Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 17, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Profiteering - purchase of flat in the Respondent's project Heritage Max - allegation is that the Respondent had not passed on the benefit of ITC - This benefit was required to be passed on to the recipients, however, the same was not done by the Respondent. Thus, Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @4.81% of the base price received by the Respondent during the period 01.07.2017 to 30.06.2019, has not been passed on by the Respondent to 390 recipients including the Applicant no. 1. - NAPA
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Profiteering - supply of "ECLAT SERUM" - allegation is that Respondent had not passed on the benefit of reduction in the GST rate by the way of commensurate reduction in prices - It is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017, and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. - NAPA
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Profiteering - supply of “Services by way of admission to exhibition of cinematography films” - allegation is that the Respondent did not pass on the benefit of reduction in the GST rate - - It is evident that the Respondent did not reduce the base prices of five categories of tickets in commensurate manner for the period from 01.01.2019 to 18.07.2019 and four categories for the period from 19.07.2019 to 31.01.2020 and has contravened the provisions of section 171 of the CGST Act. - NAPA
Income Tax
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Recovery proceedings - attachment and auction sale of immovable property - No irregularity committed by the Income Tax Department while auctioning the property. The Income Tax Department also made it very clear that the auction amount will be adjusted toward the tax liability and the interest thereon and the balance if any will be adjusted and payable toward the other stake holders - HC
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Unexplained Investment u/s 69 as taxed u/s 115BBE - It was not the case of the AO that cash withdrawal from bank account on earlier occasion had been spent by the assessee or used for some other purposes. In absence of any finding contrary to explanation of the assessee that cash deposits into bank account is out of withdrawal from earlier occasion cannot be disregarded.- AT
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Penalty u/s 271(1)(c) - Gain on sale of land - Bona-fine belief that the land under consideration was an agricultural land only - No mala-fide intention could be attributed on the part of the assessee to conceal the income or to furnish inaccurate particulars of income. The assessee made a claim in the return of income which was not accepted by Ld. AO. However, this fact alone would not necessarily justify imposition of penalty - AT
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TP Adjustment - existence of international transaction of AMP Expenses - the revenue has also substantially proved the onus of existence of international transaction between assessee and its AE’s as defined u/s 92B of the Act. Ergo, we are of the opinion that, the TPO/DRP/AO are right in holding the existence of international transaction in the AMP undertaken by the Assessee. - AT
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Unexplained cash credit u/s.68 - authenticity of the credits - as the assessee had in the course of proceedings before the lower authorities adopted an evasive approach and failed to place on record any material/document substantiating the authenticity of the loan transactions in question, therefore, we are of the considered view that no infirmity arises from non-exercise the power u/s. 131(1) of the Act by the lower authorities - Addition confirmed - AT
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Taxability of amount received for giving up his rights over properties - family settlement - sum received by assessee is traceable to the realisation of rights as legal heir of intestate succession and not to any sale, relinquishment or extinguishment of right to property. - Amount not taxable - AT
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Claim of deduction regarding donation - assessee directed to submit materials to substantiate the fact of donation it gave to local clubs/bodies during festival/sports in order to have good relations with them for smooth running of its business. And if the assessee produce evidence/material as directed by us, the AO may verify the same and allow balance 50% of the expenses which are shown to have been made by the assessee to the local clubs for smooth functioning of its business of extraction of coal and its transportation. - AT
DGFT
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Prohibition on export of wheat - However, export of wheat on Humanitarian ground, as Aid/Assistance/Government to Government shall be allowed, on case to case basis, with the specific approval of competent authority.
Corporate Law
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Oppression and Mismanagement - Violation of the Status quo order - This Tribunal comes to a resultant conclusion that while passing of status quo order it should be specific with respect to subject matters more particularly in the matters of Oppression and mismanagement, on the basis of the facts of each case and if such status quo is warranted to protect the interest of the Applicants/ Petitioners therein - AT
Indian Laws
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Recovery proceedings - withdrawal of appeal by the respondent - In fact, the Division Bench also did not consider the order of the learned Single Judge on merits but has granted relief even while permitting withdrawal of the appeal. Such conduct on the part of the litigant to once enjoy the fruits of the litigation for number of years, invite the order on merits, which is against him and in the appeal initially after obtaining the exparte adinterim relief and thereafter, having realised that the same would not be sustained, withdrawing the appeal and requesting that observations made by the learned Single Judge while dismissing the writ petition may not be considered, cannot be accepted and such conduct reprehensible - SC
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Scope and power of the Commissioner / Panch appointed by the court - When a court issues such a commission to such a person, it can direct the commissioner to make such an investigation, examination and adjustment and submit a report thereon to the court. The commissioner so appointed does not strictly perform a ‘judicial act which is binding’ but only a ‘ministerial act’. Nothing is left to the commissioner’s discretion, and there is no occasion to use his judgment or permitting the commissioner to adjudicate and decide the issue involved; the commissioner’s report is only an opinion or noting, as the case may be with the details and/or statement to the court the actual state of affairs. Such a report does not automatically form part of the court’s opinion - SC
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Interpretation of statute - whether Non Banking Financial Companies (NBFC) regulated by the Reserve Bank of India, in terms of the provisions of Chapter IIIB of the Reserve Bank of India Act, 1934 (RBI Act) could also be regulated by State enactments such as Kerala Money Lenders Act, 1958 (Kerala Act) and Gujarat Money Lenders Act, 2011 (Gujarat Act)? - The Kerala Act and the Gujarat Act will have no application to NBFCs registered under the RBI Act and regulated by RBI. - SC
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Dishonor of Cheque - requirement of deposit 20% of the amount of fine or compensation - scope of amendment to section 148 of NI Act - retrospective or prospective - In case of Section 148 of the NI Act, there is no substantive right that is being taken away by the enforcement of the amendment - the argument that Section 148 is not retrospective is rejected. - HC
IBC
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CIRP - Physical inspection of plant and machinery of the Corporate Debtor - After approval of the Resolution Plan, Monitoring Committee under the statutory scheme is to function for process of implementation of Resolution Plan and has not to act as any adversary body to the Resolution Applicant. If there were any genuine roadblocks found in the implementation of the plan, Monitoring Committee as well as Monitoring Professional is to use their good offices to sort out the difficulties and not to create roadblocks themselves in successful resolution of the Corporate Debtor. - AT
Case Laws:
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GST
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2022 (5) TMI 741
Jurisdiction to issue SCN - Levy of tax - invocation of provisions of Sections 129 and 130 of CGST Act - HELD THAT:- When same issue came up for consideration before the Gujarat High Court, Division Bench of the Gujarat High Court in the case of M/S SHANTI METAL INDUSTRIES VERSUS STATE OF GUJARAT [ 2022 (4) TMI 508 - GUJARAT HIGH COURT] , granted interim order subject to the petitioner therein depositing penalty and directed release of goods and conveyance. The issues raised in the present Writ Petition are required to be re-examined after filing counter by the respondents - there shall be stay of further proceedings pursuant to the impugned show cause notice dated 16.04.2022 and the subject goods and conveyance shall be released subject to the petitioner paying 1/4th of the amount proposed by the respondent authorities in the impugned show cause notice and on execution of personal bond for rest of the amount. Petition allowed by way of remand.
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2022 (5) TMI 740
Seizure of goods - seizure challenged on the ground that U.P. E-Way bill was not accompanying the goods - HELD THAT:- The issue involved in the present petition has already been decided by this Court in M/S JASVANT SINGH VERSUS STATE OF U.P. AND 3 OTHERS [ 2021 (12) TMI 889 - ALLAHABAD HIGH COURT] where it was held that On close, scrutiny of the record reveals that in the State of Uttar Pradesh, requirement for central e-way bill was implemented with effect from 01.04.2008. At the time of detention of the goods, there was no requirement for carrying central e-way bill. Therefore, the goods cannot/should not be seized or penalty/tax could not be legally demanded. The writ petition is allowed in same terms.
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2022 (5) TMI 739
Maintainability of Advance Ruling application - Classification of supply - nature of supply - works contract services or not - refund of excess tax paid - HELD THAT:- The questions/ clarifications sought for by the applicant from the Appellate Authority's order are not coming within the preview of Section 97(2) under the Act. The Authority for Advance Ruling is not in a position provide classifications or to give comments on the order passed by Appellate Authority under GST Act. Therefore, the subject application with regard to these questions cannot be admitted and thus not eligble for advance ruling. Hence we do not discuss the merits of the case. Whether the taxes to the, extent of 6 % (18% - 12%) so paid prior to pronouncement of Appellate Authority's order become taxes paid over and above the liability to pay within the four corners of law and can be regarded as tax in excess? - HELD THAT:- It is seen that the question raised does fall under any of the provisions of Section 97 (2) of the CGST Act, 2017. Refund claim of excess amount so paid - HELD THAT:- In this regard, it is stated that Section 54 of the CGST Act, 2017 deals with refund of taxes. Applicant may go through the procedure/provision of said GST Section.
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2022 (5) TMI 738
Profiteering - purchase of flat in the Respondent's project Heritage Max - allegation is that the Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in price - contravention of Section 171 of the CGST Act, 2017 - HELD THAT:- The Authority finds that the benefit of additional Input Tax Credit of 4.81% of the turnover has accrued to the Respondent for the project Heritage Max . This benefit was required to be passed on to the recipients, however, the same was not done by the Respondent. Thus, Section 171 of the CGST, 2017 has been contravened by the Respondent, in as much as the additional benefit of ITC @4.81% of the base price received by the Respondent during the period 01.07.2017 to 30.06.2019, has not been passed on by the Respondent to 390 recipients including the Applicant no. 1. These recipients were identifiable as per the documents provided by the Respondent, giving the names and addresses along with Unit no. allotted to such recipients. Therefore, the total additional amount of Rs. 4,74,54,151/- was required to be returned to the Applicant No. 1 and the other such homebuyers. The Respondent has profiteered an amount of Rs. 4,74,54,151/- during the period of investigation. Therefore, in view of the facts, this Authority under Rule 133(3)(a) of the CGST Rules orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since, the present investigation is only up to 30.06.2019, any benefit of ITC which shall accrue subsequently shall also be passed on to the buyers by the Respondents. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of his flats in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he had thus resorted to profiteering. Hence, he has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.07.2017 to 30.06.2019 and therefore, appears to be liable for imposition of penalty under the provisions of Section 171 (3A) of the above Act. However, the provisions of Section 171 (3A) have been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.17.2017 to 30.06.2019 when the Respondent had committed the above violation and hence, the penalty under Section 171 (3A) cannot be imposed on the Respondent for such period. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent. This Order falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. Application disposed off.
