TMI Tax Updates - e-Newsletter
April 26, 2022

Case Laws in this Newsletter:

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

Articles

1. ADJUDICATION UNDER GST (PART-6)

   By: Dr. Sanjiv Agarwal

2. DRAFT AND SAVE ONLINE APPEAL FORM AND OTHER FORMS WELL IN ADVANCE to face contingencies and to seek condonation of delay, if any in uploading of form and documents.

   By: DEVKUMAR KOTHARI

3. PRE DEPOSIT OF 75% UNDER SECTION 19 OF MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 – MANDATORY?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. APEDA to co-organise 36th edition of AAHAR 2022 from April 26th -30th at Pragati Maidan

2. Importer in Kandla Heroin Case arrested by DRI

3. Exports of Indian Ceramics and Glassware Products register growth of 168% in 2021-22 over 2013-14

Notifications

GST - States

1. 01/2022 – State Tax - dated 19-4-2022 - Jharkhand SGST

Amendment in Notification No. 13/2020 – State Tax, dated the 25th June, 2020

Circulars / Instructions / Orders

Customs

1. Instruction No. 3/2022 - dated 23-4-2022

Revised guidelines for National Risk Management Committee (NRMC) for Customs & GST

Highlights / Catch Notes

GST

• Coal Supply and Distribution: Separate Transactions with 5% and 18% GST Rates Respectively, Not Conjunct Services.

  Case-Laws - AAR : Classification of services - rate of GST - coal handling and Distribution charges - The supply of coal done through a separate purchase order and the supply of Coal Handling and Distribution of coal done through a subsequent work order are two individual supplies which are not rendered in conjunction with each other and have to be treated as independent and separate supplies only. Hence the supply of coal is liable for 5% GST and the supply of service of handling and distribution is liable for 18%. - AAR
  Visit to Get Source

  ---

• No ITC for Steel, Cement in Construction of Foundations and Walls, Rules AAR under GST Regulations.

  Case-Laws - AAR : Input tax credit (ITC) - the credit of steel, cement and other consumables even in proportion to the incremental volume of the earth foundation, side walls, beams, etc are not available as credit to the applicant. - AAR
  Visit to Get Source

  ---

• Motor Vehicle Fees and Taxes Recovered from Lessee Included in Taxable Supply Under GST Rules.

  Case-Laws - AAR : Classification of services - Valuation - Pure Agent - Additional payments made by the Applicant towards Motor Vehicle Registration fee, Motor Vehicle life Tax, RTO charges etc., for getting the vehicle to use on the Road, which are recovered from the Lessee, forms part of the supply of Leasing services and therefore should form part of the taxable supply. - AAR
  Visit to Get Source

  ---

• PSA Oxygen Generation Plant Classified as Air Separator Under CTH 8421 39 90 for GST Purposes.

  Case-Laws - AAR : Classification of goods - rate of GST - HSN Code - It is evident that the air Separators are classifiable under CTH 8421. In the case at hand, the product, PSA Oxygen Generation Plant manufactured and supplied by the applicant is an Air Separator as has been brought out in para 8.1 above, therefore, the Product is classifiable under CTH 8421. In view of the above, it is held that the product “PSA Medical Oxygen Generation Plant” is classifiable under CTH 8421 39 and more specifically under CTH 8421 39 90. - AAR
  Visit to Get Source

  ---

• Product Classified as Static Converter Under CTH 8504 40 90 Despite Auxiliary Circuits for Voltage Regulation.

  Case-Laws - AAR : Classification of goods - rate of GST - HSN Code - it is evident from the facts and the explanatory notes to CTH 8504 that the applicant's product merits classification under Chapter 85 in CTH 8504 and more specifically under CTH 8504 40 90- as Static converters(others); in as much as the Explanatory notes has specifically stated that incorporation of auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group. - AAR
  Visit to Get Source

  ---

• Advance Ruling on Service Supply Classification Denied Due to Ongoing Appeal and Prior Investigation by Authorities.

  Case-Laws - AAR : Maintainability of Advance Ruling application - Classification of supply of service - rate of GST - In the applicant case, it is seen that the State authorities have already made investigations regarding the taxability of the products for which Advance Ruling is sought for and the questions raised by the applicant in their Advance Ruling application is one of the grounds raised in the Appeal - The application is not admitted under first proviso to Section 98 (2) of the CGST/TNGST Act 2017. - AAR
  Visit to Get Source

  ---

• GST Rate for KKNPP Employee Housing Construction Not Covered by Entry Sl.No. 3(vi); Payment Method Query Unaddressed.

  Case-Laws - AAR : Classification of services - rate of GST - The services rendered by the applicant, i.e., construction of residential quarters for the employees of KKNPP under the contract awarded by NPCIL is not a service procured by NPCIL, the Government entity in relation to a work entrusted to it by the Central Government and hence rate prescribed in entry at Sl.No. 3(vi) is not applicable to the applicant and the question on modality of payment of differential tax to be paid is not answered as it is questioning the procedural aspect of law, which is not within the purview of Section 97(2). - AAR
  Visit to Get Source

  ---

• Labor Services for Forest and Environmental Conservation Activities Exempt from GST if Pure Services Conditions Met.

  Case-Laws - AAR : Exemption form GST or not - supply of labour services for collection of seeds from forest, digging contour trenches, chal-khal (water conservation pits in hills) for soil and moisture conservation, clearing of fire lines in forest to protect forest from fire which causes damage to forest, controlled burning of portion of forest to prevent spread of fire and damage to environment - Benefit of exemption is available subject to fulfillment of conditions e.g. pure service - AAR
  Visit to Get Source

  ---

Income Tax

• Section 68: Preventing Double Taxation by Accepting Assessee's Claim of Cash Received from Society to Avoid Legal Conflict.

  Case-Laws - AT : Unexplained cash credit under section 68 - if we deny the claim of the assessee for having received the money from the society, it would lead to the double addition of the same item of the cash receipt which is unwanted under the provisions of law. Firstly, the amount of cash receipt from the society will suffer from the tax in the year under consideration and secondly, the assessee failed to claim the benefit of the higher amount of available cash in hand as on 1st April 2006 before the settlement commission which eventually has already suffered the tax again. Thus, to avoid the double taxation, we are inclined to admit the contention of the assessee that he has received cash from the society which was utilized to deposit in the bank accounts. - AT
  Visit to Get Source

  ---

• Assessee's Favorable Outcome u/s 11: Consistency in Charitable Advances Without Interest Draws No Adverse Inference.

  Case-Laws - AT : Exemption u/s 11 - the case of the assessee was in its favour based on the principles of consistency. Furthermore, the assessee has achieved its own goals by advancing money without charging any interest to the institution which was engaged in charitable activities. Thus no adverse inference can be drawn against the assessee - AT
  Visit to Get Source

  ---

• Assessee Granted Tax Exemption for Prayer Hall Construction as Activities Align with Charitable Objectives u/s 11.

  Case-Laws - AT : Exemption u/s 11 - Other receipts - Admittedly, in the case on hand, the benefit of section 11 has been denied to the assessee for the activities carried out for the construction of the prayer hall. Accordingly, we hold that the activity of the assessee was in consonance with the object clause and therefore the assessee is entitled for the exemption under section 11 of the Act. - AT
  Visit to Get Source

  ---

• Assessee-trust entitled to Section 11(1)(a) deduction; Assessing Officer's income calculation conflicts with Income Tax Act.

  Case-Laws - AT : Exemption u/s 11 - The gross income is entered in the books of the assessee and accordingly reflected in final accounts. The gross income should be ascertained from books of accounts of the assessee-trust. The calculation on actual receipt of assessee made by the Ld. AO is contrary to the view of the Act. - the assessee is eligible for deduction u/s. 11(1)(a) of the Act. - AT
  Visit to Get Source

  ---

• AO's Notional Interest on Loans to Sister Concern Deemed Unsustainable u/s 36(1)(iii.

  Case-Laws - AT : Assessment of notional interest on loans - loan has been granted by the assessee to its sister concern - As per the provisions of Sec. 36(1)(iii) AO could have disallowed interest expenditure if the interest was paid in respect of capital borrowed which was not used for the purposes of business or profession. - Rather Ld. AO has computed notional interest on loans advanced by the assessee which do not find support of any statutory provisions. Therefore, the action of Ld. AO, in adding the notional interest on outstanding loans, in not in accordance with law and hence not sustainable. - AT
  Visit to Get Source

  ---

• Reassessment Invalid: Non-Jurisdictional AO's Section 148 Notice Quashed Due to Lack of Proper Transfer u/s 127.

  Case-Laws - AT : Reopening of assessment u/s 147 - notice under section 148 has been issued by a non jurisdictional AO - It is settled principle of law that when the notice under section 148 of the Act has been issued by a non jurisdictional AO, the ITO Bareli in this case, reassessment by the jurisdictional AO is bad in law and is liable to be quashed, more particularly when assessment of the assessee has admittedly not been transferred to Bareli under section 127 of the Act. - AT
  Visit to Get Source

  ---

• Assessing Officer's Addition for Unaccounted Income Overturned Due to Lack of Proper Inquiry and Verification.

  Case-Laws - AT : Addition on account of unaccounted receipts - When the assessee has asserted before the Assessing Officer that it has not received any such income, the Assessing Officer is duty bound to make proper enquiry before concluding that the disputed amount was earned by the assessee during the relevant assessment year. Instead of doing that the Assessing Officer has made the addition simply on the basis of AIR information, which, in our view is absolutely Incorrect. - AT
  Visit to Get Source

  ---

• CIT's Section 263 Revision on MBF Unit Deduction Overruled Due to DRP's Consistent Stance Allowing Deduction.

  Case-Laws - AT : Revision u/s 263 by CIT - The subject matter of the deduction in the reassessment order was the quantum of deduction but not the eligibility of the deduction and even in that case also the deduction pertaining to MBF unit but not other units whereas the revisionary proceedings dealt extensively with the eligibility of the deduction per se maintenance of separate books of accounts change of opinion by the CIT where the Ld. CIT and also the contrary reviews taken by the DRP for the successive assessment years allowing the deduction. The revisionary proceedings cannot go beyond the issue of the reassessment proceedings. - AT
  Visit to Get Source

  ---

IBC

• Court Upholds Resolution Plan by Bharat Forge; Emphasizes Revival Over Liquidation in CIRP Process.

  Case-Laws - AT : Validity of approved Resolution Plan - appellants have not received any communication from the IRP with regard to the admission/rejection of the claim - Consolidated reading of all provisions and objects of the Code apart from analysis/observations stated supra, it reveals that the purpose of CIRP is to provide life to organization and not to provide death knell. Death Knell/liquidation should be the last resort. Hence no need to touch the Resolution Plan so implemented by Successful Resolution Applicant (viz. M/s Bharat Forge Limited). - AT
  Visit to Get Source

  ---

Service Tax

• Court Reviews 813-Day Delay in Appeal Filing for Service Tax Case, Commissioner (A)'s Findings Questioned.

