Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 22, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Input Tax Credit - Inputs - Promotional Products/Materials & Marketing items used by the Appellant in promoting their brand & marketing their products - The goods procured on payment of GST which are disposed of by way of gifts are barred from being eligible for input tax credit in terms of Section 17(5)(h), even if they are used in the course or furtherance of business. Therefore, we hold that input tax credit is not eligible on the promotional items distributed as give away items on the grounds that the same is blocked by virtue of the provisions of Section 17(2) and Section 17(5)(h) of the CGST Act. - AAAR
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Provisional attachment - We are unable to accept the contention of the respondent that merely because proceedings were pending/concluded against another taxable entity, that is GM Powertech, the powers of Sections 83 could also be attracted against the appellant. This interpretation would be an expansion of a draconian power such as that contained in Section 83, which must necessarily be interpreted restrictively. - SC
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Maintainability of writ petition before the High Court - Provisional attachment - clearly the order passed by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings. - SC
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Provisional attachment - Section 83 of the HPGST Act - once the final order of assessment is passed under Section 74 the order of provisional attachment must cease to subsist. Therefore, after the final order under Section 74 of the HPGST Act was passed on 18 February, 2021, the order of provisional attachment must come to an end. - SC
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Seeking inter-State IGST invoice instead of intra-State CGST/SGST invoice - place of supply on cargo handling services - Since the CBIT has already provided its clarification, a direction is now issued to the PPT to comply with the said clarification issued by the CBIT and make amendment with respect to all the Petitioner's invoices from July 2017 onwards incorporating the levy of 18% IGST instead of 9% CGST and 9% SGST in compliance of the provision of the IGST Act. - HC
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Seeking Bail - Wrongful availment or utilization of input tax credit or refund of tax - Supply of goods and services or both without issue of any invoice - Bail granted, subject to conditions - The petitioner shall cooperate with the investigation of the case. Both the prosecution and the petitioner are directed to sit across the table and beside the amount payable by him towards GST. - HC
Income Tax
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Disallowance being provision made for warranty expenses - The assessee’s warranty provision equally lack in the proper accounting / calculating factors and, therefore, the claim of the assessee is not sustainable. The CIT (Appeals) has rightly rejected the set off of actual warranty expenses on payment basis as well as warranty expenses on payment basis. - AT
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Income from other sources - advance against share capital received during the year - The tax authorities invoked the provision u/s 56(2)(viib) without bringing on record whether the investment received by the assessee are genuine or not. We notice that the provision introduced by the legislature in order to curb the practice of generation and circulation of unaccounted money. In the current case, the tax authorities have not brought on record any generation or circulation of unaccounted money. - AT
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Estimation of income - bogus purchases - As average of gross profit for each of the years works out to only 0.6% for the assessee. But it is pertinent to note that assessee had made purchases in the instant case from grey market thereby having saving in VAT as well as incidental profit element thereof. Considering the totality of these facts and circumstances and also considering the report of the task force submitted to Department of Commerce, we deem it fit and appropriate to estimate the profit percentage at 1% of value of purchases - AT
Customs
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Validity of SCN - Undervaluation - violation of intellectual property rights of certain third parties - The petitioner's counsel strongly asserts that the document No.3 in annexure A is not the manifest filed by the petitioner but one filed by a third party. If that be so, it is a point to be canvassed at the time of adjudication. The petitioner has come to the Court prematurely - As of now, there are no violation of principles of natural justice. - HC
Service Tax
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Attachment of petitioner's Bank Account - non-payment of service tax - Since the petitioner is a local body, certainly, relief can be granted in respect of the penalty portion. But then, the petitioner has to necessarily clear the service tax liability together with interest. - HC
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Levy of Service Tax - fees collected by the University - It is true that authorisation is given to the University to maintain the property. But then, there is clear commercial element in these transactions. The University is renting the property to other institutions and collecting rent from them. Therefore, the second respondent was justified in raising demand for the said service.- HC
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Levy of service tax - reimbursable expenses - appellant charge 10% of the actual wages - if on any issue there is a legal dispute which involved interpretation of law the mala-fide intention or suppression of fact with intent to evade payment of service tax cannot be attributed to the assessee - On this ground also the extended period of demand was not invokable. - AT
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Export of service or not - Whether the Appellant is liable to pay service tax on employee-cost charged received from its overseas group companies? - - In the Present case, both the conditions (of export) are fulfilled hence the services rendered by the appellant cannot be taxed under Business Support Service - AT
VAT
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Amnesty Scheme - appeal was filed by the Revenue and was pending - The assessee is entitled to get the benefit of the Amnesty Scheme for the year 2014-15 without reference to the pending appeal filed by the State for the year 2012-13 - the appellant is eligible to opt for the Amnesty Scheme, 2020 for settling arrears of the assessment year 2014-15 without including the amount that may fall in arrears for the year 2012-13. - HC
Case Laws:
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GST
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2021 (4) TMI 839
Input Tax Credit - Inputs - Promotional Products/Materials Marketing items used by the Appellant in promoting their brand marketing their products - Section 16 of the CGST Act, 2017 - KARNATAKA AAR held that GST paid on the procurement of non-distributable products qualify as capital goods and not as inputs and the applicant is eligible to claim input tax credit on their procurement, but in case if they are disposed by writing off or destruction or lost, then the same needs to be reversed under Section 16 of the CGST Act read with Rule 43 of the CGST Rules - challenge to AAR decision - HELD THAT:- It is evident from the agreements that the ownership of the promotional items remains with the Appellant at all times. It is seen from the said agreements that the Appellant Company has undertaken to provide the promotional materials to the EBOs and distributors and the same will continue to be used by the EBO and distributors as long as the agreement is in force. It is also expressly stated in the agreements that on termination of the agreements, it is the responsibility of the EBOs and distributors to return the promotional materials to the Appellant. This fact was reiterated by the authorised representative during the course of the personal hearing when a specific query in this regard was posed by the Member. Therefore, it is evident that the title of the promotional items remains with the Appellant and is not transferred to the EBO or the distributor. In terms of Section 17(2) of the CGST Act, where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the IGST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. In other words, Section 17(2) provides that input tax credit shall be allowed only when the goods and services or both are used for business purposes or for making a taxable supply (including zero-rated supply). When the goods or services or both are used towards making an exempt supply, then input tax credit is not allowed. As per Section 2(47) of the CGST Act, the term 'exempt supply' also includes non-taxable supply - the GST paid on the procurement of promotional items supplied to the EBOs/franchisees and distributors free of charge will not be eligible for input tax credit since the said supply is a non-taxable supply. The goods procured on payment of GST which are disposed of by way of gifts are barred from being eligible for input tax credit in terms of Section 17(5)(h), even if they are used in the course or furtherance of business. Therefore, the input tax credit is not eligible on the promotional items distributed as give away items on the grounds that the same is blocked by virtue of the provisions of Section 17(2) and Section 17(5)(h) of the CGST Act. The Promotional Products/Materials Marketing items used by the Appellant in promoting their brand marketing their products can be considered as inputs as defined in Section 2(59) of the CGST Act, 2017. However, the GST paid on the same cannot be availed as input tax credit in view of the provisions of Section 17(2) and Section 17(5)(h) of the CGST Act, 2017. The decision of AAR set aside.
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2021 (4) TMI 838
Permission for withdrawal of application - Taxability under GST - Goodwill paid to retiring partners - HELD THAT:- The applicant vide their submissions had not provided the details as to how the goodwill was arrived and the details of financial accounts of 'Goodwill Account' for 18-19 19-20, which are necessary to ascertain the liability to GST. The issue on the applicability of GST on the 'Goodwill' extended by the applicant to the retiring partners can be arrived at only after analyzing the details as to how the goodwill was arrived at and the related accounts which have not been furnished by the applicant. The applicant for the reasons that their consultants are not available has requested for withdrawal of the application - the withdrawal is to be permitted as the issue cannot be decided based on the submissions made by the applicant. Therefore, withdrawal is permitted without offering any observation comment on the admissibility of the application under Section 97(2) of the TNGST/CGST Act 2017 and the applicability of the GST on the 'Goodwill'. The application filed by the applicant seeking advance ruling is disposed as withdrawn.
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2021 (4) TMI 837
Maintainability of writ petition before the High Court - Provisional attachment - Section 83 of the HPGST Act - valid exercise of power or not - HELD THAT:- it is evident that the expression adjudicating authority does not include among other authorities, the Commissioner. In the present case, the narration of facts indicates that on 21 October 2020, the Commissioner had in exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1). The Joint Commissioner, in other words, was exercising the powers which are vested in the Commissioner under Section 83(1) to order a provisional attachment in pursuance of the delegation exercised on 21 October 2020. This being the position, clearly the order passed by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings. The entire procedure which has been followed by the Joint Commissioner in the present case is contrary to the provisions contained in Section 83 read with Rule 159. The Joint Commissioner (acting on behalf of the Commissioner) has proceeded on an understanding that an opportunity of being heard to the person whose property is provisionally attached is a matter of discretion, the discretion of being that of the Commissioner. The Commissioner's understanding that an opportunity of being heard was at the discretion of the Commissioner is therefore flawed and contrary to the provisions of Rule 159(5). There has, hence, been a fundamental breach of the principles of natural justice. We are unable to accept the contention of the respondent that merely because proceedings were pending/concluded against another taxable entity, that is GM Powertech, the powers of Sections 83 could also be attracted against the appellant. This interpretation would be an expansion of a draconian power such as that contained in Section 83, which must necessarily be interpreted restrictively. Given that there were no pending proceedings against the appellant, the mere fact that proceedings under Section 74 had concluded against GM Powertech, would not satisfy the requirements of Section 83. Thus, the order of provisional attachment was ultra vires Section 83 of the Act. The writ petition filed by the appellant under Article 226 of the Constitution shall stand allowed by setting aside the orders of provisional attachment dated 28 October 2020.
