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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 6, 2021 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws Articles TAX AUDIT REPORT- CLAUSE 44 ABOUT EXPENDITURES UNDER VARIOUS CATAGORIES OF SUPPLIERS UNDER GST – seems un necessary report – this clause can be omitted to avoid u-necessary reporting which may lead to undesired results. RULING ON GST LEVY ON SUPPLY OF LOADING / UNLOADING SERVICES AT PORT FOR AGRICULTURAL PRODUCE News GST to be levied on underlying goods/services in gift vouchers: rules AAAR Spices Board India and UNDP India's Accelerator Lab sign MoU to develop blockchain-powered traceability Interface for Indian spices Government measures increase FDI inflows in the country; Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 More than ₹ 25,586 crore sanctioned to over 1,14,322 accounts by the Banks under Stand-Up India Scheme in 5 years Highlights / Catch Notes GST Accrual of GST liability - when is the ‘date of receipt of payment’ where no tax invoice is issued under Section 31 - agreement for the sale of flats in a project - Section 13(2) uses ‘earliest’ not once, but twice. - Saifee Developers had absolutely no justification in not paying the remaining GST and interest. It is unclear whether it has even paid the stamp duty on the MoU/Agreement as yet. It cannot be in default and yet continue to squat on a protective ad-interim order granted in exercise of equitable and discretionary jurisdiction - HC Visit to Get Source Condonation of delay in filing an appeal before AAAR against the order of AAR - the AAR was justified in rejecting the appeal on the ground of limitation as it was not having power to condone the delay beyond 30 days. Therefore, this Court also does not find reason to condone the delay keeping in view the statutory provisions - thus this court does not find any reason to interfere with the order passed by the AAR as the appeal itself was preferred beyond the expiry of limitation period. - HC Visit to Get Source Seeking grant of Bail - raid and search operation were conducted - fake firms - wrongful availment of credit - Suffice to say prima facie, the accused has committed an economic offence and caused monetary loss to the State which is most harmful. There is a possibility to be tampered with the evidence and tempered with the witnesses if the applicant is released on bail - it is not a fit case for bail. - DSC Visit to Get Source Income Tax TDS u/s 195 - payments made to non-resident - The amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India - No TDS Liability - HC Visit to Get Source Conversion of complete scrutiny from the limited scrutiny - In the present case, no administrative approval has been obtained from the CIT. The AO is also required to intimate the assessee regarding such conversion of case into complete scrutiny. In the present case, it is apparent that the ld. AO has touched upon the issues, which are not part of the limited scrutiny. - AT Visit to Get Source Disallowance u/s 37(1) - interest free loan to its Managing Partner - it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. This contention is not acceptable. The assessee has, in fact claimed it as spent for its business purposes only. Further, the amount spent on construction of shed is not available on record. Therefore,we are not inclined to accept this contention of the assessee and therefore, the disallowance u/s. 37(1) of the Act is upheld. - AT Visit to Get Source Penalty u/s 271AAB - the assessee did not have any option to keep the return pending anymore and wait for the department to provide copy of statements. Had the assessee not done so, the time limit prescribed u/s 139(4) would also have expired. - penalty u/s 271AAB is not mandatory but discretionary - Since due taxes have already been paid by assessee within the stipulated time thus delay in filing the return for the reasons beyond the control of the assessee constitute ‘reasonable cause’ - AT Visit to Get Source Computation of Capital Gain - provision for site development expenses against sale of plots and the disallowance being premium on re-purchase - Once the plots are sold at a higher price than the price at which these were sold earlier before cancellation along with the premium on cancellation, there should not be any addition since the assessee is paying tax on higher amount. Considering the totality of the facts and in the interest of justice, we deem it proper to restore the issue of premium on re-purchase of plots to the file of the AO with a direction to verify the details of sale of the above three plots and delete the addition once it is proved that the plots are sold at higher price than the price at which these were sold earlier along with premium on cancellation. - AT Visit to Get Source LTCG Addition - denial of natural justice - the Assessing Officer’s second round assessment order sufficiently indicates that he had afforded a number of opportunities to the assessee, but this taxpayer never ever turned up along with the corresponding explanation. - The assessee’s stand before us seeks to shift his onus on the department side does not deserve to be concurred with - AT Visit to Get Source Exemption u/s 11 - Charitable activity u/s 2(15) - activities of organizing seminars - The AO himself classified the activities under objects of general public utility. Therefore, the activities carried on by the assessee is only incidental to the main object and the ratio laid down in the case of Shree Nashik Panchvati (supra) is applicable to this case. - AT Visit to Get Source Penalty u/s 271(1)(c) - denial of deduction under section 80IB(10) - Just because the claim for this A.Y. 2009–10 was rejected, the penalty cannot be imposed considering the fact that the assessee has submitted all the relevant information during the assessment proceedings and also all the relevant information relating to this claim was available on record. - AT Visit to Get Source Benefit of the provisions of Section 10 (23C)(iiiab) - There is a sweeping difference in according the any assessee to the provisions of Section 12AA and Section 10(23C)(iiiab). The conditions and requirements of registration under Section 12 AA and the conditions and prerequisites for the claiming the benefit u/ s 10(23C)(iiiab) differs. We also find that the assessee has been granted registration u/s 12 AA from the provisions of the Act and on going through the various judgments, we hereby hold that the assessee is not entitled to the benefit of Section 10(23C)(iiiab). - AT Visit to Get Source Deduction u/S 80IA on Inland Container Depot - Unless shown otherwise, it cannot be held that the term ‘Inland Ports' is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the 17 Section and deduction can be claimed for the income earned out of these Depots. - AT Visit to Get Source Validity of final assessment order passed u/s 143(3) r.w.s 144C - The view taken by DRP that it has no power to condone the delay is inasmuch as such power is absent under section 144C of Income Tax (DRP) Rules 2009 cannot be found fault with. - The impugned order passed dated 31/08/2016 u/s 144C(13) is beyond the limitation period and is ultra virus - AT Visit to Get Source VAT The petitioner did not receive any of the notices said to be sent by the 2nd respondent and therefore, they had no occasion to submit their explanation/objection. So also, they had no occasion to submit their case personally. Consequently, the principles of natural justice are violated in the instant case. Therefore, the impugned assessment order is liable to be set aside - HC Visit to Get Source Condonation of delay in filing petition - No explanation is adduced for the elapse in time between 04.06.2016 and date of filing of this writ petition which is 08.10.2020 and in the light of the materials produced by the revenue to establish service, which are also not denied by the petitioner, no justification found to entertain these writ petitions and the same are dismissed in limine. - HC Visit to Get Source Case Laws: GST 2021 (4) TMI 184 Accrual of GST liability - agreement for the sale of flats in a project being undertaken by Shanklesha Constructions - when is the date of receipt of payment where no tax invoice is issued under Section 31? - HELD THAT:- Explanation (ii) of section 13 of GST Act tells that the date of receipt of payment is the earlier of (i) the date on which the payment is entered in the books of account of the supplier or (ii) the date on which the payment is credited to the supplier s bank account - the entire amount of ₹ 15 crores was paid between January and June 2015, before the GST Act came into force on 8th July 2017. Saifee Developers exercised its option on 14th June 2018, just under a year after the GST Act became operative. In 2018, 25 agreements for sale were executed, and 10 of these were registered. These are said to account for ₹ 3 crores from the ₹ 15 crores, and Saifee Developers has paid ₹ 35,50,200/-. Now that Saifee Developers has exercised its options to buy flats, and Shanklesha Constructions has agreed to supply these, is not Shanklesha Constructions liable to pay GST on the balance, and is this not recoverable from Saifee Developers? - Saifee Developers construct is actually self-defeating. It accepts that on 14th June 2018 it opted to treat the entire amount as a purchase price. The wrangle is about the number of flats. That is immaterial for my purposes. Whether it is one huge flat or a hundred smaller flats will make no difference to the applicability of GST or to the concept of time of supply of services under Section 13. Once the nature of the transaction is determined, then the Section begins to operate. Notably, Section 13(2) uses earliest not once, but twice. The first time is in the main sub-section (2). It is repeated in Explanation (ii). The emphasis, therefore, is clearly to peg the time of supply of services to the logically earliest possible date: when the service was provided or when the payment was received in Section 13(2)(b); and, if a question of date of payment arises, then the earlier of the entry in the books of account or date of receipt of payment - Shanklesha Constructions entry in its books is after the date of receipt of payment. The earlier of the two must apply. It is nobody s case that the GST regime will be reckoned back to a time when it did not exist. Hence, logically, if the payment was already in received in Shanklesha Constructions account on the date the GST Act came into force, that must be the date taken for the time of supply of services . Saifee Developers had absolutely no justification in not paying the remaining GST and interest. It is unclear whether it has even paid the stamp duty on the MoU/Agreement as yet. It cannot be in default and yet continue to squat on a protective ad-interim order granted in exercise of equitable and discretionary jurisdiction - the Review Petition, being entirely without merit, is dismissed. 2021 (4) TMI 181 Grant of regular bail - bogus firms - Tax evasion - vires of Section 69 and 132 of CGST Act - HELD THAT:- In the instant case, the situation is different. The matter already stands investigated. The petitioners have been in custody since June, 2020. Trial of the case would take time to conclude. No useful purpose would be served by keeping the petitioners behind the bars. Thus, all the petitions are allowed and the petitioners are directed to be released on regular bail on execution of adequate personal/surety bonds amounting to ₹ 10 lakhs each to the satisfaction of concerned trial Court/Duty Magistrate. The petitioners would surrender their respective passports before the concerned Court and will not leave India without prior permission of the Court. 2021 (4) TMI 177 Default of condition on which the bail was granted - within the statutory period provided the investigation could not be completed and complaint as provided under the provisions of GST Act was not filed against the applicant - Section 167(2) of the Code of Criminal Procedure - While considering the case for default bail of the applicant, whether condition can be imposed lime the condition imposed in the present case for depositing 50% of the amount for which prosecution was launched? HELD THAT:- Considering the language of Section 167(2) of the Criminal Procedure Code, i.e. on expiry of the statutory period to complete investigation, an indefeasible right is created in favour of the accused person entitling him to default bail once the accused applies for the default bail and shows his willingness to furnish bail, if any other condition is imposed, is to be treated beyond the jurisdiction of the Court concerned while exercising powers to grant default /statutory bail under Section 167(2) of the Criminal Procedure Code. The condition imposed under order dated 01.10.2020 passed by the Chief Judicial Magistrate, Vadodara, to the extent of directing deposit of 50% of the alleged amount of ₹ 9,43,50,223 is hereby ordered to be quashed and set aside - petition allowed. 