TMI Tax Updates - e-Newsletter
May 25, 2021

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise

Articles

1. Whether, National e-Assessment Centre New Delhi is also not properly equipped and trained? Or just work is being shown by UN-necessary re-collection of documents and information.

   By: DEVKUMAR KOTHARI

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. Income Tax (CBDT) Due Date Extended beyond May, 2021

   By: CSLalit Rajput

4. Code on Wages, 2019: 3rd Handholding Release

   By: Vivek Jalan

News

1. First consignment of GI certified Shahi Litchi from Bihar exported to the U.K

2. Auction for Sale (Re-issue) of ‘4.26% GS 2023’, and ‘5.85% GS 2030’ and ‘6.76% GS 2061’

3. Shri Piyush Goyal, Shri Dharmendra Pradhan and Shri Mansukh Mandaviya interact with the industry leaders on preparedness for Cyclone Yaas;

4. India attracted highest ever total FDI inflow of US$ 81.72 billion during 2020-21, 10% more than the last financial year

5. Minister of State for Finance and Corporate Affairs Shri Anurag Singh Thakur launches 1st Phase of MCA21 Version 3.0

6. Government of India Condemns False Reporting on Cairn Legal Dispute

Highlights / Catch Notes

Income Tax

• High Court Rules Transfer of Appeals Between ITAT Benches Unrelated to Assessment Jurisdiction Shift.

  Case-Laws - HC : Centralization of the cases - Transfer of case from one tribunal to another i.e from ITAT Bangalore and ITAT Mumbai - It is not a case before any AO. Petitioner may have expressed no objection to transfer of assessment jurisdiction from the AO at Bangalore to the AO at Mumbai after assessment for the assessment years covered by the search period, but that cannot be used to non-suit the petitioner in his challenge to transfer of appeals from one Bench of the Tribunal to another Bench in a different State and in a different Zone. The two are altogether different and have no nexus with each other. So, the preliminary objection raised on behalf of the respondents on this count has to fail. - HC
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• High Court Grants Relief in Faceless Assessment Case Due to Insufficient Response Time u/ss 143(3), 143(3A), 143(3B).

  Case-Laws - HC : Assessment passed u/s 143(3) read with Sections 143(3A) and 143(3B) - faceless assessment scheme - No doubt, in this case, such show cause notice along with a draft assessment order has been issued on 12.04.2021. However, the time extended to the assessee to avail of the options under the draft assessment order is insufficient, insofar as the petitioner has been called upon to avail one of the options set forth, by 14.04.2021. The show cause notice and the accompanying draft assessment order have been received by the petitioner by e-mail on 13.04.2021. Thus 24 hours is available to the petitioner to comply with the same. - Relief granted - HC
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• Trust Registration Denied: Missing Instrument u/s 12AA, Rule 17(A)(a) Documents Unverified, Case Sent for Re-examination.

  Case-Laws - AT : Registration of the Trust u/s 12AA denied - Rule 17(A)(a) show that when the trust is not created under an instrument it is impossible to produce any constitutive document hence the rule requires production of evidential documents i.e. the document evidencing the creation of trust. We observe that specific evidential documents furnished by the assessee in the paper book as referred above in this order has not been verified and examined by the ld. CIT(Exemption) in the context of evidential documents. - Matter restored back - AT
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• Reopening Assessment u/s 147 Ruled Unsustainable; Tribunal's Decision Blocks Income Classification Change by Revenue Authorities.

  Case-Laws - AT : Reopening of assessment u/s 147 - Income from other sources or business income - The impugned reopening itself is not sustainable in the light of the alleged twin reasons recorded by the Assessing Officer which have been decided in the tribunal first round that the same did not give rise to any taxable income which could be stated to have escaped assessment in assessee's case. It is thus apparent that the impugned additions be it as income from 'other' sources or 'business', both are contrary to the tribunal's remand directions closing all options of assessing the entire credit, debit as well as estimates thereof would not help the Revenue's cause. - AT
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• Assessment Orders: Invalid Orders u/s 263 Cannot Be Revised for Validity; Not Prejudicial if Unsustainable by Law.

  Case-Laws - AT : Revision u/s 263 - Assessment u/s 153C - revision of invalid assessment - the present proceedings being collateral proceedings and if the assessment order is inherently invalid or bad in law, then validity of such an order can be challenged at any stage in the collateral proceedings including the proceedings u/s.263, because invalid order cannot be set aside or can be revised to make it valid. Though assessment order may be said to be erroneous but certainly it cannot be held prejudicial to the interest of the revenue in such circumstances when assessment order itself is unsustainable, in view of the provisions of law - AT
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• Deemed Dividend Case: Business Advance to Director Reviewed u/s 2(22)(e) of Income Tax Act, Remanded for Further Assessment.

  Case-Laws - AT : Deemed dividend u/s.2(22)(e) - business advance in the hands of the assessee (Director) to purchase the property on behalf of Company - Matter remanded back to AO only for the purpose of examining, firstly whether the company had given the advance to the assessee for the purpose of acquisition of an asset/ property to be used for the purpose of company and; secondly, in whose name property has been finally registered. - AT
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• Revenue Authorities Reject Books of Accounts u/s 132; Cash Shortage Not a Valid Reason for Rejection.

  Case-Laws - AT : Rejection of books of accounts - This is case of action u/s 132 by the revenue wherein the cash kept at the residence of the employee could well be examined at the premises or questioned u/s 132(4). The revenue has not questioned the shortage of cash during the search proceedings. - Even so, shortage of cash cannot be a reason to reject the books of accounts and recomputed gross profit based on the performance of the company for the last three years. - AT
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• Using Unverified Notes for Tax Additions Unfair; Inflated Profit Claims Deemed Speculative, Not Factual.

  Case-Laws - AT : Undisclosed income - The service tax ledger account shows flat wise tax paid from 2011 to 2016 even on individual payments credited. Hence, just on the basis of one loose sheet of paper with miscellaneous, unconfirmed 86 uncorroborated notings, to make an addition is not fair as this would also mean a suppressed sale of of about 25% against the shown project revenue and jack up the profit to 30% (5.43% already shows) which appears to be astronomical as well as impractical on a single project. The addition dwells more in the realm of presumption than real. - AT
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• Transaction Proven Commercial, Not Deemed Dividend; Authorities Wrong in Applying Section 2(22)(e) of Income Tax Act.

  Case-Laws - AT : Deemed dividend addition u/s 2(22)(e) - The assessee produce sufficient evidence on the record to justify that it was a commercial transaction between the parties not only in assessment year under appeal but in preceding and subsequent years, therefore, the authorities below were not justified in invoking provision of section 2 (22) (e) of the IT Act against the assessee for making the addition. - AT
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Customs

• Court Quashes IGST on Oxygen Concentrators Imported as Gifts, Citing Article 14 Violation and Unconstitutional Tax Burden.

  Case-Laws - HC : Levy of IGST on oxygen concentrators - right to health and affordable treatment - Whether the State's action, of imposing IGST on oxygen concentrators, which were directly imported by individuals, albeit free of cost, without the aid of a canalising agency runs afoul of Article 14 of the Constitution? - The exclusion of individuals, such as the petitioner, from the benefits of the 03.05.2021 notification only because they chose to receive the oxygen concentrators as a gift, albeit directly, without going through a canalizing agency is, in our opinion, violative of Article 14 of the Constitution - The imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts [i.e. free of cost] for personal use, is unconstitutional - the declaration notification no. 30/2021 dated 01.05.2021 is quashed. - HC
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• Court Orders Expedited Adjudication on IGST Refund Fraud Case After Prolonged Seizure of Exported Goods Since 2020.

  Case-Laws - HC : IGST refunds - allegation of exported to avail undue export benefits - Provisional release of goods - In the instant case, the impugned seizure memo is dated 28.08.2020. Already sufficient time has elapsed. Therefore, it would be in the interest of justice if the same is adjudicated early - HC
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• Trading house accused of breaching 'actual user' condition on maize import license; court order allegedly ignored.

  Case-Laws - HC : Trading House - license for import of Maize in concessional rate of duty - allegation of breach of the ‘actual user’ condition in the licences by the petitioner - Validity of the ‘actual user’ condition or whether it was mandatory or not is the central issue. Refusal of respondent No.1 to adjudicate on this issue is not only violative of the directions of this Court as contained in the order dated 20.11.2013 but also amounts to non-exercise of jurisdiction vested in him. - HC
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IBC

• Supreme Court Reviews Insolvency Process Validity for Personal Guarantors under November 15, 2019, Central Government Notification.

  Case-Laws - SC : Insolvency proceedings against the Personal Guarantors - Vires and validity of a notification dated 15.11.2019 issued by the Central Government - It is clear that Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee. The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity. - SC
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• Corporate Debtor Faces Penalty for Violating IBC Moratorium by Filing Customs Duty and Estate Claims During CIRP.

  Case-Laws - Tri : Penalty proceedings against Corporate Debtor - contravention of the moratorium or not - submission of claim towards the Customs duty and Estate dues after initiation of CIRP - The message set out by this salutary provision is loud and clear that the provisions of the Code would come into operation notwithstanding anything inconsistent therewith contained in any other law and such law shall cease to have any effect till such time the provisions of the Code remains applicable. - Tri
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• Resolution Applicant Can Withdraw Plan Before Tribunal Approval Due to Financial Burdens, Highlighting Insolvency Process Flexibility.

  Case-Laws - Tri : Withdrawal of Resolution Plan after approval of the plan by CoC and pending approval by this Tribunal - The Resolution Applicant cannot be compelled to perform and execute the Resolution Plan when he apprehends huge losses, and should be permitted to withdraw the Plan submitted by him for approval of this Adjudicating Authority - Tri
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Central Excise

• High Court advises responding to show cause notice on CENVAT Credit for transport charges; discusses "place of removal" and limitation period.

  Case-Laws - HC : Challenge to the Show cause notice (MTC) - CENVAT Credit - transportation charges incurred in transportation of its products from its factories / depots to the customer places - place of removal - extended period of limitation - It would be more appropriate if petitioner responds to the impugned show cause-cum-demand notice by filing reply and thereafter if respondent No.3 is not satisfied with the show cause reply, the matter may be adjudicated by the adjudicating authority - HC
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• Petitioner to receive interest on refunds u/s 11BB of Central Excise Act, 1944; payment due in 3 months.

