TMI Tax Updates - e-Newsletter
April 30, 2021

Case Laws in this Newsletter:

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

News

1. CCI approves acquisition by Tata Digital Limited of up to 64.3% of the total share capital of Supermarket Grocery Supplies Private Ltd (SGS) and SGS’ sole control over Innovative Retail Concepts Private Limited

Notifications

SEZ

1. S.O. 1708 (E) - dated 26-4-2021 - SEZ

Central Government notifies the 1.466 hectares area at Knowledge City, Raidurg Village, Serilingampally Mandal, Ranga Reddy District in the State of Telangana and constitutes an Approval Committee

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2021/557 - dated 29-4-2021

Relaxation from compliance with certain provisions of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 / other applicable circulars due to the CoVID-19 pandemic

2. SEBI/HO/CFD/CMD1/P/CIR/2021/556 - dated 29-4-2021

Relaxation from compliance with certain provisions of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 due to the CoVID-19 pandemic

3. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/555 - dated 29-4-2021

Disclosure of the following only w.r.t schemes which are subscribed by the investor: a. risk-o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and b. Details of the portfolio

FEMA

4. 02 - dated 29-4-2021

Exim Bank's Government of India supported Line of Credit (LoC) of USD 250 million to the Government of the Republic of Mozambique

Highlights / Catch Notes

Income Tax

• Reassessment Invalid: Joint Commissioner's Approval u/s 151 for Reopening Beyond Four Years Challenged for Lack of Authority.

  Case-Laws - HC : Reopening of assessment u/s 147 - There is no indication of any application of mind by the authority. Moreover, the approval under Section 151 of the Act had to be granted by the Principal Chief Commissioner, or the Chief Commissioner, or the Principal Commissioner, or the Commissioner, if the reopening is beyond four years. However, the above approval in the instant case was issued by the Joint Commissioner and therefore, it was not a valid approval under Section 151 of the IT Act. - HC
  Visit to Get Source

  ---

• Court Dismisses Writ Petition on Recovery Proceedings Due to Petitioners' Delayed Tax Returns and Non-Cooperation.

  Case-Laws - HC : Validity of Recovery proceedings - The conduct of the petitioners is also relevant. Not only have the returns been filed belatedly but the petitioners have also chosen not to co-operate in the conduct of assessment. They are admittedly in receipt of the defect notices from the CPC, but have not bothered to respond to the same. The writ petitions have themselves been filed belatedly and after the elapse of more than six to eight months from the dates of impugned orders - Writ petition dismissed - HC
  Visit to Get Source

  ---

• Court Orders Excess Recovery for 2013-14 to Be Returned with Interest; Refunds Not to Offset Tax Demands Pending Appeal.

  Case-Laws - HC : Stay orders - Recovery proceedings - The amount recovered from petitioner over and above the amount as per instructions, memoranda, circular towards demand of tax for the AY 2013-14 pending in appeal would be returned to the Petitioner with interest according to law and refunds of amounts over and above the amount as per instructions / guidelines may not be adjusted towards tax demand for AY 2013-14 till disposal of appeal.- HC
  Visit to Get Source

  ---

• Assessment Reopening u/s 147 Unjustified: Mere Offer Not Proof of Salary Income Without Definitive Evidence.

  Case-Laws - AT : Reopening of assessment u/s 147 - Merely, offer made by the assessee in our considered view, ought not to have been taken as a conclusive evidence of earning salary income by the assessee. Therefore, in the absence of any conclusive evidence that the assessee infact had earned salary from M/s. Oldy Goldy Computers, the Assessing Officer was not justified in taking the addition and making the addition on account of earning of salary income - AT
  Visit to Get Source

  ---

• Capital Gains on Land Sale Governed by Unamended Provisions for AY 2011-12; Finance Act 2013 Amendments Not Applicable.

  Case-Laws - AT : Capital gain on sale of land - nature of land sold - once the amendment to the above statutory provision came vide Finance Act, 2013 w.e.f. 01-04-2014 the assessee’s case would continue to be governed by the earlier un-amended provisions as we are in AY.2011-12. This is also not the Revenue’s stand that assessee’s land(s) deserved to be treated as a capital asset as per the unamended proviso since covered by any notification issued in this behalf from the Central Government. - AT
  Visit to Get Source

  ---

• Depreciation Allowed on Installed but Unused Machinery; CIT(A) Decision Upheld, No Error Found in Assessment Year.

  Case-Laws - AT : Disallowance of depreciation of plant and machinery - even assuming for a moment, the asset was not put to use in the business of the assessee, but when the plant and machinery is installed and ready for use in the business for the relevant assessment year, then claim of depreciation can be allowed. There is no error in the findings recorded by the learned CIT(A) to delete disallowance of depreciation on plant and machinery. - AT
  Visit to Get Source

  ---

• Finance Act 2016 Amends Section 115BBE: No Business Loss Set-Off Against Unaccounted Income from April 1, 2017.

  Case-Laws - AT : Addition as headless deemed income - Unaccounted income u/s. 68 to section 69D - In sub-section (2) of section 115BBE as introduced by Finance Act, 2012 only disallowance of expenditure or other allowance was considered against unaccounted income u/s. 68 to section 69D but business loss was not covered. It is only by Finance Act, 2016 w.e.f. 01.04.2017 it is inserted in the provision to deny benefit of set off of any loss. - AT
  Visit to Get Source

  ---

Service Tax

• Refund of Service Tax Must Follow Limitation Period in Section 11B of Central Excise Act, 1944 Despite Late Realization.

  Case-Laws - HC : Refund of Service Tax - The refund of tax if any borne by the petitioner had to be made only within a period of limitation prescribed under Section 11B of the Central Excise Act, 1944 notwithstanding the fact that the petitioner became aware of the wrong payment of tax only after the Central Board of Excise and Customs issued clarification - HC
  Visit to Get Source

  ---

• Partner's Profit Share in Firm Deemed Non-Taxable, Service Tax Refund Granted for Marketing Expertise.

  Case-Laws - AT : Levy of Service Tax - appellant is a partner and the service recipient is a partnership firm - the appellant is a partner performing some duties for which he has an expertise, skill in the marketing and distribution of the goods manufactured by partnership firm M/s Zydus Healthcare. And as a remuneration, the appellant have been received the amount which is nothing else but a special share in the profit. - not liable to service tax - refund allowed - AT
  Visit to Get Source

  ---

Central Excise

• Show Cause Notice Invalid Due to Lack of Proper Notification, Violating Natural Justice Principles in Central Excise Case.

  Case-Laws - HC : Violation of principles of natural justice - there is nothing to indicate as to how this affixing at company premise should be construed as sufficient notice to the petitioner nor is it found on record from any document that he was made aware of the show cause notice which led to the order impugned and therefore, merely because in reply to another show cause notice, he has been made aware also cannot furnish the ground to assume that he was aware of the show cause notice, the order of which is impugned in this matter. - HC
  Visit to Get Source

  ---

• Purchaser can't claim duty refund paid under protest by manufacturer without following Central Excise Act Section 11B.

  Case-Laws - HC : Refund claim - Applicability of Doctrine of unjust enrichment - the purchaser of the goods was not entitled to a claim for refund of duty made under protest by the manufacturer without complying with the mandate of Section 11B of the Act. - HC
  Visit to Get Source

  ---

• CENVAT Credit Denial Overturned: Issues Not in Original Notice Cannot Be Added Later, Says Court.

  Case-Laws - AT : CENVAT Credit - input services - nexus with the manufacture of final product - Since, the above reasoning is not flowing from the show cause notice even without going into the legality of the above two issues, the orders of the both the authorities does not sustain, for the reason that any issue which were not raised in the show cause notice, cannot be imported into the adjudication order or Commissioner (Appeals) order- AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (4) TMI 1172
  Seeking grant of Bail - irregular input tax credit claimed without any transportation of goods - fake bills and invoices input tax credit was passed on to firms which were existing in papers - HELD THAT:- The bail cannot be granted to petitioner - bail application rejected.

