Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 24, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of goods - rate of GST - fruit juice-based drinks - to be classified as “Carbonated beverage with fruit juice” as per Para 3A definition in FSSAI Act or not - In the case at hand it is evident that the product contains fruit juice but is not 'Fruit pulp or Fruit juice based drink' but a Carbonated fruit beverage as marketed by the appellant and therefore, the product is not classifiable under CTH 22029920 as claimed by the appellant and is rightly classifiable under CTH '2202 1090-Other' as has been decided by the lower authority - AAAR
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Levy of GST - reimbursement of the subsidiary company to its ultimate holding company located in a foreign territory outside India - rate of GST - the Ruling pronounced by the Advance Ruling Authority is modified to the extent that GST is leviable on the reimbursement amount, being advance payment made by the holding company towards the cost incurred for the provision of Software Services supplied by the appellant, as per the Time of Supply provided under Section 13 of the CGST/TNGST Act 2017 and applicable rate is that applicable to the supply of Software Services made by them. - AAAR
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Levy of GST - leasing of pathway to a person to her/his dwelling unit by CMRL - the grant of shared access for a consideration by the appellant is classifiable under SAC 9997 as rightly held by the Lower Authority and liable to GST - AAAR
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Classification of goods - prepared laboratory reagents/ Pharmaceutical Reference Standards - AARThe Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 - liable to GST @12%
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Supply or not - The shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in USA, UK and Canada (non-taxable territory) are not exigible to GST. - AAR
Income Tax
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Set off of refund against oustanding demand u/s 245 - non receipt of notice u/s 245 - stay of demand was granted by the ITAT - It is difficult to appreciate the stand of the respondents that the order passed by the high court would not cover/operate over the matters and orders passed by the ITAT, Union of India being not a party to the matter. Such a justification from and the approach of, the respondent authorities is difficult to be approved of which is not in fitness of stature, especially of the state department, which is supposed to act like a model litigant. - HC
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Assessment u/s 153A r.w.s. 153C - Initiation of the impugned action cannot be said to be without basis. They are grounded on solid material. In fact, immediately after the seizure of the material, the impugned action was not taken. The officials examined many other persons and statements were also recorded. Only after fully satisfying himself, the assessing officer chose to issue the impugned notices. If the petitioners have nothing to fear, they can as well place all the materials before the assessing authority for consideration. - HC
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Disallowance on account of commission paid to 5 persons - Contention of the assessee that since out of the 5 ladies, 2 have confirmed the transactions, therefore by preponderance of probabilities it can be safely presumed that the transactions with other 3 ladies were also genuine is not acceptable. - AT
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Deemed dividend u/s 2(22)(e) - Since the assessee is having substantial interest in M/s Kalanikethan Textiles and Jewels Pvt. Ltd., i.e. more than 10% shareholding, the amount withdrawn from the above company over and above his credit balance, is treated as deemed dividend u/s 2(22)(e) of the Act in the hands of the assessee - AT
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Assessment u/s 153C - Now supposing a search is conducted in one year and documents of other person are handed over to the Assessing Officer, of other person or to the Assessing Officer with whom jurisdiction is centralized, after two years from the date of search, then for which six years the other person would show his accounts, whether for the years which are applicable for search person or for those years which are governed by the proviso. Thus, for those years which are governed by the proviso because the Income Tax Rules say so. - AT
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Reopening of the assessment u/s 147/148 - The "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion and what is required is "reason to believe", but not the established fact of escapement of income. - At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. - AT
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Seeking extension of stay already granted - the assessee is entitled for stay of demand even though it exceeds the period beyond the 365 days and we have already stated that the delay in non-disposal of the appeal is not attributable to the assessee. we are inclined to grant extension of stay in the instant case for a further period of 180 days or till the disposal of the appeal for this AY, whichever is earlier - AT
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Addition on protective basis u/s. 69A - The loan was received from normal banking channel as evident from the bank statement there was no cash deposited in the account of the assessee prior to giving of the loan. The Assessing Officer has not brought any material or evidences on record to disprove the aforesaid facts and evidences submitted by the assessee in support of genuineness of the loan transactions - AT
IBC
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Release of freezed bank account of petitioner - moratorium in process - Having regard to the orders passed by the NCLT admitting the application, under Section 7, and also the ordering of moratorium under Section 14 of the IBC and the orders which have been passed by the tribunal otherwise, the impugned order of the High Court resulting in the Respondent No. 1 being allowed to operate the account without making good the amount of ₹ 32.50 lakhs to be placed in the account of the Corporate Debtor cannot be sustained. - SC
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Initiation of CIRP - While initiating CIRP, one of the criteria is solvency of CD apart from debt and default in question. It is settled position of law that the provisions of the Code cannot be invoked for recovery of outstanding amount, and it cannot be misused to drop curtain on healthy organisation. - Tri
Service Tax
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Refund of unutilized cenvat credit - nexus between the input services and the output services which is exported - no correlation is required because the intention of the Government is to allow refund to the exporters and the Circular/clarification issued on this subject have to be viewed with the objective of allowing the refund. - AT
Case Laws:
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GST
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2021 (4) TMI 938
Classification of goods - rate of GST - fruit juice-based drinks - to be classified as Carbonated beverage with fruit juice as per Para 3A definition in FSSAI Act or not - taxable under the category of Other under CTH 2202 10 90 or otherwise? - persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? - challenge to AAR decision - AAR held that product 'K Juice Grape' falls under the category of Other under CTH 2202 10 90. The applicable rate of tax is 14% CGST vide Sl.No.12 of Schedule IV under Notification No.11/2017-Central Tax (Rate) and 14% under SGST at 14% vide Sl. No.12 of Schedule IV under Notification No.II(2)/CTR/532(1-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. HELD THAT:- The product prepared from juice to which water, peel oil, fruit essences and flavours, salt, sugar, invert sugar, etc appropriate to the product are added and processed by heat in an appropriate manner so as to prevent spoilage is categorised under para 2.3.10, above and the products under this category are not carbonated. The manufacturing process furnished by the appellant, states that the process involves, addition of Grape juice (13%) to the filtered sugar solution (86%-76% RO water and 10% Sugar) in a blending tank which is subjected to Mild Thermal Treatment (loss of water by 2 to 3%), cooled to room temperature, to which additives and preservatives as per the formulation and coloring flavoring agent are added - the products prepared from fruit juice and water or carbonated water with the minimum Fruit content of not less than 10.0 percent in cases of fruits other than Lime or Lemon juice falls under this category. In the case at hand, the product has a content of fruit juice as required under this Regulation 2.3.30, contains sugar and other ingredients appropriate to the product and is carbonated and therefore we do not find any reason to deviate from the finding of the Lower Authority that the product in hand is 'Carbonated Fruit Beverages or Fruit Drinks'. The schema of arrangement in the CTH under consideration is based on whether the product is water/ aerated water flavoured with fruit juices and containing sugar, etc which may be carbonated [220210] or a non-alcoholic beverage of Fruit pulp/juice-based drink [220299]. In the case at hand it is evident that the product contains fruit juice but is not 'Fruit pulp or Fruit juice based drink' but a Carbonated fruit beverage as marketed by the appellant and therefore, the product is not classifiable under CTH 22029920 as claimed by the appellant and is rightly classifiable under CTH '2202 1090-Other' as has been decided by the lower authority who have dealt in detail the applicable Food regulations as per FSSAI and the CTH 2202 readwith the explanatory notes to arrive at the said conclusion. Pre-GST Tax incidence on the product was 40% whereas in the GST regime, it was proposed to be taxed at 28%. GST Council has agreed to the recommendation as can be seen from the Minutes of the Meeting, the relevant para is: From item No. 43 to 57 of Annexure-III. the Council had no objection and approved the recommendation of Fitment Committee. The Hon ble Minister from Uttar Pradesh raised the issue about item at SI. No. 58 of Annexure III i.e. Extra Neutral Alcohol (ENA). There are no reason to interfere with the Order of the Advance Ruling Authority in this matter - appeal disposed off.
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2021 (4) TMI 937
Levy of GST - reimbursement of the subsidiary company to its ultimate holding company located in a foreign territory outside India - rate of GST - HELD THAT:- GST is to be paid on such amounts of expenses reimbursed at the time determined as per Section 13 of the GST Act, as it represents the part of consideration received in advance by the appellant from its recipient (notwithstanding that the same is later included in tax invoice of the appellant) and to be paid at the time of reimbursement as by then the actual expenses borne by the recipient is known. Rate of GST - HELD THAT:- The applicable rate of GST on such expenses incurred by the recipient and reimbursed by the appellant is the same rate at which the appellant charges for the software development service supplied by the appellant to the overseas holding company, on the ground that the expenses are part of the taxable value of such services and attract the same rate indicated in the tax invoice for the software development charges issued by the appellant on the overseas holding company. Appeal disposed off.
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2021 (4) TMI 936
Seeking clarification from the court in view of the first proviso to section 98(2) of the central goods and service tax act 2017 to enable the sixth respondent to WP namely AAR to pass orders in that application - Whether pendency of the Writ petition 24412 dt 19/08/2019 shall not preclude the AAR from deciding the application made by the Petitioner namely the PHFMS? HELD THAT:- The appeal was filed by the appellant mainly on the ground that in spite of the facts mentioned in detail on the merits of the case in the application before AAR along with the documentary evidences submitted before the AAR, the AAR have not given their ruling citing the section 98(2) of the CGST Act, as a constraint in giving their rule on the issue raised by the applicant - The applicant has filed this appeal with Appellate authority for Advance Ruling with prayer to direct the AAR to consider their application dt 15/08/2019 and pass appropriate orders as per the law and facts put before them or alternatively modify the order passed by AAR by giving clarification on issues raised by the applicant whether GST is applicable on above said services to be provided by the applicant to DME or whether the said services are exempted under notification no. 12/2017 among other grounds of appeal that may be adduced at the time of hearing. The Order of the Advance Ruling Authority was right, since at the material time there was a petition filed by the appellant, pending before the Hon'ble High Court in this matter. Therefore, there is no need to interfere with the order of the AAR.
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2021 (4) TMI 935
Exemption from GST - inward supply of services - upfront lease amount paid to M/s. RLDA for the development of Multi functional complex (Operational building) at Erode Railway junction for long term lease for 45 years - HELD THAT:- The provisions of section 103 categorically states that the ruling pronounced is binding only on the appellant. It automatically flows that if a recipient obtains a ruling on the taxability of his inward supply of goods or services, the supplier of such goods or services is not bound by that ruling and he is free to assess the supply according to his own determination, in which case, the ruling loses its relevance and applicability even. Any law provision has to be interpreted in a constructive and harmonious way keeping in mind the object of the purpose of the provision - On a conjoint reading of the provisions of Section 95(a), section 97 (2) and Section 103, it is opined that a supplier in the capacity of a recipient of his inward supplies only and not vice versa is only eligible to seek an advance ruling and not a mere recipient of goods or services in question even when he may otherwise be a supplier of his own goods or services. The Order of the Advance Ruling Authority in this matter is confirmed - appeal disposed off.
