business needs, especially in view of the fact that the TPO, in its transfer pricing orders for assessment years 2008-2009 and 2010-2011, had held the impugned transaction at arms length. - AT
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• Assessee's Hedging Loss Claim Approved u/s 43(5) Proviso, Commissioner Instructs Assessing Officer to Allow Compensation Loss.

  Case-Laws - AT : Disallowance of compensation loss claimed - hedging transaction - The transactions entered into are contended by the assessee to be in the nature of hedging transactions in order to safe-guard the company and as a precautionary measure, in the course of business carried on by it and, therefore, they fall proviso in clause (a) to sub-section (5) to Sec.43 of I.T. Act. - CIT(A) rightly directed the AO to allow the compensation loss claimed - AT
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• Share Premium u/s 68 Challenged; Finance Act 2012 Amendments Not Applicable This Assessment Year.

  Case-Laws - AT : Addition of sum received as share premium u/s. 68 - issue of shares at such high premium - The amended provisions of section 68 of the Act providing satisfaction of the assessing officer regarding explanation from the party from whom the credit is received as per proviso to section 68 of the Act was inserted by Finance Act, 2012 with effect from 1/4/2013. The same is not applicable for this assessment year. - AT
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• Tribunal Confirms Current Year Liability for Prior Period Expenses; Claim Cannot Be Denied by Authorities.

  Case-Laws - AT : Addition of Prior period expense - the genuineness of the expenses has not been doubted by the lower authorities. Since in the instant case the bills for expenses under consideration have been processed by various divisions of the assessee and finally approved in the year under consideration, and thus, respectfully following the decision of the Tribunal in the case of State Bank of Bikaner and Jaipur (supra), the liability for the expenses was finally settled and crystallised in the year under consideration. - Claim of expenses cannot be denied - AT
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• Tribunal Quashes Pr.CIT Order; Disallowance of Goodwill Depreciation by A.O. u/s 263 Cannot Stand Independently.

  Case-Laws - AT : Disallowance of depreciation on goodwill - now when the order of the Pr.CIT under Sec. 263, dated 21.02.2016 had been quashed by the Tribunal, therefore, the disallowance of depreciation on goodwill made by the A.O by relying on the order passed by his predecessor under Sec. 143(3) r.w.s 263, dated 30.12.2016, cannot survive on a standalone basis and was liable to be vacated - AT
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Customs

• High Court Invalidates Circular; Refund Claim Period for SAD Starts from Final Assessment Date, Not Payment Date.

  Case-Laws - AT : Refund of SAD - relevant Time period - the board also issued a circular no. 23/2010-Cus wherein, it was clarified that one year should be taken from the date of actual payment irrespective whether it is provisional assessment or final assessment. However, the Hon’ble High Court dealing with the very same circular since concluded that one year should be counted from the date of the final assessment, the said circular was held ultravires and quashed. - The limitation of one year has to be reckoned from the date of finalization of Bill of entry. - AT
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IBC

• KALS Group's Resolution Plan Approved by Creditors, Exceeds 66% Vote; Potential Increase in Resolution Amount Discussed.

  Case-Laws - AT : Approval of Resolution Plan - Resolution plan met with 66% criteria or not - In this case, even though the resolution plan of M/s. KALS Group has been approved with 100% voting in favour of it by the COC, in view of very meagre difference between both the Resolution Plans, we are of the view that there is scope for further improvement of the resolution amount to be payable by the Resolution Applicants. - AT
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• Financial Lease as 'Financial Debt' u/s 5(8) of Insolvency Code; Not 'Operational Debt' Per Section 5(21.

  Case-Laws - AT : Initiation of CIRP - the ‘Lease’ in the instant case, is a ‘Financial Lease’ and comes to an irresistible conclusion that there is ‘Financial Debt’ as per section 5(8) of the Code, 2016 and the default being committed by the First Respondent/Corporate Debtor in terms of the ingredients of section 3(12) of the Code, 2016. Further, that the ‘debt’ in question as per section 3(11) of the Code, 2016 cannot be termed as an ‘Operational Debt’ as per section 5(21) of the Code, 2016 - AT
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Service Tax

• Court Rules Exporters Entitled to Refunds on Unutilized CENVAT Credit Post-GST Transition for Legitimate Export Incentives.

  Case-Laws - HC : Refund of unutilized CENVAT Credit - denial on the ground of intervening changes in view of the intervening events with the implementation of GST - legitimate export incentives given to exporters of goods or service cannot be denied merely because of intervening changes. - HC
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Case Laws:

• GST

• 2021 (4) TMI 795
  Profiteering - noticees cannot be placed material relevant for the purpose of investigation/inquiry - Director General of Anti-Profiteering, investigating agency or not - Rule 126 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The NAPA, as per clause (25), of the same framework permits the interested parties/noticees to file only written submissions, and address oral arguments albeit with its permission. Issue notice.

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• 2021 (4) TMI 790
  Maintainability of appeal - appeal dismissed on the ground that the petitioner failed to file certified copy of the order passed by the adjudicating authority - HELD THAT:- When the Superintendent has proceeded on the basis that the petitioner had failed to reply to his show-cause notice when the petitioner had actually filed the reply, let the Superintendent pass a fresh order after considering the reply of the petitioner. For such purpose, the order passed by the Superintendent dated 4th October, 2019 and the appellate order dated 01.02.2021 are set aside. The proceedings are placed back before the Superintendent for fresh consideration and disposed of in accordance with law. The amount of pre-deposit which the petitioner has made in order to pursue the appeal shall be subject to further order that the Superintendent may pass of course subject to further right of appeal of the petitioner. Petition disposed off.

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• 2021 (4) TMI 789
  Detention of goods alongwith the vehicle - validity of the e-way bill which the driver was carrying had expired - power of authorities to inspect - HELD THAT:- The Superintendent has the power to detain or seize the goods as well as the conveyance, but also has the power to release such goods and conveyance provisionally on furnishing bond or such security or payment as found appropriate - In the present case, let the authorities continue the proceedings for assessment. However, till the same is done, it would not be appropriate to continue the detention and seizure of the conveyance as well as the goods. Looking to the nature of defect in the documents of the transporter alleged, the value of the goods detained, the possible tax and penalty demand which may arise, it is directed that the respondents shall release the vehicle and the goods upon the petitioner fulfilling the conditions imposed of furnishing of bond, deposit and bank guarantee - petition disposed off.

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• Income Tax

• 2021 (4) TMI 797
  Eligibility of deduction of entire sum paid to the insurance company as premium on Key Man insurance policy under Section 37 - CIT(A) as well as the Tribunal held that thus the premium on Keyman Insurance policy was allowable as business expense under Section 37(1) - HELD THAT:- Section 10(10D) of the Act deals with taxation of money received under the insurance policy. The issue that has to be decided in this appeal is as to the question of expense incurred towards the payment of insurance premium on a Keyman Insurance policy. The circular, which has been issued by the CBDT, clarifies the position by stipulating that the premium paid for a Keyman Insurance policy should be allowed as business expenditure. In the case on hand, with regard to the insurance premium paid by the assessee is concerned, the Tribunal, without giving any acceptable finding, came to the conclusion that a sum of Rs. 1,89,08,394/- should be treated as business expenditure. That apart, the assessee also failed to produce any documentary evidence to justify their claim under Section 37(1) . On a reading of the orders passed by the Commissioner of Income Tax (Appeals) as well as the Income Tax Appellate Tribunal, we are convinced that the Commissioner of Income Tax (Appeals) and the Tribunal have not considered the case of the revenue in a proper manner. Therefore, agreeing with the submissions made by the learned Senior Standing Counsel for the appellant, in the interest of justice, we are of the considered view that the orders passed by the Commissioner of Income Tax (Appeals) and that of the Income Tax Appellate Tribunal are liable to be set aside and the matter should be remitted back to the Commissioner of Income Tax (Appeals) for fresh consideration.

