TMI Tax Updates - e-Newsletter
May 3, 2021

Case Laws in this Newsletter:

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

Articles

1. SC case on Provisional attachment of the property under GST Axt─Critical Analysis

   By: OmPrakash jain

2. THE BILATERAL NETTING OF THE QUALIFIED FINANCIAL CONTRACTS ACT, 2020

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST Revenue collection for April’ 21 sets new record

2. Import of Oxygen Concentrators for personal use included in exempted category list

3. Government extends timelines of certain compliances in light of the severe pandemic

4. 1st instalment of ₹ 8873.6 crore for State Disaster Response Fund (SDRF) released in advance

Notifications

Customs

1. 29/2021 - dated 30-4-2021 - Cus

Seeks to amend notification No. 27/2021-Customs to exempt customs duty on import of specified Inflammatory Diagnostic (markers) kits, up to 31st October, 2021

2. 45/2021 - dated 30-4-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

3. FTX.56/2017/729 - dated 12-2-2021 - Assam SGST

Amendment in Notification No. FTX.56/2017/Pt-II/545 dated the 22nd May, 2020

4. FTX.56/2017/728 - dated 12-2-2021 - Assam SGST

Special procedure for making payment of 35% as tax liability in first two (2) months

5. FTX.56/2017/726 - dated 12-2-2021 - Assam SGST

Class of persons under proviso to section 39(1) - Option to furnish a return for every quarter

6. GST-1021 / C.R. 43 / Taxation-1 - dated 29-4-2021 - Maharashtra SGST

Shri. Rajiv Magoo has been appointed as member of Advance Ruling Committee in the place of Ms. P. Vinitha Sekhar

7. FIN/REV-3/GST/1/08(Pt-1) (Vol.II)/45 - dated 30-3-2021 - Nagaland SGST

Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-I )(Vol.II)/25 dated the 29th November 2020

8. G.O. Ms. No. 6 - dated 22-4-2021 - Puducherry SGST

Amendment in Notification No. G.O. Ms. No. 72, dated the 10th December, 2020

9. S.O. 49/P.A.5/2017/Ss. 9, 11, 15 and 148/2021 - dated 15-4-2021 - Punjab SGST

Seeks to amend Notification No. S.O 37/P.A.5/2017/S. 11/2017, dated the 30th June, 2017

10. S.O. 31/P.A.5/2017/S.96/2021 - dated 30-3-2021 - Punjab SGST

Supersession Notification No. S.O. 107/P.A. 5/2017/S.96/2017, dated the 7th December, 2017

Income Tax

11. 40/2021 - dated 30-4-2021 - IT

Income-tax (12th Amendment) Rules, 2021. - SETTLEMENT OF CASES - withdraw of pending application - New Rule 44DA. Exercise of option under sub-section (1) of section 245M and intimation thereof

12. 04 of 2021 - dated 30-4-2021 - IT

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Mutual Fund Transactions by Registrar and Share Transfer Agent

13. 03 of 2021 - dated 30-4-2021 - IT

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Depository Transactions

Circulars / Instructions / Orders

Income Tax

1. 08/2021 - dated 30-4-2021

Extension of time lines related to certain compliances by the Taxpayers under the Income-tax Act 1961

Highlights / Catch Notes

GST

• GST Levied on Private Contractors for Vehicle Parking Services u/s 7, Schedule II of the CGST Act.

  Case-Laws - HC : Levy of GST - license fee granted to the Private Contractors to run parking of vehicles - demand made by the Southern Railway - The provisions of the CGST Act is crystal clear that the services rendered are liable for payment of service tax and more specifically, with reference to Section 7 r/w Schedule II, the services rendered by the Railways to the writ petitioners/contractors and the writ petitioners/contractors to the end users, are falling within the scope of Section 7 r/w Schedule II of the CGST Act and therefore, all the writ petitioners are liable to pay tax, as applicable and as demanded by the Southern Railways. - HC
  Visit to Get Source

  ---

Income Tax

• Reassessment of Capital Gains Reopened u/s 147 Due to Suspected Under-assessment from Unrecognized Property Sale Transactions.

  Case-Laws - HC : Reopening of assessment u/s 147 - Capital gain on sale of property - there is “reason to believe” the income chargeable to tax has been under assessed, in view of certain sale transactions, which all are not recognizable under the provisions of the relevant Statutes. Thus, the petitioner is bound to participate in the reassessment proceedings by availing the opportunities to be provided by the competent authorities and established his case in the manner known to law. Writ petition fails. - HC
  Visit to Get Source

  ---

• Court Grants Partial Interest Waiver to Petitioner u/s 234B Due to Stay Orders from 1989 to 2001.

  Case-Laws - HC : Waiver of Interest under section 234B - the petitioner was indeed entitled for partial waiver of interest under section 234 B of the Income Tax Act, 1961 inasmuch as there was stay granted by this court on 6.1.1989 and on 12.6.1989. These orders continued to be in force as these writ petition filed by the petitioner came to be allowed on 19.12.19 94 and was reversed only on 31.1.2001. - HC
  Visit to Get Source

  ---

• Court Rules Demand Notices Invalid u/s 201; Unremitted Tax to Be Recovered from Second Respondent.

