TMI Tax Updates - e-Newsletter
April 29, 2022

Case Laws in this Newsletter:

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

Articles

1. SECTION 138 NI ACT VERSUS MORATORIUM IN IBC

   By: Mahi yadav

2. Inclination or disinclination of judges (even officers, authorities, members) should not come in way of justice and in not deciding matters properly.

   By: DEVKUMAR KOTHARI

3. TEMPORARY SURRENDER AND REVIVAL OF PROFESSIONAL MEMBERSHIP OF INSOLVENCY PROFESSIONAL

   By: DR.MARIAPPAN GOVINDARAJAN

4. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. GSTR-1/IFF enhancements deployed on GST Portal

2. Status Note on GST compensation released to States/UTs

Notifications

Companies Law

1. G.S.R. 320 (E) - dated 27-4-2022 - Co. Law

Companies (Registration of Charges) Amendment Rules, 2022.

Customs

2. 12/2022 - dated 28-4-2022 - ADD

Seeks to levy anti-dumping duty on imports of of “N, N’ – Dicyclohexyl Carbodiimide (DCC)” originating in or exported from China PR for a period of five years

3. 35/2022 - dated 26-4-2022 - Cus (NT)

Inland Container Depots for loading and unloading of goods - Seeks to amend Notification No. 12/97-Customs (N.T.) dated the 2nd April, 1997

Income Tax

4. 46/2022 - dated 27-4-2022 - IT

Central Government notifies countries and specified territories

SEBI

5. SEBI/LAD-NRO/GN/2022/82 - dated 27-4-2022 - SEBI

Effective date of certain Amendments - Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/55 - dated 28-4-2022

Reduction of timelines for listing of units of Infrastructure Investment Trust (InvIT)

2. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/54 - dated 28-4-2022

Reduction of timelines for listing of units of Real Estate Investment Trust (REIT)

GST - States

3. Circular No 8/2022 - dated 23-4-2022

Clarification regarding extension of limitation under GST Law in terms of Hon’ble Supreme Court’s Order.

Customs

4. Instruction No. 4/2022 - dated 27-4-2022

Implementation of Notification No. 28/2021-Customs dated 24th April, 2021

Highlights / Catch Notes

GST

• Court Stays GST Recovery on Mining Leases, Royalties, and DMF Contributions; Assessment Proceedings May Continue.

  Case-Laws - HC : Levy of Service Tax and / or GST on royalty and District Mineral Fund (DMF) - royalty for grant of mining lease - royalty has been considered to be a tax or profit pendre - As such, there shall be stay of recovery of GST for grant of mining lease/ royalty/DMF from the petitioners till further orders. However, the Revenue is not restrained from conducting and completing the assessment proceedings. - HC
  Visit to Get Source

  ---

• High Court Orders Reconsideration of Request for Investigation Statements in Rice Tax Case; Cites Natural Justice Violation Concerns.

  Case-Laws - HC : Seeking grant of copy of statements recorded by the respondents in the course of investigation - reason for not giving the copies of the statements not produced - non collection of tax for outward supply of rice - violation of principles of natural justice - first respondent directed to re-consider the application to independently consider the request made by the appellants in tune with the provisions of the Act - HC
  Visit to Get Source

  ---

• Software Licenses Classified as "Supply of Goods" Under Tariff Heading 8523; Excludes Limited End-User Licenses per SAC 997331.

  Case-Laws - AAR : Classification of supplies - supply of goods or supply of services? - software licenses supplied by the applicant - the goods which are supplied by the applicant cannot be used without the aid of the computer - the Explanatory Notes to the Scheme of Classification of Services stipulates that the SAC 997331 covers Licensing services for the right to use computer software and databases but excludes the services of limited end-user licence as part of packaged software from the said SAC. Hence the supply made by the applicant is covered under "Supply of goods" and the said supply is covered under tariff heading 8523. - AAR
  Visit to Get Source

  ---

Income Tax

• High Court Settles Tax Refund Case Under Vivad se Vishwas Scheme; No Limitation for Excess Tax Refunds Noted.

  Case-Laws - HC : Refund of excess Tax - Rectification of mistake u/s 154 - settlement of case under the Vivad se Vishwas scheme under VSV Act, 2020 - u/s 237 under Chapter XIX of the Income Tax Act, there is no limitation prescribed for granting refund of the amount paid in excess as tax. - HC
  Visit to Get Source

  ---

• Court Questions if Case Transfer u/s 127 of Income Tax Act Requires a Hearing for Administrative Decisions.

  Case-Laws - HC : Transfer of case u/s 127 - no show-cause notice came to be issued to the writ-applicant assigning reasons for transfer - whether the exercise of power under Section 127(2) is administrative in nature or it is quasi-judicial - We are not impressed with the submission canvassed on behalf of the Revenue that Section 127 excludes, by necessary implication, an opportunity of hearing when transfer is on account of the administrative exigency or convenience. - HC
  Visit to Get Source

  ---

• Income from Support Services in India Not Considered FIS; Payments Deemed Reimbursement for Actual Expenses.

  Case-Laws - AT : Income accrued in India - Amount received for providing ‘Support Service’ treated as Fees for Included Services (FIS) - Merely because the training program was of boarding nature, that cannot change the nature of program to fall in the purview of services, for which consideration should be FIS. Rather the consideration was in the form of reimbursement of expenses on actual basis of constituents like travelling, food, boarding and lodging of consultants employed by Indian Counterpart. The cost of training recovered from the Indian Associate was due to these expenditures on the trainees. - AT
  Visit to Get Source

  ---

• TDS on Common Area Maintenance Charges: Apply Section 194C for Maintenance Services, Not Section 194I for Rent.

  Case-Laws - AT : TDS u/s 194C or 194I - default u/s. 201(1) - short deduction of TDS - Payment of common area maintenance charges (CAM charges) - the payments made towards CAM charges are in the nature of contractual is payments that are made for availing maintenance services and they are not paid for use of any premises/equipment. Therefore the cam charges would be subjected to deduction of tax at source u/s. 194C of the Act at 2%. - AT
  Visit to Get Source

  ---

• Reinsurance Premium Payments to Non-Resident Insurers Allowed as Deductions u/s 37(1) of Income Tax Act.

  Case-Laws - AT : Allowable deduction u/s 37(1) - disallowance of reinsurance premium payment made to non-resident reinsurers who do not have a place of business / branch in India - the reinsurance premium paid by the assessee to foreign reinsurers outside India who do not have any business presence in India, was permitted in law and was permitted activity under the insurance Act 1938 and IRDA - it could be safely concluded that the payment of reinsurance premium by the assessee to foreign reinsurers could not be construed as payment made in violation of provisions of Insurance Act and IRDA regulations. - AT
  Visit to Get Source

  ---

• No Penalty for Technical Default in Tax Audit u/s 271B; Turnover in Share Trading Assessed Net of Sales/Purchases.

  Case-Laws - AT : Penalty proceedings u/s 271B - requirement of getting tax audit u/s 44AB - Determination of turnover - non-delivery based trading of shares and securities - in such case the turnover has to be determined on the basis of the net of sales and purchase of shares - Further the default committed by the assessee is of technical nature and the AO was not handicapped for want of tax audit report while making assessment under appeal. - there is no requirement for getting the accounts audited u/s 44AB - No penalty - AT
  Visit to Get Source

  ---

• Section 89 Relief Granted for Ex-Gratia Compensation to 275 Employees; Recognized as Advance Salary with TDS Deduction.

  Case-Laws - AT : Relief u/s. 89 - ex-gratia amount of compensation to each of the 275 employees provided they accept the closure and termination of their services without agitating the issue or obstructing the development of the entire Mill land - The basis of compensation calculated by the company and the company also treated the one-time compensation as a salary paid in advance and deducted the TDS on the same, clearly indicates that the compensation received by the assessee is only salary received in advance not as termination compensation even though this was paid in lumpsum as ex-gratia in one go. - AO directed to allow the claim of the assessee u/s. 89 - AT
  Visit to Get Source

  ---

• Industrial Park's Enhanced Profit Qualifies for Deduction u/s 80-IA(4)(iii) Despite Alleged Bogus Purchases.

  Case-Laws - AT : Allowability of deduction u/s 80-IA(4)(iii) - Additions against bogus purchases and bogus expenditure - the enhanced profit of the industrial park, is the income computed in accordance with the provisions of this Act. Hence such enhanced profit is deemed to be the income derived from the business of industrial park and eligible for deduction. - AT
  Visit to Get Source

  ---

Customs

• Vessel Released After Importer Secures Bond for GTL Light Paraffin; Cooperation with Customs Commissioner Required for Inquiry.

  Case-Laws - HC : Release of vessel - Classification of imported goods - GTL Light Paraffin - The goods have already been released of a bond executed by the importer. - At least, the vessel needs to be released on the writ applicant furnishing an appropriate undertaking to the Commissioner (Customs) to the effect that the writ applicants shall cooperate in the inquiry till the last. - HC
  Visit to Get Source

  ---

• Can DRI Issue Show Cause Notices? Examining Proper Officer Status and Retrospective Law Amendments' Impact.

  Case-Laws - HC : Jurisdiction - power of DRI to issue SCN - Proper Officer or not - The amendment in the act has been brought on the statute and whether it can have effect retrospectively when in case of all these matters, show cause notices have been issued prior to the amendment having come into force is not the question to be deliberated upon as argued by both the sides. - HC
  Visit to Get Source

  ---

• Goods Classification Dispute Resolved: Aluminium Composite Panels to be Classified Under CTH 7606 1200.

  Case-Laws - AT : Classification of imported goods - Aluminium Composite Material - Aluminium Composite Panels - classifiable under Chapter Tariff Heading (CTH) 7606 1200 or under CTH 7610 9030? - on perusal of literatures produced by the appellants, there are no doubt that the impugned goods are rightly classifiable under CTH 7606 1200. - AT
  Visit to Get Source

  ---

DGFT

• Deadline for Mandatory E-Filing of Non-Preferential Certificates of Origin Extended to August 1, 2022; Penalties for Non-Compliance.

  Circulars : Extension of Date for Mandatory electronic filing of Non-Preferential Certificate of Origin (CoO) through the Common Digital Platform to 1st August 2022 - issuing agencies who do not use the Online System for issue of non-preferential CoOs after 1st August 2022 will invite penal action and can be subject to 'de-listing' as an authorised agency.
  Visit to Get Source

  ---

Indian Laws

• Court Rules on Stamp Duty: Power of Attorney Cannot Be Double-Charged Under Different Provisions.

  Case-Laws - SC : Assignment of debt to Asset Reconstruction Company - whether Power of Attorney is chargeable to stamp duty or not - In all taxing Statutes, there are taxing provisions and machinery provisions. Once a single instrument has been charged under a correct charging provision of the Statute, namely Article 20(a), the Revenue cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification of the Government issued under Section 9(a). In other words after having accepted the deed of assignment as an instrument chargeable to duty as a conveyance under Article 20(a) and after having collected the duty payable on the same, it is not open to the respondent to subject the same instrument to duty once again under Article 45(f), merely because the appellant had the benefit of the notifications under Section 9(a). - SC
  Visit to Get Source

  ---

• Interim Compensation u/s 143A Cannot Be Recovered from Deceased Accused's Estate in Cheque Dishonor Case.

  Case-Laws - HC : Dishonor of Cheque - Seeking recovery of the interim compensation awarded to the petitioner - If in case of death of an accused the compensation awarded under Section 138 of the Negotiable Instruments Act, 1881 can be recovered from the estate of a deceased accused, but an interim compensation awarded under Section 143A of the said Act cannot be recovered from the estate of a deceased accused, who died before the conclusion of the trial. - HC
  Visit to Get Source

  ---

• Court Rules Against Drawer in Cheque Dishonor Case; Defense Claims Deemed Unsupported by Evidence.

  Case-Laws - HC : Dishonor of Cheque - Payment was stopped by the drawer - According to him, neither he mentioned the date nor that he has given any intimation to bank to stop payment he has not lodged any complaint to the court or to the Police in this regard, even he has not mentioned which number cheques are lost. So this defence appears to be only for defence sake and there is no merit in it. On the other hand, it is evident that both petitioner and respondent were business persons - There is nothing in defence evidence to show that the complainant case is not true. The defence evidence will not help the accused in any way. - HC
  Visit to Get Source

  ---

IBC

• Workmen's dues prioritized in liquidation u/s 53 of Insolvency Code, unaffected by Section 38 claims process.

  Case-Laws - HC : Workmen's dues - company under liquidation - discharge of dues out of liquidation proceeds - The workmen's dues, as adjudicated by the Controlling Authority under the Minimum Wages Act, 1948, has to be distributed from the liquidation assets in the order of priority as provided under Section 53 of the Code. Ext.P3 order is not in breach of the provisions of the Code - The liquidation process and the distribution of assets are not over and there is no bar under Section 38 of the Code to receive the claim under Ext.P3. Section 38 does not curtail the power of the Liquidator to distribute the dues out of liquidation process till the distribution of assets. - HC
  Visit to Get Source

  ---

VAT

• Court Denies Refund Application for Excess Pre-Deposit Paid During CIRP; Tax Department Can't Retain Extra Payment.