  Case-Laws - HC : Grant of interest on refund amount - Petitioner would be entitled to interest under section 11BB of the Central Excise Act, 1944 on the amounts refunded to it. Respondent Nos.2 and 3 shall work out the interest amount payable to the petitioner in respect of the refund claims for the relevant periods which shall be paid to the petitioner within three months from the date of receipt of a copy of this judgment and order - HC
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Case Laws:

• Income Tax

• 2021 (5) TMI 739
  Centralization of the cases - Transfer of case from one tribunal to another i.e from ITAT Bangalore and ITAT Mumbai - Transfer of cases u/s 127 - Institution of cases - Assessment u/s 153A - search and seizure action carried out in the business premises of the petitioner under section 132 was invalid as no satisfaction note was recorded prior to the search and seizure as is the requirement under section 132 - HELD THAT:- Though provisions of the Civil Procedure Code, 1908 may not be applicable to the Act as well as to proceedings before the Tribunal, nonetheless as a matter of principle, we can advert to section 20 thereof, which says that every suit shall be instituted in a court within the local limits of whose jurisdiction the defendant or in the case of multiple defendants, each of the defendants resides or carries on business or personally works for gain. This principle finds manifestation in clause 4 of the Standing Order. Whether it be a suit or an appellate proceeding before the Tribunal the place of institution of the suit would be where the defendants reside or works for gain and in case of appeal under the Tribunal Rules where the AO is located. Merely because for assessment years prior to assessment year 2005-06, the Assessing Officer was at Mumbai or for the subsequent assessment years i.e. subsequent to assessment year 2008-09 the Assessing Officer is at Mumbai would be no ground to transfer a pending appeal or appeals pertaining to assessment years 2005-06 to 2008-09 from one Bench of the Tribunal in a different State / Zone to another Bench of the Tribunal in another State / Zone. Petitioner has explained and it has not been denied that post search and seizure assessments for the four assessment years under consideration were carried out in Bangalore along with other cases following centralization of assessment. Now for assessment years subsequent to assessment year 2008-09 the assessment jurisdiction of the petitioner has been reverted back to Mumbai and conferred upon DCIT1(2)(2), Mumbai. This would not mean DCIT-1(2)(2) Mumbai to be the Assessing Officer for the four assessment years i.e. assessment years 2005-06, 2006-07, 2007-08 and 2008-09 in respect of which Assistant Commissioner of Income Tax, Central Circle-2(1), Bangalore continues to be the AO and as a consequence the respondent in the subject appeals; DCIT-1(2)(2), Mumbai is not and cannot be the respondent in the said appeals. Petitioner is the appellant in all the four subject appeals before the Bangalore Bench of the Tribunal. In other words it is the petitioner who had filed the appeals. Petitioner does not want the appeals to be transferred from Bangalore to Mumbai and wants to prosecute the appeals at Bangalore where we have seen the appeals were rightly filed. Ordinarily if a court has jurisdiction to hear a case, the case ought to proceed in that court only. This principle can certainly be extended to appeals before the Tribunal. In such circumstances transfer cannot be forced upon the appellant i.e. the petitioner against its express objection. As seen the application for transfer was filed by the Commissioner of Income Tax-1, Mumbai before the Vice President of the Tribunal on 12.08.2013; subsequently, Chief Commissioner of Income Tax (OSD), Mumbai addressed a letter dated 11.04.2019 to the President of the Tribunal requesting transfer of the appeals from Bangalore Bench to Mumbai Benches. Neither the Commissioner of Income Tax-1, Mumbai nor the Chief Commissioner of Income Tax (OSD), Mumbai who had filed the applications for transfer are respondent in the subject appeals. Therefore not being parties to the appeals, they were not competent to make the applications for transfer. In such circumstances the applications for transfer of appeals were invalid and on such invalid applications no order for transfer of appeals could have been passed. In so far the contention of the respondents that it is not open to the petitioner to object to transfer of the appeals because it did not object to transfer of jurisdiction under section 127, in our view the said contention has got no substance at all. Section 127 of the Act deals with transfer of any case from one AO to another AO. As deals with transfer of assessment jurisdiction from one AO to another AO. While certainly the appropriate authority under section 127 has the power and jurisdiction to transfer a case from one Assessing Officer to another Assessing Officer subject to compliance of the conditions mentioned therein, principles governing the same cannot be read into transfer of appeals from one Bench of the Tribunal to another Bench that too in a different State / Zone, for the simple reason that it is not a case before any AO. Petitioner may have expressed no objection to transfer of assessment jurisdiction from the AO at Bangalore to the AO at Mumbai after assessment for the assessment years covered by the search period, but that cannot be used to non-suit the petitioner in his challenge to transfer of appeals from one Bench of the Tribunal to another Bench in a different State and in a different Zone. The two are altogether different and have no nexus with each other. So, the preliminary objection raised on behalf of the respondents on this count has to fail. Having regard to the mandate of clause (2) of Article 226 of the Constitution of India, this Court certainly has the jurisdiction to entertain the writ petition. In so far filing of appeal instead of writ petition is concerned, a careful reading of section 260A(1) would go to show that an appeal shall lie to the High Court from every order passed in appeal by the Tribunal if the High Court is satisfied that the case involves a substantial question of law. Mr. Desai has laid great emphasis on the expression every order to contend that an appeal shall lie from the order dated 19.03.2020 passed by the Tribunal as well. We are afraid we cannot accept such a submission. Every order in the context of section 260A would mean an order passed by the Tribunal in the appeal. In other words, the order must arise out of the appeal; it must relate to the subject matter of the appeal. The order with which we are concerned is order dated 19.03.2020. It is not an order on the merit of the appeal. In other words, it is not an order passed in the appeal. It is an order related to transfer of the appeal. Such an order would be beyond the scope and ambit of sub section (1) of section 260A of the Act. Having regard to the discussions made above and upon thorough consideration of the matter, we are of the view that both the orders dated 19.03.2020 and 20.08.2020 are wholly unsustainable in law and are accordingly set aside and quashed.

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• 2021 (5) TMI 736
  Assessment passed u/s 143(3) read with Sections 143(3A) and 143(3B) - faceless assessment scheme - HELD THAT:- Prior to passing of the impugned order, the faceless assessment scheme requires that a show cause notice be issued to the concerned assessee accompanied by a draft assessment order setting out the additions proposed to be made. The assessee in question is given an opportunity to either accept the proposed modifications or to object to the same or to request a personal hearing in order to put forth its submissions to present its case, after filing of the written reply. No doubt, in this case, such show cause notice along with a draft assessment order has been issued on 12.04.2021. However, the time extended to the assessee to avail of the options under the draft assessment order is insufficient, insofar as the petitioner has been called upon to avail one of the options set forth, by 14.04.2021. The show cause notice and the accompanying draft assessment order have been received by the petitioner by e-mail on 13.04.2021. Thus 24 hours is available to the petitioner to comply with the same. In the light of the apparent violation of the principles of natural justice, the impugned order is set aside. The petitioner will comply with the directions in notice dated 12.04.2021 and intimate the Assessing Officer accordingly within a period of three (3) weeks from today. The respondents will facilitate receipt of such reply by the petitioner by enabling the portal to receive the objections.