  Case-Laws - HC : Default u/s 201 - demand notices challenged by the petitioners on the ground that the tax that has been demanded as arrears of tax from the petitioners Tax Deducted at Source by the second respondent but was not paid the credit of the Central Government - to the extent Tax was Deducted by the second respondent but not remitted, no demand shall be made against the petitioners. If the second respondent had failed to remit the tax to the credit of the Income Tax Department, it is however open to the department to recover the same from the 2nd respondent in the manner known to Law. - HC
  Visit to Get Source

  ---

• Tax Authorities Delete Additions u/ss 68 and 69C After Company Proves Investor's Identity and Transaction Validity.

  Case-Laws - AT : Addition under section 68 being share capital received and addition under section 69C on account of commission - some of Directors did not appear in the case of assessee - the assessee-company has been able to prove the identity of the Investor, its creditworthiness and genuineness of the transaction in the matter. - Additions deleted - AT
  Visit to Get Source

  ---

• Reassessment u/s 147 Quashed Due to AO's Reliance on Investigation Report Without Independent Judgment.

  Case-Laws - AT : Reopening of assessment u/s 147 - unexplained share application money - non independent application of mind by AO - In the present case also since the AO acted upon the report of the investigation wing and on that basis initiated the proceedings for reopening the assessment by issuing the notice under section 148 of the Act therefore reassessment proceedings were not valid. In that view of the matter also the reassessment framed by the AO deserves to be quashed. - AT
  Visit to Get Source

  ---

• Section 50C Additions Require Evidence: Fair Market Value Must Be Verified, Not Based on Unrelated Case Findings.

  Case-Laws - AT : Capital gain - Additions made u/s 50C - by no stretch of imagination, without making any sport physical verification, two piece of land can be compared to work out the fair market value. The assessing officer has simply borrowed the finding of CIT(A)-IV, Surat, without seeing its relevance or reference and applied the fair market value on the assessee’s land. No addition under section 50C can be made in absence of any evidence. - AT
  Visit to Get Source

  ---

• Denial of Carrying Forward Short-Term Capital Losses in Indian Markets Challenged u/ss 5 and 74 of Income Tax Act.

  Case-Laws - AT : Denying the carry forward of short-term capital loss - the capital losses incurred from transactions in the Indian capital markets should be construed as income accruing or arising from transactions undertaken in India falling within the scope of section 5 of the Act and therefore, the same should be eligible to be carried forward to subsequent years in accordance with the provisions of section 74 of the Act - AT
  Visit to Get Source

  ---

• High Court and Tribunal confirm reopening assessments need notice issuance by Department u/s 147; Section 292BB applies.

  Case-Laws - AT : Reopening of assessment u/s 147 - For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that section seeks to cure. The section is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice under section 143(2) of the Act was however issued by Department, the finding rendered by the High Court and the Tribunal and the conclusion arrived at were correct. - AT
  Visit to Get Source

  ---

• Clarification on Depreciation Calculation Using Stamp Value u/s 50C of Income Tax Act; Section 43(6) Stands Alone.

  Case-Laws - AT : Depreciation by adopting the stamp value as per the provision of Section 50C - As per the scheme of the provision of Section 32 r.w.s 43(6) of the Act, which is a self contained scheme to compute the amount of deprecation allowable under the Act. According to our view, the reference to section 48 of the Act or the termful value of consideration are absent. Therefore, even otherwise, these two sections are not applicable in section 43(6) - AT
  Visit to Get Source

  ---

• Depreciation Disallowed for Preoperative Expenses in Factory Setup; Costs Capitalized as Part of Plant and Machinery.

  Case-Laws - AT : Disallowance of depreciation claimed on capitalization of preoperative expenses - expenses involved in purchase of milk and determining that the factory was in proper working condition and making adjustment does not seem to be anything more than steps in setting up and finalisation of the factory, which is the capital asset. After tests have been carried out, it can be said that the factory had been set up and it is ready for commercial production. Therefore, the expenses can be said to have been incurred as cost of the plant and machinery. - AT
  Visit to Get Source

  ---

Customs

• Court Rules Reassessment Dues Not "Operational Debt" Under IBC, Following Supreme Court Interpretation of Sections 3 and 5.

  Case-Laws - HC : Reassessment of the Bill of Entry - dues are within the Operational debt under IBC or not - Though the definition of “Operational Debt” in Section 5(21) of the IBC, 2016 is not intended to include “crown debt” such as taxes and duties payable to the Government and is distinct from the “claim” and “debt” as defined in Section 3 (6) and 3(11) of the IBC,2016, as mentioned above in the beginning of the discussion on the second part of this order, this Court is bound by the interpretation placed in the above decision of the Hon’ble Supreme Court - HC
  Visit to Get Source

  ---

Corporate Law

• High Court Rules Section 272(1)(e) of Companies Act, 2013 Valid; Registrar and Authorized Person Are Distinct Entities.