  ---

• Income Tax

• 2021 (4) TMI 1176
  Assessment of trust - disallowing depreciation claimed on the premise that the cost of the assets were already claimed as application of income - HELD THAT:- Issue decided against revenue as relying on M/S. SRA SYSTEMS LTD. [ 2021 (3) TMI 977 - MADRAS HIGH COURT] . Set off to excess application of income of previous Assessment Years - HELD THAT:- When the assessee-Trust applies 85% of its income received by way of voluntary contributions other than the voluntary contributions received with specific directions and the income derived from property held under Trust, then, such income shall not be included in the total income of the Trust. Further, the balance 15% of such income even if accumulated or set apart shall also not be included in the total income of the Trust. The Tribunal, while dismissing the appeal, observed that when the Trust applies its fund from its corpus, accumulated fund, sundry creditors or from the loan obtained by the trust, then, such funds which are applied cannot be said to be funds applied from the income of the Trust. Further, the Tribunal held that there cannot be a case where the Trust can apply its income more than the income received by it for the purpose of section 11(1)(a) and (b) of the Act. In the Judgment reported in MATRISEVA TRUST [ 1999 (3) TMI 34 - MADRAS HIGH COURT] the Hon ble Division Bench of this court, while deciding the substantial questions of law as to the set off of the deficiency of funds of this year against the earlier year surplus is concerned, categorically decided the same in favour of the assessee and against the Revenue. Though the appellant-assessee relied upon the said Judgment before the Income Tax Appellate Tribunal, the Tribunal did not consider the same. The Commissioner of Income Tax (Appeals), went beyond its jurisdiction and commented on the Judgments of the High Courts. Commissioner of Income Tax (Appeals) is bound by the Judgments/Orders of the High Courts. The Commissioner of Income Tax (Appeals) was not sitting over appeal on the Judgments of the Hon ble High Courts. If the Judgments/Orders of the High Courts are applicable to the facts and circumstances of the case pending before the Commissioner of Income Tax (Appeals), he must follow the Judgments/Orders of the Hon ble High Courts without any deviation. The observation made by the Commissioner of Income Tax (Appeals) is unwarranted and cannot be appreciated in any manner. Thus we set aside and the matter is remitted back to the Assessing Officer to decide the matter afresh taking into consideration the ratio laid down in the Judgment of the Hon ble Division Bench of this court reported in Matriseva Trust after giving opportunity of hearing to the appellant-assessee.

  ---

• 2021 (4) TMI 1175
  Reopening of assessment u/s 147 - non disposal of objections prior to issuance of the impugned SCN - HELD THAT:- The Court is unable to agree with the above submission on behalf of the Department. A perusal of the SCN reveals that there is no mention of the Petitioner s detailed objections given in writing on 8th October, 2013. In fact, even the counter affidavit filed by the Department is silent on disposal of such objections prior to issuance of the impugned SCN. Indeed the requirement spelt out by the Supreme Court in GKN Driveshafts [ 2002 (11) TMI 7 - SUPREME COURT] , that an assessee s objection to the reopening of the assessment should be disposed of by the Assessing Officer by a speaking order is a mandatory requirement that cannot be dispensed with. Admittedly this mandatory requirement has not been complied with in the instant case. On this ground alone the re- assessment proceeding is vitiated. Relying on the decision in Principal Commissioner of Income Tax, Kerala v. N.C. Cables Ltd [ 2017 (1) TMI 1036 - DELHI HIGH COURT] , Mr. Ray submitted that there was a failure by the competent authority in terms of Section 151 of the IT Act to authorize the reopening of the assessment. Factually, the above position has not been able to be disputed by Mr. Mohapatra, learned Standing Counsel on behalf of the Department. Indeed the impugned letter dated 10th / 20th May, 2013 issued by the Joint Commissioner of Income Tax, Rourkela Range, to the ITO simply states Approval is hereby accorded u/s. 151(2) of the I.T. Act, 1961 for initiation of proceeding u/s. 147 of the I.T. Act, 1961 in the case of Sri Viresh Hemani . There is no indication of any application of mind by the authority. Moreover, the approval under Section 151 of the Act had to be granted by the Principal Chief Commissioner, or the Chief Commissioner, or the Principal Commissioner, or the Commissioner, if the reopening is beyond four years. However, the above approval in the instant case was issued by the Joint Commissioner and therefore, it was not a valid approval under Section 151 of the IT Act. - Decided in favour of assessee.

  ---

• 2021 (4) TMI 1173
  Default u/s 201(1) and 201(1A) - Petitioners submits that impugned order is misconceived, untenable and grossly delayed and is barred by limitation - HELD THAT:- As respondents submits that insofar as GIA US is concerned, while the tribunal had held that GIA US has no permanent establishment in India and the Revenue has preferred an appeal in these writs and the same is pending. With regard to the submission on behalf of the Petitioners about limitation, he submits that the limitation for passing order under Section 201 is governed by Section 201(3) therefore, submits that the notice dated 08.03.2021 is within the prescribed period of limitation of seven years as above. As submitted on behalf of the petitioners that the Respondents have not been able to show, as to how this provision would hold the present facts and circumstances when reference herein is to payment to non-residents and not to residents as contemplated in the said sub-section. In view of aforesaid, prima facie, there appears to be some substance in the Petitioners submissions. Hence, rule. Rule is made returnable early. Put up the matters for hearing in the 2nd week of July, 2021. In the meanwhile, there shall be no coercive action pursuant to impugned order/notices.

  ---

• 2021 (4) TMI 1171
  Reopening of assessment u/s 147 - petitioner had declared the loss of income from business - HELD THAT:- In the assessment order dated 30.03.2006 passed under Section 143(3) of the Income Tax Act, 1961, it has been merely stated that the petitioner company had been leased out to M/s.Paharpur Industries Ltd. and a lease rent charges has been treated as conversion charges and that the assessment was completed treating the conversion charges as rent and the expenditure relating to the manufacturing activity was reimbursed by M/s.Paharpur Industries Ltd. Thus, the focus was only on the income derived from the said company. It was not on the method of computation of the income. There is no discussion on the issues relating to the computation of the loss. The said order aslo does not indicate as to whether there was any discussion regarding the reasons given for reopening of the assessment in a communication dated 30.06.2010 while passing the aforesaid assessment order. Correctness of the computation of net loss for the purpose of arriving at the book loss and for the purpose of Minimum Alternate Tax in contrast with the returns filed under Section 139 of the Income Tax Act in a refund cannot be tested under Article 226 of the Constitution of India. Scope of enquiry under Article 226 of the Constitution of India is limited. It is best left to the Assessing Officer/Authorities in the hierarchy prescribed under the provisions of the Income Tax Act, 1961 to look into it. Mere declaration in the Auditors Report to the shareholders of the petitioner that as on 03.09.2003, the secured loans and the losses of the company have been understated to the extent of interest written back and the balance sheet and the profit and loss account dealt with in the said report were in compliance with the Accounting Standards referred to in Sub-Section (3C) of Section 211 of the Companies Act, 1956 is not sufficient to conclude that there was true and full disclosure by the petitioner at the time of filing of income tax returns for the purpose of assessment. The computation of income as per the Companies Act, 1956 seems to indicate that the petitioner had a whooping loss of Rs. 13,99,07,652/- which was carried forward into the Assessment Year 2002-03 apart from the loss incurred during the financial year 2001-02 amounting to Rs. 3,33,28,163/-. Therefore, it is not clear as to how the petitioner is aggrieved by the impugned re-opening of the assessment vide notice dated 17.03.2010 and the impugned speaking order dated 03.09.2010. Even according to the petitioner, the entire exercise was an academic exercise and a harassment as no additional tax was to be paid by the petitioner. It is therefore not clear why the petitioner is fighting shy from participating in the aforesaid proceedings. After all, the speaking order merely shows a prima facie view of the Income Tax Department to justify the re-opening of the assessment. It is not conclusive and it is open for the petitioner to meet of the points before the respondent by participating in the proceeding and persuade the respondent Income Tax Officer to drop the proceedings.