  Case-Laws - AT : Condonation of delay of 813 days in filing appeal - relevant date - In the present case the said order was passed by original adjudicating authority on 23.11.2020. The same was received by the appellant on 27.11.2020. There is no denial about the said date of Communication. The appeal filed before Commissioner (A) on 25.1.2021 is therefore two days prior the expiry of the statutory period of limitation i.e. 2 months. The findings of the Commissioner (A) are therefore held wrong. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (4) TMI 1143
  Seeking to defreeze/deblock the bank accounts of the present petitioner - issuance of summons under Section 70(1) of the of the CGST Act, 2017 and Section 70(1) of the GGST Act, 2017 - HELD THAT:- It appears that the electronic credit ledger maintained by the writ applicant Company has been blocked. This action appears to be in exercise of powers under Section 86A of the Act, 2017. It has been further pointed out that yesterday, the bank accounts have also been freezed. Issue Notice to the respondents returnable on 31.03.2022.

  ---

• 2022 (4) TMI 1142
  Classification of services - rate of GST - coal handling and Distribution charges collected in respect of supply of coal handling and distribution services - liable to discharge tax liability at 18% as per work order issued by the customer subsequent to his coal (only) order or not - clubbing of coal handling and distribution service ordered by customer separately and subsequently with supply of coal to understand that as a composite supply of coal and taxable at 5% or not - HELD THAT:- From the submissions of the applicant, it is seen that the sale of coal and Coal Handling and Transportation are two separate supplies rendered ordinarily by them to their customers. They have stated three scenarios of supplies which are (i) Sale of coal alone-coal simpliciter; (ii) Supply of Handling and Transportation service alone and (iii) Sale of coal first and subsequent supply of Handling and Transportation service. Hence these supplies can be rendered separately also and they are not naturally bundled in the ordinary course of business. The supply of coal done through a separate purchase order and the supply of Coal Handling and Distribution of coal done through a subsequent work order are two individual supplies which are not rendered in conjunction with each other and have to be treated as independent and separate supplies only. Hence the supply of coal is liable for 5% GST and the supply of service of handling and distribution is liable for 18%.

  ---

• 2022 (4) TMI 1141
  Input tax credit - steel, cement and other consumables (Annexure attached) to the extent of their actual usage in the execution of the works contract service when supplied for construction of immovable property, in the form of the factory which is an Integrated Factory building with Gantry Beam, which in turn used for mounting across the pre-cast concrete beams, poles and over which the crane would be operated - Structures, Pre cast, reinforced concrete beams, poles etc. (purchased as it is) which are used as supports to mount and operate the crane over 10 metres from ground, as shown in the pictures attached - Other capital goods, like rails which are fixed over the concrete arms for smooth travel of the over-head crane - HELD THAT:- Perusal of the agreement and invoices reveal that all pertain to Composite supply of Works Contract services of Construction falling under SAC 9954 and availed towards construction of factory premises to the applicant. It is the contention of the applicant that as per the Explanation in Section 17 of the GST Act, Plant and Machinery includes foundation and Structural Supports, however there is no definitive provision when such foundation or structural support simultaneously carries the load of a roof or function as side wall also. The applicant has not furnished any documentary proof for purchase of the Pre-cast/supports, as it is, for which the credit eligibility is sought. Also, the applicant has sought their eligibility to credit in respect of other capital goods like rails. Again the applicant has not furnished the details of other capital goods and also the factual details as to whether rails are procured by them per-se, or rails are also laid as a part of Works Contract services. The agreements and the copies of Invoices furnished in support of the questions raised by them shows that they have availed the services of Works Contract of construction of Integrated Factory. The applicant procures services of Works Contract of Construction of Integrated Factory Premises designed to take the load of various Plant and Machinery to be housed for operations. The incremental foundations made is not the foundation with which the Plant and Machinery are fixed to earth , which is held as eligible along with the Plant and Machinery as per the Explanation under Section 17 of the GST Act. Also, the applicant has not established that they individually procures steel, cement and other consumables for the works executed by their suppliers, thus the invoices for such goods have not been established to be in the name of the applicant. Therefore, the credit of steel, cement and other consumables even in proportion to the incremental volume of the earth foundation, side walls, beams, etc are not available as credit to the applicant. No ruling is extended on the Pre-cast, Reinforcements, supports said to have been purchased as it is by the applicant and Other Capital goods as the required facts of procurement and documentary substantiation is not made. Input Tax Credit of GST paid on Steel, cement and other consumables are not available for the applicant - The eligibility to credit of GST paid on structures, Pre cast, reinforced concrete beams, poles etc. (purchased as it is) and other capital goods are not answered as the question is not substantiated with the factual documents.

  ---

• 2022 (4) TMI 1140
  Maintainability of Advance Ruling application - Payment of IGST/Compensation Cess on import of goods - requirement to follow the procedure prescribed in Explanation to Rule 96 (10) of CGST Rules, 2017 vide Notification 16/2020 - Central Tax dt. 23 rd March 2020 and effective from 23.10.2017 - entitlement to export goods on payment of IGST and claim refund - Rule 96(10) of COST Rules, 2017 read with Section 16(3) of IGST Act, 2017 - requirement or an EOU to apply in FORM RFD-01 and get refund under Rule 89 (4) vide Notification No. 75/2017 Dated 29-12-2017 applicable w.e.f. 23.10.2017 read with Section 16 (3) of IGST Act, 2017. HELD THAT:- The question in respect of applicability of a notification issued under the provisions of the Act is covered under the ambit of this authority. In the case at hand, the applicant has stated that the question pertain to the applicability of Notification No. 16/2020-CTR dated 23.03.2020. On perusal it is seen that there is no notification No. 16/2020-C.T.(R) dated 23.03.2020 but there is a notification No.16/2020-Central Tax dt. 23-3-2020. The said Notification No. 16/2020 dt. 23.03.2020, amends the CGST Rules 2017. Among the various amendments proposed to the Rules, in the said Notification, vide Si. No. 10 of the said Notification, an Explanation was inserted in Rule 96(10)(b), with effective from 23rd October 2017, the related amendment made to Rule 96(10) which is relied on by the applicant - it is evident that Notification, the applicability of which is raised before us, amends the Rules with the insertion of the explanation is to Rule 96(10)(b). Rule 96 (10) of the CGST Rules 2017 restricts the circumstances for a person claiming Integrated Tax paid on exports of goods or services. This authority do not have jurisdiction to admit questions relating to refund of any tax paid by the applicant as per Section 97(2) of GST Act - thus, these questions are not admissible for ruling before this authority. Whether it is compulsory for an EOU to procure goods/services without payment of tax from domestic suppliers as contemplated vide Notification No. 48/2017-Central Tax dated the 18th of October 2017 read with Section 147 of CGST Act, 2017? - HELD THAT:- Ruling means a decision extended in relation to the supply made or proposed to be made by the applicant. In the case at hand, the question is on the procurement to be made by the applicant and not on the supplies made or proposed to be made by them. The subject issue is related to receipt of supply with or without tax for exports. As per section 95(a) only the supplier of goods or services or both alone is eligible to seek advance ruling. The applicant being recipient in respect of the question, it is noticed that this question is also outside the purview of the Advance Ruling Authority under 97 (2) of the GST Act. Application dismissed.

  ---

• 2022 (4) TMI 1139
  Classification of services - Valuation - Pure Agent - portion of the certain additional services viz., payment of road tax/registration fees, insurance premium, etc., rendered by the applicant in the course of its Leasing of the vehicle/s to the Lessee - falls under the category of services of a pure agent or not - recovery of Motor Vehicle Registration fee, Motor Vehicle life Tax RTO charges etc., by the applicant from the lessee for the registration of the vehicle - forming part of taxable supply or not - HELD THAT:- It is seen that they enter into a Master Agreement for operating lease with their lessee outlining the terms and conditions for such operating lease to be extended by them to the lessee. It is also seen that the applicant enters into supplemental Operating Lease agreement when the Lessee approaches them to lease a desired vehicle wherein the terms and conditions of the Master Agreement are referred and agreed to be adopted. Thus, it is evident that the applicant extends the services of Operating Lease to the Lessee. A careful reading of some of the following clauses of the agreement reveals that the ownership of the leased equipment does not pass on to the Lessee and remains with the Applicant, as is the dicta of an Operating Lease - Operational leasing is a taxable supply of service under the GST Act. From the flow chart indicating the leasing supplies, it is seen that presently, the applicant arrives at the EMI considering the entire value including the on road components charged on them and the lease rental is fixed on monthly basis. Valuation of supply - whether the On-road Component raised through a Debit note to be considered as additional services in which the applicant is a Pure agent or should form part of the value of supply of Operational lease undertaken by them? - HELD THAT:- As per Section 15, the value of a supply, where the supplier and the recipient are not related and the price is the sole consideration, is the transaction value, which is the price actually paid or payable for the said supply. In the case at hand, the applicant purchases the vehicle identified by the lessee from the dealer also identified by the lessee and supplies the vehicle as Operational lease . The supply under consideration in the instant case, is the supply of the vehicle by the dealer to the applicant. The dealer and the applicant are not related persons and therefore the consideration charged by the dealer for the supply of the vehicle to the applicant is the Transaction Value for the purposes of GST. From the submissions, it is seen that the Dealer raises a Tax Invoice towards the basic price of the vehicle with the applicable GST levies and a Debit Note towards the On-road Component comprising of Registration charges, road tax, etc. Payment of On-road components such as registration fees, Insurance fees etc., are mandatory for the vehicle to be able to be used on road, as per the provisions of Motor Vehicles Act - In the case at hand, the vehicle is given on Operating lease , wherein the ownership of the vehicle is held by the applicant and through the terms and conditions for the leasing transactions, the applicant has permitted the lessee to register the vehicle in the name of the lessee. The fact that the vehicle is allowed to be registered in the name of the lessee does not alter the other fact that the applicant is the owner of the vehicle and the lessee is a mere bailee of the goods on account of the applicant - The applicant is not paying these charges on behalf of the lessee to the dealer but is paying the charges to make the vehicle usable on road following the provisions of Motor Vehicle Act and related statutory provisions etc before leasing such vehicles to the lessee for operations. The applicant has failed to establish themselves as a pure agent and therefore the expenditure or cost incurred by the applicant in respect of the On-road components are incurred by them in the transaction of Purchase of vehicle for the supply of Operational lease to their recipient. In this connection, it is pertinent to note that section 15(2) of the GST Act, provides that any tax/duty levied under any other law and any incidental expenses incurred should also form a part of the Transaction Value . Applying the same to the case at hand, the On-road components are incidental charges incurred by the applicant in purchasing the vehicles for supply under the Operational lease to the Lessee. Therefore, the value of On-road component cannot be considered as additional charges or the applicant can t be held as acting as a Pure agent in respect of supply of the On-road Component . Additional payments made by the Applicant towards Motor Vehicle Registration fee, Motor Vehicle life Tax, RTO charges etc., for getting the vehicle to use on the Road, which are recovered from the Lessee, forms part of the supply of Leasing services and therefore should form part of the taxable supply.

  ---

• 2022 (4) TMI 1138
  Classification of goods - rate of GST - HSN Code - PSA Medical Oxygen generation plant - tax benefit for the hospital for installing PSA Medical Oxygen plant - HELD THAT:- It is evident that the air Separators are classifiable under CTH 8421. In the case at hand, the product, PSA Oxygen Generation Plant manufactured and supplied by the applicant is an Air Separator as has been brought out in para 8.1 above, therefore, the Product is classifiable under CTH 8421. In view of the above, it is held that the product PSA Medical Oxygen Generation Plant is classifiable under CTH 8421 39 and more specifically under CTH 8421 39 90. Applicable rate of tax - HELD THAT:- The PSA Oxygen generator is liable to CGST @ 9% under the above SI.No. of Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 and SGST at 9% under SI.No. 322 of Schedule-III of Notification G.O (Ms) No.62 (No. II(2)/CTR/532(d-4)/2017, TNGST (rate) dated 29-6-2017. Tax benefit for the hospital for installing PSA Medical Oxygen plant - HELD THAT:- As the matter raised in the question falls outside Section 97(2), this question is not admitted and therefore rejected.