2021 (4) TMI 174 Condonation of delay in filing an appeal before AAAR against the order of AAR - Doctrine of Merger - scope of time limitation under Income Tax Act and GST Act - Scope of Notification issued by the CBDT dated 03.04.2020 - Classification of services - royalty paid in respect of Mining Lease - HELD THAT:- The undisputed facts of the case reveals that the petitioner on 27.08.2018 has filed an application in terms of section 97 of CGST Act, 2017 seeking a ruling on the questions in respect of payment of tax on the royalty paid in respect of the mining lease and the contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) and an order was passed in respect of Advance Ruling on 21.09.2019. An appeal was preferred before the AAR on 22.06.2020 and the AAR has passed an order holding that the appeal is not maintainable - The statutory provisions governing the field provides for a remedy of appeal and the petitioner has preferred an appeal on 22.06.2020 and the AAAR has passed an order dismissing the appeal on 21.09.2020 which is impugned in the present writ petition. Notification issued by the CBDT dated 03.04.2020 is certainly not a Notification extending the period of limitation provided under the statute in respect of appeals. Reliance is also placed upon the judgment delivered by the Hon ble Supreme Court in the case of HIND WIRE INDUSTRIES LTD. VERSUS COMMISSIONER OF INCOME TAX, WEST BENGAL-V. [ 1995 (1) TMI 415 - SUPREME COURT] . It was a case under the Income Tax Act. The Supreme Court has held that the word order in the expression order sought to be amended does not necessarily mean the original order and may mean the rectified order, therefore, second rectification within four years from the order of rectification was justified. - In the aforesaid case, there was no outer limit prescribed in the matter of limitation. In the present case, it has been provided under the statute that delay can be condoned only up to 30 days. In the considered opinion of this court, such application for rectification of the mistake was dismissed summarily there was no error apparent, hence, the doctrine of merger has not taken place. Therefore, the judgment relied upon does not help the petitioner in any manner. The cases relied upon by the learned counsel for the petitioner relate to those cases where the issue of doctrine of merger was involved and the cases relate to Income Tax Act or Central Excise Act, 1944. The provisions under both the Acts are not identical to the provisions dealing with limitation under the CGST Act, 2017. The provisions under the CGST Act, 2017 provides that the delay cannot be condoned beyond the period of 60 days. The Hon ble Supreme Court in the case of Oil and Natural Gas Corporation Limited v. Gujarat Energy Transmission Corporation Limited and others [2017 (3) TMI 1628 - SUPREME COURT] where it was held that the prescription of limitation in a case of present nature, when the statute commands that this Court may condone the further delay not beyond 60 days, it would come within the ambit and sweep of the provisions and policy of legislation. It is equivalent to Section 3 of the Limitation Act. Therefore, it is uncondonable and it cannot be condoned taking recourse to Article 142 of the Constitution. Thus, the AAR was justified in rejecting the appeal on the ground of limitation as it was not having power to condone the delay beyond 30 days. Therefore, this Court also does not find reason to condone the delay keeping in view the statutory provisions - thus this court does not find any reason to interfere with the order passed by the AAR as the appeal itself was preferred beyond the expiry of limitation period. Petition dismissed. 2021 (4) TMI 147 Seeking grant of Bail - raid and search operation were conducted - fake firms - wrongful availment of credit - issuance of GST invoices without supply of goods - HELD THAT:- The accused has violated provisions of the CGST Act 2017. It is also apparently clear that on account of issuance of GST invoices without supply of goods leading to fraudulent availment and utilization of input tax credit to the tune of ₹ 159.20 Crores. It is also evident from the arrest memo generated on line 04-01-2021 having valid document identification number. In the instant case, the competent authority had followed the provisions of Section 69 and after going through the investigation report he had ordered for the arrest of the applicant. It is simply clear that the applicant was in full knowledge that the Firms for which he applied for registration were not suppliers in terms of Section 2 (105) of the Act. All guidelines were followed during the preparation of the arrest memo. The applicant was called in the office of DGG Ghaziabad and he was served upon the summons and his statement was recorded on the same day and the investigation report put up before the competent authority. The applicant is sole mastermind and responsible for every act of himself. Suffice to say prima facie, the accused has committed an economic offence and caused monetary loss to the State which is most harmful. There is a possibility to be tampered with the evidence and tempered with the witnesses if the applicant is released on bail - it is not a fit case for bail. Bail application rejected. Income Tax 2021 (4) TMI 182 TDS u/s 195 - Disallowance u/s 40(a)(i) - scope of retrospective amendment to the Income Tax Act by Finance Act 2010 to Section 9(1) - Whether the amended explanation to 9(2) relating to the income of the non-resident shall be deemed to accrue or arise in India and shall be included in the total income of the non-resident whether or not he has a resident or place of business or business connection in India or has done services in India? - Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the deduction under Section 80-IA is to be done without setting off losses on optional basis inspite of clear provisions of Section 80-IA stipulating that the said undertaking should be considered as only source of income of the assessee for the purpose of determining eligible profit? - HELD THAT:- As following the ratio laid down by the Hon'ble Division Bench of this Court reported in Fluidtherm Technology (P). Ltd [ 2015 (4) TMI 191 - MADRAS HIGH COURT] and Commissioner of Income Tax, Salem VS. Chola Spinning Mills (P.) Ltd. [ 2019 (11) TMI 934 - MADRAS HIGH COURT] the questions of law are decided against the appellant - Revenue and in favour of the respondent assessee 2021 (4) TMI 180 TDS u/s 195 - payments made to non-resident - Disallowance made u/s.40(a)(i) for non deduction of tax at source for the payment made by the assessee to Abaqus Inc., USA - addition made on account of royalty income which was taxable as per provision of section 9(1)(vi) - HELD THAT:- The questions of law involved in the above appeals were already decided by the Hon'ble Supreme Court of India against the revenue and in favour of the assessee in the Judgment reported in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED [ 2021 (3) TMI 138 - SUPREME COURT] there is no obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9 (1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases. The amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act - Decided in favour of the assessee. 2021 (4) TMI 173 Conversion of complete scrutiny from the limited scrutiny - Correct head of income - income from sale of shares - re-characterization of the income from capital gains to business - disallowance of set off of capital loss - HELD THAT:- The assessment order as well as the appellate order also did not show that any such exercise was carried out. Instead of that, the notices issued during the years of assessment proceedings emphatically shows that the case was of limited scrutiny for verification of deduction under the head capital gains claimed by the assessee. Reasons for selection of the limited scrutiny was for verifying the deduction claimed Under the head capital gain by the assessee which was examined by the learned assessing officer and he was satisfied and thus allowed the claim. However, the learned assessing officer found that there are shares of two companies, which are purchased by the assessee, bonus was declared on them, and assessee sold part of the shares and has resultantly shown capital loss on those transactions. Such losses were set off against the capital gain earned by the assessee in mutual funds and other securities. There is no evidence placed before us that such a limited scrutiny assessment proceedings have been converted into complete scrutiny proceedings. The assessment order as well as the orders of the learned and CIT A also does not show any indication of the same. If the Assessing Officer desires to look into any other adjustment or examination of any issue, then what is mentioned as reasons for limited scrutiny, the CBDT has issued a clear instruction No. 5 of 2016 dated 14.07.2016 wherein after obtaining the administrative approval from the Pr. Commissioner of Income Tax or CIT, as the case may be, he can embark upon other issues by converting it into a complete scrutiny case from limited scrutiny case. In the present case, no such exercise has been shown to us. The AO is also required to intimate the assessee regarding such conversion of case into complete scrutiny. In the present case, it is apparent that the ld. AO has touched upon the issues, which are not part of the limited scrutiny. Therefore, the same deserves to be deleted on this account only. In view of this, we direct the ld. Assessing Officer to delete the disallowance of set off of capital loss Enhancement made by the CIT (Appeals) - We hold that when the case of the assessee was selected for limited scrutiny, the ld. CIT (Appeals) can make enhancement only with the aspect of issues that were part of the limited scrutiny. Otherwise, it may happen that the ld. Assessing Officer may pass an order on the issues related to limited scrutiny and the ld. CIT (Appeals) may enhance the income of the assessee on issues other than limited scrutiny issues. This will amount to bypassing the above quoted instructions of the CBDT. It also shows that if that happens then without obtaining the approval of Commissioner of Income Tax and CCIT, the whole assessment of the assessee remains open, despite the fact that the learned assessing officer has looked into the issues contained in the limited scrutiny notice. We do not find such an intention of the CBDT in issuing the instructions of limited scrutiny case. On this score, we do not approve the enhancement made by the ld. CIT (Appeals) on issues, which were not part of limited scrutiny. Correct head of income - The purchase and sale of the above isolated securities were not at all related to the business of assessee or show any trade activity. The transactions in the shares were merely an occasional independent activity. The scale of the activity is also not substantial, looking at the income offered by the assessee in the return of income. The transactions were also not regular basis and the purchases are not shown to have been made out of borrowings. In view of this, we do not find any merit in the findings of the ld. CIT (Appeals) that the above transactions are chargeable to tax under the head business income. In view of this fact, the enhancement of income made by the ld. CIT (Appeals) deserves to be deleted and hence deleted. - Appeal of the assessee are allowed. 2021 (4) TMI 172 Disallowance u/s 40A - assessee had made cash purchases exceeding ₹ 20,000/- in violation of provisions of section 40A(3) - assessee drew our attention to the CBDT Circular No. 8 of 2006 dated 06.10.2006 and pointed out that the lower authorities have wrongly interpreted the mandatory clauses of this Circular - HELD THAT:- As per CBDT Circular No. 8 of 2006 dated 06.10.2006specifically mentioned that any person who buys animals from the farmers, slaughters them and then sells the raw meat carcasses to the meat processing factories or to the traders/retail outlets would be considered as producer of livestock and meat. This means that even the traders and retailers are covered by this Circular. The assessee drew our attention to the relevant documents of the paper book and stated that the assessee has fulfilled all the three mandatory conditions in support of his claim. However, we are of the considered view that since the lower authorities have not considered the CBDT Circular in its true perspective, these documents remained unverified. Therefore, in the interest of justice, we restore this issue to the file of the Assessing Officer. The assessee is directed to furnish all evidences demonstrating that he has fulfilled the mandatory conditions for getting benefit of Rule 6DD of the Rules and the Assessing Officer is directed to examine the evidences and decide this issue afresh after giving reasonable and sufficient opportunity of being heard to the appellant. Appeal filed by the assessee allowed for statistical purposes. 2021 (4) TMI 171 Penalty u/s. 271(1) - Assessment was completed by making disallowance of depreciation claimed on rented property - tax payable under the provisions of MAT different from tax computed on the assessed income - HELD THAT:- A perusal of the computation of taxable income as per provisions of section 115JB of the Act show that tax payable comes to ₹ 16,18,097/- under the provisions of MAT whereas tax computed on the assessed income comes to ₹ 15,53,355/-, which means that the appellant has paid taxes as per the provisions of section 115JB of the Act. As per the CBDT Circular No. 25/2015 dated 31.12.2015, no penalty can be levied on an income which has been computed u/s. 115JB of the Act and penalty has been levied on the additions/disallowances made under normal provisions of the Act. Thus as per CIRCULAR No. 25/2015 we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act. - Decided in favour of assessee. 