  ---

• 2021 (4) TMI 1169
  Validity of recovery proceedings - Intimations under Section 143 (1) - challenge to the intimations is on the ground that they do not confirm to the prescription of Section 143(1) - Revenue would argue that the error arises from the fact that the returns of income have been filed belatedly and beyond the dates stipulated under Section 139 of the Act. There is no doubt or dispute in this regard. Hence, the claim under Section 80P could not have been putforth in the light of provisions contained in Section 80AC(ii) as it stood post amendment with effect from 01.04.2018 - HELD THAT:- The scope of an intimation under Section 143 (1) (a) of the Act, extends to the making of adjustments based upon errors apparent from the return of income and patent from the record.The explanation cannot curtail or restrict the main thrust or scope of the provision and due weightage as well as meaning has to be attributed to the purposes of Section 143(1)(a) The provisions of Section 80AC(ii) make it clear that any deduction that is claimed under Part C of Chapter VIA would be admissible only if the return of income in that case were filed within the prescribed due date. Thus no claim under any of the provisions of Part C of Chapter VIA would be admissible in the case of a belated return. There is no dispute on this position. The date of filing of a return of income would be apparent on the face of return and upon a perusal thereof, it would be clear as to whether the return is a valid return, having been filed within the statutory time limit, or a belated one. This is mechanical exercise and one that can be carried out by the CPC, very much within the scope of Section 143 (1) (a) (ii) of the Act. The conduct of the petitioners is also relevant. Not only have the returns been filed belatedly but the petitioners have also chosen not to co-operate in the conduct of assessment. They are admittedly in receipt of the defect notices from the CPC, but have not bothered to respond to the same. The writ petitions have themselves been filed belatedly and after the elapse of more than six to eight months from the dates of impugned orders, in all cases. It is only when the Revenue has initiated proceedings for recovery by attachment of bank accounts have the petitioners approached this Court. This factor also strengthens my resolve that these are not matters warranting interference in terms of Article under Section 226 of the Constitution of India, quite apart from the decision that I have arrived at on the legal issue. These writ petitions are dismissed and connected Miscellaneous Petitions are also closed.

  ---

• 2021 (4) TMI 1165
  Stay orders - Recovery proceedings - Amount recovered from petitioner over and above the amount as per instructions, memoranda, circular towards demand of tax - refund orders to the extent that they seek adjustment against demand for AY 2013- 14, and writ prohibiting and restraining recovery by adjustment of refunds against the demand for the AY 2013-14 is sought with a direction to refund of amounts referred to in prayer clauses (e) to (h) - HELD THAT:- Set off of refund under the clause is to be done by using details of income tax demand lying against the person uploaded on to the system. The exercise of power to have set off / adjustment of refund is regulated by legislative provisions and instructions. The details referred to in the clause would have to correspond to the provisions and instructions operating. The tax demand for AY 2013-14 is in dispute and is pending before appellate authority. Having regard to instructions, circulars and memoranda issued from time to time, as referred to on behalf of petitioner, which are not disputed by the respondents, it appears to be expedient that the assessing officer refrains from recovering tax dues demanded for AY 2013-14. In the circumstances, a restraint is called for from recovering amount over and above, as per instructions, circulars and guidelines issued by CBDT, from time to time. The amount recovered from petitioner if is over and above as per instructions, circulars, the excess collection over and above the amount required for stay may have to be returned to petitioner and the refunds would not be adjusted till disposal of the appeal. The amount recovered from petitioner over and above the amount as per instructions, memoranda, circular towards demand of tax for the AY 2013-14 pending in appeal would be returned to the Petitioner with interest according to law and refunds of amounts over and above the amount as per instructions / guidelines may not be adjusted towards tax demand for AY 2013-14 till disposal of appeal.

  ---

• 2021 (4) TMI 1163
  Addition towards deemed rental income on stock-in-trade of unsold flats/bungalows - AO opined that the assessee ought to have offered deemed notional rental income on such vacant flats/bungalows - assessee submitted that the flats/bungalows were its stock-in-trade, from which no income could be taxed under the head Income from house property - HELD THAT:- As flats/bungalows are occupied by the assessee owner; business of property development is carried on by the assessee; the occupation of the flats etc. is for the purpose of business; and profits of such business are chargeable to income-tax. Ergo, all the four conditions for exclusion from section 22 of the Act are cumulatively satisfied in the present case. A close scrutiny of the provision inducted by the Finance Act, 2017, transpires that where a property is held as stock-in-trade which is not let out during the year, its annual value for a period of one year, which was later enhanced by the Finance Act, 2019 to two years, from the end of the financial year in which the completion certificate is received, shall be taken as Nil. The amendment has been carried out w.e.f. 1.4.2018 and the Memorandum explaining the provisions of the Finance Bill also clearly provides that this amendment will take effect from 01.04.2018 and will, accordingly apply in relation to the assessment year 2018-19 and subsequent years.stantly, we are concerned with the assessment year 2013-14. As such, the amendment cannot apply to the year under consideration. In the absence of the applicability of such an amendment, no income can be said to have accrued to the assessee from unsold flats available as stock-in-trade. We, therefore, overturn the impugned order on this score and delete the addition of Rs. 1.47 crore sustained in the first appeal. Addition u/s.41(1) - a company, namely, M/s. JVS Komatsco Industries Pvt. Ltd. (JVSK) had to receive a sum from the assessee and the said amount was written off by the company as bad debt in its accounts for the year under consideration - HELD THAT:- The controversy has arisen out of certain purchase transactions of the assessee from JVSK during the course of its business. JVSK wrote off the sum in question its books of account, but the assessee chose not to show the corresponding income. The ld. AR submitted that the amount of Rs. 77,021/- represents the amount which was deducted by it from the invoices raised by JVSK and only the net amount was debited in its accounts. AR prayed for giving one opportunity to the assessee to place the necessary details on record to prove its case. In the given facts and circumstances, we are of the considered view that it would be in the interest of justice if the impugned order on this score is set aside and the matter is restored to the file of the AO for deciding this issue afresh after allowing hearing to the assessee. In case the assessee succeeds in proving that it recorded only the net value (after deduction) at the time of incurring expenses but JVSK recorded its gross invoice value only and the sum of Rs. 77,021/- is equivalent of the differential amount of Rs.i, then no addition would be called for u/s 41(1) of the Act. In the otherwise scenario, the AO will deal with the issue as per law. Disallowance u/s.14A - HELD THAT:- As found as an admitted position that the assessee, in fact, did not earn any exempt income from the investment made in Marigold Properties during the year under consideration. The Hon ble Delhi High Court in Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon ble Delhi High Court in CIT vs. Holcim India P. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] More recently the Hon ble jurisdictional High Court in Pr. CIT VS. Kohinoor Projects Pvt. Ltd. [ 2020 (1) TMI 1161 - BOMBAY HIGH COURT] has held that in the absence of any exempt income, there cannot be any disallowance of expenses u/s 14A. As the assessee in the instant case admittedly did not earn any exempt income during the year, respectfully following the ratio of the above decisions, we hold that no disallowance was called for. The impugned order is overturned on this score and the sustenance of the disallowance is deleted.

  ---

• 2021 (4) TMI 1162
  Unexplained cash credit - sources for the advances - HELD THAT:- As far as the receipt of return of advance by Smt. G. Surekha is concerned, when summons were issued to her, her husband Shri G. Ratna Rao appeared and submitted the explanation. Therefore, the identity of Smt. G. Surekha is established. As far as the explanation given that the cheques were given in the name of her husband s friend Mr.Mohd Abdul Samad is concerned, find that it is supported by the Bank statement. It is also established that Smt.G.Surekha is not in any way related to the assessee. Therefore, the confirmation given by Smt. Surekha is to be examined and considered on its own legs. It is to be noted that the assessee has not filed the confirmation of Mr Mohd Abdul Samad, but the cheques are undisputedly issued in the name of Mr.Abdul Samad. In the earlier A.Y, the assessee has explained the sources for the advances given for purchase of the property and the said assessment was reopened and the sources were accepted by the Assessing Officer. Therefore, the transaction of giving advance by the assessee is proved. What is left to be proved is that the said amount has been returned by Smt. G. Surekha. All the cash deposits to the extent of Rs. 14.00 lakhs are allegedly made by Smt. G. Surekha. When the Assessing Officer for the A.Y 2008-09 has accepted that the assessee has given advance for purchase of a property and since there is no purchase of property during the relevant A.Y, the circumstantial evidence is in favour of the assessee that he has received back the advance paid in the earlier A.Y. Therefore, the sources for the extent of Rs. 14.00 lakhs is to be deemed as explained by the assessee. With regard to the other balance i.e. cash withdrawals which were utilized for other purposes than the deposits into the Bank, I do not find any reason to interfere with the order of the CIT (A). The addition of such an account is accordingly confirmed. Assessee s appeal is partly allowed.