  Case-Laws - HC : Rejection of application for refund of mandatory statutory obligation pre-deposit with interest - Excess amount then as accepted in the Resolution plant during CIRP proceedings under IBC - Once the tax liability raised by the Department had been fixed by effect of acceptance of Resolution Plan, manifestly, the Department could not hold on to any payment made by the assessee in excess of what has been approved under the Resolution Plan - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (4) TMI 1296
  Levy of Service Tax and / or GST on royalty and District Mineral Fund (DMF) - royalty for grant of mining lease - seeking interim protection in respect of levy of service tax / GST on royalty - HELD THAT:- It is clear that the levy of GST by the respondents is on the royalty/DMF in respect of the mining lease granted to the petitioners. The decision of the Apex Court by the 7 Judges Constitution Bench in the case of INDIA CEMENT LIMITED VERSUS STATE OF TAMIL NADU [ 1989 (10) TMI 53 - SUPREME COURT] that royalty is a tax is under consideration before a 9 Judges Constitution Bench of the Apex Court upon reference made in the case of Mineral Area Development Authority others [ 2011 (3) TMI 1554 - SUPREME COURT] . Following the interim order passed by the Apex Court in the case of M/S. LAKHWINDER SINGH VERSUS UNION OF INDIA ORS. [ 2021 (11) TMI 336 - SC ORDER ], this Court had been pleased to grant interim protection on levy of GST on mining lease / royalty/DMF. In the background of the legal position that royalty has been considered to be a tax or profit pendre and the issue is pending before the 9 Judge Constitution Bench, we are of the considered view that the petitioners have made out a case for interim protection. As such, there shall be stay of recovery of GST for grant of mining lease/ royalty/DMF from the petitioners till further orders. However, the Revenue is not restrained from conducting and completing the assessment proceedings. Learned counsel for the respondent State and CGST are granted 3 weeks time to file counter affidavit in respective writ petitions in which no counter affidavit has been filed - Let these matters be listed in the 1st week of July, 2022.

  ---

• 2022 (4) TMI 1295
  Cancellation of registration of petitioner - validity of SCN - HELD THAT:- The show cause notices and the impugned order are as vague as anything. The issue is now covered by the decision of this Court in the case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , where it was held that The procedural aspects should be looked into by the authority concerned very scrupulously and deligently. Why unnecessarily give any dealer a chance to make a complaint before this Court when it could have been easily avoided by the department. The impugned order cancelling the registration and the show cause notice is hereby quashed and set aside. The registration stands restored - application allowed.

  ---

• 2022 (4) TMI 1294
  Confiscation of goods - issuance of notice under Section-130 of the Act and applicability of Sub-section (3) of Section-129 of the Act - HELD THAT:- The larger issue raised in this writ-application, shall be decided. However, the exact amount payable by the writ-applicant in terms of Sub-section (3) of Section 129, is to be known. The possibility of ordering provisional release of the goods on the condition that the writ-applicant shall deposit the entire amount towards penalty, is being explored. There is some confusion as regards the exact amount due and payable towards penalty. Clarification is required regarding the figure. Issue notice to the respondents returnable on 20.04.2022 - On the returnable date, notify this matter on top of the board.

  ---

• 2022 (4) TMI 1293
  Seeking grant of copy of statements recorded by the respondents in the course of investigation - reason for not giving the copies of the statements not produced - non collection of tax for outward supply of rice - violation of principles of natural justice - HELD THAT:- A perusal of Ext.P10 would show that the officer has not cited any reason for not giving the copies of the statements sought for by the appellants. But in the counter affidavit the contention taken is that Section 67(5) of the Act specifically provides that the Officer can deny issuance of copies of statement if the same is prejudicial to the investigation. The affidavit cannot supplement the reasons which are not there in the order. On going through the judgment of the learned Single Judge, the learned Single Judge has rightly exercised his jurisdiction and set aside Ext.P10 and directed the officer to pass fresh orders in the request submitted by the appellants for issuance of copies of the statements. The learned Single Judge has in fact gone a step ahead and discussed the relevant provisions of law under the Act and made passive observations which may be prejudicial to the appellants - In view of the matter, since the learned Single Judge has set aside Ext.P10 and directed re-consideration, the first respondent who is directed to re-consider the application has to independently consider the request made by the appellants in tune with the provisions of the Act untrammeled by the observations made by the learned Single Judge in the judgment under appeal. Appeals disposed off.

  ---

• 2022 (4) TMI 1292
  Maintainability of Advance Ruling application - Inward Tax Credit - inward supplies - preparation of food and beverages to be provided to the employees of the company - capital equipment used for preparation of food and beverages to be provided to the employees of the company - food and beverages supplied by an outside caterer(s) on the basis of the Tax invoice(s) raised by them and reported in the GST portal through Form GSTR-1 and reflected in Form GSTR-2 GSTR-2A - food and beverages provided in the course of company s principal business, to the workers during the working hours is to be considered as Supply or not - supply or Goods or Service? - amount collected from the employees is deemed as supply or not - levy of GST on the transportation services received from external supplier for the purpose of providing transportation facility to the employees between their residence and place of work - inward supplies of Transport Service for employees to facilitate their travel from the place of residence to the place of work and back, to perform the work of the company in the course of its business - provision of food, beverage and / or transportation by the employer to the employee is done in the course of the principal business of the applicant company (employer) which would have a influential role in the furtherance of its business or not?. HELD THAT:- The conditions to be considered before admission of application, on the basis of above proviso are whether the question/s raised is/are (i) pending or decided in any proceedings (ii) in the case of applicant (iii) under any provisions of this Act. It is observed on examination of the records that the issues/questions raised by the applicant in the instant application have already been taken up by the audit team, in the case of applicant under the provisions of the CGST Act 2017. From the audit report mentioned, it is evident that the impugned issues have already been decided in the audit proceedings. Further the fact that the unit was subjected to audit proceedings was admitted during the hearing. The issues raised in the instant application and the issues decided under the audit proceedings are one and same. Thus first proviso to Section 98(2) of the CGST Act 2017 is squarely applicable to the instant case - the application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.

  ---

• 2022 (4) TMI 1291
  Classification of services - Consultancy Services rendered to ADB, Manilla - export of services or not - place of supply - Section 2 (6) of the Integrated Goods and Services Tax Act, 2017 - eligibility of refund of GST charged on Invoice issued for Consultancy Services in terms of Section 55 of the Central Goods and Services Tax Act, 2017 or eligibility for exemption as per provisions of the Asian Development Bank Act, 1966 - Constitution of authority for Advance Ruling. HELD THAT:- It is seen that the Authority for advance ruling is constituted under the provisions of the State GST Act and shall be deemed to be the Authority for advance ruling in respect of that State under the CGST Act, 2017 also. Thus it can be seen that the Authority for advance ruling is constituted under the respective State Act and not the Central Act. This would mean that the ruling given by the said Authority will be applicable only within the jurisdiction of the concerned state. It is for this reason that questions on determination of place of supply cannot be raised with the Authority of advance ruling. The determination of place of supply is not covered under any of the clauses (a) to (g) of Section 97(2) of the CGST Act 2017. Further, the use of term shall , is an imperative command restricting the scope of advance ruling only to the questions enumerated in the said sub-section. Thus, to answer the question relating to determination of place of supply, is beyond the scope of advance ruling. This authority, therefore, cannot answer the first question in the application. The second question regarding eligibility of refund or exemption is a conditional one and comes into existence only if the impugned services of the applicant do not qualify as export of services . The question regarding export of services becomes redundant as the question cannot be answered by this authority. Therefore the instant application is liable for rejection. The application filed by the applicant for advance ruling is hereby rejected.

  ---

• 2022 (4) TMI 1290
  Classification of supplies - supply of goods or supply of services? - software licenses supplied by the applicant - qualifies to be treated as Computer Software resulting in supply of goods and are therefore to be classified under Chapter Heading 8523 80 20 or not - applicability of benefits of N/N. 45/2017-Central Tax (Rate), N/N. (45/2017) No.FD48 CSL 2017, Bengaluru and N/N. 47/2017-IGST (Rate) all dated 14.11.2017 - HELD THAT:- The software supplied by the applicant is a pre-developed or pre-designed software and made available through the use of encryption keys and hence it satisfies all the conditions that are required to be satisfied to cover them under the definition of goods . Further the goods which are supplied by the applicant cannot be used without the aid of the computer and has to be loaded on a computer and then after activation would become usable and hence the goods supplied qualifies to be Computer Software and more specifically covered under Application Software . Further the Explanatory Notes to the Scheme of Classification of Services stipulates that the SAC 997331 covers Licensing services for the right to use computer software and databases but excludes the services of limited end-user licence as part of packaged software from the said SAC. Hence the supply made by the applicant is covered under Supply of goods and the said supply is covered under tariff heading 8523. Applicability of N/N. 45/2017-Central Tax (Rate) dated 14.11.2017 - HELD THAT:- The Notification No.45/2017- Central Tax (Rate) dated 14.11.2017 and Notification No.47/2017-Integrated Tax (Rate) dated 14.11.2017 stipulates the rate of CGST / IGST @ 5%, if the goods of computer software is supplied to public funded research institutions subject to fulfillment of the conditions prescribed under column 4 of the said notification - In the instant case the applicant is supplying computer software to a public funded research institution, under the administrative control of DRDO, Government of India. Further the said institute has also furnished a certificate as required to fulfill the required condition. - Benefit of notification available.

  ---

• 2022 (4) TMI 1289
  Maintainability of appeal - time limtation - appeal has been filed within the prescribed time-limit or not - appeal filed against the order for cancellation of Registration to be decided are proper or not - HELD THAT:- Though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. It is also found that the appellant has not submitted any ground for not filing of appeal within the stipulated period. The instant appeal has been filed by the appellant on 17.11.2021 against the impugned order dated 21.11.2019 by delay of more than one month from the normal period prescribed under Section 107(1) of the Central Goods and Service Tax Act, 2017. It is also found that though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. Thus, the appellant has filed this appeal beyond the prescribed period that too after expiry of further one month s period in terms of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017 which could be condoned by the undersigned. Thus, it is clear that the appellate authority has no power to allow an appeal which is filed beyond the prescribed period - since the appeal is filed after expiry of the prescribed period of three months and a further period of one month which may be condoned by the undersigned, the appeal deserves to be rejected on the grounds of limitation without going into the merits of the case. Appeal dismissed.

  ---

• 2022 (4) TMI 1288
  Maintainability of appeal - application for Revocation of Cancellation of registrations rejected - non filing of statuary returns for three consecutive tax periods; or for a continuous period of six months - appeal has been filed within the prescribed time-limit or not. Appeals to Appellate Authority - HELD THAT:- Appeals have been filed by delay from the normal period prescribed under Section 107(1) of the CGST Act, 2017. Though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017 - With regard to delay in filing of appeal, the appellants attributed the delay in filing appeal/ furnishing reply to the notice issued to the ongoing pandemic situation on account of the COVID-19 break-out and financial crunches in the business. In these unavoidable circumstances, they could not file appeal within prescribed period, the appeal is not time bar. The CBIC, New Delhi vide Circular No. 157/13/2021-GST dated 20.07.2021 issued under F. No. CBIC-20006/10/2021 has issued clarification regarding extension of limitation under GST Law where it was held that In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 02.10.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2021, if any, shall become available with effect from 03.10.2021. Thus the delay is condoned. Rejection of application for Revocation of Cancellation of registrations - non-compliance of SCN and/or revocation application is not filed within the specified time - Section 30 of the Act - HELD THAT:- The appellants have filed returns upto date of cancellation of registration hence, it is found that the appellants have substantially complied with the said provisions of the CGST Act/Rules, 2017 in the instant cases. Therefore, the registration of appellants may be considered for revocation by the proper officer. The proper officer is ordered to consider the revocation application of the appellant after due verification of payment particulars of tax, late fee, interest, penalty and status of returns in terms of provisions of the CGST Act, 2017 and rules made thereunder - appeal allowed - decided in favor of appellant.