2021 (4) TMI 170 Enhanced claim of deduction u/s. 80IB - HELD THAT:- As decided in own case [ 2020 (4) TMI 848 - ITAT DELHI] Tribunal has remitted back this issue to the file of the Assessing Officer to decide issue afresh. There is no doubt about that the Industry is related to mineral based industry and thus in this context the Assessing Officer should take cognizance of the applicability of deduction u/s. 80IB(4) whether eligible 100% or not. We therefore, remand back this issue to the file of the Assessing Officer for proper adjudication in relation to the findings given by us and decide the issue afresh. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground partly allowed for statistical purpose. TDS u/s 194J - assessee had paid remuneration to the Director including sitting fees for attending the Board Meetings etc.- AR submitted that the provisions to deduct TDS Director sitting fee has been made applicable w.e.f. 1st July, 2012. Prior to that there was no provision in the Income Tax Act, 1961 to deduct TDS on amount paid as Director sitting fees - HELD THAT:- Prima facie after looking at provisions of Section 17 and the concept of Director under the Companies Act and thus has a relationship as an employee to the Company. Besides this, the fees which is termed as sitting fees is the part and parcel of remuneration of the Director and hence has an element of salary for which TDS should be deducted. Thus, the CIT(A) has rightly sustain this addition and there is no need to interfere with the findings of the CIT(A). 2021 (4) TMI 169 Reopening of assessment u/s 147 - addition u/s 68 - assessee has received bogus share capital from certain paper/briefcase company without any business activity and that their accounts are being used to rotate the funds for accommodation entries of different types to various beneficiaries - HELD THAT:- Reasons recorded by the AO have already been reproduced in the earlier paragraphs which clearly show that the case of the assessee was reopened on the ground that it has invested in the shares G.J. Holding Ltd.,however, the assessment order shows that the Assessing Officer made an addition u/s. 68 of the Act on the ground that the assessee has received bogus share capital/premium from G.J. Holding Ltd. Thus, there is contradiction in the reasons recorded and the assessment made. There is complete non-application of mind by the Assessing Officer while recording the reasons for reopening the assessment. The assessment was basically reopened on the basis of information obtained from the Investigation Wing and without due application of mind by the Assessing Officer and such reopening was on borrowed satisfaction. It has been held in various decisions of Hon'ble High Courts and the Co-ordinate Benches of the Tribunal that reopening of assessment on the basis of borrowed satisfaction and without independent application of mind by the Assessing Officer makes such reassessment a nullity. Since, the Assessing Officer in the instant case, has reopened the assessment on the basis of information obtained from the Investigation Wing that it has invested in the shares of G.J. Holdings Ltd., whereas, in the assessment order, the Assessing Officer has finally concluded that the assessee has received an amount of ₹ 5,40,000/- from G.J. Holding Ltd. in shape of share capital and share premium, therefore, it clearly shows that there is complete non-application of mind by the Assessing Officer while reopening the assessment - Decided in favour of assessee. 2021 (4) TMI 168 Disallowance u/s 37(1) - interest free loan to its Managing Partner - assessee claims that the MD has used it for assessee's business purposes only - HELD THAT:- As assessee relied upon case GOPIKRISHNA MURALIDHAR [ 1961 (11) TMI 68 - ANDHRA PRADESH HIGH COURT] which is not applicable to the facts of the case before me, as in the said case, it was undisputed that the assessee therein had borrowed the money from HUF for the business of the family and had not borrowed for the purpose of household expenses. It was held that the family was entitled to withdraw from the capital supplied by it, with the result of the capital being depleted. In the case before me, it is not the contention that the Managing Partner has withdrawn his capital. As seen from the balance sheet of the firm also, there is no withdrawal of capital by Sri Suresh Reddy. This contention is not acceptable. The assessee has, in fact claimed it as spent for its business purposes only. Further, the amount spent on construction of shed is not available on record. Therefore,we are not inclined to accept this contention of the assessee and therefore, the disallowance u/s. 37(1) of the Act is upheld. As regards the administrative expenses, we also feel that the disallowance of 10% of the expenses under the respective head is quite excessive. Therefore, restrict the disallowance to 5% of the expenses under the relevant heads. Assessee's appeal is partly allowed. 2021 (4) TMI 167 Penalty levied u/s 271(1)(c) - undisclosed LTCG - Notice under Section 148 issued and in response to the notice assessee submitted a return declaring long term capital gain and other interest income - penalty imposed as assessee has not filed his return of income voluntarily, but after re-opening of the assessment under Section 147 - In the penalty order the AO levied penalty for furnishing inaccurate particulars of income and the CIT (Appeals) confirmed the penalty for concealment of income - HELD THAT:- The issue is squarely covered by the decision of Hon'ble Delhi High Court in Pr. CIT Vs. Sahara India Life Insurance Corporation of India Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] wherein it has been held that notice issued for imposing the penalty would be bad in law if it does not satisfy the specific charge under which the penalty proceedings had been initiated i.e. for concealment of income or for furnishing inaccurate particulars of income. Same is also the decision in CIT Vs. Manjunatha Cotton Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] wherein it has been held that the notice issued by the AO would be bad in law if it did not specify for which limb of section 271(1)(c) of the Act, penalty proceedings are initiated. Also see M/S SSA S EMERALD MEADOWS [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] As AO levied penalty for furnishing inaccurate particulars of income and the CIT (Appeals) confirmed penalty for concealment of income. In view of the above inconsistency and binding judicial decisions cited above, we reverse the orders of the lower authorities and direct the AO to delete the penalty under Section 271(1)(c) - Decided in favour of assessee. 2021 (4) TMI 166 Direct Taxes 'Vivad se Vishwas Scheme, 2020' - some of assessee's have filed form No. 1 and 2 and awaiting form No. 3 from the designated authority - In some cases, the assessee's have received form No. 3 from the designated authority and in some cases, the assessee have filed letter and expressed their willingness to file form No. 1 and 2 before the designated authority - HELD THAT:- In these present appeals, some assessee's have filed declaration in Form No. 1 along with undertaking waiving rights for any remedy in Form No. 2 to the designated Authority and has also received Form 3. In some cases, form No. 1 and 2 has been filed and awaiting form No. 3 from the designated authority and in some cases, the assessee's have expressed their willingness to file form No. 1 and 2 and settle their dispute under the scheme. Therefore, once the assessee's intend to file a declaration in Form No. 1 along with undertaking and expressed their willingness to settle pending disputes regarding direct taxes, then there is no point in keeping appeal filed by the assessee's. We, further noted that recently the Hon'ble Jurisdictional High Court of Madras has considered an identical application filed by an assessee in the case of M/s. Nannusamy Mohan (HUF) [ 2020 (11) TMI 484 - MADRAS HIGH COURT] for availing the benefit of 'Vivad se Vishwas Scheme, 2020', where the Hon'ble High Court has dismissed the appeal filed by the petitioner as withdrawn, but allowed liberty to the assessee to restore the appeal in the event the designated authority for any reason reject application filed by the assessee under section 4 of the Act. Thus taking note of the fact that some assessee's have already filed declaration in Form No. 1 along with Form No. 2 to the Designated Authority and received Form 3 and some assessee's had already filed Form No. 1 2 and awaiting form No. 3 from the designated authority and also the fact that remaining assessee's are willing to file Form No. 1 and 2 within the due date prescribed for this purpose, we dismiss the appeals filed by the assessee's as withdrawn. However, a liberty is given to the assessee's to restore the appeals, in the event of the Designated Authority, for any reason reject the application filed by the assessee under section 4 of the said Act. 2021 (4) TMI 165 Profit derived from sale of land - lands sold by AOP at Vellore - AO assessed profit derived from sale of land under the head income from business or profession on the sole basis of survey report received from Office of the Income Tax Officer, Vellore in the case of M/s. Kumaran Real Estate Builders, Vellore as an AOP - HELD THAT:- AO having accepted the fact that assessee is not a member of AOP, ought to have verified the income declared under the head long term capital gain with reference to lands sold by her in her individual capacity by ascertaining the fact that whether the assessee has sold lands as part of AOP or not. In case, lands sold by the assessee are not part of activity of AOP, but are independent lands, then assessability of profit from sale of lands should be independently examined without any influence from survey report in the case of M/s. Kumaran Real Estate Builders, Vellore, because assessment of AOP and its members were made solely based on the findings of the survey and statement recorded from the members during the course of survey. Assessing Officer has arrived at a conclusion that income derived by assessee from sale of lands is assessable under the head income from business or profession without carrying out an independent enquiry with regard to land sold by the assessee. Hence, we are of the considered view that the issue needs to go back to the file of Assessing Officer for both assessment years to ascertain the fact with regard to the land sold by the assessee in her individual capacity to determine nature of income and assessability of such income under the head income from business or profession or capital gains. Hence, we set aside both appeals to the file of the Assessing Officer and direct him to reconsider the issue in light of various evidences filed by the assessee including settlement deed executed in favor of M/s. Sri Kumaran Educational Charitable Trust and to ascertain nature of income declared by the assessee under the head income from long term capital gains. Appeal allowed for statistical purposes. 2021 (4) TMI 164 Penalty u/s. 271(1)(c) - Bogus purchases of raw materials(chemicals) - assessee in order to purchase peace, the assessee came forward to offer 5% as its profit margin in these transactions - HELD THAT:- CIT(A) had categorically given a finding that the addition had been ultimately made only on an estimated basis by placing reliance on the decision of CIT vs. Aero Traders Pvt. Ltd., [ 2010 (1) TMI 32 - DELHI HIGH COURT] , CIT vs. Vijaykumar Jain [ 2010 (4) TMI 386 - CHHATTISGARH HIGH COURT] , CIT vs. Subhash Trading Co. [ 1995 (11) TMI 37 - GUJARAT HIGH COURT] and MAHENDRA SINGH KHEDLA [ 2012 (3) TMI 568 - RAJASTHAN HIGH COURT] , the ld. CIT(A) held that no penalty u/s. 271(1)(c) of the Act could be levied on an estimated addition and accordingly, deleted the penalty. We do not find any infirmity in the said order of the ld. CIT(A) deleting the penalty on an estimated addition. Accordingly, the ground raised by the Revenue is dismissed. 