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2021 (4) TMI 836
Levy of tax and penalty only on account of a clerical error, which crept in the e-way bill- inasmuch as the incorrect number of bill of entry was mentioned therein - HELD THAT:- Issue notice. List the matter on 24.08.2021.
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2021 (4) TMI 834
Seeking inter-State IGST invoice instead of intra-State CGST/SGST invoice - place of supply on cargo handling services - clarification vide Circular No.103/22/2019-GST dated 28-06-2019 - HELD THAT:- Since the CBIT has already provided its clarification on 28th June 2019 (Annexure-A/1 to the writ petition), a direction is now issued to the PPT to comply with the said clarification issued by the CBIT and make amendment with respect to all the Petitioner's invoices from July 2017 onwards incorporating the levy of 18% IGST instead of 9% CGST and 9% SGST in compliance of the provision of the IGST Act. The necessary corrections be carried out not later than eight weeks from today. The said corrections will be carried out manually by the State Commissionerate. The writ petition is disposed off.
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2021 (4) TMI 832
Allowability of migration of the tax deducted at source as input tax credit by including it in GST TRAN-I - Section 140(1) of the JGST Act, 2017 - HELD THAT:- Mr. Ashok Kumar Yadav, learned G.A.-I prays for and is allowed two weeks' time to seek instructions and file counter affidavit. Learned counsel for the State would bring on record the rectification order dated 13 th March 2019. He should also obtain instructions as to whether the last VAT assessment order ending the tax period 30th June 2017 has been passed or not. Let the matter appear on 4th May 2021.
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2021 (4) TMI 831
Seeking Bail - Wrongful availment or utilization of input tax credit or refund of tax - Supply of goods and services or both without issue of any invoice - issuance of invoices and bills without supply of goods or services or both - offences are punishable under Section 132 (1) (a)(b) of the CGST Act - HELD THAT:- Relying on the decision of the Hon ble Supreme Court in C. PRADEEP VERSUS THE COMMISSIONER OF GST AND CENTRAL EXCISE SELAM ANR. [ 2019 (11) TMI 659 - SUPREME COURT] and in view of the fact that final assessment has not been made under Section 74 of the said Act, the petitioner is entitled to be released on bail of ₹ 5 lakhs with 5 sureties of ₹ 1 lakh each with further condition that within 15 days from the date of his release on bail, the petitioner shall deposit a sum of ₹ 91 lakhs with the appropriate officer. The petitioner shall cooperate with the investigation of the case. Both the prosecution and the petitioner are directed to sit across the table and beside the amount payable by him towards GST.
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2021 (4) TMI 798
Clandestine Removal - excess stock found during the physical stocks verification against entries made in stock register - seizure of such excess goods - Confiscation - levy of penalty upon the Firm under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 - levy of penalty upon Partner of the Firm under Section 122(3) of CGST Act, 2017. Confiscation - appellant/department has contended that adjudicating authority has erred in holding the seized goods deserved to release as the same is not liable to confiscation - HELD THAT:- The respondent/assessee has no where raised any objection about the search proceedings as well as panchnama proceedings conducted by the investigating team. From which it may be inferred that the said proceedings were conducted in transparent and fair manner - during the proceedings the physical stock was also verified and it was found excess against the entries of stock register. The whole proceedings were done in the presence of two independent witnesses and in presence of the employees of the respondent/assessee. Further, the statements of the Supervisor, Accountant and Authorized Signatory of the Firms were recorded under Section 70 of CGST Act, 2017 before the proper officer. The Supervisor of the Firm has stated in his voluntary statement that they did not maintain stock register and also did not prepare daily production slip and they used to note down the details in Kachhi Parchi. The same facts was admitted by Authorized Signatory of the Firms and brother of Partner of the Firms, in his statement. Thus, it is emerged that during the search proceedings the excess stock were found against the entry of stock register. Therefore, findings of the adjudicating authority that the unaccounted / excess stocks were not deliberately kept unaccounted is not tenable. Further, the respondent/assessee contended that the Supervisor were not aware about the fact position of stock and Authorized Signatory could not understand the question in correct prospective is also not acceptable - it is obvious that the assessee have not followed the procedures with regard to maintenance of proper record as provided in Section 35 of CGST Act and 56 of CGST Rules made thereunder hence he contravened the said Act and Rules made thereunder. This act of omission and commission on the part of assessee is nothing but to keep the unaccounted goods for removal the same clandestinely with intent to evade the proper tax liability. The respondent/assessee has emphasized that the excess stocks were found due to non updations of stock register and after obtaining photocopies of the seized records, the stock register was updated and accordingly it was found that there was no excess stocks rather it was slightly short - the investigating authority has rightly arrived the value of the said excess goods as the sale invoice price can not be relied as it was undervalued upto the 60% of the actual price of the sale. Moreover in view of the above facts, the recording of statement of the Partner Sh.Lalit Goyal would have not served the purpose for arriving the value as it is very much clear that the Kachha Systems were in place rather the proper recording of accounting systems of purchase, sale, production and stocks of the goods. The adjudicating authority has erred by holding that the seized goods is not liable for confiscation. Contrary to this view, the respondent/ assessee has contravened the provisions of Section 35 of CGST Act read with Rule 56 of CGST Rules,2017. Therefore, the seized goods is liable to confiscation in terms of Section 130 of CGST Act and Rules made thereunder - confiscation upheld. Levy of penalty upon the Firm under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 - HELD THAT:- In view of above discussions and findings it has established that the assessee did not maintained the proper books of account at the time of search proceedings hence he violated the provisions of Section 35 of CGST Act and Rules made thereunder - the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case - penalty upheld. Levy of penalty upon Partner of the Firm under Section 122(3) of CGST Act, 2017 - HELD THAT:- On going through the section 122(3) of CGST Act it may be seen that this particular penalty is imposable on the person who aids or abets any of the offences specified in clause (i) to (xxi) of sub section 1 of Section 122 of CGST Act. From the perusal of records it has been established that the Partner of the firm is the key person who deals all the affairs of the Assessee firm. Therefore, he can not be escaped from any offence of the firm and it can not be imagined that without his involvement such kind of violations of the provisions of the act or rules made thereunder would be happened. Further, the Partner has himself admitted the said offence in his statement recorded under the provisions of law - penalty upheld. Appeal allowed - decided in favor of Revenue.
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Income Tax
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2021 (4) TMI 817
Addition in respect of difference between the profit which has been shifted out in respect of loss due to Client Code Modification - HELD THAT:- It is pertinent to note that the assessee has claimed loss and at no point of time was aware about the Client Code Modification. All the details which were given by the assessee was before the Assessing Officer and at no point of time, the assessee was responsible for the Client Code Modification. The evidences and the circumstances clearly set out that assessee has never indulged into Client Code Modification and the same is confirmed from the broker. The material available is that there is a Client Code Modification done by the assessee s broker but there is no evidence emerging from the records which concludes that the assessee was involved in Client Code Modification and the same was done to escape assessment of a part of its income. Neither the Assessing Officer nor the report of Investigation wing has provided any reason or documents or statement which could establish that the client code modification has resulted in the shifting of the profit and the assessee has received back equivalent amount of cash or any monetary benefits. Further, M/s Century Finvest Pvt. Ltd. in its response to information sought by the Assessing Officer u/s 133(6) of the Act has clarified that no client code modification occurred during the Financial Year 2009-10 in the account of the assessee. These facts were not disputed by the Assessing Officer. The Ld. AR relied upon the decision of M/s Coronation Agro Industries Ltd. [ 2017 (1) TMI 904 - BOMBAY HIGH COURT] which is apt in the present case. Thus, the CIT(A) was not right in confirming the addition - Decided in favour of assessee.
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2021 (4) TMI 816
Penalty u/s 271(1)(c) - initiation of penalty is bad in law for the reason that penalty notice is vague as it does not specify the charge of penalty that whether the same is being levied for concealment of particulars of income or furnishing inaccurate particulars of income - HELD THAT:- It is pertinent to note that the actual limb of Section 271(1)(c) is not mentioned by the Assessing Officer and from the perusal of the penalty order it can be seen that the reasoning and satisfaction imposing penalty is not as per the provisions of penalty under Income Tax Statute. As per the Ld. AR on merit as well the penalty cannot be levied and when we have seen the order of the Tribunal confirming the addition made by the Commissioner of Income Tax, it appears that the same does not tantamount for imposing penalty as the assessee was under bonafide belief while not quantifying the said amount in the income of the assessee. Tribunal in quantum has deleted the addition with reference to which impugned penalty was imposed vide order in assessee s own case bearing [ 2019 (12) TMI 1035 - ITAT DELHI] -Thus, the addition upon which the penalty is imposed no longer sustains and hence, the penalty also does not survive. Hence, the appeal of the assessee is allowed.