  Case-Laws - HC : Validity of Section 272(1)(e) of Companies Act, 2013 - Having held that Registrar and 'a person authorized by the Central Government' fall into different categories, it does not warrant reading down Section 272(3) of the Companies Act - both points for consideration are held in the negative. - HC
  Visit to Get Source

  ---

• Petitioner Seeks Name "Reef Center for Wellness and Excellence LLP," Argues No Conflict with Existing Class 05 Registrations.

  Case-Laws - HC : Application for reservation of the name “Reef Center for Wellness and Excellence LLP” - The case of the petitioner in fact stands on a stronger footing. The registration of word mark already granted by the respondents are “REEFLEC', REEF”, “REEFIT FORTE”, “REEFER (HEMATANIC)” which are all for products falling under Class 05. The petitioner seeks the name “Reef Wellness and Excellence LLP”, not for any product but for a service, and that too which does not fall under Class 05. The name proposed by the petitioner cannot be said to be identical or deceptively similar - HC
  Visit to Get Source

  ---

Indian Laws

• High Court Quashes Cheque Dishonor Case After Compromise, Using Section 482 CrPC and Section 147 Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - invocation of revisional jurisdiction - because of the compromise, this is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, is invoked to compound the offence and consequently to quash the proceedings - HC
  Visit to Get Source

  ---

Service Tax

• Refund of CENVAT Credit Approved After Review; Initial Rejection Overturned Due to Compliance with Clauses 2(h) and 2(g).

  Case-Laws - AT : Refund of CENVAT Credit - claim filed within the time limitation or not - When the debit made by the appellant as evidenced by the ST-3 returns is considered, it would show that both clauses 2(h) as well as 2(g) has been complied. For these reasons, it is found that the rejection of the refund claim for the period April, 2017 to June, 2017 is not sustainable. - AT
  Visit to Get Source

  ---

Central Excise

• High Court Rules on Tobacco Repackaging: Not Its Role to Decide If It Constitutes Manufacturing; Needs Expert Evaluation.

  Case-Laws - HC : Excisability - repacking the tobacco products by scenting - High Court is not an Expert Body in order to form an opinion with regard to the manufacturing of a product or otherwise. Experts in the Department must conduct an inspection and form an opinion, whether it is a manufacture of product or the raw material is just repacked and sold to the end user. The said nature of proceedings cannot be adjudicated before the High Court, as the scope of the writ proceedings are limited - HC
  Visit to Get Source

  ---

• Divergent Views on CENVAT Credit Denial; Extended Limitation Period Not Applicable, Show Cause Notices Barred by Limitation.

  Case-Laws - AT : CENVAT Credit - when the adjudicating authorities are having a divergent view, it is found that the extended period of limitation is not invokable in the facts and circumstances of this case. Admittedly, in the case in hand, the show cause notices have been issued by invoking extended period of limitation, therefore, the denial of credit is barred by limitation. - AT
  Visit to Get Source

  ---

VAT

• Assessment Orders Under MVAT Act for 2015-2016 Period Invalid if Issued After 31.03.2020 Due to Limitation Period.

  Case-Laws - HC : Validity of assessment order - The limitation for passing of such assessment order is four years from the end of the year containing the period to which the return relates. Since the assessment period is 01.04.2015 to 31.03.2016, the four year limitation period would expire on 31.03.2020. Therefore, if the assessment order was required to be passed under section 23(2) of the MVAT Act for the aforesaid assessment period, it had to be passed on or before 31.03.2020. - Those were passed beyond the limitation period of 31.03.2020 and thus are non est in the eye of law. - HC
  Visit to Get Source

  ---

• Court Rules No VAT on ONGC Contract for Machinery Use; Previous Tax Restraint Means No Refunds Needed.

  Case-Laws - HC : Levy of VAT - transfer of right to use the machinery and equipments - Award of contract by ONGC under a work order - It is declared that the respondents shall not be competent to levy Value Added Tax on the transactions between the petitioner and ONGC which are in question. Since this Court had prevented the respondents from levying any such tax pending the petition, there shall be no question of refund - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (5) TMI 53
  Non-compliance with the previous order - HELD THAT:- The speaking order will be passed before the next date of hearing. The statement of Ms. Verma is taken on record. List the matter on 06.05.2021.

  ---

• 2021 (5) TMI 52
  Jurisdiction - validity of issued summons - Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has made out a prima facie case for wrongful assumption of jurisdiction. List the matter on 20.07.2021.