2021 (4) TMI 163 Penalty u/s 271AAB - additional income duly offered by the appellant on the basis of seized papers found during search while filing the return of income - whether penalty is discretionary and not mandatory? - HELD THAT:- From perusal of the record, we noticed that a search was carried out on 04.09.2013 on the assessee and others being members of the Okay Plus- JKD group. During the course of search various books of accounts, files, loose papers and documents of the group were found and seized. One document / diary reflecting advances given totaling to ₹ 12.50 crores was found containing various entries of bank deposits and also advances given by assessee to certain individuals towards the purchases of land. These amounts of advances were explained in the statements u/s 132(4) of the Act as earned out of land deal and this income was over and above the regular salary income and was included in the total income shown by assessee in the return of income filed. The assessee is having regular sources of income from salary and during the year assessee did some stray activity of sale of land. Since it was not a regular course of the business of the assessee, he was not required to maintain books of accounts. The profit earned out of sale of land was given as advances to various persons which were recorded in the diary which has been placed as found during the course of search. On being asked during the course of search about this diary, the assessee stated the fact that it contains advances given to various persons totaling to ₹ 12.50 crore. This diary also contained certain other notings of money which was duly found recorded in the books of accounts of group companies and since the assessee was not having any business income and does not require to maintain regular books of account thus, the entry of advances were recorded in this diary maintained by assessee. As decided in MANISH AGARWALA [ 2018 (2) TMI 972 - ITAT KOLKATA] penalty u/s 271AAB is not mandatory but discretionary and therefore, the entire set of facts and circumstances of the case have to be examined carefully and penalty can be levied by the AO only after satisfying itself about the existence of circumstances warranting levy of penalty. The penalty cannot be imposed as a matter of routine and should be levied only if the circumstances of a particular case so required. In the instant case also, income under question was entered in the other document maintained in normal course and therefore, such income will not fall within the meaning of undisclosed income as defined in section 271AAB . With regard to the observation of the Ld. CIT(A) that the penalty u/s 271AAB is mandatory, we observe that the word used in the section 271AAB is may and not shall . The word 'May' indicates discretion of the authority either to levy or not to levy a penalty. In other words the imposition of penalty is not mandatory. Ld. CIT(A) referred to the explanatory notes clause 96 which explains the intention for introduction of particular amendment however the same cannot replace the provision of Act where the word may is used and not shall . Hence, the observation of the Ld. CIT(A) that the penalty u/s 271AAB is mandatory is patently wrong and deserves to be ignored and excluded being made without properly appreciating the provision and language of the Act which is very much clear and inserted in the statute after long discussions before both the houses of parliament. The language of section 271AAB is similar to that of section 158BFA(2). Section 158BFA(2) of the Act provides that the assessing officer May direct that a person shall pay by way of penalty . With reference to this section various courts including the Hon ble Rajasthan High Court have held that penalty under this section is discretionary and not mandatory. The assessee was required to show his true and correct income which was stated by him in his statements recorded u/s 132(4) of the Act, therefore, it was necessary for him to refer to his own statements. However, according to the assessee, when the copies of such statements were not provided for a long period and considering that the heavy interest u/s 234 was running and being mandatory could not be escaped, therefore the assessee was left with no option but to file the return of income for the year under appeal without referring to the statements. In these circumstances, the assessee did not have any option to keep the return pending anymore and wait for the department to provide copy of statements. Had the assessee not done so, the time limit prescribed u/s 139(4) would also have expired. The assessee in all fairness, only wanted to make sure that each and every income admitted by him in the statements gets included in the return of income and therefore, a reference to the statements was necessary. Thus not filing of return within stipulated time was beyond the control of assessee, for which assessee could not be penalized as same constituted reasonable cause within the meaning of section 273B of the Act. Since due taxes have already been paid by assessee within the stipulated time thus delay in filing the return for the reasons beyond the control of the assessee constitute reasonable cause as has been held in the case of DCIT Patiala Vs. Hari Singh [ 2017 (9) TMI 1827 - ITAT CHANDIGARH] . AO while levying the penalty u/s 271AAB had not doubted the mode and manner of earning such income which was duly explained stand substantiated by the assessee in the return itself where it was stated that advances of ₹ 12.50 crores were made out of the income from land dealing. All these facts are undisputed and nowhere controverted by the department. However, the only dispute raised by the department is with respect to the filing of return of income after the expiry of specified time u/s 139(1) of the Act. In this regard we are of the opinion that the assessee was prevented by sufficient causes , beyond the control of assessee, due to which he could not file the return within the stipulated time period and this constituted a reasonable cause within the meaning of section 273B - thus we direct to delete the penalty levied u/s 271AAB. 2021 (4) TMI 162 Addition u/s 68 - credits in the form of share capital/share premium and/ or loan and advances appearing in the books of assessee companies - core contention of the assessee is that the funds have been channeled from the regular books of account of Bhushan Energy Ltd. which is a subsidiary of Bhushan Steel Ltd. into a maze of group companies in the form of share capital and/or loan and advances - AO treated the share capital/ share premium and or loan and advances appearing in the balance sheet of aforesaid assessee companies as alleged introduction of unaccounted funds of the assessee companies into the regular books of account which has been added u/s.68 - HELD THAT:- Assessees herein filed detailed documentary evidences in the form of duly signed confirmation of investors/lenders (parties), details of PAN, copies of ITR, duly establishing the identity of the parties and genuineness of the transactions. Assessee also filed bank statements of the parties duly establishing the creditworthiness of the parties to invest in the share capital of or advance loans to the Assessee Companies. What has been disputed is the creditworthiness and this is because, they do not have much revenue from operations and were showing marginal income. However, nowhere the Assessing Officer has disputed the funds available in their balances sheets, duly accounted for and the source from such funds have come. All the Subscribers/ Lenders are corporate entities having separate legal identity who are regularly assessed to tax and complying with all statutory requirements. One very important fact here in this case are that in all the cases Subscribers/ Lenders Companies for the relevant assessment year scrutiny assessments have been done u/s 143(3) or the cases have been reopened u/s.147 and thereafter assessments have been completed wherein in some cases exactly on the same amount additions have been made. Thus, in many instances there are double additions on the same amount. Ergo in view of these facts and evidences, the identity of the investors stands established. In so far as genuineness of the transaction is concerned, the funds have been received through banking channels and bank statement of all the investors/lenders company have been filed which prove conclusively that the assessee companies had received the funds from the said investors, who in turn have received money from the same group companies; and they have not only corroborated this fact in their confirmation along with copies of income tax return but also from their audited balance sheets filed alongwith their Income Tax Returns. Again, in so far as the creditworthiness these companies have made investments through banking channels duly reflected in the bank statement and have also filed balance sheets and detailed explanation thereafter showing their availability of funds for making the investments.the entire details of share applicants were made available to the Assessing Officer, including PAN, confirmations, bank statements, their balance sheets and profit loss accounts and certificates of incorporation, etc. Assessing Officer had not undertaken any inquiry or investigation of the veracity of above documents. Hence Tribunal has rightly held that without doubting the document, the Assessing Officer cannot make the addition only on presumption that low return of income is sufficient to doubt the creditworthiness of the share holders. Assessee by producing the above documents has discharged its initial onus of showing the genuineness and creditworthiness of the share holders. Same ratio will apply here also. Further, even for the sake of repetition, one very peculiar fact as incorporated above is that, in most of the cases of the investor company s assessments have been made u/s.143(3) or u/s 147, wherein either their source of fund have been accepted or certain additions have been made based on scrutiny examination. It is not a case where there is any cogent finding in those cases that it is unaccounted money of the assessee companies which has been routed through them or it is their unaccounted money which has been invested in the assessee company. In absence of any such finding or material, no adverse inference can be drawn in the case of the assessee companies. Thus, the identity and the creditworthiness of the investor/subscriber company stands fully established and so also the genuineness of the transaction. No reason or justification for sustaining such an addition of share capital or share premium under the deeming provision of Section 68. We are in tandem with the arguments raised by the ld. counsel and the explanation given by him in view of supporting documents as dealt and incorporated above and are accepted. In the result additions as made by the AO on this score are directed to be deleted. Fresh addition made by the CIT (A) by making enhancement on account of alleged commission income - addition of new source of income is beyond the scope of enhancement by the CIT (A) - HELD THAT:- Such an addition made by the ld. CIT (A) is definitely beyond the scope of jurisdiction conferred upon the ld. CIT(A) on u/s.251 by introducing new source of income and that without giving any reasonable cause against enhancement. Even otherwise also, since all the assessee are essentially group companies and the common management under one control, the question of any hypothetical charge of any commission income for providing facility to route the funds of any group company does not arise. The entire addition is based on surmises and presumption, because, CIT (A) s reasoning is based practice prevalent in the market sans any tangible material or inquiry or evidence on record. Thus, the addition made on basis of estimation of 2% of commission income in the case of these three assessees, i.e., Jawahar Credit and Holdings Pvt. Ltd., Jingle Bells Alluminium Pvt. Ltd. and Kasper Information Technology Pvt. Ltd. is directed to be deleted. Disallowance u/s 14A r.w.r. 8D - CIT(A) restricted the additions made by the A.O holding that the amount of disallowance u/s 14A cannot in any case exceed the exempt income, i.e., the dividend income in the instant case - HELD THAT:- Assessee company had made suo-moto disallowance which can be said to be expenses attributable for earning of exempt income. This was computed by the assessee by aggregating the total direct expenses debited in its profit and loss account as per the figures given in the earlier part of the order. The dividend income received by the assessee is only ₹ 9,94,717/- and therefore such an attribution for providing man power services, etc. can be said to be reasonable basis. AO without recording any subjective satisfaction having regard to the accounts of the assessee or the nature of expenses debited has mechanically applied Rule 8D which is not the mandate of the law in view of Section 14A(2). Thus, there was no reason for making any addition over and above the suo moto disallowance made by the assessee. CIT (A) has found it reasonable to restrict the disallowance u/s.14A to ₹ 5 lacs, which in our opinion is fully justified and therefore, we hold that the balance addition of ₹ 18,32,813/- has rightly been deleted by the ld. CIT(A). In the case of Angel Cement Pvt. Ltd for Assessment Year 2012-13; in the case of Delight Resorts Pvt. Ltd. for Assessment Year 2012-13; and Stylish Construction Pvt. Ltd. for Assessment Year 2012-13, the Department has challenged the alleged admission of additional evidence by the ld. CIT (A) without giving opportunity to the Assessing Officer in violation of Rule 46A. First of all, it has been clarified that no additional evidences were submitted except for assessment orders passed by the Income Tax Department which is part of the income tax records cannot be construed as additional evidences and therefore such ground is devoid of any merits and same is dismissed. 