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2021 (4) TMI 934
Classification of supply of services - pure services relating to waste collection, segregation, treatment, transportation and disposal services under the service agreements entered with both concessionaries - N/N. 11/2017- C.T.(Rate) dated 28 th June 2017 - Exempt form GST or not - HELD THAT:- When the bid for services to GCC is directly with the appellant and the services are to be done by the appellant to GCC, why appellant entered into agreement with concessionaire, who has been promoted by the appellant itself, though out of question here, appears somewhat strange. However, the answer lies in the fact that the very nature of concessionaire agreement / bid with GCC involves supply of bins, construction of sheds, vehicles, mechanical sweepers, etc., along with other goods and services; therefore, the appellant who only won the bid and should have performed the activities directly to the GCC, floated two concessionaires who will procure the goods and supply to the appellant, who in turn will provide the services, so as to be termed to be pure services allegedly to enable them qualify themselves under the exemption notification. This artificial separation of activities to be performed wholly by the successful bidders and to be provided to the GCC, is a colourable device to avail the exemption under GST and legally and factually not tenable. Appellant is a totally different entity than from concessionaires in as much as they are all separately incorporated and separately registered with GST and they are distinct persons as per GST Act. So, on the basis of holding equity, they cannot claim to be on par with the concessionaire, who otherwise too are ineligible for the exemption, being the provider of composite supply of goods and services to GCC anyway. The order of the Advance Ruling Authority is upheld - appeal disposed off.
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2021 (4) TMI 933
Levy of GST - leasing of pathway to a person to her/his dwelling unit by CMRL - Challenge to AAR decision - Original Authority has ruled that leasing of pathway by the appellant to Dr. Prema (lessee) by way of shared access of the Non-residential property held by the appellant is taxable under GST. HELD THAT:- The appellant had initially acquired the property (including the land for which shared access is extended to the land owner) for public purpose from the land owner and paid the considerations. The land owner had disputed the settlement before Civil Court and thereupon the appellant had entered into an MOU for out-of-court settlement. One of the claims accepted by the appellant is to extend the shared access of the pathway to the land owner for a consideration for a specific period. The issue is on this activity of grant of shared access for a consideration by the appellant - easement is a right one possesses over certain other land for the beneficial enjoyment of his land, to do and continue to do something or to prevent and continue to prevent something being done on such land, on parting of the said other land. Thus easement' is a right a person holds on the land which is not his but a necessity for enjoyment of his property and is not granted but acquired. In the case at hand the appellant had acquired the land of the landowner and compensated monetarily along with agreeing to grant the shared access to the pathway for a specific period on payment of lease rentals. In respect of right-to-way as easement, it is the right of the landowner, held with him on account of sale of the land appurtenant to the pathway and such right flows automatically on sale. In the case at hand, however based on the Memorandum of Understanding, the landowner is granted shared-access of the pathway from the acquired land for a specific period of 35 years on payment of lease rentals and is also termed as 'lease' in the said MOU. Therefore, the shared access granted by the appellant to the land owner against lease rentals is not 'easement' acquired/held by the landowner on account of the sale of land. Once it is held that the nature of shared access is not an easement held by the land owner, the contention of the appellant does not hold any merit. The land once acquired for business purposes becomes a non-residential property. The Landowner has been granted the right of shared access enabling the land owner access to the road. This right to use the pathway being common to both the appellant and the landowner, the pathway cannot be termed as land appurtenant to the residential dwelling as claimed by the appellant - Transfer of right to use the space without the transfer of space per-se also conveys the right to occupy. In the instant case, it is not a lease of the pathway but only rights are granted to the land owner by the appellant for the shared access. It is seen that the grant of access to the pathway is a right given by them to the landowner. This activity of agreeing to grant rights for shared access of the pathway is an act of agreeing to tolerate an act and is classifiable under SAC 999794 under other miscellaneous services/Agreeing to tolerate an act' and is taxable to 9% CGST and 9% SGST as per SI.No.35 of Notification 11/2017 CT(Rate) dated 28.06.2017 as rightly held by the Lower Authority.
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2021 (4) TMI 932
Exemption from GST - Supply of Man Power services provided by M/s KEONICS and M/s GEMINI SECURITY AND ALLIED SERVICES to applicant (HDMC) - Pure services - exemption under N/N. 12/ 2017 of CGST (rate) read with Notification No.02/ 2018 CGST (rate) - HELD THAT:- Section 95 (c) of the CGST Act 2017 defines Applicant as any person registered or desirous of obtaining registration under the said Act - It could be easily inferred that any person registered or desirous of obtaining registration under CGST Act 2017 can seek advance ruling only in relation to the supply of goods or services or both being undertaken or proposed to be undertaken. M/s HDMC, who have filed the instant application is not a supplier of either goods or services or both but is a recipient of services. Thus the instant application is not admissible and liable for rejection in terms of Section 98(2) of the CGST Act 2017.
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2021 (4) TMI 931
Levy of IGST - import as well as supply of Prepared Laboratory Reagents / Pharmaceutical Reference Standards (PRS) - taxable at the rate of 12% or Entry No.453 to Schedule III attracting a levy of Integrated Tax at the rate of 18%? - Entry No. 80 in Schedule II to the Notification No. 1/2017-Integrated Tax (Rate) dated 28-06-2017 (as amended) - HELD THAT:- The facts of the case are identical to the ruling passed by this authority in the case of IN RE: M/S. CHROCHEMIE LABORATORY PVT. LTD., [ 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] , wherein it was ruled that Entry. No. 80 of Schedule II to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to prepared laboratory reagents - The Karnataka Appellate Authority of Advance Ruling, while disposing the appeal filed by M/s. Chromachemie Laboratory Pvt. Ltd., has set aside the aforesaid ruling in IN RE: M/S. CHROMACHEMIE LABORATORY PRIVATE LIMITED [ 2020 (1) TMI 795 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA] . The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate) dated 28th June, 2017 attracting a levy of Integrated Tax at the rate of 12%.
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2021 (4) TMI 930
Classification of goods - prepared laboratory reagents/ Pharmaceutical Reference Standards - correct classification is Notification No. 01/ 2017-IT (R) is Sr. No. 80 of Schedule II attracting a levy of 12% or Sr. No. 453 of Schedule III attracting a levy of 18 %? HELD THAT:- The facts of the case are identical to the ruling passed by this authority in the case of IN RE: M/S. CHROCHEMIE LABORATORY PVT. LTD., [ 2019 (10) TMI 871 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] , wherein it was ruled that Entry. No. 80 of Schedule II to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to prepared laboratory reagents - The Karnataka Appellate Authority of Advance Ruling, while disposing the appeal filed by M/s. Chromachemie Laboratory Pvt. Ltd., has set aside the aforesaid ruling in IN RE: M/S. CHROMACHEMIE LABORATORY PRIVATE LIMITED [ 2020 (1) TMI 795 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA] . The Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate), dated 28th June, 2017 attracting a levy of Integrated Tax at the rate of 12%.
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2021 (4) TMI 929
Supply or not - supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India - shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in located in USA, UK and Canada (non-taxable territory) - printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST - services received by the applicant from Foreign service provider such as warehousing of printed books located in USA (non-taxable territory), under reverse charge mechanism - input tax credit. Whether the supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant are treated as supply under GST? - HELD THAT:- Schedule III, relevant to Section 7 of the CGST Act 2017, at clause 7 specifies that Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India shall be treated neither as a supply of goods nor a supply of services - supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India does not amount to supply under GST, in terms of clause 7 of Schedule III, relevant to Section 7 of the CGST Act 2017. Whether GST is levied on the shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in located in USA, UK and Canada (non-taxable territory)? - HELD THAT:- The supplier providing the shipping services to the applicant is outside India, the recipient of the said service i.e. the applicant is within India and the place of supply is in India in terms of Section 13 of the IGST Act 2017. Thus the impugned service squarely qualifies to be an import of service, in terms of Section 2 (11) of the IGST Act 2017, in the hands of the applicant and hence the amount paid by the applicant towards the said shipment service is exigible to GST, under Reverse Charge Mechanism. Whether printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant? - HELD THAT:- In the instant case, the content of the books is supplied by the applicant, who owns the said content i.e. usage right to the intangible inputs. Further the physical input i.e. the paper used for printing the books belongs to the printer and hence both the conditions are fulfilled - it is clearly evident that the supplier providing the printing services to the applicant is outside India, the recipient of the said service i.e. the applicant is within India and the place of supply is in India in terms of Section 13 of the IGST Act 2017. Thus the impugned service squarely qualifies to be an import of service, in terms of Section 2(11) of the IGST Act 2017, in the hands of the applicant. Hence the printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant. Whether the services received by the applicant from Foreign service provider such as warehousing of printed books located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST? - HELD THAT:- Though the supplier is located outside India and the recipient is located in India, the place of supply of service is outside India, in terms of Section 13 of IGST Act 2017. Therefore, the impugned service is not covered under import of service and hence is not exigible to GST under RCM basis on expenses incurred on warehousing charges of printed books. Whether input tax credit can be availed, to the extent of inputs and input service? - HELD THAT:- The applicant is not entitled to avail input tax credit on inputs and input services on the transaction covered in first question as the said transaction does not amount to supply under GST.
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2021 (4) TMI 918
Recovery of Government dues (Central Goods and Services Tax) - period of July, 2017 to March, 2019 - seeking time for filing counter-affidavit - HELD THAT:- Time limit for completion or compliances has been extended further up to 30.11.2020 vide CBIC Circular dated 01.09.2020 at page 259. Petitioner on his own bonafide has deposited ₹ 15 lacs towards the tax dues. However, due to Covid-19 situation and on account of the garnishee notice, his business is at a stand still. Learned counsel for the respondent CGST Mr. Amit Kumar submits that statement of facts have been received, but he would require one week time to file counter affidavit. Learned counsel for the respondent has however has not been able to reply to the specific contention of the petitioner as to how despite the CBIC Circular dated 03.04.2020 and its extension by circular dated 01.09.2020 such notice has been issued - As prayed for, one week time is allowed to the learned counsel for the respondents to file counter affidavit. Matter be listed on 03.02.2021. Affidavit be filed latest by 29.01.2021 with advance copy to the learned counsel for the petitioner.
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2021 (4) TMI 917
Seeking pre-arrest bail of the accused-petitioner - fake E-way Bills - HELD THAT:- The petitioner is granted interim protection till a final decision is taken, on perusal of the materials in the case diary, till the date fixed, i.e., 03.02.2021. The accused-petitioner will appear before the Investigating Police Officer within a period of 7 (seven) days from today, and, in the event of his arrest, he shall be released on furnishing a bail bond of ₹ 20,000/- with one suitable surety of the like amount to the satisfaction of the arresting authority, on the conditions imposed - application allowed. List the matter on 3rd February, 2021 .
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Income Tax
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2021 (4) TMI 923
Reopening of assessment u/s 147 - HELD THAT:- In view of the submissions made by the learned counsel on either side, following the ratio laid down by the Hon'ble Supreme Court of India in the judgment reported in Commissioner of Income Tax, Delhi Vs. Kelvinator of India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] the questions of law are decided against the Revenue and in favour of the assessee.