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• 2021 (5) TMI 735
  Disallowance of capital work-in-progress - HELD THAT:- From the orders of the authorities below, it is clear that the assessee has debited to the capital expenditure in the P L account in respect of those mines which are not in operation or the mines were unsuccessful for coal mines. It is also clear that the breakups were filed before the CIT(A) which has been incorporated by him in his order. We find that in most of the cases mines were closed and no operations could be carried out, the capital work in progress relating to that mine development expenditure could not be capitalized. Therefore, the capital work in progress relating to the mine development expenditure incurred was written off since no asset could be created. Any expenditure which does not bring any additional advantage to the business of the assessee is revenue expenditure. The expenditure was basically of revenue nature and incurred wholly and exclusively for the purpose of business. The assessee had also filed detailed written submissions before the CIT(A) and had relied on number of judgments. We set aside the order of the CIT(A) on this issue and accordingly, allow the grounds raised by the assessee on this issue in the respective AYs. Interest receivable from subsidiary company - HELD THAT:- Subsidiary company APHMEL was a sick company as declared by BIFR during January 1993 whose net worth was totally eroded and the interest receivable was also uncertain. Against the BIFR order, M/s APHMEL preferred an appeal before the AAIFR and vide order dated 05/09/2005, the matter was remanded back to BIFR by AAIFR. AO observed that the interest should be offered as income by the assessee on the accrual basis is not correct in respect of the interest receivable from sick company if the matter is pending before the BIFR. There is no certainty in regard to the interest receivable from the sick company. We find substance on the case laws relied upon by the ld. AR on this issue - we delete the addition made on this issue with a rider that the AO is free to make addition when the interest shall be received by the assessee company in the year in which it is received by the assessee. Accordingly, the grounds raised by the assessee on this issue are allowed. Prior period expenditure - HELD THAT:- We find that the details were filed before the AO during the course of assessment proceedings and rejecting the details, the AO made the addition. In the appellate proceedings before the CIT(A), again the details were provided and the CIT(A) has called for a remand report from the AO. The details were provided to the AO during the remand proceedings were accepted by the AO and he held that the expenditure should be allowed when it is crystalized. Accordingly, the AO was agreed as per his remand report that these prior period expenditures should be allowed in the year in which it is crystalized. Once, in the remand proceedings, the revenue accepts the plea of the assessee, then, there should not be further scope to confirm the additions made by the AO in this regard. We find substance in the submissions of the ld. AR and case laws relied in this regard quoted supra. Accordingly, we allow this ground of appeal of the assessee. TDS u/s 194A - TDS on interest on land compensation deposited in court as per court order raised in AYs 2009-10 to 2011-12 - AO observed that the assessee company paid interest on land compensation as per court order with a remark amount deposited in courts as per Court orders - HELD THAT:- The assessee has deposited the interest as per the court directions on the enhanced compensations to be paid to the pattadars. There is no doubt that the assessee was much aware in regard to the payment of interest to the pattadars, but, the assessee has not paid directly to the pattadars. From the submissions made by the assessee, it is clear that this amount has to be deposited as per the directions of the Court order. A circular has been issued by the Board in regard to the responsibility of the TDS deduction on the interest payment on compensation/enhanced compensation. Now coming to the case on hand, it is clear that the assessee has deposited the amount with the Court, but, it has not actually paid to the actual recipients directly i.e., pattadars. On analysis of the above cited section and Circulars, it is clear that the assessee is not responsible for deducting tax deduction at source and assessee is also not sure that when the amount shall be paid to the actual recipients/pattadars. In our considered opinion, the addition made in this regard is not sustainable in the eyes of law and, therefore, the addition is deleted. Accordingly, grounds raised on this issue are allowed in favour of the assessee. Loss due to exchange fluctuation on interest on capital borrowed in forex for acquisition of machinery, after such asset is put to use - HELD THAT:- We find substance in the submissions made by the ld. AR that once capital assets are put to use thereafter interest expenditure in respect of the loan taken for purchase of the capital assets is treated as revenue expenditure as per Explanation 8 to section 43(1) of Income Tax Act. We agree with the submissions made by the ld. AR, but, none has provided the actual date of put to use the machinery into the business of the assessee. Therefore, this issue is remitted back to the file of AO for limited purpose for verification for actual date of put to use the machinery and if the interest paid by the assessee is after the machinery put to use then the claim of the assessee is to be allowed as a revenue expenditure and if it is found otherwise, then AO will decide the issue as per Explanation 8 to section 43(1) of Income Tax Act. This ground is treated as allowed for statistical purposes. Depreciation on mine development to 10% OR 15% claimed - HELD THAT:- On perusal of the submission of the AR of the assessee it has been observed that in assessee s own case while granting investment allowance U/s 32A of the IT Act, similar expenditures incurred by the assessee under the head plant and machinery were decided in favour of the assessee and held that it was plant and machinery by the Hon ble jurisdictional AP High Court as relied upon by the assessee. Further the assessee has relied on the decision of the Hon ble SC in case of Karnataka Power Ltd. [ 2000 (7) TMI 72 - SUPREME COURT] is squarely applicable to the facts of the present case. The Ld. CIT (A) has not accepted this judgement of Hon ble SC holding that it relates to Investment Allowance u/s 32A of the Income Tax Act, 1961. Once similar expenditures have been accepted by the Hon ble SC as quoted supra , we are of the view that the expenditures incurred by the assessee were necessary for excavation of coal from mines and shafts . In view of the above observations, we allow this ground of appeal of the assessee by holding that the assessee is entitled to charge depreciation @ 15% under the block of assets plant and machinery , as against 10% made by the AO . Prior period expenditure disallowance enhancement of expenses by CIT-A- HELD THAT:- CIT(A) has enhanced the prior period expenditures as claimed by the assessee. In this regard, in our considered opinion, we remit this matter back to the file of the AO for verification when the expenditure was crystalized. If the AO satisfied that the assessee has rightly claimed prior period expenditure and then allow the claim of the assessee following the decision taken by us in for AYs 2005-06 to 2010-11. Accordingly, the AO is directed to decide the issue in accordance with law. Thus, this ground is allowed for statistical purposes. Short deducted the TDS - whether AO has rightly made the disallowance u/s 40(a)(ia)? - CIT(A) deleted the disallowance made by the AO - HELD THAT:- The assessee has made payments which were required to be deducted tax at source as per the prescribed rate in force as per chapter XVIIB, which has been narrated by the Tax auditor in Form 3CD as per annexure - IX of the Tax audit report . On perusal of the orders of the authorities below, it is clear that the assessee has deducted TDS on the above payments at lower rate as prescribed in the Act. The section 40(a)(ia) is applicable only in those cases where tax has not been deducted at all. But in the given case, the assessee has deducted tax at lower rate. The assessing Officer is not justified to make disallowance U/s 40(a)(ia) on the payments made and debited into the Profit Loss Account on the ground that assessee has not deducted TDS at full rate as was in force. TDS u/s 194A - HELD THAT:- The assessee has made payments which were required to be deducted tax at source as per the prescribed rate in force as per chapter XVIIB, which has been narrated by the Tax auditor in Form 3CD as per annexure - IX of the Tax audit report . On perusal of the orders of the authorities below, it is clear that the assessee has deducted TDS on the above payments at lower rate as prescribed in the Act. The section 40(a)(ia) is applicable only in those cases where tax has not been deducted at all. But in the given case, the assessee has deducted tax at lower rate. The assessing Officer is not justified to make disallowance U/s 40(a)(ia) on the payments made and debited into the Profit Loss Account on the ground that assessee has not deducted TDS at full rate as was in force.

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• 2021 (5) TMI 730
  Chargeability of the interest on compensation or enhanced compensation - c ompulsory acquisition of agricultural land - Exemption under section 10(37) or Income from Other Sources under section 56 - Whether CIT (Appeals) is right in law in holding that the interest received by the Assessee under section 28 of the Land Acquisition Act, 1894 during the impugned year on the compulsory acquisition of agricultural land is in the nature of compensation and exempt under section 10(37) and is not chargeable to tax under the head Income from Other Sources under section 56 of the Income Tax Act, 1961?- HELD THAT:- As noticed that a similar issue having identical facts has already been decided in the case of ITO vs. Shri Lakshmi Chander Gupta (HUF) [ 2021 (2) TMI 883 - ITAT CHANDIGARH] no valid ground to interfere with the findings given by the Ld. CIT(A). Appeals of the department are dismissed.

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• 2021 (5) TMI 729
  Validity of reopening of assessment u/s 147 - HELD THAT:- During the course of search proceedings in the case of Shirish Chandrakant Shah, statements were recorded from various persons on oath. Similarly statement of Shri Shirish Chandrakant Shah was recorded u/s.132(4) of the Act on 13/04/2013 wherein he had accepted that he is engaged in providing accommodation entries against receipt of cash. In the said statement, he also explained the modus operandi followed by him in providing various accommodation entries to various people. From the aforesaid statements, AO observed that M/s. Avance Technologies Ltd.and M/s. Prabhav Industries Ltd., were controlled and managed by the Shri Shirish Chandrakant Shah and these companies are bogus entities from whom the assessee has received share application money against cash. Since these evidences were gathered by the ld. AO pursuant to search and seizure operation conducted in the case of Shri Shirish Chandrakant Shah, the said information constitutes tangible information and accordingly, assessment of the assessee was duly reopened. In the instant case, the reopening has been made within four years from the end of the relevant assessment year. We hold that tangible information was very much available with the ld. AO to trigger the process of reopening and hence, the reopening is held to be valid and accordingly, the ground No.1 raised by the assessee challenging the validity of reopening of assessment is dismissed. Unexplained cash credit u/s.68 - Capital share gain with share premium - All the transactions are routed through account payee cheques in the regular banking channels. The justification for premium was also duly made by the assessee by giving explanation in writing. This clearly proves the genuineness of the transactions. We find that the ld. AO after receiving all the information in the form of various documentary evidence remained silent. AO did not resort to make any verification in any manner whatsoever either by issuing notice u/s.133(6) of the Act or issuing summons u/s.131 of the Act to the concerned shareholders in order to exmine the veracity of such documents. We find that the ld. AO without resorting to any sort of verification in the manner known to law, had simply proceeded to make addition in the hands of the assessee by treating the receipt of share capital and share premium as accommodation entries merely by relying on the statement recorded from Shri Shirish Chandrakant Shah and his key employess. In any case we also find that the statement of Shri Shirish Chandrakant Shah and his key employees were never furnished to the assessee for its rebuttal. Hence, the said statements cannot be relied upon as sole basis for framing addition in the hands of the assessee. We hold that the addition made u/s.68 of the Act in the case of the assessee is merely based on surmise and conjecture and absolutely without any basis and absolutely without any verification in the manner known to law. Accordingly, we have no hesitation in deleting the addition made u/s.68 of the Act in the case of the assessee. Receipt of share capital and share premium are not accommodation entries, there cannot be any addition that could survive on account of commission u/s.69C.

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• 2021 (5) TMI 727
  Disallowance u/s.14A - HELD THAT:- DR is fair enough not to controvert this undisputed fact that the issue is covered in favour of the assessee. With the assistance of ld. representatives, we have gone through the decision of ITAT in the case of assessee itself on the issue of disallowance made u/s. 14A adjudicated [ 2019 (9) TMI 910 - ITAT AHMEDABAD] . Addition on account of interest u/s. 244A - AO has made addition on account of interest received u/s. 244A of the Act for the assessment year 2010-11 and 2012-13 on the basis of detail shown in ITS - HELD THAT:- The claim of the assessee that it had not received interest, was not verified at the level of lower authorities. Therefore, we are of the view that that it will be appropriate to restore this case to the file of Assessing Officer for deciding afresh after verification and examination of the claim of the assessee that it has neither received any refund for assessment year 2009-10 and 2012-13 nor received any intimation regarding the same. Therefore, this ground of the assessee is allowed for statistical purposes.