2021 (4) TMI 161 Addition u/s 68 - share capital, share premium, share application money and unsecured loan received during the year - assessee failed to ensure the personal deposition of the directors of the aforesaid companies - AO noted that the companies, namely, M/s Global Merchandisers Pvt. Ltd., M/s Kabir Commodities Pvt. Ltd. appeared not to be genuine parties and the genuineness of the transactions entered with them is also doubtful - .CIT(A) deleted the addition - HELD THAT:- No infirmity in the order of the CIT(A) in deleting the addition. Perusal of the details submitted in the paper book as well as in the submissions made before the CIT(A) reveals that in the case of M/s Global Merchandisers Pvt. Ltd., the receipts are to the extent of ₹ 175 lakhs whereas the repayments have been made to the extent of ₹ 1,53,30,400/-. Therefore, there is net receipt of ₹ 21,69,600/- only. From the various details furnished by the assessee, we find, the amount of ₹ 175 lakhs was received from M/s global Merchandisers Pvt. Ltd. through banking channels and the company, during the impugned assessment year has a balance sheet of the size of ₹ 151 crores. The total turnover of the said investor is ₹ 7,21,25,000/-. Similarly, in the case of M/s Kabir Commodities Pvt. Ltd., the amount has been received through banking channels and the company has a balance sheet of the size of ₹ 90 crores. From the various details furnished by the assessee, we further find an amount of ₹ 2,49,55,000/- was received from the same company and also the payment of ₹ 4,05,10,000/- made to the said company in the immediately succeeding assessment year, i.e., 2013-14 and the AO in the order passed u/s 143(3) has accepted such receipts and payments. The investing companies are group companies and have common directors or their family members. Both the investing companies have been assessed u/s 143(3) of the Act, a fact stated before the lower authorities and not controverted by the Revenue. There is no evidence whatsoever that the investing companies were controlled by any entry operator - there is no evidence or allegation that cash was deposited in the investing companies or even downstream of investing companies and source of investing companies is suspect. We find merit in the argument of the ld. Counsel that this is a case where the funds have moved within the group and there is no fresh inflow of funds from outside the group. Since the AO, in the orders passed u/s 143(3) of the Act in the immediately succeeding assessment year, which was reopened subsequent to the assessment for the impugned assessment year on the allegation that the assessee has received huge share capital and share premium, has accepted such share capital and share premium and the assessee has successfully demonstrated the identity and credit worthiness of the investor companies and genuineness of the transaction, therefore, we do not find any infirmity in the detailed and the reasoned order of the CIT(A) deleting the addition made by the AO u/s 68 of the Act. The order of the CIT(A) on this issue is accordingly upheld - Decided in favour of assessee. Disallowance on account of provision for site development expenses against sale of plots and the disallowance being premium on re-purchase - HELD THAT:- So far as the premium of re-purchase is concerned, it is the submission of the ld. Counsel that three of the customers have cancelled their bookings and since the market price was higher during the relevant period, they were paid certain extra amount as premium and the assessee thereafter sold the plots at a higher price. There is no loss to the revenue since those plots were sold at higher price and taxing the amount again will amount to double addition, i.e., once in the hands of the assessee and again in the hands of the investors who had cancelled their bookings and obtained the premium. Lower authorities have not considered the various details furnished by the assessee in the paper book. Once the plots are sold at a higher price than the price at which these were sold earlier before cancellation along with the premium on cancellation, there should not be any addition since the assessee is paying tax on higher amount. Considering the totality of the facts and in the interest of justice, we deem it proper to restore the issue of premium on re-purchase of plots to the file of the AO with a direction to verify the details of sale of the above three plots and delete the addition once it is proved that the plots are sold at higher price than the price at which these were sold earlier along with premium on cancellation. Provision for site development expenses against sale of plots - Order of the CIT(A) is a cryptic one. He has not at all considered the various details furnished by the assessee before him including the notes to accounts in the audited balance sheet. Since the AO in the instant case has made the addition on account of non-furnishing of details and the ld.CIT(A) has not at all considered the various submissions made before him and has passed a cryptic order, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue of provision for site development expenses to the file of AO with a direction to give one more opportunity to the assessee to substantiate its case and decide the issue as per fact and law. The grounds of appeal No.1-3 are accordingly allowed for statistical purposes. 2021 (4) TMI 159 Admission of additional ground - Education cess - allowable deduction u/s. 37(1) - HELD THAT:- Apex court's landmark decision in National Thermal Power Co. Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] as considered the All Cargo Global Logistics Ltd., [ 2012 (7) TMI 222 - ITAT MUMBAI(SB)] holds that this tribunal can very well entertain such legal ground so as to determine correct tax liability of an assessee subject to the condition that all the relevant facts form part of the records. We make it clear that the disallowance of education cess has nowhere been contested at the Revenue's behest on facts. We thus accept the assessee's foregoing petition dt. 25-09-2020 seeking to rase the impugned additional ground in all these assessment years. TP Adjustment - ALP determination - determining the cost of royalty and professional charges - application of 'benefit test' to hold that it is not the assessee, having very much a robust market presence but its overseas AE(s) who actually stood gained and therefore, cost of the twin heads of royalty as well as technical services deserve to be taken as NIL only - whether such a 'benefit test' could be validly invoked in Section 92CA reference or not? - HELD THAT:- Case law CIT Vs. Cushman and Wakefield (India) Pvt. Ltd., [ 2014 (5) TMI 897 - DELHI HIGH COURT] and CIT Vs. EKL Appliances Ltd., [ 2012 (4) TMI 346 - DELHI HIGH COURT] hold that the TPO's jurisdiction is to analyse the assessee's international transactions viz-a-viz ALP thereof in the statutory reference made by the Assessing Officer than to ascertain or apply the actual 'benefit stand' on the gains derived there from. Their lordships are of the opinion that in both these contexts that the so called 'benefit test' needs to be satisfied from the view point of the assessee and common business prudence rather than the TPO questioning the taxpayer's wisdom. TPO had adopted two comparables i.e., M/s. Bajoria Foods Pvt. Ltd., and McCain Foods India Pvt. Ltd., which nowhere indicate the fact that the assessment year(s) therein involved first year of introduction of the corresponding products in India. The TPO therefore also appears to have not given any due consideration to the clinching facts in the assessee's arm's length determination in these facts and circumstances. The factual position is no different qua the latter aspect of assessee's payment of technical services as well. The assessee's agreement to this effect suggests that it had agreed to pay for the impugned charges in lies of consultancy services involving all quality control access to overseas facilities regarding peanut butter products, granola bars, snack Bar and other products. Assessing Officer has nowhere applied even a single comparable in his discussion so as to come to in the impugned NIL cost of the assessee's professional/technical services availed. We thus accept the assessee's third and fourth substantive grounds in this lead A.Y. 2010-11 to delete the impugned royalty and technical services payments adjustments respectively. Decided in favour of assessee. Disallowance of advertisement and sales promotion expenditure u/s. 37(1) as the same need to be amortized u/s. 35D - Revenue's stand herein supports the impugned disallowance that all these expenses have been correctly amortized u/s. 35D of the Act being capital in nature thereby enabling the taxpayer to derive business advantage(s) in sales and marketing for the specified number of years - HELD THAT:- We find no reason to agree with the Revenue's foregoing stand. We make it clear that learner lower authorities themselves have been fair enough in not rebutting the impugned expenditure claim on facts since they have merely directed the assessee to amortise its advertisement and sales promotion expenses u/s. 35D of the Act. This statutory provision comes into play in case an assessee's expenditure claim is in connection with a new or extension of the undertaking or in setting up a new unit which is not the fact herein the assessee has not opted for any extension set up a new unit as it is sought to be canvassed in the lower authorities' respective orders. We quote hon'ble apex court's landmark decision Taparia Tools Ltd. [ 2015 (3) TMI 853 - SUPREME COURT] in these facts and circumstances that a revenue expenditure claim ought not to be disallowed merely the same could also be amortized as per Revenue's stand. We thus accept the assessee's business expenditure claim in other words. The impugned disallowance is directed to be deleted. Disallowance of Section 234A impugned interest - HELD THAT:- We notice that the assessee had filed its return of income on 08-10-2010 in view of the CBDT's press release dt. 28-09-2010 extending time limit u/s. 139(1) of the Act followed by the taxpayer's regular return upto 15-10-2010. This clinching fact has gone un-rebutted from the departmental side. We direct the Assessing Officer to delete the impugned interest amount. Section 234B interest is treated as consequential in nature. Education cess disallowance/addition - Revenue vehemently contended that such a claim is not allowable being a 'tax' u/s. 40(a)(ii) - HELD THAT:- Hon'ble Bombay High Court's recent decision in Sesa Goa Ltd., Vs. JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] and Chambal Fertilisers Chemicals Ltd., [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] rely on the CBDT circular dt. 18-05-1967 to hold that the expression 'tax' in the above statutory provision does not include a 'cess'. We thus accept the assessee's instant 10th substantive ground in A.Y. 2010-11. Short credit of TDS deducted - HELD THAT:- Issue restored back to the Assessing Officer for his afresh factual verification. Denying Section 32(1) depreciation on the capital expenditure incurred for the purpose of scientific research - HELD: THAT:- DRP in A.Y. 2013-14 has already accepted an identical claim of depreciation of capital expenditure incurred for the purpose of scientific research. Learned panel herein has disallowed the assessee's Section 37 claim by treating the same as an instance of capital expenditure. All these clinching facts have gone un-rebutted from the Revenue's side. we thus hold that once learned lower authorities have themselves treated the assessee's claim under capital head, it is very much entitled to be considered for the impugned depreciation as per law. The same is therefore accepted for statistical purposes. The Assessing Officer shall decide the corresponding block of assets viz-a-viz assessee's capital expenditure as per law. Additional depreciation u/s. 32(1)(iia) on fixed assets i.e., platform, electrical fittings, packing machine, weighing machine and curtains as per the TPO's draft assessment order dt. 26-12-2007 - HELD THAT:- We find no merit in the instant stand since all these assets form very much part of the assessee's food products manufacturing, processing and packing business. Take for instance the curtains which have been put up between vacant places so as to maintain maximum hygiene. Case law CIT Vs. K.K. Enterprises [ 2015 (2) TMI 508 - RAJASTHAN HIGH COURT] and CIT Vs. Parry Engineering and Electrical Pvt. Ltd. [ 2014 (12) TMI 752 - GUJARAT HIGH COURT] hold that such assets form part and parcel of assessee's plant and machinery only. We thus accept the assessee's impugned depreciation claim. Considering returned income going by the revised than the original return's figures - HELD THAT:- It prima-facie appears that the assessee had filed its revised return on 14-03-2016 which has not been taken note of in the lower authorities' respective orders. We thus accept the assessee's instant substantive ground for statistical purposes and direct the Assessing Officer to consider the revised computation/return as per law. 2021 (4) TMI 158 LTCG Addition - denial of natural justice - only argument during the course of hearing is that neither the Assessing Officer nor the CIT(A) have provided the assessee an opportunity to cross-examine Shri Krishna Reddy who acted as an intermediary in the receipt of money by the assessee before reiterating the impugned addition - Reference to tribunal s earlier remand directions dt.31-01-2017 restoring this sole issue back to the Assessing Officer - HELD THAT:- We find no merit in either of the foregoing arguments. We make it clear that this tribunal s first round remand directions had directed the Assessing Officer to offer cross-examination of the said third party only if required and not otherwise as a rule. Case records and more particularly, the Assessing Officer s second round assessment order dt.29-12-2017 sufficiently indicates that he had afforded a number of opportunities to the assessee; as elucidated in para 3.2, but this taxpayer never ever turned up along with the corresponding explanation. We wish to reiterate here that the tribunal s earlier co-ordinate bench [ 2017 (7) TMI 32 - ITAT HYDERABAD] had already expressed its agreement with the department qua the impugned addition in principle. The assessee s stand before us seeks to shift his onus on the department side does not deserve to be concurred with therefore. We thus hold in these peculiar facts and circumstances that both the lower authorities have rightly reiterated the impugned long term capital gains addition in assessee s hands on account of his failure to comply with the tribunal s earlier directions and on the basis of the overwhelming supportive evidence. The assessee fails in his sole substantive grievance therefore. 