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2021 (4) TMI 922
Set off of refund against oustanding demand u/s 245 - non receipt of notice u/s 245 - It was pointed out that the outstanding demands stated were stayed by orders of the high court and the Income Tax Appellate Tribunal (ITAT) - HELD THAT:- Respondents had admitted that certain amount of refund is due to the petitioner for AY 2019-20 and in the next paragraph, it has been directed to release the due refund within a period of two weeks. The observations about admission of refund amount due and its release are in tandem. Although it is referred to that on 21st January, 2021, petitioner was communicated about adjustment and was acknowledged under e-mail dated 22nd January, 2021, perusal of the e-mail annexed to the reply refers to status of outstanding demands and intimation under section 143 (1) and not to under section 245 - It also emerges that there is no record made available by the respondents about any separate intimation being issued to the petitioner under section 245 of the Act for adjustment of demands from the refund from AY 2019-20 as referred to under note in intimation pursuant to section 143 (1) of the Act. The affidavit in reply is silent over the same. It is not the case of the respondents that revenue officer had passed an order, inter alia, with regard to contention that there is no receipt of intimation under section 245 of the Act at the end of the petitioner and reasons were recorded as to why those are not sustainable and that it was communicated to the petitioner before adjusting the refund. Although the respondents purport to contend that proper procedure had been followed, record does not bear that there had been any communication made to the petitioner as to its submissions being not acceptable before or at the time of making the adjustment. Decisions in the cases of A. N. Shaikh [ 1986 (3) TMI 15 - BOMBAY HIGH COURT ], Hindustan Unilever Ltd. [ 2015 (7) TMI 366 - BOMBAY HIGH COURT ], and Milestone Real Estate Fund [ 2019 (4) TMI 863 - BOMBAY HIGH COURT ] relied on, on behalf of the petitioner have not been met with by the respondents nor it is the case of the respondents that any other course could be adopted for adjustment of refund. There is stark absence of material showing compliance of requirements viz: application of mind to contentions on behalf of the petitioner, reasoned order and its communication to the assessee. The facts and circumstances lend lot of substance to submissions advanced on behalf of the petitioner that there is absence of compliance of requirements under section 245 of the Act, coupled with observations of high court in the decisions relied upon on behalf of the petitioners. The order specifically refers to that same is applicable to interim orders of courts, tribunals and authorities over which the court has power of superintendence. All the subsequent orders are also made available whereunder there does not appear that their operation is limited to the extent of eviction / dispossession of persons / tenants. Having regard to aforesaid extract of the order of this court and the order passed from time to time, as have been annexed by the petitioner to the writ petition, it would be discernible that interim orders passed by the tribunal were to be operative till 31st January, 2021. In the scenario, it is difficult to go by the explanation and submission that there had hardly been any interim relief granted by the tribunal operating in respect of demands for AYs 2007-8 and 2008-09. It is difficult to appreciate the stand of the respondents that the order passed by the high court would not cover/operate over the matters and orders passed by the ITAT, Union of India being not a party to the matter. Such a justification from and the approach of, the respondent authorities is difficult to be approved of which is not in fitness of stature, especially of the state department, which is supposed to act like a model litigant. We, therefore, consider in the circumstances of the case and emerging position, it would not be said that the action of the respondents of adjusting the amount is sustainable.
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2021 (4) TMI 921
Depreciation to assessee trust - HELD THAT:- Following the judgment of the Hon'ble Supreme Court reported in RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] and and NATIONAL COLLEGE COUNCIL, TEPPAKULAM, TIRUCHIRAPALLI. [ 2021 (4) TMI 469 - MADRAS HIGH COURT] and M/S. NATIONAL COLLEGE COUNCIL [ 2019 (8) TMI 1671 - MADRAS HIGH COURT] Substantial question of law is answered against the revenue and the appeals are dismissed.
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2021 (4) TMI 920
Assessment u/s 153A r.w.s. 153C - as per assessee seized material do not incriminate either of the petitioners. The seized materials are commercial documents relating to medical equipments purchased by MMHRC, Madurai. Depreciation was claimed in respect of those equipments and the same was also granted. Therefore, it is not open to the assessing officer to reopen such concluded matters - HELD THAT:- The learned counsel appearing for the petitioners took immense pains to drive home his contention that since the documents in question pertain only to the AY 2014-15, the assessment order of M/s.S.R.Trust cannot be reopened in respect of other years. This contention appears to be very attractive but on a deeper scrutiny, we are not able to accept the same. It is true that the seized material bears the dates for the period from January 2014 to March 2014. But again these dates cannot be taken at their face value. Only after enquiry one can come to the conclusion regarding the actual period to which they relate. We may refer to 'chaos theory' in this regard. The hypothesis of Edward Lorenz is that the mathematical models for weather systems can be extremely sensitive to initial conditions and that small changes in these initial conditions can result in big effects. The flapping of butterfly in Toronto can cause a typhoon in Tokyo. Correspondence between the two is revealed only with the benefit of hindsight. It is true that while taking action under Section 153C of the Act, the assessments can be reopened only for the period that correspond to the seized material. The question of correspondence with the assessment period has to be borne in mind when final order is passed. At the initial stage, the correspondence cannot be formulated with precision. Things may appear fuzzy at the beginning. Only an enquiry can unearth the entire truth. At the initial stage, certain leeway has to be given to the authorities. The statute itself prescribes the ceiling limit. The long arm of the department cannot extend beyond a point. I am therefore of the view that it would be against public interest to abort the efforts taken by the department to unearth the escaped income. Initiation of the impugned action cannot be said to be without basis. They are grounded on solid material. In fact, immediately after the seizure of the material, the impugned action was not taken. The officials examined many other persons and statements were also recorded. Only after fully satisfying himself, the assessing officer chose to issue the impugned notices. If the petitioners have nothing to fear, they can as well place all the materials before the assessing authority for consideration. We are satisfied with the jurisdictional facts exist for assumption of jurisdiction under Section 153A as well as Section 153C of the Act. I do not find any illegality or infraction of procedure in the action initiated by the respondents. The writ petitions lack merit.
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2021 (4) TMI 916
Income accrued in India - payments received by the assessee from its Indian customers in respect of licenses granted for use of copy righted computer software as royalty u/s 9(1)(vi) - India Singapore DTAA - HELD THAT:- As payments received on sale of software licenses are not in the nature of royalty, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright under 12AA of India Singapore DTAA. A.R submitted that the DTAA entered by India with Australia also contains similar provisions. Accordingly, following the decision rendered by Hon ble Supreme Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VERSUS THE COMMISSIONER OF INCOME TAX ANR. [ 2021 (3) TMI 138 - SUPREME COURT] we hold that the payments received by the assessee on sale of software licenses in India are not in the nature of Royalty as per the provisions of DTAA. As observed by Hon ble Supreme Court in the above cited case, there is no requirement to apply provisions of sec. 9(1)(vi) of the Act - We set aside the orders passed by Ld. CIT(A) on this issue in both the years and direct the A.O. to delete the income assessed as royalty in respect of sale of software licenses in both the years under consideration. Appeals of the assessee are allowed.
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2021 (4) TMI 915
Denial of grant of credit for tax deducted at source - whether the assessee is lawfully entitled to the adjustment of TDS for the year under consideration in the computation of total income by the AO in the order passed giving effect to the order of the ITSC? - AO in denying such credit for TDS, has primarily held that section 240 of the Act is inapplicable to the assessee s case as no return of income for the year was filed u/s 139 of the Act before filing application before the ITSC - HELD THAT:- AO shall compute the tax payable after giving credit for taxes already paid by the applicant . `Taxes already paid do not mean only the taxes directly paid by the assessee but also those paid on its behalf. Sub-section (1) of section 199 with the caption `Credit for tax deducted states that Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made . . Thus, it is glaring from section 199 that the tax deducted at source is also a payment of tax on behalf of the assessee in the instant case. The ITSC s direction for giving credit for taxes already paid by the applicant brings into its fold not only the amount of tax paid by the assessee but also the amount of tax deducted at source on behalf of the assessee. To sum up, the order passed by the ITSC u/s 245D(4) of the Act even de hors the filing of return u/s 139 of the Act is an order passed under other proceeding under this Act for the purposes of section 240 and the amount of TDS is a component of the amount of taxes already paid in terms of section 199 of the Act. The sequitur is that the ld. CIT(A) was fully justified in directing the AO to allow credit for TDS amounting to ₹ 70.53 lakh in determining the amount of refund due to the assessee for the year under consideration - Decided against revenue.
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2021 (4) TMI 914
Rejection of deduction claimed u/s 80P(2)(a)(i) - HELD THAT:- We notice that an identical issue has been considered by the co-ordinate bench in the case of Karkala Co-op S Bank Ltd [ 2021 (2) TMI 854 - ITAT BANGALORE] wherein an identical issue has been restored to the file of AO for examining it afresh. Rejection of deduction u/s 80P(2)(d) of the Act in respect of interest income earned on fixed deposits - HELD THAT:- In the instant case, the assessee has earned both interest income and dividend income. In view of the decision rendered by the jurisdictional Hon ble High Court of Karnataka in M/S THE TOTGARS' CO-OPERATIVE SALE SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WARD-1, SIRSI [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] the assessee is entitled for deduction of proportionate cost, administrative and other expenses. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with similar directions. Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (4) TMI 913
Denial of exemption u/s 80P(2)(d) of the Act in respect of interest income earned from Co-operative banks - HELD THAT:- In the case of Karkala Co-op. S. Bank Ltd. Vs. ITO [ 2021 (2) TMI 854 - ITAT BANGALORE] the Bangalore bench of Tribunal has considered issue of eligibility of the assessee to claim deduction u/s 80P(2)(d) and it was held that the assessee is eligible for deduction of expenses incurred for earning the interest income. Thus restore the same to the file of the AO with the direction to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head other sources. Denial of deduction u/s 80P of the Act in respect of commission income earned on sale of e-stamps - HELD THAT:- Section 80P(2)(c) prescribes deduction in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b). It further states that the deduction u/s 80P(2)(c) is allowable to so much of its Profits and gains attributable to such activities as does not exceed the amount prescribed. Thus the quantum of deduction is the amount of profits and gains attributable to the activities subject to the maximum amount prescribed therein - the assessee would be eligible for deduction u/s 80P(2)(c) of the Act in respect of commission income on sale of estamps, since it is not one of the activities mentioned in clause (a) or (b) - it is necessary to first determine the profits and gains attributable to the activities of earning commission income on sale of e-stamps and then compute deduction u/s 80P(2)(c) subject to the limits prescribed in the said provision. Accordingly, this issue requires fresh examination at the end of AO. Accordingly, set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it afresh.