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• 2021 (4) TMI 796
  Reopening of assessment u/s 147 - writ petitioner contended that the reopening of assessment is made without jurisdiction and in the absence of any tangible evidence with reference to the provisions of the Act - Whether reopening of assessment is based on change of opinion? - HELD THAT:- The reason to believe and the requirements for reopening of assessment are well enumerated under Section 147 of the Income Tax Act. However, in the present case, the petitioner has failed to establish that the reason for reopening is connected with the facts adjudicated originally by the Assessing Officer. Thus, there are new materials available before the Authorities Competent for the purpose of reopening of the assessment and therefore, the writ petition is devoid of merits. High Court cannot make a roving enquiry in respect of the reasons, which are otherwise based on some materials objects were not scrutinised or adjudicated by the Assessing Officer in the original assessment order. The order dated 07.11.2018 issued by the Deputy Commissioner of Income Tax, disposing of the objections raised against the initiation of action under Section 147 of the Act, reveals that the issue involved in the original assessment under Section 143(3) of the Act and the reasons for reopening of assessment under Section 147 of the Act, are different. Deputy Commissioner of Income Tax, in clear terms, formed an opinion that the issue involved during the original assessment was dis-allowance of slump sale and the reasons for reopening of assessment under Section 147 of the Act, was to reassess the income of Rs. 82,49,045/-, which has escaped assessment being entirely different. When factually, the Deputy Commissioner of Income Tax formed an opinion by assigning reasons that the issue involved during the original assessment was different from that of the reasons for reopening of assessment, then there is no reason for the High Court to go into the further details by conducting a roving enquiry and it is for the Competent Authorities to adjudicate the issues on merits and by affording opportunity to the writ petitioner in the manner prescribed under the Statute. It is not as if the reopening of the assessment is the final proceedings. It is only an initiation and the petitioner is bound to avail the opportunity to be provided for the purpose of establishing his case with reference to certain facts and circumstances and by producing documents and evidences. Such an exercise cannot be done by the High Court under Article 226 of the Constitution of India. Thus, once the Competent Authority formed an opinion that the issue involved during the original assessment is unconnected with the reasons for reopening of the assessment under Section 147 of the Act, then the High Court is expected to be slow in interfering with the reopening of the assessment and the authorities must be provided with the opportunity to conduct further adjudications/enquiry by following the procedures contemplated and by affording an opportunity to the assessee and the assessee is also at liberty to establish his case with reference to the evidences available and therefore, this Court is of an opinion that the reasons stated in the impugned order are candid and convincing. There is no violation, as such, in respect of Section 147 of the Income Tax Act and the reasons for reopening of assessment is different with reference to the details furnished in the order dated 07.11.2018 passed by the Deputy Commissioner of Income Tax. Thus, the petitioner is at liberty to participate in the process of enquiry and defend his case in the manner known to law.

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• 2021 (4) TMI 794
  Computing eligible deduction u/s 10A - tribunal holding that the expenditure in foreign exchange is to be excluded from both export turnover and total turnover while computing eligible deduction under section 10A - HELD THAT:- As relying on case of M/s. SRA Systems Ltd., Chennai [ 2021 (3) TMI 977 - MADRAS HIGH COURT ] question of law may be decided in favour of the assessee and the appeal may be dismissed.

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• 2021 (4) TMI 793
  Disallowance of entry tax on raw materials and the inputs that are brought into assessee factory at Bangalore for manufacture of Tractors - Whether the finding of the Tribunal is proper especially when the assessee has debited an amount towards entry fees against the miscellaneous charges in the Profit and Loss account? - HELD THAT:- Revenue fairly submitted that the questions of law that were framed in the above appeal at the time of admission were already decided against the Revenue by the Hon ble Division Bench of this Court in Commissioner of Income Tax, Chennai Vs. TVS Motors Ltd [ 2014 (2) TMI 522 - MADRAS HIGH COURT ] - Thus the questions of law are decided against the Revenue.

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• 2021 (4) TMI 787
  Disallowance u/s 14A r.w.r 8D(2)(ii) and 8D(2)(iii) -Tribunal deleted the addition - as per revenue Board s Circular No.5/2014 dated 11.02.2014 , which emphasizes that the only expenditure allowable is which is relatable to earning of income and therefore, the expenses which are relatable to earning of exempt income have to be considered for disallowance, irrespective of the fact whether any such income has been earned during the financial year or not? - HELD THAT:- It is evident that the capital and reserves of the company are far in excess of the investment made. Therefore, the presumption arises that such investments have been made from capital and reserves of the company and from non interest bearing funds and not out of borrowed funds to warrant any disallowance while computing the income. [See: Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] and Lalsons enterprises [ 2010 (4) TMI 98 - DELHI HIGH COURT ] . It is also pertinent to mention here that the Assessing Officer has not recorded the satisfaction that assessee had incurred expenditure to earn exempt income as envisaged under Rule 8D(1) of the Rules. There is no positive material to show that the assessee had incurred such expenditure to earn exempt income. Commissioner of Income Tax (Appeals) and the tribunal therefore, have rightly deleted the disallowance under Section 14A read with Rule 8D of the Rules. The Circular No.5/2014 dated 11.02.2014 has no application to the facts of the case as the Assessment Year in question is 2009-10. In view of preceding analysis, the substantial question of law framed by a bench of this court is answered against the revenue.

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• 2021 (4) TMI 786
  Assessment u/s 153A - search in the premises of the assessee as well under Section 132 of the Act - Application u/s 154 - Assessee submitted that the tribunal did not adjudicate the controversy involved in the appeal on merits - It is also urged that an opportunity should be given to the assessee for submitting the documents to show that addition could not be made in the hands of the assessee. - HELD THAT:- It is not in dispute that subsequently, the Commissioner of Income Tax (Appeals) has allowed the petition filed by the assessee under Section 154 of the Act and has granted the relief to the assessee. From the relevant extract of para 19 of the order of the tribunal it is evident that despite opportunity being available to the assessee before the tribunal, the as. Has not produced any material before the tribunal. Apart from this, in the fact situation of the case, in our considered opinion, the relief has already been granted to the assessee in proceedings under Section 154 of the Act, therefore, the challenge to the impugned order has been rendered academic. It is therefore not necessary for us to adjudicate the validity of the order dated 14.07.2017 passed by the tribunal and to answer the substantial questions of law.

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• 2021 (4) TMI 785
  Computation of deduction u/s 80IB - Tribunal held that the allocation of common expenses in the ratio of turnover of a project should not be adopted but percentage of completion method should be adopted when computing the total turnover of the assessee for the purpose of computation of deduction u/s. 80IB - HELD THAT:- As per tribunal there was no definite ratio laid down that the common overhead expenses have to be allocated on the basis of turnover as contested by the revenue. With due regards, we are of the firm view that the case law relied on by the Revenue to drive home its point is rather distinguishable and not directly applicable to the facts of the case on hand. In an overall consideration of the facts and circumstances of the issue, the Revenue has not brought out any concrete documentary evidence to justify its stand in excluding the difference in allocable expenses. We are, therefore, of the considered view that the exclusion of the difference in allocable expenses from the deduction as claimed by the assessee was misconceived and thus, exclusion of difference in allowable expenses is unjustified. Thus substantial question of law does not arise for our consideration which is evident from the findings recorded by the tribunal. Whether the Tribunal is correct in holding that the assessee would be entitled to claim deduction u/s.80IB(10) of the Act, despite the project Zircon having commercial shop establishment of more than 2000 sq. ft. and this project being part of the larger project Ultima , where number of flats measuring more than 1500 sq. ft. had been constructed contrary to section 80IB(10)? - HELD THAT:- As the aforesaid substantial question of law has been answered by this court in COMMISSIONER OF INCOME TAX, BANGALORE, VS. BRIGADE ENTERPRISES LTD. , [ 2020 (9) TMI 1137 - KARNATAKA HIGH COURT] . For the reasons assigned in the aforesaid decision, the second substantial question of law is answered against the revenue and in favour of the assessee. Profits derived by the assessee on the sale of land/undivided share to the purchasers of flats - Whether it is to be included in the profits for computing deduction u/s.80IB(10) of the Act when the land was owned by the sister concern transferring undivided share in favour of the purchasers of flats? - HELD THAT:- From perusal of Section 2(47)(v) of the Act, it is evident that if the possession of any immovable property is handed over in part performance of the contract referred to in Section 53A of the Transfer of Property Act, 1882 the same would be a transfer within the meaning of Section 2(47) of the Act. In the instant case, the assessee has taken possession of the land in pursuance of an agreement executed between it and its sister concern and has paid consideration to its sister concern for purchase of the land. The assessee thereafter has constructed residential apartments on it and therefore, the land shall be deemed to have been transferred within the meaning of Section 2(47)(v) of the Act and is entitled to claim deduction under Section 80IB of the Act. In this connection, reference may be made to decision of the Supreme Court in PCIT VS. GREEN ASSOCIATES [ 2019 (4) TMI 224 - SC ORDER] . The substantial question of law No.3 is answered against the revenue and in favour of the assessee.

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• 2021 (4) TMI 781
  Disallowance u/s 40(a)(ia) - Whether Tribunal was right in holding that the amendment n made to section 40(a)(ia) by Finance Act, 2010 would apply retrospectively, though the amendment is made with effect from 1.4.2010? - HELD THAT:- As relying on Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] it is clear that the amendment made by the Finance Act, 2010 was curative in nature and it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its return of income on 17.10.2009, as per the ratio laid down by the Hon ble Apex Court, the assessee should be allowed to claim the benefit of the amendment made in the Finance Act to the provisions of Section 40(a)(ia) of the Income Tax Act. The learned Senior Standing Counsel appearing for the appellant has not produced any contra judgment in support of the Revenue. We are of the considered view that the ratio laid down by the Hon ble Supreme Court in the Judgment squarely applies to the facts and circumstances of the present case. - Decided against revenue.