  ---

• 2021 (4) TMI 1161
  Reopening of assessment u/s 147 - eligibility of reasons to believe - addition u/s 69A - HELD THAT:- Assessing Officer is not suppose to arrive at the final conclusion. He is supposed to reach at a reasonable belief, which a prudent man will arrive at, that the income has escaped assessment. It has to be a prima facie case regarding escapement of income. AO is not passing the final judgement. In the case in hand there is no two opinion that the assessee had bank account in which substantial cash was being deposited from various parts of the country. It is also a fact that the assessee had not disclosed this account to the department and also not filed his return of income for the relevant assessment year. The Assessing Officer has recorded all this in his reasons and then he took the approval of the competent authority as provided in the Act. Everything is in order. The satisfaction and the reason has to be that of Assessing Officer, not of anybody else - the Assessing Officer had enough reasonable and actionable information to arrive at a particular decision. Therefore, the ground challenging reopening u/s 147 is dismissed. We do not find any infirmity in the finding of Ld.CIT(A) as the assessee has not supported his submissions by filing any contrary evidences. Hence, Ground of appeal raised by the assessee are dismissed. Addition u/s 69A on Unexplained money - We do not see any infirmity into the findings of the Ld.CIT(A) as the assessee had only made a bald statement without giving any supportive evidences regarding his business. No detail is furnished by the assessee regarding whom spare parts as claimed by the assessee were supplied and the complete details of parties to whom he supplied computer parts. In the absence of such material evidences, we do not see any reason to interfere in the findings of the authorities below. Therefore, Ground of appeal raised by the assessee are rejected and same are dismissed. Addition made in respect of the salary income - We find that the Assessing Officer did not make any inquiry from the employer of the assessee whether he had actually received the salary. Merely, offer made by the assessee in our considered view, ought not to have been taken as a conclusive evidence of earning salary income by the assessee. Therefore, in the absence of any conclusive evidence that the assessee infact had earned salary from M/s. Oldy Goldy Computers, the Assessing Officer was not justified in taking the addition and making the addition on account of earning of salary income. Moreover, if it is presumed that the assessee had earned salary income in that event, the Assessing Officer should have accepted source of deposit made in bank account. We, therefore, direct the Assessing Officer to delete this addition. Thus, Ground of appeal raised by the assessee is allowed.

  ---

• 2021 (4) TMI 1160
  Capital gain computation - valuation of property u/s 50C by adopting the value as assessed by the DVO before the Ld.CIT(A) - HELD THAT:- We find that there is no dispute with regard to fact that fair market value determined by the DVO at Rs. 8,89,63,168/- against the actual sale consideration of Rs. 8,78,00,000/- as disclosed in Sale Deed. The resulting difference is Rs. 11,63,168/- which is 1.02%. As relying on MARIA FERNANDES CHERYL VERSUS INCOME TAX OFFICER INTERNATIONAL TAXATION 2 (3) (1) , MUMBAI [ 2021 (1) TMI 620 - ITAT MUMBAI] we direct the Assessing Officer to delete the addition. Thus, Grounds of appeal raised by the assessee in this appeal are allowed.

  ---

• 2021 (4) TMI 1156
  Capital gain on sale of land - nature of land sold - treatment to assessee s land sold as a capital asset - HELD THAT:- No merit to accept the foregoing Revenue s argument as the amended Section 2(14) Explanation (iii) clause(b) reads as the Central Government may having regard to the extent and scope for, urbanization of that area and other relevant consideration, specify in this behalf notification in the official gazette . It therefore emerges that once the amendment to the above statutory provision came vide Finance Act, 2013 w.e.f. 01-04-2014 the assessee s case would continue to be governed by the earlier un-amended provisions as we are in AY.2011-12. This is also not the Revenue s stand that assessee s land(s) deserved to be treated as a capital asset as per the unamended proviso since covered by any notification issued in this behalf from the Central Government. I therefore direct the Assessing Officer to delete the impugned long term capital gain addition on this count alone.

  ---

• 2021 (4) TMI 1155
  Fringe benefit tax on account of expenditure pertaining to staff towards electricity consumption - statutory obligation to provide electricity to the employees at their residential premises as per National Coal Workers Agreement - HELD THAT:- On going through the above agreement entered into between the representatives of Central Trade Unions with Hon ble Minister of Coal Mines and Secretary, Govt. of India, Department of Coal Chairman, Coal India ltd. on 12th January, 2004, we find that the CBDT has not been recognized the said agreement and, therefore, this agreement cannot override the income-tax Act, which is enacted by the Parliament. The above agreement is not statutory and only a facility provided to the employees in a particular sector. In view of the above discussion, we do not find any infirmity in the orders of the CIT(A) in confirming the order of the AO wherein the AO has made an addition in the hands of the assessee towards Fringe benefit tax on account of expenditure pertaining to staff towards electricity consumption and upholding the orders of CIT(A) in all the appeals under consideration, we dismiss the grounds raised by the assessee in all the AYs under consideration.

  ---

• 2021 (4) TMI 1154
  TP adjustment in respect of Specified Domestic Transactions (SDT) - whether AO/TPO/DRP has erred in law and in facts by determining an adjustment to specified domestic transactions (SDT) by applying provisions omitted from statute book. - HELD THAT:- As following the binding decision rendered by Hon ble High Court of Karnataka in the case of Texport Overseas P Ltd [ 2017 (12) TMI 1719 - ITAT BANGALORE] we hold that the reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec.92BA is not valid, as the said provision has been omitted. Accordingly, we direct the AO to delete the addition relating to specified domestic transactions made u/s 92CA of the Act. As pointed out by Ld D.R, the co-ordinate bench, in the case of Texport overseas P Ltd, has restored the matter to the file of the A.O. with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2) of the Act. Following the same, we restore this issue to the file of the AO with the direction to examine the claim of expenditure mentioned above in terms of the provisions of section 40A(2) of the Act.In the result, the appeal of the assessee is treated as allowed for statistical purposes.

  ---

• 2021 (4) TMI 1153
  Interest subsidy received by the appellant under Technology Upgradation Fund Scheme (TUFS) for Textile and Jute Industries - MAT computation u/s 115JB - reducing the amount of subsidy from the book profit while computing u/s 115JB - HELD THAT:- As relying on own case [ 2019 (2) TMI 1888 - ITAT AHMEDABAD] , we consider that issue raised in grounds no. 1 to 1.3 as above covered in favour of the assesse after following the decision of Co-ordinate Bench as supra that the interest subsidy is required to be treated as capital receipt of non-taxable nature. Therefore, similar to the direction laid down by the Co-ordinate Bench for A.Y. 2012-13, we restore this issue to the file of the A.O. for verification and to exclude the subsidy from the ambit of taxation as directed in the decision of the Co-ordinate Bench. Therefore, these grounds of appeal of the assessee are allowed for statistical purpose.

  ---

• 2021 (4) TMI 1152
  Disallowance u/s 14A - AO noticed that assessee has made huge investments in shares and securities, but did not make suo moto disallowance of any expenses relatable to exempt income and hence, invoked Rule 8D of Income Tax Rules, 1962 and computed disallowance - CIT-A deleted additions made towards disallowance u/s.14A by holding that when there is no exempt income earned for the relevant assessment year, then there cannot be any disallowance relatable to such exempt income - HELD THAT:- The issue of disallowance of expenses relatable to exempt income u/s.14A, in a situation where there is no exempt income earned for the relevant assessment year has been subject matter of deliberations by various High Courts, including the case of M/s. Redington India Ltd. [ 2017 (1) TMI 318 - MADRAS HIGH COURT] in the light of the provisions of section 14A of the Act, where it was clearly held that provisions of section 14A r.w.r 8D cannot be made applicable in a vacuum i.e., in the absence of exempt income. The Hon ble Supreme Court in the case of CIT vs. Chettinad Logistics Pvt.Ltd. [ 2018 (7) TMI 567 - SC ORDER] has upheld the findings of the Hon ble Madras High Court that section 14A cannot be invoked, where no exempt income was earned by the assessee in the relevant assessment year. In this case, the learned CIT(A) has recorded categorical finding that the assessee has not earned any exempt income for the relevant assessment year. Therefore, we are of the considered view that findings recorded by the learned CIT(A) in light of the decision of Hon ble Jurisdictional Madras High Court in the case of M/s. Redington India Ltd. Vs.Addl.CIT (supra) is in accordance with law and does not call for any interference. - Decided in favour of assessee. Disallowance of depreciation of plant and machinery - AO disallowed depreciation claimed on plant and machinery on the ground that although plant and machinery was installed and commissioned before 30.03.2013, but the same has not been put to use in the business of the assessee - HELD THAT:- In this case, on perusal of various details filed by the assessee including commissioning report of plant and machinery, we find that all plant and machinery were acquired and installed before the end of the financial year. In fact, the assessee has placed on record production details of finished goods from newly installed plant and machinery. Assessing Officer has erred in disallowing depreciation on plant and machinery on assumption and surmises that in one day so much units of finished goods cannot be produced without understanding fact that in one day so many lakhs of units can be produced depending upon installed capacity of the plant and machinery. In this case, the observations of the Assessing Officer that so much units cannot be produced in one day was nothing but assumption or surmises, but not based on any facts and figures. Therefore, we are of the considered view that on this ground depreciation claimed on plant and machinery which were installed and put to use in the business of the assessee cannot be denied. Be that as it may, even assuming for a moment, the asset was not put to use in the business of the assessee, but when the plant and machinery is installed and ready for use in the business for the relevant assessment year, then claim of depreciation can be allowed. There is no error in the findings recorded by the learned CIT(A) to delete disallowance of depreciation on plant and machinery. - Decided in favour of assessee.