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2021 (4) TMI 912
Disallowance made u/s 43B - assessee submits that service tax which was paid to the service provider was payable to the Service Tax Department by the service provider only and not by the assessee - assessee submitted that the assessee paid commission which includes service tax to the service provider and under these circumstances Section 43B of the Act was not applicable to the assessee -HELD THAT:- We hold that Section 43B of the Act does not apply to this payment on the facts and circumstances of the case and hence the disallowance made u/s 43B of the Act is hereby deleted. Ad-hoc disallowance made by the AO - AO disallowed part of the expenses claimed by the assessee on ad-hoc basis on the ground that the expenses incurred for personal purposes cannot be segregated - HELD THAT:- The assessee failed to file supporting bills and vouchers before the AO. In our view, the decision of the AO as confirmed by the ld. CIT(A) on these two issues are ad-hoc and call for no interference for the reason that no bills and vouchers were produced by the assessee before the AO. Thus we uphold the same and dismiss these grounds of the assessee. Additional ground regarding the claim for deduction of educational cess paid - HELD THAT:- We uphold the contention of the assessee that the education cess and higher education cess is allowable as a deduction by applying the propositions of law laid down by the Hon ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] . In the result, this ground of the assessee is allowed. Addition of notional interest - assessee gave loan to Shyam Sundar Kayal (father of a partner of the assessee firm) and he was charged interest @9%, whereas from others who had taken advances from the assessee, the assessee charged interest @12%. The difference amount of 3% was treated as notional income of the assessee and taxed by the AO - HELD THAT:- It is well settled that notional interest cannot be brought to tax - See HIGHWAYS CONSTRUCTION CO. PVT. LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1992 (11) TMI 86 - GAUHATI HIGH COURT] Ad-hoc disallowances made by the AO - HELD THAT:- As assessee failed to produce sufficient evidences before the AO in support of his claim. The AO noted that there was no explanation furnished by the assessee and also vouchers or log books etc. were not proved by the AO. Thus he made an ad-hoc disallowance. The ld. CIT(A) confirmed the same. We find no infirmity in this factual finding of the AO. The assessee in this case failed to discharge the burden of proof that lays on it. Thus we dismiss ground nos. 2, 3 4 of the assessee.
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2021 (4) TMI 911
Disallowance of Employee Stock Expenditure (ESOP) - AO noticed from the computation for the AY under consideration that the assessee had added back an amount as ESOP Expenditure disallowed to the extent of options not exercised during the year - CIT(A) after considering the submissions of the assessee and following the decision of ITAT, Hyderabad in assessee s own case [ 2017 (9) TMI 1595 - ITAT HYDERABAD] deleted the disallowance - HELD THAT:- We are of the view that the decision of the CIT(A) is in consonance with the decision of ITAT, therefore, we do not find any infirmity in the order of the CIT(A) and upholding the same, we dismiss the ground No. 2 raised by the revenue on this issue. Disallowance made u/s 43B towards gratuity provision - AO noticed from the audit report that an amount was claimed as provision for gratuity which remained unpaid as on the date of filing of return and the same was not disallowed in the computation of income - HELD THAT:- As gone through the orders of revenue authorities. In the case of CIT Vs Commonwealth Trust (P) Ltd.[ 2004 (4) TMI 51 - KERALA HIGH COURT] , on which reliance placed by the assessee, the Hon'ble High Court of Kerala held that provision towards an approved gratuity fund is allowable u/ s 40A(7)(b) as deduction and is not hit by section 43B of the Act. The Hon'ble High Court of Kerala in the case of Chacko las Spinning and Weaving Mills Ltd Vs CIT [ 1989 (3) TMI 124 - KERALA HIGH COURT] held that provision made for contribution to approved gratuity fund shall be allowed as deduction u/s 40A(7)(b) of the Act and it is not necessary that there should be a payment by the assessee of for contribution towards an approved gratuity fund existing on the day when the provision is made or during the period for which the provision is made. Therefore, we see no reason to interfere with the order of CIT(A) in allowing the ground of assessee and upholding the same, we dismiss ground No. 3 raised by the revenue. Deduction on the basis of section 43B for provision made for an approved gratuity fund as deductible u/s 40A(7) - HELD THAT:- As sufficient internal accruals to fund the advance trust as well as considering the AO s observations in assessee s own case for AY 2008-09 following the Tribunal decision in AYs 2009-10 and 2010-11 that the loan to trust was made out of internal accruals and not from the borrowed funds, the CIT(A) allowed the ground of the assessee. DR could not bring any contrary decision against the decision of the Tribunal for AYs 2009-10 and 2010-11. Therefore, upholding the decision of the CIT(A), we dismiss the ground raised by the revenue on this issue.
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2021 (4) TMI 910
Disallowance on account of commission paid to 5 persons - assessee is engaged in trading in gold, silver and diamond jewellery. The assessee company has franchisee of Tanishq - HELD THAT:- It is true that all the five ladies are residents of Hisar and three ladies live at the adjacent building of the business premises of the assessee. It is also a fact that the two ladies did appear before the AO whose statements were recorded by him and they have confirmed the receipt of sales commission. Since the two ladies have confirmed the transactions by statements recorded by the Assessing Officer, we do not find any reason why addition should be made. We, accordingly, direct the Assessing Officer to delete the addition of commission paid to 2 persons / ladies. In respect of the other 3 ladies, they may have been married, but nothing prevented them to furnish their statements by way of affidavits. Merely because the payments have been made through account payee cheques would not justify the rendition of services since no evidences have been furnished before us except for the bald statement that the ladies are now married and do not reside in Hisar. Contention of the assessee that since out of the 5 ladies, 2 have confirmed the transactions, therefore by preponderance of probabilities it can be safely presumed that the transactions with other 3 ladies were also genuine is not acceptable. Since no evidence has been furnished towards rendition of services by 3 ladies, disallowance of commission paid to them is hereby confirmed which means Ground No. 1 is partly allowed. Addition on account of alleged under valuation of closing stock of gold and silver coins - Valuation of the closing stock on the basis of average of opening stock and cost price - assessee has been consistently following the cost or market price, whichever is lower method of accounting for valuation of closing stock - HELD THAT:- CIT(A), in his order, has mentioned that the assessee itself has claimed in the appellate proceedings that it is valuing closing stock at average cost. Before us, the ld. counsel for the assessee vehemently stated that the observations of the ld. CIT(A) are against the facts and the assessee has never made such submission. Since there are conflicting submissions emanating from the orders of the authorities below, we deem it fit to restore this issue to the file of the Assessing Officer. The assessee is directed to demonstrate that the stock has been valued at cost price which is in consistence with its practice in earlier year and the Assessing Officer is directed to examine the details afresh and if satisfied that the assessee has been consistently valuing its stock at cost or market price, whichever is less, then no addition needs to be made on this account. If the Assessing Officer is not satisfied with the details of the assessee, he may decide the issue afresh as per provisions of law. Accordingly, Ground No. 2 is allowed for statistical purposes.
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2021 (4) TMI 909
Deemed dividend u/s 2(22)(e) - HELD THAT:- As per the ledger account, it is clear that the amount was transferred from HDFC Bank through DD to Ch.N.K.D. Prasad, who was director of the company in which the appellant holds substantial shares of the company. The shares owned by Ch.N.K.D. Prasad was transferred in the name of the appellant i.e. the amount was transferred for the purchase of shares in the name of the appellant. The company has also debited to the current account as maintained by the company of the director. The assessee has also alleged that the AO has not calculated the reserves and surplus on the date of advance to the directors and he has taken closing balance of reserves and surplus as at the end of the year i.e. 31/03/2006, which is not correct and while calculating the reserves and surplus, depreciation as per the IT Act has also not been calculated by the AO. It was the duty of the assessee to prove that on the date of advance the assessee must calculate the reserves and surplus, which has not done by the assessee. In regard to Reserves Surplus , it should be read in general terms as used in the IT Act. The payer is a company and the financial statements are prepared as per the Companies Act. Therefore, both the contentions raised by the ld. AR is rejected. We also find that the current account maintained in the name of the appellants in the company s ledger, there are debit balances on different occasions, but, no interest has been charged. The ld. AR of the assessee could not prove any business exigency in the present case. Since the assessee is having substantial interest in M/s Kalanikethan Textiles and Jewels Pvt. Ltd., i.e. more than 10% shareholding, the amount withdrawn from the above company over and above his credit balance, is treated as deemed dividend u/s 2(22)(e) of the Act in the hands of the assessee to the extent of ₹ 20,00,000/- Accordingly, the grounds raised by the assessee on this issue are partly allowed.
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2021 (4) TMI 908
Approvals u/s.10(23C)(vi) rejected - HELD THAT:- We observe in this clinching backdrop that the PCIT(Central) has erred in law and on facts not only in assuming his Section 10(23C)(vi) jurisdiction on 16-09-2019 (before having being confirmed the prescribed authority s jurisdiction to this effect on 05-11-2019) but also he has wrongly withdrawn the assessee s approval with effect from the date it had been granted the same - And that the latter action also involved illegality since this approval had come way back in the year 2009 as against the search carried out almost after a decade i.e., 23-03-2018. We thus adopt strict interpretation in the given facts and circumstances of the case in the light of Rule2CA of the Income Tax Rules, 1962 and going by hon ble apex court s constitutional bench decision in CCCE Vs. Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT ] and conclude that the impugned order withdrawing the assessee s approval is not sustainable for want of the Pr.CIT(Central) s jurisdiction. We make it clear that we are dealing with an instance of patent lack of jurisdiction at the threshold itself which cannot be made good in latter stages. There is yet another equally significant aspect of the matter before us. There is hardly any dispute that the Pr.CIT s order; assuming but not accepting it as correct, has withdrawn the assessee s approval from the day which was granted the very relief i.e., from 27-03-2008 turning out to be well beyond the period of show cause notice itself. And that too, without even indicating as to how the assessee had violated the conditions of its approval granted earlier in all these intervening assessment years wherein it had also been assessed without any violation of the approval s conditions. We therefore rely upon our foregoing detailed discussion and hold that Pr.CIT(Central) herein has erred in law and as on facts in withdrawing the assessee s approval granted u/s.10(23C)(vi) of the Act. The assessee has also filed a detailed case law paper book as well as citing various judicial precedents but we do not deem it appropriate to deal with any of them since it is an instance of the Pr.CIT(Central) s lack of jurisdiction. The assessee s impugned approval is restored as a necessary corollary.