  ---

• 2021 (5) TMI 39
  Levy of GST - license fee granted to the Private Contractors to run parking of vehicles - demand made by the Southern Railway - HELD THAT:- When there is no provision to collect the GST from the contractors on the license fee, then the terms and conditions of the agreement became null and void and therefore, the conditions imposed in the agreement would not be binding on the contractors. In this regard, the learned counsel for the petitioner relied on Section 32 of the CGST Act and sub-clause (2) to Section 32 stipulates that no registered person shall collect tax except in accordance with the provision of this Act or the Rules made thereunder - In the present cases, even before the introduction of the present CGST Act, the Contractors were paying the taxes based on the erstwhile Act, mainly Service Tax Act. After the implementation of the CGST Act, when there is prohibition of unauthorised collection of tax, the demand now made by the Southern Railways is in violation of the provisions of the CGST Act and therefore, the writ petitions are to be allowed. The facts admitted are that the land belongs to the Southern Railways, the writ petitioners were given license to run vehicle parking and while entering into an agreement of license, the Southern Railways, in clear terms, stated that the contractors are liable to pay taxes as applicable under the CGST Act. In turn, the contractors are also liable to pay the service tax, if they are falling within the ceiling prescribed under the Act. Thus, the Railway has to pay tax for the services rendered to the contractors by collecting license fees and the contractors, in turn, have to pay service tax for collection of parking fee from the end users - This being the pattern of liability to pay tax, which is contemplated under the provisions of the Act, there is no question of granting exemption to anyone of the persons, either the Railways or the contractors, who all are licensees and permitted to run the vehicle parking areas and therefore, their liability under the provisions of the Act, is unambiguous. In the present cases, liability of the licensees are well enumerated with reference to Section 7 and Schedule II to the Act. As discussed above, when the liability is unambiguous and the nature of services are also falling within the scope of Section 7 r/w Schedule II, then there is no reason to consider the claim of the writ petitioners for invoking Section 32 of the Act - Section 32 deals with prohibition of unauthorised collection of tax. Here the question of unauthorised collection does not arise at all. When the collection of tax is in consonance with the provisions of the Act, the provisions of Section 32, cannot be invoked at all. Thus, the arguments with reference to Section 32 stands rejected. The provisions of the CGST Act is crystal clear that the services rendered are liable for payment of service tax and more specifically, with reference to Section 7 r/w Schedule II, the services rendered by the Railways to the writ petitioners/contractors and the writ petitioners/contractors to the end users, are falling within the scope of Section 7 r/w Schedule II of the CGST Act and therefore, all the writ petitioners are liable to pay tax, as applicable and as demanded by the Southern Railways. There is no scope for entertaining the grounds as raised in the present writ petitions and consequently, all the writ petitions are devoid of merits and accordingly, they stand dismissed.

  ---

• Income Tax

• 2021 (5) TMI 50
  Penalty u/s 271(1)(c) - Revised return filed consequent to search and seizure operations under Section 132 - difference between the return of income originally filed and subsequently filed under Section 153A - reason which prevailed with the ITAT for setting aside of the said penalty was, that neither the notice under Section 271(1)(c) of the Act nor the order imposing penalty, specified which of the alternatives was being invoked i.e., whether of concealment of particulars of income or furnishing of inaccurate particulars of such income - HELD THAT:- The statute, under Section 153A of the Act, having itself providing for an option to be given to the assessee to file a revised return of income, whether the provisions of Section 271(1)(c) of the Act would apply with respect to the return of income, as originally filed or to the revised return of income pursuant to opportunity under Section 153A of the Act. Prima facie it appears that once the statute itself has given an opportunity to the assessee, the provisions of Section 271(1)(c) of the Act should apply to the revised return of income. The appellant refers to Explanation 5A to Section 271 of the Act, to contend that Section 271(1)(c) of the Act would apply to the original return of income filed and not to the revised return of income. The notice issued under Section 271(1)(c) of the Act, is not placed on record. We would like to see the said notice, to satisfy ourselves that the notice fulfilled the requirements of Explanation 5A supra, also.The counsel for the appellant is requested to, before the next date of hearing, file a compilation of all the judgments on aforesaid aspects as well as the notice under Section 271(1)(c) of the Act issued to the respondent as well as any other document which may be relied upon during the hearing.

  ---

• 2021 (5) TMI 47
  Liability under Vivad se Vishwas Act - valid search case or not? - adopting a rate of 125% of disputed tax applicable to search case in accordance with section 3 of the DTVSV Act - HELD THAT:- As far as sections 158BC and 158BD are concerned, we note from Section 158BI that Chapter XIV-B which contains sections 153BC and 153BD shall not apply where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A after the 31st day of May of 2003. The dates of the reports, searches/ surveys, statements of persons with respect to the investigation referred to in the Assessment Order are all post May, 2003. It is not the case of the Revenue that action pursuant to sections 153A or 153C had been initiated in the case of petitioner. These facts are not disputed. Therefore, in our considered view, this criteria no. (ii) necessary for a case to be search case is not satisfied. The statement of Petitioner recorded on 14.12.2017 at the time of assessment under section 131, nowhere suggests any incriminating material or admission of purported manipulation/rigging of scrips of Lifeline Drugs except saying that he had purchased the shares on advice of his brother nor it is elicited that the Petitioner had any knowledge of penny stock company, its financial position or about the activities of the company. In the scenario, the allegation that the assessee in collusion with the parties who had rigged the prices of shares artificially by manipulation and thereby introduced the amount received in the guise of LTCG/STCG is rather conjecturous. Nowhere in the statements recorded, referred to in the assessment order is there any allegation that Petitioner was one of the parties that had booked any artificial gains. There is no allegation that any incriminating material belonging to Petitioner was obtained in the course of the search. The assessment therefore does not appear to be on the basis of search initiated under Section 132, or requisitions made under Section 132A of the Income-tax Act. Having regard to aforesaid, it is difficult to agree with the submissions made on behalf of the counsel for the Revenue that the assessment order is on the basis of search. Since petitioner s case cannot be regarded as a search case, consequently order dated 26th January 2021 in Form No.3, passed by Respondent No.1 being the Designated Authority, would be unsustainable. We accordingly set aside Order dated 26th January 2021 in Form No.3 passed by Respondent no. 1 and direct the Respondent no. 1 to pass a fresh order in Form No.3 determining tax payable by the Petitioner as a non-search case in accordance with the DTVSV Act read with Rule 4 of the DTVSV Rules, as per Circular no. 4/2021 dated 23rd March, 2021 within a period of two weeks from the date of receipt of this order.