2021 (4) TMI 157 Exemption u/s 11 - Charitable activity u/s 2(15) - activities of organizing seminars - assessee s receipts / Income from activities and interest income was treated as Income of the assessee and taxed accordingly - AO mentioned that in this case registration under section 12A was cancelled by DIT (exemptions) as assessee has engaged itself in commercial activities - HELD THAT:- Assessee trust was established to promote internet and e-commerce. In order to promote and popularize the objects, assessee has to arrange and organize the seminars and other medium of promotion. In that process, assessee has organized some sponsorship and collected fees. The existence of these kind of trust depends upon the systematic programs and organizing seminars in that process, they have to collect fees for that effort. In that process, we would not say profit but surplus in order to survive self-reliant and meet out the administration cost of the trust. Hon ble Bombay High Court adjudicated in the case of Shree Nashik Panchvati [ 2017 (3) TMI 1262 - BOMBAY HIGH COURT] held that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of Internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee s activities under mutuality concept. We are aware that in order to claim the mutuality, assessee has to maintain the separate books for the service rendered to members and non-members. Even the assessee has to prove that the identities of the contributors to the common fund must be entitled to participate in the surplus and the participators to the surplus must be the same persons who have contributed to the common fund. Unless these conditions are satisfied, the assessee cannot be treated as mutual organization. In the given case, AO has not verified nor assessee has claimed any benefit under mutuality. We notice that the assessee has not maintained any separate register for the services rendered to members and non-members. Therefore, it cannot be classified under mutuality. Registration under section 12AA is restored and the Co-ordinate Bench has already adjudicated that mere holding seminars cannot be termed a commercial or business activity. Therefore, the registration granted after evaluating the objects of the trust as charitable and now merely because of organizing seminars itself cannot make the trust non charitable or commercial. Invoking of section 2(15) of the Act merely because of revenue from organizing seminar cannot make the trust looses the character of charity. The AO himself classified the activities under objects of general public utility. Therefore, the activities carried on by the assessee is only incidental to the main object and the ratio laid down in the case of Shree Nashik Panchvati (supra) is applicable to this case. Therefore, we are inclined to accept the plea of the assessee and accordingly, all the grounds raised by the assessee are allowed 2021 (4) TMI 156 Penalty u/s 271(1)(c) - denial of deduction under section 80IB(10) - HELD THAT:- Assessee had derived profit from the project named Shreeji Heights. We notice that the learned Commissioner (Appeals) observed that the assessee did not make the said claim in the return of income since the assessee was under mistaken understanding of the law that since it has constructed commercial units, it cannot claim benefit under section 80IB(10). Commissioner (Appeals) noticed that the assessee s housing project was approved on 16th April 2004, therefore, the project was eligible for claiming deduction under section 80IB of the Act which fact is in conformity with the judgment of the Hon'ble Jurisdictional High Court in CIT v/s Brahma Associates [ 2011 (2) TMI 373 - BOMBAY HIGH COURT] wherein it has been held that the claim is fully allowable in case the project was approved prior to the amendment made in law w.e.f. 1st April 2005. In view of these observations, the learned Commissioner (Appeals) held that the assessee was eligible for claiming deduction under section 80IB Co ordinate Bench has allowed the claim of assessee under section 80IB of the Act for the assessment year 2010 11 and 2012 13 even though these claims were also made first time before the Assessing Officer. The claim of the assessee for the assessment year 2009 10 was rejected. Just because the claim for this A.Y. 2009 10 was rejected, the penalty cannot be imposed considering the fact that the assessee has submitted all the relevant information during the assessment proceedings and also all the relevant information relating to this claim was available on record. There is no concealment or furnishing of inaccurate particulars in this case. Consequently, we are in agreement with the observations of the learned Commissioner (Appeals) who was indeed justified in directing to delete the penalty imposed by the Assessing Officer under section 271(1)(c) - Decided in favour of assessee. 2021 (4) TMI 155 Assessment u/s 153A - disallowance of deduction claimed by the assessee in respect of purchase of Zinc from M/s Hindustan Zinc Ltd (HZL), Haridwar and transport expenses paid to M/s Mewar Transport Company - AO made addition in respect of the above two items based on the evidence gathered in the search carried out by the Director General of Central Excise Department, Khopoli Unit at the premises of the assessee and subsequent order passed by the Customs and Central Excise Settlement Commission - HELD THAT:- The only source of information is the tax evasion petition received during assessment proceeding. DR also could not rebut the finding of the Ld. CIT(A) that no incriminating material was found during the course of the search under section 132 of the Act and the case is squarely covered by the decision of the Hon ble High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . We uphold the finding of the Ld. CIT(A) on the issue in dispute and the grounds No. 1 and 2 of the appeal of Revenue are accordingly dismissed. 2021 (4) TMI 154 Addition of unexplained deposits in the bank account maintained by the assessee - HELD THAT:- The return so filed u/s 44AD has been accepted by the Assessing officer which in effect means the declarations and disclosure so made by the assessee in terms of carrying on diary business, non-maintenance of books of accounts and gross receipts from such business has since been accepted by the Assessing officer. In such a scenario, where there are cash and other credits in the bank account maintained by the assessee which are less than the gross receipts from diary business so declared by the assessee, we find the explanation offered by the assessee that such deposits are from his diary business as a plausible explanation in absence of anything contrary on record in terms of any other source of income - We find force in the contention so advanced by the ld AR that the source of cash and other deposits in the bank account is out of assessee s dairy business and gross receipts thereof have already been offered in the return of income.The addition so made by the Assessing officer is hereby directed to be deleted. - Decided in favour of assessee. 2021 (4) TMI 153 Exemption u/s 10 (23C)(iiiab) - CIT (A) held that the assessee is a society engaged in improvement of standard of vocational training under public private partnership scheme but do not fulfill the primary conditions for claim u/ s 10 (23C)(iiiab) - HELD THAT:- The interpretation of the word education by Hon ble Supreme Court in the case of Sole Trustee, Loka Sikshana Trust v CIT [ 1975 (8) TMI 1 - SUPREME COURT] - the word education has been used to denote systematic instruction, schooling or training given to the young in preparation for the work of life and it also connotes the whole course of scholastic instruction which a person has received, which led to the understanding that only institutions affiliated to boards and universities providing schooling which resulted in a degree or diploma. The education also included primary education as such education was a backward integration to normal schooling. The case of Sole Trustee, Loka Sikshana Trust v CIT [ 1975 (8) TMI 1 - SUPREME COURT] has been the yardstick for interpretation of the word education . The ratio basically boils down to (i) institutes affiliated to boards and universities providing schooling which resulted in a degree or diploma. (ii) primary education as was a backward integration to normal schooling. The Hon ble Gujarat High Court considered identical issue in the case of Saurashtra Education Foundation v. CIT [ 2004 (2) TMI 11 - GUJARAT HIGH COURT] and held that all kinds of education would not fall within the meaning of section 2(15) of the Act, unless the training, instruction, etc. results in grant of a diploma or degree by a university or a governmental agency. Various Courts have held that institutions allied to educational institutions which were providing normal schooling were also educational in nature. Institution conducting exams for diploma and degree courses were also treated as educational in nature. It has also been held that additional training or courses shall also be held as education provided such courses are conducting some primary educational activity whereas standalone such courses cannot be treated as education for the purpose of Income Tax Act. The society has not been registered or affiliated to any board or university or any organization imparting education as defined by the Hon ble Supreme Court. There is a sweeping difference in according the any assessee to the provisions of Section 12AA and Section 10(23C)(iiiab). The conditions and requirements of registration under Section 12 AA and the conditions and prerequisites for the claiming the benefit u/ s 10(23C)(iiiab) differs. We also find that the assessee has been granted registration u/s 12 AA from the provisions of the Act and on going through the various judgments, we hereby hold that the assessee is not entitled to the benefit of Section 10(23C)(iiiab). Appeal of assessee dismissed. 2021 (4) TMI 152 Deduction u/S 80IA on Inland Container Depot - HELD THAT:- Apex Court held the issue in favour of the assessee in the decision reported in CIT vs. Container Corporation of India [ 2018 (5) TMI 359 - SUPREME COURT] .the term Inland Port' has been defined nowhere. But the Notification that has been issued by the Central Board of Excise Customs (CBEC) dated 24.04.2007 in terms holds that considering the nature of work carried out at these ICDs they can be termed as Inland Ports. Further, the communication dated 25.05.2009 issued on behalf of the Ministry of Commerce and Industry confirming that the ICDs are Inland Ports, fortifies the claim of the respondent herein. Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 80-IA of the IT Act, the appellant herein is unable to put forward any reasonable explanation as to why these notifications and communication should not be relied to hold ICDs as Inland Ports. Unless shown otherwise, it cannot be held that the term Inland Ports' is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the 17 Section and deduction can be claimed for the income earned out of these Depots. The actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places. - Decided in favour of assessee. Disallowance of deduction on account of lease rent paid in advance against the land taken on longterm lease for business purposes on pro rata basis - HELD THAT:- As relying on assessee's previous year For this assessment year also, Ld. CIT DR did not object for the issue being set aside with a direction clearly bringing on the facts whether it is the claim of depreciation or whether the claim of allowability of expenditure. Recording the same we set aside the findings of the Ld. CIT(A) on this issue and remained the same to the file of the learned Assessing Officer with a direction to the assessee to furnish the complete details of the claim of the assessee clearly bringing out the facts whether it is a claim of the depreciation or whether it is a claim of the allowability of expenditure. Ground No. 2 of assessee s appeal is accordingly allowed for statistical purpose. Deduction under section 80IA of the Act on the Rail System (Rolling stock) - HELD THAT:- . Assessment order itself shows that the learned Assessing Officer is aware of the fact of Ld. CIT(A) and ITAT in allowing the deduction, but observed that it was not acceptable to the Revenue and since the Department filed appeal before the higher appellate forum is, the issue had not attained finality. Revenue, however, did not produce any material before us to contradict the observations of the Ld. CIT(A) that the Department had accepted the orders of the ITAT for the assessment year 2003-04 and no appeal was filed before the Hon ble High Court. Since a consistent view has been taken by the appellate authorities right from Assessment Year 2003-04 and for all the successive years such disallowance was deleted, in the absence of any material to show that such view taken by the appellate authorities had not attained finality, we find it difficult to deviate from such consistent view. While respectfully following the view taken by the Tribunal in assessee s own case for the assessment year 2003-04 and also the subsequent deletions made by the appellate authorities, we hold that this disallowance cannot be sustained has to be deleted. We therefore, direct the assessing officer to delete this addition. 