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2021 (4) TMI 907
Assessment u/s 153C - Whether no satisfaction was recorded in case of search person? - HELD THAT:- It is pertinent to note that no satisfaction was recorded in case of search person and thus, the assessment itself becomes null and void. In fact, in the present case the Assessing Officer of assessee while submitting the remand report has categorically accepted that he has not recorded any satisfaction in the file of searched person. He has just taken a plea that he was the AO of both searched person and of the assessee. Besides this the contentions of the Ld. AR that as per the sub-rule-5 of Rule 6F every assessee under the Income Tax Act has to maintain the account of six previous years for the purpose of Income Tax. Now supposing a search is conducted in one year and documents of other person are handed over to the Assessing Officer, of other person or to the Assessing Officer with whom jurisdiction is centralized, after two years from the date of search, then for which six years the other person would show his accounts, whether for the years which are applicable for search person or for those years which are governed by the proviso. Thus, for those years which are governed by the proviso because the Income Tax Rules say so. And that is why the legislature in his wisdom by virtue of proviso, has substituted the date of search with the date of receiving of the documents pertaining to such other. Otherwise provisions of Rule 6F would redundant and the Assessing Officer can asked for records of those years also for which an assessee is not obliged to maintain records. However, the Assessing Officer assuming the impugned year, as a year of search, has framed the assessee under normal provisions of Income Tax. While applying the mandate of the proviso of section 153C read with 153A(1) and principle of law as laid down by the Hon ble Jurisdictional High Court in the case of RRJ Securities [ 2015 (11) TMI 19 - DELHI HIGH COURT] then the six years which were to be covered are the years mentioned in table given by the Ld. AR. Thus, these contentions of the Ld. AR are sustainable under the provisions of the Income Tax Act as well as Income Tax Rules. Besides this, the CIT(A) has not taken the cognizance of the additional evidence filed by the assessee and thus on the merit also, the assessee succeeds. Hence, the appeal of the assessee being is allowed.
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2021 (4) TMI 906
Unexplained cash credit u/s.68 - Failure to prove the genuineness and creditworthiness of fresh capital introduced by the partners of the firm during the year under consideration - HELD THAT:- After going through the FIR, and other criminal events among the partners, we note that one of the partners has killed another partner on the occasion of Garba festival, therefore, there was fight/quarrel and serious dispute among the partners, one of the partners put into jail by Police/Court and one of the partners has died, hence there was no co-operation among the partners, therefore the required documents could not be submitted before the assessing officer/CIT(A), as the situation was beyond control. Considering the above facts, we note that because of these criminal events the assessee did not get opportunity to submit documents and evidences during the assessment stage. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, in the interest of justice, we restore the matter back to the file of Ld. Assessing Officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee. Addition on account of alleged suppressed its pass income and treated as undisclosed income - HELD THAT:- The accounts were reconciled only after the event was over and the 'pass income' was collected from the agent and pass selling centers. The difference in the figures of pass income is due to the fact that both the Profit and Loss accounts were prepared on different time periods and the correct figures were included after the reconciliation. However, ld DR for the Revenue reiterated the stand taken by the assessing officer. We note that AO has taken two different figure pertaining to 'pass income' from the Profit Loss account as on 31.03.2007 and as on 31.03.2008. The figures of December 2007 were provisional figures where the net profit of ₹ 1,01,908/- has been shown while in the Profit Loss account for 31.03.2008 the net loss of ₹ 48,68,592/- has been shown. The period mentioned as 01.04.2007 to 31.03.2008 is by default settings of the accounting software. The pass income' has been shown at ₹ 39,79,500/- in the Profit Loss account filed during the course of the event. Subsequently, when the accounts was reconciled, the pass income increased to ₹ 89,50,000/-from the income shown of ₹ 39,79,500/- on which the net profit ₹ 1,01,908/- has been shown. We note that assessee has shown voluntarily the higher pass income at ₹ 89,50,000/- as compared to earlier pass income at ₹ 39,79,500/- therefore, it should not be doubted that assessee has concealed his income. Whether turnover/sales is treated as income or net profit embedded in sales is treated as income of the assessee? - Hon ble Gujarat High Court in the case of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] held that only net profit embedded in sales should be treated as income. As Learned Counsel submits and draw our attention to the profit and loss account of the assessee vide paper book page no.93, wherein the net profit is shown to the tune of ₹ 1,01,908/-. Therefore, considering the facts and precedent applicable to these facts, as narrated above, we delete the addition of ₹ 49,70,500/- and direct the assessing officer to treat the net income of the assessee at ₹ 1,01,908/-. Thus, ground No.4 raised by the assessee is allowed in above terms.
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2021 (4) TMI 905
Undisclosed income disclosed as per seized diary during survey action under section 133A - to be treated under the head business income or under the head other sources - main grievance of assessee is that the income tax officer in his assessment order, has stated that the income from undisclosed sources does not fall under any heads of income which is a wrong observation of the assessing officer and therefore the order passed by the assessing officer is not in accordance with law - HELD THAT:- From the above decision of Hon`ble Gujarat High Court in the case of Fakir Mohmed Haji Hasan [ 2000 (8) TMI 44 - GUJARAT HIGH COURT] it is abundantly clear that where an income which is not admitted, but is inferred by the assessing officer and if it could not be brought under any particular head of incomes, deduction may be lost. Where such receipt cannot be brought under any particular head of income, it will have to be assessed under the head other sources but deductions under section 57 of the Act may not be admissible as it will not be possible for the assessee to claim deduction as relating to such deemed income, since the assessee has denied that income, but if he is able to prove any expenditure in relation to such admitted income, there is no reason for denying the same. Therefore, the deemed income will be assessable under the head income from other sources , however, the deduction available under the head income from other sources will be lost. As undisclosed source income of ₹ 1,10,00,000/- of the assessee cannot be assessed under the head 'business or profession', as the nature of receipts is not known, that is, the assessee has failed to explain the nature of said undisclosed source income. In Sreelekha Banerjee v. Commissioner of Income-tax [ 1963 (3) TMI 47 - SUPREME COURT] , the Hon`ble Supreme Court observed: The very words ' an undisclosed source' show that the disclosure must come from the assessee and not from the department. Therefore, in the absence of any plausible explanation form the ld Counsel, we are constrained to agree with the findings of the ld CIT(A). That being so, we decline to interfere in the order of ld CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by the assessee is dismissed.
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2021 (4) TMI 904
NP Estimation - CIT(A) has held that the AO treated the entire deposit in bank account of assessee as sale of assessee and estimated net profit by applying net profit rate of 5% - HELD THAT:- On perusal of facts, it is seen that the credit is in the bank account of the assessee and it is the onus of assessee to prove correct nature of the credits. She has not given any evidence to prove that this is not the turnover. The affidavit filed by her is not supported by any evidence and is self-serving. So far as net profit rate of 5% is concerned, the same is reasonable. The assessee did not furnish any comparative cases where the net profit rate is lesser than 5%. The case laws relied upon the ld. AR are not applicable on the facts of the present case, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same qua the issue under consideration. Reopening of the assessment u/s 147/148 as proper sanction U/s 151 was not obtained before issuing notice - HELD THAT:- The case of the assessee was reopened in the light of information/documents to the extent which were available with the AO. The material before the Assessing Officer was relevant and affords a live link or nexus to the formation of the prima facie belief that income chargeable to tax has escaped assessment in the hands of the assessee. The sufficiency and correctness of material need not be looked at the initial stage at the time of reopening of the case. While considering whether commencement of reassessment proceedings was valid, the court has only to see whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not anything to be considered at that stage. The reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion and what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Appeal of the assessee is dismissed.
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2021 (4) TMI 903
Seeking extension of stay already granted - HELD THAT:- SA filed by the assessee is for seeking extension of stay already granted by this Tribunal wherein this Tribunal had extended the stay for a period of 180 days from 07.10.2019 or till the disposal of the appeal by this Tribunal, whichever is earlier. Thereafter, the stay already granted was extended from time to time by this Tribunal pursuant to the blanket stay order passed by Hon ble Bombay High Court upto January 2021. Similarly, from the chronology of events given of the stay application preferred by the assessee, we find that the delay in non-disposal of the appeal was not due to the reason attributable to the assessee as appeals were adjourned from time to time either at the behest of the bench or at the request made by ld. Departmental Representative (DR). We find that total taxes paid by the assessee for this year is less than 20% of the total demand raised thereon ad hence the applicability of mandate of section 254(2A) comes into operation. We find that the ld. Authorized Representative (AR) made various propositions to drive home the point that amended proviso to section 254(2A) of the Act could be made applicable only for stay application filed for the first time after 01.04.2020 and the same cannot be made applicable for extension of stay. We find that the ld. DR had filed written submissions which were sent in email on 01.04.2021 wherein he had vehemently argued that the law mandates payment of 20% of the total demand as a pre-condition for granting stay of demand by the Tribunal after the amendment. This mandatory condition cannot be tinkered by the Tribunal in any circumstances. We find that this issue had already been considered by the co-ordinate bench of this Tribunal in the case of Bennett Coleman Company Ltd [ 2021 (4) TMI 840 - ITAT MUMBAI] wherein held assessee has no fault for the delay in disposing of the pending appeals. Therefore, we are of the view that assessee deserves to be granted extension of stay for a period of 4 months and accordingly, we grant the same. Thus we find that the assessee is entitled for stay of demand even though it exceeds the period beyond the 365 days and we have already stated that the delay in non-disposal of the appeal is not attributable to the assessee. we are inclined to grant extension of stay in the instant case for a further period of 180 days or till the disposal of the appeal for this AY, whichever is earlier. The assessee is directed not to take any adjournment on the scheduled date of hearing except due to unavoidable or exceptional circumstances and co-operate in expeditious disposal of the appeal. Disallowance under section 14A - Once this disallowance under section 14A of the Act is ignored, the net result of other remaining additions would still only result in assessed loss and hence there is no requirement of payment of any taxes for this AY. On this reason itself, assessee is entitled for extension of stay. Even otherwise as already stated earlier, the facts for this AY are similar to facts before the stay application for AY 2010-11 and accordingly the decision rendered thereon by us hereinabove shall apply mutatis mutandis for this AY also. Accordingly, we are inclined to grant extension of stay for a period of 180 days or till the disposal of the appeal for this AY by this Tribunal, whichever is earlier. The assessee is directed not to take any adjournment on the scheduled date of hearing except due to unavoidable or exceptional circumstances and co-operate in expeditious disposal of the appeal. Depreciation on 3G Spectrum Fees - If the said disallowance is ignored, the net result of remaining additions would only result in assessed loss and hence no tax is per se payable for this AY. We find that assessee had made a prima facie case in its favour and accordingly we inclined to grant extension of stay for a further period of 180 days from today or till the disposal of the appeal by this Tribunal for this AY, whichever is earlier. The assessee is directed not to take any adjournment on the scheduled date of hearing except due to unavoidable or exceptional circumstances and co-operate in expeditious disposal of the appeal.
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2021 (4) TMI 902
Addition of unrealized hedging loss on forward contracts - HELD THAT:- As relying on M/S WOODWARD GOVERNOR INDIA P. LTD. M/S HONDA SIEL POWER PRODUCTS LTD. [ 2009 (4) TMI 4 - SUPREME COURT] the addition on a/c of unrealized hedging loss on forward contracts made by the Assessing Officer and confirmed by the CIT (A) is deleted. Additional ground to claim deduction of education cess paid on income tax for the year under section 37(1) - HELD THAT:- As these grounds being legal and not raised either before the Assessing Officer or the CIT (A), we deem it fit and proper to admit the same and remand the same to the file of the Assessing Officer for examination of the issues raised therein in accordance with law.