  ---

• 2021 (4) TMI 1151
  Rectification u/s 254 - HELD THAT:- Having gone through the order of the Tribunal and also the grounds of appeal raised by the Revenue, we find that there is an inadvertent mistake in disposing of the appeal of the Revenue by not dealing with all the grounds raised by the Revenue. Since all the grounds were not adjudicated, we deem it fit and proper to amend last line of para No.6 of the ITAT order.

  ---

• 2021 (4) TMI 1150
  Reopening of assessment u/s 147 - addition u/s 68 - Bogus LTCG - HELD THAT:- From the details furnished by the assessee before the Assessing Officer as well as before the learned CIT(A), find the assessee has demonstrated that he had sold 15,000 shares of M/s. DMC Education Ltd., during the A.Y. 2011-12 for a consideration and after deducting the purchase cost of Rs. 60,000, shares of which were acquired in A.Y. 2006-07 (5,000 shares) and subsequent bonus shares, the assessee after deducting the purchase cost and transfer expenses had declared Long Term Capital Gain of Rs. 1,29,903/-. Therefore, once, the assessee had declared such income and claimed the same as exempt, the Assessing Officer without verifying the return and without independent application of mind could not have reopened the assessment on the basis of report from the Investigation Wing, which is on account of borrowed satisfaction and not independent application of mind. Thus, find merit in the argument of the learned counsel for the assessee that such reopening is based on wrong appreciation of facts and on borrowed satisfaction. It has been held in various decisions that when the reopening of the assessment is based on incorrect or wrong appreciation of facts, such reopening is not in accordance with law. It has also been held in various decisions that when the reopening is made on the basis of report of the Investigation Wing and without independent application of mind by the Assessing Officer to the return field by the assessee, such reopening of assessment is also not in accordance with law and has to be quashed. Since, in the instant case, the Assessing Officer has acted mechanically on the basis of report from the Investigation Wing and without independent application of mind and the reopening of assessment is on wrong appreciation of facts, therefore, such reopening of the assessment, in our opinion, is not in accordance with law. - Decided in favour of assessee.

  ---

• 2021 (4) TMI 1141
  Addition as headless deemed income - Unaccounted income u/s. 68 to section 69D - Appellant had disclosed the same as undisclosed stock as evident from profit loss account, stock record etc. - CIT(A) held that the value of excess stock found during survey was not to be assessed as business income u/s. 28 - HELD THAT:- As stated provisions of section 115BBE, it is noticed provision of section 115BBE(2) has been inserted by the Finance Act 2016 w.e.f. 01.04.2017 which specifically say that no deduction in respect of any expenditure or allowance or set off any loss shall be allowed to the assessee under any provision of the act in computing his income referred to in clause (a) of sub-section (1). In sub-section (2) of section 115BBE as introduced by Finance Act, 2012 only disallowance of expenditure or other allowance was considered against unaccounted income u/s. 68 to section 69D but business loss was not covered. It is only by Finance Act, 2016 w.e.f. 01.04.2017 it is inserted in the provision to deny benefit of set off of any loss. Therefore, in the case of the assessee, if we reduce the business income then we shall arrive at loss In that case the amount of Rs. 50,00,000/- will become taxable under the head income from other sources . But a set off of business loss of Rs. 49,70,470/- shall become allowable since the provision to deny set off of loss is introduced w.e.f. 01.04.2017 in section 115BBE of the Act. Even under these circumstances also, the assessee will derive the gross total income of Rs. 29,530/- . Since the case of the assessee is pertained to assessment year 2015-16, therefore, in the light of the above facts and findings, the appeal of the assessee is allowed.

  ---

• Corporate Laws

• 2021 (4) TMI 1149
  Right to apply u/s 241 of Companies Act - petitioners do not hold minimum percentage of shareholding in the capital of the Respondent No. 1 on which is require to file a petition - whether this Tribunal can exercise its discretion which is vested with it in terms of the provisions of Section 244 of Companies Act, 2013? - HELD THAT:- From the perusal of Section 241, it is noted that as per proviso to Section 244(1), the word may has been used as regard to waiver of all or any of the requirements specified in Clause (a) or Clause (b) so as to enable the members to apply under Section 241 of Companies Act, 2013. Clause (b) is not applicable as Respondent no. 1 is having a share capital. As far as the fact of the petitioners are not having requisite number shareholders or holding not less than one tenth of issued share capital are concerned, there is not dispute that the petitioners, in application filed under Section 241 of Companies Act, 2013, do not meet these criteria. Further, there is no dispute as regard to payment of amount of calls on such of shares or of other sums due on their shares. We have to look whether the applicants have made out an exceptional case for waiver of all or any of the requirements specified in Clause (a) of sub-section 1 of Section 242 of Companies Act, 2013? In this process, in our considered opinion, it is inevitable that the merits of the application field under Section 241 of the Companies Act, 2013 may have to be considered. Having said so, we, however, make it clear that this is to be done just to meet the object and criteria laid down in Section 244 of Companies Act, 2013 and views expressed on the merits for this purpose cannot be considered or treated as views expressed by this Authority which may amount to determination of the main dispute either against or in favour of either parties. Keeping this limitation or factor, in our mind, the facts relied on by the petitioners for getting the waiver, we state that these pertain to siphoning off funds through Shell Companies promoted by Respondent no. 2. On a query from this Bench whether any material or resolution exists in records or otherwise which defines such distribution of responsibilities between two Managing Directors in terms of provisions of Companies Act, 1956 or Companies Act, 2013. However, no material has been brought on record to this effect. It has also been claimed by the Respondent No. 1 and 2 that even the transactions made basis for filing an application under Section 241 of Companies Act, 2013 pertain to a period much prior to three years from the date of filing of that petition, hence, the petition filed under Section 241 of Companies Act, 2013 has as such barred by limitation. It is also noted that Respondent No. 1 company is a listed company and more than 6,000 (six thousand) shareholders are member of the company and none of them has joined the petitioners. The petitioner cannot be absolved from responsibilities of such alleged transactions of siphoning off or fraud, though, he may not be involved actively. Since, he was the Chairman and Managing Director and many of such transactions required the approval of the Board of Directors or otherwise also it cannot be said that the petitioner No. 3 did not have any knowledge thereof. It is also a settled judicial principle that one who is seeking some exemption or waiver means that he is invoking the principle of equity, therefore, the integrity of such person should be above board and atleast it should not be under cloud. Even otherwise, in case of allegations of nature involved in petition filed under Section 241 of Companies Act, 2013 cannot rule out of possibility of collective involvement of people at the helm of affairs. Thus, considering the submissions made by all the sides and material on record, we hold that the petitioner has not been able to establish a case which may pursued us to accede to his request of waiver of company as specified under Section 244(1)(a) of the Companies Act, 2013. Application dismissed.