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• 2021 (4) TMI 779
  Disallowance of job work charges - case of the assessee was selected for examination on account of large other expenses claimed in P L account - substantial amount was paid in cash - HELD THAT:- The genuineness of the quantum of payment was required to be verified by the A.O. and since the substantial amount was paid in cash. No any details of vouchers in support of cash payment was filed and only copy of ledger was filed which also reflects the details of cash payment made on a particular date but no supporting evidence to justify the payment was filed. Therefore, in absence of complete supporting evidence, verification of the expenses was not possible. Even before us, no details of vouchers have been filed and only submission was made to the effect that complete ledger accounts alongwith supporting evidence has been filed before the A.O. for verification, however, we are of the view that in absence of complete supporting evidence, confirmation of expenses were not possible by the A.O.. As substantial amount of Rs. 1,96,69,519/- was made in cash, the A.O. was justified in making disallowance @ 10% of the said amount which comes to Rs. 19,66,951/- and added to the total income of the assessee. Since the genuineness of quantum of payment so made by the assessee was to be verified and the facts in support of cash payments so made, the same could not be verified for justifying the payments. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Appeal of the assessee is dismissed.

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• 2021 (4) TMI 778
  TP Adjustment - Disallowance on professional fee u/s 40A(2) and alternatively u/s 37 - CIT-A deleted the addition holding that the TPO while determining the ALP has not disputed the genuineness of the payment and has accepted the ALP declared by the assessee - Whether CIT(A) was justified in deleting the above addition made without appreciating the fact that under sub-section (3) of Section 92C the TPO only computes the arm s length price in relation to an international transaction and is not empowered to examine the genuineness of the said payment - HELD THAT:- As decided in ORACLE INDIA (P.) LTD. VERSUS ADDITIONAL COMMISSIONER OF INCOME-TAX [ 2009 (8) TMI 821 - ITAT DELHI] Assessing Officer is required to compute the total income of the assessee in regard to the arms length price determined by the TPO - when payments are already been accepted at arms length by the TPO, then there was no justification on the part of the A.O. to hold that the expenditure is unreasonable and invoke the provisions of section 40A(2) of the I.T.Act. See M/S. HERBALIFE INTERNATIONAL INDIA PVT. LTD. [ 2015 (10) TMI 2794 - ITAT BANGALORE] AO has not compared the reasonableness of payment with respect to fair market value of services provided by RNA vis- -vis outside parties. The Hon ble Delhi High Court in the case of CIT v. Nestle India Ltd. [ 2011 (5) TMI 566 - DELHI HIGH COURT] had held that once the assessee has discharged initial onus, the burden would be shifted to the Revenue to show that the expense was unreasonable and excessive having regard to the legitimate needs of business based on material or evidence on record and that the assessee had made less than ordinary profits . Thus we are of the view that the A.O. has erred in invoking the provisions of section 40A(2) of the I.T.Act to disallow the claim of expense as excessive and not legitimate to the business needs, especially in view of the fact that the TPO, in its transfer pricing orders for assessment years 2008-2009 and 2010-2011, had held the impugned transaction at arms length. Disallowance of said expenditure u/s 37 - RNA has rich experience in setting up, running of stores and other related matters. It is providing such inputs to the other group concerns world over. The A.O. has nowhere doubted the genuineness of the agreement, the retention of services as well as the fact of actual payment of professional fees. The A.O. has disallowed the payment merely because he considered that there was no necessity of incurring such expenses by stating that the assessee had full-fledged management team and well-equipped resources. The A.O. cannot take a place of the management of the company and decide from its own point of view, whether an expense has to be incurred or not. Merely because there is expert management and team and resources, it cannot be contended that the expenditure was not at all required - thus we are of the view that the A.O. is not correct in disallowing the expenditure also u/s 37 of the I.T.Act. Disallowance of premium on forward cover - addition made on premium on forward cover u/s 43(5) treating it as speculative loss which is capital in nature and allowing the appeal of the assessee - HELD THAT:- The forward contracts were entered into mainly to hedge the import payments and working capital loans repayment which is in the ordinary course of trade or business of the assessee. The hedging contracts are in the nature of foreign exchange contract to purchase foreign exchange on a specified future date at a predetermined date. The bankers levied premium for entering into such forward contract. These are in the nature of actual charges levied by the bankers. It is nothing but bank charges which is purely revenue in nature. The said expenditure is incurred to secure the assessee s business from foreign exchange fluctuation risk. In case the assessee would not have taken the forward contract to cover itself from fluctuation risk, it can lead to making higher payment of imports and incurring huge losses, which could result in lesser profit. As per section 43(5) of the I.T.Act, speculative transaction means a transaction in which the contract for purchase or sale of any commodity including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips - In order to attract the definition of a speculative transaction, all the characteristics mentioned in the said definition is required to be satisfied - The term commodity has not been defined under the Income Tax Act Black s Law Dictionary (8th Edition) defines the term commodity as an article of trade or commerce; the term embraces only tangible goods, such as products or merchandise, as distinguished from services; an economic good, especially a raw material or an agricultural product. As decided in MUNJAL SHOWA LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX. [ 2003 (6) TMI 188 - ITAT DELHI-E] foreign currency does not fall within the purview of the term commodity and hence this characteristic of a speculative transaction is not satisfied. Since, the definition of speculative transaction itself is not applicable to the assessee s case as all the conditions were not satisfied, treating the transaction as speculative in nature is not sustainable in law. Therefore, we hold that the CIT(A) is correct in deleting the disallowance of premium on forward contract and no interference is called for. - Decided in favour of assessee.

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• 2021 (4) TMI 770
  Rectification of mistake u/s 254 - Tribunal has not considered the contentions of the assessee - HELD THAT:- Reappreciation of facts and modification of the Tribunal s order is nothing but review of ITAT order. U/s 254(2) of the I T Act, ITAT can only rectify the alleged mistakes which are apparent from record and cannot reappreciate the evidence and review its findings as held by the Hon ble Bombay High Court in the case of CIT vs. Ramesh Electric Trading Co.[ 1992 (11) TMI 32 - BOMBAY HIGH COURT ] Therefore, this M.A. is not maintainable and is accordingly rejected.M.A. filed by the assessee is dismissed.