  ---

• Income Tax

• 2022 (4) TMI 1297
  Delayed payment of employee s contribution to provident fund under section 36(1)(va) - scope of amendment brought in the statute by Finance Act, 2021, the provisions of section 36(1)(va) r.w.s. 43B - HELD THAT:- The assessee has deposited employee s contribution to PF/ESIC after due date specified in PF/ESIC Acts but before the due date of filing the return of income as prescribed in section 139(1) of the act The ITAT Bangalore in the case of Shivanajappa Vijay Kumar [ 2021 (12) TMI 598 - ITAT BANGALORE] after following the decision of Hon ble High Court of Karnataka [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the amendment made to section 36(1)(va) of the Act will have prospective application. We have also perused the decision of ITAT Chennai in the case of Adhyar Anand Bhavan Sweets India P. Ltd. [ 2021 (12) TMI 558 - ITAT CHENNAI] wherein after following the decision of Hon ble High Court of Madras in the case of M/s Industrial Security and Intelligence India P. Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] held that the amendment brought in the statute by Finance Act, 2021, the provisions of section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. In the case of the assessee, it had remitted the employee s contribution towards PF/ESIC beyond the due date for payment as specified in PF/ESIC Act, but within the due date for filing the return of income, therefore, following the aforesaid decisions, we considered that Ld. CIT(A) is not justified in disallowing the claim of deduction of the assessee. Accordingly, we decide this issue in favour of the assessee

  ---

• 2022 (4) TMI 1287
  Validity of assessment orders passed u/s 147 read with Section 144B - penalty notices issued under Section 274 - petitioner states that the impugned orders have been passed without following the principle of natural justice and in violation of Section 144B of the Act as no opportunity of hearing was granted to the petitioner despite a specific request having been made under Section 144B(vii) - HELD THAT:- This Court is of the view that the issue involved in the present writ petitions are no longer res integra. This Court in Bharat Aluminium Company Ltd. vs. Union of India Ors 2022 (1) TMI 658 - DELHI HIGH COURT has held that the use of the expression may in Section 144B(7)(vii) is not decisive. Where a discretion is conferred upon a quasi-judicial authority whose decision has civil consequences, the word may which denotes discretion should be construed to mean a command. Consequently, requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. It was further held that the classification made by the Respondent between the matters involving disputed questions of fact and questions of law by way of the Circular dated 23rd November, 2020 is not legally sustainable. Accordingly, the impugned assessment orders passed under Section 147 read with Section 144B of the Act for the Assessment Years 2014-15, 2015-16, 2016-17 and 2017-18 are violative of principle of natural justice and Section 144B(7)(vii) of the Act. It is settled law that when there is a violation of principle of natural justice, the availability of an appellate remedy does not operate as a bar to the maintainability of the writ petition. Consequently, the impugned Assessment orders, Demand notices and Penalty notices are quashed and the matters are remanded back to the Respondents for passing fresh orders in accordance with law after giving an opportunity of personal hearing to the petitioner.

  ---

• 2022 (4) TMI 1286
  Refund of excess Tax - Rectification of mistake u/s 154 - settlement of case under the Vivad se Vishwas scheme under VSV Act, 2020 - whether the petitioners are entitled for an order under Section 154 in the light of the case of the petitioner having being settled under Vivad Se Vishwas Scheme, 2020 and opted under the Vivad Se Vishwas Act, 2020 for the Assessment Year 2011-2012 and to consequently refund the tax paid by the respective petitioners alone with interest under Section 244A ? - HELD THAT:- Recently, under similar circumstances as decided in [ 2021 (11) TMI 1055 - MADRAS HIGH COURT] there is no dispute that the petitioner has paid the tax for the relevant assessment year viz., 2011-12 and therefore, the protective assessment for the year 2014-15 results in excess payment of tax. The petitioner cannot be taxed twice on the same income. Ultimately, the purpose of exercising power under the Act is only intended to collect correct and just tax under the provisions of the Income Tax Act, 1961 from an assessee. The Act is not intended either to collect or retain any amount which is not due from an assessee. The above passage squarely applies to the facts of the present case as the department has also not disputed the fact that the petitioner has settled the dispute under the Vivad se Vishwas scheme for the assessment year 2011-12 as a consequence of which the tax offered and paid by the petitioner during the assessment year 2014-15 had become excess. That apart, under Section 237 under Chapter XIX of the Income Tax Act, there is no limitation prescribed for granting refund of the amount paid in excess as tax. Therefore, I do not find any merits in the submissions made by the learned Senior Standing Counsel appearing on behalf of the respondents. Therefore, these Writ Petitions deserves to be allowed. WP allowed.

  ---

• 2022 (4) TMI 1285
  Seizure for assets in search proceedings - Application of seized or requisitioned assets u/s 132B - whether we should direct the respondents to hand over the diamonds to the writ applicant? - HELD THAT:- The statutory provision of Section 132B of the Act is very clear. There appears to be a mandate and such mandate is mandatory and not directory. This is evident from the ratio of the decision of this High Court in the case of Nadim Dilipbhai Panjvani [ 2016 (1) TMI 811 - GUJARAT HIGH COURT] wherein this Court has taken the view that the Courts should attach considerable importance to the time frame provided under Sections 132A and 132B when it comes to a question of retention of books of accounts or of seized assets. It is not permissible for the Court to read the time limit provided in the proviso to clause (i) of sub-section (1) of Section 132B of the Act as being merely directory. Any attempt on the part of the Court to read it as directory would substantially dilute the rigors of the statutory provisions and would give an unbridled power to the Assessing Officer to retain the seized assets awaiting the finalization of future possible liability for indefinite period without deciding the application of the person concerned who may be legitimately in a position to explain the source of the asset so seized. This writ application succeeds and is hereby allowed. The respondents are directed to hand over the seized asset (diamonds) to the writ applicant within a period of four weeks from the date of receipt of the writ of this order

  ---

• 2022 (4) TMI 1284
  Transfer of case u/s 127 - no show-cause notice came to be issued to the writ-applicant assigning reasons for transfer - whether the exercise of power under Section 127(2) is administrative in nature or it is quasi-judicial - transferring the case of the writ-applicant from the office of the respondent no.3 at Surendranagar to the office of the respondent no.2 at Ahmedabad - nondisclosure of reason in the order of transfer - HELD THAT:- It cannot be gainsaid that if a statute requires affording of an opportunity of hearing before an order is passed to the person to whom the order relates, it would be an effective opportunity, which is required to be given. The effective hearing, which is required to be given would mean that the assessee must know the ground for the proposed transfer/proposed action and opportunity to rebut the same and to establish that the grounds for such transfer are not tenable under law or for any other reason, as may be admissible under law, such ground would not be sufficient to pass an order of transfer. We are not impressed with the submission canvassed on behalf of the Revenue that Section 127 excludes, by necessary implication, an opportunity of hearing when transfer is on account of the administrative exigency or convenience. This proposition put forward by Mr.Bhatt, the learned senior counsel appearing for the Revenue, is based on the maxim expressio unius est exclusio alterius , which is a rule of prohibition by necessary implication. We do not think that the above rule will apply in the instant case. In the case of Ajantha Industries and Ors. [ 1975 (12) TMI 1 - SUPREME COURT] , the Supreme Court was dealing with a case, wherein the reasons were not communicated and it was said that failure to communicate the reasons for passing an order under Section 127 renders the order bad. We are of the view that the principles enunciated by the Supreme Court in the case of Ajantha Industries ( supra ), hold the field. This Court, over a period of time, has been following Ajantha Industries ( supra ) in its letter and spirit. We have no hesitation in coming to the conclusion that the impugned order of transfer and all the consequential proceedings pursuant thereto could be said to be without jurisdiction. We are not impressed with the submission canvassed on behalf of the Revenue that Section 127 excludes, by necessary implication, an opportunity of hearing when transfer is on account of the administrative exigency or convenience. This proposition put forward by Mr.Bhatt, the learned senior counsel appearing for the Revenue, is based on the maxim expressio unius est exclusio alterius , which is a rule of prohibition by necessary implication. We do not think that the above rule will apply in the instant case. In the result, this writ-application succeeds and is hereby allowed. The impugned order of transfer dated 8th July 2021 passed under Section 127(2) of the Act qua the writ-applicant is hereby quashed and set-aside. Consequently, the assessment order dated 28th September 2021 also stands quashed and setaside.

  ---

• 2022 (4) TMI 1283
  Set off of loss of the Company merged with it as per the Scheme formulated and sanctioned by BIFR and approved by AAIFR - Whether Tribunal was right in law in not permitting the set off of loss when the Nodal Authority / Director General of Income Tax has conveyed its approval for grant of reliefs and concessions under section 139(3) and 79 read with 72A of the Income Tax Act besides waiver of interest, penal interest, penalties etc. under Income Tax Act? - HELD THAT:- The appellant / assessee as well as the respondent / Revenue jointly, referring to the judgement [ 2019 (2) TMI 1780 - MADRAS HIGH COURT ] in respect of the assessee s own case relating to the assessment year 2004-05, the identical question of law was raised in that case and the same was decided in favour of the assessee and against the Revenue.

  ---

• 2022 (4) TMI 1282
  Disallowance towards delayed payment of employee s contribution to provident fund under section 36(1)(va) - HELD THAT:- From the facts available on record, it is evident that the due date of filing the return of income for the year under consideration was 30.11.2019. Further, from the details of contribution received from employees towards provident fund, as forming part of tax audit report, we find that on certain occasions payments were made to the concerned authorities beyond the due date provided under the relevant provident fund statute. Further, in the present case, it has not been disputed that the payment of employee s contribution towards provident fund was made before the due date of filing of return of income. The only basis on which the Revenue denied the claim of assessee in respect of employee s contribution to provident fund was that the payment was made beyond the due date prescribed under the relevant provident fund statute. We find that the Hon ble Jurisdictional High Court in Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] held that both employee s and employer s contributions are covered under the amendment to section 43B of the Act, relying upon the decision of the Hon ble Supreme Court in CIT v/s Alom Extrusions [ 2009 (11) TMI 27 - SUPREME COURT] , and therefore payment of employee s contribution on or before the due date of filing of return of income is allowable. In the present case, the payment of employee s contribution towards provident fund was made after the due date prescribed under the relevant provident fund statute though before the due date of filing the return of income. Thus, respectfully following the aforesaid judicial precedents, we direct the jurisdictional Assessing Officer to delete the disallowance made under section 36(1)(va) of the Act. As a result, ground No. 1 raised in assessee s appeal is allowed.

  ---

• 2022 (4) TMI 1281
  Rejection of books of account under section 145(3) - computing income on estimated basis @ 20% - HELD THAT:- Perusal of the appellate order of the Ld. CIT(A) reveals that he was also of the view that there were various defects in the books of account and no satisfactory explanation was given by the assessee. Certain details asked for by the Ld. AO were also not provided. The creditor s details were also not reconciled as per books of account. CIT(A) concurred with the view of the Ld. AO that the books of account of the assessee were not correct and complete. He, therefore upheld the impugned addition. In the absence of any material brought on record by the assessee to rebut the contentions of the Ld. AO/ CIT(A), we decline to interfere. Debit being rent in P L account - AO, keeping in mind the nature of assessee s business came to the conclusion that there was no need for the assessee to pay any rent. He also observed that despite specific query, no details of TDS effected on the said payment were submitted except making a bald statement in the grounds of appeal that the reasons for payment of rent, TDS returns and details already filed have not been appreciated. No evidence at all in support has been submitted either before the Ld. CIT(A) or before us. Therefore, no interference is called for. Ground No. 3 is rejected. Deemed dividend under section 2(22)(e) - HELD THAT:- In the grounds it is stated that M/s. Universal Buildwell Pvt. Ltd. is neither a shareholder of the assessee company nor the assessee company is holding shares of the said company and the explanation of the assessee that the transactions are genuine business transactions and are inclusive of reimbursement of expenses has been overlooked. There is no substance in what the assessee is now stating before us. Before the Ld. AO/CIT(A) the assessee did not give any proper explanation and furnished details of Rs. 12,36,429/- only. For the balance amount no explanation was given except that the amount was given for business need. The findings of the Ld. AO/ CIT(A) remained unassailed before us. We therefore endorse their findings and reject this ground as well. Denial of set off and carry forward of brought forward losses from earlier years - HELD THAT:- AO did not record any reasons therefor. Therefore, the Ld. CIT(A) in para 6 of the appellate order directed the AO to verify the facts from the records and determine the brought forward losses as per law. It is thus obvious that the Ld. CIT(A) has not upheld denial of set off and carry forward of brought forward losses from earlier years as stated in the ground taken before us. We, therefore reject this ground also.