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2021 (4) TMI 815
Reopening of the assessment under section 147/148 - addition on account of unexplained cash deposit in bank account u/s 69A - assessee has not filed his return of income - HELD THAT:- The amount deposited in the bank account may be out of sale proceeds of investments, property or agricultural income of the assessee which may be exempted under the Income Tax Act. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped assessment. Just to reopen the assessment, based on the cash deposits would not make the Revenue s case strong, because mere fact that these cash deposits have been made in a bank account, which according to us do not indicate that these deposits constitute an income which has escaped assessment. Such cash deposit may be out of past savings. The above reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and has not been filed return of income. Therefore, the cash deposit in the bank account could not be basis for holding the view that income has escaped assessment. The assessee may have deposited the cash out of his sale of capital asset, sale of property and sale of investment etc. Therefore, reasons recorded by the Assessing Officer are not valid and hence the reassessment proceedings initiated based on the reasons recorded is bad in law. Assessing Officer in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute that the assessee did file the return of income for the assessment year under consideration, which was duly acknowledged by the department, then, it has to be held that the entire reasoning thus proceeded on the wrong premises that the assessee had never filed the return. This, itself would be sufficient to annual the notice of reopening the assessment. Besides, mere cash deposit in the bank account would not disclose escapement of income. The assessee might have deposited the cash out of his sale of capital asset, sale of property and sale of investment, agricultural income etc. Therefore, we are inclined to hold the reassessment proceedings under section 147 of the Act as bad in law and hence, we quash the reassessment proceedings. - Decided in favour of assessee.
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2021 (4) TMI 812
Trading loss allowable as deduction u/s 28 OR bad debt u/s 36(1)(vii) - Disallowance of National Spot Exchange Limited ( NSEL ) loss (described as bad debts claim ) - HELD THAT:- The transactions in commodities have been undertaken by the assessee in NSEL platform, which is the coordinating authority between the buyers and sellers. It is the responsibility of the NSEL to settle the accounts of the assessee. Due to closure of NSEL on account of large scale frauds, the realisation of the amount has become doubtful. In the instant case, it is the NSEL which has failed to pay the money due to the assessee. Hence, in my opinion, the amount of ₹ 29.33 lakhs lost by the assessee in NSEL was not a bad debt, but it is a case of business loss. Hence it is a case of trading loss allowable as deduction u/s 28 of the Act and not as bad debt u/s 36(1)(vii) of the Act. Hence, in my view, there is no requirement to refer to the provisions of sec.36(1)(vii) of the Act. Even though the assessee wrote off entire amount of ₹ 29.33 lakhs in one go in his books of account, he chose to claim the deduction in a staggered manner in three years. The major portion of the amount has been claimed in AY 2014-15 2015-16. The possibility of staggered claim could be that the assessee might have expected that he could realize some amount of ₹ 29.33 lakhs. Since, it did not happen, the assessee has claimed the remaining amount of ₹ 6.61 lakhs in the year under consideration. When the claim of the assessee had been allowed in AY 2014-15 and 2015-16 and further, since it is a trading loss, the assessee was justified in making claim during the year under consideration. However, as rightly admitted before Ld CIT(A), this amount is deductible against the business income only. Accordingly, set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim against the business income. Disallowance of interest expenditure - assessee had taken loan against fixed deposits kept with Banks - interest paid on that loan has been claimed as deduction against interest income declared under the head Income from other sources - HELD THAT:- There should not be any dispute that the impugned interest expenditure is allowable as deduction against business income of the assessee. There is also no dispute with regard to the fact that the assessee had availed loan against fixed deposits in order to pay the interest liability arisen on overdraft facilities availed by the assessee. A.O. has also recorded that the overdraft facility has been used by the assessee during the course of business/trading activity carried on by the assessee, meaning thereby the loan against fixed deposit has also been availed for business purposes only. In that case, the interest expenditure is also allowable as deduction against income from business. CIT(A) has observed that the assessee has not furnished any supporting document in respect of this claim. The same is not the point of dispute arising from the assessment order. The issue is whether the interest expenditure is allowable as deduction against interest income. If it is not allowable as deduction against interest income, then whether it is allowable as deduction against business income. The interest expenditure is allowable as deduction against business income only. Accordingly, set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to allow the above said interest expenditure as deduction against business income. If both the claims discussed above are allowed against business income, then the income from business may result in a negative figure, in which event, the A.O. is directed to allow intrahead adjustments as per provisions of section 71 of the Act. Appeal filed by the assessee is allowed.
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2021 (4) TMI 809
Admission of additional ground raising a fresh claim - Benefit of section 54F denied - investment made in a new property - proceeds of the original asset was invested in house property in the hands of the son - assessee is unable to execute the sale deed in his favour because of his illness - AR contended that the sale agreement in which the payments have been indicated is a sufficient proof for the purchase of the property - HELD THAT:- The assessee has filed additional ground by raising a fresh claim. As contended that the proceeds of the original asset was invested in house property in the hands of the son and investment of sale consideration towards the new residential house property should be alternatively be considered in the hands of the son of the assessee. The assessee had relied on judicial pronouncements that deduction u/s 54F of the I.T.Act should be considered in the name of the son of the assessee by filing proof of investment made by the son of the assessee. The assessee in the additional ground has raised totally a fresh claim. The issue raised in the additional ground goes to the root of the issue and for substantial cause and justice, I admit the same. It is the claim of the assessee that the assessee has transferred the amount of ₹ 33,50,000 to his son and the details of investment made in the new property by the son is to the extent of ₹ 47,18,150. The assessee in support of the above, has also furnished additional evidence as mentioned above. Since I have admitted the additional ground, the additional evidence in support of the additional ground is also admitted. Since the additional ground and the additional evidence are taken on record, the matter needs to be considered de novo by the Assessing Officer. Accordingly, the issue raised in the additional ground is restored to the files of the A.O. A.O. shall consider the claim in the additional grounds. As regards the additional grounds, the assessee shall be entitled to file evidence in support of his case. The assessee is directed to co-operate with the Department and shall not seek unnecessary adjournment. A.O. shall dispose of the matter after affording a reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed for statistical purposes.
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2021 (4) TMI 808
Disallowance being provision made for warranty expenses - AR pointed that Appellant had created the provision on the basis of past history and was based on a scientific and reliable method and as such, the disallowance sustained by the Ld. CIT(A) deserves to be deleted- HELD THAT:- Variation in the methods adopted for the provision for warranty has not been clearly set out after 2010-11 by the assessee. CIT (Appeals) has rightly held that the assessee has not made a reliable estimate of amount of provision on the basis of past historical trend of warranty claimed. The assessee itself has admitted that due to up-gradation of technology, the defects in components were minimized and, therefore, warranty claim were substantially reduced. But in subsequent assessment year 2013-14, the assessee reversed the provision keeping in mind the quantum of brought forward of provision of warranty amount and which reduced the actual claim during the year. In assessment year 2013-14 the utilization of provision during the year from opening provision, balance figure also became a negative figure. Therefore, it clearly establishes that assessee had not been stick in making the provision for warranty at the end of financial year under consideration when it had all the available facts relating to warranty claim made and historical trend of available claim as laid down in the case of Rotork Controls India Pvt. Ltd[ 2009 (5) TMI 16 - SUPREME COURT] The assessee s warranty provision equally lack in the proper accounting / calculating factors and, therefore, the claim of the assessee is not sustainable. The CIT (Appeals) has rightly rejected the set off of actual warranty expenses on payment basis as well as warranty expenses on payment basis. - Decided against assessee.
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2021 (4) TMI 807
Addition on account of difference between gross receipts as per Form 26AS vis- -vis turnover as per profit and loss a/c - whether difference represents the reimbursement of expenditure recovered on cost to cost basis by the Appellant, and hence shall not form part of the turnover? - Admission of additional evidence - HELD THAT:- Having gone through the additional evidence filed by the assessee, we find that the assessee has tried to reconcile the difference between the gross receipts and the TDS certificates and in support thereof, has filed the relevant documents before us. We therefore, deem it fit and proper to admit the same and set aside the issue to the file of the Assessing Officer for denovo consideration in accordance with law. This ground of appeal is accordingly treated as allowed for statistical purposes. Disallowance of advance and debit balance written off - Assessee submitted that the assessee is producing the details for the balance of the bad debts written off in the form of additional evidence - HELD THAT:- Since the additional evidence filed is in support of assessee s contentions and is likely to prove that the debits have been written off, we deem it fit and proper to admit the same and remand the issue to the file of the Assessing Officer for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. Assessee s appeals partly allowed for statistical purposes.