  ---

• 2022 (4) TMI 1137
  Calculation of GST - used/second hand gold jewellery or ornaments from persons who are not registered under GST - at the time of sale of such goods there is no change in the form/nature of such goods and ITC will also not be availed on such purchase - whether GST is to be paid only on the difference between the selling price and purchase price as stipulated under Rule 32(5) of CGST Rules, 2017? - failure to furnish the substantiating documents as required by this authority - HELD THAT:- Applicant is stated to be engaged in the business of buying and selling of old/used/second hand gold jewellery/ornament from the unregistered person, who are all general public. They have stated that these articles will be sold as such to the end consumers, i.e., the used/second hand gold ornaments so purchased are sold in the same form in which they are purchased to another registered or unregistered person, except for some minor processing in the form of cleaning and polishing, without altering the nature of such ornament/jewellery. It is seen that the applicant is engaged in taxable supply of jewellery. They are dealing in buying the jewellery from the individuals as seen from the document furnished. To substantiate that the so purchased jewellery was subjected to only minor process which do not change the nature of the goods, the applicant has not furnished any documentary evidence, though the same was specifically called for during the hearing. The applicant has submitted a sample invoice no. ARA/07/2021-2022 dt. 01.12.2021 mentioning `sale of Used Gold Ornament issued to Mrs. Aarthi Abinaya, for the gold ornaments namely stud with jimikki and ring. However, Purchase receipt number/grammage for such purchase is not indicated in the said sale invoice. Also, in the purchase invoice submitted the ornaments said to have purchased do not include the Stud with Jimikki and ring and hence from the furnished documents, we are constrained to verify the claim of the applicant that he undertakes sale of used goods. Advance ruling is a facility extended and the person seeking the same has to furnish the details as required by this authority to verify and pronounce the ruling - In the instant case, from the documents furnished, there is no clear cut link between purchase sale, and the applicant do not furnish the purchase details and grammage in the sale invoice. Thus the applicant has not furnished with the documentary proof that he satisfies the conditions provided under Rule 32 (5) enabling him to adopt the differential value as prescribed in the said rule. Hence, No ruling is extended.

  ---

• 2022 (4) TMI 1136
  Classification of goods - rate of GST - HSN Code - solar pump controller - to be classified under CTH 8504 or not - HELD THAT:- As per Chapter Note 2 to Chapter 85, Heading 8501 to 8504 do not apply to goods described in Headings 8511, 8512, 8540, 8541 or 8542. On perusal of the Headings 8511, 8512, 8540, 8541 and 8542, it is clear that the product in hand do not fall under these Headings and the product being a Convertor, is likely covered under CTH 8504 above, more specifically under CTH 8504 40 90. It is further seen from the Explanatory notes, that the apparatus of this group are those used to convert electrical energy in order to adopt it for further use. In the present case, it is seen form the product overview that the applicant s product is designed and manufactured exclusively for pumps (ACIM/PMSM). Their product is an electronic controller connected between the solar submersible pump which is submerged into the bore well and the solar panels. It takes power from the solar panel which is a DC power and drives the ACIM/PMSM pumps. The built in Maximum power point tracking (MPPT) algorithm optimizes the performance of the pump by utilizing the maximum power from the solar panel and also regulates the voltage and current coming from the solar panel - Thus, it is evident from the facts and the explanatory notes to CTH 8504 that the applicant s product merits classification under Chapter 85 in CTH 8504 and more specifically under CTH 8504 40 90- as Static converters(others); in as much as the Explanatory notes has specifically stated that incorporation of auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group. Rate of Tax - HELD THAT:- In the case at hand, it is seen that the product solar pump convertor drive is to be placed between the solar panel and the submersible pump and the power from the solar panels are converted by this device when connected between the panels and pump; maximise the power availability to the Load, i.e., the submersible pumps. Further, the drive provides for remote monitoring support and is compatible and may be upgraded as an USPC [Universal Solar Pump Controller] - In the instant case, the product has MPPT, IP(65) protection, dry run protection and such other features as stipulated in the above specifications, which shows that the product is a stand-alone device and when connected to solar panel converts the solar power into AC, optimizes the power and delivers it to the load, i.e., the submersible pump making such pump as solar power driven pump. The applicable rate of tax on the above said product, when supplied for integration with solar panels and AC submersible pumps, as discussed at para 8 above, as effective from 01.10.2021, is CGST @ 6% as per Si. No. 201 A of Schedule II of Notification 01/2017-CT (Rate) dated 28.06.2017 as amended vide Notification No.8/2021- Central Tax (Rate) dated: 30.09.2021 and SGST @ 6% as per Sl. No 201 A of Schedule-II of Notification No. II (2)/ CTR/532(d-4) (G.O. Ms. No 62, CTR dated: 29.06.2017) as amended vide Notification G.O.Ms. No 121(TN) dated: 04.10.2021 w.e.f. 01.10.2021.

  ---

• 2022 (4) TMI 1135
  Classification of supply of goods/service - rate of GST - construction of efficiency hostel, extension of school of basic science, extension of mechanical science extension of school of infrastructure of IIT at Argul Campus Bhubaneswar, Odisha Construction of New infrastructure 2nd phase of IIT Bhubaneswar in permanent at Argul, Khurda, Odisha - supply to a Government Entity i.e. IIT, Bhubaneswar - applicability of concessional rate of tax in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 - Revision of bills/invoices - HELD THAT:- The following pre-requisites are to be satisfied in order the supply to qualify for the notified exemption. (a) Service provided or to be provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a structure meant predominantly for use as (i) an educational (ii) a clinical, or (iii) an art of cultural, establishment. (b) Services are provided to Central Government, State Government, Union Territory, a local authority, Governmental Authority or Government Entity (c) If the services provided to Government Entity, then the services must have been procured by the Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority. As per the first pre-requisite, IIT Bhubaneswar is an autonomous public institution of higher education and governed by the Institutes of Technology Act, 1961; therefore, the said construction for IIT. Bhubaneswar cannot said to be used for commerce, industry, or any other business or profession. Hence, 1st pre-requisite for the supply to qualify for the notified concession is satisfied/ful-filled - as regard the second pre-requisite it is held that IIT, Bhubaneswar is entitled to be termed as Government Entity in terms of Explanation to Notification No. 11/2017-C.T. (Rate), and also as per Notification No. 31/2017-C.T. (Rate), dated 13-10-2017 as it fulfills the necessary and sufficient conditions laid down under notification supra. It therefore leaves no doubt that IIT, Bhubaneswar is a Government Entity for the purpose of provisions of CGST Act, 2017 and OGST Act, 2017 - As per third pre-requisite, it is held that the rate of 12% is applicable from the date when the aforesaid amended Notification has come into effect or from the commencement date of the said contract whichever is later. The Works Contract Service of construction of efficiency hostel, extension of school of basic science, extension of mechanical science extension of school of infrastructure of IIT at Argul Campus Bhubaneswar, Odisha Construction of New infrastructure 2nd phase of IIT Bhubaneswar in permanent at Argul, Khurda, Odisha allotted to the applicant under sub contract basis would merit entitlement for concessional rate of GST @ 12% in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (and as amended). Revision of bills/invoices - HELD THAT:- This question does not fall under the provisions of Section 97(2) of the CGST Act, 2017; therefore, the said question does not merit discussion/consideration. Application disposed off.

  ---

• 2022 (4) TMI 1134
  Maintainability of Advance Ruling application - Classification of supply of service - rate of GST - Job work service in relation to manufacture of Coconut Oil and Coconut De-oiled cake - Job work service in relation to manufacture of Rice Bran Oil and De-oiled Rice Bran - Taxable at 5% or otherwise? - applicability of Sl. No. 26 (1) and (g) of Notification No. 11/2017-CT(Rate) dated 28.06.2017 read with Notification No. 31/2017-CT (Rate) dated 13.10.2017 - HELD THAT:- It has been expressed by the Centre Jurisdictional authority that the State authorities have already made investigations regarding the taxability of the products for which Advance Ruling is sought. Section 98 of the CGST Act 2017 /TNGST Act 2017 provides the procedure to be followed on receipt of the application and the first proviso to Section 98(2) states that the application is not to be admitted when the question raised in the application is already pending or decided in any proceedings in the applicant s case. As per Section 98 (2) of the CGST Act, 2017, any application for advance ruling involving questions already pending or decided in any proceedings in the case of the applicant under any of the provisions of this Act shall not be admitted - In the applicant case, it is seen that the State authorities have already made investigations regarding the taxability of the products for which Advance Ruling is sought for and the questions raised by the applicant in their Advance Ruling application is one of the grounds raised in the Appeal filed by the Department against the order passed by the State Tax officer, Intelligence, O/o Deputy Commissioner (ST) Intelligence, Madurai seeking reassessment. In view of the specific embargo of Section 98(2) of the CGST Act, 2017, the Advance ruling application submitted by the applicant cannot be admitted by this Authority as the proceedings are pending on the issues on which the Advance Ruling is sought for - The application is not admitted under first proviso to Section 98 (2) of the CGST/TNGST Act 2017.

  ---

• 2022 (4) TMI 1133
  Classification of services - rate of GST - execution of works contract service at Kudankulam Nuclear Power Project - applicability of S.No vi (or) vii of Notification No.24/2017 dated 21.09.2017 - requirement of payment of differential tax through debit note under GSTR 1 or not - Government entity or not - HELD THAT:- The applicant is a Joint Venture between M/s. SOM Projects Private Ltd and M/s. Varindera Constructions Limited solely for carrying out the works contract service for Kudankulam Nuclear Power Project (KKNPP), a unit of Nuclear Power Corporation of India Ltd (NPCIL) at their site, namely Anuvijay Township, Kudankulam, Radhapuram Taluk, Tirunelveli, Tamilnadu. From the submissions made by the applicant, it is observed that they have been awarded the project of constructing 360 nos of (D-type Nos., D-special-80 Nos and E-type-40 nos) residential quarters (9 blocks of G+10 floors) for residential usage of their employees at Anuvijay Township, Kudankulam. It has been stated by the applicant that this work order has been received directly from M/s. Nuclear Power Corporation of India Ltd, which is a Government entity and there is no intermediary involved in the whole scheme of transactions. Nuclear Power Corporation India Limited (NPCIL), is a Public Sector Enterprise under the Department of Atomic Energy (DAE), Government of India, incorporated on September 17, 1987 as a Public Limited Company under the Companies Act 1956 with the objective of operating the atomic power stations and implementing the atomic power projects for the generation of electricity, in pursuance of the schemes and programs of Government of India under the Atomic Energy Act and the entire shares are held by the Central Government. Thus, NPCIL is a PSE established under Department of Atomic Energy, (Central Government Department) with 100 percent equity held by the Central Government to implement atomic projects for the generation of Electricity as entrusted by the Central Government and therefore is a Government Entity . Now that it is established that the service recipient is a Government entity, the condition in clause c of SI. No. vi, which stipulates that the supplies should be procured by the said Government entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be is taken up for consideration. In the instant case, the work of construction of residential quarters has been awarded to the applicant by NPCIL - the Works contract service rendered by the applicant in construction of residential quarters fails to satisfy the condition stipulated in Sl.Nos vi of Notification no. 11/17. Thus it is clear that the service rendered by the applicant is not covered by the said Sl.no. vi of the Notification cited supra and shall attract GST at 18%. The services rendered by the applicant, i.e., construction of residential quarters for the employees of KKNPP under the contract awarded by NPCIL is not a service procured by NPCIL, the Government entity in relation to a work entrusted to it by the Central Government and hence rate prescribed in entry at Sl.No. 3(vi) is not applicable to the applicant and the question on modality of payment of differential tax to be paid is not answered as it is questioning the procedural aspect of law, which is not within the purview of Section 97(2).