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2022 (5) TMI 737
Profiteering - supply of ECLAT SERUM - allegation is that Respondent had not passed on the benefit of reduction in the GST rate by the way of commensurate reduction in prices - violation of section 171(1) of CGST Act - HELD THAT:- It is also observed from the record that the Respondent is engaged in selling of medicines from his retail stores having GSTIN 27BDVPM0061N1ZZ. It is also revealed from the plain reading of Section 171 (1) supra that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second about the passing on the benefit of the ITC - On the issue of reduction in the tax rate, it is apparent from the record that there has been a reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, on the subject goods being supplied by the Respondent, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 30.09.2019 - it is evident that, the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017. It is established that the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017, and has not passed on the benefit of reduction in the rate of tax to his recipients by commensurate reduction in the prices. Accordingly, the profiteered amount is determined as Rs. 1,54,138/- as per the provisions of Rule 133 (1) of the CGST Rules 2017. The Respondent is therefore directed to reduce the prices of his products as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. Penalty - HELD THAT:- It is clear that the Respondent has contravened the provisions of Section 171 (1) of the CGST Act, 2017. However, since, the penalty prescribed under Section 171 (3A) of the CGST Act, 2017 for violation of the above provisions has come in to force w.e.f. 01.01.2020 and the infringement pertains to the period from 01.01.2019 to 30.09.2019 and the Respondent has also deposited the profiteered amount alongwith the interest, therefore, no penalty is proposed to be imposed on the Respondent. Application disposed off.
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2022 (5) TMI 736
Profiteering - supply of Services by way of admission to exhibition of cinematography films - allegation is that the Respondent did not pass on the benefit of reduction in the GST rate - contravention of section 171 of CGST Act - penalty - HELD THAT:- It is evident that the Respondent did not reduce the base prices of five categories of tickets in commensurate manner for the period from 01.01.2019 to 18.07.2019 and four categories for the period from 19.07.2019 to 31.01.2020 and has contravened the provisions of section 171 of the CGST Act. This Authority determines the profiteered amount as Rs. 9,74,638/- and Rs.2,32,112/- for the period 01.01.2019 to 18.07.2019 and 19.07.2019 to 31.01.2020 respectively. Therefore, the total amount of profiteering covering the period of 01.01.2019 to 31.01.2020 is determined as Rs.12,06,750/- The Authority determines the total amount of profiteering as Rs. 12,06,750/- as per the provisions of Rule 133 (1) of the above Rules - Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 12,06,750/- in the Consumer Welfare Fund of the Central and the State Government in the ratio of 50:50, as per the provisions of Rule 133 (3) (c) of the above Rules along with 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit. The above amount shall be deposited within a period of 3 months from the date of passing of this Order failing which it shall be recovered by the concerned Commissioners CGST/SGST. Penalty - HELD THAT:- As the Respondent has committed an offence for violation of the provisions of Section 171 (1) during the period from 01.01.2019 to 31.01.2020 therefore, he is apparently liable for imposition of penalty under the provisions of Section 171 (3A) of the Act. These provisions came into effect from 01.01.2020 i.e penalty equivalent to ten per cent. of the profiteered amount will be imposed upon him for the amount collected after 01.01.2020. However, no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority. This Order falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017. Application disposed off.
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Income Tax
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2022 (5) TMI 744
Reopening of assessment u/s 147 - notice against deceased - deceased - Jagannath Rampal Kabra had claimed bogus accommodation entry and there was escapement of income - whether the reopening of assessment is void-ab-initio as the Notice under Section 148 of the Act has been issued to dead person? - HELD THAT:- The aforesaid question of law is no more res-integra. The issue came to be considered by this Court in the case of Chandreshbhai Jayantibhai Patel vs. Income Tax Officer [ 2019 (1) TMI 353 - GUJARAT HIGH COURT] as legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid There is no scope/occasion for filing a voluntary return for escapement of income and the only provision under which return can be filed is on issue of a notice under Section 148. Indisputably, the assessment proceedings for escaped income were initiated by issue of notice under Section 148 of the Act and therefore the AO was vested with jurisdiction over the case. However, issuing notice upon the deceased assessee is as good as no valid notice in eye of law resulting in irregularity, which is not curable. It would be a nullity, as it hits upon the inherent jurisdiction of AO. On a bare reading of the provision, it is evident that issuance of valid notice confers power upon the AO to assume jurisdiction for initiation of proceedings for assessment of escapement of income. It is a cardinal proposition in law that not issuing notice at all or issuing that beyond statutory period or issue of an invalid notice under Section 148 does affect the jurisdiction of AO and would make the assessment/reassessment null and void because the notice under this section is not a mere procedural requirement but a condition precedent to assume jurisdiction and to make a valid assessment/reassessment. Absence of such a notice would make the assessment invalid and without jurisdiction in view of the decisions of Y Narayana Chetty[ 1958 (10) TMI 10 - SUPREME COURT] , THAYABALLI MULLA JEEVAJI KAPASI (DECD.) (BY HIS LEGAL REPRESENTATIVES) [ 1967 (3) TMI 1 - SUPREME COURT] ,KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA [ 1971 (9) TMI 9 - SUPREME COURT] , ELECTRO STEEL CASTINGS LTD. [ 2003 (7) TMI 58 - CALCUTTA HIGH COURT] , MADAN LAL AGARWAL [ 1982 (9) TMI 26 - ALLAHABAD HIGH COURT] , NYALCHAND MALUKCHAND DAGLI [ 1965 (9) TMI 57 - GUJARAT HIGH COURT ] Thus notice being issued upon deceased assessee is void ab initio and the consequential proceedings and the orders passed thereon are any without jurisdiction and are therefore, hereby quashed and set aside. - Decided in favour of assessee.
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2022 (5) TMI 743
Deduction u/s 80IB(10) - proportionate deduction - claim of the assessee for the deduction was disallowed for the A.Ys. 2006-07 and 2007-08 mainly on the ground that the completion certificate was not obtained from the local authority by 31.03.2008 owing to non-completion of the said building by the due date - assessee had projects in Sector 1 and Sector 7, for which development charges were paid as a single unified project but AO jettisoned the contention of the assessee that the projects on Sector 1 and Sector 7 were different and rejected the assessee‟s contention for giving proportionate deduction in respect of built-up area completed before 31.03.2008 - HELD THAT:- It is seen that the issue under consideration came up for consideration before the Tribunal. Vide its afore-referred order, the Tribunal held that Sector 1 and Sector 7 were different projects; housing project in Sector 1 was completed prior to the stipulated date and hence deduction u/s 80IB(10) of the Act was available; housing project in Sector 7 was not completed and hence the assessee was entitled to proportionate deduction u/s 80IB(10). Admittedly, there is no change in the facts and circumstances of the case. Respectfully following the precedent, we hold that the ld. CIT(A) was fully justified in following the order of Tribunal in holding that the assessee was entitled to deduction u/s 80IB(10) of the Act in respect of Sector 7 project on proportionate basis.- Decided against revenue.
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2022 (5) TMI 742
Delayed payment of employee's contribution, beyond the prescribed time, to the welfare Funds like PF - Scope of amendment - contribution paid before the due date of filing of return of income u/s. 139(1) - HELD THAT:- The employees' contribution of ESI and PF had been deposited before the due date of filing of return u/s. 139(1) of the Act is not in dispute. It is seen that the said issue, as far as the present Forum is concerned, stands fully covered in favour of the assessees not only by the consistent orders of the various Benches of the ITAT across the country but also by the consistent orders of the Chandigarh Bench of the ITAT. It is seen that all along, the Co-ordinate Benches have held that the amendments to Sections 36(1)(va) and u/s. 43B of the Income Tax Act effected by the Finance Act, 2021 are applicable prospectively and not retrospectively. While coming to the said conclusion, the Benches have relied upon the Notes on Clauses at the time of introduction of the Finance Act, 2021 and have held that the amendment is applicable in relation to the assessment year 2021-22 and subsequent years and not retrospectively. Thus, in view of this legal position, as considered by the Co-ordinate Benches and duly taking note of the judgements of the jurisdictional High Court in the case of CIT Vs Nuchem Limited.[ 2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] we are of the view that the additions cannot be made or sustained on the strength of the amendment effected by Finance Act, 2021 to Sections 36(1)(va)/43B of the Act as the legal position thereon is very clear. The departmental stand that it is clarificatory in nature has consistently been rejected. Thus, in the face of the clear legal position, we find that the claim of the assessee is to be allowed. We are bound by the law laid down by the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Hemla Embroidery Mills (P) Ltd. [ 2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] wherein it was categorically held that the respondent - assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return u/s. 139(1) - Decided in favour of assessee.
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2022 (5) TMI 735
Recovery proceedings - attachment and auction sale of immovable property - petitioner before this Court is that the impugned auction notice dated 27.02.2017 was published on 01.03.2019 does not disclosed the reserve price through fixed the market price - HELD THAT:- The arguments advanced on behalf of the petitioner that Rule 52 and 53 (of the II Schedule of the Income tax Act 1961) were not followed cannot be countenanced in the light of the fact that the impugned auction notice clearly stated the terms and condition of the proposed Auction could be downloaded from the website of the Income Tax Department or collected from the office of the respondent Tax Recovery Officer. There is also no violation of Rule 53 (b). As per Rule 53 (b), a proclamation of sale of immovable property is to be drawn up after due notice to the defaulter as to the time and place of sale. The proclamation shall also specify as fairly and accurately as possible the reverse, if any, assessed upon the property or apart thereof. If revenue has not been assessed, question of including the same in the proclamation sale does not arise. In this case the property was admittedly in the hand of one sudhakar jayaraj who had filed W.P. Even according to the petitioner, the property was not used for any business by the petitioner. When the first attempt was made to recover the amount with the issue of auction notice, dated 16.06.2008, there was response - No irregularity committed by the Income Tax Department while auctioning the property. The Income Tax Department also made it very clear that the auction amount will be adjusted toward the tax liability and the interest thereon and the balance if any will be adjusted and payable toward the other state holders namely 234 time share holders, dues to Repco Bank and the tax due to the Commercial Tax Department totalling to Rs.95,02,968/-. Since the amount was recovered from the auction sale is only Rs. 3,38,03,500/-, the third respondent is also bound to pay the amounts due to the 234 time share holders, Commercial Tax Department and Repco Bank. These are the liabilities of the petitioner which the third respondent has undertaken to discharge and therefore, we do not find any irregularity in the auction conducted by the Income Tax Department. There is no merit in the present writ petition.