  ---

• 2022 (4) TMI 1280
  Rectification u/s 154 - ITAT s power to admit grounds otherwise than by revised return - disallowing alternative claim made u/s. 80G during proceedings u/s 154 in respect of donation for which claim was made inadvertently u/s. 80GA in the return of Income and was disallowed in the order passed u/s. 143(1) - HELD THAT:- As assessing officer has rejected the assessee s claim referring to Hon ble Supreme Court decision in the case of Goetze India Ltd.[ 2006 (3) TMI 75 - SUPREME COURT ] and in the said decision Hon ble Supreme Court itself has held that their aforesaid order will not impinge on the ITATs, power to admit grounds otherwise than by revised return. Furthermore we note that Ld. CIT(A) has referred that the donee s approval had expired by the time the donation was made by the assessee. If this fact is correct assessee s claim cannot be sustained. However since this is a matter of verification of records we consider it appropriate to remit the issue to the file of AO. The assessing officer shall examine the documentary evidence of the validity of the donee s approval. If the same has not expired the assessee s claim shall need to be considered as per law. If the same has expired the assessee shall not have any legal claim for deduction. Accordingly the issue stands remitted to the file of Assessing Officer - Appeal by the assessee stands allowed

  ---

• 2022 (4) TMI 1279
  Income accrued in India - Amount received for providing Support Service treated as Fees for Included Services (FIS) - addition to income the amount of support services as per Services Agreement and reimbursement of expenses as per Cost Reimbursement Agreement as Fees for Included Services ( FIS ) under Article 12(4)(b) of India-USA DTAA - whether such services meet the condition of make available of technical knowledge, experience, skill, knowhow, etc.? - Reimbursement of Training Expenses treated as FIS - HELD THAT:- There is no categorical finding of the Ld.FAA that the support services were in the nature of consultancy or technical services. Rather it observed in Para 5.5.3 In fact the receipts from services clearly indicate that the same cover a large spectrum of area and would necessarily qualify as managerial services. . As managerial services are not mentioned in Article 12 of the Treaty, so certainly by classifying the receipts to be from managerial services and then to include them in FTS, on basis of sub-clause 4(a) of Article 12, the Ld. FAA has committed the error. On perusal of licensing agreement effective from 1st January, 2012 submitted by the assessee it can be observed that the intangible referred to in Article 1 means the intellectual property set forth on appendix (i) hereto, which may be amended from time to time . Appendix I shows that it is a trade mark for use of which the licensing agreement was executed. There is no recital in the agreement which would indicate that the use of tangible by Indian Associate was in any way necessary for the effective application or enjoyment of right, property or information, for which the royalty was agreed to be paid. The services rendered were not customarily provided and it is also not so otherwise established by the Revenue on the basis of any cogent evidence that such services are customarily provided in cases of licensing agreements for the use of Trade Mark. The consideration for these services cannot be considered to be insubstantial portion, rather the matter of fact is that for assessment year 2013-14, the assessee received in respect of support services and royalty income. The most important factor being that there are separate agreements for the licensing of the intangible and the service agreement. The copy of service agreement on record for the assessment year 2014-15, show that this agreement was effective from 1st January, 2011 while the licensing agreement was later in time in terms of being effective from 1st January, 2012. Thus, FAA has fallen in error in squaring up the case of assessee in terms of memorandum to the Treaty and giving a finding that the predominant factor is the grant of license to use the name which gives rise to royalty and all other payments and agreement flow from principal licensor licensee agreement. Thus the finding of Ld FAA, that the five determining factors for the classification of the consideration under paragraph 4(a) are clearly satisfied in the appellant s case is not sustainable. Thus, the findings of the learned FAA deserve to be reversed. The ground is sustained. Coverage of training fees by make available clause in the definition of technical services - HELD THAT:- FAA had failed to appreciate that this training was not part of the main contract of licensing agreement for royalty and there was no corresponding recital in the licensing agreement, which required the Indian Associates and the assessee to enter into any agreement for providing the training. The appellant provided relevant training and workshops to newly recruited consultants who joined the Indian Associate and the purpose of this training was not to provide any specific technical training or share any technical knowledge, expenses, skills, know how or processes neither by way of training, there was any transfer of any technical plan or technical design. The findings of Ld. FAA skill is being imported to the receipt and at the same time to the Indian entity the service is being rendered are not sustainable. The trainees were only sansitised to understand their job responsibility, the business model, policies and procedures, under which the new recruits were expected to work. The training cannot strictly be even called managerial or leadership training so as to enhance any productivity or profits, but were more of a orientation program at the time of induction of the new recruit. Merely because the training program was of boarding nature, that cannot change the nature of program to fall in the purview of services, for which consideration should be FIS. Rather the consideration was in the form of reimbursement of expenses on actual basis of constituents like travelling, food, boarding and lodging of consultants employed by Indian Counterpart. The cost of training recovered from the Indian Associate was due to these expenditures on the trainees. Thus, in regard to the additions the findings of the learned FAA deserve to be reversed.

  ---

• 2022 (4) TMI 1278
  TDS u/s 194C or 194I - default u/s. 201(1) - short deduction of TDS - Payment of common area maintenance charges (CAM charges) - whether the rent and maintenance which are paid as part of single agreement is liable to be deducted tax at source at the same rate of 10% u/s. 194I? - HELD THAT:- As per clause 9 of the lease agreement (pages 62 of paper book) makes it clear that the maintenance charges paid are not paid for use of land/building to fall within the ambit of the definition of rent u/s. 194I. The CAM charges are in the nature of contractual payments towards electricity, water supply, security, lift maintenance etc., falling within the meaning of section 194C whereby these charges are paid for carrying out the work for maintenance of the common area that are available along with the lease premises. The fact that these two payments are agreed and paid under the same agreement does not change the character / nature of such payments warranting single rate of tax deduction at source. The law has provided for different rates of tax deduction at source based on the nature of payment and it is imperative that the correct rate of tax is applied depending on the nature of payments. We are of the considered view that the payments made towards CAM charges are in the nature of contractual is payments that are made for availing maintenance services and they are not paid for use of any premises/equipment. Therefore the cam charges would be subjected to deduction of tax at source u/s. 194C of the Act at 2%. The assessee has applied the right rate of tax for deduction at source at 2% on CAM charges and therefore the assessee cannot be held to be an assessee in default u/s. 201(1) of the Act. We therefore allow the appeal in favour of the assessee

  ---

• 2022 (4) TMI 1277
  Unexplained cash deposits in the bank of the assessee including the period of demonetization - HELD THAT:- Undisputed fact that on the aforesaid sales, VAT as per the applicable rates has been paid by the assessee and the payment of VAT is also reflected in the VAT returns filed by the assessee with the Department of Trade and Tax, Government of Delhi. Before us Revenue has not placed any material on record to demonstrate that the details of cash sales filed by the assessee are fictitious or bogus. Revenue has also not placed any material on record to demonstrate that the VAT return filed by the assessee before the Appropriate Authorities have been rejected by the Authorities. It is also a fact that the assessee is having only one source of income which is also not in dispute. The purchase of goods from which the alleged sales have been made by the assessee has also not been rejected by the Revenue. I find that the Bangalore Bench of the Tribunal, on similar facts, in the case of Anantpur Kalpana, Gangavathi, Karnataka [ 2021 (12) TMI 599 - ITAT BANGALORE] and M/s. Hirapanna Jewellers, Visakhapatnam [ 2021 (5) TMI 447 - ITAT VISAKHAPATNAM] has held that when the sales have been accepted as revenue receipt, the same could not have been again added as income. We find the issue in the present case is also covered by the aforesaid two decisions relied on the assessee. In such circumstances and in absence of any contrary material brought on record by the Department, in the present case no addition is called for - therefore, direct for deletion of the addition made by A.O. and upheld by the Ld. CIT(A). Thus, the ground raised by the assessee is allowed.

  ---

• 2022 (4) TMI 1276
  Delayed employees contribution towards Provident fund Employees State Insurance Corp. - adjustments u/s 143(1) - payments made by the assessee [payments made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s 139(1) - HELD THAT:- We are of the view that the aforesaid adjustments made by Revenue on 31.10.2019, whereby the aforesaid amount was added to assessee s income, were unfair, unjust, and bad in law. For this view, we respectfully take support from the order of Agra Bench of ITAT, in the case of Mahadev Cold Storage vs. Jurisdictional Assessing Officer [ 2021 (6) TMI 506 - ITAT AGRA] At the very least, Revenue should have given due consideration to the fact that the issue was highly debatable and controversial. As already discussed earlier, adjustments u/s 143(1) of Income Tax Act by way of intimation u/s 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of section 143(1) of Income Tax Act. Revenue was clearly in error, in making the aforesaid adjustments u/s 143(1) of Income Tax Act on 31.10.2019 on a debatable and controversial issue. We would like to make respectful mention of order of Jabalpur Bench of ITAT in the case of Nikhil Mohine vs. DCIT [ 2021 (11) TMI 927 - ITAT JABALPUR] in which similar view has been taken. It is also well settled that retrospective amendment cannot be invoked to make addition by way of adjustment and intimation u/s 143(1) of Income Tax Act. This view was taken by the Hon ble Supreme Court in the case of CIT vs. Hindustan Electro Graphites Ltd [ 2000 (3) TMI 2 - SUPREME COURT] in which the view of Hon ble Kolkata High Court in the case of Modern Fibotex India Ltd. Anr.[ 1994 (3) TMI 17 - CALCUTTA HIGH COURT] was approved. We are of the view that the aforesaid additions by way of adjustment and intimation u/s 143(1) of Income Tax Act, were beyond the scope of Section 143(1) of Income Tax Act; and further, that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue. - Decided in favour of assessee.

  ---

• 2022 (4) TMI 1275
  Levy of penalty of concealment u/sec. 271(1)(c) - difference in stamp value in sale consideration as disclosed in return of income and as assessed by registrar stamps - matter was referred under section 50C(2) to departmental valuer - HELD THAT:- We are of the opinion that the AO has considered the full value consideration U/s 50C as against the actual sale consideration declared by the assessee . The increased of value by the AO in the full value consideration does not amount either concealment of particulars of income or furnishing inaccurate particulars of income. Further we observed additions made on values of Dy. Registrar office being deemed value and even additions on such deemed value accepted by assessee it cannot be said furnishing of inaccurate particular for levy of penalty of concealment u/sec. 271(1)(c). We are of the opinion that said claim made under the provisions of the Act is disallowed by the AO would not attract the penalty provisions of Section 271(1)(c) - in case of CIT vs. Reliance Petroproducts Pvt. Ltd.[ 2010 (3) TMI 80 - SUPREME COURT] has held that where the information given by the assessee is not found to be incorrect the assessee cannot be held guilty of furnishing inaccurate particulars of income for the purpose of levying the penalty U/s 271(1)(c) - Hon ble Supreme Court has also observed that merely making a wrong claim does not amount to furnishing inaccurate particulars of income in the absence of finding that any detail by the assessee is incorrect or false. Based on the ld. AR for the assessee has referred to various decisions of the High Courts and Coordinate Bench of the Tribunal on the point that penalty order passed by the AO based on different charges in the show cause notice is not valid. Accordingly, in view of the facts and circumstances of the case the penalty levied by the AO u/s 271(1)(c) of the Act is not sustainable and the same is deleted. Decided in favour of assessee.

  ---

• 2022 (4) TMI 1274
  Disallowing the interest free loans u/s 36(1)(iii) and thereby erred in treating the same as loans taken for non-business purposes - HELD THAT:- CIT(A) has observed that the funds have been diverted to non business purpose. The assessee was having the loan fund in sum of Rs. 12.19 crore in which an amount of Rs. 3.35 crore was not utilized exclusively for the business purpose. In brief 27% of the total loan fund was not utilized for the business purpose. The AO disallowed the interest on pro-rata basis. The facts are not distinguishable at this stage. There is nothing on record to which it can be assumed that the AO has wrongly disallowed the claim of the assessee. Factually also there is nothing on record in connection with the utilization of whole loan funds for business purpose. Accordingly, we affirm the finding of the Ld. CIT(A) on these issues and decide these issues in favour of the Revenue and against the assessee. Disallowance under section 2(22)(e) - main contentions of the appellant is that the transaction between the appellant firm and M/s. K.C. Kapadia and Sons Pvt. Ltd. are not in the nature of loan transactions, but rather are current account transactions and hence the Section 2(22)(e) cannot be applied - HELD THAT:- AR instead has not explained in any mode or manner by leading factual evidence as to how the classification as per the TAR is erroneous and that the transaction is actually not one of loan but relates to current account transactions. Further, the myriad of case laws cited by the Id. AR do not prove as to how the peculiar and solitary facts of the case of the appellant would absolve the matter to be taken out of the ambit of the rigours of Section 2(22)(e). Citation of case laws without cogently explaining their pinpointed relevance to the case at hand will be of little assistance in furthering the case of the appellant on this issue. As tin the case of Sh. Sahir Sami Khatib [ 2018 (10) TMI 250 - BOMBAY HIGH COURT] recently held that where assessee was holding more than 10 per cent of equity shares of lending company and also having substantial interest in borrowing company, amount of loan given by lender company to borrower company was rightly added to assessee s taxable income as deemed dividend. Going by the above analogy, the pattern of the inter-se holding pattern of shareholding and voting rights in the company M/s. K.C. Kapadia and Sons Pvt. Ltd. by the two partners of the firm to the tune of 20% will definitely attract provisions of Section 2(22)(e). Decided against the assessee.