  ---

• 2022 (4) TMI 1132
  Exemption form GST or not - supply of labour services for collection of seeds from forest, digging contour trenches, chal-khal (water conservation pits in hills) for soil and moisture conservation, clearing of fire lines in forest to protect forest from fire which causes damage to forest, controlled burning of portion of forest to prevent spread of fire and damage to environment - applicability of N/N. 12/2017 Central Tax (Rate ) dated 28-06-2017 or not - rate of goods and service tax applicable to such supply of services - supply of services for raising seedlings in nursery is exempted services in Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 or any other related exemption notification? - supply of services for plantation in forest is exempted or not - supply of services for creation of check-dam for Soil and Moisture Conservation is exempted services or not - deduction of TDS. HELD THAT:- Sl. No. 3 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 under Chapter Head for the service code 99 exemption has been granted to Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity, by way of any activity in relation to any function entrusted to a Panchayat under article 2430 of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. To avail the benefit of the provisions of above said notification, two conditions of the notification has to be fulfilled in letter and spirit, first one being that the receiver Of services should be the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution and the second one being that the service provided should be either be a Pure services or Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. Of the value of the said composite supply . Thus, exemption under Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017, is available only to the provider of Pure services (excluding works contract service or other composite supplies involving supply of any goods) and Composite supply of goods and services in which the value of Supply of goods constitutes not more than 25 per cent. of the value of the said composite supply , when the receiver of such services is Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity and also the services so provided should fall in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - each and every contract for Composite supply of goods and services has to be examined individually, for ascertaining the eligibility of exemption Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017. Thus, the benefit of exemption Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017, is available only if the contract is either for pure service or for Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply and on activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution only and not in any other cases. Deduction of TDS under section 51 of the Central Goods and Services Tax Act 2017 - HELD THAT:- In the instant case, the applicant has declared that in most cases the value of total contract is less than Rs. 2.5 Lakhs and this appears to be a generalized statement and not a specific one - TDS is not required to be deducted on payment made to the supplier of taxable goods or services or both, only when the value of such supply under a contract does not exceeds Rs. 2.5 Lakhs and in any other case, the provisions of Section 51 of the Act, has to be followed scrupulously.

  ---

• Income Tax

• 2022 (4) TMI 1131
  Seeking release the seized assets (jewellery) - During the search and seizure proceedings, jewellery owned and possessed by the petitioners also have been seized - HELD THAT:- We are of the view that the Principal Commissioner, Income Tax-I, Ahmedabad should look into the representation filed by the writ applicants dated 13th February, 2021 and take an appropriate decision in accordance with law. The representation appears to be quite exhaustive. It contains all the necessary particulars to enable the Principal Commissioner to arrive at a particular conclusion. We dispose of this writ application with a direction to the Principal Commissioner of Income Tax, Ahmedabad to look into the representation filed by the writ applicants within a period of 15 days from today. If need be, give an opportunity of personal hearing and pass an appropriate order in accordance with law on or before 31st May, 2022 without fail. If the order is adverse to the writ applicants, it is open for them to question the same before the appropriate forum in accordance with law. It shall also be open for the writ applicants to even question the legality and validity of the seizure itself before the Principal Commissioner, Ahmedabad.

  ---

• 2022 (4) TMI 1130
  Refund alongwith interest under Section 143(1) - Petitioner s grievance is that though there has been an intimation on 23rd November 2021 under Section 143(1) that petitioner was entitled to a refund but petitioner has not received the refund - HELD THAT:- To the petition is also annexed a photocopy of Citizen s Charter 2014, a declaration of our commitment to the taxpayers by the Income Tax Department where it says issue of refund alongwith interest under Section 143(1) of the Act will be made within six months from the date of the return and in this case, indisputably, returns was filed on 15th February 2021. Mr. Suresh Kumar requests for two weeks time to file reply. Though we are not inclined to grant any time nevertheless in view of the deadline of 31st March 2022 to complete assessment, we are granting the indulgence. Within two weeks from today, respondent no.4 and respondent no.5 (not below the rank of Assistant Director of Income Tax) shall file an affidavit in reply and serve a copy thereof explaining why the refund is not being issued. Respondent nos.4 and 5 shall also explain why the concerned officer, who is delaying the refund, should not be penalized in as much as why he should not be directed to pay the interest from his pocket on the refund. We note this because though petitioner will be getting refund with 6% interest, it is public money that is being used to pay the interest. Stand over to 13th April 2022.

  ---

• 2022 (4) TMI 1129
  Rectification of mistake u/s 154 - legality and validity of the Demand Notice on the ground that it is contrary to the Assessment Order for the said Assessment Year, dated 07.04.2021 - interest under Section 234 (C) was wrongly charged as such interest could not have been charged, there being no taxable income as income of the petitioner was assessed at loss - petitioner points out that even at this stage, the claim for TDS credit has been overlooked by the Assessing Officer while carrying out the rectification - HELD THAT:- In the circumstances, we direct respondent No.2 to pass a fresh rectification order for the Assessment Year 2018-19 considering the above grievance of the petitioner. The same shall be done within a period of 30 days from the date of receipt of a copy of this order.

  ---

• 2022 (4) TMI 1128
  Disallowance of exemption u/s. 54F claimed on long term capital gains on sale of residential property - As per AO property sold is not residential house and assessee had not declined income under the head income from house property accordingly, the AO held that the assessee is not liable for exemption u/s 54F - HELD THAT:- In support of its contention, the assessee filed certain details, such as, copy of the electricity bill of June 2012 and September October 2012 and copy of draft and receipt, payment of scheme, charges and the receipt dated 21st July, 2011 had also filed. Building material purchase bill dated 12.04.2010 and other relevant documents before us by way of a paper book stating that these documents are vital for disposing of appeal of the assessee. As claim of the assessee has been rejected by the lower authorities for the ground that assessee has not started building construction activity within three years. The benefit of Section 54F of the Act cannot be given. As the assessee could not file all the relevant details before the lower authorities at our direction assessee could file certain directions which are important for adjudication of the case. In our considered opinion and in the interest of justice, we give one more chance to the assessee and set aside the matter back to the file of the AO with the direction to go through the paper book filed by the assessee before us and thereafter decide the matter as per law. Disallowance of interest - CIT(A) confirmed the action of the AO as assessee could not submit any documents/evidences whether amount was spent for purchase of land or building material etc.- HELD THAT:- In this case assessee has taken loan for business purpose as interest has been paid on unsecured loans in a proprietary firm of the assessee. Since, the amount has not been used for construction of house, therefore, same cannot be allowed and we do not find any infirmity in the order passed by the lower authorities and therefore, we confirm the action of the lower authorities.

  ---

• 2022 (4) TMI 1127
  Addition on account of long term capital gain - Nature of land sold - the abstracts of 7x12 issued by the E-dhara Mamlatdar showing the position as on 12.10.2009 was filed wherein the name of the new purchaser was rightly mentioned in the said abstracts instead in the name of the assessee - HELD THAT:- Regarding the first contention after considering the statement of the Talati and the cross-examination made by the assessee it was found that the land was not agricultural one as stated by the Talati is not borne by any record rather the collectors order way back in 2004 already classified the land in question as agricultural land. We, therefore, agree with the decision taken by the Ld. CIT(A). Eligible for benefit u/s 54B - Whether the advance payment made by the assessee which is more than the capital gain tantamount to purchase of the property? - It is an undisputed fact that when the initial payment of Rs. 12.15 crores has been made for purchase of the new asset that too more than the amount of capital gain to the tune of Rs. 2.90 crores before the due date of filing of the return of income under Section 139(1) of the Act. Considering the CBDT s Circular No. 471 dated 15.10.1986, Circular No. 672 dated 06.12.1993 the said to be treated as construction for the purpose of Section 54/54F. Further that considering the Circular No. 672 issued by the CBDT the said amount paid out of the net sale consideration in the original asset is required to be treated as purchase / construct. Further that though the above clarification is for Section 54F, the analogy in our considered opinion has been rightly applied by the CIT(A) in the case in hand considering the facts and circumstances therein. Hence, advance payment by the appellant to purchase agricultural land from the sale proceed of the land sold by him has been rightly found eligible for benefit under Section 54B of the Act by the Ld. CIT(A) without any ambiguity so as to warrant interference. Once the main issue is decided in favour of the assessee consideration of the third limb relating to deposit of capital gain amount has become nugatory. The Revenue s appeal is, therefore, dismissed.

  ---

• 2022 (4) TMI 1126
  TP adjustment made in respect of international transaction on provision of non-binding investment advisory services by the assessee - Comparable selection - HELD THAT:- We are inclined to agree to the arguments advanced by the ld. AR that if all the 15 comparables chosen by the ld. TPO are rejected ; IDC India Ltd and ICRA Management Consultancy Services Ltd., are included, the assessee s margin would be well within the tolerance band of +/-5% of the comparables margin. Accordingly, the assessee s margin would be well within the tolerance band of +/-5% with the comparables margin as stated by the ld. AR. Accordingly, there would be no need for making any adjustment to arm s length price in respect of provision of non-binding investment advisory services. The ld. TPO is hereby directed to delete the addition made in this regard. In any case, we find that the ld. TPO grossly erred in taking entity level TNMM for the purpose of benchmarking instead of confining himself only to international transaction carried out with the AEs. The entire evidences in this regard were duly submitted by the assessee before us together with the workings thereon. Hence, the observations of the ld. TPO that the details were not made available by the assessee which warranted him to resort to entity level benchmarking is factually incorrect. Accordingly, the grounds raised by the assessee are allowed. Transfer pricing adjustment towards cost of allocation towards central and regional support services and being 50% towards software development and other IT services - HELD THAT:- It could be safely concluded that assessee had indeed availed the aforesaid services and derived benefits thereon by incurring the cost paid to AE on the basis of cost allocation based on cost allocation case depending on actual usage without any mark-up thereon. Hence, the assessee duly discharged its onus of justifying the claim of expenses paid to its AE towards cost allocation of software development and other IT services. In any case, the ld. TPO ought not to have disallowed 50% of the said expenditure on an adhoc basis. The ld. TPO is duty bound to determine the ALP of an international transaction only by following any of the five prescribed methods provided in Rule 10B of the Income Tax Rules and not otherwise. AE had charged certain costs on the assessee based on appropriate cost allocation key. In these circumstances, it could not be said that assessee had not provided any documentary services to support its claim of payment of cost allocation charges to its AE for availing various services as detailed hereinabove. In any case as stated supra, the ld. TPO had merely determined the ALP of this international transaction at Rs.Nil without benchmarking the same by using any of the prescribed methods provided in Section 92C read with Rule 10B of the Income tax Rules. Reliance again is placed on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Johnson Johnson Ltd.[ 2017 (3) TMI 1520 - BOMBAY HIGH COURT] . Accordingly, we direct the ld. TPO to delete the transfer pricing adjustment made in respect of cost allocation towards central and regional support services. The ground No.2 raised by the Revenue is hereby dismissed. Disallowance of prior period expenses - HELD THAT:- From the evidences, it is evident that the said expenses have been crystallized during the year under consideration. It is not a case of the Revenue that these expenses were indeed claimed as deduction by the assessee in A.Y. 2006-07 itself. The genuinety of the expenditure together with its business purpose is not doubted by the Revenue. Hence, the same cannot be subject matter of disallowance merely on the ground that bills were dated prior to 31/03/2006 in respect of services rendered prior to 31/03/2006. Admittedly these invoices were received only during A.Y.2007-08 and the expenditure has been crystallized during the year. In these circumstances, the said expenditure cannot be disallowed. Accordingly, we direct the ld. AO to grant deduction for Rs. 10,00,972/-. AR during the course of arguments submitted that a sum of Rs. 50,205/- represent expenses inadvertently accounted in the A.Y.2007-08 which was rectified in A.Y.2007-08 as the same was already granted in A.Y.2006-07. Similarly, we find a sum of Rs. 50,205 was debited on 10/04/2006 as expenditure on payment basis and the same was reversed on 11/04.2006 and credited to the same business promotion account. However, proper explanation has not been granted by the assessee in this regard. Hence, the disallowance made by the ld. AO treating the same as prior period expenses is hereby confirmed.