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2021 (4) TMI 806
Deduction u/s 80P(2)(a) - assessee has earned interest from surplus funds, which are not required immediately for business purposes and were invested in short term deposits and securities - As held that such an interest is not attributable to the business of the assessee in carrying on the business of providing credit facilities to its members or marketing of the agricultural produce of its members and is therefore, assessable as income from other sources and not as its business profit. Observing that the deduction u/s 80P(2)(a) is allowable only from its business income and not from income from other sources - HELD THAT:- This issue of interest income being business income or income from other sources was considered by various Benches of the Tribunal and also the jurisdictional High Court wherein the jurisdictional High Court has distinguished the decision of the Hon'ble Supreme Court in the case of Totgar s Cooperative Sale Society vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] that the facts of the case before them and have held that the interest income from fixed deposits made out of surplus funds available with the assessee is also attributable to the business of the assessee and is accordingly allowable as a deduction u/s 80P of the Act As relying on THE VAVVERU CO-OPERATIVE RURAL BANK LTD. VERSUS THE CHIEF COMMISSIONER OF INCOME TAX, VIJAYAWADA [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] the appeal of the assessee is allowed.
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2021 (4) TMI 805
Transfer pricing adjustment on the ground that the assessee company has shifted profits from non-eligible unit to the eligible unit in order to claim higher deduction under section 80IC - HELD THAT:- The issue stands squarely covered in favour of the assessee by order dated 24.10.2016 passed by Tribunal in the immediately preceding assessment years, i.e. AY 2010-11 and AY 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] wherein identical disallowance made by the assessing officer has been deleted. The Tribunal, while allowing the claim of the assessee under section 80-IC of the Act, held that for the purpose of computing market price of inter-unit transfer of goods, when the non-eligible units procured goods at market price from third party vendors and supplied the same to the eligible unit at the same purchase price as increased by the applicable freight cost, no further substitution of such price is warranted in terms of section 80IA(8) of the Act and the transaction was a genuine business transaction borne out of commercial expediency. Addition of freight inward/import clearing expenses to cost of closing inventory - HELD THAT:- As decided in own case [ 2017 (1) TMI 266 - ITAT DELHI] tribunal deleted the aforesaid addition on the ground that in those years it has been held that the assessee was following consistent system of accounting, which was unnecessarily disturbed by the Revenue, without change in facts. It was further held that tinkering with the accounting method was unjustified when the exercise did not materially alter the profits of the assessee company. Addition on account of cost of rejection of semi-finished goods and obsolete items to the value of closing stock - HELD THAT:- As decided in own case [ 2017 (1) TMI 266 - ITAT DELHI] on reading of the assessment order as well as the direction of the Ld. Dispute resolution panel it was not found that how the loss of the assessee was found to be normal when the assessee submitted that it is an abnormal loss incurred by it during the course of manufacturing process. Further the Ld. dispute resolution panel has also stated that both the cost of normal and abnormal losses have to be loaded to the value of the closing stock is devoid of any merit as it is contrary to the accounting standard issued by the Institute of chartered accountants of India which has been mandated by the Ministry of corporate affairs, which only says that, only normal losses are required to be included and abnormal losses are required to excluded for the purpose of the valuation of the closing stock of the finished goods and semi finished goods. In view of the above, we respectfully following the decision of the coordinate bench in the appellant s own case for the previous year allow ground of the appeal of the assessee Disallowance of provision for increase in price of material - HELD THAT:- As the provision for the material is worked out in respect of price amendments which were already issued on 31.03.2009 which was made on the basis of actual supplied made upto the end of the year as per price amendments actually issued on 31.03.2009. The provision was made on the basis of actual PO issued to the vendors for change in the prices during the year and thus, does not involved any estimation. Therefore, the Assessing Officer was not right in making adjustments which are not consistent with the explanation to Section 115JB. Disallowance of cost of scrap material - HELD THAT:- In the present Assessment Year also the assessee is not dealing in scrap, and/or holding the scrap as inventory, and, thus, was not required to value the closing stock after taking into account the value of scrap. This Tribunal, for A.Y.s 2010-11 and 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] while coming to the aforesaid conclusion, laid emphasis on the fact that such transaction was revenue-neutral and held that considering the size of the assessee company, it could not be expected to keep quantitative tally of miniscule items Disallowance of prior period expenses - HELD THAT:- As decided in own case [ 2017 (1) TMI 266 - ITAT DELHI] Assessing Officer has nowhere disputed the genuineness of the expenditure claimed by the assessee and if assessee is denied deduction, then it would never get deduction for such expenses. From DRP Order, we also observed that the DRP has followed its decision in respect of immediately preceding year. At the same time, we observe that the mistake of totaling and the working given by the assessee has not been properly verified at the end of Assessing Officer and the same should have been verified by the Assessing Officer. Under above circumstances, we hold that the issue is squarely covered in favour of the assessee Allowability of provision of Head office expense reversed in succeeding year - AR submitted that the aggregate provision for advertisement expenses incurred at the head office made at the end of the relevant previous year, which was reversed in succeeding year - HELD THAT:- In the present Assessment Year, detail of provisions for advertisement was submitted before the lower authorities. Further, the Assessing Officer, in the set-aside proceedings for A.Y. 2008-09, vide order dated 26.02.2015, accepted the claim of the assessee and allowed relief on the aforementioned identical issue by observing that the assessee had computed the provision on the basis of actual Purchase Orders, which was scientific and logical in nature. Thus, the Assessing Officer was not right in disallowing the said expenses and also adding back the same while computing book profit, holding the same to be unascertained liability. Thus, the issue is squarely covered by the orders the Tribunal in A.Ys. 2008-09 to 2013-14. Disallowance of alleged excessive purchases from related parties as per AS-18 - HELD THAT:- Tribunal order for A.Ys. 2010-11 and 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] held that failure on part of the revenue to controvert any of the findings in the earlier order of the tribunal or pointing out any contrary decisions on this issue, the respectfully following the order of the coordinate bench to not inclined to uphold the disallowance made by the Ld. Assessing officer on account of the purchases made from the parties who are related parties in terms of accounting standard 18 issued by the Institute of chartered accountants of India but not in terms of provisions of section 40A (2) of the income tax act. In the result ground of the appeal of the assessee is allowed. Payment received on behalf of Hero Honda Fin Corp. Ltd. (HFCL) deemed as dividend under Section 2(22)(e) - HELD THAT:- As decided by the Tribunal order for A.Ys. 2010-11 and 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] assessee s intention did not reflect that the amount was received as loan or advance so as to attract the provisions of section 2(22)(e) of the Act. The Tribunal further held that the assessee was holding the money as a custodian and the amount would be exempted in terms of clause (ii) section 2(22)(e) since the amount was given in the ordinary course of business - decided in favour of assessee. TDS u/s 194H - non deduction of TDS on quarterly targets and turnover discount and Sales Discount - HELD THAT:- This issue is also covered in favour of the Assessee by the Tribunal order for A.Ys. 2010-11 and 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] as well as the decision of the Hon ble High Court in case of Mother Dairy Ltd. [ 2012 (2) TMI 80 - DELHI HIGH COURT] holding that the discount in question is not in the nature of commission but an incentive for higher sale targets TDS u/s 194J - no deduction of tds on legal and professional charges - HELD THAT:- In the present Assessment Year, the Assessing Officer disallowed the aforesaid expenses, invoking section 40(a)(ia), for the failure of the assessee to deduct tax at source there from under section 194J of the Act. But, it is pertinent to note here that the Assessing Officer did not doubt that the payment was made by assessee towards reimbursement of expenses. It was still held that assessee was liable to deduct tax at source under section 194J of the Act. Thus, the issue is squarely covered by the order of the Tribunal for A.Ys. 2010-11 and 2011-12. [ 2017 (1) TMI 266 - ITAT DELHI] Gains from sale of investments income treated as business income - HELD THAT:- In the year under consideration, the issue is identical to the AYs 2010- 11 and 2011-12 wherein the Tribunal allowed this issue in favour of the assessee after considering the legal position and intention of the assessee company, the Tribunal came to the conclusion that income from sale of shares/mutual funds/PMS etc. would be taxable as capital gains, instead of business income brought to tax by the assessing officer on the basis that the assessee (a) was not a trader in stock; (b) had no intention of holding the shares as stock; (c) sales were effected by delivery (d) that the department had itself in earlier years taxed such transactions under the head capital gains - Decided in favour of assessee. Addition u/s 14A r.w.r. 8D - HELD THAT:- Ends of justice would be met if in this year also, the issue is re-examined by the Assessing Officer in light of judgment of the Hon ble Apex Court in the case of Maxopp Investment Ltd. vs. CIT [ 2011 (11) TMI 267 - DELHI HIGH COURT] . Accordingly, the matter is restored to the file of the Assessing Officer. We direct the Assessing Officer to pass appropriate orders in accordance with law after duly considering the judgment of the Hon ble Apex Court in the case of Maxopp Investment Ltd. vs. CIT (supra) after giving proper opportunity to the assessee to present its case. Addition of disallowance made under section 14A read with Rule 8D of the Rules while computing book profits under section 115JB - We find that the said issue is squarely covered in favour of the assessee by the order of the Hon ble Delhi High Court in the case of PCIT v. Bhushan Steel Ltd. [ 2015 (9) TMI 1424 - DELHI HIGH COURT] and by the order of the Special Bench of the Tribunal in the case of ACIT vs Vireet Investments (P.) Ltd[ 2017 (6) TMI 1124 - ITAT DELHI] , accordingly the addition made in this regard is deleted. Depreciation on Model Fee - assessee manufactures two-wheelers under technical collaboration agreement entered into with Honda Motor Co. Ltd., Japan ( Honda ). In accordance with the above collaboration agreement, the assessee pays model fee to Honda to obtain design/know-how to manufacture a new model of two-wheeler - HELD THAT:- As the expenditure was incurred on new model fees prior to commencement of production of new models of two wheelers, thus, this action is revenue neutral in a broader perspective as the same adjustment would be required to be made to the opening stock of finished goods for the year under consideration. Thus, this issue is covered in favour of the assessee by the decision of the Tribunal for A.Ys. 2010-11 and 2011-12[ 2017 (1) TMI 266 - ITAT DELHI] Disallowance of reimbursement of foreign travelling expenses to directors/employees - disallowance was made on the ground of non-submission of evidence/proof of actual expenses incurred by employees - HELD THAT:- This Tribunal in A.Ys. 2010-11 and 