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2022 (5) TMI 734
Penalty u/s 271(1)(c) - defective notice u/s 274 - no specific charge towards either concealing the particulars of income or furnishing of inaccurate particulars of income was made - HELD THAT:- Where the charge is not properly set out in the notice u/s 274, viz., both the limbs stand therein without striking off the inapplicable limb, the penalty order gets vitiated. Turning to the facts of the extant case, we find from the notice u/s 274 of the Act that the AO retained both the limbs, whereas penalty was imposed only with reference to one of them. Respectfully following the above Full Bench judgment of the Hon ble jurisdictional High Court, [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] we overturn the impugned order on this legal issue and direct to delete the penalty to the extent imposed by the AO. Enhancement of penalty directed by the ld. CIT(A) - It is clear from the mandate of section 251(1)(b), that CIT(A) has been conferred with a power to enhance the penalty already imposed by AO. Once section 251(1)(b) empowers CIT(A) to enhance the penalty in unambiguous terms, no fetters can be brought in to check such a power by a claim that CIT(A) cannot enhance the penalty without making enhancement in the income in the quantum appeal. Having found, in principle, that CIT(A) is empowered to enhance the penalty, now we turn to the factual panorama of the case for ascertaining if the penalty was rightly directed to be enhanced. At this stage, it is relevant to mention that the AO initiated penalty without striking out the irrelevant limb of section 271(1)(c), which we have held supra, has the consequence of vitiating the penalty order. Once the penalty order itself does not stand because of wrong issuance of notice u/s.274, the power of enhancement of penalty conferred by section 251(1)(b) automatically becomes meaningless because this provision talks of vary it so as to enhance the penalty. Varying the penalty for enhancement pre-supposes the existence of some valid penalty which is subject to variation. If the penalty ceases to exist in entirety, it cannot be varied so as to make enhancement. In view of the fact that the penalty imposed by the AO has been held above to be vitiated, there can be no question of any enhancement thereto. We, therefore, hold that the ld. CIT(A) was not justified in confirming and further directing to enhance the penalty imposed by the AO u/s.271(1)(c) of the Act. Assessee appeal allowed.
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2022 (5) TMI 733
Unexplained Investment u/s 69 as taxed u/s 115BBE - cash withdrawal from City Union Bank account is more than amount of cash deposited in the very same bank account - time gap of more than 3 to 5 days between cash withdrawal and cash deposits - evidence to prove that cash withdrawal has been used for some other purposes - HELD THAT:- Once the AO never disputed fact that cash withdrawal from bank account is higher than amount of cash deposited into bank account, then the A.O. ought not to have made additions towards cash deposits into bank account only for the reason that there is time gap of more than 3 to 5 days between cash withdrawal and cash deposits from very same bank account. It was not the case of the AO that cash withdrawal from bank account on earlier occasion had been spent by the assessee or used for some other purposes. In absence of any finding contrary to explanation of the assessee that cash deposits into bank account is out of withdrawal from earlier occasion cannot be disregarded. CIT(A), without appreciating above facts has simply confirmed additions made by the Assessing Officer. Hence, we reverse findings of the learned CIT(A) and direct the Assessing Officer to delete additions made towards cash deposits into City Union Bank account u/s.69 - Decided in favour of assessee.
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2022 (5) TMI 732
Condonation of delay - Revision u/s 263 - appeal is time barred by 95 days and the assessee has filed affidavit stating the reasons - assessee in his affidavit stated the reasons that he has received intimation u/s.143(1) of the Act and according to the same, the assessee s legal consultant stated that intimation is factually incorrect and application for rectification u/s.154 of the Act shall be filed - HELD THAT:- We noted from the application for condonation and affidavit filed, that the reasons stated are for the intimation order passed u/s.143(1) of the Act and not the revision order. Hence, we find no reason to condone the delay and hence, the appeal is dismissed as barred by limitation.
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2022 (5) TMI 731
Addition u/s 68 - unsecured loans taken by the assessee - AO made addition of the same since the assessee failed to furnish any details with regard to the same - CIT(A) deleted the addition on finding that the addition related to three loans all taken from directors of the assessee company, out of which two loans were old not taken during the impugned year while the third loan, taken in the name of one Mr. Bhavesh G. Patel, part of it was taken in earlier year which was assessed and no addition made on account of the same while for the balance assessee had filed confirmation regarding the deposits and the A.O. had also received confirmations from the parties against notices u/s. 133(6) - HELD THAT:- It is evident that with respect to the issue of unsecured loans, the assessee had established from its financial results that they were majorly old loans. Further the enquiry conducted by the A.O. during remand proceedings also confirmed the genuineness of the unsecured loans. The A.O. having himself found the loan to be genuine after making due enquiry, we see no reason to interfere in the order of the Ld. CIT(A) deleting the addition made on account of unsecured loans u/s. 68 of the Act - Decided in favour of assessee. Disallowance of depreciation on newly acquired assets - CIT-A deleted the addition - HELD THAT:- Disallowance of depreciation was made since no details were available with the A.O. vis- -vis the purchase of new assets. CIT(A) noted from the records of the assessee as well as the Tax Audit Report filed, that the assets were duly accounted for in the books of the assessee. Further the bills of the assets purchased were forwarded to the A.O. for verification, and no adverse comments were made by him on the same. We note that it was only contemporary data/evidence which was furnished by the assessee, verified by the A.O. and no infirmity found in the same. CIT(A) was justified in admitting the evidences and deleting the disallowance of depreciation. Unexplained investment u/s. 69 - addition related to the bank balance reflected in the return of income filed by the assessee on account of the same remaining unreconciled with the ban - CIT-A deleted the addition - HELD THAT:- CIT(A) deleted the addition on finding that these balances were duly reflected in the books of account of the assessee and were majorly carried forward from the earlier years. We find that it was only contemporary evidence which was appreciated by the ld. CIT(A) for the purposes of holding that the entire bank balance was explained as appearing in the books of accounts of the assessee. Even the A.O. did not make any adverse comment with regard to the same in his remand report. The Ld. CIT(A) we hold was therefore wholly justified in deleting the addition made u/s 69. Addition made on account of unexplained credit - addition in relation to the sundry creditors reflected in the return of income ,for failure of the assessee to furnish necessary details - CIT-A deleted the addition - HELD THAT:- CIT(A) found the entire balance as pertaining to sundry creditors against which there were corresponding L/C s also all duly reflected in the audited books of accounts of the assessee and further found there was no basis with the A.O. for making the impugned addition which was merely done on estimate basis. He also noted that in remand proceedings, the A.O. had made sample verification of the details given by the assessee and found them to be correct. Considering the aforesaid fact therefore he deleted the addition made correctly. Disallowance of expenses which constituted 15% of the total expenditure incurred on Power and Fuel, Salary and Wages, Advertisement, Donation, Other expenses and Interest - CIT-A deleted the addition - HELD THAT:- CIT(A) who we find has deleted the addition noting that there was no abnormal increase in these expenses as compared to the preceding years and further noting the fact that the A.O. had verified the expenses on sample basis and made no adverse comments. He also noted that in scrutiny assessment for earlier years no disallowance of such expenses was made except of a meagre amount of Rs. 20,000/- on lump sum basis in assessment year 2007-08. CIT(A) noted that the expenditure in the impugned year was comparable with the turnover of the assessee and in the absence of any specific defect/ abnormality pointed out by the A.O. correctly deleted the disallowance. Addition made by the A.O. by estimating gross profit - HELD THAT:- CIT-A deleted the addition finding that there was no basis with the AO for either rejecting the Books of the assessee or for applying the GP rate for estimating the profits. He also noted that the Books of the assessee were duly audited. Accordingly he held the act of the AO of rejecting the Books of the assessee and estimating the Gross Profit to be entirely baseless and thus unjustified. Before us Ld.DR was unable to point out any infirmity in the above findings of the Ld.CIT(A) .
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2022 (5) TMI 730
Income of royalty arising out of the above trademark of brand Marriott - taxable in the hands of the assessee or not? - HELD THAT:- Assessee has given a registration certificate dated 21st august, 2006 and covers above assessment years. No doubt, as held by the Hon'ble Delhi High Court in the case of CUB Pty Limited [ 2016 (7) TMI 1094 - DELHI HIGH COURT] that since the brand owner not located in India, the situs of the brand would also be outside India and naturally, the income arising there from would be chargeable to tax in the hands of the owner of the brand. In fact, Marriott International Inc. (assessee) in these appeals is not the owners of the brand as per certificate of ownership produce before us. Therefore, it is chargeable to tax in the hands of the person who owns the brand. Nevertheless, it is not the contention of the assessee that no tax should have been deducted under section 195 of the Act on the payments made by, Juhu Beach Resorts Limited, V.M. Salgaonkar and Brothers Pvt. Ltd. and Chalet Hotels Limited and we are also conscious of the fact that sum is received by the assessee and provision of section 163 of the act also needs to be examined. However, there is a substantive provision for that. We set aside all these four appeals back to the file of the learned Assessing Officer with a direction to consider the certificate of registration on trademark dated 21 August 2006, which was applied for on 24 November 2003. AO may re-consider that in whose hands the above income is chargeable to tax as royalty income. AO may also consider that who received the above sum on behalf of the non- resident tax payers and whether the provision of section 163 of the Act can be invoked or not considering assessee as an agent of Non-resident. Appeal allowed for statistical purposes.