  ---

• 2021 (5) TMI 46
  Reopening of assessment u/s 147 - notice under Section 148 not been served on the petitioners before the last date as per the provisions of the Act - HELD THAT:- Issue of Notice by the Competent Authority is contemplated under Section 149 of the Income Tax Act. However, Service of Notice to the assessee has not been contemplated under the said provision. Thus, the time limit prescribed for issue of notice under Section 148 of the Income Tax Act, would not fall under the definition of service under Section 27 of the General Clauses Act, 1897. Thus, Section 27 of the General Clauses Act, 1897 may not have relevance with reference to Sections 147, 148 and 149 of the Income Tax Act, 1961. Issue of Notice and Service of Notice to the assessee cannot be compared at all. What is contemplated under Section 149 of the Income Tax Act is issue of notice and not service of notice to the assessee. The service part is to be complied with subsequently enabling the assessee to defend his case. Undoubtedly, the assessee can defend his case only after service. However, for reckoning the period of limitation issue of notice is sufficient. As following the principles laid down in GKN Driveshafts (India) Ltd [ 2002 (11) TMI 7 - SUPREME COURT] the respondents are bound to provide opportunities and assign reasons by following the procedures contemplated as well as the principles settled. With reference to the point of limitation, it is to be construed that the impugned notices under Section 148 of the Act, were signed by the Competent Authorities on 31.03.2018 and as per the typed set of papers filed by the respondents, the notices were dispatched on the same date i.e., on 31.03.2018, which would be sufficient to satisfy the requirements under Section 149 of the Act and thus, the petitioners are at liberty to defend the case as contemplated under the provisions of the Act.

  ---

• 2021 (5) TMI 43
  Reopening of assessment u/s 147 - Capital gain on sale of property - petitioner has given only Power of Attorney and the property is not transferred through registered sale deed - HELD THAT:- Audit objections raised that the ownership of the Property, cannot be transferred between persons by way of executing a Power of Attorney or a Sale agreement as they do not come under the purview of the Transfer of Property Act. The decision taken in consequence of part performance of the Act under Section 53-A of the Transfer of Property Act is subject to the conveyance of the ownership through registered document u/s 54 of Transfer of Property Act. Thus, it is an admitted fact in the present case, neither of the provisions of the Transfer of Property Act has been complied with. Thus, it cannot be considered as valid sale for the purpose of considering the case of the petitioner. As admitted that only Power of Attorney was given by the assessee to Mr.B.Nagi Reddy and no property was conveyed during the relevant point of time in the year 2004-05. Therefore, the assessee is ultimate owner of the property and he has executed the sale deed of the said property to M/s.Malabar Diamond Gallery Private Limited in the P.Y.2009-10 relevant to A.Y.2010-11 only. Based on these facts, the respondent formed an opinion that there is a reason to believe that the income chargeable to tax has been under assessed by the assessee. This Court is of the considered opinion that the petitioner in reply, articulated his case by saying that the petitioner had transacted the sale of his property in a genuine manner and therefore, he handed over the possession soon after the Sale agreement dated 15.12.2003. The petitioner had received the entire sale consideration and the said income was already assessed and the particulars regarding the sale agreement, the Power of Attorney were also furnished to the Assessing Officer during the Assessment Year 2004-05. Thus, the petitioner has genuinely transacted and therefore, the ground reason to believe is non-est and initiation of reopening of assessment is untenable. Any transaction, which is not within the parameters of the legality, cannot be considered as a valid transaction for the purpose of Income Tax Act. Assessee are doing many transactions in a calculated manner and at the advice of legal and account any brains. Therefore, the complex nature of transactions, which all are made, not within the parameters of the provisions of any law of the land, then the Income Tax department cannot consider such transactions as a valid transactions for the purpose of accepting the informations provided or the transactions made. Any illegal or irregular transactions made by an assessee cannot be considered as a valid transaction for the purpose of assessment, though the said transaction appears to be genuine, as far as the assessee is concerned. Department has considered that the party to the Sale agreement of M/s.Vinayaga Land Developers, submitted the Books of Accounts of the firm for the Financial Year 2009-10 and the copy of the return of income in which the said income is included as business income and offered to tax under the head Profits and gains from business or profession . Thus, the said M/s.Vinayaga Firm in their Books of Accounts as stated that it is a business income. Thus, the Department has got every reason to believe that the income chargeable to tax has been under assessed. Certain irregular transactions between the parties with some idea or motive, can never be construed as legal transactions for the purpose of recognizing the same under the provisions of the Income Tax Act. Law expects that all transactions are to be made in accordance with the provisions of the Statutes and the rules in force. Any such illegal or irregular transactions, which all are not in consonance with the Statutes cannot be construed as valid transaction for the purpose of making an assessment and even, if the petitioner pleads that his transactions are genuine, there is every reason to believe that there is a possibility of under assessment, in view of the fact that sale transaction completed by registering a sale deed only during the Assessment Year 2010-11. All such intricacies are to be scrutinized only by re-opening the assessment, and through adjudication. This Court is of the considered opinion that Section 147 is an initiation for reopening of assessment. As per the ratio laid down by the Hon ble Supreme Court of India in the case of DKN Driveshafts (India) Limited [ 2002 (11) TMI 7 - SUPREME COURT] the procedures were followed in the case of the petitioner. The reasons for reopening of assessment in the case of the petitioner was furnished by the Department. Thus, the petitioner has to avail the opportunity to be provided for the purpose of reassessment. Section 147 is an initiation of proceedings and if the Department could able to establish that there is reason to believe, then the Courts are expected to be slow in interfering with such notices as the assessee would be provided with an opportunity to contest their case by producing documents and establishing the genuinity of the transactions. Courts cannot venture into the adjudication of disputed facts, which all are to be verified and adjudicated with reference to the documents and evidences to be produced by the respective parties. Further, under Article 226 of the Constitution of India, High Court is empowered to scrutinize the process, through which, a decision is taken by the competent authority in consonance with the Statute and certainly, not the decision itself. The only consideration would be to form an opinion, whether the pre-conditions as contemplated under the provisions of the Act are complied with or not. In the present case, the admitted facts as well as the reasonings given by the respondent are unambiguous that there is reason to believe the income chargeable to tax has been under assessed, in view of certain sale transactions, which all are not recognizable under the provisions of the relevant Statutes. Thus, the petitioner is bound to participate in the reassessment proceedings by availing the opportunities to be provided by the competent authorities and established his case in the manner known to law. Writ petition fails.