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• 2021 (5) TMI 726
  Registration of the Trust u/s 12AA denied - Rejecting their application in form no. 10A for the approval u/s. 12AA - HELD THAT:- The Clause (a) of rule 17A of Income Tax Rules requires that the application of registration under section 12A of a charitable or religious trust or institution would be accompanied by the following documents namely, where the trust is created or the institution is established, under an instrument, the instrument in original and where the trust is created or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution. Thus, rule 17A nowhere envisages the existence of a trust deed or its registration. The factum of existence of trust can also be established by producing documents evidencing the creation of the trust. Section 12AA lays down the procedure for granting Registration. Rule 17(A)(a) show that when the trust is not created under an instrument it is impossible to produce any constitutive document hence the rule requires production of evidential documents i.e. the document evidencing the creation of trust. We observe that specific evidential documents furnished by the assessee in the paper book as referred above in this order has not been verified and examined by the ld. CIT(Exemption) in the context of evidential documents. In view of the above facts and circumstances, we would deem it proper to set aside the impugned order to the file of the ld. CIT(Exemption) for deciding afresh after considering the specific documents placed - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (5) TMI 725
  Reopening of assessment u/s 147 - Income from other sources or business income - receipt towards land development - receipt in assessee s credit side without carrying out any development works - second round of appeal - HELD THAT:- A perusal of the Tribunal s order in first round remand directions makes us clear that the same have already sealed the ultimate outcome of the instant lis . This is for the reason that learned co-ordinate bench had made it clear inter alia concluded that it could not uphold the treatment of the twin receipt amounts received by the assessee as its taxable income. More particularly in view of the fact that it had not performed any development work at all. Learned co-ordinate bench further observed that neither the said disallowance of the entire expenditure could be agreed with nor these receipts could be subjected to estimation as well. These three key findings make it evident that the department s action seeking to assess the assessee s entire receipts credit or debit side as well as estimation, thereof in case of M/s. NCCPL (supra) already stands decided against the Revenue and in favour of the tax payer. We therefore are of the opinion that there is nothing left in the instant second round for to delve deeper on the impugned issue(s). The purpose of reopening mechanism was only to assess the assessee qua these receipts followed by the alleged bogus invoices wherein the learned coordinate bench had made it clear in the former round itself that neither of them could be taken as assessee s income. We thus hold that merely because the Assessing Officer has added these receipts as income from other sources or the CIT(A) as business income (supra), does not make any difference at all. This is more particularly for the reason that the assessee had already succeeded qua assessment of the very sum as income in the first round as set aside in Section 254 proceedings. There is hardly any dispute that the Assessing Officer had invoked his section 148/147 jurisdiction for the reason that the survey exercise dt. 20.7.2007 had witnessed the impugned receipt in assessee s credit side without carrying out any development works since involving as bogus invoices only. Learned co-ordinate bench s first round order had admittedly reversed the said twin reasoning that neither of them could be assessed as assessee s income. Faced with this situation, we hold that once the impugned reopening mechanism based on this twin reasoning itself was decided against the department on merits, there is no reason left to support the impugned reopening since its very foundation itself has no legs to stand. The impugned reopening itself is not sustainable in the light of the alleged twin reasons recorded by the Assessing Officer which have been decided in the tribunal first round that the same did not give rise to any taxable income which could be stated to have escaped assessment in assessee s case. It is thus apparent that the impugned additions be it as income from other sources or business , both are contrary to the tribunal s remand directions closing all options of assessing the entire credit, debit as well as estimates thereof would not help the Revenue s cause. We thus quash the impugned reopening as well in both these appeals.

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• 2021 (5) TMI 724
  Deduction u/s 80IA - consortiums and JVs entitlement to claim 80IA deduction relief - CIT(A) held that the provision of deduction u/ s 80IA(4) is applicable to constituent of the JVI Consortia without appreciating that the assessee has not entered into an agreement with the Central Government or a State Government or a Local Authority or any other Statutory Body - HELD THAT:- Coming to Revenue s first and foremost argument regarding consortiums and JVs entitlement to claim 80IA deduction relief, we make it clear that the tribunal s co-ordinate bench order in M/s. Transtroy India Limited(supra) has already decided the same issue in assessee s favour and against the department. No contrary judicial precedent has been quoted at the Revenue s behest to rebut the same. We thus, uphold the CIT(Appeals) findings qua this former grievance canvassed from the revenue s side. Assessee s status as a developer or a mere works contractor u/s. 80IA(4) and 80IA Explanation - We note that the Assessing Officer detailed discussion of the assessment order has made it clear that the assessee itself satisfies all the three components of development, operation, and maintenance thereof along with financial involvement and risk factor involved in the corresponding infrastructure projects. Revenue s argument raised before us goes contrary to the assessment findings therefore. We thus are of the opinion that there is neither any irregularity nor illegality in the order of the CIT(Appeals) s identical findings allowing the assessee s sec.80-IA deduction claim. Both these lower appellate orders are upheld therefore.

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• 2021 (5) TMI 723
  Disallowance u/s. 35(1)(ii) - HELD THAT:- This issue covered in favour of the assessee against revenue by the decision of SANTOSH SURESH KUMAR AGARWAL [ 2018 (9) TMI 1827 - ITAT KOLKATA] wherein the Tribunal followed the decisions of the Coordinate Bench of this Tribunal in the case of Rajda Polymers [ 2017 (11) TMI 1631 - ITAT KOLKATA] allowed the claim of the assessee. Disallowance of loss - assessee purchased and sold jute -HELD THAT:- The relevant bills and vouchers are filed before the Assessing Officer by the assessee to prove the genuineness of the transactions. There was no investigation or verification above by the Assessing Officer. No evidence was gathered to demonstrate that the claim of the assessee was wrong. The disallowance was made merely on conjectures and surmises. The Ld. CIT(A) has also not considered the evidences in the record and in one line, rejected the contention of the assessee. This is not in accordance with law. Thus we delete this disallowance. Thus we allow these two grounds of the assessee. Addition made on account of deemed interest income - HELD THAT:- We find that notional income cannot be brought tax under the scheme of the Income Tax Act as held by the Hon ble Gauhati High Court in the case of Highways Construction Co. Pvt. Ltd. [ 1992 (11) TMI 86 - GAUHATI HIGH COURT ] - Respectfully following the proposition of law laid down in those cases, we delete this addition of notional income and allow this ground of the assessee.

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• 2021 (5) TMI 722
  Revision u/s 263 - revision of invalid assessment - Assessment u/s 153C - Assessment u/s 143(3) in pursuant to notice u/s. 142(1) - whether in cases of Section 153C, the period of six years has to be reckoned from the date of recording of satisfaction note or from the date of search carried out in a case of a person provided in Section 153A? - Scope of amendment - HELD THAT:- The date of satisfaction, i.e., 25.09.2018 has to be reckoned as the date of reference from where six assessment years immediately preceding assessment years has to be construed and therefore, six preceding assessment years in this case shall be from Assessment Year 2012-13 to Assessment Year 2018-19. The instant Assessment Year, i.e., Assessment Year 2017-18 ergo would be covered in the earlier six assessment years where the assessments have to be framed u/s.153C only, whereby the Assessing Officer was required to issue a notice u/s.153C, and frame the assessment u/s.153C/143(3). Assessing Officer had issued notice u/s.142(1) and resultantly has framed the assessment u/s.143(3), treating it to be regular assessment for the year of search. The amendment to clarify this position u/s. 153C (1) was brought in the statute by the Finance Act, 2017 w.e.f. 01.04.2017, wherein it has been provided that the six preceding assessment years for the person covered u/s 153C would be same as that of the searched person covered u/s 153A. In other words, in case of the other person (i.e. person covered u/s 153C), six preceding assessment years has to be reckoned from the year of search. This amendment has been held to be prospective by the Hon ble Jurisdictional High Court in the case of CIT vs. Sarwar Agency P Ltd . [ 2017 (8) TMI 733 - DELHI HIGH COURT ] Here in this case, since the date of search is 21.07.2016, therefore, the amendment brought by the Finance Act, 2017 would not be applicable and ex consequenti the assessment for the instant Assessment Year 2017-18 ought to have been completed u/s.153C of the Act and the order of assessment dated 18.12.2018 passed u/s 143(3) in pursuant to notice u/s. 142(1) is bad in the eyes of law in view of the law interpreted and upheld by the Hon ble Jurisdictional High Court in CIT vs. RRJ Securities Ltd. [ 2015 (11) TMI 19 - DELHI HIGH COURT] and ARN Infrastructure India Ltd. v. ACIT [ 2017 (4) TMI 1194 - DELHI HIGH COURT ] It is incontrovertible that proceedings u/s. 263 are collateral proceedings of the assessment, because ld. CIT/PCIT exercise revisionary jurisdiction u/s.263 seeking to revise the assessment order on the ground that it is erroneous in so far as it is prejudicial to the interest of revenue. The edifice of the proceedings u/s 263 is the assessment order which is the original proceedings which has come to an end. However, if the original assessment order itself was invalid or illegal in terms of jurisdiction or was not in accordance with the provisions of the statute or was barred by limitation, then such an invalid order cannot be subject matter of further proceedings so as to validate the said assessment order in collateral proceedings like u/s 263. We hold that the present proceedings being collateral proceedings and if the assessment order is inherently invalid or bad in law, then validity of such an order can be challenged at any stage in the collateral proceedings including the proceedings u/s.263, because invalid order cannot be set aside or can be revised to make it valid. Though assessment order may be said to be erroneous but certainly it cannot be held prejudicial to the interest of the revenue in such circumstances when assessment order itself is unsustainable, in view of the provisions of law we set aside the impugned order passed u/s.263, as Ld. PCIT could not have revised the assessment order which itself is an invalid order. - Decided in favour of assessee.

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• 2021 (5) TMI 721
  Deemed dividend u/s.2(22)(e) - business advance in the hands of the assessee (Director) to purchase the property on behalf of Company - HELD THAT:- We do not agree with the contention that looking to large number of entries in the account between company and shareholder, then it should not be treated in the nature of loan and advances as stipulated u/s.2(22)(e). If the investment in the residential property at Gurgaon for which Board resolution was passed on 12.03.2014 was for and on behalf of the company then only any such advance will not be treated in the nature of deemed dividend u/s.2(22)(e). The Board of Directors have passed a resolution for making payment up to Rs. 5 crore to Smt. Neena Kandari for the specific purpose of purchase of residential property, solely for the purpose of Company s business or asset and even if the balance amount was invested by the assessee through her own sources, then also it does not lead to inference that property is of the assessee only. The property was meant to be used for the residence of the Directors provided by the company. To justify the name of assessee in the said property, the contention of the assessee has been that, under the RBI guidelines, housing loan can be granted only to the individual and not to the company, and therefore, instead of buying the property in company s name, it was decided to buy the property in the individual name of the Directors on behalf of the company. In support of this contention, it has been shown before us that the Builder of the flat where the assessee company intended to purchase the flat had written a letter dated 04.02.2015 to register the property in the joint name of the company as well as the Directors. Even the housing loan sanctioned by the HDFC Bank shows the company as a co-borrower. Thus, as culled out from the records placed, the property was jointly purchased by the assessee and M/s. Enrich Agro Foods Products Pvt. Ltd. We are remanding this issue to the file of the Assessing Officer only for the purpose of examining, firstly whether the company had given the advance to the assessee for the purpose of acquisition of an asset/ property to be used for the purpose of company and; secondly, in whose name property has been finally registered. The Assessing Officer shall provide sufficient opportunity to the assessee to establish and substantiated the aforesaid facts. With this observation, the appeal of the Revenue is treated as partly allowed for statistical purposes.