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2022 (5) TMI 729
Penalty u/s 271(1)(c) - Gain on sale of land - AO noted that the agricultural income was shown as exempt and but for scrutiny notice, the assessee would not have come forward to file a revised working of its income - claiming the taxable income to be agricultural income clearly denotes furnishing of inaccurate particulars of income - HELD THAT:- Transaction has happened in AY 2010-11, going by the version of Ld. AO that the Joint Development Agreement (JDA) would crystallize capital gains liability on the assessee, the said transaction would have been taxable in the year of entering into JDA i.e. AY 2010-11. Nevertheless, the assessee has offered the transaction in AY 2012-13 which would lend credence to the argument that the assessee made sincere efforts to put a quietus to the possible litigation by accepting the proposal of Ld. AO. Another fact to be noted is that this land was purchased in the year 1995 and the deed of purchase clearly mentioned that the land was agricultural land only. In fact that assessee incurred development expenditure and initially planted fodder and seasonal crops. But due to non-viability of the project, the assessee in the year 2007, planted mango trees and coconut trees. All these facts would lend credence to assessee s belief that the land under consideration was an agricultural land only and any income arising there from would be agricultural income only which is exempt from tax. On the basis of said belief, the assessee separately disclosed sale of agricultural land in the financial statements as well as in the computation of income. Upon perusal of these documents, it could be well said that the transaction was duly disclosed in the financial statement as well as in the return of income and it could not be said that there was any concealment of particulars of income by the assessee. No mala-fide intention could be attributed on the part of the assessee to conceal the income or to furnish inaccurate particulars of income. The assessee made a claim in the return of income which was not accepted by Ld. AO. However, this fact alone would not necessarily justify imposition of penalty as per the decision of Hon ble Supreme Court in the case of CIT V/s Reliance Petro Products Private Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] Defective notice - non specification of charge - Show cause notice issued to the assessee does not specify the limb for which the penalty was being initiated i.e. for furnishing of inaccurate particulars of income or for concealment of income. This issue, though raised before Ld. CIT(A), has been decided against the assessee wherein it has been held that both the limbs of Sec.271(1)(c) were applicable. However, we find that it is settled position of law that exact charge should be framed against the assessee in the show cause notice and in the absence of such specific charge, the penalty proceedings become null and void as held by larger bench of Hon ble High Court of Bombay in the case of Mohd. Farhan A.Shaikh V/s DCIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2022 (5) TMI 728
Late fee u/s. 234E r.w.s 200A - delay in filing statement of TDS within the prescribed time - Sufficient cause of delay - HELD THAT:-. Considering the principles laid down in Equipment Fabricators [ 2021 (11) TMI 213 - ITAT BANGALORE] in construing the expression sufficient cause the principle of advancing substantial justice is of prime importance and the expression sufficient cause should receive a liberal construction. In our considered view the ill health of the MD of the assessee due to which he could not concentrate on the business matter is a sufficient cause for delay in filing the appeal before us.. We therefore condone the delay of 108 days in filing the appeal and admit the appeal for further adjudication on merits. While arguing on merits the learned AR reiterated the submissions made before the lower authorities and the learned DR supported the stand of the revenue as reflected in the order of the CIT(A). It is not in dispute that if the ratio laid down in the case of Fateeraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] is applied then the levy of interest u/s.234-E of the Act would be illegal for returns of TDS in respect of the period prior to 1.6.2015. The present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015. The decision in the case of Fateeraj Singhvi (supra) was rendered on 26.8.2016. It has been held in the case of MSV IT Solutions Ltd. [ 2018 (10) TMI 1774 - ITAT HYDERABAD] wherein on identical facts noticing that there was no legal remedy prior to 1.6.2015 against an intimation u/s.200A of the Act, the Hyderabad Bench condoned delay in filing appeal before CIT(A). Considering the peculiar facts and circumstances of the case and keeping in mind that technicalities should not stand in the way of rendering substantive justice, we are of the view that interest of justice would be met if the delay in filing appeals by the Assessee before CIT(A) is condoned and the issue with regard to levy of interest u/s.234-E of the Act be remanded to the CIT(A) for fresh consideration in accordance with the observations made in this order. Appeal by the assessee is treated as allowed for statistical purpose.
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2022 (5) TMI 727
Unexplained cash credit in view of section 68 - three ingredients as liable to be proved on behalf of the assessee i.e. Identity of the shareholder, Genuineness of the transaction Credit worthiness of the shareholder - HELD THAT:- The assessee has given the address, PAN, certificate of incorporation, Memorandum and Articles of Association of the above subscriber who have subscribed to the shares. To prove the creditworthiness of the subscribers, the appellant has submitted the certificate of source of fund, balance-sheet, Profit Loss A/c and Return of income of share applicants. To prove the Genuineness of above share transaction, appellant has submitted, Copy of Cheque, Copy of Cheque Deposit Slip, Copy of Bank Statement of M/s. Moongipa, Copy of Share Certificate Counterfoil, Copy of Extract of Minutes of BOD Meeting, Copy of source of Funds Certificate, Copy of ITR Acknowledgement, Copy of Audit Report along with Balance-Sheet, Copy of Certificate of Incorporation, Copy of Memorandum Articles of Association Company Master Data showing status active. The facts of the present case are quite identical to the facts of the assessee s own case and other sister concern cases M/S. SHIVA SHAKTI ENCLAVES PVT LTD. [ 2021 (6) TMI 325 - ITAT MUMBAI] , M/S MOONGIPA DEV. INF. LTD. [ 2021 (5) TMI 156 - ITAT MUMBAI] and M/S. MOONGIPA DEVELOPMENT AND INFRASTRUCTURE LTD. [ 2020 (12) TMI 768 - ITAT MUMBAI] , M/S BINI BUILDERS P. LTD. [ 2021 (5) TMI 186 - ITAT MUMBAI] and M/S. BINI BUILDERS PVT. LTD. [ 2020 (3) TMI 595 - ITAT MUMBAI] . Thus we delete the addition and decide this issue in favour of the assessee against the revenue.
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2022 (5) TMI 726
Estimation of assessee's income by adopting net profit ratio 12% of net contract receipts - whether it is excessive and unreasonable? - HELD THAT:- As respectfully following the aforesaid order of coordinate Bench of ITAT, Delhi in the case of Nand Kishore Pundir [ 2015 (7) TMI 1403 - ITAT DELHI] in the specific facts and circumstances of the case before us, we direct the Assessing Officer to determine assessee's income by adopting net profit ratio of 8% on the net contract receipts of the assessee. - Decided in favour of assessee.
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2022 (5) TMI 725
TP Adjustment - existence of international transaction of AMP Expenses - HELD THAT:- Admittedly assessee has been engaged in the distribution of goods produced by the AE, further the assessee is also not the exclusive distributor of the goods being sold in India and apart from the assessee, independent third party customer based in India can directly place the order for buying the goods from AE. The assessee is neither manufacturer of the goods nor the exclusive distributor and the assessee has also reported huge expenses on account of AMP and reporting loss in India being distributor. Tribunal in the case of Vodafone India Services Ltd. [ 2018 (1) TMI 1302 - ITAT AHMEDABAD] relying on the Supreme Court judgment in the case of CIT Vs. Jubilee Mills Ltd. [ 1962 (9) TMI 47 - SUPREME COURT] and Raghuvanshi Mills Ltd. Vs. CIT [ 1960 (12) TMI 7 - SUPREME COURT] declared that the test is not whether the AE and the assessee have actually acted in concert, but whether circumstances are that human experience tells us that it can be safely be taken that they must be acting together. By applying the ratio laid down in the above judicial pronouncements, on verifying the material on record, we have no hesitation to hold that, the assessee and AE have acted in concert between the assessee and the AE s for carrying out the AMP expenses. We hold that the revenue has also substantially proved the onus of existence of international transaction between assessee and its AE s as defined u/s 92B of the Act. Ergo, we are of the opinion that, the TPO/DRP/AO are right in holding the existence of international transaction in the AMP undertaken by the Assessee. Accordingly we dismiss the assessee s Grounds of Appeal No. 4 to 10. Whether the Method of Profit Split Method (PSM) adopted by the AO in determination Arm Length Price (ALP) of the Advertisement Marketing and Promotion (AMP) expenses is the proper or not? - The international transaction of AMP functions exists in the case of the assessee and restore the issue to the TPO for following the direction of the Hon ble Delhi High Court in the case of Sony Ericsson [ 2015 (3) TMI 580 - DELHI HIGH COURT] for benchmarking under TNMM in aggregated manner along with the purchase of goods from the AE s or in the segregated manner, after taking into account appropriate comparables or applying of Resale price method or Cost Plus Method or Profit Split Method keeping in view the findings of the Hon ble Delhi High Court. Needles to say that, the Assessee shall be given opportunity of being heard. Further Assessee is directed to provide all the relevant documents including the financials of its AE s if required, failing to which the Authorities can act in accordance with law by invoking the relevant provisions. Accordingly, we allow the Ground No.11 to 26 for statistical purposes.
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2022 (5) TMI 724
Unexplained cash credit u/s.68 - primary onus to substantiate the authenticity of the credits appearing in the books of accounts is cast upon the assessee, failing which the same is to be treated as an unexplained cash credit in his hands - HELD THAT:- Assessee had failed to substantiate the identity and creditworthiness of the lenders, as well as prove the genuineness of the loan transactions in question, therefore, we are of the considered view that the AO had rightly held the loan transactions in question as unexplained cash credits within the meaning of section 68 of the Act. Before the CIT(Appeals), though the assessee had placed on record PAN No. of one of the lender, viz. Ms. Seema R Mutreja, however, the same in our considered view would not suffice for substantiating the nature and source of the credit appearing against her name in the books of accounts of the assessee. In so far the claim of the Ld. AR that the lower authorities had erred in law in not exercising the power vested with them u/s.131(1) of the Act i.e, by not summoning the respective lenders despite specific requests of the assessee, the same we are afraid does not find favor with us. As is discernible from the records, the assessee had failed to place on record any documentary evidences which would substantiate the veracity of the loan transactions in question and would suffice to conclude that the primary onus that was cast upon it to substantiate the authenticity of the loan transactions was duly discharged by him. As a matter of fact, the assessee had been taking shifting stands before the lower authorities and had tried to shift the burden of proving the authenticity of the loan transactions upon the department. Now when the assessee before us had failed to discharge the primary onus that was cast upon it as regards proving the nature and source of the loan transactions in question, therefore, the raising of a request by him, and that too for the very first time in the course of the proceedings before the CIT (Appeals) did not merit acceptance. If the assessee in the course of the assessment proceedings would have placed on record any material which would have evidenced the authenticity of the loan transactions in question, then, in our considered view, the lower authorities would have been obligated to exercise the power u/s. 131(1) of the Act in order to dispel doubts, if any, as regards the authenticity of the loan transactions in question. However, as the assessee had in the course of proceedings before the lower authorities adopted an evasive approach and failed to place on record any material/document substantiating the authenticity of the loan transactions in question, therefore, we are of the considered view that no infirmity arises from non-exercise the power u/s. 131(1) of the Act by the lower authorities, which as observed by us hereinabove, was sought by the assessee for the very first time in the course of the proceedings before the CIT(Appeals). We do not find any infirmity in the view taken by the lower authorities who had rightly held the loan transactions in question as unexplained cash credits within the meaning of Section 68 - Decided against assessee.