  ---

• 2021 (5) TMI 42
  Waiver of Interest under section 234B - whether the petitioner is entitled for complete or partial waivers or no waiver at all from payment of interest under section 234 B? - HELD THAT:- As per clause (d) to CBDT Circular F. No. 400/234/95-IT (B) dated 23.5.1996, where any income which was not chargeable to income tax on the basis of any order passed in the case of an assessee by the High Court within whose jurisdiction such assessee was assessable to income tax, and as a result, such assessee did not pay income tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law, as the case may be, decision of the Supreme Court in his own case [ 2001 (1) TMI 80 - SUPREME COURT] , which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings, the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment years found to be less then the amount of advance tax payable on his current income, the assessee chargeable to interest under section 234B and/or 234C is entitled to reduction of waiver of such interest if the Chief Commissioner of the Director-General of Income Tax is satisfied for grant of such reduction or waiver interest. Thus, the facts as they stand out make it clear that the petitioner was indeed entitled for partial waiver of interest under section 234 B of the Income Tax Act, 1961 inasmuch as there was stay granted by this court on 6.1.1989 and on 12.6.1989. These orders continued to be in force as these writ petition filed by the petitioner came to be allowed on 19.12.19 94 and was reversed only on 31.1.2001. Therefore, up to the date of the order of the Honourable Supreme Court this was a fit case for exercising the discretion vested with the first respondent for reducing the proportionate interest under section 234B of the Income Tax Act, 1961. First respondent ought to have also considered the mitigating circumstances in as much as the total surplus generated by the petitioner during the relevant assessment year was Rs. 4,69,62,119/-. Out of the aforesaid cumulative surplus generated Rs. 3,89,70 000/- being 75% of the aforesaid surplus generated by the petitioner was given for a charitable purpose to another Trust named Aditanar Educational Institution for educational purpose as was done in the past since inception. The cumulative tax that has been determined to be paid by the petitioner by the Income Tax Officer in the respective assessment order was Rs. 2,47,57,082/-. The cumulative out flow on account of tax would have been Rs. 6,37,27, 082/-which ought to have been considered by the first respondent before rejecting the application for waiver of interest. It would imply that the petitioner would have to borrow the amounts for keeping its commitment to the said Trust and to the department. Up to the date of the decision of the Honourable Supreme Court on 31.1.2001, the respondent department could not have demanded tax. After all, some form of exemption on the payment/transfer made to the aforesaid trust for educational purpose has been exempted right from beginning and all along the petitioner had to approach the court for relief which was also granted to the petitioner and stand of the petitioner was upheld. The amendment to the law in 1983 with effect from 1.4.1984 changed the perspective and the issue attained finality only after the Honourable Supreme Court pronounced its judgement in [ 2001 (1) TMI 80 - SUPREME COURT] Therefore, this was a fit case for granting waiver by the first respondent to the petitioner upto 31.01.2001. This court is inclined to modify the impugned order and grants partial waiver of interest to the petitioner upto 31.01.2001, being the date of the order of the Honourable Supreme Court [ 2001 (1) TMI 80 - SUPREME COURT] which reversed the decision of the Division Bench of this Court in [ 1994 (12) TMI 62 - MADRAS HIGH COURT] The second respondent is therefore directed to re-quantify the proportionate interest to be paid by the petitioner on account of the delay in payment of advance tax from the date of disposal of the appeal of the Income Tax Department by the Honourable Supreme Court on 31.1.2001 till the actual date of payment aforesaid tax by the petitioner. This exercise shall be carried out within a period of three months from the date of receipt of a copy of this order.