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2021 (4) TMI 901
Reopening of assessment u/s 147 - AO issued notice u/s 148 for the reasons that assessee has not filed the return - HELD THAT:- As assessee is regularly filing his return with ITO, Ward-7(1), Jaipur. No efforts have been made to ascertain whether assessee has filed the return or not. Thus, the very reason for reopening the assessment that assessee has not filed the return of income is incorrect. In this regard, we draw strength from the decision of the Coordinate Bench of this Tribunal in the case of Sh. Kulwant Singh [ 2018 (12) TMI 1874 - ITAT JAIPUR] . Thus where the Assessing Officer has reopened the assessment mechanically without application of mind and jurisdiction, we hold that the reopening of the assessment is not valid and the same is hereby quashed. - Decided in favour of assessee.
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2021 (4) TMI 900
Disallowance of commission payment - According to assessee, the commission was paid to TCI as shopping commission to attract foreign tourists coming through TCI to the shop of the assessee - HELD THAT:- While deciding this ground, the A.O. as well as the ld. CIT(A) has not considered the letter submitted by the TCI wherein the TCI had confirmed that amount of ₹ 15.00 lacs paid on 31/12/2007 and 01/06/2008 was for the F.Y. 2008-09 and had also not considered the decision of ld. CIT(A) in the case of sister concern of the assessee i.e. M/s Jaipur Gems Crafts wherein under identical circumstances, the additions were deleted. Considering the principles laid down by the Hon ble Supreme Court in the case of Kishanlal Chawla Vs State of Uttar Pradesh . [ 2021 (4) TMI 841 - SUPREME COURT] wherein it was said that every trial is voyage of discovery in which the truth is the quest . Since in the income tax proceeding, the A.O. is considered as an adjudicator as well as investigator, therefore, it Was all the more duty of the A.O. to evaluate or consider all the documents placed on record by the respective parties. Therefore, considering the interest of justice, equity and fair play, we restore the matter back to the file of the A.O. for deciding the issue afresh after considering the letter submitted by the TCI wherein the TCI had confirmed that amount of ₹ 15.00 lacs paid on 31/12/2007 and 01/06/2008 was for the F.Y. 2008-09 and the decision of ld. CIT(A) in the case of sister concern of the assessee i.e. M/s Jaipur Gems Crafts wherein under identical circumstances, the additions were deleted. Addition u/s 69 - realization of the advance given to Shri Rohit Walter and Prabhu Kumar as unexplained cash introduced by the assessee in their name - HELD THAT:- As per the assessee, the said additions were made on the basis of assumptions and surmises as the assessee was having turnover of ₹ 51,45,367/- and the payment was made two these persons through cheque and the assessee was having sufficient cash and bank balances and as and when some need arises to the assessee then in that eventuality the assessee used to withdraw cash from the bank and the revenue authorities have not seen or examined the cash book to find out that on the date of deposit of cash in these accounts, was there any necessity to meet the expenses. No such event/instance in this nature has been pointed out by the revenue rather the ld. CIT(A) in the operative portion of the order has mentioned that the A.O. had made additions as the necessary confirmation from the above two persons from whom the money was received as temporary loan were not produced. However, after examining the pleadings of both the parties, we have not found that at any stage, the assessee had ever claimed that they have received temporary loan from these two persons namely Rohit Walter and Prabhu Kumar, therefore, in such circumstances, we are unable to understand as to how the ld. CIT(A) had concluded that the assessee has received temporary loan from the above two persons. According to the assessee, there is some confusion on the part of the revenue in appreciating the facts of the present case. Therefore, considering the interest of justice, we also set aside this issue back to the file of A.O. with direction to decide the issue afresh after examining the cash book or any other documents as it deem fit for deciding this issue.
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2021 (4) TMI 899
Addition on protective basis u/s. 69A - CIT(A) has deleted addition made on protective basis holding that addition on substantive basis has been carried out in the case of Shri Mehul Mehta on the basis of order of Settlement Commission therefore action of the Assessing Officer to make addition on protective basis in the case of the assessee was treated as unjustified - HELD THAT:- As explained that amount was returned by the broker through whom the transaction was undertaken. In this regard, a copy of affidavit of Satyam Amitbhai Padihar, broker in the land dealing was furnished during the course of assessment proceedings. It is further noticed that the impugned land was ultimately sold on 19th August, 2016 to other parties. CIT(A) has also stated that considering the nature of transaction only substantive addition can be made in the hands of the buyer and in the hands of the seller on the reasoning that if payment was made by the buyer not out of disclosed sources the amount has to be added as undisclosed income to the total income of the buyer on substantive basis and at the same time if the receipt of consideration is not disclosed by the seller, the amount has to be added as undisclosed income to the total income of the seller on the substantive basis only. As undisputed fact that Shri Mehul Mehta in whose hands the addition was made on substantive basis had made relevant disclosure in the application for settlement which has been considered by the settlement commission in the order dated 17th Nov, 2017 u/s. 245D(iv) as elaborated in the finding of ld. CIT(A). In view of the above fact and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in deleting the similar addition made in the hands of the assessee on protective basis. Therefore, this ground of appeal of the revenue stands dismissed. Addition u/s 68 - assessee has received unsecured loan - AO held that assessee has failed to establish the identity and creditworthiness of the lender and genuineness of the transaction - CIT-A deleted the addition - HELD THAT:- During the course of appellate proceedings before ld. CIT(A) the assessee has filed additional evidences which were admitted by the ld. CIT(A) and remand report was also called from the Assessing Officer. The Assessee explained that confirmation of the lender could not be obtained as he was not available at that relevant point of time. However after abled to contact the lender the necessary detail in support of the transaction i.e. copy of 7/12 of agricultural land owned by the lender, copy of bank statement of the lender and confirmation of the lender were obtained. Accordingly, the assessee furnished additional evidences which were in the nature of bank statement, confirmation containing his detailed address, documentary evidences of the ownership of agricultural land and it was also explained that since lender was an agriculturist therefore he was not liable to file any return of income. The loan was received from normal banking channel as evident from the bank statement there was no cash deposited in the account of the assessee prior to giving of the loan. The Assessing Officer has not brought any material or evidences on record to disprove the aforesaid facts and evidences submitted by the assessee in support of genuineness of the loan transactions. - Decided against revenue.
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2021 (4) TMI 896
Nature of land sold - Treatment of sale amount of the land sold by the Assessee - Assessee during the Assessment proceedings, claimed long term capital gain qua sale of land, however, in the first appellate proceedings changed his stand and claimed that sale consideration received qua land sold during the year did not constitute a capital asset within the meaning of Sec 2(14) of the Act and therefore no capital gains income is chargeable to tax in respect of the said transfer of the land - HELD THAT:- As per section 2(14) if the land falls more than 8 km. from the local limits of any municipality or cantonment board to in item (a) and which has a population of more than ten lakh cannot be considered as capital asset. In the instant case, admittedly the land situated at an aerial distance of 9.2 km. and it is also admitted fact by the AO that the land sold by the Assessee was an agricultural land prior to sale and as per VRO, the agricultural activities were carried out in the said land upto the month of December 2014. From Adangal extract obtained from the Mee-Bhumi portal, the land has been described as an agricultural land and is useful for cultivation. Further, from the certificate of the Addl. Assistant Engineer, APSPDCL, Gannavaram, it clearly reflects that agricultural power connection was also available in the name of the Assessee for the land in dispute. Even from the proceedings of the Sub-Collector, Nuzvid whereby imposed the penalty on the builder for conversion of agricultural land into non-agricultural land without obtaining permission as required u/sec. 3 of the Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006 and for non-payment of conversion fees, it goes to show that the land under dispute was agricultural land only. The aforesaid facts have been duly considered by the ld. Commissioner while admitting the claim of the Assessee and holding that the land under dispute was an agricultural land and therefore exempt u/sec. 2(14) of the Act and cannot be subjected to tax. Addition on the ground that the Assessee could not substantiate with any evidence for carrying out the agricultural activities during the year on the land given for development and as per local enquiries conducted through ITI there was no agricultural activity in the said land during the last 2 or 3 years - Commissioner, on appeal, clearly held that the issue of whether the land owned by the Assessee at Kesarapalli village represented agricultural land and whether agricultural activities were carried out on the said land by the Assessee prior to transfer of the land during the year, has already been discussed and adjudicated earlier in its order and it was held that the said land constitute agricultural land and that the Assessee carried out agricultural activities in the said land prior to the transfer of the land during the year. The ld. Commissioner finally held that in view of the said finding of the fact, it is held that the action of the AO in not accepting the claim of agricultural income of the Assessee and treating the same as income from other sources‟ is not sustainable. In our view, the ld. Commissioner thoroughly examined the issue and held that the land under dispute as agricultural land and the Assessee cultivated the land up to transfer of the same, therefore disallowance to the extent of ₹ 45,000/- as claimed by the Assessee as agricultural income, in any way, does not entail any interference . Consequently, we are inclined not to interfere with the decision of the ld. Commissioner on this issue as well. Revenue appeal dismissed.
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2021 (4) TMI 889
Reopening of assessment u/s 147 - notice issued u/s 148 on the completely incorrect address of the appellant - as per revenue notice was issued upon the assessee by electronic mode - addition made by the A.O under Sec.69A - HELD THAT:- Nothing has been placed on record which would reveal that the A.O had got the notice issued under Sec. 148, dated 21.03.2018 served through affixture at the last known address of the assessee - A.O had referred to an incorrect address of the assessee in the body of the assessment order itself militates against the aforesaid unsubstantiated claim of the A.O of having carried out a valid service of the notice issued under Sec. 148, dated 21.03.2018 through affixture at the last known address of the assessee. In the backdrop of the aforesaid facts, we are unable to persuade ourselves to subscribe to the validity of the service by affixture of the notice issued under Sec. 148, dated 21.03.2018, as had been claimed by the A.O in the assessment order. Notice issued under Sec. 148 was sent to the assessee through ITBA on 21.03.2018 - Before us, the revenue had relied upon a letter received from the ITO- 27(2)(1), Mumbai, dated 21.01.2021 and therein claimed that the notice issued under Sec. 148 was served on the assessee on 21.03.2018 through ITBA. However, on a perusal of the screenshot of the income-tax portal of the assessee as had been placed on our record at Page 16 of the assessee s Paper Book (for short APB ), we find that the same though reveals that the notice under Sec. 148 was issued on 21.03.2018 [document ID No. ITBA/AST/S/148/2017- 18/1009359143(1)] however, the column referring to the date of service of the said notice is found to be blank. In fact, we are unable to comprehend that when the assessee, as claimed, did not have any e-mail address then, how the notice issued under Sec. 148 could have been served upon him by the department through electronic mode. Nothing has been brought on our record by the ld. D.R to dislodge the aforesaid claim of the assessee. As the assessee had not filed his return of income for the year in question i.e A.Y 2011-12 thus, the occasion of furnishing of any e-mail address in such non-existent return of income doe not arise. Insofar the last income-tax return of the assessee is concerned, the same, as observed by us hereinabove was filed by the assessee for A.Y 2005-06 on 29.08.2005 - On a perusal of the return of income for A.Y 2005-06, we find that no e-mail address was therein made available by the assessee. Lastly, it is also not the case of the department that the assessee had ever made available its e-mail address either to the income-tax authority or to any person authorised by it. We concur with the ld. A.R that the claim of the revenue that the notice issued under Sec. 148, dated 21.03.2018 was served upon the assessee by electronic mode being devoid of any force cannot be accepted. Accordingly, on the basis of our aforesaid deliberations, we are of a strong conviction that the notice issued under Sec.148, dated 21.03.2018 had also not been served by the department by electronic mode. As pursuant to the notice issued by the A.O under Sec. 133(6), dated 11.07.2018 to the assessee s bank viz. Cosmos Cooperative Bank Ltd, Branch: Ghatkopar (W), Mumbai, the latter vide its letter dated 30.07.2018 had furnished with him the complete details of the assessee, viz. copy of the account opening form; copy of the KYC documents, PAN Card, of the assessee; copy of KYC documents, PAN Card and Passport of Mrs. Pankaj Bharti Shah (widow of the assessee); and the contact number of the assessee/widow of the assessee. In the backdrop of the aforesaid facts, we are unable to understand that now when the actual address of the assessee was available with the A.O from the aforesaid three sources, viz. (i) last income-tax return of the assessee i.e for A.Y. 2005-06; (ii) PAN database; and (iii) details furnished by the bank; then, what had stopped him from serving the notice issued under Sec. 148 at the said address. On the basis of the aforesaid facts, we are of a strong conviction that as the assessment framed by the A.O under Sec. 144 r.w.s 147, dated 10.11.2018 was not preceded by a service on the assessee of a notice issued under Sec. 148 thus, no valid assessment could have been framed by him. Accordingly, we are of the considered view that de hors service on the assessee of a notice issued under Sec.148 of the Act the assessment framed by the A.O under Sec. 144 r.w.s 147, dated 10.11.2018 cannot be sustained and is liable to be vacated - Decided in favour of assessee.