  ---

• Insolvency & Bankruptcy

• 2021 (4) TMI 1159
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Dishonor of Cheque - Operational Creditors - Existence of debt and dispute or not - HELD THAT:- The date of default is 19.03.2018 that is the date of the last invoice issued which was unpaid, and the present application is filed on 20.05.2019. Hence the application is not time barred and filed within the period of limitation - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The Applicant has complied with the provision of Section 9(3)(b) of the Code, 2106. In order to deal with issue in hand with respect to preexistence of dispute as the alleged by the Corporate Debtor in the reply to the notice under Section 138 of Negotiable Instruments Act, 1881, We would like to refer to the judgment of the Hon`ble NCLAT in SUDHI SACHDEV VERSUS APPL INDUSTRIES LTD. [ 2018 (11) TMI 1671 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] wherein it was held that In the present case, it is not in dispute that there is a debt payable to the Operational Creditor and default on the part of the Corporate Debtor. The pendency of the case under Section 138/441 of the Negotiable Instruments Act, 1881, even if accepted as recovery proceeding, it cannot be held to be a dispute pending before a court of law. Thereby we hold that the pendency of the case under Section 138/441 of Negotiable Instruments Act, 1881 actually amounts to admission of debt and not an existence of dispute. Thus, it is a clear admission of debt and this Adjudicating Authority does not have to indulge in the details or the quantum of debt if the debt proved is more than One Lakh and the default is shown to have occurred. Therefore, the Application is admitted and the commencement of the CIRP is ordered - application admitted - moratorium declared.

  ---

• 2021 (4) TMI 1148
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Service Providers or not - existence of debt and dispute or not - HELD THAT:- There is a thin line of difference with regard to the provisions of Section 3(16)(e) of the Code and with regard to the business activities of the Respondent. Section 3(16)(e) of the Code, envisages that the term Financial Services shall include rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of (i) buying, selling, or subscribing to, a financial product; (ii) availing a financial service; or (iii) exercising any right associated with financial product or financial service whereas the Respondent being engaged/involved in Stock Broking business is directly dealing in the shares, securities, derivatives, etc. on behalf of its clients including the Applicant rather than only rendering advice or soliciting or agreeing in that regard. Hence, it can be said that the Respondent is covered under the purview of the Corporate Debtor and cannot be considered as the Financial Service Provider since it is directly dealing with the financial products and not only rendering advice or soliciting or agreeing in that regard. The amount of debt payable by the Respondent - Corporate Debtor is more than the statutory limit prescribed under the provisions of the section 4 of the Insolvency and Bankruptcy Code, 2016 as on the date of filing of the application i.e. 22.07.2019 - The Applicant has furnished the copy of Written Communication of the Proposed Interim Resolution Professional - CA Prakash Udhawdas Tekwani in Form - 2 in terms of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. From the material placed on record by the Applicant, this Adjudicating Authority is satisfied that the application is complete in all respects and the Corporate Debtor has committed default in paying the dues to the Applicant - Petition admitted - moratorium declared.

  ---

• 2021 (4) TMI 1147
  Dissolution of Corporate Debtor - assets of the Corporate Debtor have been fully liquidated - Section 54 of the Insolvency and Bankruptcy Code, 2016 (IB Code) r.w. Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- Considering the facts and invoking various provisions of the Law, and finding that the assets of the Corporate Debtor have been fully and completely liquidated to the satisfaction of the Creditors, there remains nothing to keep the Corporate Debtor/Company alive. The Corporate Debtor stands dissolved from the date of this order as per the Section 54(2) of the Insolvency and Bankruptcy Code, 2016 - application allowed.

  ---

• 2021 (4) TMI 1146
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- Contention raised by the corporate debtor in respect that Mr. Manish Narayan Saboo is not authorized by the board of the corporate debtor for filing the present application is not valid. The contention of the corporate debtor in respect that the present application is barred by limitation is also not valid. The first invoice was raised on 27.02.2016, and the last invoices raised on 20.07.2016, and the present application was filed before this authority on 14.02.2019 which is well within the limitation, i.e. 2 years 11 months, and 18 days. It is also noted that the ground raised by the corporate debtor that there is a pre-existing dispute because goods supplied by the operational creditor to the corporate debtor were defective as alleged. This ground is baseless as there being no supporting documents. If there was any pre-existing dispute that must be raised before filing this present application. In the present application, no other document is produced on record by the corporate debtor to prove the preexisting debt - There can so many reasons for rejection of goods by a third party and there is no such condition between Operational Creditor/Corporate Debtor that payment would be refunded only after goods are accepted by the client of Corporate Debtor. The corporate debtor further relies upon the letter issued by the M/s. General Polytex on 24.09.2019 which has been issued after filing the present application in respect that the goods supplied by the operational creditor were defective. It is also not indicated that the alleged facts were communicated to the operational creditor. An averment made by the operational creditor can t be sustained without any cogent evidence. Hence, this contention of the corporate debtor is also rejected. The present application is defect-free and complies with the relevant provisions of the IB Code and Rules formed thereunder - Application admitted - moratorium declared.

  ---

• 2021 (4) TMI 1145
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is found that the petitioner has filed all the documents and the petition is complete in all respect. Service is complete. That, the petitioner received the last payment on 25.04.2018, therefore, the date of default is 25.04.2018 - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no pre-existing dispute regarding the operational debt from the side of the corporate debtor. The documents produced by the operational creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the operational debt - this adjudicating authority is of the considered view that operational debt is due to the Applicant and it fulfilled the requirement of I B Code. No dispute has been raised by the respondent at any point of time. That, Applicant is an Operational Creditor within the meaning of Section 5 sub-section 20 of the Code. From the material on record, petitioner is able to establish that there exists debt as well as occurrence of default and the amount claimed by operational creditor is payable in law by the corporate debtor as the same is not barred by any law of limitation and/or any other law for the time being in force. It is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - petition admitted and the moratorium is declared for prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code.

  ---

• 2021 (4) TMI 1144
  Seeking withdrawal of application which was filed for initiation of CIRP against Corporate Debtor - Section 12A of the Insolvency and Bankruptcy Code 2016 read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- The Adjudicating Authority may allow a withdrawal application admitted under Section 7, 9 or 10 on an application made by the applicant with the approval of the 90% of the voting share of the CoC. Therefore, to file an application under Section 12A, the applicant is required to fulfill two conditions i.e., first, the application must be filed by the applicant on whose prayer the application under Section 7, 9 or 10 is admitted and secondly, it must be approved by 90% voting share of the CoC. The application for withdrawal application admitted under Section 7, 9 or 10 shall be filed by the applicant - Similarly, Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provides that an application for withdrawal under section 12A may be made to the Adjudicating Authority before the constitution of the committee, by the applicant through the interim resolution professional and after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be. Mere reading of the provisions shows that under Section 22(2) of the IBC, 2016, the committee of creditors, may, in the first meeting, by a majority vote of not less than sixty-six per cent of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional. Whereas under Section 27(2) there is a provision for replacement of Resolution Professional, who was appointed under Section 22, with another Resolution Professional by a vote of sixty-six per cent of voting share of the CoC. Therefore, Section 27 of the IBC, 2016 has a provision for replacement of Resolution Professional, who was appointed under Section 22 of the IBC. Hence, Section 27 is not applicable in this matter, because prayer is for the replacement of the IRP not the RP. Mr. Arun Jain IRP neither submitted the explanation as sought for nor filed the Affidavit. All this shows that the IRP not only failed to perform the duty of initiating CIRP of the CD but also disobeyed the directions given by this Adjudicating Authority. The non-initiation of CIRP of the Corporate Debtor is a serious dereliction of duty on the part of the IRP and for which apart from the contempt proceedings, disciplinary proceeding must be initiated against the IRP - in sequel to the above, by exercising the power under Rule 11 of the NCLT Rules, 2016 read with directions given by the Hon ble NCLAT in the Company Appeal No. 166/2020 in para 7 of the order, we hereby appoint Mr. Shiv Nandan Sharma, Registration No.-IBBI/IPA-001/IP-P00384/2017-18/10641, Email id: [email protected]. Mobile No. 9540000212 as an IRP from the panel communicated to this Adjudicating Authority by IBBI - Mr. Shiv Nandan Sharma is directed to take the charge of the CIRP of the CD with immediate effect. The Court Officer will immediately inform the IRP so appointed by all modes. Application disposed off.