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2022 (5) TMI 723
Income from Other Sources or capital gain - addition u/s 56(2)(vii)(a) - family settlement - amount received for giving up his rights over some of the items of the suit properties - suit properties were bequeathed to the assessee s mother under the will - HELD THAT:- Provisions of Sec.56(2)(vii)(a) will apply only when any sum of money is received, without consideration, the aggregate value of which exceeds fifty thousand rupees. Admittedly, the assessee received the sum of Rs.1.60 Crores for giving up his rights over some of the items of the suit properties. The fact that all the items of suit properties were bequeathed to the assessee s mother under the will of K.K.Vijayakumar cannot be the basis to hold that the assessee did not have any rights whatsoever. The assessee had a right to question the validity of the will and had in fact filed the suit for partition and separate possession of his share of the suit properties. He gave up his rights to contest the will and in return received Rs.1.60 Crores and a shop at Avenue Road. Therefore the sum in question cannot be said to have been received without consideration. The sum in question is not in the nature of revenue receipt and is capital receipt not chargeable to tax. The sum so received cannot also be brought to tax as capital gain u/s.45 of the Act. In the case of Smt.T.Gayatri [ 2013 (8) TMI 934 - ITAT BANGALORE] the facts were, one 'B', father of assessee died intestate leaving behind four sons and six daughters including assessee. After expiry of 'B', assessee along with other sisters filed a suit for partition of self acquired property of their father. The suit was ultimately compromised between the parties duly recognized by Court. In terms of memorandum of compromise daughters agreed to receive their 1/10th share each in property coming to Rs. 87.50 lakh from their brothers. The assessee's brothers subsequently entered into a joint development agreement of property in question. In terms of said agreement, the developer directly paid amount of Rs. 87.50 lakh each to daughters of 'B' including assessee therein. The daughters of 'B' thereupon executed a release deed of disputed property in favour of their brothers. For the relevant year, the assessee filed her return wherein amount of Rs. 87.50 lakhs was not offered to tax under the head 'capital gain'. The assessee took a stand that the sum in question was a receipt consequent to a family arrangement and therefore, there was no transfer of any capital asset so as to attract provisions of section 45. The Tribunal dealt with the aforesaid issue and came to the conclusion that sum received by assessee is traceable to the realisation of rights as legal heir of intestate succession and not to any sale, relinquishment or extinguishment of right to property. The Tribunal took note of the fact that there was a suit for partition in which the assessee became entitled to 1/10th share over the property. The Tribunal also took note of the fact that there was a compromise recorded between the parties before the appellate court, whereby assessee agreed to receive Rs.87.50 lakhs towards her 1/10th share over the property in lieu of 1/10th share of property physically delivered after division by metes and bounds. In these circumstances that the Tribunal came to the conclusion that the sum received by assessee was nothing but realization of assessee's rights as legal heir. The Tribunal also took note of the subsequent release deed executed by assessee in favour of developers, who purchased the property from other co-sharers, as a document for perfecting the title of the third party to the property and not for any other purpose. The Tribunal ultimately came to the conclusion that there was no transfer within the meaning of section 2(47) of the Act and therefore capital gain was not exigible. The above decision would also support the view that the sum in question cannot be brought to tax as capital gain also. We therefore hold that sum received by the assessee in the facts and circumstances of the case cannot be brought to tax. The addition made is therefore directed to be deleted and the appeal of the assessee is allowed.
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2022 (5) TMI 722
Depreciation on Goodwill - goodwill arising on amalgamation - HELD THAT:- Hon ble Supreme Court in the case of Smifs Securities Ltd. (supra) while considering an identical issue, held that goodwill arising on amalgamation to be a capital asset eligible for depreciation. The facts in the case of Smifs Securities Limited [ 2012 (8) TMI 713 - SUPREME COURT ] were similar to that of the present assessee. The consideration paid by the amalgamated company over and above the net assets of the amalgamating company should be considered as goodwill arising on amalgamation. Based on the above, we are of the opinion that the depreciation claimed by the assessee on goodwill acquired deserves to be allowed in accordance with law. Ld.AO is directed to compute depreciation in accordance with the principles laid down in case of Smifs Securities Ltd. Assessee appeal allowed. Short credit of tax deducted at source - AO is directed to verify and grant credit in accordance with the law.
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2022 (5) TMI 721
Disallowance of additional depreciation being 20% of the total claim of additional depreciation - HELD THAT:- From a perusal of the aforesaid order of the Tribunal in assessee s own case [ 2019 (1) TMI 1974 - ITAT KOLKATA] on the additional depreciation claim, we note that the issue was restored back to the file of the AO and the assessee was directed to produce all the details as required in support of its claim for deduction in respect of additional depreciation and the Tribunal has directed the AO to grant additional depreciation on such plant and machinery that have been used for the production of coal and reminded the AO the fact that the assessee is a Public Sector Undertaking which undergoes audit by the Comptroller and Audit General (in short CAG); And in this regard it has been brought to our notice, that pursuant to the remand, the AO has allowed the claim of additional depreciation to the assessee. Be that as it may be, we set aside the order of the Ld. CIT(A) and this issue is remanded back to the AO, with the same observation and directions given in the assessee s own case on this issue (Mutatismutandis) and direct him to consider the claim of the assessee and to pass order in accordance to law. Thus, the sole issue is decided on merits for statistical purposes. Claim of deduction regarding donation - HELD THAT:- We note that on similar issue i.e. donation/expenditure claimed by an assessee in respect of donation given to the local clubs during Durga Puja etc. the Hon ble Calcutta High Court in CIT vs. Bata India Ltd. [ 1993 (3) TMI 89 - CALCUTTA HIGH COURT] held that the same was an allowable expenses. However we note that in the present case in hand, since the assessee could not submit materials/evidence before the authorities below in respect of its claim of donation given to the local clubs, we direct the assessee to submit materials to substantiate the fact of donation it gave to local clubs/bodies during festival/sports in order to have good relations with them for smooth running of its business. And if the assessee produce evidence/material as directed by us, the AO may verify the same and allow balance 50% of the expenses which are shown to have been made by the assessee to the local clubs for smooth functioning of its business of extraction of coal and its transportation. With the aforesaid direction this issue is set aside back to the file of AO and the AO is directed to pass a fresh order.
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Customs
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2022 (5) TMI 720
Validity of SCN - Smuggling - seizure of gold bar, silver ingots and fine silver and cash - notice under Section 110 (2) of the Customs Act, 1962 for extending the time for investigation was quashed and subsequent notices/summons issued to the petitioner therein have been held to be without any authority of law - HELD THAT:- Taking into consideration the submission made by learned counsel for the petitioner based on order dated 02.03.2022 passed by the High Court in WPC No.5388 of 2021 whereby the notice under Section 110 (2) of the Act of 1962 was held to be without any authority of law, the notice was quashed, it is directed that respondents shall not proceed any further pursuant to notice dated 23.04.2022 (Annexure P-1) issued under Section 124 of the Act of 1962, till the next date of hearing. List this case after four weeks.
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Corporate Laws
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2022 (5) TMI 719
Oppression and Mismanagement - Violation of the Status quo order - seeking direction to the Respondents therein (Appellants herein) to pass a direction to the Respondents therein to maintain status quo in all aspects while managing the affairs of the Company, and revoke all Approvals, Resolutions etc. with respect to raising of any additional debt - HELD THAT:- The Respondents 1 to 4 herein have filed the Company Petition bearing No. CP 02 of 2020 before the National Company Law Tribunal, Kochi Bench under various provisions of the Companies Act, 2013 including alleging oppression and mismanagement in the affairs of the Appellant No.1 Company and sought various main and interim reliefs in the CP. It is contended that relief viii of the interim reliefs in the main CP, inter alia the Respondents herein have sought a direction restraining the Appellants 2 to 8 herein from in any manner alienating, mortgaging, selling or encumbering any of the movable or immovable properties of the company. It is seen that the NCLT made absolute the status quo order dated 17.01.2020, further by making it clear that the approvals/resolutions with respect to raising of any additional debt shall be kept in abeyance and the same will be subject to the outcome in the main Company Petition - This Tribunal is of the view that the NCLT while passing the interim order of status quo on 17.01.2020 simply stated that the parties are directed to maintain status quo in all aspects as on today until further orders, has not specifically made out whether status quo to be maintained with respect to management, shareholding and immovable assets of the Company. This Tribunal is of the view that the status quo order is in wider amplitude. It is an admitted fact that the Appellant No.1 Company is into the business of automobile sector and there are 6000 workers in the Company. As per the MOA, the main objects are to carry on the business of motor dealers of cars, motor vehicles etc. and the company has to perform its functions as per its objectives. The NCLT ought to have specified the status quo order with regard to its either shareholding, management and immovable properties etc. In the present case the Respondents herein have alleged that the Appellants have violated the orders of the status quo dated 17.01.2020 by availing ECLGS i.e. Emergency Credit Line Guarantee Scheme offered by the Govt. of India and the Appellant Company in it 245th Board meeting dated 10.02.2021 taken a decision by majority of Board of Directors to avail ECLGS during subsistence of status quo order dated 17.01.2020 - This Tribunal is of the view that the Appellants have not violated the orders of the Tribunal dated 17.01.2020 by making it clear that the Company has to function through the Board of Directors and there is no stay with regard convening and holding of the Board meetings to take a timely decision on the basis of the business of the Company. It is made clear that the interest of the Company is paramount. This Tribunal comes to a resultant conclusion that while passing of status quo order it should be specific with respect to subject matters more particularly in the matters of Oppression and mismanagement, on the basis of the facts of each case and if such status quo is warranted to protect the interest of the Applicants/ Petitioners therein - this Tribunal find that the impugned order dated 18.06.2021 para 11 third sentence onwards namely making it clear that the approvals/resolutions etc. with respect to raising of any additional debt shall be kept in abeyance and the same will be subject to the outcome in the main Company Petition. is hereby quashed and set aside. Accordingly, the issue is answered.
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2022 (5) TMI 718
Illegal transfer of shares - consideration for transfer of shares in the name of petitioner or not - questions with regard to genuineness of the documents can be decided by this Tribunal or not? - HELD THAT:- There is an admission on the part of the Respondents that the Petitioner has paid an amount of Rs. 10 Lakhs as part consideration for 40% shares, the total consideration being Rs. 20 Lakhs. The contention of the Respondents is that the Petitioner promised to pay the same later, but however the Respondents would handover blank transfer deeds as an assurance for transferring 40% shares and submitted that the Respondents handed over the original share certificates on payment of the balance consideration. Believing the Petitioner, blindly they handed over the blank transfer deeds as early as 2011, though share certificates were not handed over - Even according to the Petitioner, he was managing the affairs of the Company, hence the contention of the Respondents that letterheads containing the signature of Respondent No. 2 were given to the Petitioner in order to facilitate the smooth functioning of the Company cannot be dismissed. Jurisdiction of this Tribunal to decide the issues of fraud - HELD THAT:- Admittedly in this case, the Petitioner does not have Share Certificates. As to why he did not insist for issuance of share certificates is not explained. However, from the admission made by the Respondents, it is clear that Rs. 10,00,000/- was given by the Petitioner. But the contention is that the Petitioner promised to give the remaining amount of Rs. 10,00,000/- later and did not want to take their share certificate till then. All these are highly disputed questions of fact, which cannot be adjudicated by this Tribunal. Hence, this point is answered holding that the Petitioner, as admitted by Respondents No. 1 to 3 has given Rs. 10,00,000/- which can be recovered by filing an appropriate application before appropriate forum. Admittedly, the Share Certificates are in possession of Respondent No. 4. Hence, unless evidence is taken with regard to the contentions raised by either side, no finding can be given with regard to the rights of the Petitioner. As regards the Share Transfer Form which is submitted on 11.06.2014, the Counsel for the Respondent contends that according to General Circular No. 19/2014, issued by the Government of India, Ministry of Corporate Affairs, the Share Transfer Forms executed before 01.04.2014 even if it is in as per Form-7B are decided to be accepted and thereafter it should be in Form SH-4. The Counsel submits that the Share Transfer Form filed by the Petitioner is Form-7B, which is valid only up to 01.04.2014. No counter argument, is presented on the said aspect - This Tribunal does not have jurisdiction to decide the questions raised in this Petition Petition dismissed.