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• 2021 (4) TMI 768
  TP adjustment - Corporate Guarantee Fee addition - whether Corporate Guarantee issued by the Assessee to its AEs comes within the definition of International Transaction or not? - HELD THAT:- The Finance Act, 2012 has inserted, an explanation to Section 92B with retrospective effect from 1st April, 2002 to include the term guarantee within the definition of international transaction. Therefore, the Corporate Guarantee issued by an entity on behalf of its AEs is an international transaction as considered by the Bombay High Court in the case of the Commissioner of Income Tax Vs. Everest Kentor Cylinder Limited [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] Thus it is clear that Corporate Guarantee by an entity on behalf of its AEs a subsidiary company is a international transaction. However, while arriving at a rate, the Assessing Officer has taken comparables from commercial banks to at arrive at mean margin of 1.04% and adopted such rate to determine the ALP of corporate guarantee issued by the Assessee. The Hon ble Mumbai High Court has confirmed the order of the Tribunal wherein the Tribunal estimated the guarantee commission at the rate of 0.50%. We therefore by considering the facts and circumstances of the case, we are of the opinion that we will fix the guarantee commission at the rate of 0.50%. Accordingly, we set aside the order passed by the Assessing Officer and direct the Assessing Officer to adopt at the rate of 0.50% commission on guarantee issued by the Assessee on behalf of its AEs, a subsidiary company. Disallowance of Interest Expenditure - interest expenditure on borrowed funds utilized for the purpose of additional capital in foreign owned subsidiary - HELD THAT:- We find that the similar issue came up for consideration in the Assessment Year 2010 2011, 2011 2012 in [ 2016 (10) TMI 807 - ITAT CHENNAI ] AND [ 2017 (6) TMI 1345 - ITAT CHENNAI] for the Assessment Year 2012 2013, the Hon ble Tribunal has considered for the Assessment Year 2011 2012, 2010 2011 and 2011 2012 by order dated 19.06.2017 and directed the Assessing Officer to verify as to whether the investment made in subsidiary to have controlling interest, or to avoid the dilution of controlling interest, or to keep the controlling interest intact as per the object clause of the Memorandum of Association of the Assessee company and to decide thereupon. In view of the above decision of the Hon ble ITAT in the Assessee s own case and also the principle of consistency laid down by the Hon ble Supreme Court in the case of Radhasoami Satsang Vs Commissioner of Income Tax [ 1991 (11) TMI 2 - SUPREME COURT] , we direct the Assessing Officer to follow the above passed order thereupon. So far as reliance placed by Ld. DR in the case of Maxopp Investment Ltd. (supra) is concerned, no application to the facts of this case.Thus the ground of appeal filed by the Assessee is allowed for statistical purposes. TDS u/s 195 - Non-Deduction of tax on Professional and Consultancy Fee and payment of drilling services Management fee - HELD THAT:- The similar issue has been considered by thewherein eld Co-ordinate Bench of the Tribunal in assessee s own case for AY 2012-13 [ 2017 (6) TMI 1345 - ITAT CHENNAI] as held criterion of residence, place of business or business connection of a non-resident in India has been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilization of the service in India to attract tax liability u/s.9(i)(vii) remained untouched and unaffected by the Explanation to Section 9 of the Act and outside India. Therefore, the twin criterion of rendering of services in India and utilization of services in India become evidently necessary condition to deduct tax. However, in respect of the said payments, the rendering of services being purely off shore and outside India, the whatever paid towards the said services does not attract tax liability. We are inclined to remit the issue to the file of the Assessing Officer to examine the issue afresh in the light of the above order along with the concerned DTAA and decide thereupon. Denial of tax credit u/s. 90 - HELD THAT:- As relying on own case we are inclined to hold that once the interest income subject to tax in any manner in the hands of the assessee, the corresponding tax credit to be given. Accordingly, this ground is remitted to the AO to examine the issue in the light of our above findings Disallowance of loss on forward contracts - AO disallowed the Forex loss of the Assessee mainly on the ground that the Assessee need not enter into such a contract for the nature of the business of the Assessee - HELD THAT:- So far as the first objection raised by the AO is concerned, we find that the line of the business of the Assessee is charter-hiring of offshore drilling rigs to oil companies like ONGC, Hardy Exploration, etc. The revenue is in the nature of charter-hire income from drilling and production services. All payments under these agreements for provision of the rigs on charter-hire and drilling services are in foreign currency, predominantly in USD. Therefore, the Assessee pleads that it has taken a business decision to protect its interest and had entered into a Forex contract with Banks and subsequently it has claimed loss on the Forex contracts. Second objection raised by the AO, non furnishing of details i.e., invoices, risk analysis statement submitted to the bank etc. e are setting aside the order passed by the Assessing Officer and we direct the Assessing Officer to re-consider the issue details and pass the order thereupon, keeping in view the decision of the Hon ble ITAT of Bangalore Bench in the case of M/s. Essilor India Private Limited Vs. The Deputy Commissioner of Income Tax [ 2020 (2) TMI 1487 - ITAT BANGALORE] . Thus the ground of appeal filed by the Assessee is allowed for statistical purposes. Disallowance of expenses relates to earning exempt income u/s.14A r.w.R 8D - Dispute Resolution Panel has modified the order passed by the Assessing Officer and also made one more addition u/s.115 JB - HELD THAT:- As case of the Assessee that no disallowance u/s.14A has to be made because the Assessee is having sufficient own funds. However, as for the Assessing Officer, the Assessee is not able to submit the details and substantiate that the borrowed funds are not utilized for the purpose of the business. Thus, we set aside the order passed by the Assessing Officer and remit the issue back to the file of the Assessing Officer to examine afresh, keeping in view the decision of the Delhi Bench Special of the Tribunal in Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] passed order thereupon. Disallowance of long term capital loss - loss on sale of investments in the equity shares of M/s. Aban Holdings Pvt. Ltd., Singapore, who is a wholly owned foreign subsidiary of the assessee-company (or in other words bought by back of shares by the wholly owned foreign subsidy) - HELD THAT:- We find that the Board has taken a decision to buy back the entire shares of M/s. Aban Holdings Private Limited, Singapore, Assessee s wholly owned subsidiary company and that no third party in involved. The transaction is between the Assessee s own sister concern and the Assessee. The Board has taken a decision on 13th November, 2013. As regards to the entire buyback of the shares, the Assessing Officer for the Assessment Year 2014 2015, in the scrutiny proceedings allowed the capital loss of the Assessee. In the year under consideration, the Assessing Officer says that the Assessment Year 2014 2015 is different from the Assessment Year 2015 2016. The Board has taken a decision with regard to the buyback of the shares. One transaction has already been completed for the Assessment Year 2014 2015 and the same is allowed by the Assessing Officer. The remaining part of the transaction is completed during the subsequent year and the Assessing Officer has doubted the same on the ground that the Minutes of the Meeting has not been placed before the Assessing Officer and also the Assessee has sold the same shares to M/s. Aban Holdings Private Limited, Singapore. We find that the reason given by the AO in our opinion is justified for the reason that the AO has given different treatment for the same shares for the year 2014-15 and 2015-16, the AO is disallowed the capital loss claimed by the assessee by following the decision of the Hon ble Jurisdictional High Court in the case of Premier Synthetic Industries Vs. Income-Tax Officer, Ward II (7), Coimbatore [ 2012 (7) TMI 72 - MADRAS HIGH COURT] Even the Hon ble Dispute Resolution Panel [DRP] has taken support from the same decision. In the case of the Premier Synthetic Industries held that the loss cannot be allowed either as a revenue loss or a capital loss. The above decision is not applicable to the facts of the case. As per the note filed by the Assessee in the present case, the Assessee has made investment in M/s. Aban Holdings Private Limited, Singapore for the financial year 2008 2009 dated 27.09.2012, AGM held by M/s. Aban Offshore Private Limited to buyback of shares on 30.10.2013, buyback of shares of the first half on 01.02.2013 and buyback of shares of the second half was on June 2014. The above facts were neither properly examined by the DRP nor by the Assessing Officer. We are of the opinion that the order passed by DRP has to be set aside and the issue has to be remitted back to the A.O. Accordingly, we set aside the order passed by DRP and remit the matter back to the AO to decide the issue afresh keeping in view of the observations made by us. Disallowance of Professional and Consultancy Services - HELD THAT:- In our opinion it is the business decision taken by the Assessee to engage the services of a particular company for the purpose of business. Assessing Officer is not justified in respect of the Consultancy Services received by the Assessee because the Assessee has paid an amount of Rs. 1,89,00,000/- and TDS is also being deducted on the said payment. No prudent businessman can make a payment to the third party without receiving the services from the party. The only objection in our view that is concerned is the details in respect of the services rendered that are not filed before the Assessing Officer. AO has not examined as to whether M/s. Emkay Global Financial Limited has offered the same for taxation or not? This fact is very much necessary to decide this issue. Therefore, we set aside the order passed by the Assessing Officer and remit the matter back to the file of the Assessing Officer to examine as to whether M/s. Emkay Global Financial Limited has offered the amount received from the Assessee for taxation or not? We also direct the Assessee to submit all the details of the services rendered by M/s. Emkay Global Financial Limited.

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• 2021 (4) TMI 767
  Disallowance of compensation paid - CIT-A deleted addition - HELD THAT:- We observe that in the remand report the AO stated all the replies from the commission recipients are stereo-typed, they have not done any such business either before or after this transaction. The important aspect the CIT(A) missed while directing the AO to delete the addition is that he ignored the remand report submitted by the AO which is based on the statements of beneficiaries recorded and evidences gathered during the course of remand proceedings. As relying on DURGA PRASAD MORE [ 1968 (8) TMI 17 - SUPREME COURT] we set aside the order of the CIT(A) and restore that of the AO wherein his categorical finding is that the claim is far from truth and concluded that the assessee failed to produce any evidence that the commission agents rendered any services in course of business. It also failed to produce that any agreement entered into between the parties regarding nature of works to be done, rates of commission, terms conditions for payments, etc. We also observe from the quarterly TDS returns that all the commissions have been debited only on 31/03/2009. It is also not clear that when the actual payments were made. From the details filed by the assessee in the paper book which contain 55 payees amounting to Rs. 2,45,40,000/-. It is also beyond our understanding that after discharging his/her work, they do not know how much commission they are going to get, but only they come to know the same on 31/03/2009 when the entries were passed in the books of account of the assessee. - Decided in favour of revenue Disallowance of compensation loss claimed - CIT(A) directed the AO to allow the compensation loss claimed - HELD THAT:- As during the financial year relevant to the assessment year 2009-10, the assessee has entered into number of transactions for supply of MS flats, MS angles, etc., with M/s. Shalini Steels (P) Ltd and Vijay Iron Foundry (P) Ltd. The transaction was for supply of steel products in the month of December, 2008 at the agreed price. The transactions entered into are contended by the assessee to be in the nature of hedging transactions in order to safe-guard the company and as a precautionary measure, in the course of business carried on by it and, therefore, they fall proviso in clause (a) to sub-section (5) to Sec.43 of I.T. Act. From the purchase orders given to Shalini Steels (P) Ltd Vijay Iron Foundry (P) Ltd, ,it can be found that they are for purchase of MS angles, MS flats, etc., there is no description and specification of the material required by the assessee company which do not match the requirement of CPDCL. In view of the above, the transactions with M/s. Shalini Steels (P) Ltd and M/s. Vijay Iron Foundry (P) Ltd cannot be compared with the transactions in the invoices/bills furnished as additional evidence. As submitted by the ld. AR in his written submissions in respect of any hedging transaction, the same should be backed by adequate availability of raw material/the material required under contract in the hands of the supplier so that the contract can be fulfilled in case delivery is required. This condition has not been met because it has been categorically stated by the Managing Directors of Shalini Steels {P} Ltd Vijay Iron Foundry {P} Ltd in their sworn depositions that the supplier companies did not have the stock in the required quantities as on the date of cancellation. Nor at any other time within the contract period, was the material manufactured by the companies and informed to the Central Excise Authorities of the existence of the goods to be supplied. In such a situation, the ingredients of the hedging transactions are not fulfilled, therefore, on this count also, it has to be held that the loss incurred by the assessee is only in the nature of speculative loss. CIT(A) before directing the AO to allow the compensation loss claimed by the assessee held that I am not inclined to accept the view of the Assessing Officer that the cancellation of the work orders by the appellant and consequently paying compensation is an arranged transaction with a view to reduce profits or for the matter a speculative transaction. No infirmity in the order of the CIT(A) - Decided against revenue.