  ---

• 2022 (4) TMI 1125
  Unexplained cash credit under section 68 - AO was not satisfied with the contention of the assessee on the reasoning that there was no evidence available on record suggesting that additional 3 bank accounts belongs to the assessee as Benamidar - AO also did not believe on the contention of the assessee that the part of the amount of cash deposit was out of the money available with the impugned society - HELD THAT:- Assessee in the settlement commission has disclosed 19 bank accounts of which he was the Benamidar. These 3 additional bank accounts were also duly disclosed in the petition filed before the settlement commission which were also admitted as the bank accounts of the Benamidar. A report was also called upon under rule 9 wherein the learned ld. PCIT has also admitted the assessee as the Benamidar of these 3 bank accounts. The admission by the learned Ld. PCIT in his report leaves no scope of confusion for the AO to draw an inference against the assessee that it was afterthought. Accordingly, we hold that the assessee was the Benamidar of these 3 bank accounts. At this juncture, we are inclined to mention that there were total 19 bank accounts which were used as the Benamidar. But the issue that arising from the order of the AO is limited to the extent of 6 bank accounts only. Accordingly, we are not inclined to give any finding on the remaining bank accounts which have been accepted as the Benamidar. Whether the cash book prepared for the financial year 2004-05 and the cash balance (opening as on 1 April 2004), should be considered as the cash available with the assessee for the purpose of depositing the same in the bank account? - AO has not brought anything on record suggesting that the assessee has made investment or utilized the impugned cash withdrawal from the bank in the financial year 2004- 05 for some other purpose. In the absence of such finding, the presumption goes in favour of the assessee that such cash was available with him which has been utilized for making the deposit in the year under consideration. At this juncture, it is also important to note that it was submitted by the assessee before the learned CIT-A that he has prepared the cash book for the period beginning from 1st April 1999 till 31st March 2006 to justify the availability of cash in hand in his books of accounts. But the AO has never questioned to the assessee about the cash available in the earlier years with the assessee.Thus in the absence of any question raised by the AO to the assessee about the availability of cash in the earlier years, the same cannot be doubted. Whether the cash available with the society can be considered as deposits made in the bank account of the assessee? - The crucial issue arises if it is believed that there was no money received by the assessee from the society which was deposited in the bank accounts as discussed above, there would be negative balance of the cash and the same is liable to be taxed. If it is done so, then the closing cash in hand of the assessee shall automatically increase by the amount which was purported to have been received from the society. In that event, the application made before the settlement commission showing the opening balance as on 1 April 2006 of Rs.50 lakhs should be enhanced by the amount claimed to be received from the society which ultimately would reduce the tax burden upon the assessee before the settlement commission. However, the order of the settlement commission has reached to the finality wherein the opening cash balance of Rs.50 lakhs was shown by the assessee. Thus, if we deny the claim of the assessee for having received the money from the society, it would lead to the double addition of the same item of the cash receipt which is unwanted under the provisions of law. Firstly, the amount of cash receipt from the society will suffer from the tax in the year under consideration and secondly, the assessee failed to claim the benefit of the higher amount of available cash in hand as on 1st April 2006 before the settlement commission which eventually has already suffered the tax again. Thus, to avoid the double taxation, we are inclined to admit the contention of the assessee that he has received cash from the society which was utilized to deposit in the bank accounts. Thus we direct the AO to delete the addition made by him under the provisions of section 68 - Decided in favour of assessee.

  ---

• 2022 (4) TMI 1124
  Exemption u/s 11 - denial of benefit as activities of the assessee were not in consonance with its object clause being charitable in nature - AO was of the opinion that the activities of the assessee are in the nature of religious which were camouflaged as charitable in nature, thus the activities carried out by the assessee were not in accordance with the trust deed - Whether the activity of the assessee in relation to the construction of the prayer hall is religious in nature ? - HELD THAT:- CIT-A has allowed the appeal of the assessee after passing the detailed and reasoned order - DR at the time of hearing has not brought anything contrary to the finding of the learned CIT-A. In this regard we find support and guidance from the order UNITED BREWERIES LTD. [ 2010 (1) TMI 86 - KARNATAKA HIGH COURT] wherein held that in the absence of any material on appreciation of which material the finding is required to be recorded, there is no question of the matter being remanded to the Tribunal as the Tribunal will not be able to record a finding in the absence of any material. The conclusion of the Tribunal to reverse the well considered and well recorded findings of the assessing authority and the first appellate authority, on disallowing claim it is nothing short of perverse conclusion as it is neither conclusion based on any material on record nor after giving any reasons to reverse the findings of the assessing authority and the first appellate authority who have givenwell supported reasons and discussed the material available. Whether the advance made by the assessee is in violation of the provisions of section 11 read with section 13(1)(d)? - We note that the advance was made by the assessee in the financial year 2011-12 which was subject to the assessment under the provisions of section 143(3) of the Act and there was no allegation against the assessee for having contravened the provisions of section 11(5) read with section 13(1)(d). Likewise the amount of advance received back in full in the assessment AR 2016-17 which was also the subject matter of assessment under section 143(3) of the Act but no adverse inference was drawn by the AO during the relevant assessment proceedings. Accordingly, the case of the assessee was in its favour based on the principles of consistency. Furthermore, the assessee has achieved its own goals by advancing money without charging any interest to the institution which was engaged in charitable activities. Thus no adverse inference can be drawn against the assessee Not applied the income derived from property held under trust for the purpose of charitable activity and therefore it is not eligible for exemption under the provisions of law - As provision of section 11(1)(d) provide that voluntary contribution made with a specific direction which shall form the part of corpus of the trust will be excluded from the income. Under the provision of section 11(1)(d) only twin condition that the contribution has been made voluntary and made with specific direction has to satisfy. As such with regard to corpus donation there is no criteria to apply the 85% of receipt toward charitable purpose. Coming to the case on hand, we find that out of the total receipt of Rs. 8,21,15,600/- a sum of Rs. 5,83,47,006/- represents the corpus fund which was received for the specific purposes i.e. construction of prayer hall. Thus in our considered view, the corpus fund represents the capital receipt which has to be utilized for the specific purposes and therefore the same cannot be subject to tax being receipt in the nature of capital. See SRI DURGA NIMISHAMBA TRUST [ 2011 (9) TMI 576 - KARNATAKA HIGH COURT] . Other receipts i.e. interest income and regular donations - We find that the assessee has incurred an expense of Rs. 30.92 Lacs leaving a surplus amount of Rs. 2.06 crore approx. which in our considered view at the most can be brought to tax in the situation where the benefit of section 11 is denied to the assessee. Admittedly, in the case on hand, the benefit of section 11 has been denied to the assessee for the activities carried out for the construction of the prayer hall. Accordingly, we hold that the activity of the assessee was in consonance with the object clause and therefore the assessee is entitled for the exemption under section 11 of the Act. Hence the ground of appeal of the revenue is hereby dismissed.

  ---

• 2022 (4) TMI 1123
  Disallowance of interest expense u/s 36(1)(iii) - assesses had given interest free advance to various parties for acquiring immovable properties.- AO was of the opinion that the assessee has not been able to prove the nexus of amounts advanced to the sources of interest free funds i.e. share capital, reserve the interest free loans - CIT-A deleted the addition - HELD THAT:- CIT-A came to a finding that the appellant had sufficient interest free funds as against the advances made during the year under consideration and therefore the assesses case is squarely covered by several case laws including that of Gujarat State Fertilisers and Chemicals Ltd [ 2013 (7) TMI 701 - GUJARAT HIGH COURT] , CIT vs. Gujarat Narmada Valley Fertilisers Corporation Ltd [ 2014 (3) TMI 847 - GUJARAT HIGH COURT] and CIT vs. Raghubir Synthetics Ltd,. [ 2013 (7) TMI 806 - GUJARAT HIGH COURT] - Furthermore it was observed that the assessee s case is squarely covered in assessee s own case for Assessment Year 2011-12 [ 2019 (2) TMI 1889 - ITAT AHMEDABAD] , 2013-14 [ 2019 (3) TMI 1836 - ITAT AHMEDABAD] and 2014-15 [ 2020 (12) TMI 558 - ITAT AHMEDABAD] wherein on the same facts the disallowance made by the learned AO has been deleted and on that basis relying upon the same the learned CIT(A) deleted the addition made against the assessee. We have further considered the order passed by the Coordinate Bench in assessee s own case for Assessment Year 2013-14 and 2014-15 whereupon we find that the issue is identical and therefore, in our considered opinion the order passed by the Ld. CIT(A) in deleting the addition made by the Ld. Assessing Officer is just and proper so as to warrant interference. - Decided against revenue. Disallowance u/s 14A - assessee company had investment which yielded exempt income and the assessee has debited interest expense on borrowed funds.- HELD THAT:- We find that the Ld. CIT(A) considered the order passed by his predecessor on the similar facts on the identical issue in the appeal preferred by the assessee itself for A.Y. 2011-12 [ 2019 (2) TMI 1889 - ITAT AHMEDABAD] - We have further considered the order passed by the Coordinate Bench in assessee s own case for A.Y. 2013-14 [ 2019 (3) TMI 1836 - ITAT AHMEDABAD] and 2014-15 [ 2020 (12) TMI 558 - ITAT AHMEDABAD] whereupon we find that the issue is identical and therefore, in our considered opinion the order passed by the Ld. CIT(A) in deleting the addition made by the Ld. AO is just and proper so as to warrant interference. Therefore, the ground of appeal preferred by Revenue is found to be devoid of any merit and hence dismissed. Disallowance u/s 14A of the Act while computing books profits u/s under section 115JB - HELD THAT:- We have further considered the order passed by the Ld. CIT(A) while deleting the order passed by the Ld. AO. It appears that since the disallowance has already been deleted by the Ld. CIT(A) which has been confirmed by us the disallowance while computing income under Section 115JB has also been deleted as found to be justified and hence upheld. This ground of appeal, therefore, found to be devoid of any merit and hence dismissed.