2011-12 [ 2017 (1) TMI 266 - ITAT DELHI] and earlier years has held that disallowance cannot be made merely on the basis that vouchers were not produced by the employees. We also find that the Tribunal has in the appeal for the assessment yea₹ 2009-10, 2012-13 and 2013-14, decided the issue in favor of the assessee company following the aforesaid order passed for assessment yea₹ 2010-11 and 2011-12. As, the facts have not changed in this year as well, therefore, the issue is squarely covered by the decision of the Tribunal for earlier Assessment Years. Disallowance of Royalty Expenditure on the ground of being capital in nature - HELD THAT:- As relying on own case of assessee [ 2017 (1) TMI 266 - ITAT DELHI] Royalty paid in terms of license B agreement is held to be an allowable revenue deduction. Disallowance u/s 80IC on account of profit attributable to the brand value and marketing network - HELD THAT:- As decided in own case [ 2017 (1) TMI 266 - ITAT DELHI] head office is not a separate profit centre and, therefore, no profit is to be separately attributed to such activity. It further observed that, for the purpose of working out eligible deduction under section 80-IC of the Act, actual expenses incurred at the head office are to be allocated between various profit centers on a rational and scientific basis. Disallowance u/s 80IC on account of other income - Addition on the ground that such incomes were not derived from the business of manufacture of specified articles or things - HELD THAT:- Similar disallowance made by the assessing officer in assessment yea₹ 2010-11 and 2011-12 has been deleted by the Tribunal vide consolidated order [ 2017 (1) TMI 266 - ITAT DELHI] . The Tribunal, after examining the nature of the aforesaid incomes, held that other incomes in the nature of interest on loan to employees, interest on loan to vendors for working capital support earned by a unit eligible for deduction under Section 80IC of the Act shall be considered as incidental to the activity of carrying out manufacturing and, thus, eligible for deduction under that section. Accordingly, the aforesaid issue stands squarely covered in favour of the assessee. Allowability of weighted deduction u/s 35(2AB) with respect to scientific research and development expenses incurred during the year -aforesaid claim of weighted deduction has been disallowed in the assessment order on the ground that the said claim was not raised by the assessee in the return of income filed for the relevant year - HELD THAT:- When the assessee receives notice for assessment and is asked to file the documents in support of the return of income including computation of income, such documents and computation of income are deemed to have been filed at the time of filing the original return of income, rendering the original return to be a valid return and not a defective return under section 139(9) of the Act. In view of the same, computation of income is deemed to be filed along with return of income and notes of such computation of income as per the undisputed practice and ratio laid down by the aforesaid decisions are to be deemed as forming integral part of the return of income, which are required to be considered by the assessing officer, while completing the assessment of an assessee. As considering that the AO after examining the facts and legal position with respect to the impugned weighted claim of deduction under section 35(2AB), did not dispute the same on merits, erred in not granting the benefit to the assessee merely on the ground that the same was made through note to computation of income and not in the return form. Accordingly, we reverse the action of the AO and direct him to allow the weighted deduction to the assessee. Considering that, we have allowed the claim on the principal contention raised by the assessee, alternate contentions as well as the additional ground of appeal are rendered academic in nature. Depreciation @ 25% on leasehold rights acquired in lands at Haridwar and Neemrana u/s 32(1)(ii) - HELD THAT:- Assessee is eligible for depreciation at 25% on lease hold rights acquired in Haridwar and Neemrana. As regards the land at Haridwar, the AO is directed to allow the claim of depreciation as per opening WDV carry forward from the earlier years. In so far as the depreciation of land at Neemrana is concerned the same shall be allowed after verification of the relevant payments claimed to have been made by the assessee.
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2021 (4) TMI 802
Income from other sources - advance against share capital received during the year - applicability of provision of section 56(2)(viib) - HELD THAT:- We notice from the record that the assessee is an investment holding company, wholly-owned subsidiary of EIL, pursuant to the merger of the investment and finance division of EIL, the assessee became a wholly owned subsidiary of ICSPL. The assessee has invested in various unlisted companies including M/s The Mobile Stores Ltd (TMSL), which is wholly-owned subsidiary of the assessee company. The tax authorities invoked the provision u/s 56(2)(viib) without bringing on record whether the investment received by the assessee are genuine or not. We notice that the provision introduced by the legislature in order to curb the practice of generation and circulation of unaccounted money. In the current case, the tax authorities have not brought on record any generation or circulation of unaccounted money. Rather they acknowledged that the funds were invested by the holding company and received by the subsidiary company as advance towards share capital. It is not disputed that the net worth of the company is NIL because of investment in step down subsidiary company (due to provision towards revaluation of investment). It is also not disputed that the funds were moved from the holding company to the assessee and the funds were re-invested in the step down subsidiary company in order to revive the step down subsidiary in that process, the investment in such step down company is safeguarded. The receipt of consideration for issue of shares to mean the proceeds for exchange of ownership for the value. The term consideration means something in return i.e. Quid Pro Quo . The receipt is exchanged with the ownership in the company. In the given case, the holding company passed the resolution to finance TMSL through the assessee and the funds intended for TMSL, which is step down subsidiary and the funds were remitted to the assessee as an advance towards share capital during this impugned assessment year (we do not intend to discuss the quantum of actual receipt of the advance during this assessment year at this stage. It is a separate discussion since assessee has only passed journal entries to convert the unsecured loan into advance towards share capital). The consideration means the promise of the assessee to issue shares against the advances received. In our view, the receipt of advances are a liability and will never take the character of the ownership until it is converted into share capital. The assessee can never enjoy the receipt of money from the investor until the ownership for the money received is not passed on i.e. by allotment of shares. The receipt of consideration during the previous year means the year in which the ownership or allotment of shares are passed on to the allottee in exchange for the investment of money. The tax authorities interpretation that when the receipt of money and mere agreement for allotment of shares without actual allotment of shares will make the consideration complete as per the contractual laws. In our view, unless and until the event of allotment of shares takes place, the assessee cannot become the owner of the funds invested in the company. The event of allotment will change the colour of funds received by the assessee from liability to the ownership. In our considered view, the provision of section 56(2)(viib) are attracted only in the year of allotment of shares i.e. assessment year 2014-15 - In case we accept the proposition of tax authorities then any fund received by the sick or capital eroded subsidiary companies will be more than the fair market price of the shares By merely transferring funds as unsecured loan or advances towards share capital will not trigger the deeming provision under section 56(2)(viib). We do not foresee that the legislature must have intended to tax such legitimate investment under section 56(2)(viib). This is a peculiar case where not only share premium are brought under the deeming provision but including face value of shares. In our view, the tax authorities have mechanically invoked the deeming provision without actually investigating whether the assessee has actually indulged in any money laundering activities. The tax authorities are not expected to act mechanically without appreciating the soul and purpose of introduction of the particular and specific provision. Considering the above discussion, in our view, the provision of section 56(2)(viib) is applicable only in the year in which assessee issued actual share capital and AO is directed to drop the additions initiated under section 56(2)(viib) during this assessment year, therefore order of Ld. CIT(A) is set aside.
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2021 (4) TMI 801
Addition of unexplained cash credit u/s 68 - CIT-A treating the accounted and disclosed in the return of income filed u/s 139 of the Act the brokerage incom as unexplained cash credit - HELD THAT:- AO treated the commission income as unexplained cash credit by taking view that assessee has not given any explanation and evidence. On the contrary, in assessment order, AO recorded that the filed submission dated 10.02.2015, wherein it was submitted that he is not covered within the provision of section 44AD of the Act, he is maintaining all regular books of accounts and other records for commission income. He is also incurred certain expenses, which can be verified. The ledger account of commission income was also furnished, along with party wise details and the available addresses and the amount of commission. No finding was given on such explanation furnished and evidenced by the assessee. Moreover,AO has not doubted the various expenses claimed against commission income. The assessee has shown commission income in original return of income. We find convincing force in the submissions of learned AR of the assessee that the assessee has already filed Return of Income under section 139 of the Act before the date of initiation of assessment proceeding and much less after completion of investigation carried out by Investigation Wing of Revenue, it could not in any way be termed as unexplained income, the addition of unexplained income is purely guess work of assessing officer. No justification in treating the commission income as unexplained cash credit, accordingly appeal of the assessee is allowed
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2021 (4) TMI 800
Revision u/s 263 - deduction claimed un/s 80P(2)(d) not available and that deduction so allowed in the assessment by assessing officer is erroneous and prejudicial to the interest of revenue - HELD THAT:- As noted that during the assessment the Assessing Officer vide notice under section 143(2) of the Act dated 19.09.2016 required details regarding the deduction claimed Chapter VIA including justification and supporting documents thereof. The assessee vide its reply dated 23.02.2017 furnished complete details regarding deduction under Chapter VIA, consisting deduction under section 80(2)(c) of ₹ 50,000/- and deduction under section 80P(2)(d) with justification. AO again vide notice dated 25.04.2017 issued under section 142(1) further required the details regarding deduction under section Chapter VIA, the assessee furnished the details of interest income on Fixed Deposits with Co-operative Banks. Assessing Officer passed assessment order on 28.06.2017, admittedly, there is no reference about the contents of the reply furnished by assessee, however, in para 1 of the assessment order the reference of both the notices is clearly referred. The ld. PCIT before passing under section 263 of the Act, identified the issue regarding the claim of deduction under section 80P(2)(d). The assessee in its reply dated 15.02.2020 clearly explained that the issue was examined by Assessing Officer and that the assessment order is not erroneous. Thus keeping in view of the decision Hon'ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd., [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] wherein the assessee-co-operative society is held eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank, we conclude that the order passed by assessing officer is not erroneous. Hence, the grounds of appeal raised by assessee are allowed.