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• 2021 (5) TMI 720
  Disallowance u/s 14A r.w.s. 8D - HELD THAT:- The assessee has earned exempted income and the assessee has also voluntarily disallowed the expenditure to earn the exempted income. AO has not discussed anything as to why the expenditure declared by the assessee was not realistic for maintaining the investments. There may not be much difference on the quantum of work for making one rupee investment or one hundred crores or maintaining the existing investments. Once the assessee has admitted the expenses for earning the exempt income and it was not explained as to how the said expenses may not be realistic, the Assessing Officer was not correct to make disallowance under Rule 8D(2)(ii) of the Income Tax Rules and accordingly, the disallowance made under Rule 8D(2)(ii) stands deleted. So far as disallowance under Rule 8D(2)(iii) is concerned, the Assessing Officer is directed to consider only those investments for computing average value of investment which yielded exempt income during the year under consideration as per Rule 8D(2)(iii) in view of the Delhi Special Bench of the Tribunal in the case of ACIT v. Vireet Investment (P) Ltd..[ 2017 (6) TMI 1124 - ITAT DELHI] and to pass detailed order. Appeal of assessee is partly allowed for statistical purposes.

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• 2021 (5) TMI 719
  Order passed by CIT(Appeals) ex-parte - assessee has submitted that none of notices stated to be issued by the ld. CIT(Appeals) fixing the appeal of the assessee for hearing from time to time was ever received by the assessee and such non-receipt of notices resulted in non-compliance on the part of the assessee before the ld. CIT(Appeals) - HELD THAT:- We find merit in the contention of the ld. Counsel for the assessee that the appeal of the assessee was dismissed by the ld. CIT(Appeals) vide his impugned order passed ex-parte without giving proper and sufficient opportunity of being heard to the assessee and there is a clear violation of principle of natural justice. Moreover, the ld. CIT(Appeals) as per the provisions of sub-section (6) of section 250 was required to dispose of the appeal of the assessee vide an order in writing stating the points for determination, the decision thereon and the reasons for the decision. It is observed that the impugned order passed by the ld. CIT(Appeals) does not comply with these requirements. We, therefore, consider it fair and proper and in the interest of justice to set aside the impugned order passed by the ld. CIT(Appeals) ex-parte dismissing the appeal of the assessee for non-prosecution and remit the matter back to him for disposing of the appeal of the assessee afresh on merit in accordance with law after giving proper and sufficient opportunity of being heard to the assessee and by passing a well reasoned and well discussed order. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (5) TMI 717
  Disallowance u/s 14A of notional expenditure - AR submitted before us that the Ld. CIT (A) has not decided the issue with respect to addition made invoking the provisions of section 14A of the Act while computing taxable income under the normal provisions of the Act - also the issue in the assessment order U/s. 154 of the Act was with respect to the addition made invoking the provision of section 14A of the Act while computing the taxable income U/s. 115JB of the Act and hence, not related to the issue which was before the Ld. CIT (A) - HELD THAT:- With respect to the arguments advanced by the ld. AR dismissing the appeal of the assessee by the ld. CIT (A) by treating the appeal to be infructuous, we find merit in the same. The issue in the appeal against the order U/s. 154 of the Act was with respect to invoking the provisions of section 14A of the Act by computing the taxable income of the assessee U/s. 115JB of the Act. Therefore, we do not find it to be of any relevance with respect to the issue raised in the appeal before the Ld. CIT (A) which is on invoking the provisions of section 14A of the Act while computing the taxable income under the normal provisions of the Act. Hence, it is evident that the Ld. CIT (A) has not addressed the ground raised in the appeal. However as per on an earlier occasion on the identical issue of invoking the provisions of section 14A of the Act while computing the taxable income under the normal provisions of the Act, we hereby remit the matter back to the file of the ld. AO to verify whether the assessee had made the entire investment in its sister-concerns out of its non-interest-bearing funds and if found so, delete the addition made invoking the provisions of section 14A of the Act and if found otherwise, pass appropriate order in accordance with law and merit. Accordingly, both the relevant grounds raised in the appeal are disposed off.

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• 2021 (5) TMI 716
  Rejection of books of accounts - GP estimation - AO has rejected the gross profit declared by the assessee during the year @ 5.97% and the difference between the average GP rate and GP declared by the assessee of 4.21% has been taken as additional GP and added the same on the total income of the assessee - CIT (A) deleted the addition holding that the AO was not justified in rejecting the books of accounts - HELD THAT:- We have gone through the record and unable to accept with the contention of the AO that the cash has to be necessarily kept at the office premises only disregarding the explanation of the assessee that the amounts have been kept with the Manager owing to the safety of the cash at work premises - we are unable to accept the reason of the Assessing Officer that the assessee failed to give any evidences to prove that the cash was kept at the house of the employee of the company at House No. 1131/29, Jwala Pur, Haridwar. This is case of action u/s 132 by the revenue wherein the cash kept at the residence of the employee could well be examined at the premises or questioned u/s 132(4). The revenue has not questioned the shortage of cash during the search proceedings. Even so, shortage of cash cannot be a reason to reject the books of accounts and recomputed gross profit based on the performance of the company for the last three years. The action of the Assessing Officer cannot be supported and we decline to interfere with the order of the ld. CIT (A). Delay in ESI/PF Contribution - CIT (A) deleted the addition made by the AO on account of delay in ESI/PF Contribution owing to payment of the same by the assessee before the due date of filing of the return of income u/s 139(1) - HELD THAT:- Since, the decision of the ld. CIT (A) is in consonance with the judgment of Hon ble Apex Court in the case of CIT Vs ALOM Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] we decline to interfere with the order of the ld. CIT (A). Addition/Seized material - Before the ld. CIT (A), the assessee explained this page as outward records of empty reels on which wires and cables have been rolled. No financial value. No impact on revenue. - HELD THAT:- CIT (A) held that this is an outward Gate Pass has not been mentioned on it and it has no relevance with the surrender made by the assessee. There is no contrary material to prove the decision of the ld. CIT (A) was incorrect. In the absence of any material to support the addition made, the action of the ld. CIT (A) is hereby confirmed. Sundry Creditors /Non-confirmation of accounts - AO has made addition as the assessee could not submit the confirmations at the time of assessment - CIT-A deleted - HELD THAT:- The entire details have been submitted before the First Appellate Authority. The opening balances have been accepted by the AO and the closing balances have been added to the total income. The AO has not taken any step to look into the purchases made in the earlier years, thus impliedly accepting the purchases as genuine. All the relevant details and evidences have been produced before the ld. CIT (A) thus discharging the onus of proving genuineness of the transactions. We find that other than non-receipt of confirmations, the AO has not conducted any enquiry. The ld. CIT (A) has given relief after going through the documents filed to prove the transactions by going through the evidences filed in relation to each party. Since, no contrary evidences were gathered by the revenue and the case being an assessment conducted in consequence to a search, inspite of which there is conspicuous absence of any material to make the addition, we decline to interfere with the order of the ld. CIT (A). Gross Profit of AC Boxes - AO concluded that the work done by M/s. Electromech Industries, was not of that concern but was only of the assessee company, and thus, he estimated that there was manufacturing for average 300 days and 500 pieces per day on which he estimated profit of Rs. 13/- piece and made the impugned addition - The dispute is whether M/s Electromech Industries belongs to the assessee or not ? HELD THAT:- The simplest way would be to obtain the sales tax registration and other statutory requirements filed by the entity before various authorities which the revenue filed to do. From the record, we find that M/s Electormech Industries has shown income returned varying from Rs. 29.17 lacs to Rs. 44.25 lacs. The entity has also has a factory at Haridwar and hence any income determined out of the impounded or seized material pertaining to M/s Electormech Industries cannot be added in the hands of the assessee company. The addition made by the AO is hereby directed to be deleted. Excess Stock found in search - HELD THAT:- The assessee submitted that there was no quantitative difference in items of Inventory of stock found, and the difference was only because of valuation of stock which was taken during the year, whereas the stock was required to be valued at the end of the assessment year, as per cost or market value whichever is less. In the interest of justice, we hereby direct that the assessee shall produce all the relevant documents to substantiate the purchase of the stock in quantitative terms as per the books before the revenue authorities. The AO shall value the stock taking into consideration, the opening balance as per the balance sheet and the purchase invoices (at cost price) till the date of search and take an appropriate decision as per the provisions of the Act.

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• 2021 (5) TMI 714
  Undisclosed income as per disallowance on account of provisions - assessee was selected for limited scrutiny through CASS - CIT-A restricted the addition - addition on basis on a paper (loose sheet) found in possession one of the partners in the assessee firm during the course of search proceedings - HELD THAT:- The absence of the above two steps shows that he made the addition causally and without actually going into the depth of the issue and reaching conclusive findings through proper examination of evidences persons. The Skelton flats rate is coming to Rs. 3200 to Rs. 3400/- per square feet itself while the completed or fully furnished flat is sold @ 4967/- which difference if not real, would involve an adverse finding from both the service tax department as well as the SRO for tax avoidance if some flats of same measurement are sold at different rates to accommodate cash proceeds. No adverse findings have been gathered by the A.O. from these two departments in respect of the assessee s project. The service tax ledger account shows flat wise tax paid from 2011 to 2016 even on individual payments credited. Hence, just on the basis of one loose sheet of paper with miscellaneous, unconfirmed 86 uncorroborated notings, to make an addition is not fair as this would also mean a suppressed sale of of about 25% against the shown project revenue and jack up the profit to 30% (5.43% already shows) which appears to be astronomical as well as impractical on a single project. The addition dwells more in the realm of presumption than real. It is clear that the A.O. s examination of the Annexure AS-2 was very casual and not based either on the possible further enquiries or workings or on the appreciation of statements and change in the status of several flats owners. He has just made a one sided assessment based only on the loose sheet without bringing on record the other corroborative evidences. The addition made by the AO based on the loose paper, which is not conclusive evidence and, therefore, the same is not sufficient to make the addition. We found that the ld. CIT(A) has passed a speaking and reasoned order discussing all the details of the case of the assessee, therefore, we do not find any reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. This ground of the Revenue s appeal is dismissed.