  ---

• 2022 (4) TMI 1122
  Exemption u/s 11 - assessee is a charitable trust registered u/s. 12AA - AO calculated the deduction u/s. 11(1)(a) at the rate of 15% on actual receipt of the assessee passed the order accordingly - HELD THAT:- CIT(A) is mentioned that the deduction should not be on hypothetical income. But the gross income which was received by the assessee during the year is not hypothetical. The action directed by the Ld. CIT(A) is totally devoid of any logic. The gross income is entered in the books of the assessee and accordingly reflected in final accounts. The gross income should be ascertained from books of accounts of the assessee-trust. The calculation on actual receipt of assessee made by the Ld. AO is contrary to the view of the Act. Having regard to the clear pronouncement of their Lordships of the Supreme Court [ 2000 (11) TMI 4 - SUPREME COURT] the assessee is eligible for deduction u/s. 11(1)(a) of the Act. Accordingly the grounds of the assesses are allowed.

  ---

• 2022 (4) TMI 1121
  Revision u/s 263 by CIT - Addition u/s. 69 - HELD THAT:- It is not in dispute that the assessee could not produce requisite witnesses before the authorities below to explain the source of cash deposit in the bank account. The impugned order also reveals that the Ld. CIT(A) has not decided the appeal on merits but dismissed the same only for want of representation on behalf of the assessee. In the circumstances and in the interest of justice, we deem it proper to remand the case back to the file of Assessing Officer for making assessment afresh after giving an opportunity to the assessee to put up its case and to produce requisite witnesses before the Assessing Officer in support of its claim. The assessee is also directed to cooperate with the Assessing Officer and not to seek unnecessary adjournments. Accordingly, the appeal of the assessee is allowed for statistical purposes.

  ---

• 2022 (4) TMI 1120
  Penalty imposed u/s. 271(1)(c) - notice issued initiating the penalty proceedings being defective - HELD THAT:- After perusing the notices issued under section 271(1)(c) for all the impugned assessment years, even dt. 21/03/2006, it is apparent that the irrelevant portion having been not struck off by the A.O. in the said notices and the exact charge/s against the assessee as to whether he concealed the particulars of his income or furnishing inaccurate particulars of such income was not clear. As the decision rendered by the Hon ble Bombay High Court in the case of Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] is squarely applicable in the present case and even the Ld. DR has not disputed this aspect of the matter. We, therefore, respectfully following the said decision of the Hon ble Bombay High Court quash the impugned penalty imposed by the Assessing Officer under section 271(1)(c) - Appeal of assessee allowed.

  ---

• 2022 (4) TMI 1119
  Assessment of notional interest on loans - loan has been granted by the assessee to its sister concern - assessee submitted that no interest was charged from HEPL since they were facing financial difficulties - HELD THAT:- It has been explained by the assessee that during 2012-13, HEPL expressed inability to pay interest on advances since they were facing financial difficulties. Accordingly, they requested assessee not to charge interest which was agreed upon by both the parties. However, rejecting the same,AO has computed notional interest of 18% on outstanding loans advanced by the assessee. On the basis of these facts, we are of the considered opinion that the addition of notional interest is not sustainable in the eyes of law. It is trite law that only real income is to be assessed to tax unless expressly provided under the act. No statutory provision has been shown to us which mandate addition of notional interest. The assessee had debited interest expenditure during the year. As per the provisions of Sec. 36(1)(iii) AO could have disallowed interest expenditure if the interest was paid in respect of capital borrowed which was not used for the purposes of business or profession. As per the mandate of Sec. 36(1)(iii), the amount of interest paid in respect of capital borrowed for the purposes of business or profession is an allowable deduction. In the instance case AO could have invoked the provisions of s 36(1)(iii) to hold that the borrowed capital was not used for the purposes of business or profession. However, the same has not been done and the provisions of Sec. 36(1)(iii) have not been invoked. Rather Ld. AO has computed notional interest on loans advanced by the assessee which do not find support of any statutory provisions. Therefore, the action of Ld. AO, in adding the notional interest on outstanding loans, in not in accordance with law and hence not sustainable. Another aspect of the matter is that the loan has been granted by the assessee to its sister concern. Naturally the assessee had business interest in that entity. The assessee has charged interest till 31.03.2012 and thereafter no interest has been charged as per mutual understanding since the borrower entity was facing financial difficulties. The assessee did not pay interest to the shareholders till 31.03.2013. Therefore, non-charging of interest was fully justified by the assessee and the same could be said to have been out of commercial expediency. In such a case the ratio of decision of Hon ble Supreme Court in the case of S.A. Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] would be applicable wherein it was held that once it was established that there was nexus between the expenditure and purposes of business, which need not be the business of the assessee, deduction u/s. 36(1)(iii) was to be allowed. It was further held that the expression commercial expediency is an expression of wide import and includes such expenditure as prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. Further, the expression for the purpose of business is wider in scope than the expression for the purpose of earning profits . This decision has subsequently been followed by Hon ble Court in Hero Cycles Pvt. Ltd. [ 2015 (11) TMI 1314 - SUPREME COURT] . We find that the ratio of these decisions is applicable to the facts of the case considering the arguments of the revenue that that the provisions of Sec. 36(1)(iii) have been invoked. Viewed from any angle, the additions as made by Ld. AO is not sustainable - Decided in favour of assessee.

  ---

• 2022 (4) TMI 1118
  Reopening of assessment u/s 147 - notice under section 148 has been issued by a non jurisdictional AO - HELD THAT:- When it is undisputed fact that jurisdictional AO of the assessee trust is ACIT (Exemption)-2(1), Mumbai and jurisdiction has never been changed or transferred to ITO, Bareli, the very initiation of reopening by ITO, Bareli u/s 147/148 of the Act is bad in law. Because under section 120 124 of the Act only ACIT (Exemption), Mumbai is the AO of the assessee trust empowered to frame the assessment, which has never been changed or transferred to ITO, Bareli under section 127 of the Act. It is settled principle of law that when the notice under section 148 of the Act has been issued by a non jurisdictional AO, the ITO Bareli in this case, reassessment by the jurisdictional AO is bad in law and is liable to be quashed, more particularly when assessment of the assessee has admittedly not been transferred to Bareli under section 127 of the Act. So the assessment framed by the ACIT(Exemption)-2(1), Mumbai on the basis of initiation of reopening under section 147/148 of the Act is not sustainable in the eyes of law for lack of jurisdiction being void ab-initio. - Decided in favour of assessee.

  ---

• 2022 (4) TMI 1117
  Reopening of assessment u/s 147 - Addition of sales involved in clandestine removal of finished goods - addition made by the Assessing Officer on account of profit element involved in the alleged suppressed sales in the year under consideration has been deleted by the Ld.CIT(A) - HELD THAT:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of AYs 2007-08 2008- 09 [ 2017 (11) TMI 1852 - ITAT AHMEDABAD] we respectfully follow the decision of the Co-ordinate Bench of this Tribunal and uphold the impugned order of Ld.CIT(A) deleting the addition made by the Assessing Officer on account of the profit element @ 15.18% involved in the alleged suppressed sales - Decided against revenue.

  ---

• 2022 (4) TMI 1116
  Disallowance on account of bad debts written off - HELD THAT:- We find that the assessee has made a claim of bad debts in the financial statements/books of accounts the details whereof are available in the paper book - The assessee has also furnished the invoices raised in respect of which the bad debts were written off with journal entries passed for effecting those entries. We find that the authorities below have observed that amount claimed as bad debts were not correlated to the income of the earlier year which is wrong as the cross reference of the invoices which have been written off as non recoverable have duly been submitted by the assessee before the authorities below. We are of the considered view that assessee is entitled to the claim of bad debts in terms of section 36(1)(vii) read with section 36(2) of the Act. Moreover, the case of the assessee is squarely covered by the decision of the Apex Court in the case of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] wherein the Apex Court has held that mere claim of bad debts would be suffice and the bad debts ought to be allowed in terms of section 36(1)(vii) of the Act. Accordingly, we set aside the order of Ld. CIT(A) on this issue and direct the AO to allow the claim of bad debts to the assessee. Ground No.1 is allowed. Addition on account of unaccounted receipts - HELD THAT:- As decided in own case [ 2018 (5) TMI 249 - ITAT MUMBAI] Assessing Officer proceeded to make the addition without making any further enquiry. As rightly observed by the learned Commissioner (Appeals), the minimum the Assessing Officer could have done is to issue notices under section 133(6) or 131 of the Act to the concerned parties whose identities were available before the Assessing Officer, to ascertain the correct fact. When the assessee has asserted before the Assessing Officer that it has not received any such income, the Assessing Officer is duty bound to make proper enquiry before concluding that the disputed amount was earned by the assessee during the relevant assessment year. Instead of doing that the Assessing Officer has made the addition simply on the basis of AIR information, which, in our view is absolutely Incorrect. - Decided in favour of assessee. Disallowance being 10% under various heads - HELD THAT:- We note that the assessee has attached sample bills from page No.141 to 152 in respect of subscription expenses and printing and copying expenses. Besides the assessee has also filed the ledger account of miscellaneous expenses along with sample bills at page No.3 to 8. We note that the disallowance made by the authorities below is purely on adhoc basis and is on the higher side. We note that no such disallowance was made either in the subsequent year or in the earlier years. In our opinion, it would meet the ends of justice if a sum of Rs. 1,00,000/- is disallowed out of these expenses. Accordingly, we modify the order of Ld. CIT(A) and direct the AO to add only Rs. 1,00,000/-. Ground No.3 is partly allowed

  ---

• 2022 (4) TMI 1115
  Revision u/s 263 by CIT - claim of deductions under sections 80-IA and 80- IB - figure of losses in respect of MBF unit for the assessment years 2003-04 and 2004-05 was not ascertainable - separate books of accounts were not being maintained in respect of MBF unit and therefore, MBF unit was not eligible for deduction under section 80-IB - Arguments of the Assessee that revisionary order u/s 263 is barred by limitation - HELD THAT:- We find that the original assessment u/s 143(3) was completed on 31.12.2007. The reassessment u/s 148 has been completed on 04.03.2013. The order u/s 263 was passed on 27.03.2015. The order passed u/s 148 relates to deduction u/s 80IB of MBF unit and reduction of accumulated losses up to the Assessment Year 2004-05 while allowing the deduction u/s 80IB in 80IA which has been duly taken into consideration earlier during the original assessment proceedings. We find that the AO has prejudiced the accumulated losses of 8.83 crores and also considered the profit of MBF unit which has claimed 100% deduction u/s 80IB earlier. Thus, the issue of eligible of deduction u/s 80IA and 80IB in respect of various units of the assessee including MBF unit which is a subject matter of u/s 263 is not an issue before the AO during the reassessment proceedings The subject matter of the deduction in the reassessment order was the quantum of deduction but not the eligibility of the deduction and even in that case also the deduction pertaining to MBF unit but not other units whereas the revisionary proceedings dealt extensively with the eligibility of the deduction per se maintenance of separate books of accounts change of opinion by the CIT where the Ld. CIT and also the contrary reviews taken by the DRP for the successive assessment years allowing the deduction. The revisionary proceedings cannot go beyond the issue of the reassessment proceedings. In case, if any issue out of the original assessment is to be revised the limitation time for passing of such order would recon from 31.12.2007. Since the issues raised by the Ld. CIT in the order passed u/s 263 do not emanate from the assessment order dated from 04.03.2013, we hereby hold that the order of the Ld. CIT has not been held to be legally valid. Appeal of assessee allowed.