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2021 (4) TMI 799
Estimation of income - bogus purchases - assessee is engaged in the business of trading in cut and polished diamonds - HELD THAT:- It is not in dispute that the assessee is engaged in the business of trading in cut and polished diamonds. The report of the task group for diamond sector submitted to Department of Commerce suggested that the net profit that could be derived in the diamond manufacturing ranges from 1.5% to 4.5% and in trading activity thereof, the profitability range is 1% to 3%. As average of gross profit for each of the years works out to only 0.6% for the assessee. But it is pertinent to note that assessee had made purchases in the instant case from grey market thereby having saving in VAT as well as incidental profit element thereof. Considering the totality of these facts and circumstances and also considering the report of the task force submitted to Department of Commerce, we deem it fit and appropriate to estimate the profit percentage at 1% of value of purchases in the peculiar facts and circumstances of the instant case. The ld. AO is accordingly directed to make addition only to the extent of 1% of value of tainted purchases for each of the assessment years under consideration. Accordingly, the ground raised by the assessee in this regard is partly allowed.
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Customs
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2021 (4) TMI 829
Export Obligation Discharge Certificate - petitioner's contention that the impugned order has been passed omitting to take note of the EODC - HELD THAT:- If the authority were of the view that the document had been omitted to be taken note of, by inadvertence, he could report the same to the Court on the next occasion. Today, Mr.Santhanaraman, circulates written instructions dated 27.03.2021 to the effect that the EODC was indeed omitted to be taken into account and thus the demand raised under the impugned order would have to be reversed. The impugned order-in-original is thus quashed - Petition allowed.
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2021 (4) TMI 818
Validity of SCN - Undervaluation - violation of intellectual property rights of certain third parties - allegation is that some of the documents that find place in the show cause have not been served on the writ petitioner - reliance placed on the documents other than the ones set out in annexure A of the show cause notice or not - violation of principles of natural justice or not - HELD THAT:- There is a well known distinction between the documents that are 'referred to' and the documents that are 'relied on'. In the show cause notice, the authority for the purpose of covering the trajectory of events or for the purpose of narration may refer to certain documents but it is not incumbent on the authority to make available every document, which is referred to in the show cause notice. Only those documents on which reliance will be made in the adjudication will have to be supplied to the noticee. The petitioner's counsel strongly asserts that the document No.3 in annexure A is not the manifest filed by the petitioner but one filed by a third party. If that be so, it is a point to be canvassed at the time of adjudication. The petitioner has come to the Court prematurely - As of now, there are no violation of principles of natural justice. Petition dismissed.
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Corporate Laws
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2021 (4) TMI 835
Extension of term of engagement of qualified Company Secretaries for a period of one year which can be further extended up to three years or such further period as may be directed - direction to increase the Salary of Company Secretaries who are presently working with the office of Official Liquidator and further permitted to pay monthly salary from fund available with the office of official Liquidator - amendment of Clause VIII of the Scheme of Company Secretaries - HELD THAT:- Taking facts stated in the present report on record the Official liquidator is permitted to extend the term of engagement of qualified Company Secretaries namely (1) Mrs. Maitry Desai (2) Ms. Vaidehi Savaliya for a period of one year which can be further extended up to three years and permitted to increase the Salary of Company Secretaries who are presently working with the office of Official Liquidator from ₹ 25000/- to ₹ 30,000/- and further permitted to pay monthly salary from fund available with the office of official Liquidator under the head Company paid staff salary Reserve Fund of Common pool Account of various companies in liquidation. Report disposed off.
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2021 (4) TMI 826
Final Winding up of Company - Section 481 of the Companies Act, 1956 - HELD THAT:- This Court directed the Official Liquidator to verify the property documents and, on being satisfied in that regard, handover possession of the property to M/s Phoenix ARC. Subsequently, on 5th September, 2019, the aforesaid property was handed to the authorised representative of the M/s Phoenix ARC. The outstanding charges of the security agency deputed to oversee the property M/s Manasvi Security Services were also liquidated - This Court also permitted the Official Liquidator to invite claims from creditors of the Company by publishing citations in newspapers vide order dated 4th February, 2020 in Co Appl 33/2019. Citations were published but no claims were received. The Official Liquidator clarifies that there are no other assets of the company - In the circumstances, nothing survives for adjudication in these applications. The Company is left with no assets. No claims have been received from any creditors despite citations having been issued. Petition disposed off.
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Insolvency & Bankruptcy
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2021 (4) TMI 814
Reduction of share capital - diminution of any liability in respect of unpaid share capital or not - proper genuine reason has been given for reduction of share capital or not - Consent affidavit from creditors - utilization of Security Premium Account for making payment to the non-promoter shareholders - Consent from 171 non-promoters shareholders who were not traceable, not obtained and claim of such shareholders has not been secured or determined - permissibility of Selective reduction of shareholders - maintainability of Petition for reduction of capital under Section 66 of the Act. No proper genuine reason has been given for reduction of share capital - HELD THAT:- There is no law that a Company can reduce its capital only to reduce any kind of accumulated loss - it cannot be said that the Appellant Company has not given any genuine reason for reduction of share capital. Consent affidavit from creditors has not been obtained - HELD THAT:- The debt or claim of every creditor. (i) has been discharged or (ii) determined or (iii) has been secured or (iv) his consent is obtained, if any one condition is satisfied then the Tribunal may dispense with the requirement of giving notice to creditors or publication of notice under this rule or both - It is observed that while objections have not been received from creditors, neither has any consent affidavits on their behalf been produced. With regard to reduction of share capital is erroneous. Security Premium Account cannot be utilized for making payment to the non-promoter shareholders - HELD THAT:- The SPA can be utilized for making payment to non-promoter shareholders. The submissions made by Ld. Counsel for the Respondents that the amount laying the SPA can be applied by the company, only for the purposes which are specifically provided in sub-Section 2 of Section 52 of the Act and for no other purpose, cannot be accepted. Consent from 171 non-promoters shareholders who were not traceable, has not been obtained and claim of such shareholders has not been secured or determined - HELD THAT:- The Petitioner Company has a total of 171 non-promoter shareholders, majority of them are untraceable, in this regard, in the Petition it is specifically mentioned that the amount to be paid to the untraceable nonpromoter shareholders will be kept in an Escrow Account for a period of three years and any amount remaining unclaimed in the Escrow Account for more than three years pursuant to capital reduction would be transferred to the Investor Education and Protection Fund (IEPF). Section 125 of the Act provides that the amount in the unpaid dividend account of the companies is to be transferred to the IEPF under Section 124 (5) of the Act - Ld. Tribunal was satisfied with the aforesaid provision in the scheme, therefore, the Petition has not been dismissed on this ground. Selective reduction of shareholders is permissible or not - HELD THAT:- The selective reduction is permissible if the non-promoter shareholders are being paid fair value of their shares. In the present case, none of the non-promoter shareholders of the Company have raised objection about the valuation of their shares. It is nobody s case that the proposed reduction is unfair or inequitable. It is also made clear that the proposed reduction is for whole non-promoter shareholders of the company. Maintainability of Petition for reduction of capital under Section 66 of the Act - HELD THAT:- Admittedly, there is a provision in Article 45 and 47 of the Article of Association that the company may by special resolution reduced its capital and in the EGM held on 04.02.2019 a special resolution was duly passed for reduction of share capital. The Appellant Company has pleaded the genuine reason for reduction of share capital and has secured the rights of 171 nonpromoter shareholders who are not traceable - the Tribunal has erroneously held that the Application for reduction of share is not maintainable under Section 66 of the Act, consent affidavits from the creditors is mandatory for reduction of share capital, SPA cannot be utilized for making payment to nonpromoter shareholders, consent from 171 non-promoter shareholders who are not traceable is required, selective reduction of shareholders of non-promoter shareholders is not permissible. Appeal allowed.