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• 2021 (5) TMI 708
  Deemed dividend addition u/s 2(22)(e) - assessee had received loan from Ramsan Communications Ltd. and the receipt of loan was considered as deemed dividend and added to the income u/s 2(22)(e) - HELD THAT:- As decided in own case [ 2018 (8) TMI 1881 - ITAT DELHI] Similar transaction was accepted as commercial transaction between the parties in earlier as well as subsequent years in which interest has also been paid and no adverse inference have been drawn against the assessee, therefore, rule of consistency do apply with the income proceedings and the AO without bringing any further evidence against the assessee should not have taken a different view against the assessee. The decisions relied upon by Ld. Counsel for the assessee squarely apply to the facts and the circumstances of the case. The assessee produce sufficient evidence on the record to justify that it was a commercial transaction between the parties not only in assessment year under appeal but in preceding and subsequent years, therefore, the authorities below were not justified in invoking provision of section 2 (22) (e) of the IT Act against the assessee for making the addition. Disallowance u/s 40(a)(ia) - scope of amendment of second proviso to Section 40(a)(ia) - HELD THAT:- CIT(A) remitted the issue to AO to verify the issue in line with the decision of Hon ble Delhi High Court in the case of CIT vs. Ansal Landmark Township. [ 2015 (9) TMI 79 - DELHI HIGH COURT] wherein has held that the insertion of second proviso to Section 40(a)(ia) to be declaratory and curative in nature and it has retrospective effect from 1st April 2005, being the date from which sub clause (ia) of Section 40(a) was inserted by the Finance (No.2) Act 2014. It has further held that as long as the payee has filed the return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. Before us, Revenue has not pointed to any fallacy in the findings of CIT(A). In such a situation, we find no reason with the order of CIT(A) and thus the ground of Revenue is dismissed.

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• Customs

• 2021 (5) TMI 742
  Levy of IGST on oxygen concentrators - right to health and affordable treatment - Whether the State s action, of imposing IGST on oxygen concentrators, which were directly imported by individuals, albeit free of cost, without the aid of a canalising agency runs afoul of Article 14 of the Constitution? - HELD THAT:- On the day, when the instant petition was served on the Standing Counsel for the State, i.e., 03.052021, yet another notification bearing no. 4/2021-Customs, dated 03.05.2021, was issued by the State; this time, by exercising powers under Section 25(2) 5 of the Customs Act. Through this notification, the State, inter alia, exempted the imposition of IGST on oxygen concentrators subject to the conditions provided in the annexure appended to the said notification - The conditions prescribed in the notification dated 03.05.2021, prevent the petitioner from claiming exemption from imposition of IGST, although, the oxygen concentrator imported by him is gifted [i.e., has been received free of cost] and is for personal use. Condition no. 1, which exempts from the imposition of IGST only those oxygen concentrators that are imported, for COVID relief through a canalizing agency creates, to our minds, a manifestly arbitrary and unreasonable distinction between two identically circumstanced users depending on how the oxygen concentrator has been imported. Imposition of IGST is, thus, as per notification dated 03.05.2021, completely waived, i.e., exempted, if the oxygen concentrator is imported through a canalizing agency. The exclusion of individuals, such as the petitioner, from the benefits of the 03.05.2021 notification only because they chose to receive the oxygen concentrators as a gift, albeit directly, without going through a canalizing agency is, in our opinion, violative of Article 14 of the Constitution - There is no justification whatsoever in excluding individuals from the purview of notification dated 03.05.2021 only on the ground that they received oxygen concentrators directly as gifts from their friends and/or relatives located outside the country. It is the petitioner s case that the oxygen concentrator was shipped to him by his nephew who is located in New York, United States of America. What is, to be borne in mind, is not the benefits the State has granted up until now. What is instead, required to be judicially reviewed is the action of the State, in not treating, even-handedly, persons, who ordinarily should fall in the same class users. The distinction, drawn, as noted above, is manifestly arbitrary, unreasonable, unfair and wholly unsustainable. Whether Article 21 of the Constitution, which includes the right to health and affordable treatment, would require the State to demonstrate that levy and collection of the impugned tax in times of pandemic, war, famine, floods, and such like conditions would subserve public interest? - Whether Article 21 of the Constitution, imposes on the State, a positive obligation to provide adequate resources for protecting and preserving the health and well-being of persons residing within its jurisdiction? - HELD THAT:- If the State expected its action to be sustained, in the instant case, it ought to have demonstrated, that the revenue, it would possibly garner, as IGST, in respect of oxygen concentrators which are imported in the circumstances, in which, the petitioner is put, would be appreciably more than the cost incurred to administer the collection of IGST on such transactions. These details need not have borne mathematical precision; a broad-brush approach would have sufficed-so that we could be persuaded to hold that denying relief to the petitioner and persons similarly circumstanced would be in public weal. The counter-affidavit filed by the State gives us no clue whatsoever concerning this vital issue - the petitioner has demonstrated, by adverting to his circumstances, that IGST involves distinct and noticeable burdensomeness , which is, directly attributable to its imposition. A bare perusal of the IGST Act would show that the Government can exempt, generally, either absolutely or subject to such conditions as it may specify, inter alia, goods or services or both of any specified description from whole or any part of tax leviable thereof with effect from such date as it may indicate provided that it is satisfied that it is necessary in the public interest to do so based on a recommendation received from the GST Council in that behalf - The said provision does not bind the Government to issue an exemption notification even if a recommendation in that regard is made by the GST Council. Furthermore, a perusal of the notification dated 01.05.2021 and 03.05.2021, would show that the State has exercised its powers for grant of exemption by relying upon Section 25(1) and 25(2) of the Customs Act in respect of so much of IGST that was leviable under Section 3(7) of the CTA read with Section 5 of the IGST Act. There is no reference in these two notifications to Section 6(1) of the IGST Act. There is weight in Mr. Datar s argument that the power to grant exemption from IGST is relatable to Section 3(12) of the CTA. The compliance of clause (a) of condition no. 104 appended to entry no. 607A of the General Exemption No. 190, should suffice, in our opinion. Thus, it would be sufficient if the persons, who are similarly circumstanced as the petitioner, furnish a letter of undertaking, to the officer designated by the State which would, inter alia, state that the oxygen concentrator would not be put to commercial use. Till such time an officer is designated by the State, it would be in order, if the importer were to address the letter of undertaking to the Joint Secretary, Customs and/or his/her nominee and handover the same to the officer detailed at the customs barrier. The imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts [i.e. free of cost] for personal use, is unconstitutional - the declaration notification no. 30/2021 dated 01.05.2021 is quashed. Petition disposed off.

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• 2021 (5) TMI 740
  IGST refunds - allegation of exported to avail undue export benefits - Provisional release of goods - grievance of the petitioner pertains to withholding of IGST refund and instructions/directives issued to the petitioner s banker not to accept related remittances - HELD THAT:- it is now clear that the subject goods/consignment have been released provisionally. Now the grievance of the petitioner pertains to withholding of IGST refund and instructions/directives issued to the petitioner s banker not to accept related remittances. The above grievances are directly relatable to validity of the seizure dated 28.08.2020. From a reading of section 110, more particularly sub section (1) thereof, it is discernible that seizure is not an end in itself. Seizure can be made only if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act. Thus, a discretionary power is vested upon the proper officer to seize such goods if he has reason to believe that those goods are liable to confiscation under the Customs Act. Petitioner has contended that the subject goods were imported from China to India by M/s. HP India Sales Pvt. Ltd. and petitioner had purchased the same from M/s. Connect Info Solutions after five stages of trading. No action was taken by the respondents against M/s. HP India Sales Pvt. Ltd. at the time of import if at all there was any violation. This provision cannot be invoked after five stages of trading that too at the stage when petitioner had purchased the goods, paid the IGST to the seller and on completion of all formalities obtained let export order for export. It is seen that in every case in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty must be preceded by an adjudicatory process in which principles of natural justice are required to be followed but before initiation of such adjudicatory process show-cause notice under section 124 is required to be given to the owner or to the concerned person mentioning therein the grounds of proposed confiscation or penalty whereafter an opportunity of making representation is required to be given followed by reasonable opportunity of hearing. In the instant case, the impugned seizure memo is dated 28.08.2020. Already sufficient time has elapsed. Therefore, it would be in the interest of justice if the same is adjudicated early - the jurisdictional Principal Commissioner of Customs may authorize an appropriate officer of the customs department to adjudicate on the impugned seizure memo dated 28.08.2020 and the consequences which would follow by issuance of notice under section 124(a) of the Customs Act. The said notice shall be issued within a period of three weeks from the date of receipt of a copy of this judgment and order. The entire proceeding of adjudication shall thereafter be completed within a period of eight weeks from the date of issue of notice under section 124(a) of the Customs Act. Petition disposed off.

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• 2021 (5) TMI 737
  Trading House - license for import of Maize in concessional rate of duty - allegation of breach of the actual user condition in the licences by the petitioner - petitioner sought adjustment of amount deposited during investigation towards the demand - HELD THAT:- The licences were granted by respondent No.1 subject to the actual user condition and other usual conditions of import. This Court noted that all the show cause notices emanated from the alleged violation of the actual user condition contained in the two licences. Therefore, High Court was of the view that it would be in the fitness of things if the two notices dated 30.08.2013 with regard to the licences be first concluded on an expeditious basis and thereafter the notice dated 04.09.2013 issued by the Directorate of Revenue Intelligence be adjudicated, if necessary. The writ petition was disposed of with a direction to respondent No.1 to first adjudicate the show cause notices dated 30.08.2013 on all issues expeditiously after giving the petitioner an opportunity of personal hearing. It was clarified that depending upon the outcome of the said proceeding, the show cause notice dated 04.09.2013 issued by the Directorate of Revenue Intelligence would be adjudicated. When respondent No.1 adjudicated the show cause notices, it noted the proceedings before the Andhra Pradesh High Court but only stated that public notice No.47 dated 18.05.2011 indicated that the actual user condition was made non-mandatory with effect from 18.05.2011. Either the stand taken by Union of India and Director General of Foreign Trade before the Andhra Pradesh High Court was not brought to the notice of respondent No.1 or he had conveniently overlooked the stand so taken. Be that as it may, respondent No.1 took the stand that it was beyond the purview of the adjudicating authority to adjudicate on the legality of the conditions imposed in the import licences and therefore, he refrained from deciding on the matter of legality of the actual user condition. However, after referring to the said condition and the provision of rule 13 of the Foreign Trade (Regulation) Rules, 1993, respondent No.1 held that petitioner had violated the actual user condition of the licences thereby making it liable for action under section 11(2) of the Act. Consequently, the penalty was imposed. Validity of the actual user condition or whether it was mandatory or not is the central issue. Refusal of respondent No.1 to adjudicate on this issue is not only violative of the directions of this Court as contained in the order dated 20.11.2013 but also amounts to non-exercise of jurisdiction vested in him. As rightly pointed out by this Court in the order dated 20.11.2013 the core issue is the insertion of actual user condition in the two licences - whether such insertion is legally permissible or without entering into this aspect, whether such condition is directory or mandatory are issues which are required to be gone into by respondent No.1. Failure to do so has occasioned non-exercise of jurisdiction. The matter requires to be heard afresh on all issues as directed by this Court - Matter is remanded back to respondent No.1 for a fresh decision in accordance with law after giving due opportunity of hearing to the petitioner - Petition allowed by way of remand.