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Insolvency & Bankruptcy
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2022 (5) TMI 717
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- It is clear that for the extension of limitation under section 18 of the Limitation Act, insofar section 9 application of the appellant is concerned, there has to be a clear acknowledgment of debt within 3 years from 19.6.2006 and mere promise to pay at a much later date, on 21.10.2015 cannot extend limitation as required under section 18 of the Limitation Act. It is found that the Appellant was not part of the scheme of rehabilitation and therefore he is not entitled to claim exclusion of any period when its legal right of redressal was suspended - the appellant has not been able to establish the extension of limitation as required under Section 18 of the Limitation Act on the basis of valid acknowledgments provided by the corporate debtor to the operational debt, which is in default from June, 2006. The Adjudicating Authority did not commit any error in holding that section 9 application of Appellant was barred by limitation - appeal dismissed.
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2022 (5) TMI 716
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - assignment of Trademark - existence of debt and dispute or not - Dishonor of cheque - existence of legally enforceable debt or not - rebuttal of presumption - HELD THAT:- In the present case, a post-dated Cheque was given by the Appellant bearing date 15.03.2018 and before 15.03.2018 could arrive or the Cheque was presented, Respondent No.1 was communicated by letter dated 12.03.2018 that the Appellant does not accept any liability to make payment of GST and instructions are being issued to the Bank to Stop Payment - further by letter dated 19.10.2018 Respondent No.1 demanded payment of GST amount of Rs.52,80,000/- by the Appellant which was denied by the Appellant by its reply dated 24.10.2018. In the reply it was clearly mentioned that fraud was committed on the Appellant. It is clear that there is pre-existing dispute with regard to the Operational Debt claimed by the Respondent No.1 in its Section 9 Application. The Notice under Section 8 was replied and in the reply pre-existence of dispute has been claimed and referred which was neither spurious nor illusory, hence, the Adjudicating Authority was obliged to reject the application. The Adjudicating Authority relying on the post-dated Cheque dated 15.03.2018 observed that the said Cheque prove that the Corporate Debtor has accepted his liability and agreed to pay GST additional over amount of consideration, which observation is erroneous. Even before the date of the post-dated Cheque i.e. 15.03.2018, the Corporate Debtor informed to the Respondent No.1 on 12.03.2018 that there is no liability to pay GST by the Corporate Debtor and instruction of Stop Payment is being issued to the Bank. Thus, the issue of issuing Cheque became redundant and further when Cheque was presented in June, 2018 it was dishonoured as per instructions dated 13.03.2018 - The preexisting dispute was demonstrated in correspondence and complaints filed by the Corporate Debtor against the Respondent No.1. The Adjudicating Authority has committed error in admitting the application under Section 9 there being pre-existing dispute between the parties which dispute was in existence even prior to the date of issue of Notice under Section 8. The impugned order passed by the Adjudicating Authority is unsustainable and is hereby set aside - Appeal allowed.
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2022 (5) TMI 715
CIRP - Physical inspection of plant and machinery of the Corporate Debtor - seeking to undertake detailed analysis and assessment of the plant for four days with their technical team which was declined by the Monitoring Committee observing that first the SRA should deposit the substantial amount as required under Resolution Plan and then only they can undertake the necessary visits - HELD THAT:- After approval of the Resolution Plan on 30.05.2019, Appellant by 10.06.2019 has made payment of INR 10.55 Crores. The Monitoring Committee has met in the month of June, 2019 itself on several occasions to consider steps towards implementation of the plan. In the meeting of the Monitoring Committee dated 06.06.2019, the request made by representative of the Successful Resolution Applicant to undertake visit of the plant for four days was noticed and not acceded to with observation that first the Appellant should deposit the substantial amount as required under the Resolution Plan and only then they can do undertake the necessary visit - It is also relevant to notice that the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. After approval of the Resolution Plan, Monitoring Committee under the statutory scheme is to function for process of implementation of Resolution Plan and has not to act as any adversary body to the Resolution Applicant. If there were any genuine roadblocks found in the implementation of the plan, Monitoring Committee as well as Monitoring Professional is to use their good offices to sort out the difficulties and not to create roadblocks themselves in successful resolution of the Corporate Debtor. First prayer in the application is direction is sought against the Appellant under Section 74(3) read with Section 235A of the Code. In the entire application there is not even pleading that Appellant has even primafacie knowingly and willfully contravened any provision of plan within the meaning of Section 74 - For offence under Section 74(3), there is to be pleading that SRA or any person knowingly or willfully contravened any of the terms of the Resolution Plan. In entire application neither any pleadings nor averments have been made that SRA has willfully and knowingly contravened the terms of Resolution Plan. The Adjudicating Authority has not even adverted to Section 74(3) and had directed for making a reference to IBBI for taking appropriate action under Section 74(3), which order is unsustainable. Application disposed off.
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2022 (5) TMI 714
Violation of principles of natural justice - Service of notice - seeking to set aside the ex-parte order - Corporate Debtor Company did not receive the attempted service of notice - argument of the Petitioner's Counsel has been that the office of the Corporate Debtor was closed due to Covid-19 pandemic and that only a watchman was present and the watchman might have refused the notice, due to which an endorsement of refusal came to be made on the notice issued by the Operational Creditor. HELD THAT:- According to Section 8 of IBC, a demand notice shall be delivered on the occurrence of default and the Corporate Debtor shall within a period of 10 days issue reply notice. Section 9 (1) of IBC, prescribes that after the expiry of the period of 10 days from the date of delivery of the notice or invoice, demanding payment, if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute, under Section 8(2) of IBC, he may file an application. Hence for filing an application, the 10 days' time starts from the date of delivery of notice to the Corporate Debtor, which in this case expired by 07.01.2022, which is the date of filing the application since admittedly, the notice is delivered on 27.12.2021. In the impugned order, it can be seen that this Tribunal considered the reply notice dated 04.10.2021 wherein it was stated that the Operational Creditor failed to perform his duties as prescribed under the agreements and that the term of 4 years elapsed as per contract dated 31.12.2011 and was not renewed and that the project did not materialize during the term in question, and observed that no evidence was produced in that regard, since the Corporate Debtor did not choose to appear and contest the case and prove the contentions made in the reply notice. Powers of the Tribunal in going in to the merits of the case in an application filed, seeking to set aside the order setting the Corporate Debtor ex-parte - HELD THAT:- In an application seeking to set aside the order of ex-parte, the Applicant needs to either prove that the service of notice is not effected on him or that he was prevented by sufficient cause not to appear before this Tribunal inspite of such service. In this case the pleas taken in the application are none of the above two. The plea taken is that the notice was refused as the Office was not functioning or that the office was functioning limitedly with skeleton staff, which can be held as not proved in the light of above discussion. The reply notices do not spell existence of pre-existing dispute in terms of section 8 of IBC. It is only the contentions in the demand notices that are disputed. According to section 8 of IBC a dispute should be existing by the date of demand notice or there should be pending a suit or arbitration proceedings which are filed before the receipt of such notice, which is not made out in this case. Application dismissed.
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Service Tax
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2022 (5) TMI 713
Refund of service tax paid - rejection on the ground that some services were not identified as specified services by the Approval Committee - interest on delayed refund - HELD THAT:- In the appellant s own case M/S. INTAS PHARMA LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD [ 2013 (7) TMI 703 - CESTAT AHMEDABAD] , the benefit of refund has been allowed in respect of services not listed as a specified services approved by the approval committee - thus, the appellants are entitle to refund in respect of services received by them for the authorized operations even if, such services are not listed as a specified services in the list approved by the Approval Committee. Interest on delay in payment of refund in terms of Section 11BB - HELD THAT:- There is no specific mechanism provided for notification No. 12/2013-ST. Consequently, all these refund would be governed by Section 11B and therefore, the appellant would be entitle to interest in terms of Section 11BB. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 712
Condonation of delay of almost 10 months in filing appeal - sufficient reasons for delay or not - due to medical emergency prevailing in the family of the Chartered Accountant, could not take steps in time - HELD THAT:- The delay has been cogently explained by the Appellant/ assessee in filing their appeal before the Commissioner (Appeals). Accordingly, in the interest of justice, the delay in filing Appeal before the Commissioner (Appeals) is condoned, and this Appeal is allowed by way of remand to the learned Commissioner (Appeals), to decide the Appeal on merits after hearing the Appellant and giving opportunity of making his pleading and filing evidence in support of their contentions. The Appellant is directed to appear before the Commissioner (Appeals) with a copy of this order within a period of 60 days from the date of receipt of this order and seek opportunity of hearing, alongwith a copy of their fresh grounds of appeal and explanations, alongwith evidences as they wish to rely upon - Appeal allowed by way of remand.
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Central Excise
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2022 (5) TMI 711
Maintainability of appeal - monetary amount involved in the appeal - CENVAT Credit - input services or not - sales commission paid to one M/s. Supreme Packaging with whom, agreement is entered upon, to appoint them as Del Credere Agent for effective proper guarantee of solvency of customers and effective recovery of money - post clearance services or not - HELD THAT: In fact the amount of duty involved in the present appeal is Rs.1,46,148/- which is less than the prescribed limit of Rs.2 lakhs and the appeal can be dismissed as non-maintainable, in view of the low amount involved and as per proviso to Section 35 B (1) of the Central Excise Act, 1944 the Tribunal could refuse to admit appeal involving such low amount. Admissibility of CENVAT Credit in respect of Del Credere Agent Services , received by Appellants - HELD THAT:- They had appointed M/s. Supreme Packaging as Del Credere Agent , to guarantee the solvency of their customer and ensure speedy recovery of the amounts due from them. These service are in relation to the activities which are post sale and clearance of goods and hence these cannot be treated as input services for the manufacture of goods cleared by the appellants from their factory. The appeal is dismissed as not admitted as well as on merits.