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2021 (4) TMI 813
Maintainability of application - petition filed under Section 9 of the Code before the commencement of the Code - treated as a valid authorisation or not - opportunity to rectify the defects as per proviso to Section 9 (5) (ii)(a) of the Code to be provided or not - HELD THAT:- In the instant case, it is found that the Adjudicating Authority has dismissed the Petition for want of proper Authorisation. However, the Adjudicating Authority has not considered providing an opportunity to the Applicant to rectify the defects. In contrast, proviso to Section 9(5)(ii)(a) of the Code makes it mandatory to provide an opportunity to the applicant for rectifying the defects of the application. In these circumstances, it can be held that the Adjudicating Authority has erred in dismissing the Application for want of Authorisation, without even providing an opportunity to rectify the defects in compliance with Section 9(5)(ii)(a) of the Code. The Adjudicating Authority is directed to decide the application afresh at the earliest - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 803
Extension of CIRP - Resolution plan already approved - HELD THAT:- When Resolution Plan is already approved and available, it would not be appropriate to refuse extension of time, in the facts of the matter. The Impugned Order is modified so as to hold that extension is granted to CIRP in the matter of present Corporate Debtor granting exclusion of 221 days from 25th March, 2020 to 31st October, 2020 due to COVID-19 situation and CIRP period is extended upto 29th January, 2021 which includes 90 days extension by NCLT Order dated 11th February, 2020 - appeal disposed off.
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PMLA
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2021 (4) TMI 821
Money Laundering - incriminating materials against the petitioners to connect the petitioners in the involvement of the offence under PMLA Act, present or not - HELD THAT:- Admittedly, the respondent authority filed the complaint against 15 persons u/s.245(2)Cr.P.C., read with Sections 3, 4 and 8 (5) of PMLA Act, in which these petitioners have been arrayed as A-14, A-15 respectively - A reading of the averments made in the complaint in paragraph 7.14 reveals that there is allegation against A-14 and in paragraph 7.15 prima facie there is allegation against A-15. In order to support the said allegation, the Government Advocate produced copy of the statements given by A-14, A-15 and further statement given by A-4, which clearly reveal the role of the present petitioners. Therefore, once prima facie allegations against these petitioners are made out, trial court can proceed with the complaint by framing charges. While deciding petition u/s.245(2) Cr.P.C., the court need not conduct a roving enquiry on the materials placed by the prosecution and the admissibility and the validity of the statement given by the other accused have to be decided only at the time of trial and the defence taken by the accused need not be considered in deciding the petition u/s.245(2) Cr.P.C. It can be decided only after trial and therefore, this court finds that prima facie there are averments in the complaint and also to support the averments, the prosecution also relied on the statements given by the Revision Petitioners/A14 and A15. Therefore, under these circumstances, this court does not find any illegality or infirmity in the order passed by the trial court. Criminal Revisions are dismissed.
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Service Tax
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2021 (4) TMI 833
Levy of Service Tax - Royalty and District Mineral Fund - period April, 2016 to June, 2017 - HELD THAT:- Let this matter be tagged along with SUNITA GANGULY, WIFE OF SHRI ARDHENDU GANGULY VERSUS PRINCIPAL COMMISSIONER, CENTRAL GST CENTRAL EXCISE, SUPERINTENDENT (PREV) , CENTRAL GOODS AND SERVICE TAX CENTRAL EXCISE, THE STATE OF JHARKHAND [ 2021 (3) TMI 601 - JHARKHAND HIGH COURT] , since the issues are common. List these cases accordingly.
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2021 (4) TMI 828
Maintainability of summons - Constitutional validity of the levy of Service Tax on transfer of right to use intellectual property rights - HELD THAT:- The appellant submitted that in terms of the observation made by the learned Single Bench, the appellant has appeared before the Officer and also submitted his written submission. In such view of the matter, this writ appeal has become infructuous, as the summons issued to the appellant has worked by itself and the appellant has also appeared before the respondent. Appeal closed.
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2021 (4) TMI 825
Attachment of petitioner's Bank Account - non-payment of service tax towards renting of immovable properties, inspite of more than one assessment order passed against the petitioner - HELD THAT:- In the counter affidavit, the adjudicating authority has stated that the petitioner is liable to pay a total sum of ₹ 24,44,383/- towards service tax liability along with appropriate interest and penalty. Since the petitioner is a local body, certainly, relief can be granted in respect of the penalty portion. But then, the petitioner has to necessarily clear the service tax liability together with interest. The consequential recovery action cannot be interfered with - It is for the petitioner to move the adjudicating authority for appropriate relief - petition dismissed.
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2021 (4) TMI 823
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - petitioner did not pay the required amount under the scheme within the period of 30 days - HELD THAT:- According to the petitioner, he made an attempt to electronically make the said payment on 30.06.2020. Though the said amount was debited from the petitioner's account, it was subsequently re-credited. The payment process was not successful - The petitioner seems to have kept quiet thereafter. Though he would state that he was approaching the respondent officials in person, vide communication dated 15.01.2021, the fourth respondent herein called upon the petitioner to clear the original liability. Thereafter, the petitioner woke up and filed the present writ petition. After making the attempt on 30.06.2020, the petitioner appears to have gone into slumber and not even a representation is enclosed in the typed set of papers - no relief can be granted to the petitioner - petition dismissed.
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2021 (4) TMI 819
Levy of Service Tax - fees collected by the University - petitioner had been collecting affiliation fees, inspection fees and other fees etc. from the affiliated colleges and charges by way of renting of immovable properties - demand of interest and penalty as well - Circular No.89/7/2006-ST dated 18.12.2006 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs - HELD THAT:- There can be no doubt that a college as per the UGC regulations will have to be affiliated to some University. Therefore, the affiliation fees as well as the inspection commission collected by the University are in the nature of statutory levies. By performing those activities, the petitioner is only discharging a statutory function and the fees collected by the petitioner cannot be amenable to levy of Service Tax. It is true that authorisation is given to the University to maintain the property. But then, there is clear commercial element in these transactions. The University is renting the property to other institutions and collecting rent from them. Therefore, the second respondent was justified in raising demand for the said service. There is no justification in levying penalty - Appeal allowed in part.
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2021 (4) TMI 811
Levy of service tax - reimbursable expenses - appellant charge 10% of the actual wages to be paid to the workers so hired/supplied as their service charges and recover the same from service recipient - time limitation - HELD THAT:- The appeal can be disposed of on point of limitation without going into the merit of the case. The appellant is registered with the service tax authority. They filed periodically ST-3 return in respect of service provided by them declaring the value as per their bona fide belief which is equal to commission which they received from the service recipient. With this disclosure the revenue is very much in the knowledge about the nature of service provided by the appellant therefore the revenue was not prevented to verify the correctness of the nature of service as well as the value declared by the appellant in their ST-3 return. In this undisputed fact it cannot be said that the appellant have suppressed the vital fact with intention to evade service tax. It is also found that the issue is purely of interpretation of valuation provision under Finance Act, 1994. In view of the judgment in COMMISSIONER OF C. EX., CUS. ST., DAMAN VERSUS NR. AGARWAL INDUSTRIES [ 2014 (5) TMI 603 - GUJARAT HIGH COURT] it is settled that if on any issue there is a legal dispute which involved interpretation of law the mala-fide intention or suppression of fact with intent to evade payment of service tax cannot be attributed to the assessee - On this ground also the extended period of demand was not invokable. As per the facts in the present case the period of dispute i.e. 2005-06 to 2009-10 and show cause notice was issued on 19.05.2011. It is also observed that the appellant has filed their ST-3 return covering the period October 2009 to March 2009 on 27.04.2010. As per the facts the entire demand is beyond the normal period and falling under the extended period of limitation - entire demand is time barred - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 810
Levy of Services Tax - Business Support Services - Group Company cross charge received from its overseas group company - travel reimbursement paid to its own employees for their overseas business travel - tax on service charge on third party vendor cross charge received from the overseas group companies - service tax on employee-cost charged received from its overseas group companies? - Extended period of limitation. Whether the Appellant is liable to pay service tax for Group Company cross charge received from its overseas group company, under BSS category? - HELD THAT:- In the agreement the nature of services is not specifically mentioned but it provides sharing of cost incurred by the service providers in providing the services - the definition of Business Support Service was amended w.e.f. 01.05.2011 to include operational or administrative assistance in any manner . Hence, the services in relation to operational and administrative assistance can only be taxed post the said amendment and not before that. Here, we note that learned Commissioner in the impugned order has wrongly held that the said inclusion was only clarificatory in nature and hence chargeable to service tax retrospectively. Even if it is assumed that under the Integrated Services Agreement, the foreign company is providing any operational or administrative assistance to the appellant, then the same shall be taxable only w.e.f. 01.05.2011 and not prior to that. It is settled principle in law that when the scope of the taxable service is expanded, it will have only prospective effect. Further, it is not disputed that w.e.f. 01.05.2011, the appellant is paying the service tax under the category of Business Support Service hence the confirmation of demand under the Business Support Service for the disputed period is not sustainable in law and therefore we decide this issue in favour of the appellant. Whether the Appellant is liable to pay service tax on travel reimbursement paid to its own employees for their overseas business travel? - HELD THAT:- The appellant from the very beginning i.e. at the time of filing submissions