  ---

• 2022 (4) TMI 1273
  Delayed deposit of employees contribution towards PF and ESIC - Addition u/s 36(va) r.w.s 2(24)(x) - scope of amendments made in sec 36(1) and sec 43B - HELD THAT:- Admitted facts of the present case are that the payments of PF ESI contribution relating employee s contribution are before the due date of filing of return of income U/s 139(1) of the Act. We have noted that the issue under consideration is covered by the decision of the Coordinate Bench in case of M/s Mohanlal Khatri [ 2021 (11) TMI 1035 - ITAT JAIPUR] and also case of CIT vs. AIMIL Ltd [ 2009 (12) TMI 38 - DELHI HIGH COURT] held that the payment of employees contribution in regard to PF ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act. For amendment it has been brought in the statute book to provide certainty about the applicability of provisions of Section 43B of the Act inspite of belated payment of employee s contribution. We also noted from the memorandum explaining the provisions to Finance Act, 2021, wherein relevant Clauses to said memorandum clearly intended that the amendment shall take effect from 01.04.2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed.

  ---

• 2022 (4) TMI 1272
  Disallowing the deduction of irrecoverable advances which turned bad and written off in the books of accounts - assessee is an NBFC and is in the business of financing, investment and in real-estate development - HELD THAT:- We find, while the assessee is stating that the advances made by the assessee to Bhayana Interiors Furniture Pvt. Ltd. and Wig Brothers Projects Pvt. Ltd. were in relation to the development of Goa property which is in trading account forming part of its business, the ld.CIT(A) has given a finding that these advances given to the above two parties were capital in nature as they were given for the construction of business assets in Goa. Thus, there is a contradiction between the statement made by the assessee that it is on account of trading account forming part of its business whereas the CIT(A) has given a finding that it is capital in nature being given for construction of business assets in Goa. Under these circumstances, we deem it proper to restore the issue to the file of the AO with a direction to verify the past records and decide the issue as per fact and law including the claim of the assessee to allow the same as business loss after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground of appeal No.1 raised by the assessee is accordingly allowed for statistical purposes. Disallowing long term capital loss which arose from permanent write off share capital - AO was not satisfied with the arguments advanced by the assessee on the ground that written off amounts of investments so made in the books of account are not a transfer in the eye of law u/s 2(47) of the IT Act and it is a notional loss as the shares remained with the assessee - HELD THAT:- It is the submission of the ld. Counsel for the assessee that since the value of investment in the shares had extinguished, therefore, it amounts to transfer and, accordingly, the capital loss so incurred by the assessee deserves to be allowed along with its indexation. It is also his argument that in the alternative, it should be allowed as business loss. Further, it is also the contention of the ld. Counsel that in the FY 2020-21, relevant to AY 2021- 22, the assessee had recovered a part of the amount invested in Sanskar Homes Pvt. Ltd. by way of transfer of shares for a consideration of Rs. 2,30,00,000/- against the amount invested of Rs. 1,00,00,000/- and such recovered amount has been credited in the miscellaneous income of the assessee and has been offered for taxation purpose. In our opinion, the issue needs re-adjudication at the level of the AO in view of the fact that has emerged subsequent to the assessment and appeal proceedings that assessee had offered such sale proceeds to taxation in the year of sale. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh and in accordance with the law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - HELD THAT:- Since the AO, in the instant case has also not recorded any satisfaction before making the disallowance, therefore, respectfully following the order of the Tribunal in assessee s own case for AY 2014-15, we set aside the order of CIT(A) and direct the AO to delete the addition. The ground raised by the assessee is accordingly allowed.

  ---

• 2022 (4) TMI 1271
  Allowable deduction u/s 37(1) - disallowance of reinsurance premium payment made to non-resident reinsurers who do not have a place of business / branch in India - alternative disallowance that was made by the ld. AO in this regard was u/s.40(a)(i) of the Act for payments made without deduction of tax at source - HELD THAT:- Reinsurance premium sought to be paid to foreign reinsurers outside India was taken due cognizance by the IRDA, being the regulatory authority for insurance companies, and had not found anything adverse or in any violation of provisions of Insurance Act and insurance regulations thereon - we find that IRDA vide letter dated 12/02/2020 had given clarification in respect of assessment proceedings of the assessee company for A.Y.2016-17 and 2017-18 directly addressed to the ld. AO, wherein, it was specifically clarified that the reinsurance premium paid by the assessee to foreign reinsurers outside India who do not have any business presence in India, was permitted in law and was permitted activity under the insurance Act 1938 and IRDA (General Insurance-Reinsurance) Regulations issued by the authority. It was also mentioned in the said letter that the regulations issued by the authority i.e. IRDA are subordinate legislation which are also placed before both the Houses of Parliament. Hence, in view of the above, it could be safely concluded that the payment of reinsurance premium by the assessee to foreign reinsurers could not be construed as payment made in violation of provisions of Insurance Act and IRDA regulations. CIT(A) observed that since the foreign reinsurer in the instant case does not have a branch or place of business in India, the amended definition of Section 2(9) of the Act w.e.f. 26/12/2014 would go against the assessee. Accordingly, the ld. CIT(A) had granted relief to the assessee in respect of payments made prior to 26/12/2014. But we find that the Hon ble Madras High Court had already held that the definition of Section 2(9) of the Insurance Act has no role to play in the instant case. Hence, there was no need to get into the amendment in Section 2(9) thereon. We find that the Hon ble Madras High Court [ 2019 (2) TMI 335 - MADRAS HIGH COURT ] had held that definition in Section 2(9) of the Insurance Act is irrelevant for the purpose of Section 101A read with IRDA regulations. Hence, the observation made by the ld. CIT(A) in para 4.2.5, in our considered opinion, is wrong. Applicability of provisions of Section 40(a)(i) in respect of reinsurance premium paid to foreign reinsurers - It is a fact that in the impugned case of the assessee before us, i.e. Tata AIG Insurance, it is not in dispute that foreign reinsurer does not have any place of business or branch or any business connection or permanent establishment in India. Hence, the payments made by the assessee company to the said foreign insurer is not chargeable to tax in India in the hands of the foreign reinsurer in terms of Section 195(1) of the Income Tax Act. Hence, there is no obligation on the part of the assessee payer to deduct tax at source thereon. Reliance in this regard is placed on the decision of the Hon ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd., vs CIT [ 2010 (9) TMI 7 - SUPREME COURT ] Accordingly, the provisions of Section 40(a)(i) of the Act would not come into operation at all. Moreover, these decisions were duly quoted by the assessee before the ld. CIT(A) vide its submission dated 25/02/2020 which was completely ignored by the ld. CIT(A) while adjudicating the issue. Hence, the entire observations of the lower authorities had been duly addressed in the aforesaid findings by us. At the cost of repetition, we would like to reiterate the fact that there is absolutely no dispute that the foreign reinsurers does not have any place of business in India / permanent establishment in India / branch established in India / Liaison office in India. Hence, any payment made by the assessee company to such foreign insurers would not be chargeable to tax in the hands of the foreign reinsurers in India in terms of Section 195(1) of the Act. Accordingly, as stated earlier, there would be no obligation on the part of the assessee, being a payer, to deduct tax at source and consequently there cannot be any disallowance u/s.40(a)(i) of the Act. Accordingly, assessee succeeds on this ground also. Claim of depreciation as per the provisions of Section 32 - HELD THAT:- Legislature never wanted to deny any deduction or allowance that was otherwise allowable to the assessee under the very same provisions of Sections 30 to 43B of the Income Tax Act. It also impliedly mentioned that by this process, the double disallowance that would occur shall be avoided. There would be cases where assessee while making certain provision for certain expenses or provision for certain reserves would add it back voluntarily in the return of income even though the same is an item of legitimate expenditure in the P L account. When the very same expenditure is actually paid by the assessee in different assessment year, the same should be logically and legally liable for deduction / allowance to the assessee in the year in which such payments are made. This alone would address the clear intention of the legislature. Moreover these benefits are otherwise available to all other types of the assessee and there is no logical reason that an Insurance company alone should be deprived of the same. This would be more relevant from the point of discrimination of assessee. Considering the totality of these observations, it could be safely concluded that the amendment brought in Finance Act 2020 addressing this anomaly is merely curative in nature and hence has to be construed as clarificatory having retrospective effect as it was brought in to avoid unintended consequences and to avoid discrimination with other assessees. We find that the reliance has been rightly placed by the ld. AR on the decision of the Hon ble Supreme Court in the case of Allied Motors (P) Ltd. [ 1997 (3) TMI 9 - SUPREME COURT ] wherein it was held that when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give it a reasonable interpretation, it could be read to be retrospective in operation, particularly to give effect to the section as a whole. This direction, in our considered opinion, would make computation provisions mentioned in Rule 5 of the first schedule of the Income Tax Act workable. In view of the above observations, we direct the ld. AO to grant allowance of depreciation u/s.32 of the Act for the year under consideration. Needless to mention that the ld. AO should rework the depreciation of subsequent years accordingly due to change in the written down value of the block of assets. Accordingly, the ground No.10 raised by the assessee is allowed. Seeking credit for tax deducted at source - HELD THAT:- We find that the ld. AO had not granted the credit of additional tax deduced at source claimed by the assessee during the assessment proceedings. Since this matter requires factual verification, we direct the ld. AO to verify the claim of the assessee and grant TDS credit in accordance with law. Accordingly, the ground No.11 raised by the assessee is allowed for statistical purposes.

  ---

• 2022 (4) TMI 1270
  Tax audit u/s 44AB - Determination of turnover - Penalty proceedings u/s 271B - assessment proceeding that the assessee failed to comply with provisions as laid down in section 44AB as the assessee was involved in delivery based as well as non-delivery based trading of shares and securities and thus had speculative income/loss non-speculative business income/loss as per the provisions laid down in section 43(5) - HELD THAT:- We find that the AO imposed penalty for not getting the accounts audited as according to the AO turnover exceeds the threshold limit as prescribed u/s 44AB of the Act. We note that the assessee is doing non-delivery based transactions and in such case the turnover has to be determined on the basis of the net of sales and purchase of shares. Further the default committed by the assessee is of technical nature and the AO was not handicapped for want of tax audit report while making assessment under appeal. Default committed by the assessee is a technical or venial nature. Beside that the assessment was selected for limited scrutiny to verify the derivative (future) transaction and securities transactions. Thus we are of the view that there is no requirement for getting the accounts audited u/s 44AB of the Act as the turnover is less than the prescribed limit. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.

  ---

• 2022 (4) TMI 1269
  Relief u/s. 89 - ex-gratia amount of compensation to each of the 275 employees provided they accept the closure and termination of their services without agitating the issue or obstructing the development of the entire Mill land - HELD THAT:- We observed from the record that assessee is one of the employee who did not agree for the voluntary retirement scheme offered by the company and subsequently company has pledged a piece of land for the benefit of 275 employees who are not agreed for the voluntary retirement scheme compensation. Subsequently owing to the order of the Labour Commissioner and Municipal Corporation of the Greater Mumbai which imposed certain conditions on the company to safeguard the interest of the 275 workers who had not opted for voluntary retirement scheme. Subsequently individual employees and the company entered into supplementary agreement and the company agreed to compute the total compensation payable by the company till they attain 63 years of age and accordingly in the case of the assessee it was determined to be at Rs..59,15,934/-. The company after considering that these are one time lumpsum ex-gratia amount payable to the employee and settled the same after deducting the TDS as per the provision u/s. 192 - We observe from the record that company in the supplementary agreement has explained that the one time lumpsum ex-gratia amount is salary paid to the ex-employee in advance and accordingly, it has deducted tax at source in accordance with the provisions of the I.T. Act. In this regard the company also issued Form 16 to the assessee for the relevant year 2016-17. On careful consideration of the facts on record we observe that even though the textile unit was closed on 2008 and assessee has refused to agree the voluntary retirement scheme offered by the company and under protest assessee and similar employees managed to get compensation through Labour Commissioner and as per the directions of the Labour Commissioner, as agreed by the company, the assessee was awarded the compensation for the remaining period of service till the age of 63 years. The basis of compensation calculated by the company and the company also treated the one-time compensation as a salary paid in advance and deducted the TDS on the same, clearly indicates that the compensation received by the assessee is only salary received in advance not as termination compensation even though this was paid in lumpsum as ex-gratia in one go. Thus we are inclined to treat the compensation received by the assessee as only salary received in advance. Therefore, we direct the Assessing Officer to allow the claim of the assessee u/s. 89 r.w. Rule 21A of I.T. Rules. Accordingly, the appeal filed by the assessee is allowed.