  ---

• 2021 (4) TMI 1143
  Recovery proceedings for recovery of loan - Corporate Debtor failed to make repayment of its dues and has been declared as Non Performing Asset - It was submitted by the Learned Senior Counsel for the Applicant that the Applicant being a secured creditor has expressed his willingness to stand outside the purview of liquidation proceedings under Section 52 of IBC, 2016 - Effect of amended Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 which came into force on 06.01.2020, retrospective or prospective - possession of the entire Unit VII comprising of 164.05 acre, when they purportedly have security interest over only 85 acre of land. Whether the amended Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 which came into force on 06.01.2020 can be given retrospective effect? - HELD THAT:- The IBBI vide its Circular No. IBBI/LIQ/024/2019 dated 26.08.2019, upon saddled with queries from the stakeholders with respect to the applicability of the amended regulations to the Liquidation process, has clarified that the Amended Regulations are not applicable to the Liquidation Processes, which had commenced before coming into force of the said Amended Regulations and that they are applicable only to the Liquidation processes, which commenced on or after the said Amended Regulations came into force. Thus, this circular amply clarifies the issues as to the prospective applicability of the Amended Regulations to the Liquidation process of the Corporate Debtor - since the Liquidation process in relation to the Corporate Debtor has commenced on 25.04.2018, the IBBI (Liquidation Process) Regulations, 2016, which was prevalent at that point of time only will apply to the facts and circumstances of the present case. Whether the Applicant is entitled to claim the possession of the entire Unit VII comprising of 164.05 acre, when they purportedly have security interest over only 85 acre of land? - HELD THAT:- Once the Secured Creditor has expressed his willingness to stand outside the liquidation process, the Liquidator cannot have any hold over the said property and as such the property over which the secured creditor exercises his security interest would not form part of the Liquidation Estate and the Liquidator is duty bound to hand over the physical possession of the said property to the Secured Creditor. However, it is to be noted here that to enforce the security interest under Section 52(1)(b), the Creditor must either have exclusive charge or sole first charge , which would enable it to enforce its security interest - in view of the documents not being placed on record in order to substantiate the fact as to which property the Applicant is having exclusive charge and sole first charge , this Tribunal hereby directs the Liquidator to identify the properties over which the Applicant is having exclusive charge or sole first charge and to hand over the physical possession of the same to the Applicant in order to exercise their security interest. It is also made clear that the properties over which the Applicant is having second charge or pari passu charge is to be held within the possession of the Liquidator and necessarily the said property forms part of the Liquidation Estate . Application disposed off.

  ---

• 2021 (4) TMI 1142
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - HELD THAT:- It is not in dispute that applicant was serving as General Manager of the Corporate Debtor. This fact is further supported by Form-16 issued under the provisions of Income Tax Act, 1961 which confirm the quantum of salary. It is also not in dispute that reply to notice of demand issued under Section 8 of IBC, 2016 has not been given. Such notice has been delivered and notice to that effect has been put on record, hence, for this reason alone this application can be admitted. Further the debt is due and payable because it is not barred by limitation nor it is premature. No dispute prior to issue of notice under Section 8 of IBC, 2016 exists as evident from the material on record. A default has occurred in payment thereof. The outstanding amount is more than Rs. 1,00,000/-, being threshold limited to admit the petition filed under Section 9 of IBC, 2016. Application admitted - moratorium declared.

  ---

• Service Tax

• 2021 (4) TMI 1167
  Refund of Service Tax - service tax on the petitioner for utilizing the storage facility - period between September 1999 to March 2000 - Section 35(a) of the Central Excise Act, 1944 as made applicable to Appeals against orders of the Tribunal under Section 83 of the Finance Act, 1994 - HELD THAT:- The Hon ble Supreme Court in UOI Vs. Mafatlal India Ltd. , [ 1996 (12) TMI 50 - SUPREME COURT] , while dealing with refund of tax, classified refunds into two categories. The first one on account of unconstitutional levy and second one on account of illegal levy - Explaining the second category of refund, the Court also held that where a duty of tax has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. The theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee s case, a similar point is decided in favour of the manufacturer/assessee. The refund of tax if any borne by the petitioner had to be made only within a period of limitation prescribed under Section 11B of the Central Excise Act, 1944 notwithstanding the fact that the petitioner became aware of the wrong payment of tax only after the Central Board of Excise and Customs issued clarification bearing reference Order No. 2/1/2002-ST dated 24.4.2002. Thus, the period prescribed under section 11B of the Central Excise Act, 1944 had expired long before the above were clarification was issued. Petition dismissed.

  ---

• 2021 (4) TMI 1157
  Levy of Service Tax - appellant is a partner and the service recipient is a partnership firm - service recipient having relationship of partner and partnership firm can be categorised as service provider and service recipient or not - refundable or not even when the assessment of payment of service tax was not challenged - HELD THAT:- In a partnership firm, partner s capital can be in the form of cash/asset. It can also be in the form of contribution of skill and labour alone without contribution in cash. This issue has been considered by Hon ble Supreme Court in the case of CHANDRAKANT MANILAL SHAH AND ANOTHER VERSUS COMMISSIONER OF INCOME-TAX [ 1991 (10) TMI 1 - SUPREME COURT] . In the said case, the issue for deciding was the validity of the partnership between the Karta of a Hindu undivided family and one of his sons. The son had not brought any cash/asset as his capital contribution to the partnership but was contributing only his skill and labour. Hon ble Supreme Court observed that Indeed, skill and labour are by themselves possessions. Any possession is one of the dictionary meanings of the word property . In its wider connotation, therefore, the mental and physical capacity generated by skill and labour of an individual and indeed the skill and labour by themselves would be the property of the individual possessing them. They are certainly assets of that individual and there seems to be no reason why they cannot be contributed as a consideration for earning profit in the business of a partnership firm. From the observation of the Hon ble Supreme Court it follows that remuneration received by a partner by employing his skill and labour as per partnership deed is also a profit. The profit in such circumstances can be a special share in the profit. In the present case also, the appellant is a partner performing some duties for which he has an expertise, skill in the marketing and distribution of the goods manufactured by partnership firm M/s Zydus Healthcare. And as a remuneration, the appellant have been received the amount which is nothing else but a special share in the profit. As per the plain reading of section 85(1) of Finance Act, it provides for filing an appeal before the Commissioner (Appeals) only in case an order is passed by an officer below the rank of Principal Commissioner or Commissioner of Central Excise. In the case of self assessment of Service Tax, there is no order of assessment passed by any officer below the rank of Principal Commissioner or Commissioner of Central Excise. Therefore, there is no provision corresponding to section 47(2) of Customs Act, 1962 in the Finance Act, 1994. Therefore, there is a clear distinction between the assessment under Customs and Service tax. Recovery of tax - HELD THAT:- The appellant have clearly declared that they have not recovered the amount of Service Tax from Zydus Health Care and the burden of Service Tax was not passed on to the Zydus Health Care. It shows that both the authorities have ignored this declaration made by the appellant. Therefore, the contention made by them that the appellant has not satisfied that the incidence of Service Tax, for which refund claim was made, has not been passed on is apparently erroneous. The appellant are entitled for the refund of the claim made by them - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (4) TMI 1168
  Levy of additional duty liability - duty imposed by restricting the loss due to the drying of tobacco leaves (driage of tobacco leaves) to 10% as against 24% claimed by the petitioner - HELD THAT:- The proceedings before the Settlement Commission proceeds on the principal of trust. An applicant who was admittedly an evader of tax is expected to make a clean breast of his tax sins before the Settlement Commission and atone for mistakes and should undertake to pay the tax by making true and full disclosure before it - As an incentive to encourage such deviant assessee s who opt to alter their deviant ways, a golden chance is given to them for settling the case under the Act. In return such assessee s may be given immunity from prosecution and penalty under the scheme of the Act. Further, the 1st respondent Settlement Commission is manned by the senior officers drawn from the Central Excise, Customs and Service Department with vast experience. They have been given wide powers to not only accept the additional liability disclosed in the application for settlement but also give a deserving applicant a reprieve by granting immunity from prosecution and penalty. Earlier, this power also extended the power to grant waiver from payment of interest - In M/S SANGHVI RECONDITIONERS PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2010 (2) TMI 6 - SUPREME COURT] , the Hon ble Supreme Court held that the petitioner having opted for settlement is not permitted to dissect Settlement Commission s Order to accept what is favourable and reject what is not. The submission that there was no rational basis on which the 1strespondent Settlement Commission has unilaterally restricted the loss due to drying of the tobacco leaves to 10% as against 24% claimed by the petitioner cannot be entertained as it would also amount to interference with the finding of facts arrived by the 1st respondent Settlement Commission - There is perversity in the impugned order, Therefore, scope for judicial review under Article 226 of the Constitution of India is to be eschewed. Petition dismissed.