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2022 (5) TMI 710
Denial of interest on refund granted to the appellant - refund of the credit of SED taken by them paid on inputs received from EOU - whether refund was granted within the three months when it was decided, or not - HELD THAT:- Irrespective of the disputes that arise after the filing of refund claim, the appellant became entitled to interest from after three months of filing of original refund claim. Reliance placed in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] where it was held that the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable. Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 709
Confiscation of the goods lying outside the factory premises - old and used Moulds supplied by some other manufacturers - demand on C.I. Moulds manufactured on job work basis from the old and used moulds supplied by the principal supplier under Notification No.214/86 dated 25.03.1986 - Whether demand of duty on the coal stored outside the factory premises on which no Cenvat credit was taken is liable for confiscation and whether the Cenvat credit can be denied on such coal? - time limitation - suppression of facts or not. Goods allegedly lying outside the factory premises whether liable for confiscation or not - HELD THAT:- As per the facts of the case which is not under dispute that the appellant have applied for extension of ground plan for inclusion of the premises where the goods were lying well in advance and subsequently, the ground plan was approved. Therefore, it cannot be said that the goods were lying outside the factory. Moreover, the appellant received the old and used moulds for the purpose of job work in their factory under Notification No.214/86-CE therefore, no cenvat credit was taken on such goods accordingly, such goods cannot be treated as excisable goods hence, no question arise for confiscation of the goods - neither confiscation is legal nor the duty demanded on such goods is correct. Demand on C.I. Mould which was manufactured on job work basis in terms of Notification No.214/86-CE - HELD THAT:- As per the undisputed facts, the various suppliers were supplying the old and used moulds to the appellant for converting into new mould and returning it back to the principal supplier. In this regard all the suppliers have filed a declaration as required under Notification 214/86-CE. This arrangement is permissible under which the job worker is exempted from payment of any excise duty in terms of notification No.214/86-CE. - All the documents and records clearly show that the appellant have received the old and used moulds and converted into fresh mould and returned back to the supplier of old and used mould for which they merely charged the job work charges. Whether old and used mould/scrap can be cleared under Rule 4(5)(a) or not - HELD THAT:- It is no longer under dispute as per the various judgments cited by the appellant. It is a settled law that manufacturer for the purpose of manufacturing their goods can clear their own generated scrap to the job worker and get the finished goods manufactured out of it in terms of Notification No.214/86-CE. - there are no reason why the department has proceeded to demand duty from the appellant when all the records and facts as revealed from the investigation clearly shows that the appellant have involved in job work of making C.I. Mould from old and used mould/scrap supplied by their principal manufacturer - there are no hesitation in holding that the demand on this count is not sustainable. Denial of Cenvat credit and the ground that the same was lying outside the factory - HELD THAT:- Firstly, the appellant had not taken the cenvat credit when the goods were lying stored outside, the credit was taken only after taking the coal into the factory therefore, there is no violation of any Cenvat Credit Rules. Secondly, the coal was lying outside the factory but it was lying within the premises which is owned by the appellant only - the appellant had applied for inclusion of the said premises in the factory premises even before storing the goods and subsequently, the permission was granted and the said premises deemed to have been part and parcel of the registered premises of the appellant. For this reason also the Cenvat credit on coal cannot be denied. Since the demand itself is not sustainable, penalty on the main appellant as well as co-appellant is also not sustainable. Time Limitation - suppression of facts or not - HELD THAT:- The appellants have strongly raised the defence on limitation on the ground that the job work transactions were clearly declared in the monthly ER-1 return therefore, there is no suppression of fact - limitation aspect is not decided upon, as the issue is decided in merits itself. The entire demand made against the appellant and the confiscation of goods is not legal and correct hence the same is not sustainable - Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 708
Time Limitation - intermediate goods - chemical solution known in the trade parlance as season' - short shelf life - weak/non marketable - period October, 2014 to March, 2015 - Service of SCN - HELD THAT:- There is a definite error in the file number as mentioned in the copy of the dispatch register (reproduced in the order in appeal in the para 8 of the order). It is also found that the Department is making a vague claim of service of the order-in-original, as no proper receipt of service is produced before the Commissioner (Appeals) and the Department have not given name and designation of the officer of the company on whom the said order has been served. It is legally required to be served on the authorised representative of the company, normally the authorised representative for making compliance under the excise law and Rules thereunder. As it is the successive show cause notice, and appellant was already in appeal with respect to the same dispute for the previous period, there is no reason for the appellant to sit tight and not take any steps to file their appeal upon service of the impugned order-in-original - finding of the Commissioner (Appeal) is erroneous and hit by the provisions of section 37 C of the Act. The appeal is allowed by way of remand to the Commissioner (Appeals), with direction for hearing the appellant, and decide the appeal on merits.
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CST, VAT & Sales Tax
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2022 (5) TMI 707
Classification of goods - rate of Trade Tax under the U. P. Trade Tax Act - Nitrogen component in the Chemical Fertilizer DAP (Di Ammonium Phosphate) - relevant date for enhancement of rates of DAP with effect from 29/01/1999 - Whether the revision in the rate of Nitrogen content in DAP would be applicable from the date of enhancement of the rate of DAP by the Government of India with effect from 29 January, 1999 or from 26 February, 2000 when the same was notified by the State Government? HELD THAT:- There is no dispute with regard to facts in issue inasmuch as vide notification dated 27th May, 1998 the value of Nitrogen component in DAP was fixed at ₹1381.30. Subsequently the value1381.30. Subsequently the value of DAP was enhanced by the Union of India on 29/1/1999. The notification of the Commissioner, Trade Tax dated 26/02/2000 referred to the said enhancement of rate of DAP and consequent enhancement of value of the Nitrogen component in the DAP vide circular issued by the Department of Agriculture which was given wide circulation. There is no dispute that prior to notification dated 26/02/2000 the notification dated 27th May, 1998 was in existence. The notification dated 6th May, 1998 itself provided the percentage of different components of the Chemical Fertilizer shall be determined according to the guidelines issued by the Department of Agriculture from time to time and the Department of Agriculture had informed the Commercial Tax Department vide letter dated 08/05/1998 that value of the Nitrogen component in DAP would be 1381.30 - The first appellate court as well as Commercial Tax Tribunal have both while disallowing the claim of the revisionist have held that at the moment the rate of DAP were enhanced by the Central Government vide its order dated 29.1.1999, the revisionist started collecting the enhanced rate. No material has been placed by the revisionist before this Court to upset the concurrent finding of facts recorded by both the authorities below that the revisionist had collected the enhanced rate of DAP from the date of notification issued by Government of India. It is also noticed that vide its order dated 26.2.2000 the Commissioner, Trade Tax had circulated the letter of Government of India dated 14.10.1999 which fact was already within the knowledge of the revisionist, who is a dealer of DAP and the contention of the revisionist in this regard has not been accepted by the first appellate court as well as Commercial Tax Tribunal - The revisionist having realized enhanced rate of DAP from 1999 when the rate was enhanced by the Government of India, he would be liable to pay Trade Tax at the enhanced rate of Nitrogen content in DAP. This finding recorded by the Tribunal has not been assailed by the revisionist. In case, the revisionist is allowed to pay Trade Tax the earlier rate of nitrogen component in DAP, it would amount to unjust enrichment and, therefore, even in this view of the matter the revision fails. This Court in consideration of the aforesaid facts is of the considered opinion that no interference is required with the judgment of the Commercial Tax Tribunal that enhanced rate of nitrogen would be effective from 1999 itself rather than 26.2.2000. The question is answered in favour of the revenue as against the revisionist. Consequently, the revision is dismissed.
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2022 (5) TMI 706
Validity of assessment order - production of sufficient documents or not - HELD THAT:- After the remand order passed by this Court, two times opportunity was given to the petitioner and twice notices were given and both times the responses have been given by the petitioner dealer - First time, the documents sought for by the Revenue had been given. When further time was sought for especially to substantiate the movement of goods from seller to buyer, those transport documents were sought for and the same were not filed by the petitioner by stating the reason that, both buyer and seller are located in the same campus ie., sister concern and hence there was no separate movement or transportation and no separate charges had been incurred by the seller dealer or by the petitioner in transporting the goods - Only based on this stand taken by the petitioner dealer, the Revenue after having considered the said documents filed by them, has come to the conclusion, of course rightly, that this kind of goods movement between two sister concerns which are located in the same campus is nothing but a bill trading. The Revenue has come to a further conclusion that, this type of purchases / sales between group companies / related persons situated within the same premises without actual movement of goods is the typical model for bill trading activities, where there would be no bank statements, proper entries in Annexures to Form I returns and ledger accounts, the quantum of goods purchase would be sold as such in the same vehicle with a meager value addition less than 1% but there would not be actual involvement of goods at all and these type of activities enable the parties involved to circulate undue ITC among themselves and other groups - the reasoning found out, based on the records, which were produced by the petitioner dealer, in the considered opinion of this Court, cannot be said to be a conclusion arrived at without any documents. This Court has no hesitation to hold that the impugned order is fully justifiable and sustainable and there is no reason, whatsoever available before this Court to show its indulgence for interfering with the said impugned order - Petition dismissed.
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2022 (5) TMI 705
Refund claim - case of petitioner is that refund has not been effected except for one assessment year and that large amounts are still remaining due from the respondents - entitlement of interest on for delay in payment of interest under Section 44 of the KGST Act - HELD THAT:- If any refund is due to the petitioner, the same is liable to be processed and refunded without further delay. To enable such consideration of the quantum of refund due to the petitioner including the interest due, the 1 st respondent is directed to take a decision upon Ext.P7, Ext.P7(a), Ext.P7(b) and Ext.P7(c), as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of this judgment. Considering the long delay, that has ensued from the filing of Ext.P7 till date, petitioner will be at liberty to file a fresh representation also seeking refund of the amounts due, pointing out the details along with a copy of this writ petition - Petition disposed off.
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2022 (5) TMI 700
Remand of the case for fresh consideration - HELD THAT:- Learned counsel appearing for the parties submit that they are not ready with the case today and this Court may fix another date for the purpose of disposal of these appeals. They submit that the matters may be listed on 16.06.2022. Registry is directed to list these appeals in List-I on 16.06.2022.
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Indian Laws
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2022 (5) TMI 704
Recovery proceedings - symbolic possession of the mortgaged property under section 13(4) of the SARFAESI Act or not - HELD THAT:- First of all, we deprecate the conduct on the part of respondent No. 1 in withdrawing the Letters Patent Appeal despite the fact that this Court was seized of matter in which the exparte adinterim order dated 25.01.2022 passed by the Division Bench was under challenge and in which respondent No. 1 was appearing before this Court. He ought not to have withdrawn the Letters Patent Appeal and made the proceedings before this Court infructuous. As observed hereinabove, such act of withdrawal of the Letters Patent Appeal on the part of respondent No. 1 original appellant and thereby making the proceedings before this Court infructuous so as to avoid adjudication on the correctness of the impugned order after order dated 22.02.2022 was passed by this Court is wholly deplorable. Even otherwise, in the facts and circumstances of the case a number of proceedings were initiated by respondent No. 1 by which he has delayed the proceedings initiated by the bank under the SARFAESI Act, and has stalled the recovery proceedings. In spite of the strong observations made by the adjudicating authority in the earlier order produced by the learned Single Judge in his judgment and the strong observations made by the learned Single Judge, the Division Bench was not justified in initially granting an exparte adinterim relief and thereafter, to continue the same on withdrawal of the Letters Patent Appeal. In fact, the Division Bench also did not consider the order of the learned Single Judge on merits but has granted relief even while permitting withdrawal of the appeal. Such conduct on the part of the litigant to once enjoy the fruits of the litigation for number of years, invite the order on merits, which is against him and in the appeal initially after obtaining the exparte adinterim relief and thereafter, having realised that the same would not be sustained, withdrawing the appeal and requesting that observations made by the learned Single Judge while dismissing the writ petition may not be considered, cannot be accepted and such conduct reprehensible - Once the Division Bench did not interfere with the order passed by the learned Single Judge on merits, thereafter, it was not open for the Division Bench to pass an order permitting the appellant respondent No. 1 to withdraw the Letters Patent Appeal and also make observations that any of the observations made by the DRT as well as by learned Single Judge while dismissing the writ petition shall be ignored and/or shall not be taken into consideration was beyond the ken of the Division Bench. Allowing such a practice would tantamount to not only taking a chance before the court but would be indeed speculative and an abuse of the process of the court. The proceedings before the Court are not for taking the chance by the litigants. Impugned order is not sustainable - petition disposed off.