2021 (4) TMI 151 Validity of final assessment order passed u/s 143(3) r.w.s 144C - Not following direction of the DRP - as submitted that, the final assessment order should have been passed by Ld.AO following the due process of law, and therefore is bad in law and should be quashed - HELD THAT:- Admittedly the impugned assessment order passed by the Ld.AO under section 143 (3) read with section 144C is in violation mandatory provisions under section 144C(10) and (13) of the Act by not passing the order in pursuance of and in conformity with the directions of DRP issued under section 144C(5) of the Act. We therefore respectfully following the case of XCHNGING SOLUTIONS LIMITED VERSUS DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 7 (1) (2) [ 2021 (1) TMI 156 - ITAT BANGALORE] we setaside the impugned final assessment order dated 28/01/2016 passed for assessment year 2011-12 and we remand the issues to the Ld.AO/TPO to pass appropriate order in accordance with law having regard to the directions of the DRP. Appeal filed by assessee for assessment year 2011-12 stands allowed for statistical purposes. Assessment not completed within the period of limitation - AY 2012-13 - HELD THAT:- Admittedly the draft assessment order dated 10/3/2016 was received by assessee on 12/03/2016 as per the speed post tracking record of the postal department and the period of 30 days for filing Form 35 A in terms of section 144C (2) expired on 11/04/2016. Assessee in the present facts filed objections before DRP on 13/04/2016, thereby causing 2 days delay. The view taken by DRP that it has no power to condone the delay is inasmuch as such power is absent under section 144C of Income Tax (DRP) Rules 2009 cannot be found fault with. Hon ble Pune Tribunal in case of TDK Electronics AG vs ACIT [ 2020 (2) TMI 1277 - ITAT PUNE] as dealt in detail with the various provisions, Act, wherein, the legislature has conferred the power of condoning delay to various authorities under the Act. Thus we hold that impugned order passed dated 31/08/2016 u/s 144C(13) is beyond the limitation period and is ultra virus. We hold the returned income as the assessee income. 2021 (4) TMI 150 Unexplained cash deposits u/s.68 - HELD THAT:- Addition under section 68 of the Act was made in the case of M/s Radhe Developers India Ltd. for the amount of cash deposited in bank of Kanjibhai Desai in the year under consideration. Though the same was deleted by the learned CIT(A), treated the same as explained cash credit which was subsequently confirmed by us [ 2021 (3) TMI 918 - ITAT AHMEDABAD ] in the appeal filed by the Revenue. Thus in such facts and circumstances we are of the considered view that the Revenue cannot treat similar transaction in different manner with respect to different assessee. Assessee has discharged its onus as provided under section 68 of the Act namely the identity, genuineness and creditworthiness of the parties. For the identity, the assessee has furnished the PAN/address/bank details/confirmation of M/s Radhe consultancy. Similarly, for the creditworthiness and genuineness of the transactions, the assessee filed cash book, bank book, bank statement and balance sheet and assessment orders of M/s Radhe Consultancy and group which is showing the amount given to assessee. 2021 (4) TMI 149 Reopening of assessment u/s 147 - penny stock purchases - Bogus LTCG - Eligibility of reasons to believe - HELD THAT:- From the assessment order, we find that the Assess- ing Officer had made addition on account of long-term capital gain holding the long-term capital gain to be bogus. Nowhere in the assessment order the Assessing Officer made the addition on account of escapement of income for which he had recorded the reasons. The Income-tax Appellate Tribunal, Kolkata Bench, in the case of Sanju Jalan [ 2018 (1) TMI 1300 - ITAT KOLKATA] under similar facts and circumstances, had allowed relief to the assessee. In the present case also we find that the Assessing Officer has not made addition on the alleged escapement of income recorded in the reasons. Therefore we allow ground of the appeal. 2021 (4) TMI 148 Bogus LTCG - script being a penny stock and paper entity - HELD THAT:- Assessee had purchased shares through SEBI registered brokers through screen based trading and for which the payments were made through banking channels. The assessee had sold shares through authorized stock brokers through screen based trading and payments were received through banking channels after deduction of STT. shares of CCL International Ltd. were in the demat account of asses see and the fact of these shares having been transferred to the account of brokers M/s. Chuknoo Securities Ltd. on account of sale is also apparent from this paper. The transaction statement placed in paper book also proves that the assessee was holding other scripts also. Paper book demonstrates that proceeds of sale of such shares were credited to bank account of the assessee. All evidence of purchase sale are placed. All these documents clearly demonstrate that the assessee did earn long-term capital gain on the sale of shares of CCL International Ltd. after holding for a period of more than one year and on which STT was also paid. Moreover the Assessing Officer has not doubted any of the above documents. The only objection raised by the authorities below is that the scrip from which the assessee had earned long-term capital gain has been held by the Investigation Wing of the Revenue to be a paper entity and which has further held that this scrip was being used for creating artificial capital gain. We find that the hon'ble Tribunal in the case of Mohan Lal Agarwal (HUF) [ 2018 (11) TMI 1489 - ITAT DELHI] has examined this aspect and after recording detailed findings has held this scrip to be a genuine scrip and has held that the scrip is not a paper entity. Also see SHRI ACHAL GUPTA, SHRI UDIT GUPTA, SHRI RAKESH NARAIN GUPTA VERSUS INCOME TAX OFFICER-3 (1) , KANPUR. [ 2021 (1) TMI 896 - ITAT LUCKNOW] Therefore, following the above judicial precedents, we allow the appeals of the assessee on the merits. Customs 2021 (4) TMI 183 Attachment of Bank Accounts - Duty Drawback - service of Order-in-Original - change of address - HELD THAT:- The petitioner must have written to the second respondent about the change of address and requested the second respondent to send communications in future to the said address. Such an exercise was not undertaken by the petitioner. The third respondent is directed to withdraw ₹ 98,857/- from the petitioner's bank account and remit the same to the second respondent. This amount will be adjusted towards pre-deposit that the petitioner has to make for filing the statutory appeal. The petitioner is said to have received on 26.03.2021 the impugned Order-in-Original dated 22.09.2020. The petitioner shall file an appeal within a period of sixty days therefrom - Since the amount of ₹ 98,857/- from out of the petitioner's account is going to be retained and paid to the department, the impugned communication attaching the petitioner's bank account with the third respondent is quashed. Petition allowed. Insolvency & Bankruptcy 2021 (4) TMI 160 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - restraint order against SIB - HELD THAT:- Since the Hon'ble NCLAT, by considering the findings of this Adjudicating Authority mentioned in the impugned order, has inter alia held that the AA has erred in directing South Indian Bank to go and get directions from the High court or to await decision of issue by the High Court, when SIB was not even party in the Writ Petition. It is also observed that CD is aware that both the orders were against SBI as portions reproduced from its statement of objections (Diary No. 18701), and held that it was difficult to accept that there was restraint order against SIB. Therefore, the contentions raised again on behalf of Respondents, with respect to those issues are not being adverted to or to decide them again, as the Hon'ble NCLAT has set aside the impugned order. Time Limitation - HELD THAT:- The Corporate Debtor vide letter dated 29.11.2014 to the SBI with copy to the SIB (Assignee Bank) acknowledged the payments made to SIB in discharge of its liability to SIB and the Corporate Debtor, vide its certificate dated 20.11.2015 certified the 'Debt' owed and payment against such 'Debt' to SBI 85 SIB. The account of the Corporate Debtor was declared as 'Non-performing Asset' on 30.01.2014. However, the instant Petition/Application is filed on 23.11.2017. Therefore, the question is whether limitation starts from date of NPA or from subsequent dates of acknowledgement of debt and part-payments made, and what is law on the issue. Debt and default - HELD THAT:- There is hardly any dispute raised by the Respondent except raising that matter is pending before Hon'ble High court, DRT, stay is granted and continuing etc, which are already considered by the Hon'ble NCLAT in the said Appeal and negative also, and thus there are no more res Integra. Therefore, there is no other alternative for Adjudicating Authority except to initiate Insolvency proceedings against the Corporate Debtor. Application admitted - moratorium declared. 2021 (4) TMI 145 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - transfer of immoveable property - comes under scope of IBC or not - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- In the instant case, money was advanced by the Petitioners for the purchase of immovable property, which is of an agricultural land which cannot be transferred as per Law. As rightly pointed out by the Respondent that dispute in respect of transfer of immoveable property needs to be adjudicated by Civil Court having territorial jurisdiction over same - It is relevant to point out here the judgment of Hon'ble Supreme Court of India in Pioneer Urban Land and Infrastructure Limited Anr. Vs. Union of India Ors.[ 2019 (8) TMI 532 - SUPREME COURT ], wherein it is inter alia held that, a person who is genuinely not interested in purchasing a flat/apartment shall not be entitled to any remedy under this Code. It is relevant to observe here that even though the Petitioners are not able to demonstrate that the case falls within purview of the extant provisions of the Code, the fact remains that Respondent admittedly is in receipt of the money in question paid by the Petitioners. As rightly contended by the Petitioners, the Respondent, by knowing well about the nature of property and law on transfer of such property, have falsely represented and duped them to enter into the Agreement in question. It is not the case of Respondent that they have apprised the Petitioners about the issue they have raised now to oppose their claim. Therefore, though the case is not fit to initiate CIRP, it is fit case for the Petitioners to initiate appropriate Civil and Criminal proceedings against the Respondent for their misrepresentation and claim appropriate reliefs in those proceedings. The Petitioners have failed to make out any case so as to initiate CIRP in respect of the Corporate Debtor. However, the Petitioners can be granted liberty to initiate appropriate Civil and Criminal proceedings before jurisdictional Courts - Petition dismissed. 2021 (4) TMI 144 Consolidation of two Corporate Insolvency Resolution Process (CIRP) - fulfilment of criteria of consolidation of CIRP or not - Common Control - Common Directors - Common Assets - Common Liabilities - Inter-dependence - Pooling of Resources - Intricate links between the Companies - Common Financial Creditors - HELD THAT:- The Ld. Adjudicating Authority Mumbai Bench in the case of STATE BANK OF INDIA AND MR. VENUGOPAL DHOOT VERSUS VIDEOCON INDUSTRIES LIMITED, VIDEOCON TELECOMMUNICATIONS LIMITED, KAIL LTD., EVANS FRASER CO. (INDIA) LTD., MILLENNIUM APPLIANCES (INDIA) LTD., APPLICOMP INDIA LTD., ELECTROWORLD DIGITAL SOLUTIONS LTD., TECHNO KART INDIA LTD., TREND ELECTRONICS LTD., CENTURY APPLIANCES LTD., TECHNO ELECTRONICS LTD., VALUE INDUSTRIES LTD., PE ELECTRONICS LTD., CE INDIA LTD. AND ORS. [ 2019 (8) TMI 1654 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH] rightly laid down certain parameters while ordering for consolidation of CIRP. The said order was cited before Ld. Adjudicating Authority Bengaluru Bench, However, while passing the impugned order there is no finding whether these parameters are fulfilled or not in this case. Common Control - HELD THAT:- Both Companies are promoted by the same family and there is unity of ownership and interest - The Respondent No. 1 is controlling company of Respondent No. 2. Common Directors - HELD THAT:- Mr. M.V. Murlidher and Padma Murlidher both are Directors in Respondent Nos. 1 and 2 Company. Thus, the Directors of the both Companies are Common and there is common control of companies. Common Assets - HELD THAT:- There is inter-dependency between two Companies and the assets are common to such an extent that the Respondent No. 2 Company has provided its land and warehouse to the Respondent No. 1 Company to carry on its business activity. Common Liabilities - HELD THAT:- The liabilities of the Companies are also common and Companies had made themselves jointly and severally liable for the loans. Respondent No. 1 and 2 have common creditors i.e. Respondent