  ---

• 2022 (4) TMI 1268
  Disallowance of deduction u/s. 80IA on account of profit from sale of steam - AO held that no deduction under S. 80IA of the Act was admissible on sale of steam which was used for consumption in other unit - HELD THAT:- As decided in own case [ 2018 (1) TMI 1667 - ITAT AHMEDABAD ] relying on various decision in support of the claim made by the assessee and acceptance by the AO that steam is a form of power and eligible for deduction and for the basis of deduction relying on the engineers certificate as well different case laws held. CIT(A) has rightly deleted the addition and profit margin kept by the assessee in Captive consumption is fair and reasonable. In our considered opinion on the basis of consistency and ld. CIT(A) has passed a detailed and reasoned order. - Decided against revenue.

  ---

• 2022 (4) TMI 1267
  Revision u/s 263 - Assessee claimed as exempt on principle of mutuality as per section 80P - assessee made investment in fixed deposits in nationalized bank (SBI and Union Bank of India) and co-operative bank and interest received thereon was claimed as exempt - HELD THAT:- Neither the Ld. A.O. nor the Ld. Pr. CIT has considered the decision by Supreme Court of India in the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT ] wherein it has been has held that interest earned by assessee-club on fixed deposits from its member banks would not be exempt from tax on basis of doctrine of mutuality. When we brought this fact to the attention of the parties, the Ld. counsel for the assessee submitted that facts of the Supreme Court decision in Bangalore Club supra is distinguishable on facts and assessee s case is covered by the decision of M/s. Sakar Corporation (supra). In our considered view, the Ld. A.O. has while passing the original assessment order has not considered certain important factual aspects. We accordingly restore the matter to the file of A.O. to analyze the applicability of the decisions cited above in the assessee s set of facts and pass a de-novo assessment after providing reasonable opportunity to the assessee.

  ---

• 2022 (4) TMI 1266
  Rejection of books of accounts - AO assessed income @ 8% of gross receipts - HELD THAT:- Before us the Ld. Counsel for the assessee has submitted that the assessee never received notice of hearing from the CIT(A) and hence could not cause appearance before first appellate authority. Revenue on the other hand has not contested the claim of the assessee that the assessee was never served with the notice of hearing by Ld. CIT(A). In the interests of justice, we are restoring the file to the Ld. CIT(A) for carrying out a detailed inspection of books of accounts of the assessee and carry out a verification of their genuineness and authenticity. In this regard, opportunity may also be given to the Ld. Assessing Officer for cross verification. The assessee is also directed to kindly co-operate in the matter and provide assistance to the Revenue

  ---

• 2022 (4) TMI 1265
  Revision u/s 263 by CIT - interest income from the unsecured loans not declared by the assessee - HELD THAT:- Admitted facts are that the assessee has taken a loan from various creditors amounting to Rs. 61 lakhs as detailed in the order u/s. 263 - The assessee has submitted the written submissions and relied on the decisions of various Benches of the Hon ble Tribunal and Hon ble High Courts as detailed in written submissions. We have gone through the records and written submissions of the assessee. We find that there is no specific mentioning about the submissions made by the assessee in the order of the AO. In view of the above invoking the powers under section 263 of the Act by the Ld. Pr. CIT is valid in law and therefore, we hereby confirm the order of the Ld. Pr. CIT. - Decided against assessee.

  ---

• 2022 (4) TMI 1264
  Delayed payment of PF contribution regarding employees contribution - Revenue has disputed that the employees contribution received by the assessee would be treated as income of the assessee because the same has not been deposited in the Government account within the due date as prescribed under the respective Acts - whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? - HELD THAT:- In the present case before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted by Hon ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd [ 2014 (9) TMI 576 - SUPREME COURT] an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22 of Explanation-2 to s. 36(1)(va) of the Act and not retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee s appeal is allowed.

  ---

• 2022 (4) TMI 1263
  Depreciation on non compete fee - Depreciation on intangible asset as per Section 32(1)(ii) - HELD THAT:- To justify its claim of depreciation, in course of proceedings before the departmental authorities, assessee has submitted that since depreciation was allowed in preceding assessment years, the same cannot be disallowed in the impugned assessment year as Rule of Consistency would apply. However, we are unable to agree with the aforesaid submission made by the assessee before the departmental authorities. It appears, at the time of allowing depreciation in assessment years 2012-13 and 2013-14, the departmental authorities did not have the benefit of the ratio laid down by the Hon ble jurisdictional High Court in case of Sharp Business System [ 2012 (11) TMI 324 - DELHI HIGH COURT] The reasoning of the Hon ble jurisdictional High Court for coming to such conclusion is, unlike the rights mentioned in Section 32(1)(ii) which an owner can exercise against the world at large and can be traded or transferred, in case of non compete fee, the advantage is restricted only against the seller. Therefore, it is not a right in rem but in personem. We are conscious of the fact that some other non-jurisdictional High Courts have held that non compete fee is an intangible asset coming within the ambit of Section 32(1)(ii) of the Act and have allowed depreciation. However, since, we are bound by the decision of the Hon ble jurisdictional High Court rendered in case of Sharp Business System Vs. CIT(supra), respectfully, following the ratio laid down in case of Sharp Business System (supra), we hold that assessee s claim of depreciation on non compete fee is unacceptable. Accordingly, we uphold the decision of Commissioner (Appeals) by dismissing the grounds raised.

  ---

• 2022 (4) TMI 1262
  Allowability of deduction u/s 80-IA(4)(iii) - AO has rejected deduction u/s 80-IA(4)(iii) due to one single reason only i.e. the Notification was not issued by the CBDT at the time of finalization of assessment - As per assessee he has already submitted all details of the Devraj Industrial Park not only to the CBDT but also to the Ld. AO by filing the aforesaid letter dated 25.02.2013 and 25.03.2013 which are very much embodied in the assessment-order itself - HELD THAT:- We also observe from the submissions made by the Ld. AR that the assessee has submitted full details of the park to the CBDT, Ld. AO and Ld. CIT(A). We also observe that the assessee has submitted audited P L A/c, audited Balance-Sheet and Form 3CD alongwith the return. We also observe that the Hon ble Gujrat High Court [ 2017 (11) TMI 582 - GUJARAT HIGH COURT] para No. 31, reproduced above has mandated The petitioner s claim for deduction at whichever stage pending before the assessing or appellate authority shall be governed by this declaration . In such circumstances we are inclined to hold that the Ld. CIT(A) has rightly allowed the deduction u/s 80-IA(4)(iii), as claimed by the assessee. - Decided in favour of assessee. Whether the other income earned by the assessee was eligible for deduction u/s 80-IA(4)(iii)? - After due consideration we find sufficient force in the submission of the Ld. AR, without repeating the same, that the Kasar Vatav and Dividend income earned by the assessee, are derived from the business of industrial park and therefore eligible for deduction u/s 80-IA(4)(iii). Accordingly, we allow deduction. Whether the bogus purchases and bogus expenditure are eligible for deduction u/s 80-IA(4)(iii)? - We have considered the submissions of both sides as also the aforesaid CBDT Circular No. 37 / 2016 dated 02.11.2016. We observe that the CBDT has clearly accepted that if the profit of business is enhanced by disallowances of expenses, such enhanced profit is eligible for deduction. Needless to mention that the Circulars issued by the CBDT are binding upon the lower authorities and so is the Circular No. 37 / 2016. Section 80AB is directly applicable, which mandates that the income computed in accordance with the provisions of this Act shall be deemed to be the income derived from the business of industrial park. In the present case, the Ld. AO has computed the income of the business of industrial park after making the disallowances of bogus purchases and bogus expenditure and therefore the amount arrived at after making these disallowance i.e. the enhanced profit of the industrial park, is the income computed in accordance with the provisions of this Act. Hence such enhanced profit is deemed to be the income derived from the business of industrial park and eligible for deduction. In view of this, we find no infirmity in the action of Ld. CIT(A). Hence we hold that the profit of business enhanced by the disallowance of bogus purchases and bogus expenses is eligible for deduction u/s 80-IA(4)(iii). Revenue appeal dismissed.

  ---

• Customs

• 2022 (4) TMI 1261
  Release of vessel - Classification of imported goods - GTL Light Paraffin - The goods have already been released of a bond executed by the importer. - whether the subject goods is in the form of Liquid Paraffin or Light Diesel Oil? - report of the CRCL, rejected by DRI - HELD THAT:- The writ applicants are the owners of the vessel. It is noted that the goods have already been released. As two reports now on record of two different laboratories, further detention of the vessel, need not be allowed. At least, the vessel needs to be released on the writ applicant furnishing an appropriate undertaking to the Commissioner (Customs) to the effect that the writ applicants shall cooperate in the inquiry till the last. The inquiry has otherwise also to proceed further as the importer has also executed a bond while getting the good released and has already furnished a bank guarantee of the amount equivalent to the value of the goods. This writ application is disposed off directing the Commissioner (Customs), Kandla, to release the vessel after obtaining the undertaking.

  ---

• 2022 (4) TMI 1260
  Seeking refund under Rebate of State and Central Taxes and Levies (ROSCTL) scheme - benefit of scheme announced vide a N/N. 14/26/2016-IT (Vol.II) dated 08.03.2019 or not - inadvertent selection of option NO instead of YES while filing the ROSCTL claim of the petitioner in the said Shipping Bill, or not - case of petitioner is that such an error never occurred during the filing of IECGATE portal - HELD THAT:- It is submitted that there was an inadvertent error while filing the Shipping Bill and that upon realizing the same, the petitioner addressed the communication to the 3rd respondent on 06.05.2020 informing the inadvertence error with a request to amend the Shipping Bill. The 3rd respondent also appears to have given a certificate on 07.06.2021 to the effect that the petitioner is entitled to ROSCTL scheme. Hence, the request of the petitioner may be considered favorably. Despite the same, the 2nd respondent has rejected the request of the petitioner by conveying the decision of the Committee on 09.07.2021, vide e-mail dated 20.07.2021. The decisions of this Court in M/S. K.I. INTERNATIONAL LIMITED VERSUS THE COMMISSIONER OF CUSTOMS (APPEAL-II) , THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS (EDC) [ 2021 (6) TMI 1007 - MADRAS HIGH COURT] and TRACTORS AND FARM EQUIPMENT LIMITED VERSUS DIRECTORATE GENERAL OF FOREIGN TRADE (DGFT) , THE DGFT POLICY RELAXATION COMMITTEE, THE ASSISTANT COMMISSIONER OF CUSTOMS [ 2022 (3) TMI 826 - MADRAS HIGH COURT] though deal with export under the MEIS scheme, nevertheless it would apply to the facts of the case inasmuch as ROSCTL scheme announced vide Notification No.14/26/2016- IT (Vol.II) dated 08.03.2019 has been given to promote export. The Ministry of Textile has decided to rebate embedded State and Central taxes and levies to support exporters from India. The fact that the petitioner has exported goods out of India and the petitioner was otherwise entitled to the aforesaid scheme is not in dispute. This writ petition is allowed by directing the respondents 2 and 3 to grant the benefit to the petitioner in terms of the Foreign Trade Policy within a period of 6 weeks from the date of receipt of a copy of this order - petition allowed.

  ---

• 2022 (4) TMI 1259
  Jurisdiction - power of DRI to issue SCN - Proper Officer or not - Initiation of proceedings by respondent no.7 - validity of proceedings and inquiry/investigation conducted for the imports made by the petitioner at various Customs Stations under jurisdiction of respondent nos. 2 to 6 - Section 28(4) of the Customs Act, 1962 - HELD THAT:- While analyzing Section 28A(4) of the Customs Act, the Apex Court in M/s. Canon India Pvt. Ltd. [ 2021 (3) TMI 384 - SUPREME COURT ] held that the provision must be construed as conferring the power of such review on the same officer or his successor who has been assigned the function of assessment. An officer who did the assessment could only undertake reassessment and after extensive analysis, the Court held that the entire proceeding initiated by the Additional Director, General of DRI by issuing show cause notices in all the matters are invalid, without any authority of law and liable to be set aside and accordingly, ensuing demands also have been set aside. It is noteworthy that before the Apex Court, it also examined the issue of limitation by considering the fact that a show cause notice under Section 28(4) could be issued within 5 years from the relevant date which means the date on which the goods were assessed and cleared in case the duty was not paid, short paid or erroneously refunded by reason of collusion or any misstatement or suppression of facts. On having found that the importer had not made any willful misstatement or suppression of facts, the Court therefore held that extended period of limitation of 5 years was not available to any authority to reopen under Section 28(4) as it was difficult to hold that there was any willful misstatement on facts. In case of COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS [ 2021 (9) TMI 316 - SUPREME COURT] , the identical issue had arisen and the Apex Court in wake of the decision of Three Judges Bench of the Apex Court in M/s. Canon India Pvt. Ltd. had dismissed the appeals as the show cause notice was also issued by the Additional Director General, Directorate of Intelligence who is held to be not the proper officer within the meaning of Section 28(4) read with Section 2(34) of the Customs Act. The arguments advanced of there being no infirmity in appointment of the DRI officers as Customs Officers under Notification No. 17/2002 dated 07.03.2002 and the discussion on Section 6 for the entrustment of the functions of the officers of the customs on certain other officers which are the officers of the Central or State Government or a Local Body, by emphasizing on a conjoint reading of Sections 4 and 6 will surely not be within the purview of this Court. Thus, not only the binding decision of the Apex Court in case of Canon India will govern the fate of each matter where the issuance of show cause notice is by the DRI and in contravention of the ratio laid down, it is also for this Court to ignore such ratio by holding that this issue also could be approached in different ways. Nor would it make permissible to defend the action of the State on the ground of cause expounded in the show cause notice when the very authority as per the decision lacked authority to issue the same. This Court much awaited for the outcome of review which is pending - The amendment in the act has been brought on the statute and whether it can have effect retrospectively when in case of all these matters, show cause notices have been issued prior to the amendment having come into force is not the question to be deliberated upon as argued by both the sides. Show cause notice issued in each case by the DRI is quashed - Petition allowed.