against various audit inquiries from time to time, in its reply to the SCN issued by the respondent has highlighted that the said foreign exchange expenses have been incurred on account of employees of NCR India who frequently travel abroad for official purposes for the growth and promotion of the business of the appellant - the travel expenses incurred by the employees of the appellant were not incurred in relation to Integrated Services Agreement. These services are never received in India and hence cannot be taxed in the hands of the appellant under Section 66A of the Finance Act, 1994. Whether the Appellant is liable to pay service charge on third party vendor cross charge received from the overseas group companies? - HELD THAT:- These other expenses represents cost shared in relation to certain specific services from such third party vendor such as pay roll or online monitoring of ATM operations of the appellant. We also find from the documentary evidences furnished by the appellant that these other expenses are independent of the Integrated Services Agreement charges and hence not includable in the value for the purpose of demand of service tax liability - other expenses incurred which are in the nature of reimbursement made by the appellant to overseas Group Company towards third party vendor cost engaged at the group level are not liable to be taxed as Business Support Service for the same reasons as held in the findings on issue number one above. Hence, this issue is also decided against the Revenue. Whether the Appellant is liable to pay service tax on employee-cost charged received from its overseas group companies? - HELD THAT:- The appellant has provided various services to its group entities located outside India and has cross charged its overseas Group Company towards its employee cost which cannot be construed as provision of service and hence cannot be taxed under Business Support Service as sought to be done by the learned Commissioner. Further, it is found that even if these services i.e. Business Support Service are considered taxable, the same would qualify as export of service under Rule 3(i)(iii) of Export of Service Rules 2005 because as per the Export of Service Rules, taxable services shall be deemed to be provided outside India, if the service recipient is located outside India and consideration is received in convertible foreign exchange - In the Present case, both the conditions are fulfilled hence the services rendered by the appellant cannot be taxed under Business Support Service and the ratio of the decisions relied upon by the appellant cited supra are squarely applicable to the facts of the case hence considering from both angles, the appellant cannot be taxed under Business Support Service and this issue is also decided in favour of the appellant. Extended period of limitation - HELD THAT:- In the present case, the appellant has not suppressed facts from the Department and the during the audit they have provided all the information and the records and after the audit for the earlier period, no show-cause notice was issued and it is only on 24/04/2012, show-cause notice was issued invoking the extended period without bringing on record any material to show that extended period of limitation under Section 73(1) of the Finance Act can be invoked - it is also found that the appellant has submitted return for the half year October 2006 to March 2007 on 18/04/2007 and the show-cause notice was issued on 24/04/2012 which is beyond even the extended period of 5 years and hence not sustainable in law. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (4) TMI 824
ISD credit - GTA credit - delay on the part of the petitioner in responding to the communication - principles of natural justice - HELD THAT:- There was absolutely no delay on the part of the petitioner. On the other hand, the relevant materials furnished by the petitioner were not taken note of before passing the impugned order on 30.12.2020. Therefore, the adjudicating authority has to necessarily revisit the issue by taking note of all the particulars and the materials furnished by the petitioner on 30.12.2020. Of-course, the adjudicating authority will take note of the earlier reply submitted by the petitioner herein. Interest of justice requires that personal hearing is afforded to the petitioner. The learned Senior Counsel would state that the petitioner would appear promptly on the date to be fixed by the adjudicating authority for personal hearing and that they would not drag on the matter. The petitioner through his senior counsel gives an undertaking that they would extend the fullest co-operation for expeditious conclusion of the adjudication proceedings post remand - The matter is remitted to the file of the first respondent to pass order afresh in accordance with law - Petition allowed by way of remand.
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2021 (4) TMI 804
CENVAT Credit - time limitation - credit availed after a period of 6 months from the date of issue of cenvatable invoices - cenvat credit was availed after 01.09.2014, in respect of invoices issue prior to 01.09.2014 - applicability of proviso inserted in Rule 4(1) 4(7) vide notification No. 21/2014-CE(N.T.) dated 11.07.2014 - HELD THAT:- Though there are various decision on the issue however, the Division Bench in the case of BHARAT RESINS LTD. VERSUS C.C.E. S.T. SURAT-I [ 2019 (9) TMI 701 - CESTAT AHMEDABAD] held that the limitation of 6 months provided as per notification no 21/2014-CE(N.T.) is not applicable in cases where the invoices were issued before the notification came into effect i.e. 01.09.2014. The appellant is entitled for the Cenvat Credit since all the invoices on which cenvat credit was claimed were issued prior to 01.09.2014 - personal penalty imposed on Shri Vijay Kumar Srivastaw will also not sustain the same is also set aside - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (4) TMI 830
Principles of natural justice - impugned assessment order passed without considering the response of the petitioner and without affording a personal hearing - HELD THAT:- In the last one year, it is noticed at least 200 cases where the Assessing Officer under the CST Act has not issued show cause notice or if they issued notice, they have not considered the response of the assessees, and mechanically confirmed the demand mentioned in the show-cause notice and we have had to set aside all such orders and make a remand to the Assessing Officers - In spite of specific warning by this Court to the Standing Counsel for the Commercial Taxes Department that this kind of conduct by the Assessing Officers will not be countenanced, it appears that she same thing is continuing obviously because this Court has taken a lenient view in the earlier matters and had avoided imposing costs. This Court is being burdened time-and-again to decide the correctness of such assessment orders being passed by the Assessing Officers in violation of principles of natural justice. The matter is remitted back to the 2nd respondent for fresh consideration and 2nd respondent is directed to provide personal hearing to the petitioner - petition allowed by way of remand.
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2021 (4) TMI 827
Seeking grant of stay on recovery of balance amount - compliance with the pre-deposit - HELD THAT:- At the time of considering a stay application, the Appellate Authority was required to consider whether the appellant, before it, had established a prima facie case on the merits of the case, and if so, whether the grant of stay of recovery ought to be conditional or unconditional depending upon the financial position of the appellant. In the instant case, while the Appellate Tribunal found that the petitioner had made out a prima facie and arguable case in the appeal which necessitated the grant of stay against recovery, pending disposal of the appeal, it also went on to hold that requiring the petitioner to deposit any amount would result in irreparable loss and hardship to him - While we cannot ascertain the factual basis for the latter finding of the Appellate Tribunal, we are of the view that the subsequent finding of the Tribunal as regards the irreparable loss and hardship that would result to the petitioner effectively prevented it from requiring the petitioner to deposit any amount as a condition for the grant of the stay of recovery of the balance amount, pending disposal of the appeal. Appeal disposed off.
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2021 (4) TMI 822
Amnesty Scheme - appeal filed by the Revenue, relating to one assessment year and pending consideration before Tribunal - to be included for settlement, if the assessee does not opt for that to be settled under the scheme or not - HELD THAT:- The scope, purport and intent of the Scheme is to settle the entire arrears of tax. It is intended to effectuate recovery of the entire amount of tax in arrears by giving certain reductions or waivers. The conditions stipulated for availing the benefit under the Scheme have to be strictly complied with. It is a complete code in itself and is exhaustive of the matters dealt with. A few of the highlights of the Scheme propounded by the Government in 2020 are hundred percent waiver of interest and penalties, 60% waiver of the balance tax arrears if the outstanding dues are paid in a lump sum and 50% waiver of the balance tax arrears, if outstanding dues are paid in instalments. The Scheme is applicable for all pending tax arrears, including cases remaining in appeal. Taxpayers, who had failed to settle arrears under the previous Amnesty Scheme, are also given the option to take the benefit under the Scheme and any amount paid under the earlier Amnesty Scheme is also stipulated to be given due credit. The assessee is entitled to get the benefit of the Amnesty Scheme for the year 2014-15 without reference to the pending appeal filed by the State for the year 2012-13 - the appellant is eligible to opt for the Amnesty Scheme, 2020 for settling arrears of the assessment year 2014-15 without including the amount that may fall in arrears for the year 2012-13. Appeal allowed.
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2021 (4) TMI 820
Rectification of mistake - error apparent on the face of record - non-production of Form F declaration - Validity of assessment order - HELD THAT:- The Hon'ble Court in the case of State of Tamil Nadu Vs Arulmurugan and Company [1982 (11) TMI 143 - MADRAS HIGH COURT], held that the Tribunal has power to receive C forms at the time of the appeal for sufficient cause. Even assuming that the Assessing Officer has completed the assessment and the assessee files an appeal before the first appellate authority and in the appeal, Form F declaration is filed, the appellate authority is entitled to entertain the same and issue appropriate directions to the assessing authority to redo the assessment. Undoubtedly, in the instant case, the respondent has not preferred an appeal to the first appellate authority, but however, taking note of the fact that the allegation against the appellant is one of local sale, onus of proving the same is with the Department and this conclusion was arrived at by the assessing authority on account of non-production of Form F declaration and if Form F declaration is available with the assessee at this juncture, it is found that there will be no error in law in directing the Assessing Officer to redo the assessment as the Assessing Officer is not an adversary to the dealer and he is bound to make a proper assessment and calculate the rate of tax. The Assessing Officer/appellant is directed to redo the assessment by receiving the Form F declaration, verify the genuineness, etc., and complete the assessment in accordance with law, after affording an opportunity of personal hearing to the authorized representative of the assessee - Appeal allowed by way of remand.
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