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2021 (4) TMI 887
Ex-parte order - No opportunity was granted to the assessee before the learned CIT Appeal - Reopening of assessment u/s 147 - denying Exemption U/s. 54F of the Income Tax Act, 1961 to the appellant in respect of Construction of Residential House - HELD THAT:- As laid down by the honorable Supreme Court in Catena of judgement that the purpose of tax administration is to collect just and fair tax from the citizen and it should not be an endeavor of the revenue authority to take benefit of ignorance of the citizen or absence of appellant in the proceedings. In the present case the individual assessee are before us who had plead that the absence of AR/assessee was on account of sufficient reasons. In our considered opinion the interest of justice, requires that the matters be sent back to the file of the learned AO for a fresh adjudication on merit. We expect the learned AO to decide the matter expeditiously after issuing the sufficient notice to the assessee and he shall grant the assessee sufficient opportunity to produce the evidence/document as may be advised. The assessee is also directed to present on each and every date fixed by the AO and shall not take undue date/adjournment in the matter. It is expected that the appeal shall be decided by the AO preferably within a period of 6 months from the receipt of this order. Appeals of the assessee are allowed for statistical purposes.
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2021 (4) TMI 886
Depreciation claim to assessee trust - Assessee claiming exemption under Section 11 - allowable on the fixed asset (the cost of the capital asset) acquired for charitable purposes as if so allowed it would amount to double deduction, which cannot be the intention of the legislature? - HELD THAT:- When the appeals are taken up for hearing, Mr.J.Narayanasamy, learned senior standing counsel appearing for the appellant Revenue fairly submitted the substantial questions of law which has been framed in these appeals, have been answered against the Revenue by the Hon'ble Supreme Court in CIT Vs. Rajasthan and Gujarati Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] . Following the judgment of the Hon'ble Supreme Court reported in RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] and NATIONAL COLLEGE COUNCIL, TEPPAKULAM, TIRUCHIRAPALLI. [ 2021 (4) TMI 469 - MADRAS HIGH COURT] and M/S. NATIONAL COLLEGE COUNCIL [ 2019 (8) TMI 1671 - MADRAS HIGH COURT] Substantial question of law is answered against the revenue and the appeals are dismissed.
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Customs
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2021 (4) TMI 927
Recovery of Interest - the Settlement Commission adjudicated the issues and granted full immunity from payment of fine and penalty and prosecution under the Customs Act - HELD THAT:- The scope of review under Article 226 of the Constitution of India is to scrutinise the process through which a decision is taken by the Competent Authorities with reference to the Statutes and not the decision itself. Thus, the decision taken, which all are disputed with reference to certain documents are to be adjudicated. The respondent-Deputy Director General of Foreign Trade is directed to consider the representation dated 14.02.2017 submitted by the writ petitioner through Registered Post with Acknowledgement Due (RPAD) and dispose of the same on merits and in accordance with law, if necessary by providing personal hearing if any request is made in this regard by the writ petitioner - Petition disposed off.
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2021 (4) TMI 924
Refund of IGST/ITC - HELD THAT:- A perusal of the order dated 14.11.2019 shows that the petitioner is seeking refund of IGST/ITC to the tune of ₹ 1,33,95,749/- along with interest. Therefore, we are not able to appreciate as to why the entire amount is stuck. List the matter on 03.05.2021.
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Corporate Laws
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2021 (4) TMI 898
Seeking a direction to the Registrar of Companies, Chennai (ROC), to restore the name of the Company in the Register of Companies - Section 252(1) of the Companies Act, 2013 - HELD THAT:- It has been brought to the notice of this Tribunal that the applicant has not complied with filing of balance sheets and other statutory returns before the RoC. The Struck off Company is engaged in chit fund business. The cross-section of society is involved in the business considering the welfare of the chit fund deposits it is inevitable, that this company ought to be restored. The Registrar of companies, Chennai, the respondent herein, is ordered to restore the original status of the Applicant Company i.e. M/s. Guru Guberan Chits Private Limited as if the name of the company has not been struck off from the Register of Companies with resultant and consequential actions like changing status of Company from strike off to Active - Application allowed.
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2021 (4) TMI 895
Seeking restoration of the name of the Company in the register maintained by the Registrar of Companies - Section 252(1) (3) of the Companies Act, 2013 - applicant is owner of land parcels - HELD THAT:- The main assets of the Appellant Company are the land parcels registered in its name, on the strength of which the Applicant is seeking restoration of the Appellant Company in the register of RoC. Here, it is worthwhile to refer to the Judgment of Hon'ble High Court of Gauhati in the matter of FELPACT PRIVATE LIMITED, ANANDA CHANDRA SHARMA VERSUS THE REGISTRAR OF COMPANIES, SHRI BHUPENDRA NATH, SMTI. SUCHITRA CHAKRABORTY, SMTI. HIRAMOTI DEVI, SMTI. SUKRITY BHAGWATI, SMTI. PRABHATY SARMA, SHRI SATYA NATH SARMA, SRI SAMBHU CHARAN BARMAN [ 2017 (6) TMI 1338 - GAUHATI HIGH COURT] where it was held that ownership of such a big estate is indicative of the fact that if there is no owner of any land, there is every likelihood of the said land will waste away by encroachment or otherwise or it will become a den for anti-social activities. It is considered just and fair to allow restoration of the name of the Appellant Company in the Register of Companies maintained by RoC - Appeal is allowed subject to payment of costs of ₹ 25,000 only to the Ministry of Corporate Affairs and ₹ 25,000 to the Prime Minister's Relief Fund, the proof of which will be furnished by the Appellant to the Registry of this Tribunal within 07 days - application allowed.
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Insolvency & Bankruptcy
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2021 (4) TMI 928
Release of freezed bank account of petitioner - moratorium in process - HELD THAT:- The contours of the jurisdiction under 482 of the Cr.P.C. are far too well settled to require articulation or reiteration. Undoubtedly, in this case by 26.08.2019 an application filed under section 7 of the IBC was admitted, the appellant appointed as the interim resolution professional and what is more a moratorium declared. With the declaration of the moratorium the prohibitions as enacted in section 14 came into force. It is clear that the assets of the company would include the amounts lying to the credit in the bank accounts - The provisions of the IBC contemplate resolution of the insolvency if possible, in the first instance and should it not be possible, the winding up of the Corporate Debtor. The role of the insolvency professional is neatly carved out. From the date of admission of application and the appointment of Interim Resolution Professional, the management of the affairs of the Corporate Debtor is to vest in the Interim Resolution Professional. With such appointment, the powers of the Board of Directors or the partners of the Corporate Debtor as the case may be are to stand suspended. Having regard to the orders passed by the NCLT admitting the application, under Section 7, and also the ordering of moratorium under Section 14 of the IBC and the orders which have been passed by the tribunal otherwise, the impugned order of the High Court resulting in the Respondent No. 1 being allowed to operate the account without making good the amount of ₹ 32.50 lakhs to be placed in the account of the Corporate Debtor cannot be sustained. The Learned Counsel for the Appellant has also no objection in the Respondent No. 1 being allowed to operate its account subject to it remitting an amount of ₹ 32.50 lakhs into the account of the Corporate Debtor. The Respondent No.1 is allowed to operate its account subject to it to first remitting into the account of the Corporate Debtor, the amount of ₹ 32.50 lakhs which stood paid to it by the management of the Corporate Debtor - Appeal allowed.
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2021 (4) TMI 897
Seeking extension of CIRP by another 34 days - section 12(2) 12(3) of the Code r/w. Rule 11 of NCLT Rules, 2016 - HELD THAT:- The total number of days from the admission of the Corporate Debtor to CIRP i.e., from 03.09.2019 to 21.02.2021 is 536 days. Till 08.04.2021, the total number of days from the admission of CIRP i.e., 03.09.2019 to 08.04.2021 is 582 days. Exemption of Covid period as per Section 40C of the Code from 25.03.2020 till 17.10.2020 is 206 days. The maximum period admissible under Section 12(2) 12(3) of the Code is 330 days. However, considering that this Applicant/RP had to undergo harassment and also criminal cases as a Resolution Professional in respect of M/s. Bhatia Coke and Energy Limited, the company under CIRP, considerable time and energy was lost. Hence, the Applicant could not effectively conduct the CIR process. Furthermore, the Covid-19 pandemic also does not permit effective operation of the CIR Process. This Adjudicating Authority grants extension of CIRP period till 08.04.2021, as per the provisions of Section 12(2) 12(3) of the IBC read with Rule 11 of NCLT Rules, 2016 - Application allowed.