  ---

• 2021 (5) TMI 38
  Validity of block assessment - time limit for completion of block assessment - as per assessee proceedings having been initiated after a lapse of 6 years from the order of this Court - HELD THAT:- As per section 158BE of the Income Tax Act, 1961, an order has to be passed within a period of one year from the end of the month in which the last of the authorisations for such under section 132 or requisition under Section 132A, as the case may be, was executed in case where a search is initiated or books of account or other documents or assets position after the 30th day of June, 1995, but before the first day of January 1997. In this case admittedly the assessment order who had been passed within the limitation prescribed by 31.1.1997 by the assessing officer. The assessing officer was not only required to issue notice within 15 days of such requisition/authorization but also required to complete the assessment procedures within a period of one year. Thus, as the provisions as they read do not allow any elaborate cross examination of witnesses by an assessee. These assets have to be taxed in the hands of the petitioner. To assess tax on the assets seized from the petitioner, there is no necessity for extending the petitioner the benefit of cross examination of witnesses. Also, no useful purpose would also be served at this distant point of time to summons witnesses to come for cross examination who allegedly gave statements against the petitioner for licenses issued when the petitioner was the Chairman, Managing Director of the Tamil Nadu Minerals Ltd. and this distant point of time. It will neither serve any useful purpose to the petitioner nor to the Income Tax Department. However, to the extent undisclosed income in the form of assets viz. cash, jewellery and valuable assets were recovered/seized from the petitioner and his associates, the petitioner is liable to pay tax. Therefore, notwithstanding failure on the part of the assessing officer extend the benefit of cross examination of persons who have given statements against the petitioner during investigation, the petitioner is required to discharge income tax liability on the assets viz. undisclosed cash, jewellery and the valuables recovered from his possession from various premises. Under these circumstances, this Court is inclined to dispose the writ petition by directing the respondent to complete the assessment in sofar as the assets recovered from the petitioner and his associates during the search conducted on 19/20.1.1996 within a period of three months from date of receipt of a copy this order

  ---

• 2021 (5) TMI 37
  Default u/s 201 - demand notices challenged by the petitioners on the ground that the tax that has been demanded as arrears of tax from the petitioners Tax Deducted at Source by the second respondent but was not paid the credit of the Central Government - HELD THAT:- The counters filed by the first and the third respondent do not give the exact amount of tax that was allegedly due from the petitioners which ought to have been paid by the petitioners as per the assessments completed for the respective petitioners under section 143 of the Income Tax Act, 1961 as modified by orders passed under section 154 of the Income Tax Act, 1961. During the intervening period, orders have been passed under section 201(i) and 201(IA) of the Income Tax Act, 1961 against the second respondent by three separate orders dated 16 01.2018 for the assessment years 2011-12, 2012-13 and 2013-14 as mentioned above. These have to be factored while demanding arrears of tax to the petitioners. To the extent tax was deducted by the second respondent and not remitted by the second respondent to the Income Tax Department, recovery can be only directed against the second respondent as the second respondent is the assessee in default. The petitioner cannot be made to pay tax twice. Recovery of any of such Tax Deducted at Source but not remitted by the second respondent has to be recovered only from the second respondent. We quash the respective demand notices and direct the third respondent to issue fresh demand notices to the petitioners after taking note of the subsequent developments and payments made by the 2nd respondent. It is made clear that to the extent Tax was Deducted by the second respondent but not remitted, no demand shall be made against the petitioners. If the second respondent had failed to remit the tax to the credit of the Income Tax Department, it is however open to the department to recover the same from the 2nd respondent in the manner known to Law. Balance of tax if any, which has escaped payment alone can be recovered from the Petitioners, by issuing suitable notice under the provisions of the Income Tax Act, 1961. Such notice may be issued within a period of four weeks from the date of receipt of copy of this order.