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• 2021 (4) TMI 766
  Rectification u/s 154 - Deduction u/s 10B after adjustment of losses of other units owned by the assessee - as submitted that since the re-computation of deduction u/s 10B was as per CBDT Circular No. 7/2013 dated 16.07.2013, the action of the Assessing officer falls within the preview of Sec.154 - HELD THAT:- None appeared on behalf of the assessee. DR could not controvert that the issue on merit itself is covered in favour of the assessee by the Supreme Court in M/S YOKOGAWA INDIA LTD. [ 2016 (12) TMI 881 - SUPREME COURT] - Moreover as rightly pointed out by the learned CIT(A) this issue cannot be subject matter of order under section 154. As an order under section 154 can be passed only on a mistake apparent from record. By no stretch of imagination this issue can be said to be a mistake apparent from record. Appeal by the revenue stands dismissed.

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• 2021 (4) TMI 762
  Deemed dividend u/s. 2(22)(e) - assessee company is a concern in which the shareholders of M/s. Anyushka Investment Pvt. Ltd. (the payer company) have substantial interest - CIT-A deleted the addition - HELD THAT:- We find that it is evident from the facts above assessee is not a shareholder of the lending company that is AIPL. Hence on the touchstone of the special bench decision of Bhaumik Colour P. Ltd. [ 2008 (11) TMI 273 - ITAT BOMBAY-E] deemed dividend under section 2(22)(e) of the Act are not taxable in the hands of the assessee. Reliance upon the Bombay High Court decision in the case of Impact Container [ 2014 (9) TMI 88 - BOMBAY HIGH COURT] is also germane in as much as when it is the normal business of the lending company to give advances the receipt of advance from the same by the assessee cannot be termed as deemed dividend under section 2(22)(e) Addition of sum received as share premium u/s. 68 - issue of shares at such high premium by assessee company whose net worth is negative and purchase of the same by M/s. Anyushka Investments Pvt. Ltd. (both assessee company and AIPL has common directors) is unacceptable - CIT-A deleted the addition - HELD THAT:- As assessee has submitted all the necessary documents required to satisfy the extant provisions of section 68. The required documents as noted above in the order of learned CIT(A) and submission of the assessee s counsel were available before the assessing officer also. The said party is a group concern and it has also confirmed the transaction. Furthermore we note that assessee company has received the share capital including premium from the same group company that is AIPL, from whom it has also received loan of Rs. 1.18 crores. AO is not doubting the capacity of AIPL in granting the loan but is doubting the capacity to give the share capital. The amended provisions of section 68 of the Act providing satisfaction of the assessing officer regarding explanation from the party from whom the credit is received as per proviso to section 68 of the Act was inserted by Finance Act, 2012 with effect from 1/4/2013. The same is not applicable for this assessment year. As regards the issue of justification of share premium that is also not applicable for the assessment year under consideration as the same is applicable from 1.4.2013.The above position is duly supported by decision of honourable jurisdictional High Court in several decisions including Gagandeep Infrastructure Pvt. Ltd. [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] Pr. CIT Vs. Veedhata Towers Pvt. Ltd. . [ 2018 (4) TMI 1004 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2021 (4) TMI 761
  Exemption u/s 11 - refusing to grant registration u/s 12AA and Section 80G(5)(vi) - CIT (E) held that the activities of the trust reveal that the trust has restricted itself to religious activities only and hence not covered under definition of charity as explained u/s 2(15) - HELD THAT:- Admittedly, at the time of grant of registration the Commissioner is not empowered to examine the application of income but he has to examine whether the application is made in accordance with the requirements of section 12A and whether form No.10A has been proper or not. Commissioner is further to examine whether the objects of the trust are charitable or not and also to satisfy himself about the genuineness of the activities of the trust or the institution. Commissioner is not to examine the application of income at this juncture. The Hon ble Supreme Court in CIT v. U.P. Forest Corpn. [ 1998 (3) TMI 5 - SUPREME COURT] , held that in order to take advantage of the provisions of section 11 of the Act, the trust or the institution has to get itself registered. Whether the income of the institution can be regarded as being held for charitable purposes and whether the institution is entitled to registration under section 12A of the Act, requires investigation of facts. In view thereof, section 12AA recognizes the principle laid down by the Hon ble Supreme Court and Commissioner under section 12AA of the Act is empowered to call for such documents or information from the trust or the institution in order to satisfy himself that the objects of trust are charitable and also about the genuineness of the activities of the trust or the institution and is also empowered to make such enquiries as he deem necessary in this regard. From the enquiries conducted by the ld. CIT (E), we find that ld. CIT (E) has not brought anything on record to prove that the objects of the trust or institution are not charitable in nature. Hence, we set aside the order of the ld. CIT (E) declining the registration u/s 12AA and u/s 80G(5)(vi) - Appeals of the assessee are allowed for statistical purposes.

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• 2021 (4) TMI 760
  Addition of Prior period expense - AO has disallowed prior period expenses on the ground that same pertain to earlier years - justification of how the expenses crystallized in the year under consideration - HELD THAT:- The assessee is following Mercantile system of accounting. Prior period expense are generally those expenses which are relating to the current year in the sense they are crystallized during the year, though relating to activities of an earlier year. For accounting purposes these are generally known as prior period items and required to be shown separately. Normally, where mercantile system of accounting is followed, expenses relating to relevant year are accounted for in that year. However, prior period expenses had to be allowed in subsequent years if those expenses are crystallized in that year. CIT(A), which have been reiterated before us, the assessee has contended that bill in respect of professional charges of Rs. 42,000/-was received on 30/04/2008 - Counsel before us referred to page No. 7 of the paper-book, which is a copy of the said Bill and submitted that bill was processed finally on 19/01/2009 by the finance division, before travelling through various Department of the assessee company. Regarding other bills of Rs. 43,491/-; Rs. 50,000; and Rs. 23,021 also similar submissions have been made by the learned Counsel of the assessee. We find that Tribunal Jaipur bench in the case of State Bank of Bikaner and Jaipur [ 2014 (11) TMI 264 - ITAT JAIPUR] held that expenses of the previous year are allowable in the respective year to which they pertained but information as regard to such expenses with evidence was received by the assessee from the various branches after closing of books of accounts, and hence same are allowable during the year under consideration. Before us also, the genuineness of the expenses has not been doubted by the lower authorities. Since in the instant case the bills for expenses under consideration have been processed by various divisions of the assessee and finally approved in the year under consideration, and thus, respectfully following the decision of the Tribunal in the case of State Bank of Bikaner and Jaipur (supra), the liability for the expenses was finally settled and crystallised in the year under consideration. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition made by the Assessing Officer for prior period expenses. The ground of the appeal of the assessee is accordingly allowed.

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• 2021 (4) TMI 759
  Disallowance of depreciation on goodwill - whether goodwill acquired by the assessee enhances the value of entire FedEx brand? - CIT vacated the disallowance on deprecation of goodwill so made by the A.O - A.O relying on the order passed by the Pr. CIT under Sec. 263 for A.Y. 2011-12 wherein the latter had observed that if some goodwill had been acquired by the assessee then, partially such goodwill was for the business of the international affiliates of the assessee company and only a reasonable part of the same would be relatable to the assessee company, had thus, adopting the same line of action attributed 25 % of the value of goodwill to the assessee and disallowed the balance 75% of its value - HELD THAT:- Admittedly, the order passed by the Pr. CIT under Sec. 263, for A.Y. 2011-12had been quashed by the Tribunal [ 2017 (11) TMI 1215 - ITAT MUMBAI] As observed by us hereinabove, the Tribunal while quashing the order passed by the Pr.CIT under Sec. 263 had categorically observed that as the agreement for acquiring the business of AFL and UFL was between the assessee and AFL/UFL and none of the affiliates of the FedEx Group were a party to the same thus, it cannot be said that the affiliates had acquired the goodwill along with the assessee. Thus the controversy in hand had its genesis in A.Y. 2011-12, we find, that the CIT(A) had rightly, observed that now when the order of the Pr.CIT under Sec. 263, dated 21.02.2016 had been quashed by the Tribunal, therefore, the disallowance of depreciation on goodwill made by the A.O by relying on the order passed by his predecessor under Sec. 143(3) r.w.s 263, dated 30.12.2016, cannot survive on a standalone basis and was liable to be vacated. Accordingly, finding no infirmity in the view taken by the CIT(A), we herein uphold his order. - Decided against revenue.