Nos. 3 and 4. Directors of both the Companies have given personal guarantees for the loans. Inter-dependence - HELD THAT:- The Respondent No. 1 Company was running a Distillery Unit in the Peenya land and warehouse building belonging to the Respondent No. 2 Company as stated by Respondent No. 6 (RP) in its Status Report filed before this Appellate Tribunal. Thus, the Respondent Nos. 1 and 2 are interdependence. Pooling of Resources - HELD THAT:- Undisputedly the Directors are common using their contacts and relationship to run both the Companies. For the sanction of the loan facility for the Respondent No. 1 Company. The Respondent No. 2 Company has mortgaged Peenya land and warehouse and also stood as guarantor for the Respondent No. 1 Company. Intricate links between the Companies - HELD THAT:- It is clear that the Respondent No. 2 Company is associated company of Respondent No. 1. In the I B Code, the word associate company has not been defined. Section 3 (37) of the I B Code, provides that word and expressions used but not defined in this Code but defined in the Companies Act, 2013 shall have the meaning assigned in the Companies Act, 2013. Common Financial Creditors - HELD THAT:- The Respondent Nos. 1 and 2 have Common Financial Creditors i.e. the Respondent Nos. 3 and 4 - Apart from this Financial Creditors i.e. Respondent Nos. 3 and 4 in their written submissions have not pointed out that how the consolidated CIRP shall prejudice their rights. Even if the combined CIRP is ordered the balance of convenience is squarely on Respondent Nos. 3 and 4 herein who are secured Financial Creditors and whose interest will remain protected even during the combined Insolvency as secured Financial Creditors. The Appellant being an Operational Creditor is placed sixth in hierarchy for the liquidation process in the I B Code. The Respondent Nos. 1 and 2 fulfilled the criteria of consolidation. Ld. Adjudicating Authority has not appreciated the facts of this case in right perspective - the Ld. Adjudicating Authority are directed to appoint a single common Resolution Professional/Liquidator who will carry on the duties and perform the function of the Resolution Professional/Liquidator in accordance with the I B Code for the consolidated CIRP. Appeal allowed. Service Tax 2021 (4) TMI 179 Levy of Service Tax - Section 66 D(g) of Finance Act, 1994 - HELD THAT:- The learned counsel appearing for the respondent confirms that though the order has been noted by the officer while recording the submission of the petitioner, its ratio has neither been taken note of by the officer nor distinguished. In any event, she seeks to point out that, that order is, in fact, adverse to the assessee - This submission, prima facie, does not appear to be factually correct as the tax has been appropriated since the assessee in that case had collected the tax from its customers. In any event, it was incumbent upon the officer to have taken note of the order and any amount of explanation in this regard before me will not account for such lapse on the part of the authority. The matter remanded back to the authority to be heard afresh and a speaking order - petition allowed by way of remand. CST, VAT & Sales Tax 2021 (4) TMI 178 Classification of goods - equipment in question which has been held to be an electronic equipment - covered by item no. 5 machinery and spare parts of machinery of Schedule referred in Section 4(1) of the U.P. Tax on Entry of Goods Act? - Ex-parte order - HELD THAT:- The Tribunal has erred in reaching a contrary conclusion, that too, without considering it's earlier view. In that regard, it has been further submitted that the petitioner could not bring to the knowledge of the Tribunal an earlier adjudication made by it, in the case of the assessee itself, since the matter proceeded ex-parte , on practically the first date fixed in the proceedings, after the Tribunal reopened post lockdown enforced due to spread of the pandemic Covid-19 - The ex-parte nature of the order apart, at present, it does stand out that the Tribunal has taken two divergent views in the case of the assessee itself, inasmuch as, in the earlier order, the Tribunal had clearly opined that the goods that have been dealt with by the assessee are not taxable under the provisions of the Entry Tax Act, whereas in the appeal giving rise to the present revision, a contrary view has been taken. While taking a such contrary view, the Tribunal has not considered the earlier adjudication made by it, which adjudication had become necessary in light of the earlier decision of this Court. The matter remitted to the Tribunal to pass a fresh order in accordance with law - Revision allowed by way of remand. 2021 (4) TMI 176 Maintainability of petition - availability of efficacious and alternative remedy of appeal - service of notice - purchase of taxable goods was not covered by valid purchase bills - principles of natural justice - HELD THAT:- The entire gamut of the pleadings in the writ petition as well as the rejoinder is aimed at projecting how the petitioner was not served with pre-audit, pre-assessment show cause notices and other notices and thereby how the petitioner was deprived the valuable opportunity of submitting their explanation and how the petitioner was not afforded a personal hearing thereby depriving the principles of natural justice - In normal circumstances, this Court desists from entertaining the writ petition on the availability of efficacious and alternative remedy. However, under certain special circumstances, violation of principles of natural justice being one, this Court would exercise its preliminary jurisdiction. Time limitation - applicability of decision in the case of Glaxo Smith Kline [2020 (5) TMI 149 - SUPREME COURT] where it was held that The remedy of appeal is creature of statute. If the appeal is presented by the assessee beyond the extended statutory limitation period of 60 days in terms of Section 31 of the 2005 Act and is, therefore, not entertained, it is incomprehensible as to how it would become a case of violation of fundamental right, much less statutory or legal right as such - HELD THAT:- Unlike in the said case, the petitioner filed the writ petition well within the period of limitation available for filing appeal. In such a case, having regard to the totality of the facts, this Court can entertain the writ petition. Violation of principles of natural justice - contention of the petitioner is that the said Deepak Agarwal, who was the erstwhile employee of the petitioner company, resigned from the company on 15.10.2018 itself and therefore, they did not receive any notice dated 12.06.2016 - HELD THAT:- In this context, the petitioner filed the proceedings dated 30.10.2018 issued by the Senior Manager, Human Resources, stating that Mr. Deepak Agarwal worked as Deputy Manager in Finance, Legal and Secretarial (Taxation) from 22.01.2016 to 15.10.2018. Therefore, as rightly argued by the petitioner, the notice dated 12.06.2016 cannot be said to be received by the petitioner - Also, the petitioner filed a copy of Form No.DIR-XII which shows that the Director Rajath Kumar Gupta, S/o Ved Prakash, resigned from the Directorship on 28.03.2018. Hence, notice sent to him cannot be attributed to the petitioner. Notice date 20.03.2020 was also said to be sent by e-mail but, the concerned employee left service. Above all, the GST registration certificate of the petitioner shows that the address of the petitioner was changed with effect from 01.02.2019. So, for this reason also, the petitioner cannot be said to be received the notices which if they were sent to old address. Thus, the petitioner did not receive any of the notices said to be sent by the 2nd respondent and therefore, they had no occasion to submit their explanation/objection. So also, they had no occasion to submit their case personally. Consequently, the principles of natural justice are violated in the instant case. Therefore, the impugned assessment order is liable to be set aside - petition allowed. 2021 (4) TMI 175 Condonation of delay in filing petition - challenge to orders of assessment passed in terms of the provisions of the Tamil Nadu Value Added Tax Act, 2006 - present Writ Petitions challenge orders of assessment, and have been filed beyond the period of 90 (60 + 30) days provided in terms of Section 51 of the Act from the date of receipt of the orders by the petitioners - HELD THAT:- The trigger for the present discussion is the recent judgment of the Supreme Court in the case of Assistant Commissioner (Ct) LTU vs. M/s.Glaxo Smith Kline Consumer Health Care Limited [ 2020 (5) TMI 149 - SUPREME COURT ], wherein this issue arose - Upon compliance with the terms imposed, the matter was heard and the writ petition came to be allowed quashing the order of assessment and relegating the matter to the assessing authority to be redone afresh after hearing the petitioner. It is thus that the revenue carried the matter in appeal to the Supreme Court arguing that the High Court had exceeded its jurisdiction and committed a manifest error in admitting a writ petition beyond the period of limitation set out in the concerned statute. The wide powers with which the High Court is invested must not be exercised in such a way that are inconsistent with legislative intent prescribing a rigid limitation under statute. In conclusion, the Bench reverses the decision of the High Court and allows the writ appeals saying that no case have been made out either before the High Court, and no finding has been recorded by the High Court in regard to its decision for entertaining the writ petition beyond the period of statutory limitation - Article 226 of the Constitution of India is thus, elastic enough to accommodate challenges to proceedings beyond the period provided under limitation, although such discretion has to be exercised very sparingly and the situation causing the delay examined closely and minutely. The impugned orders in W.P.Nos.14720 and 14722 of 2020 are dated 13.05.2016 and 26.05.2016 and the time for filing of appeals with delay are long gone. The Writ Petitions have, however, been filed on 08.10.2020 with a delay in excess of five years. The reasons adduced in the affidavit filed in support of the Writ Petitions is that the petitioner was unaware of the order having been passed and came to know of it only when coercive recovery proceedings were initiated for collection of the arrears. However, this is denied in the counter filed by the respondent - Service of the order upon the petitioner on 04.06.2016 is thus not in dispute - No explanation is adduced for the elapse in time between 04.06.2016 and date of filing of this writ petition which is 08.10.2020 and in the light of the materials produced by the revenue to establish service, which are also not denied by the petitioner, no justification found to entertain these writ petitions and the same are dismissed in limine. Petition dismissed. Indian Laws 2021 (4) TMI 146 Dishonor of Cheque - burden to prove - onus to rebut the statutory presumptions under Sections 138 and 139 of the N.I Act - service of notice - Existing debt or not - HELD THAT:- It is a settled proposition of law that mere issuance of a cheque and its dishonour would not constitute an offence by itself under Section 138 N.I Act, 1881 unless the basic elements of Section 138 and the eventualities mentioned in Clauses (a), (b) and (c) in the proviso to Section 138 of the N.I. Act, 1881 are satisfied. With regard to the service of statutory notice, accused pleaded that she did not receive any such notice after the cheque issued by her was allegedly dishonoured. The complainant seems to have proved by adducing documentary evidence that he issued such notice (Exbt.4) within 15 days from the date of his receiving the information from the bank that the cheque was dishonoured for insufficiency of fund in the account of the accused. Existing debt or not - HELD THAT:- Despite payment of loan the complainant did not give back her cheque which was later misutilized by the complainant and the present case was filed against her. In her cross examination also she said that she issued two cheques in favour of the complainant. In this regard, she could not produce any evidence at all. She could not recall the dates on which those cheques were issued. She also stated in her evidence that the blank cheques and the stamp paper given by her to the complainant were destroyed by the complainant in her presence. Therefore, question of using blank cheque against her is redundant. Moreover, though she denied to have issued the said cheque of the sum of ₹ 1,30,000/- to the complainant, she has categorically admitted in her cross examination that the signature appearing on cheque No. 028821 (Exbt.1) was her own signature. The fact that after the cheque was dishonoured, complainant issued demand notice within the statutory period demanding the accused to pay the cheque amount is also proved. Having received no response from her, the accused filed the case under Section 138 N.I Act, 1881 in which accused was convicted and sentenced by the trial Court which was reversed in appeal by the Additional Sessions Judge. The accused respondent is held guilty of offence punishable under Section 138, N.I. Act. She will pay ₹ 1,30,000/- as fine within a period of three months from today which will be paid to the complainant petitioner - criminal revision petition is allowed.
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