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• Corporate Laws

• 2021 (5) TMI 733
  Oppression and mismanagement - security of the mall has been a matter of grave concern - sections 241-242 read with 244 of the Companies Act, 2013 - HELD THAT:- The plea that the Directors of the Company have abdicated their responsibility in maintaining the Mall properly itself is sufficient to prima facie hold that all is not well and smooth in the Company. The fact that the Dreams Mall Commercial Premises Workers Association had written to the Hon ble Minister for Energy for electricity connection itself goes to show that the Company has abandoned its responsibility and has put a deaf ear to the plight of the majority of the shop owners. It is trite that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred and the courts may in the larger interests of administration of justice may excuse or overlook a mere irregularity or a trivial breach of law for doing real and substantial justice to the parties and pass orders which will serve the interest of justice best - The materials available on record clearly indicate that the Petitioners, a motley group of shop-owners had come together to raise concerns regarding the running of the Mall to their detriment. The common cause had brought them in to unison itself is indicative of the fact that their sole intention was redressal of their grouses and they were themselves aware what they wanted to do by authorising Mr. Nitin to take up cudgels on their behalf. They were conscious of the import and intent of the authorization. Considering the facts of the case and the law thus settled it can be safely be held that the consent by the Petitioners given to Mr. Nitin Bangera to present the Petition would accordingly be not susceptible to any misgivings nor can be invalidated - Admittedly, the Constituents / Members / Shop-owners of the Mall have not been regular in paying the CAM charges fixed by the Tribunal as per order dated 10.12.2018. Therefore, for the better maintenance and proper administration of the Mall, the prayers made by the Administrator in CA No. 1069 of 2020 may have to be allowed in part as indicated infra. Application disposed off.

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• 2021 (5) TMI 710
  Seeking to restore the name of the Company in the Register of Companies maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The Counsel for Applicant further stated that the Company would file necessary-Financial Statements and Annual Returns soon after restoration of the name of the Company with the Registrar of Companies, Hyderabad and prayed the Tribunal to revive this Company - Also, the latest Balance Sheet as on 31st March 2019 and Financial Statements for the year ending 31st March, 2019 of the Company. The Company is having Total Assets of Rs. 2,21,45,865/- and Total Liabilities of Rs. 1,82,76,560/-. After going through the provisions of Section 252(3) of the Companies Act, 2013, this Tribunal is of the view that the Company was in existence and it is a going concern and name of the Company to be restored in the Register of Companies as maintained by RoC - Application allowed.

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• 2021 (5) TMI 707
  Oppression and Mismanagement - illegal share allotments - void ab-initio allotments - HELD THAT:- This Tribunal has ample powers while dealing with applications filed under Section 241-242 for the purpose of safeguarding the interests of the company and its shareholders and the public in general. Such powers encompass passing of orders that may include exemption or waiver of certain parameters of the Act for larger interests. The instant application is an apt case for exercise of powers in order to bring a quietus to the issues inter-se the parties and for overall interests. The Settlement Agreement dated 20.01.2020 is taken on record and liberty is granted to the Applicants to withdraw the corresponding Company Petitions - Application disposed off.

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• Insolvency & Bankruptcy

• 2021 (5) TMI 743
  Insolvency proceedings against the Personal Guarantors - Vires and validity of a notification dated 15.11.2019 issued by the Central Government - petitioners contend that the power conferred upon the Union under Section 1(3) of the Insolvency and Bankruptcy Code, 2016 could not have been resorted to in the manner as to extend the provisions of the Code only as far as they relate to personal guarantors of corporate debtors - HELD THAT:- The notification of 30.11.2016 brought into force certain provisions that hadthe effect of operationalizing the enactment in respect of four distinct categories, i.e. companies incorporated under the Companies Act, companies governed by special Act, LLPs and other bodies incorporated under any law which the Central Government could by notification specify. These provisions triggered the application of the Code to corporate debtors as well as LLPs and other companies and corporations - It is quite evident that the method adopted by the Central Government to bring into force different provisions of the Act had a specific design: to fulfill the objectives underlying the Code, having regard to its priorities. Plainly, the Central Government was concerned with triggering the insolvency mechanism processes in relation to corporate persons at the earliest. Therefore, by the first three notifications, the necessary mechanism such as setting up of the regulatory body, provisions relating to its functions, powers and the operationalization of provisions relating to insolvency professionals and agencies were brought into force. These started the mechanism through which insolvency processes were to be carried out and regulated by law. The Adjudicating Authority for personal guarantors will be the NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given. The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against the corporate debtor. Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the DRT to NCLT. It is clear that Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee. The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity. The impugned notification is not an instance of legislative exercise, or amounting to impermissible and selective application of provisions of the Code. There is no compulsion in the Code that it should, at the same time, be made applicable to all individuals, (including personal guarantors) or not at all. There is sufficient indication in the Code- by Section 2(e), Section 5(22), Section 60 and Section 179 indicating that personal guarantors, though forming part of the larger grouping of individuals, were to be, in view of their intrinsic connection with corporate debtors, dealt with differently, through the same adjudicatory process and by the same forum (though not insolvency provisions) as such corporate debtors - It is held that the impugned notification was issued within the power granted by Parliament, and in valid exercise of it. The exercise of power in issuing the impugned notification under Section 1(3) is therefore, not ultra vires; the notification is valid. The other question which parties had urged before this court was that the impugned notification, by applying the Code to personal guarantors only, takes away the protection afforded by law; reference was made to Sections 128, 133 and 140 of the Contract Act; the petitioners submitted that once a resolution plan is accepted, the corporate debtor is discharged of liability - The rationale for allowing directors to participate in meetings of the CoC is that the directors liability as personal guarantors persists against the creditors and an approved resolution plan can only lead to a revision of amount or exposure for the entire amount. Any recourse under Section 133 of the Contract Act to discharge the liability of the surety on account of variance in terms of the contract, without her or his consent, stands negated. The sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor s liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this court has indicated, time and again, that an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability. Thus, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract - the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The writ petitions, transferred cases and transfer petitions are accordingly dismissed.

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• 2021 (5) TMI 734
  Condonation of delay in filing application - Liquidation of Corporate Debtor - Section 42 of IBC - HELD THAT:- Debt is defined u/s 3(11) of the Code as a liability or obligation is respect of a claim which is due from any person and inter alia includes an operational debt. Operational Debt defined u/s 5(21) of the Code inter alia means a claim in respect of provision of goods or services. For the present purpose claim would mean right to remedy for breach of contract under any law for the time being in force if such breach gives right to payment. The breach on the part of the Corporate Debtor gave rise to a right to the Applicant to payment. Meanwhile however, the Corporate Debtor issued another cheque dated 15.12.2002 for the balance amount of Rs.. 4,62,066/-. It was dishonoured by the bank on 05.06.2003. The said claim amount of Rs.. 4,62,066/- thus became due and payable with effect from 05.06.2003. It could only be realized in terms of Article 31 of the Limitation Act, within three years thereof. The Applicant did not take any action/step for realization of the amount within that period nor did he issue any demand for the said amount. Considering the broad sentiments expressed by the Hon ble Courts with respect to adjudication of claim on merits and the fact that the Applicant was a retired employee, it was possible that he could not pursue for recovery of his claim from the Corporate Debtor in right earnest. We feel it appropriate that the interest of justice would be best served by invoking the inherent powers of this Authority available under Rule 11 of the NCLT Rules, 2016. Application allowed.

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• 2021 (5) TMI 732
  Penalty proceedings against Corporate Debtor - contravention of the moratorium or not - submission of claim towards the Customs duty and Estate dues after initiation of CIRP - HELD THAT:- It is settled that the Code is a complete code in itself as recognized by the Hon ble Apex Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT] . Section 238 of the Code mandates that the provisions of the Code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having the effect by virtue of any such law. The message set out by this salutary provision is loud and clear that the provisions of the Code would come into operation notwithstanding anything inconsistent therewith contained in any other law and such law shall cease to have any effect till such time the provisions of the Code remains applicable. A plain reading of section 14 of the Code would inter alia indicate that neither any suit or proceedings can be instituted or continued before any other Authority. Sub-section (1)(d) provides that no property by an owner or lessor can be recovered which is under occupation of the Corporate Debtor. Explanation to the Section makes it abundantly clear that all the rights and privileges granted in respect of such possession shall continue and cannot be curtailed by any authority including the Central and the State Governments. All the dues claimed under the show cause notices and the consolidated notice dated 11.02.2019 admittedly relate to a period preceding the declaration of CIRP. In any case the Respondent has already presented a claim before the IRP in respect of the outstanding duty and dues. The Respondent accordingly shall stay his hands from seeking any action in terms of the notices indicated above. No order u/s 74(2) of the Code can be passed, the same being of a penal nature - application allowed.

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• 2021 (5) TMI 731
  Time limitation of Resolution Plan - timelines set out in the Resolution Plan not adhered - HELD THAT:- The new management of the Corporate Debtor could not be held liable and responsible for the malfeasance and misfeasance committed by the former promoters / directors of the Corporate Debtor. It could not be saddled with the repercussions of reprehensible actions of the erstwhile management. Though the present predicament faced by the Applicant is not in respect of any new claim, the principle and sentiment echoed by the Hon ble Court can be applied to resolve the present imbroglio. Rules of procedure are but handmaidens of justice. The Hon ble Court in Sardar Amarjit Singh Kalra v. Pramod Gupta [ 2002 (12) TMI 607 - SUPREME COURT ] observed that laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits of substantial rights of citizens under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to hamper the cause of justice or sanctify miscarriage of justice. The present management of the Corporate Debtor shall be permitted to approve the Accounts and Returns of the Corporate Debtor for the period prior to 16.10.2019 in its next meeting. The Applicant shall file the relevant Returns and Statements for the period within three months hence - Application allowed.