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• 2021 (4) TMI 758
  Rectification u/s 254 - addition u/s. 68 and disallowance of bogus purchases - ITAT has erred in appreciating some of the evidence and submissions - HELD THAT:- We find that the ITAT has elaborately discussed the issues both as regards addition u/s. 68 of the Act and disallowance of bogus purchases. The assessee s claim that ITAT has erred in appreciating some of the evidence and submissions do not amount to mistake apparent from record liable to be rectified u/s. 254(2) - The case laws referred by the assessee before us in the Miscellaneous Petition are not at all applicable to the facts of the present case. Various decisions regarding cash credit and bogus purchases claimed to have been filed by the assessee in the appeal proceedings are also on the facts of the individual case. Even the decision in the case of Mohammad Haji Adam Company [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] is also on the facts of the individual case of trading concern and by no stretch of imagination lays down a specific law to be universally follows on account of bogus purchases. Appreciation of the facts by the Tribunal which as per the assessee is erroneous or wrong cannot permit review of the same by another Bench of the Tribunal in the Miscellaneous Application. There is no mistake apparent from record in the order of the Tribunal. Hence, this Miscellaneous Application by the assessee stands dismissed.

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• 2021 (4) TMI 757
  Rectification u/s 254 - Appeal against the 12A rejection Order passed by CIT (Exemption) Mumbai Asstt Year 2017-18 - HELD THAT:- We find that the mistakes have crept in the order of the Tribunal and accordingly we rectify the mistakes as follows :- In first paragraph line no. 2 Commissioner of Income Tax (Appeals) should be read as Commissioner of Income Tax (Exemption) and learned CIT(A) should be read as learned CIT(E) (i)Paragraph 3, 6th line (ii) paragraph 4, 3rd line (iii) paragraph 5, 4th line the word learned CIT(A) should be read as learned CIT(E) In the result, Miscellaneous Application filed by the assessee is allowed.

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• 2021 (4) TMI 756
  TP Adjustment - MAM selection - adjustments to the total income of the Appellant under Section 92CA(3) of the Act on account of adjustment in the arm s length price of the international transaction, using Comparable Uncontrolled Price ( CUP ) as the most appropriate method - rejecting the economic analysis undertaken by the Appellant using the Transactional Net Margin Method (TNMM), in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ( the Rules ), and instead using CUP as the most appropriate method for the determination of the arm s length price of the international transaction of export of finished goods, without providing any cogent reason - HELD THAT:- Tribunal in assessee s own case in[ 2020 (10) TMI 1240 - ITAT MUMBAI] wherein the identical issue has been restored to the file of the AO to decide the same after taking into account certain observations made by the Bench. Transfer Pricing Officer has adopted a very selective approach while applying CUP. Even, while applying CUP, the Transfer Pricing Officer has not properly looked into assessee s claim of various adjustments on account of geographical location, volume and timing difference. The Transfer Pricing Officer has only allowed volume adjustment on purely ad-hoc basis, that too, only in respect of a single product while ignoring various other products wherein volume difference between AE and non-AE transaction is substantial.assessee s contention that the price of products insofar as sales made to the AE and non-AE would vary due to timing difference has not been properly considered. The various adjustments which are required to be made have been demonstrated before us by the learned counsel for the assessee by furnishing charts. In our view, all these factors have to be taken into consideration, even, while applying CUP method. One more submission of the assessee is that the DRP has allowed adjustment on account of marketing/allied cost. However, while computing such adjustment, the Assessing Officer has not taken note of marketing personnel cost. Since the facts before us are materially same, We are, therefore, respectfully following the decision of the co-ordinate bench of the Tribunal restore this matter to the file of the AO to decide the same afresh . Adjustment on account of payment made towards intra group services in respect of marketing, administrative, logistic support and information technology services - HELD THAT:- As relying on own case [ 2020 (10) TMI 1240 - ITAT MUMBAI] inescapable conclusion would be that the adjustment made by the Transfer Pricing Officer to the arm s length price of payment made towards Intra-group services is unsustainable. In view of the aforesaid, we have no hesitation in deleting the addition made by the Assessing Officer on account of the aforesaid adjustment.

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• 2021 (4) TMI 755
  Complaint filed u/s 276 B read with Section 278 B of the Income Tax Act - accused company has not deposited the TDS - non -service of notice or defect in notice u/s 2(35) - HELD THAT:- As the complaint does not mention about the mode of service of notice and order u/s 2(35) Ex CW1/7 and Ex CW1/8 of the Income Tax Act; CW 1 and CW 2 confirmed that no proof of service is placed on record and the diary number on CW1/8 was incomplete and no clarification was brought on record despite court observation. Merely, on the basis of partial diary number written on the notice, it cannot be safely presumed that the notice and order u/s 2(35) of the Income Tax Act Ex CW1/7 and Ex CW1/8 have been served upon the accused no.2. From the record, it is clear that the complainant has failed to prove the service of notice and order u/s 2(35) of the Income Tax Act upon accused no. 2. From the mandate given in Roshni Cold Storage [ 1998 (7) TMI 13 - MADRAS HIGH COURT] and M.R. Pratap [ 1983 (7) TMI 38 - MADRAS HIGH COURT] it is clear that in the absence of proof of service of notice u/s 2(35) the contention of accused that he cannot be proceeded with for the delayed payment of the tax amount by the company, is a well founded one. Whether accused was not personally responsible for the deposit / collection of the TDS with the complainant department? - From the evidence on record, it is clear that complainant has failed to prove that accused no 2 Sh. Pradeep Kumar Jain as Managing director for the relevant period, the service of notice and order under section 2 (35) Income Tax Act, 1961 on accused no 2 is not proved and the document Form 27A shows that it was Mr. Yoginder Singh who was responsible for the deduction and collection of TDS. In view of the aforesaid, accused no 2 Sh. Pradeep Kumar Jain is given benefit of doubt and acquitted for the offence u/s 276B r/w S. 278B of the Income Tax Act, 1961. Financial Difficulties - As the case of accused will be covered u/s 278 AA of the Income Tax Act, if he is able to prove the reasonable cause existed when the default was committed. There is initial onus on prosecution to establish the ingredients of offence alleged and prove absence of the reasonable cause on the part of the accused / assessee. The reasonable cause shall be fair, not absurd, not irrational and not ridiculous. Reasonable cause would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or for want of bonafides. The tax deducted as source cannot be equated with the payment of other liabilities like service tax or sales tax whose payment may be dependent upon the actual realization of money. TDS is deducted in advance by the assessed before making any payment for the scheduled items. The assessee acts as custodian of tax/TDS amount and needs to deposit the same within stipulated period as per Rule 30. Merely because the business suffered from recession and the working capital stifled, cannot be a termed as sufficient cause for non payment of TDS amount. A company cannot be permitted to use the TDS amount for channelizing and fulfilling its working capital deficit. DW1 Sh Ashish Verma in his cross examination admitted that the company was making payment of various loans to its directors and its associate companies during the relevant period. Therefore, when the company is able to discharge its other liabilities, the ground for recession cannot be cited as an excuse for non payment of the TDS amount. In the sanction order Ex CW1/2 the CIT (TDS) has also appreciated the financial exigencies cited by the company and has concluded that the payment of TDS has nothing to do with the liquidity of the deductor company. Though the audit reports DW1/3 to DW1/6 specifies the liabilities and the loans of the accused no 1 company, but it does not pinpoint the reasons for failure make the payment of TDS amount. Reasonable cause would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or for want of bonafide. In present facts and circumstances the company has failed to show any circumstances which has prevented the company from payment of TDS amount especially when the payment to the associate companies and directors were continuing. Merely because there was recession in the market cannot be considered as reasonable cause for non compliances because a company is supposed to keep its working capital reserves or overdraft facilities to meet these lean period patches. The case of the accused company is clearly not covered u/s 278AA Income Tax Act, 1961 and accordingly the accused no 1 company is convicted for the offence u/s 276 B Income Tax Act, 1961 for delay in depositing the of the TDS amount.