  ---

• 2022 (4) TMI 1258
  Classification of imported goods - Aluminium Composite Material - Aluminium Composite Panels - classifiable under Chapter Tariff Heading (CTH) 7606 1200 or under CTH 7610 9030? - HELD THAT:- The issue is decided by the Commissioner (A) s Chennai in favour of the appellants on two occasions. Department s appeal was rejected by CESTAT. It is found that CESTAT had rejected the appeal of the Department for the reason of delayed filing by dismissing the COD application. There are no material on record to show that dismissal of the application by CESTAT has been appealed against by the Department. Under the circumstances, it is found that order of learned Commissioner (A) s Chennai has attained finality and it is not open for the Department to raise the same issue again and again. Moreover, it is found that in the case of COMMISSIONER OF CUSTOMS (IMPORTS) , CHENNAI VERSUS ICP INDIA PVT. LTD. [ 2018 (7) TMI 546 - CESTAT CHENNAI] , on an identical set of facts, Coordinate Bench at Chennai had decided the issue in favour of the appellants. Thus, on perusal of literatures produced by the appellants, there are no doubt that the impugned goods are rightly classifiable under CTH 7606 1200. The learned Authorised Representative relies upon M/S. D M BUILDING PRODUCT PVT LTD., SRI PRABPRIT SINGH KOCHAR MANAGING DIRECTOR VERSUS THE COMMISSIONER OF CUSTOMS [ 2019 (7) TMI 12 - CESTAT BANGALORE] . On going through the facts of the case, it is found that the facts of the case are different, items in dispute in the case of D M Building were items prepared for use in structures after import, whereas in the instant case, the impugned goods are simple aluminium plates which are used for cladding the outer walls of the building - The facts of the case and the item being different, the case referred by learned Authorised Representative cannot be relied upon. Moreover, in the case of the appellants, the decision of the Commissioner (A) s Chennai has attained finality and a contrary decision, which will be detrimental to the appellants cannot be taken in the interest of justice. Appeal allowed - decided in favor of appellant.

  ---

• Insolvency & Bankruptcy

• 2022 (4) TMI 1257
  Seeking payment of minimum wages and compensation payable to three erstwhile employees - company under liquidation - discharge of dues out of liquidation proceeds - priority of discharge of workmen s dues - Section 53 (1) (b) (i) of I B Code - HELD THAT:- It is to be noted that Section 53(1) deals with distribution of assets and the order of priority of distribution of liquidation assets. Under Section 53 (1) (b) (i) of the Code, priority is given for workmen s dues for the period of twenty-four months preceding the liquidation commencement date. It does not mean that the workmen s dues for the period prior to the said period need not be paid. The same has to be paid in the order of priority. 53 (1) (f) of the Code deals with the distribution of any remaining debts and dues . Therefore, the Liquidator has to distribute the amount covered by Ext.P3 order in terms of the priority as provided under Section 53 (1) of the Code. There can be no doubt that in view of Section238 of the Code, the Code will override anything inconsistent contained in any enactment, including the Minimum Wages Act, 1948. The Code provides for distribution of workmen s due from the liquidation assets in the order of priority. The workmen s dues, as adjudicated by the Controlling Authority under the Minimum Wages Act, 1948, has to be distributed from the liquidation assets in the order of priority as provided under Section 53 of the Code. Ext.P3 order is not in breach of the provisions of the Code - The liquidation process and the distribution of assets are not over and there is no bar under Section 38 of the Code to receive the claim under Ext.P3. Section 38 does not curtail the power of the Liquidator to distribute the dues out of liquidation process till the distribution of assets. There are no reason to interfere with Ext.P3 order of the Controlling Authority under the Minimum Wages Act, 1948, except to the extent of directing the petitioner to deposit the amount ordered therein within 30 days of the order. The amount directed to be paid in Ext.P3 shall be paid by the petitioner in the order of priority as provided under Section 53 (1) (f) of the Code - petition disposed off.

  ---

• 2022 (4) TMI 1256
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dies - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The observations and conclusion which has been drawn by the Adjudicating Authority are based on the sequence of the events and facts of the case. The Adjudicating Authority has returned the finding that there was not a single correspondence between the Operational Creditor and the Corporate Debtor qua raising and demanding of bill amount or supply of material. No order of supply of material and demand for payment prior to filing of the Application are the reasons which have been relied and the Adjudicating Authority has come to the conclusion that the bill raised is forged and fabricated and has been raised only for initiation of CIRP of the Corporate Debtor who is the builder - it is also noticed that bill as relied by the Appellant does not contain any GST number which reaffirms the view that bill was a bogus bill prepared only for filing the Section 9 Application. The submission of the Counsel for the Appellant is agreed upon that the quantum of the amount may not be relevant for taking a decision either to reject or admit the Application but on the sequence of the events and the facts which were before the Adjudicating Authority, the Adjudicating Authority rightly came to the conclusion that there was active collusion between the parties to defraud the other creditors and to facilitate the Respondent to enjoy the rigors of the I B Code. There are no reason to take a different view from one which have been taken by the Adjudicating Authority - appeal dismissed.

  ---

• 2022 (4) TMI 1255
  Maintainability pf application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - extension of loan facility by the petitioner bank to the respondent corporate debtor or not - petition has been filed by duly Authorised officer of DHFL or not - HELD THAT:- Admittedly, the Insolvency proceedings were ordered to be initiated on 03.12.2019 against the Petitioner/Financial Creditor herein. Therefore, the Authorization Letter based on Power of Attorney dated 26.09.2017/31.10.2017, issued on the basis of Resolution dated 21.07.2017/23.08.2017 stand terminated on triggering of insolvency proceedings against the Financial Creditors, as Board of Financial Creditor i.e. DHFL was no more in existence after 03.12.2019. On appointment Resolution Professional, it has to be represented by RP only. Further the Administrator was appointed on 24.12.2019, thus, the present petition was required to be filed on behalf of DHFL either through its Administrator or Resolution Professional only and none else. Any such subsequent ratification of the acts deeds of Authorised Officer Mr. Amit Kumar Dubey, does not made him as duly Authorised Officer, as he was also no more in existence due to lack of value valid power of attorney Mr. Vivek Jaigadkar. Had, the petition would have filed before the appointment of Resolution Professional Administrator, the situation would have been different and his acts could have ratified and proceedings would have been taken over by either of these financial creditors. In the absence of any such valid power of attorney, the authorized officer had no legal and valid right authority to file and pursue the present petition. Thus, it is established the ratification of the Power of Attorney/Authorisation Letter both Mr. Mr. Vivek Jaigadkar Mr. Amit Kumar Dubey respectively by the erstwhile Administrator, Dewan Housing Finance Corporation Limited and subsequently by M/s. Piramal Capital Housing Finance Ltd. being Successful Resultant Applicant cannot be held legally valid for the purpose of filing continuation of the present petition under Section 7 of the Code - the present petition has not been filed by Authorised officer of Bank, hence, the same is not maintainable. Whether the petitioner bank actually extended the loan facility to the respondent corporate debtor? - Whether the petitioner bank is entitled to trigger the CIR proceedings on the basis of default in repayment of the amount involved herein? - HELD THAT:- No doubt, lacking of security while extending facility of loan may not be ground for not considering the above said amount as financial debt, but in the matter in hand, Apparently that there are number of above said irregularities qua the transactions made by the petitioner, which leads to the conclusion that the same does not come under the purview of financial debt and falls in the category of avoidance transactions being made with malicious intent. It is established that once the party consciously elected to take one plea, it cannot be permitted to say something inconsistent contradictory to that at the same juncture. In the matter in hand, the petitioner consciously took decision to file an application IA No. 257/2021 under Section 60(5), 66 of Code saying that the transaction to the Corporate Debtor as well as other companies were fraudulent collusive in nature. Thus, now, by virtue of this petition under section 7 of code, it cannot be allowed to say that the said transaction was valid being loan in nature. The petitioner cannot be allowed to blow hot cold by taking contradictory inconsistent stands with a malafide intention to take undue advantage to secure an order of initiation of CLR proceedings against the corporate debtor herein. The expression debt due would obviously refers to debts that are due payable under law and not the amount, which was disbursed fraudulently collusively with ulterior motive. Thus, an amount may not be due, if it is not payable in law or in fact and the moment it does not satisfy basic conclusion that a default has actually occurred, the petition cannot be admitted. The respondent clearly pointed and proved that there is no dispute qua the claimed amount of Rs. 187 crores, but and it was in fact not a financial debt . This Tribunal is of affirm view that neither the present petition under section 7 of code has been filed by duly Authorised Officer nor the petitioner herein succeeded to establish that the amount involved in the transaction was actually a financial debt under section 5(8) of code - petition dismissed.

  ---

• Service Tax

• 2022 (4) TMI 1254
  Prayer for interim protection till the restoration application is not taken up by the learned CESTAT, Eastern Zone, Kolkata for disposal - recovery of the dues under Section 87 of the Finance Act 1994 read with Section 174 and Section 79 of the CGST Act 2017 - HELD THAT:- Since the restoration petition is pending before the learned CESTAT, Eastern Zone, Kolkata and petitioner had got an interim protection on pre-deposit earlier, we are inclined to grant interim protection to the petitioner from any coercive steps on the part of the respondents till 23.05.2022 when the matter is posted before the learned CESTAT, Eastern Zone, Kolkata. Needless to say, learned CESTAT would endeavour to take up the case on 23.05.2022 or any date prior to or thereafter on prior notice to the petitioner. However, interim order shall cease to operate on 23.05.2022. Let the order be communicated to the learned CESTAT, Eastern Zone, Kolkata through FAX and email, apart from the usual course. Petitioner shall also serve the copy of the instant order upon learned Deputy / Assistant Registrar, CESTAT, Kolkata within a period of 1 weeks. Writ petition disposed off.

  ---

• 2022 (4) TMI 1253
  Refund of service tax - one time upfront amount (premium, salami, cost, price, development charge or by whatever name called) - taxable service provided or agreed to be provided by a State Government industrial development corporation or undertaking to industrial units - service by way of grant of long term lease of 30 years or more of industrial plots - denial of refund on the ground of non-production of requisite documents - period commencing from the 1st June, 2007 and ending with the 21st September, 2016 - HELD THAT:- The issue is no longer res integra and the appellants have a strong case in their favour on merits as well as procedure. This Bench has gone into both the issues in the case of COMFORT NIGHT LINEN PRODUCTS AND PROCESS INSTRUMENTATION AND ENGINEERS VERSUS COMMISSIONER OF CENTRAL TAX CENTRAL EXCISE, CALICUT [ 2021 (8) TMI 169 - CESTAT BANGALORE ] and held that the refund is due to the appellants. The issue is squarely covered in favour of the appellants and the impugned orders are not sustainable - Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2022 (4) TMI 1252
  Registration of sale deed of the property - possession of the secured assets - original borrower defaulted in the repayment of the loan amount - HELD THAT:- What came to be purchased by the writ-applicant in the auction proceedings conducted by the State Bank of India was a secured asset under the provisions of the SARFAESI Act. In such circumstances, the State cannot claim preference over the subject property for the purpose of recovery of the dues towards VAT. It is hereby declared that the State cannot claim any first charge over the subject property by virtue of Section-48 of the GVAT Act, 2003 - The Sub-registrar is directed to register the sale-deed duly executed by the State Bank of India in favour of writ-applicant in accordance with the provisions of the Registration Act at the earliest. Application allowed.

  ---

• 2022 (4) TMI 1251
  Violation of principles of natural justice - opportunity to submit documents / proofs in respect of purchases, not provided to the Appellant - when the proceedings against the Appellant have gone on ex-parte, whether the Tribunal has erred in law and on facts to order pre-deposit of amounts? - Whether a pre condition to hear the appeal can be set when the Appellant has not even been heard once and its case has not been decided on merits at all? - HELD THAT:- We need not now proceed to answer the substantial questions of law formulated by this Court at the time of admission of the appeal. The impugned order passed by the Tribunal dated 4th September, 2018 is hereby quashed and set aside. The writ applicant shall deposit the amount of Rs. 8 Lakh and Rs. 13,000/- respectively with the First Appellate Authority within a period of two weeks from today. If the requested amounts are deposited towards the GVAT dues and CST dues, then the First Appellate Authority shall hear the appeals filed by the appellant herein on merits and dispose them of in accordance with law. Tax appeal disposed off.