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• 2021 (5) TMI 728
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - non-issuance of NOC by the Banks, to which the assets of the Corporate Debtor is hypothecated - existence of debt and dispute or not - HELD THAT:- The Bench understands that the whole substratum of the Petition is based on an Agreement between the parties of 20.12.2018 which is broadly an Agreement for sale for which money has been given by the Petitioner by way of an inter corporate loan. This Agreement has a clear-cut clause that in the event of non-issuance of NOC by the Banks, to which the assets of the Corporate Debtor is hypothecated and the final asset purchase transaction not materializing between parties, the amount will be treated as Inter Corporate Loan carrying an interest of 18% per annum. NOC was required from the Bank to acquire the assets of the Corporate Debtor by the Petitioner and only thereafter an Agreement was to be executed for purchase of assets. The Bench also notes that it was abundantly clear that both the parties had agreed to treat the amount as a loan with an agreed rate of interest to be paid - The obtaining of an NOC by the Corporate Debtor from the Banks to which the assets were hypothecated was the primary and only major condition before executing the sale transaction as per the Agreement arrived between the Parties. It is for the non-obtaining of NOC by the Corporate Debtor that the sale transaction could not be executed and, therefore, the agreement was terminated as per the relevant clause of the agreement and demand was raised vide letter dated 09.01.2020 for paying the default amount along with interest within 30 days. The Bench also notes that the Corporate Debtor in its financial statement has recorded and admitted that it to be a financial debt. The Petitioner has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves Admission . Petition admitted - moratorium declared.

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• 2021 (5) TMI 718
  Liquidation of Corporate Debtor - section 33 of the IB Code, 2016 - HELD THAT:- Recently the Hon ble Supreme Court of India in its judgment passed in Civil Appeal No. 8766-67 of 2019-Committee of Creditors of Essar Steel India Limited through Authorised Signatory vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ] observed that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor, but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC. The moratorium declared under Section 14 of the IB Code shall cease to have effect from the date of the order of liquidation - liquidation order is passed.

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• 2021 (5) TMI 715
  Direction upon the Resolution Professional to accept the claim of the applicant in full by condoning delay in filing the claim before the Resolution Professional - HELD THAT:- Admittedly, the applicant has filed its claim beyond the stipulated time i.e. near about after 8 months when the liquidator has filed its final list of stakeholder before the Adjudicating Authority on 13.05.2019 as per regulation 31(2) of the Insolvency Bankruptcy Board of India (Liquidation Process) Regulation, 2016. Moreover, the claim has originated on 30.11.2019, these were not in existence as on the liquidation commencement date. The said fact has already been informed to the applicant and acceptance, if any, shall be against the Rule 16 of the IBBI (Liquidation Process) Regulations, 2016. However, on perusal of the record it is found that liquidator has already accepted the original claim for Rs. 97,95,135/- lodged by the applicant and the same is duly accepted and admitted. Under such circumstances, if any claim is accepted, in that event, the liquidator has to revise their stakeholders list but in contravention of Regulation which may further delay the process of liquidation and very objective of the Insolvency and Bankruptcy Code will be frustrated. Application dismissed.

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• 2021 (5) TMI 713
  Seeking to consider the decision taken by the CoC of the Corporate Debtor for exclusion of the Corporate Insolvency Resolution Process by a period of 60 days under the proviso of Section 12(3) with effect from 20.02.2021 - HELD THAT:- Although non-cooperation of the Corporate Debtor cannot be construed as exceptional circumstances so as to seek exclusion/extension of time, we are mindful of the fact that with the police help, as ordered by this Tribunal, the CIRP has made considerable headway and is likely to reach a logical conclusion, in a few weeks time, as informed by the learned Counsel for the RP. The RP has been making sincere efforts in this direction. The overall time after extension would be within 330 days. If not allowed the Corporate Debtor would slip into liquidation, which would be the last and avoidable option. Hence, in exercise of the inherent powers conferred upon us by Section 60 of the Code. Exclusion of 60 days from the timeline of CIRP process period of the Corporate Debtor, which ended on 20th February, 2021, is hereby granted - Application allowed.

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• 2021 (5) TMI 712
  Withdrawal of Resolution Plan after approval of the plan by CoC and pending approval by this Tribunal - Whether the EMD and the Performance Bank Guarantee deposited by the Resolution Applicant to participate in the resolution process of the Corporate Debtor, be returned to the Resolution Applicant or forfeited due to loss caused for withdrawing from the process at this juncture? - HELD THAT:- It is seen in the case at hand that the Resolution Applicant proposed a resolution plan on an understanding that the land required for generating 20 million saleable units annually was as mentioned in the IM. However, he was informed by the erstwhile Promoters that there was an additional 4th parcel of land, covering 42 acres, in use for the project and which was essential for generating 20 million saleable units. He was informed that 100 acres of land was required for this level of production and 58 acres was not sufficient. The erstwhile CD demanded Rs. 7.50 crore to hand over the 4th parcel of land. This was not brought to his notice earlier in the IM or otherwise. The Resolution plan being based on the details made available to the Applicant under the Information Memorandum, any new discovery that would affect the interests of the Applicant adversely, and entitles the Applicant to decide his participation afresh, bearing in mind the changed situation and the possibility of future losses. The Resolution Applicant cannot be compelled to participate in resolution plan jeopardising its own interest. Even if the information provided by the erstwhile Promoter is incorrect, as mentioned by the RP in his objections, if a doubt is created in the mind of the Applicant with regard to the possibility of losses from the project, backed by an independent consultant s report, we are of the view that he would justifiably not be inclined to carry on as a Resolution Applicant. The Resolution Professional admits in his objections that the erstwhile Promoter had not provided accurate information, as mentioned in the IM and had refused to cooperate, and that he was interested in blocking his efforts to complete the CIRP. In fact it is seen from his objections that in all parcels of land, the information provided is at variance, though he contests the contentions of the erstwhile Promoter. Whatever may have been the reason, either lacuna in estimating the requirement as well as availability of land for generation of power in a manner that is beneficial to the Applicant, or the lack of full and correct information provided by the erstwhile Promoters to the RP, the fact remains that there was a considerable disparity in what was represented to the Applicant regarding the area of land required for generating 20 million saleable units of power, which is required to maintain the Corporate Debtor as a going concern and what is actually required/made available. The Resolution Applicant cannot be compelled to perform and execute the Resolution Plan when he apprehends huge losses, and should be permitted to withdraw the Plan submitted by him for approval of this Adjudicating Authority - Application allowed.

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• 2021 (5) TMI 711
  Maintainability of petition - seeking to delete the name of the Respondent No. 2 from the array of parties - Section 60(5) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Respondent No. 2 is not a party to the Business Transfer Agreement which is carried on between the Petitioner and the Respondent No. 1. Respondent No. 2 is an affiliate company of the Respondent No. 1 since April, 2020. All the rights and the liabilities arising out of the BTA are only within the domain of the Respondent No. 1 and the same cast no shadow up on the functioning or liabilities of the Respondent No. 2. Hence, this Application was made for deletion of Respondent No. 2. The instant Application is filed in accordance with extant provisions of Code, and the reasons for removal of Respondent No. 2 are convincing, and as agreed to by the Petitioner. Therefore, it would be just and proper to remove the Respondent No. 2 from the list of Respondents - petition disposed off.

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• 2021 (5) TMI 709
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Letter of the Appeal Paper Book sent by Respondent through Ld. Advocate (supra) clearly shows that the dispute prior to issuance of Demand Notice - The representatives, Mr. Micheal Mr. Sunil K. Deepati had visited the Respondent office on 17.07.2018 and the Respondent was informed by them that the Appellant is ready to resumption of further supply on 90 days L.C. but this fact has been concealed in the notice issuance of under Section 8 of the IBC. The Adjudicating Authority has also taken note of the fact that the claim of an independent entity M/s Connel Bros. Company (India) Pvt. Ltd. ( Connel ) was also included by the Appellant in their claim. So taking note of all these facts, we are of the considered view that there is pre-existing dispute between the parties much prior to issuance of Demand Notice under Section 8 of the IBC and there is no illegality in the order passed by the Ld. Adjudicating Authority. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity - Appeal dismissed.

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• Central Excise

• 2021 (5) TMI 741
  Challenge to the Show cause notice (MTC) - CENVAT Credit - transportation charges incurred in transportation of its products from its factories / depots to the customer places - place of removal - extended period of limitation - HELD THAT:- After analyzing the materials on record and statements of various officers of the petitioner which were recorded during investigation, it has been observed that CENVAT credit on input services is eligible for outward transportation upto the place of removal. Assessee was not eligible for taking CENVAT credit on the service tax paid on transportation charges incurred for transportation of goods from depots and factories to the place of the customers i.e., beyond the place of removal. Referring to the amendment, it is contended that it is only upto the place of removal that any service appears to have been treated as input service for allowing CENVAT credit thereon. Post amendment, the benefit which was admissible earlier even beyond the place of removal would now get terminated at the place of removal. CENVAT credit cannot travel beyond the point of removal. It would be more appropriate if petitioner responds to the impugned show cause-cum-demand notice by filing reply and thereafter if respondent No.3 is not satisfied with the show cause reply, the matter may be adjudicated by the adjudicating authority - Petition dismissed.

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• 2021 (5) TMI 738
  Grant of interest on refund amount - relevant time for calculation of interest - calculation of interest after expiry of three months from the respective dates of application till the date of actual refund under section 11BB of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 - HELD THAT:- Sub-section (1) of section 11B says that any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and in such manner as may be prescribed. The application shall be accompanied by documentary and other evidence in support of the claim. Sub-section (2) of section 11B provides that upon receipt of any such application if the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty by the applicant is refundable, he may make an order accordingly whereafter the amount is to be refunded. From a reading of section 11BB, it is evident that if any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of section 11B, there shall be paid to that applicant interest at such rate which is not below 5% and not above 30% per annum as may be fixed by the central government, by notification in the Official Gazette. The interest will be calculated for the period commencing from the date immediately after expiry of three months from the date of receipt of such application till the date of refund of such duty. Petitioner would be entitled to interest under section 11BB of the Central Excise Act, 1944 on the amounts refunded to it. Respondent Nos.2 and 3 shall work out the interest amount payable to the petitioner in respect of the refund claims for the relevant periods which shall be paid to the petitioner within three months from the date of receipt of a copy of this judgment and order - Petition allowed.

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