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2022 (5) TMI 703
Scope and power of the Commissioner / Panch appointed by the court - Reference of subject matter of the suit or a part thereof to arbitration under Section 21 of the Arbitration Act, 1940 - HELD THAT:- In the present case, the application dated 23rd December 1994 was moved by the plaintiff and it was not signed by the defendant. As per the heading, the application was for the appointment of a commissioner/arbitrator to conduct an enquiry in respect of the accounts by a competent Chartered Accountant who shall act as a panch/Commissioner and submit a report after conducting an audit of the accounts. It was stated that the transactions between the parties are fairly large in number and, therefore, it is necessary to handover the aforesaid task to a Chartered Accountant. The application also states that for the enquiry regarding accounts an opportunity of hearing should be given to both the parties. Name of S.K. Mantri, Chartered Accountant, to act as panch/commissioner was proposed. The prayer in the application was that the panch/ commissioner would submit the report to the court after conducting an audit of the accounts. The application cannot be read as an application moved on a prior agreement or consensus for reference to arbitration. Order XXVI Rule 9 of the Code gives wide powers to the court to appoint a commissioner to make local investigations which may be requisite or proper for elucidating any matter in dispute, ascertaining the market value of any property, account of mesne profit or damages or annual net profits. Under Order XXVI Rule 11, the court has the power to issue a commission in a suit, in which examination of adjustment of accounts is necessary, to a person as it thinks fit directing him to make such examination or adjustment. When a court issues such a commission to such a person, it can direct the commissioner to make such an investigation, examination and adjustment and submit a report thereon to the court. The commissioner so appointed does not strictly perform a judicial act which is binding but only a ministerial act . Nothing is left to the commissioner s discretion, and there is no occasion to use his judgment or permitting the commissioner to adjudicate and decide the issue involved; the commissioner s report is only an opinion or noting, as the case may be with the details and/or statement to the court the actual state of affairs. Such a report does not automatically form part of the court s opinion, as the court has the power to confirm, vary or set aside the report or in a given case issue a new commission. Hence, there is neither abdication nor delegation of the powers of functions of the court to decide the issue. Sometimes, on examination of the commissioner, the report forms part of the record and evidence. The matter referred to S.K. Mantri was limited to examination of the accounts. The issues and questions of dispute in the suit were far broader and wider. These included questions as to the agreed price or the rate of transportation in view of the letter dated 05th June 1992, which was withdrawn by letter dated 30th September 1992, computation of the transportation costs payable to the plaintiff under the contract in case the coal delivered was within or beyond the 1% stipulation, whether or not the defendants were right in making deductions on account of bad quality coal, higher moisture content etc. whereby the weight of the coal had increased, delay in delivery on the part of the plaintiff, whether the defendants are entitled to charge interest while making recoveries, etc - It is interesting to note that the S.K. Mantri himself did not decide whether or not the plaintiff is entitled to rent of the plot or security charges observing that this was an aspect for the court to decide. However, he forgot that his jurisdiction was limited to checking and verifying accounts and not deciding any issue or questions beyond the accounts on issues and questions referred. The impugned order dated 19th September 2019 of the High Court affirming the order dated 16th May 1996 passed by the Additional District Judge, Sehore Camp Astha, is set aside. It is held that the report of the Chartered Accountant is not an award and is to be treated as a report of a commissioner appointed by the Court under Order XXVI Rule 11 of the Code. Objections of the defendant to the said report will be considered in light of the aforesaid discussion and our findings, and after hearing both the sides the trial will proceed as per law. We clarify that the observations made in this judgment are for the disposal of the present appeal. The civil suit will be decided on merits without being influenced by any findings recorded by us that only relate to the limited aspect of the report dated 22nd June 1995 of the commissioner. Application disposed off.
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2022 (5) TMI 702
Interpretation of statute - whether Non Banking Financial Companies (NBFC) regulated by the Reserve Bank of India, in terms of the provisions of Chapter IIIB of the Reserve Bank of India Act, 1934 (RBI Act) could also be regulated by State enactments such as Kerala Money Lenders Act, 1958 (Kerala Act) and Gujarat Money Lenders Act, 2011 (Gujarat Act)? HELD THAT:- Section 45Q confers overriding effect upon Chapter IIIB, over other laws. Therefore, the States of Gujarat and Kerala cannot contend that the laws made by them are in addition to the provisions of Chapter IIIB. Though it was contended by the learned counsel appearing for the State of Gujarat that the Gujarat Act exempts NBFCs registered under the RBI Act from seeking registration under the Gujarat Act, we do not think that the same would go to the rescue of State of Gujarat. Under Section 5(2) of the Gujarat Act, NBFCs registered under the RBI Act are deemed to have been registered under the Gujarat Act. Therefore, all other provisions of the Gujarat Act are sought to be applied to NBFCs operating in the State of Gujarat. The other provisions of the Gujarat Act include the (i) power of search and seizure; (ii) requirement to maintain certain books and registers and to furnish statements; and (iii) the mandate not to dispose of any article taken from a debtor as a pawn, pledge or security, before a period of two years from the date stipulated for final payment, etc. The Gujarat Act also empowers the Civil Court under Section 30 to reopen certain transactions and to limit the interest recoverable. Section 32 of the Gujarat Act empowers the borrower to deposit the money before a Civil Court and the civil Court to assume jurisdiction of the adjudication of the dispute - Interestingly, Gujarat Act, 2011 tacitly recognizes the regulation of NBFCs under the RBI Act. Yet the State got the assent of only the Governor. The Kerala Act and the Gujarat Act will have no application to NBFCs registered under the RBI Act and regulated by RBI. Therefore, all the appeals filed by NBFCs against the judgment of the Kerala High Court are allowed. Likewise the appeals filed by the State of Gujarat against the judgment of the Gujarat high Court are dismissed.
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2022 (5) TMI 701
Dishonor of Cheque - requirement of deposit 20% of the amount of fine or compensation - scope of amendment to section 148 of NI Act - retrospective or prospective - It is submitted that the newly added Sections 148 and 143A of the NI Act came into force on 1st September, 2018, whereas the appeal had been filed on 4th April, 2018, that is, before the said amendment, hence, the matter did not fall in the ambit of the same and the application under Section 148 of the NI Act in itself was not maintainable? - HELD THAT:- The language of the provision is silent on the point that at which stage the application under Section 148 of the NI Act can be filed in an appeal against conviction under Section 138 of the NI Act, whether it may be filed at the first instance at the stage of initiation of the proceedings or at any stage during the pendency of appeal, and whether the provision is applicable to the appeals filed prior to the amendment - Keeping in view the objective of the amendment, it is proper to say that to avoid frivolous, unnecessary and unscrupulous litigations and proceedings, the Court concerned may take the required steps to ensure that the appellant has approached the Court with a genuine and real case against the order of conviction and is not wasting the time and resources of the judicial machinery only to delay his conviction and punishment thereof. Such a check on filing of appeals cannot be said to be limited to the cases arising only after the amendment. If it is the intention of the legislature to provide for an effective measure to deal with the menace of unnecessary litigations, then such measure may be intended to be applied to cases where the proceedings under appeal are still underway and have been pending for years. In case of Section 148 of the NI Act, there is no substantive right that is being taken away by the enforcement of the amendment - the argument that Section 148 is not retrospective is rejected. The order passed by the learned ASJ could not have been said to be in excess of power, to the extent of imposition of the fine of 20% of the amount. Whether the condition as imposed by the learned ASJ, that the suspension of sentence will be vacated in case the fine amount is not deposited within the stipulated period, amounted to modification or review of order and hence, impermissible by law? - HELD THAT:- Section 362 makes it clear that the bar on alteration of judgment or order is on the judgment or final order and not just any order passed during the pendency of the proceedings, including any interlocutory order. The words used in the provision are while disposing of a case and the bar is hence, only for final orders and judgments that finally decide the fate of the case and dispose it off - The general practice under Section 148 of the NI Act is that the Court concerned while passing the order considering suspension of sentence, imposes the condition of payment of atleast 20% of the fine/compensation amount and if the accused/convict fails to abide by or comply with any condition, as imposed upon him while grating bail and/or suspension of order, the concerned Court may make a finding to the effect of cancelling the bail of the convict/appellant. Nevertheless, the bail or suspension of sentence does not stand automatically cancelled in cases where a fine or compensation has been levied on the appellant under Section 148 of the NI Act and is not deposited by him as per the directions of the Court concerned. It is true that Section 148 of the NI Act does not provide for any sanction or punishment for non-payment of the fine / compensation amount, however, the same is to be decided by the Court concerned in accordance with the facts and circumstances of each case, the sentence in question, the material on record, the likelihood of the appellant to evade the process of justice and such other factors - The learned ASJ passed the order in contradiction to the provision when it granted only a month s time to deposit the payment of 20% of the fine/compensation amount, when Section 148 itself makes provision for a payment within sixty days which may be extended for thirty days but not thereafter. Hence, the impugned order was contrary to law and illegal since the learned ASJ did not honour the period prescribed under the provision. Learned ASJ further, reviewed his order dated 5th April, 2018 while passing the impugned order and he did not have the power to impose such a condition on the petitioners that took away the liberty granted by the same Court, four years before the impugned order. Since, it has been established that the applicability of Section 148 of the NI Act will be extended to appeals arising out of complaint cases that have been filed prior to the amendment, it is found that the learned ASJ was not wrong in adjudicating upon an application under section 148 of the NI Act, at the given stage, and imposing the cost/fine/compensation of 20% of the amount imposed by the learned Trial Court. Hence, to the point of retrospectivity, this Court is satisfied that the contentions and grounds raised on behalf of the petitioners do not stand ground in the peculiar facts and circumstances of this case - it is found that the order passed was impermissible by law and not in accordance with the statute, for the reason that, firstly, the period prescribed for depositing fine awarded under the provision is of sixty days which may be extended for thirty days, yet the learned ASJ only granted a period of one month to the petitioners to deposit 20% of the fine/compensation in favour of the complainant, and secondly, imposing the condition of vacation of suspension of substantive sentence amounted to a review of its own order which is unsustainable by law. Petition allowed.
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