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2021 (4) TMI 893
Maintainability of petition - estoppel from invoking provisions of Code again when they have already invoked provisions of Code by filing Company Petition earlier against Pro forma Respondent - HELD THAT:- By reading of the provisions of Section 60(5) of IBC Code, it is clear that the above provision enables parties to file Misc. Application(s) or proceedings by or against Corporate Debtor or Corporate Persons. It does not entitle a party to file a fresh Company Petition to initiate Group Insolvency as sought for in the instant Petition. Moreover, the Association has already moved against main Corporate Debtor by inter alia contending that it is the responsibility of Holding Company to get constructed promised houses as per Agreements through its alleged Subsidiary namely M/s. Ithaca Estates India Pvt. Ltd. While initiating CIRP, one of the criteria is solvency of CD apart from debt and default in question. It is settled position of law that the provisions of the Code cannot be invoked for recovery of outstanding amount, and it cannot be misused to drop curtain on healthy organisation. The Project Skylark Ithaca is being developed by Ithaca Estates Private Limited (IEPL). Even in CIRP initiated in respect of Skylark Mansions Pvt. Ltd., the Resolution Plan proposed by Resolution Applicant is subject to contribution of ₹ 1250/- per sq. ft. only from each customer in order to complete Skylark Ithaca Project. Therefore, it shows, the Corporate Debtor is in a position to complete the project in question - Corporate Debtor, prima facie appears to be solvent Company, which cannot be subjected to insolvency proceedings and it should be given one more opportunity to fulfill its obligations to various Home Buyers, who have substantially contributed to get their flats. The Petitioner has failed to make out even prima facie case so as to initiate CIRP as prayed for - Petition dismissed.
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2021 (4) TMI 892
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is apparent on record that this Corporate Applicant had defaulted in making payments to Aesys S.P.A. Italy. In this case, the Corporate Applicant namely, M/s. Aesys Technologies India Private Limited has made a submission stating that they would like to recommend an IRP to take over the management of the affairs of the Corporate Applicant Company. This Company application is required to be admitted u/s 10 of the Code - Application admitted.
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2021 (4) TMI 891
Seeking removal of name of the Operational Creditor from the Stakeholders Consultation Committee constituted under Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016 - permission to modify entries in the list of stakeholders as filed before this Tribunal and reconstitute the Stakeholders' Consultation Committee pursuant to the withdrawal of the claim by M/s. Regenix Drugs Limited - HELD THAT:- Regulation 31(3) of the Liquidation Process Regulations, 2016 permits the Adjudicating Authority to allow revised list of stakeholders submitted by the Liquidator. Since one of the Operational Creditor viz. M/s. Regenix Drugs Limited has withdrawn its claim from the Liquidator, there arises a necessity for the Liquidator to modify the list of Stakeholders. In the circumstances, application deserves to be allowed. Thus, the Liquidator as per Regulation 31(3) of the IBBI (Liquidation Process) Regulations, 2016, is permitted to revise the list of stakeholders of the Corporate Debtor. The Liquidator is directed to file the modified list of stakeholders before this Tribunal within a period of 7 days from the date of this order - application allowed.
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2021 (4) TMI 890
Liquidation of Corporate Debtor - Section 60(5) of Insolvency and Bankruptcy Code, 2016 r/w. Rule 11 of NCLT Rules, 2016 and Section 420 of the Companies Act, 2013 - HELD THAT:- It is highly improper to reverse the clock and the petitioner ought to have taken up this matter when the matter was admitted, before the Hon'ble National Company Law Appellate Tribunal (NCLAT), which is the Appellate Authority in the present situation. Application dismissed.
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Service Tax
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2021 (4) TMI 894
Refund of unutilized cenvat credit - service tax paid on various input services said to have been used for providing output services exported outside India - rejection of refund only on the ground of lack of nexus between the input services and the output services which is exported - N/N. 27/2012-CE (NT) dated 18/06/2012 read with Rule 5 of Cenvat Credit Rules, 2004 - period October 2015 to December 2015 - HELD THAT:- It has been consistently held by the Tribunal in various decisions cited supra wherein the Tribunal has taken a view that after the amendment of Rule 5 of Cenvat Credit Rules, 2004, there is no need for one to one correlation between the input services and the output services and moreover the Board Circular dated 16/03/2012 also clarified that no correlation is required because the intention of the Government is to allow refund to the exporters and the Circular/clarification issued on this subject have to be viewed with the objective of allowing the refund. Department has not questioned the service tax paid on input services at the time when the cenvat credit was taken and as per the decision of this Tribunal in the case of K LINE SHIP MANAGEMENT INDIA PVT. LTD. VERSUS C.C.G.S.T., MUMBAI WEST [ 2018 (12) TMI 1481 - CESTAT MUMBAI] , it has been held that the Department is not permitted to question the same at the time of claiming refund. Further in view of the clarification given by the Tax Research Unit of CBEC vide their letter dated 16/03/2012, the amended Rule 5 of Cenvat Credit Rules does not require correlation between the output service exported and the input service used in such output services exported. Further, as far as Rent-a-Cab service is concerned which the Department has disputed on the ground of exclusion, it is found that in the present case the appellant has availed the services of Rent-a-cab for the purpose of bringing and dropping the employees and this service has been used for providing the output service and the invoices have been produced by the appellant. The appellant is entitled to refund of CENVAT credit - Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 888
Refund of service tax paid - development charges to SIPCOT Industrial Growth Centre, Perundurai - time limitation - HELD THAT:- A refund claim as per section 104 has to be filed within six months from the date when the Bill receives the assent of the President of India. Such assent was received on 31.3.2017. Thus, the refund claim ought to have been filed on or before 30.9.2017. In the present case, the refund claim is filed on 9.10.2017. Needless to say that when the service tax has been collected by SIPCOT, the appellant would require necessary documents from SIPCOT to file the refund claim - there was a confusion as to who has to file the refund claim and therefore this has led to the delay in filing the refund claim. In the decision cited by the ld. Counsel for appellant, the Tribunal has considered the issue and held that the time limit of one year prescribed in section 11B of Central Excise Act would apply. In the case of Teknomec Vs. CGST CE, Chennai [ 2019 (7) TMI 1416 - CESTAT CHENNAI ], this Tribunal held that when claim has been filed within reasonable time from the date when appellant received intimation from SIPCOT, the refund has to be granted. The rejection of refund claim is unsustainable - appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (4) TMI 926
Grant of regular bail - Recovery of pseudoephedrine hydrochloride from her baggage - section 67 of NDPS Act - HELD THAT:- The substance alleged to have been recovered from the petitioner/accused is 19.3 Kg. of pseudoephedrine hydrochloride which is a controlled substance. It has been rightly submitted by the Ld. counsel for the petitioner/accused that it is neither a narcotic drug nor a psychotropic substance under the NDPS Act. The alleged offences are not punishable with death or imprisonment for life. The offence falling U/s 9A r/w section 25A of the NDPS Act is punishable with imprisonment which may extend to 10 years and also fine which may also extend to ₹ 1 Lakh and the bar of Section 37 is not attracted in the present case as the substance recovered is a controlled substance within the meaning of Section 2 (viid) of the Act. Whether the petitioner/accused who is a foreign national is entitled to be released on bail, if she is able to make out a case in her favour? - HELD THAT:- There is no bar for releasing foreign national on bail, if the case so warrants. The bar of section 37 of the NDPS Act is not applicable. Therefore, keeping in view the entire facts and circumstances, the petitioner/accused who is in J.C. since 13.07.2019 is admitted to bail on her furnishing personal bond in the sum of ₹ 1,00,000/- with two solvent sureties each of the like amount subject to the satisfaction of the trial Court. Being released on bail, the petitioner shall inform the NCB Office, the address at which she will reside during the period she is on bail - application disposed off.
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2021 (4) TMI 925
Grant of Regular Bail - 65 pellets/capsules allegedly recovered from the stomach of petitioner - instruction 1/88 dated 15.03.1988 of Narcotic Control Bureau - non-compliance of Section 50 of NDPS Act - HELD THAT:- It has been categorically stated in the complaint in question that notice under Section 50 of the NDPS Act was issued to the accused Bobby Collins Anagor by Sh. B.L.Bairwa, IO, NCB and he was also explained of his legal rights that if he desires his search can be conducted before a Magistrate or a Gazetted officer to which he denied and also wrote the same on the Notice under Section 50 of the NDPS Act. It is further noted that Sh.CSK Singh, IO offered their personal search to petitioner, to which also he refused. Thereafter, petitioner was taken to the CISF room where his baggage was physically examined but nothing was recovered from his personal search - With regard to compliance under Section 67 of the Act, it has been averred in the complaint that once the accused/petitioner disclosed carrying pellets/ capsules in his stomach, he was served with notice under Section 67 of the Act, on which he requested the NCB officers to take him to NCB office to enable him to tender his voluntary statement. Petitioner recorded his voluntary statement in his own handwriting in which he accepted having swallowed pellets/capsules of drugs and requested to take him to hospital. A small amount of powder was taken separately from each packet and tested separately with the help of field testing kit which gave results for cocaine. Since all the recovered cocaine from 65 capsules were of same size, packaging, texture, colour and property, they were transferred to a polythene packet and weighed. It came out to be 1.320 kg, out of which two samples of 5 gms each were drawn and put inside two zip lock pouches. The process was completed in the presence of CSK Singh, Investigating Officer and two independent witnesses and after completion of other necessary procedure, the sample so obtained and marked was sent to the Chemical Examiner, CRCL. Pertinently, the petitioner has approached this Court when only one prosecution witness remains to be examined and trial is at the fag end. During the course of hearing, learned counsel sailed this Court through examination and cross-examination of witnesses PW-3 and PW-10 to point out various infirmities in the prosecution case. Prosecution evidence is yet to be concluded and testimonies of other witnesses are not before this Court, hence, it would not be worthwhile to scrutinize the statements of these two witnesses in piecemeal. Furthermore, in what way and manner the prosecution failed to follow the procedure prescribed under the Act, can be established by the petitioner during his evidence in defence. Petition dismissed.
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2021 (4) TMI 919
Maintainability of petition - Public Interest Litigation - constitution of multi-disciplinary investigation team to investigate into the alleged breach of the provisions of the Reserve Bank of India Act, 1934, (RBI Act), the Income Tax Act, 1961, (IT Act) the Securities and Exchange Board of India Act, 1992 - HELD THAT:- This Court, on a closure scrutiny of the assertions and references in this petition and in the writ petition in INDIA AWAKE FOR TRANSPARENCY SHRISTHI CRESCENDO VERSUS UNION OF INDIA, THE DIRECTOR ENFORCEMENT DIRECTORATE, CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA, GOVERNOR RESERVE BANK OF INDIA, CHAIRMAN CENTRAL BOARD OF DIRECT TAXES, MR AH PREMJI, M/S HASHAM INVESTMENT AND TRADING COMPANY PRIVATE LIMITED [ 2020 (10) TMI 1239 - KARNATAKA HIGH COURT ] is of the considered view that the petitioner cannot be permitted to continue with this petition despite the unconditional withdrawal of the said writ petition in W.P.No.3635/2020 (PIL) even on the ground that the subject matters in these two petitions are different: to permit the petitioner to continue the writ petition would be overlooking the kernel given the core issues urged by the petitioner for the seeming and encouraging artifice. It is already observed that the Coordinate Benches in similar circumstances relying upon this proposition have dismissed the other writ petitions holding that such petitions, which are filed after abandoning the earlier petition with the unconditional withdrawal, would not be maintainable. This Court is also of the considered view that the enunciation by the Hon ble Supreme Court in Sarguja Transport Services vs. State Transport Appellate Tribunal, M.P., Gwalior and others [ 1986 (11) TMI 377 - SUPREME COURT ] would apply and the petition is liable to be dismissed also on this ground. Petition dismissed.
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