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• Customs

• 2021 (4) TMI 788
  Proper Officer under Customs Act - non-existing power under Section 2 (34) of the Customs Act - HELD THAT:- Dealing with the notification dated 2nd May, 2012, relied upon by the respondent, which confers the various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2), the Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] held that the Section under which the notification has been issued does not confer any power on any authority to entrust any functions to the officers. It was also held that the notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2 (34) of the Customs Act, hence was invalid. List this petition on 26th July, 2021.

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• 2021 (4) TMI 774
  Levy of Redemption Fine and Penalty - import of Black matpe FAQ crop 2019 classifiable under 0713 3110 - restricted goods or not - Ministry of Commerce Industry (Department of Commerce) vide Notification No. O.S 1478(E) dated 29.03.19 - HELD THAT:- In the present case the importer had admitted that he does not have a license from DGFT in respect of the restricted goods which means that the said goods have been imported by the appellant in contravention of Section 111(d) of the Customs Act, 1962 and hence liable for confiscation. Further it is found that the goods being restricted cannot be imported without proper license issued by the DGFT and in the present case, the appellant did not possess the license and hence the goods were liable for confiscation and the Commissioner has rightly allowed the redemption subject to payment of fine of Rs. 7,00,000/- under Section 125 and penalty of Rs. 3,00,000/- under Section 112 of the Customs Act, 1962. There are no reasons to interfere in the impugned order which is hereby upheld - appeal dismissed.

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• 2021 (4) TMI 765
  Refund of SAD - relevant Time period - time period of one year as provided under Section 27 shall be reckoned from the date of actual payment of SAD or from the finalization of the assessment? - N/N. 102/2007-Cus dated 14.09.2007 - HELD THAT:- In the present case the facts is not under dispute that the assessee though paid SAD on 18.1.17 but this payment is under the provisional assessment of Bill of Entry . Admittedly the same bill of entry have been finalized on 07.01.17 when the appellant has paid the differential amount of SAD therefore, even though the payment was made on 29.8.13 even the said payment has been finalized with the final assessment of Bill of Entry. Therefore, the date of finalisation of payment should be from the date of finalisation of Bill of Entry i.e. 07.1.17. If this is so, then one year period will start from date of finalization of Bill of Entry which in the present case is 07.1.17. The refund claim was filed on 18.1.17 which is within one year from the date of finalization of Bill of Entry. The Hon ble Delhi High Court in the case of PIONEER INDIA ELECTRONICS (P) LTD. VERSUS UNION OF INDIA ANOTHER [ 2013 (9) TMI 705 - DELHI HIGH COURT] considering the same issue held that one year period should be calculated from the date of finalization of the assessment in a case were earlier the bill of entry has been provisionally assessed. On this interpretation the board also issued a circular no. 23/2010-Cus wherein, it was clarified that one year should be taken from the date of actual payment irrespective whether it is provisional assessment or final assessment. However, the Hon ble High Court dealing with the very same circular since concluded that one year should be counted from the date of the final assessment, the said circular was held ultravires and quashed. The limitation of one year has to be reckoned from the date of finalization of Bill of entry. In the present case, the refund claim was filed within one year from the date of finalization therefore, it is not time barred - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (4) TMI 763
  Scheme of Amalgamation and Merger - seeking to dispense with the meeting of Equity Shareholders of the Applicant Companies - seeking to dispense or direct the Company to conduct the meeting of Secured and Unsecured Creditors of the Applicant Companies - HELD THAT:- The Companies has followed extant provisions of Companies Act in framing the Scheme in question, which are duly approved by the Board of Directors of the Companies involved. The Statutory Auditors/Chartered Accountants of the Companies have also issued respective Certificates by inter-alia certifying the details of shareholders, creditors, and compliance of accounting treatment as prescribed U/s 133 of the Companies Act, 2013 with reference to the Scheme in question. The Applicant Companies have disclosed all the material facts relating to the Scheme in question and filed necessary documents along with the Application. Relief granted as sought for, by dispensing with the meeting of Equity Shareholders and Secured Creditors of the Applicant Companies and to Convene the meeting of the Unsecured Creditors of the Applicant Companies by appointing the Chairperson and Scrutinizer for convening the meeting, fixing venue, time, quorum etc. - Application allowed.

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• Insolvency & Bankruptcy

• 2021 (4) TMI 777
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - issuance of demand notice, mandatory or not - HELD THAT:- There was no valid ground to conclude that the Petition was filed with malicious intent. The Adjudicating Authority s finding regarding malicious intent cannot be treated as valid by any stretch of the imagination. The Petition was dismissed mainly because alleged debt cannot be treated as financial debt. Only on this basis, the inference cannot be drawn that the Petition was filed with malicious intent. In any event, the apparent malicious intent was for the issuance of the demand notice, which, as stated above, is not even a legal requirement under Section 7 of the Code. Therefore it is clear that the observation of the learned Adjudicating Authority that the Petition is filed with malicious intent is invalid. In the facts and circumstances of the present case, only on the ground that the Adjudicating Authority has not treated the alleged Transaction as a financial debt, no action could have, in any event, be taken under Sections 65, 72 and 75 of the Code. In any event, from the facts of the case, none of the preconditions of the above-mentioned provisions of Sections 65, 72 or 75 of the Code has been satisfied, which is evident from the following - Appellant had initiated proceeding under Sections 7 of the Code in the financial creditor s capacity to exercise their legal right. While the petitions were dismissed on merits, there is no doubt that the said proceedings were initiated for the purposes envisaged by law. There is nothing on record to show that the proceedings u/s 7 of the Code were initiated for the purpose other than seeking a resolution, which is the sine qua non for initiation of proceedings under Section 65 of the Code. Appeal disposed off.

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• 2021 (4) TMI 776
  Approval of Resolution Plan - Resolution plan met with 66% criteria or not - section 36 of the I B Code, 2016 read with Regulation 39 (4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- Taking into consideration the almost similarly placed resolution plans and claims and counter claims made by both the Resolution Applicants, we are of the view that there is a need for further pursuance of the Resolution Plan and with the very hope that the Corporate Debtor may fetch better value that what has been offered by the Resolution Applicants. In this case, even though the resolution plan of M/s. KALS Group has been approved with 100% voting in favour of it by the COC, in view of very meagre difference between both the Resolution Plans, we are of the view that there is scope for further improvement of the resolution amount to be payable by the Resolution Applicants. The direction issued to the Committee of Creditors to take fresh bids from the existing two Resolution Applicants to submit a Resolution Plan for its consideration within a period one month are clearly unsustainable in view of the recent judgment of the Hon ble Supreme Court in Kalpraj Dharamshi Anr. V. Kotak Investment Advisors Ltd. Anr [ 2021 (3) TMI 496 - SUPREME COURT] , which squarely applies to the facts of the present case. Application allowed.

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• 2021 (4) TMI 775
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Service Providers - extortionate credit transaction - Lease Agreement - existence of debt and dispute or not - Lease Agreement is a Finance or Capital Lease - Service of Demand Notice - HELD THAT:- The Second Respondent/Financial Creditor without prejudice to its rights under law had called by the First Respondent/Corporate Debtor and Another to pay a sum of Rs. 94,81,209/- only within 14 days from the receipt of the Demand Notice by any one of them or both of them, failing which the First Respondent/Corporate Debtor and Another were informed that the Second Respondent/financial Creditor would be constrained to proceed against them as per Law, including, but not limited to initiate Insolvency Proceedings under the Insolvency Bankruptcy Code against the First Respondent/Corporate Debtor. It is to be pointed out that in the Rejoinder of the Appellant (filed to the Reply of the Second Respondent/Financial Creditor/Applicant) in paragraph 5 (1), it is mentioned that there is neither a Financial Service provided by the Second Respondent as per section 2(16) of the I B Code, nor a Financial Product as per section 2(15) of the I B Code, 2016, but an ordinary lease of furniture and fixtures to the First Respondent Company that are fully owned by the Second Respondent, therefore, the Second Respondent is not a Financial Service Provider under section 2(17) of the I B Code, 2016. Section 3(14) (a to d) of the Code defines Financial Institution .(including a financial institution as defined in section 45 -I of the Reserve Bank of India Act, 1934 (2 of 1934). Section 50 of the I B Code, 2016 provides a carve out to a Financial Service Provider for its credit facility to be regarded as extortionate . Likewise, section 167 of the I B Code, 2016 provides that any debt extended by a person regulated for the provision of Financial Services shall not be considered as an extortionate credit transaction - As matter of fact, the definition of Corporate Person in section 2(7) of the I B Code, 2016 excludes any Financial Service Provider . This Tribunal without any haziness holds that the Lease in the instant case, is a Financial Lease and comes to an irresistible conclusion that there is Financial Debt as per section 5(8) of the Code, 2016 and the default being committed by the First Respondent/Corporate Debtor in terms of the ingredients of section 3(12) of the Code, 2016. Further, that the debt in question as per section 3(11) of the Code, 2016 cannot be termed as an Operational Debt as per section 5(21) of the Code, 2016 - Application dismissed.