  ---

• 2022 (4) TMI 1250
  Rejection of application for refund of mandatory statutory obligation pre-deposit with interest - Excess amount then as accepted in the Resolution plant during CIRP proceedings under IBC - Section 82 (3) of the Rajasthan Value Added Tax Act, 2003 - HELD THAT:- Section 82(3) of the Act of 2003 imposes a mandatory statutory obligation of making a pre-deposit for entertaining an appeal. In appeals against ex parte assessment orders, the mandatory statutory pre-deposit would be 5% of the Value Added Tax and 10% of the Value Added Tax amount in other cases. As per Section 53 (4) of the Act of 2003, where refund of any amount becomes due to a dealer, he shall be entitled to receive simple interest at such rate as may be notified by the State Government - The Act of 2003 has further been supplemented by the Rajasthan Value Added Tax Rules, 2006 (the Rules of 2006). Rule 27 of the Rules of 2006 also deals with refund of excess tax/penalty/interest/other sum due, as a result of an assessment made or in pursuance of an order passed by any competent officer, authority or court. Once the tax liability raised by the Department had been fixed by effect of acceptance of Resolution Plan, manifestly, the Department could not hold on to any payment made by the assessee in excess of what has been approved under the Resolution Plan, i.e. Rs. 61.05 crores. The reasoning given by the Tax Board in the impugned orders that the amount deposited by the assessee by way of statutory pre-deposit was not a part of the Resolution Plan is absolutely without foundation for the simple reason that this amount was a proportion of the tax liability fixed on the assessee and once the total tax liability has been quantified by the NCLAT, any amount paid by the assessee over and above such amount would have to be reimbursed as per Section 53 (3) (3A) of the Act of 2003 read with Rule 27 of the Rules of 2006. In the case of STATE OF GUJARAT VERSUS ESSAR STEEL LTD [ 2016 (5) TMI 221 - GUJARAT HIGH COURT] , Hon ble Gujarat High Court directed refund of pre-deposit on acceptance of the appeals and decided the issue in favour of the assessee. In the present case, though the appeals have not been accepted, but an analogous situation has been created with acceptance of the Resolution Plan and extinguishment of all debts/liabilities of the sick unit towards the statutory creditor, i.e. the State Government/Commercial Taxes Department. The consolidated impugned order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer in the appeals filed by the petitioner is set aside to the extent the applications filed by the petitioner for refund of pre-deposit amounts with interest were rejected - revision allowed.

  ---

• 2022 (4) TMI 1249
  Seeking release of refund claim alongwith pendent lie interest - interest as per Section 42 of DVAT Act on Refund claimed amount - liability to pay exemplary damages to the petitioner - respondents had acted in malafide and colorable exercise of power in with holding the refunds or not - Jurisdiction of civil courts to grant such refunds - HELD THAT:- The concerned Respondents are directed to decide the claim of refund of the Petitioner for Rs. 13,15,968/-, for the 4th quarter of the Assessment Year 2013-14 along with interest as claimed, in accordance with law, rules, regulations and Government policies applicable to the facts and circumstances of the case and also keeping in mind the principles of unjust enrichment propounded by the Hon ble Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , where it was held that The jurisdiction of civil courts is not barred in entirety regarding the attack against the levy and/or claim for refund. The decision shall be taken by the concerned Respondents, as expeditiously as possible and preferably within a period of 8 weeks from the date of receipt of copy of this order.

  ---

• Indian Laws

• 2022 (4) TMI 1248
  Assignment of debt to Asset Reconstruction Company - inability of bank to recover the loan granted - whether Power of Attorney is chargeable to stamp duty or not - HELD THAT:- In the case on hand, the consideration paid by the appellant to OBC, was for the purpose of acquisition of the financial assets, in respect of a particular borrower. The draft of the PoA contained in Schedule 3 of the deed of assignment was only incidental to the deed of assignment. The deed of assignment has already been charged to duty under Article 20(a) which deals with conveyance . In fact Article 45(f) also requires a PoA covered by the said provision to be chargeable to stamp duty under Article 20. In view of the Notification dated 01.04.2003 issued in exercise of the power to reduce, remit or compound the duty, conferred by Section 9(a) of the Act, the amount of duty chargeable in terms of Article 20(a) was capped at Rs. 1,00,000/. In addition to the said amount of Rs. 1,00,000/, the appellant was asked to pay an additional duty of Rs. 40,000/under Section 3A. The appellant has thus paid a total amount of Rs. 1,40,000/with the instrument having been charged as a conveyance under Article 20(a). In all taxing Statutes, there are taxing provisions and machinery provisions. Once a single instrument has been charged under a correct charging provision of the Statute, namely Article 20(a), the Revenue cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification of the Government issued under Section 9(a). In other words after having accepted the deed of assignment as an instrument chargeable to duty as a conveyance under Article 20(a) and after having collected the duty payable on the same, it is not open to the respondent to subject the same instrument to duty once again under Article 45(f), merely because the appellant had the benefit of the notifications under Section 9(a). Since the impugned order of the High Court did not address these issues and went solely on the interpretation of Article 45(f), the same is unsustainable - Appeal allowed - decided in favor of appellant.

  ---

• 2022 (4) TMI 1247
  Dishonor of Cheque - Seeking recovery of the interim compensation awarded to the petitioner, from the estate of a deceased accused - accused died before the conclusion of the trial - acquittal of the accused - Section 143A of NI Act - HELD THAT:- By operation of Section 70 of the Indian Penal Code, 1860 any unpaid fine may be levied at any time within six years after the passing of the sentence, and the death of the accused does not discharge from the liability any property which would, after his death, be legally liable for his debts - The combined reading of the relevant provisions makes it clear that where the compensation has been directed to be paid upon conclusion of a proceeding under Section 138 of the Negotiable Instruments Act, 1881, the legal heirs who have inherited the estate of the deceased are liable to repay the fine or compensation amount when an application under Section 421 of the Code of Criminal Procedure, 1973, has been filed. In the case M. ABBAS HAJI VERSUS T.N. CHANNAKESHAVA [2019 (9) TMI 1497 - SUPREME COURT] the Supreme Court ultimately allowed the application filed by the legal heirs of the deceased to prosecute his appeal - The position of law will be, however, different in a case where the interim compensation has been granted under Section 143A of the Negotiable Instruments Act, 1881. Section 143A (1) of the Negotiable Instruments Act, 1881, speaks of payment of interim compensation. Section 143A (1) is independent of Section 143A (4) of the Negotiable Instruments Act, 1881. A bare reading of Section 143A (4) makes it clear that in the event the drawer of the cheque is acquitted, the interim compensation paid in terms of Section 143A (1) has to be repaid together with the prevalent bank interest - The order of interim compensation is, therefore, dependent on the outcome of the trial. There is no finality attached to such interim order of compensation and no right is crystallized in favour of the complainant by dint of such interim order of compensation. The order of interim compensation, which is passed in the aid of final compensation, will cease to exist when the trial comes to an end due to the death of the accused since in such eventuality there cannot be any scope to adjudicate the innocence or the guilt of the accused in the trial. If in case of death of an accused the compensation awarded under Section 138 of the Negotiable Instruments Act, 1881 can be recovered from the estate of a deceased accused, but an interim compensation awarded under Section 143A of the said Act cannot be recovered from the estate of a deceased accused, who died before the conclusion of the trial. Revisional application dismissed.

  ---

• 2022 (4) TMI 1246
  Dishonor of Cheque - insufficiency of funds - amicable settlement between parties, entering into compromise - HELD THAT:- In compliance of order of this Court though the applicant/revisionist did appear in person as he was in jail, however, his counsel Shri Arpan Shrivastava appeared before the Registrar Judicial-II for verification of their compromise. The complainant who has been identified by his counsel Shri Kapil Patwardhan appeared in person before the Registrar (Judicial-II). The Registrar (Judicial-II) submitted his report dt.10.3.2022 stating that complainant has voluntarily entered into compromise without any force, compulsion, duress, undue influence or threat. The complainant also stated that he has no objection if the applicant/revisionist is acquitted in the light of compromise in question. However, the Registrar (Judicial-II) has pointed out that in view of decisions in the case of Damodardas S. Prabhu Vs. Sayed Babalal H, [ 2010 (5) TMI 380 - SUPREME COURT ] and M.P. State Legal Services Authority Vs. Prateek Jain and others, [ 2014 (10) TMI 528 - SUPREME COURT ] the applicant/revisionist is required to deposit 15% of the cheque amount as costs with the State Legal Servics Authority - it is directed subject to applicant s depositing compounding fee of 15% of cheque amount (Rs. 1,50,000/-) i.e. Rs. 22,500/- before the State Legal Services Authority, Jabalpur within 15 days from the date of receipt of copy of this order, the prayer of parties for compounding be treated to have been allowed, impugned judgment dated 30.07.2021 be treated to be set aside and the applicant be treated to be acquitted from the charge under section 138 of the Negotiable Instruments Act. Revision allowed.

  ---

• 2022 (4) TMI 1245
  Dishonor of Cheque - One Time Settlement Scheme - essential ingredients of vicarious liability under Section 141 of N.I. Act, present or not - HELD THAT:- . This Court cannot be oblivious nor can it shut its eyes to see that the amount disbursed by the respondent in favour of the SDBL as a loan, is a pubic money and if they are not serious to recover the same and litigating the matter as per their own choice by not initiating any recovery proceeding, the amount which is being offered by the borrower cannot be denied to accept. The proceeding of N.I.Act cannot be kept pending only because the respondent is not willing to settle the dispute despite the fact, as has been discussed above, amount is still lying with the respondent. The overall circumstances and the averments made in the complaint and the excellent ratiocination prima facie made the argument of learned counsel for the petitioners more impressionable, but this Court is uninterested being disinterested to step into that question for the reason that the offer made by the petitioners for adjustment of amount appears reasonable and impregnable. Ergo, to break the chain of elongated litigation pursued unnecessarily for more than two decades and to bring the discord to its logical end, it is opined that the complaint cases should be quashed by adequately compensating the respondent. The proceedings of all the complaint cases, which have given rise to these petitions, are hereby quashed. It is directed that from the deposited amount of the SDBL which is lying in Escrow Account and in possession of the respondent, the total cheque amounts, in all the complaint cases, shall be adjusted and further an amount of Rs. 50 Lac towards compensation and Rs. 20 Lac towards cost of litigation shall also be adjusted - petition allowed.

  ---

• 2022 (4) TMI 1244
  Dishonor of Cheque - Payment was stopped by the drawer - discharge of legally recoverable debt or not - rebuttal of presumption - financial capacity to lend - sources of income - Legality of money lending business without any license - validity of signature on the cheque - burden of prove - section 138 of NI Act - HELD THAT:- On perusing the averments made in the complaint coupled with the documentary evidence produced before the Court, it is evident that petitioner has discharged burden of proving his case. The accused has admitted that cheque belong to his account and also admitted his signature on it. In view of the evidence led before the Court, the presumption under Section 139 of Act and Section 118 of NI act arise in favour of complainant. In this case, the accused has lead evidence as DW1. In his examination in chief, it is stated that a false case has been filed against him. The contentions of the petitioner in this regard are all false as some of his cheques were missing and he has intimated the Bank to stop the payment and the signature on the demand note is not of his signature. This is in examination in chief. He never stated that, he does not know this complainant or his brother. He does not say that complainant has no financial capacity, he does not say that how the cheque was mis-used. Validity of signatures on the cheque - HELD THAT:- The accused has not produced any documents before the Court to show that he has informed the Bank that he lost the cheques or cheque book, he has not examined the Manager also but simply state that he has informed the bank to stop the payment will not help the accused-petitioner. Even he has not stated that on which date he has given intimation to bank. According to him, neither he mentioned the date nor that he has given any intimation to bank to stop payment he has not lodged any complaint to the court or to the Police in this regard, even he has not mentioned which number cheques are lost. So this defence appears to be only for defence sake and there is no merit in it. On the other hand, it is evident that both petitioner and respondent were business persons - There is nothing in defence evidence to show that the complainant case is not true. The defence evidence will not help the accused in any way. The complainant has discharged the burden on him the presumption arising under said Negotiable Instrument Act is in his favour. If the entire materials are considered the judgment passed by the trial Court which was confirmed by appellate Court cannot be said as either illegal or erroneous. Both the courts have considered the provisions of laws and also the presumption under Section 139 of the NI Act properly. The accused has failed to rebut such presumption. Petition dismissed.

  ---