  ---

• 2021 (4) TMI 1166
  Levy of Personal penalty on petitioner - service of notices of personal hearing not done - violation of principles of natural justice - HELD THAT:- From the reply of the company, it can be deduced unequivocally that the show cause notice and the personal hearing notices have not been served upon the petitioner. It has a reference of the first show cause notice served upon the company and therefore, it assumed that the show cause notice and the personal hearing notices have been served upon the present petitioner also - this stand on the part of the respondent of not having known the changed address of petitioner on his having failed to put to the notice of department is wholly unacceptable. Failure to send the show cause notice and the notices of personal hearing therefore, upon the last known address of the petitioner is also unsustainable as the department of Income Tax already had details. The penalty imposed upon the petitioner in the order in original is to the tune of Rs. 2,28,65,888/-. Any penalty imposed personally on the person cannot be saddled, unless due opportunity is given. Here not only there is a question of availing opportunity of hearing, the very service of the show cause notice is also seriously questioned and we also could notice from the pleadings before us that neither the show cause notice was served upon the petitioner nor was he served notice of personal hearing. Again, there is nothing to indicate as to how this affixing at company premise should be construed as sufficient notice to the petitioner nor is it found on record from any document that he was made aware of the show cause notice which led to the order impugned and therefore, merely because in reply to another show cause notice, he has been made aware also cannot furnish the ground to assume that he was aware of the show cause notice, the order of which is impugned in this matter. Such assumption and presumption are absent in the statute and they cannot furnish the basis to sustain the order of huge amount of personal penalty. The foundation of principle of natural justice is audi alteram partem, the necessity of grant of opportunity of hearing and no party is to be condemned unheard. Here, there appears to be a flagrant violation of the said principle which necessitates indulgence. The show cause notice issued by the respondent no.3 is forming part of the record. The same shall be the notice which is to be construed as the show cause notice - Matter shall be decided by the authority concerned by giving the fullest opportunity without being influenced by any other aspects - appeal allowed by way of remand.

  ---

• 2021 (4) TMI 1164
  Refund claim - Applicability of Doctrine of unjust enrichment - manufacturer paid the differential disputed excise duty under protest when the assessment was finalized in favour of the manufacturer - HELD THAT:- Indisputably, the application was filed by the appellant as a buyer of the goods from the supplier namely the said M/s.Fenner India Ltd., which paid duty under protest after the period of limitation prescribed in law and therefore, this would dis-entitle the claim of refund to the assessee as prayed for by applying the law laid down by the Hon ble Supreme Court in the case of COMMISSIONER OF C. EX., MUMBAI-II VERSUS ALLIED PHOTOGRAPHICS INDIA LTD. [ 2004 (3) TMI 63 - SUPREME COURT] , wherein it was held that the purchaser of the goods was not entitled to a claim for refund of duty made under protest by the manufacturer without complying with the mandate of Section 11B of the Act. The appellant assessee has not made out any case to interfere with the impugned order passed by the Tribunal - Appeal dismissed and the substantial questions of law framed are answered against the assessee.

  ---

• 2021 (4) TMI 1158
  CENVAT Credit - input services - storage/ warehouse services availed for storing the imported inputs - denial of credit on the ground that this service has no nexus with the manufacture of final product for the reason that the said warehouse/ godown are located out of the premises of the appellants factory - Permission under Rule 8 of Cevat Credit Rules, 2004 for storage of inputs outside the factory - scope of SCN - HELD THAT:- The only allegation in the Show cause notices that since, the renting of immovable property service is not included in the definition of input service. Accordingly, the said service used by the appellant neither falls under scope definition of input service nor has nexus with manufacturing activity. However, in the adjudication order and order of Commissioner (Appeals) both the authorities have travelled beyond the scope of show cause notice. In as much as the Cenvat credit was denied on the ground that the godown / warehouse where the input is stored is outside the factory premises and the appellant have not obtained the permission under Rule 8 of Cenvat Credit Rules, 2004. Since, the above reasoning is not flowing from the show cause notice even without going into the legality of the above two issues, the orders of the both the authorities does not sustain, for the reason that any issue which were not raised in the show cause notice, cannot be imported into the adjudication order or Commissioner (Appeals) order. Nexus with manufacturing activity - HELD THAT:- In the present case there is no dispute that the warehouse / godown outside the factory premises was taken on rent for storage of input which is meant for production of final product, therefore, there is a direct nexus of warehousing / storage service with the manufacturing activity of the appellant. Permission under Rule 8 of Cevat Credit Rules, 2004 for storage of inputs outside the factory - HELD THAT:- In the present case, there is no allegation that the appellant have availed the Cenvat Credit in respect of the inputs lying in warehouse outside the factory. Therefore, in the given facts Rule 8 is not applicable, moreover, as regard the Cenvat Credit in respect of input services Rule 8 does not come into the play, for the reason that the location of the receipt of service is not material and Rule 8 is not relevant for the purpose of availing the Cenvat Credit on the input service namely renting of immovable property. T he appellant out of the total Cenvat Credit of Rs. 5,57,384/- paid an amount of Rs. 3,27,392/- along with interest and same was not contested by them, therefore, the amount paid by the appellant is maintained as not contested. However, the demand of Rs. 2,29,992/- and entire penalty and corresponding interest are set aside - Appeal allowed in part.

  ---

• CST, VAT & Sales Tax

• 2021 (4) TMI 1174
  Attachment of Bank Account of petitioner - recovery of the demand raised for the year 2008-2009 - pendency of the second appeal - stay application not decided - HELD THAT:- What is noticed in the instant case is that from October 2020, the petitioner is already before the second appellate authority and without deciding his application for the stay, which was filed in October,2020, the second appellate authority on 19.01.2021 has chosen to invoke its powers under section 44 to attach the bank account. Attaching of the bank account would naturally result into serious consequences which many a times would be not possible to be counted or contemplated. There could not have been any order without availing the opportunity in wake of pendency of Appeal and pending adjudication of an application of stay. While relegating the parties to the respondent Appellate authority, it is directed that the application of stay, if not the entire Appeal, shall be determined on availing due opportunity of hearing to the Petitioner, within two weeks of the receipt of copy of this order. Petition disposed off.

  ---

• 2021 (4) TMI 1170
  Adjustment of input tax credit against tax liability - Rule 10(10(b) of the Tamil Nadu Value Added Tax Rules, 2007 - Disallowance of adjustment of the input tax credit amounting to Rs. 23,31,952/- from the petitioner s online monthly return of February 2014 towards the arrears of the tax liability for the Assessment Year 2011-12. Adjustment of input tax credit against tax liability - HELD THAT:- Credit will be allowed to be adjusted against tax liability under Central Sales Tax Act , 1956 only if a dealer produced Form C prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 - only if credit is available as per Rule 10(9)(a) of the Tamil Nadu Value Added Tax Rules, 2007 read with Section 9(5) of the Tamil Nadu Value Added Tax Act, 2006 as in force w.e.f. 01.01.2001, it can be adjusted / utilized for discharging tax liability under Central Sale Tax Act, 1956 under Rule 5(3-A) of the Central Sales Tax (Tamil Nadu) Rules, 1957 - the petitioner was entitled to adjust the input tax credit only if such credit was available under the Section 19 of the Tamil Nadu Value Added Tax Act, 2006. Both the petitioner and the respondent have not brought to the attention of the Court about the fate of assessment order passed under Tamil Nadu Value Added Tax, 2006 for the aforesaid assessment year as to whether credit was allowed to the petitioner under Section 19 of the said Act. Therefore, there are no merits in the present writ petition in absence of such vital information. If there was any zero rated sale during the subsequent years, it can only be refunded in accordance with the law to the petitioner. There is no scope for adjustment for past liabilities - Therefore, if the petitioner was otherwise entitled to such refund under Section 18 of the Tamil Nadu Value Added Tax, 2006, instead of refunding the amounts to the petitioner, such amount may be allowed to be set-off against the tax liability in view of the peculiar situation arising out of subsequent development and transition to a different tax regime under the GST Laws with effect from 01.07.2017. The petitioner is allowed to file an appeal against the impugned orders within a period of thirty days from date of receipt of a copy of this order before the appellate authority - petition dismissed.

  ---