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• 2021 (4) TMI 773
  Maintainability of Appeal - locus standi of the Appellant for filing the appeal - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - service of demand notice - HELD THAT:- In view of the provision under Section 61(1) of IBC that any person aggrieved by the order of the Adjudicating Authority may prefer an appeal, the Appellant has not been able to show as to how she is aggrieved by the Impugned Order and is an interested party for preferring this appeal. Moreover, since the authorised representative of the Corporate Debtor in the matter that was filed before the Adjudicating Authority has chosen not to file any appeal against the Impugned Order it was necessary for the Appellant to establish her locus standi for filing this appeal. The Appellant is unable to establish how she is aggrieved by the Impugned Order, and, therefore, her locus standi in filing this appeal. The appeal is thus not maintainable as it doesn t satisfy the criterion for preferring an appeal, as set out in Section 61(1) of the IBC. Appeal dismissed.

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• 2021 (4) TMI 772
  Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Resolution Plan as approved by the CoC under Section 30(4) of the Code meets the requirements of Section 30(2) of the Code and Regulations 37 38 of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved as provided under Section 31 of the Code. Application allowed.

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• 2021 (4) TMI 771
  Reference of matter to SFIO - It is argued that the Adjudicating Authority could not have directly asked the Central Government to refer the matter to SFIO as there is a procedure required to be followed under Section 213(b) of the Companies Act, 2013 - HELD THAT:- An error has occurred when Adjudicating Authority gave directions to send matter to SFIO which needs to be corrected so that the proper procedure as required under Section 213 of the Companies Act, is followed. The Central Government is directed to adopt procedure under Section 213 (b) of The Companies Act, 2013 and Central Government may get the affairs of the Companies investigated by an Inspector or Inspectors appointed by the Central Government and take further necessary steps as per law - Appeal allowed - decided in favor of appellant.

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• 2021 (4) TMI 769
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Creditor - pre-existing dispute or not - HELD THAT:- No disputes were raised as covered under section 5(6) of the Code which provides that the dispute includes a suit or arbitration proceedings relating to-(a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty . Therefore, there is no pre-existing dispute before issuance of the demand notice to the corporate debtor. Further, there is undisputed amount of Rs. 22,17,175/- which has already been admitted by the Corporate debtor in their reply to the demand notice dated 12.09.2019 also in addition raised dispute to wriggle out of applicant s claim. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties. It can be thus inferred that there is no merit in the so-called dispute raised by the corporate debtor in reply to the application. This leaves no doubt that the default has occurred with respect to the payment of the operational debt of the applicant. From the records and the reply of the corporate debtor to the present application, it cannot be inferred that dispute of the corporate debtor is of genuine nature, which merely is a moonshine dispute. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The date of default as per Form V occurred on 17.08.2018 and the application is filed on 18.10.2019, hence the debt is not time barred and the application is filed within the period of limitation. In the given facts and circumstances, the present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. Application admitted - moratorium declared.

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• 2021 (4) TMI 764
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues or not - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- The Petitioner has not enclosed any documents to show the existence of Financial Debt such as agreement or promissory note or letter of request or letter of acknowledgement or payment of Interest or Income Tax 26 AS Statement or other documents. He has shown only Bank entries to show that the payment is made to Corporate Debtor. On the other hand, the Respondent has stated that the amount received is for Sale of goods, for Sale of Business. The Petitioner failed to prove the debt due is financial debt and hence he cannot be considered as a Financial Creditor as per Section 5(7) of the IB Code. As per Section 7 of IB Code, only a Financial Creditor can initiate Corporate Insolvency Resolution Process. This Adjudicating Authority is of the view that the present petition filed under Section 7 of IB Code, does not qualify for admission - Petition dismissed.

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• Service Tax

• 2021 (4) TMI 792
  Admission of Liability of Service Tax - period spanning between 2010-2011 and 30.06.2017 - HELD THAT:- Mr. Singh, with his counter-affidavit, has filed a copy of the petitioner s letter addressed to the respondents which is dated 26.09.2019, wherein, inter alia, the petitioner seems to have suggested that it will revert as to its pending tax liability after consulting with its Chartered Accountant. List the matter on 28.05.2021.

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• 2021 (4) TMI 791
  Permission for sale of Aircraft - requirement of furnishing the details of an unencumbered solvent security - violation of condition on which aircraft was granted permission to extend Non-Scheduled Air Transport Services (NSAT Services) to its customers - HELD THAT:- There are decisions rendered by several courts, in which, it has been held, that stale show cause notices cannot be adjudicated upon by the concerned statutory authorities. The concerned statutory authority will adjudicate upon the show cause notice dated 18.09.2013 - The petitioner will have liberty to file a supplementary reply which, as Mr. Gulati says, would, inter alia, advert to the issue concerning delay in adjudicating upon the show cause notice, and its consequences in law.

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• 2021 (4) TMI 783
  Refund of unutilized CENVAT Credit - denial on the ground of intervening changes in view of the intervening events with the implementation of GST with effect from 01.07.2017 - eligibility of refund on legitimate export incentives - HELD THAT:- The refund of CENVAT credit under Rule 5 of the CENVAT Rules 2004 read with Notification No.27/2012- CE(NT) dated 18.06.2012 is a legitimate export incentives given to an exporter of service and goods. Therefore, such legitimate export incentives given to exporters of goods or service cannot be denied merely because of intervening changes. Considering the fact that the petitioner has also not been able to utilize the credit of duty under the provisions of GST which came to be effected from 01.07.2017, legitimate export incentives cannot be denied to the petitioner - there are no merits in denying the benefit of refund claim filed by the petitioner under Rule 5 of the CENVAT Rules, 2004 - petition allowed.

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• CST, VAT & Sales Tax

• 2021 (4) TMI 782
  Recovery Proceedings - notices of recovery titled urgent notices - TNGST Act - CST Act - HELD THAT:- Learned Government Advocate for the respondent circulates a copy of notice dated 25.03.2021, issued on the same date by RPAD setting out the correct enactments, period of assessment and break-up of tax, surcharge, interest and penalty. The impugned notices contain glaring factual arrears, the impugned notices dated 02.12.2019 and 07.102.2020 are quashed and the writ petitions are allowed.

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• Indian Laws

• 2021 (4) TMI 784
  Dishonor of Cheque - acquittal of the accused - liability to pay exist or not/ enforceable debt or not - cheque issued on force and threat or not - Section 138 of the N.I. Act - HELD THAT:- The cheque vide Ext.1 was admittedly drawn by D.W.1, the accused/ respondent No.1 for payment of an amount of Rs. 1,15,000/-, which was returned dishonoured by the Union Bank of India, (U.B.I.) Tinsukia Branch to the complainant/ appellant vide Ext.2, the letter and Ext.3, the bank note. Whether the cheque vide Ext.1 was issued in discharge of a debt/ liability of the accused/ respondent No.1? - HELD THAT:- There is no denying the fact that admittedly the accused/ respondent No.1 issued the cheque without the name of the payee, which the complainant/ appellant (payee) himself filled up and presented in bank for encashment. The evidence shows that the cheque amount was payable in terms of a written contingent agreement, copy of which is, of course, not exhibited, in the event of performance of the function by the artists through Progoti Enterprise, Mumbai, which enterprise was not even impleaded as accused/ respondent or its representative examined by either of the parties in the case. The complainant has not event established that he was the authorized signatory of the said enterprise to receive the cheque on its behalf and that the accused/ respondent No.1, being the President of the said unregistered N.G.O namely, Digboloy was personally liable under any debt or liability towards the complainant/ appellant on the date of issue of the cheque in question wherein he himself admittedly entered his name in different ink. This Court sees no reason to reverse the finding of acquittal of the accused/ respondent No.1 of the offence subscribing substituted views expressed by the Learned Trial Court - Appeal dismissed.

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• 2021 (4) TMI 780
  Issuance of Duplicate share certificates - original share certificates were misplaced - section 420/406 of the Penal Code - HELD THAT:- In the case in hand, the allegations made against the accused petitioners are bereft of any intention of cheating or misappropriation at the inception of the transaction. The equity shares were admittedly issued against consideration and loss or misplacement of such shares by the opposite party is a subsequent event which was not contemplated by the parties at the time of issuance of the shares. No prima facie case of initial deception has been made out and under no stretch of imagination can it be held that the petitioners acted with criminal intent at the inception on an anticipation that the shares would be misplaced at a subsequent stage. Even if it is held that duplicate share certificates were deliberately not issued in favour of the opposite party with criminal intent, such act was done at a subsequent stage only after the original share certificates were misplaced and no such intent is found at the inception of the transaction. No prima facie case of criminal intent at the inception having been made out against the petitioners in the complaint, it can be held that no criminal offence, far less an offence under section 420/406 of the Penal Code is disclosed in the complaint and allowing the proceedings to continue shall amount to abuse of the process of law - application allowed.

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