  ---

• 2022 (4) TMI 1100
  Grant of approval/registration u/s 80G - Grant rejected based upon material on record , that the assessee is not solely existing for educational purposes - assessee is registered u/s 12AA - CIT(E) observed that the assessee is primarily engaged in running an educational institution on commercial lines without any element of charity at all to public at large - HELD THAT:- This matter can be restored back to the file of ld. CIT(E) for de novo consideration of assessee s application for registration/approval u/s.80G(5) of the Act. We have observed that ld. CIT(E) issued notice dated 02.09.2017 seeking as many as 23 queries. The assessee had filed part reply before ld. CIT(E) , which is placed on record. On the next date of hearing on 18.10.2017, the assessee/counsel did not appear , and ld. CIT(E) did not give any further opportunity of hearing to the assessee, and rather dismissed the application filed by the assessee for registration/approval u/s 80G(5) of the 1961 Act on the same date viz. 18.10.2017. As assessee has averred before us that many of the findings of ld. CIT(E) are erroneous/perverse, and if one more opportunity is granted, the assessee shall produce books of accounts, vouchers and other evidences to substantiate its contentions, and the assessee shall also furnish necessary details/evidences if any other queries which ld. CIT(E) may require assessee to explain. The ld. CIT-DR has also fairly stated that the matter can go back to the file of ld. CIT(E) for denovo consideration of assessee s application. Appeal of the assessee allowed for statistical purposes.

  ---

• 2022 (4) TMI 1099
  Capital gain on land sold - Nature of land sold - whether the assessee s land in question is located within 6 kms of aerial distance or outside 6 kms of aerial distance from the municipal limits of Tambaram Municipality and that of the land in question which is in village Varadarajapuram? - HELD THAT:- JCIT has calculated the aerial distance of Varadarajapuram village from the outer limit of Tambaram Municipality measured aerially as seen from the google map positioning of GPS. Further, we noted that in the same directions, the JCIT has referred to one letter of Tahsildar dated 22.12.2017, wherein the Revenue Tahsildar has only made approximation of the land in question from the outer limit of Tambaram Municipality We have also gone through the web documents filed by assessee in her paper-book at pages 1 to 3 and particularly page 3, the land in question, when measured aerially the distance from outer limit of Tambaram Municipality is 8.14 kms (5.06 miles). Even the VAO vide his certificate dated 22.11.2017 has certified that the aforementioned land is situated beyond 7 kms from Tambaram Municipality. In entirety of facts and going through these evidences we are of the view that the land situated in village Varadarajapuram is beyond 6 kms of outer limit of Tambaram Municipality. Hence, we are of the view that the aforesaid land was not taxable because land did not fall within the distance of 6 kms from the outer limit of Tambaram Municipality measured aerially. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed. - Decided against revenue.

  ---

• Customs

• 2022 (4) TMI 1114
  Classification of imported goods - Polyester Knitted Fabrics - Viscose Synthetic Fabrics - classifiable under CTH 60063200 and CTH 55162200 or not - rejection of declared value - sufficient opportunity of hearing not provided - Confiscation - penalty - HELD THAT:- At the outset, it has to be stated that the appellant has not filed any reply to the SCN and has not attended the personal hearing. Ld. Counsel has submitted that there is sufficient evidence to show that the value of contemporaneous imports of identical goods are much different than the values given in the table in the SCN. So also, he disputes classification arrived at by the department on the basis of lab test reports. Taking into consideration the lengthy submissions made by the Ld. Counsel for appellant, it is opined that the appellant has to be given one more chance to contest the case on merits. The matter is fit for remand to the adjudicating authority who is directed to conduct de novo adjudication of the matter. The adjudicating authority are directed to complete the de novo adjudication within a period of three months from the date of receipt of this order - appeal allowed by way of remand.

  ---

• Corporate Laws

• 2022 (4) TMI 1113
  Sanction of scheme of amalgamation - Section 232(3) and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.

  ---

• Insolvency & Bankruptcy

• 2022 (4) TMI 1112
  Validity of approved Resolution Plan - appellants filed their claims in form C as Unsecured Financial Creditor - appellants have not received any communication from the IRP with regard to the admission/rejection of the claim and the Resolution Plan was approved without their participation as Financial Creditor in Committee of Creditors - HELD THAT:- It is unfortunate to record that IRP has responded to the Appellants vide IRP s letter dated 28th February, 2020 (in Appeal No. 352/2021) that the claim of the Appellants is to be made as Financial Creditor as they have given Unsecured Loan and not as Operational Creditor after verifying records by him and hence the Appellants claim as Operational Creditor was not accepted and he was asked to fill up Form C on 28.02.2020 and he filed the same on the same day. In spite of that the Resolution Professional (Respondent No. 1) has not considered their claim as Financial Creditor. The Courts of India have time and again held that the commercial wisdom of the CoC is paramount, and that the CoC in its commercial wisdom is empowered to take decision which is non-justiciable. It is now well settled in law as held by Hon ble Supreme Court in JAYPEE KENSINGTON BOULEVARD APARTMENTS WELFARE ASSOCIATION ORS. VERSUS NBCC (INDIA) LTD. ORS. [ 2021 (3) TMI 1143 - SUPREME COURT] has noted that whether a resolution plan and its propositions are leading to maximization of value of assets or not, would be matter of enquiry and assessment of the Committee of Creditors alone. Consolidated reading of all provisions and objects of the Code apart from analysis/observations stated supra, it reveals that the purpose of CIRP is to provide life to organization and not to provide death knell. Death Knell/liquidation should be the last resort. Hence no need to touch the Resolution Plan so implemented by Successful Resolution Applicant (viz. M/s Bharat Forge Limited). Prima facie, there is apparent mistake by the Resolution Professional for not considering the claim of the Appellant Financial Creditor in Company Appeal(AT)(Insolvency) No. 352 of 2021 being Unsecured Loan Holder as per the written statement of his predecessor IRP is not in good taste and accordingly, Financial Creditors, who have received the major chunk from the Resolution Applicant should appropriately refund the original claim, minus any amount received, made by the Financial Creditor as Operational Creditor (as per letter of Interim Resolution Professional dated February 28, 2020 as stated) in the same percentage as these Financial Creditors have received from Resolution Applicant i.e., M/s Bharat Forge Ltd. Appeal allowed in part.

  ---

• 2022 (4) TMI 1111
  Requirement of payment of claim of the applicant regarding the payment of dues after the commencement of the CIRP - effect of moratorium period - demand barred under Section 14 of the IBC or not - period 11.10.2019 to 30.06.2021 and for the Financial Year 2021-22 - HELD THAT:-A bare perusal of Section 25(1) shows that it is the duty of the Resolution Professional to preserve and protect the assets of the Corporate Debtor including to continue the operation of the Corporate Debtor. Admittedly it is a Real Estate Project and for the construction of the buildings a lease was granted to the Corporate Debtor under terms and conditions, which includes the payment of premium and lease rent. The claim of the Applicant that so far the amount due and payable prior to the institution of the CIRP is concerned, same has already been submitted before the Resolution Professional but so far dues which are due and payable after the initiation of CIRP in terms of the rescheduled agreement, the Applicant is entitled to get it. A bare perusal of Section 14(2) of IBC, 2016 shows that during the moratorium, the supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted - Section 14(1)(d) restrain the owner or lessor from recovery of any property where such property is occupied or is in possession of the Corporate Debtor. But as per Explanation of Section 14(1) of the IBC, this provision is subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. Admittedly, to enjoy the lease granted by NOIDA Authority to the corporate debtor, lease premium and lease rent are to be paid for during the period 11.10.2019 to 30.06.2021 as per the letter dt. 04.06.2021, sent by the Applicant to the Resolution Professional. Therefore, even if we accept the contention of the Resolution Professional that the lease rent does not fall under the categories of supplies to the essential gods and services, but in terms of Explanation of Section 14(1) of the IBC 2016 added w.e.f. 28/12/2019, the applicant is entitled to get lease premium amount as well as lease rent arising for the use or continuation of the lease during the moratorium period, failing which the moratorium will not apply for the suspension or termination of lease - as the Resolution Professional has failed to pay the lease premium and lease rent due to the NOIDA Authority, therefore, the respondent is directed to make the payment of the current amount, which is due and payable within 6 months or include the said amount as Insolvency Resolution Process Cost under Regulation 31 of the IBBI (Insolvency Resolution Process of Corporate Persons). Application allowed.

  ---

• 2022 (4) TMI 1110
  Seeking dissolution of Company - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 (IBBI Regulations) - HELD THAT:- When the matter was first heard, this Bench had directed that notices be issued to the RoC. The ROC has filed their reply stating that an Affidavit of Solvency was filed by the Director deposing that the Company was not being liquidated to defraud any person - Pursuant to the service of the notices to the ROC and IBBI, no objection has been raised by them. The voluntary liquidator has filed an affidavit confirming that neither he nor the Company has received any objection with regard to the present liquidation proceedings of the company from any authority whatsoever. The applicant states that necessary compliances of Section 59 and other relevant provisions of the Insolvency and Bankruptcy Code, 2016 read with the regulations have been stated within time, more specifically submission of the Form GNL-2 to the ROC and the intimation to the IBBI vide email, after realisation and distribution of the assets to its members and closure of the Bank account. In view of the satisfaction accorded by the voluntary liquidator by way of the present application, the said company is hereby dissolved with effect from the date of the present order - Petition allowed.

  ---

• 2022 (4) TMI 1109
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The case of respondent is that dispute was raised about quality of the goods supplied by the operational creditor. However, it is seen that the corporate debtor has even paid partly by settling before Ld. MM, Tiz Hazari. Therefore, the contention of corporate debtor regarding disputes cannot be considered. It is clearly established that the default in payment of the operational debt has occurred by the corporate debtor. Though the corporate debtor has raised dispute with regards the defective goods, but has not placed on record any document which proves the invoices were disputed. In view of the cheques issued and amount paid by corporate debtor. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute. The applicant has established its claim which is due and payable by the corporate debtor. The present application is admitted - moratorium declared.

  ---

• 2022 (4) TMI 1108
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - petition filed under section 9 against Corporate Debtor, already admitted - HELD THAT:- This Tribunal in petition filed under Section 9 of Insolvency and Bankruptcy Code 2016, by M/s. Sulpa International, admitted the matter vide order dated 11.03.2022 and initiated Corporate Insolvency Resolution Process against M/s. Savute Textiles Private Limited, which company is the Corporate Debtor in this matter. When a similar situation came up before the NCLT Chennai Bench in STATE BANK OF INDIA VERSUS MERCHEM LTD [ 2018 (1) TMI 1681 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI] , the Bench directed the applicant therein to file their claim before the IRP appointed on 15.01.2018 pursuant to the admission of Section 9 Application filed by Mr. Pradeep M.R (Operational Creditor) against M/s. Merchem Limited (Corporate Debtor), with liberty to revive the petition, in case the CIRP order in the case of Merchem Ltd. is challenged/set aside by the higher courts. Since Corporate Insolvency Resolution Process against the Corporate Debtor vide order dated 11.03.2022 is already initiated, and the Interim Resolution Professional has directed to initiate the proceedings immediately through paper publication to invite claims of all stakeholders, this application is disposed off with a direction to the applicant herein to file his claims before the IRP in the matter of M/s. Savute Textiles Private Limited, without any delay. In the event wherein, the admission order dated 11.03.2022 is set aside by any higher courts, the applicant herein is at liberty to revive this Company Petition. Application admitted.

  ---

• Service Tax

• 2022 (4) TMI 1107
  Entitlement to abatement form service tax - composite contract or not - abatement of 67% from the gross amount received for commercial construction services from the Nagar Palika - HELD THAT:- Learned Counsel for the appellant has, however, drawn attention to the tender document of Nagar Palika dated 24.12.2007, work order dated 25.01.2008 and the assessment orders of the commercial tax authority of the State Government for the period 2007-2008 and 2008-2009. However, none of these documents establish that the amount which the appellant received was for composite contract for supply/deemed supply of materials and rendering services. The mere fact that the commercial tax authority had assessed the appellant for commercial tax does not prove that the assessment was towards part of the amount received under this contract for which it received consideration for construction services. The tender document also cannot be co-related with the receipts by the appellant. The work order dated 25.01.2008 submitted by the appellant also does not indicate that the appellant is supposed to supply any goods or used goods. Therefore, the Commissioner (Appeals) was correct in not allowing the abatement of 67% from the gross receipts from the Nagar Palika. However for the financial year 2008-2009, even if the gross receipts are considered the total receipts fall below the threshold limit of Rs. 10,00,000/- during the financial year. Therefore, no service tax can be levied for the financial year 2008-2009. The demand accordingly needs to be set aside for this financial year. No interest or penalty can consequently to be levied for this financial year. The impugned order is modified by setting aside the demand for the year 2008-2009 along with interest and the penalties imposed under Sections 76 and 78 for this period. The remaining part of the impugned order is upheld - Appeal disposed off.

  ---

• 2022 (4) TMI 1106
  Condonation of delay of 813 days in filing appeal - relevant date - rectification of mistake - Whether it is 4.9.2018 the date of order in original or it is 23.11.2020 the date when the original authority communicated the order dated 23.11.2020 rejecting the ROM to the present appellant to be the relevant date under section 85(3A) of the Finance Act 1994 for period of two months therein to reckon? - HELD THAT:- Perusal of provision of section 74 of the Finance Act 1994, makes it clear that after an ROM has been filed the order wherein the mistake has been alleged can be amended in any possible way, as mentioned in the above provision, depending upon the facts of each case. This particular perusal is sufficient for me to hold that once an application for rectification of mistake has been adjudicated by the original adjudicating authority on the merits, the final order of original adjudicating authority irrespective that ROM was rejected or allowed, i.e. irrespective that the original order was amended or not, the date for original order to attain finality is the order of the said ROM application. The perusal makes it clear that the appellant assessee had since paid certain amount of tax and the demand was raised on the gross amount that the absence of the benefit of cum tax was alleged to be an error apparent on record. The submission of the learned DR that the prayer in the application was such which could be raised before the appellate authority as above plea is held to have justifiably been raised by the original adjudicating authority only, cannot be agreed upon. Single Bench of this Tribunal also in the case of OMKAR ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2017 (2) TMI 263 - CESTAT MUMBAI] has held that once the application of section 74 gets rejected by the Additional Commissioner the order of Additional Commissioner becomes final on the rejection of the said application and thus the relevant date for computation of time period under Section 85 of Finance Act is the date of decision of date of ROM and not the date of O-I-O. In the present case the said order was passed by original adjudicating authority on 23.11.2020. The same was received by the appellant on 27.11.2020. There is no denial about the said date of Communication. The appeal filed before Commissioner (A) on 25.1.2021 is therefore two days prior the expiry of the statutory period of limitation i.e. 2 months. The findings of the Commissioner (A) are therefore held wrong. Since the order of Commissioner (A) was only on the ground of limitation the present matter is remanded back to the Commissioner (A) for adjudication on merits - appeal allowed by way of remand.

  ---

• 2022 (4) TMI 1105
  Refund of unutilized deposit lying in Personal Ledger Account (PLA) - rejection on the ground of time bar - HELD THAT:- In the first place, that the Revenue has nowhere disputed appellant s claim as regards its claim that the refund it sought was nothing but the one lying in their PLA, unutilized, which was to be utilized by them towards future duty, at the time of clearance of their final product. It is also not in dispute that with the introduction of GST from 01/07/2017, the appellant s deposit in their PLA remained unutilized and hence, the refund of the same was rightly claimed. When an amount is deposited to PLA, to be appropriated towards duty which may fall due in future and there having no appropriation, the same does not pass on to the Government unless the goods are cleared, and the duty is levied, such money lying deposited in PLA cannot be utilized. With the introduction of GST from 01/07/2017, such utilization was ruled out and hence, what the appellant sought was its own money. Further, Section 11B prescribes time limitation for claiming refund of duty interest, if any, paid. In the Order-in-Original, even though Appellate Authority observed that the appellant filed a refund claim of Rs. 20,38,157/- which was the advance cash balance lying in their PLA as on 30/06/2017, but later, in the same order, has proceeded tangentially, to hold that there were lack of supporting documents, to hold that the appellant s claim was for refund of Advance Cash Payment and has tried to justify the same, finally though, rejection has been made on the ground that refund claim was made beyond one year s time limitation under Section 11B ibid. When the deposit in PLA is not disputed, the authorities cannot treat the same, just to reject a valid and rightful claim, as anything other than deposit. Though an attempt is made to give a different colour to the deposit , but justification is not forthcoming, with due support of any valid documents, anywhere in the orders of lower authority. The appellant s claim for refund of their deposit lying unutilized in their PLA is perfectly valid, which being not a duty, time limit prescribed under Section 11B ibid. could not apply. The denial of the same is held unsustainable being contrary to the settled position of law - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (4) TMI 1104
  Recovery of CENVAT Credit - purchased copper ingots and sent them directly to its job workers for converting them into copper wire rods - denial of credit on the ground that since VKM had not manufactured any ingots, it could not have supplied them to its buyers and only invoices were issued without supplying any ingots - HELD THAT:- The basis of the allegations in the show cause notice in this case and denial of Cenvat credit by the impugned order and imposition of penalties is also on the ground that M/s VKM had not manufactured any copper ingots and had only issued invoices to the appellant. This Tribunal had already decided, by a detailed order in VINOD KUMAR JAIN VERSUS C.C.E. S.T. -JAMMU KASHMIR AND OTHERS [ 2018 (5) TMI 1512 - CESTAT NEW DELHI] , that this allegation is not true and VKM had manufactured copper ingots. Therefore, no basis remains for denial of Cenvat credit to the appellant/assessee herein. Consequently, the imposition of penalty upon the assessee and Shri Anil Gupta, Director of the assessee also cannot sustain. The impugned order dated 26.09.2013 cannot be sustained - appeal allowed - decided in favor of appellant.

  ---

• 2022 (4) TMI 1103
  Re-credit - Restoration of amount in CENVAT credit account, from where the payment of duty was made - Appellant was not liable to pay duty on the finished goods for export - N/N. 30/2004-CE dated 09/07/2004 - HELD THAT:- Admittedly, the dispute with regard to rebate totalling Rs. 59,16,907 was sub judice before the Hon ble Rajasthan High Court on the date of adjustment vide orders-in-original dated 28.01.2013. The said order is patently illegal and in violation of the instructions of the Board s Circular No.13/92-CX-6 dated 4.11.1992. Further, it is found that this Tribunal in its precedent judgement in the case of Voltas Ltd. Vs. CCE [ 2006 (5) TMI 232 - CESTAT, BANGALORE ] has held that Section 11 can be invoked only when the demand proposed to be adjusted have reached finality. As the dispute relating to rebate for the amount of Rs. 59,16,907/- has been subjudice before one appellate forum or the other and passing of the adjudication orders and appellate orders pursuant to protective show cause notices 12.01.2010 is ab-initio void in the eyes of law. Such adjudication and appellate orders are declared to be nonest under law. The Adjudicating Authority is directed to disburse the sanctioned rebate amount of Rs. 85,38,790/- with interest under Section 11 BB of the Act within a period of 30 days from the date of receipt of copy of this order - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (4) TMI 1102
  Valuation - Determination of Excise Duty - amount of Assam VAT adjusted by the Appellant against the VAT remission granted under Assam Industries (Tax Exemption) Scheme, 2009 - demand on the ground that the Assam VAT collected by the Appellant was not paid to the Government exchequer and should have formed part of the assessable value of the goods removed during the period under dispute - extended period of limitation - HELD THAT:- The Appellant manufactured and cleared excisable goods, the value of which are assessed under Section 4(1)(a) of the Central Excise Act, 1944. The Appellant has availed VAT remission under Assam Industries (Tax Exemption) Order, 2005 w.e.f. March 2011. As per terms of the above remission scheme the Appellant charged and collected 100% of the VAT payable from their buyers, retained 99% of the same and paid only 1% to the State Government. Department alleged that the as per Section 4(3)(d) of the Central Excise Act, 1944, the aforesaid amount of 99% of the VAT collected from buyers, which was not paid to the State Government is not excludible and should have formed part of Assessable Value for the purpose of payment of Central Excise duty. Extended period of limitation - HELD THAT:- On perusal of Circular No.1063/2/2018-CX dated 16.02.2018 and decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] , it can be held that the differential duty, if any, is to be held as payable only for the period falling within the normal time limit. The extended period of limitation will not be available to the Department to raise such demand. The matter is remitted to the Ld.Adjudicating authority only for the limited purpose of re-quantifying the demand falling within the normal period of limitation - appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2022 (4) TMI 1101
  Input Tax Credit - Reserved Input Tax Credit (RITC) - purchase of plastic chairs which were not sold but used as scrap/raw material for manufacturing of new chairs - whether Input Tax Credit is available only when the purchase goods have been sold in the same form and condition either within the State of U.P. or outside the State of U.P.? - HELD THAT:- Admittedly, the revisionist is a registered dealer under the VAT Act. It is not in dispute that for manufacturing of plastic chairs, raw materials were used. Admittedly, the chair purchased by the revisionist were used as raw material after making the said chairs as scrap on which the tax were already paid. The authorities have made RITC on the ground that the purchased chair have not been sold in the same form and condition. The authoritie have lost sight of the fact that the revisionist is manufacturer of plastic chair as well as trader also. It is not in dispute that the plastic chairs which were purchased after payment of tax have been used for manufacturing of plastic chair. Once this fact has not been disputed, the authorities were not justified in reversing the ITC of the revisionist. Section 13 (1) (A) of VAT Act specifically provides that if the purchased goods are used in manufacturing of any taxable goods except non VAT goods and thereafter if, such manufactured goods are sold either inside the State or in the course of interstate trade or commerce, the full amount of input tax has to be given - Admittedly, respondents dealer after purchase of chair used the same in manufacturing of new chair, then as per the above mentioned provisions/serial no. 2 of the table entitles full input tax credit to it. The said claim of ITC has wrongly been denied. Learned Standing Counsel could not show any such restrictions provided under the Act that on the activity of the revisionist there is such prohibition for reversal of input tax credit. In absence of such a provision being pointed out by learned Standing Counsel, the revisionist is entitled for claim of its input tax credit on the purchase of its use in the manufacturing of new chairs. The revisions are allowed.

  ---