  ---

• 2021 (5) TMI 30
  Assessment u/s 153A - No speaking order passed by the said respondent rejecting the request of the petitioner to drop the proceedings initiated under section 153A of the Act and directing the petitioner to file return of income for the assessment year 2011-2012 in accordance with the provisions of section 153A - HELD THAT:- If we examine the impugned speaking order prima facie, there is no indication about any tangible evidence showing undisclosed investment in the assets of the petitioner. In paragraph no.5 of the aforesaid order, we find that according to respondent no.2, there is a bogus liability which has resulted into emergence of asset on the other side. Respondent no.2 has not mentioned about any tangible evidence wherefrom it can be deduced about undisclosed investments in any asset of the petitioner. This is a case where a concluded assessment is sought to be reopened beyond the six assessment years and therefore, in such a case provisions of the fourth proviso to section 153A is required to be interpreted strictly. That being the position and considering the long line of judicial precedents starting from Calcutta Discount Co. Ltd Vs ITO, [ 1960 (11) TMI 8 - SUPREME COURT] we are of the view that the matter would require further deliberation by the Court and considering the jurisdictional issue involved it would not be just and proper to relegate the petitioner to face the assessment proceedings and the consequential remedy of appeal, if the occasion so arises. Issue notice, returnable after four weeks.

  ---

• 2021 (5) TMI 29
  Addition under section 68 being share capital received and addition under section 69C on account of commission - some of Directors did not appear in the case of assessee - HELD THAT:- Assessee produced documentary evidences before the A.O. to establish that assessee has received genuine share capital/premium from the Investor Company. The documentary evidences have not been doubted by the authorities below. The Investor Company has declared income of Rs. 173.55 Lacs in assessment year under appeal and has sufficient funds to make investment in assessee-company. It is a Public Limited Company and listed with BSE. Therefore, the assessee-company has been able to prove the identity of the Investor, its creditworthiness and genuineness of the transaction in the matter. Therefore, there were no justification for the authorities below to make or confirm the addition against the assessee under section 68. The Hon ble Delhi High Court in the case of Divine Leasing Finance Ltd. [ 2006 (11) TMI 121 - DELHI HIGH COURT] held that no adverse inference to be drawn if the shareholders failed to respond to the notice issued by the A.O. - Therefore, merely because the same Directors did not appear in the case of assessee would not be a ground to have an adverse inference against the assessee. Considering the totality of the facts and circumstances of the case in the light of above decisions, we do not find any justification to sustain the addition under section 68 and addition under section 69C - Decided in favour of assessee. Reopening of assessment u/s 147 - HELD THAT:- As in the light of this decision, the Order of the Tribunal in the case of ASN Polymers Pvt. Ltd.,[ 2020 (12) TMI 1199 - ITAT DELHI] cannot be considered favourable in favour of the assessee. We, therefore, following the Order of the Tribunal in the case of INS Finance Investment P. ltd., (supra) confirm the reopening of the assessment in the matter. This ground of appeal of Assessee is dismissed.

  ---

• 2021 (5) TMI 26
  Reopening of assessment u/s 147 - information found from the searched person consequent to the search u/s 132 relied upon - HELD THAT:- In the instant case, there is no dispute that the joint receipt was seized during the course of search as mentioned by the AO in the assessment order as well as the remand report and the assessment was made u/s 147 on the basis of statement recorded u/s 132(4) of the Act, appraisal report and the joint receipt.All of them are directly related to the information found from the searched person consequent to the search u/s 132. Therefore, as provided u/s 153A and 153C, all the search assessments required to be made u/s 153A or 153C, but not u/s 147 of the Act. No fresh information was collected by the AO or no information has come to the notice of the AO in normal course other than the information collected during the course of search from the searched person. Thus, the assessee s case is squarely covered by the decision of this Tribunal in G.Koteswara Rao [ 2015 (12) TMI 1280 - ITAT VISAKHAPATNAM] . The department has not brought any other evidence to establish that the joint receipt was not seized during the search/s 132. In the light of the aforesaid discussion and on consideration of facts and the law we, hold that the assumption of jurisdiction by the AO u/s 147 is bad in law, hence, we set aside the order of the Ld.CIT(A) and the assessments framed u/s 147 r.w.s. 143(3) are quashed. The appeals of the assesses allowed.

  ---

• 2021 (5) TMI 22
  Reopening of assessment u/s 147 - unexplained share application money - non independent application of mind by AO - borrowed satisfaction - HELD THAT:- Since the facts of the present case are similar to the facts involved in the aforesaid referred to case of M/s Indo Global Techno Trade Limited [ 2020 (6) TMI 375 - ITAT CHANDIGARH] so respectfully following the aforesaid referred to order dt. 15/06/2020, we are of the view that reopening by the AO in the present case was not justified. Moreover the AO himself admitted that the reopening in this case was based on the information received from Director of Income Tax (Intelligence Criminal Investigation) Chandigarh which is evident from the observation of the Ld. CIT(A). In the present case, the AO initiated the proceedings under section 147 r.w.s 148 of the Act on the basis of the information received from Director of Income Tax (Intelligence Criminal Investigation) Chandigarh - On a similar issue in M/S RAJSHIKHA ENTERPRISES PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-15 (2) , NEW DELHI [ 2016 (6) TMI 1406 - ITAT DELHI] wherein held AO acted upon the report of the Investigation Wing only and on that basis initiated the proceedings for reopening the assessment by issuing the notice u/s 148 of the Act. Therefore, the reassessment proceeding was not valid. In the present case also since the AO acted upon the report of the investigation wing and on that basis initiated the proceedings for reopening the assessment by issuing the notice under section 148 of the Act therefore reassessment proceedings were not valid. In that view of the matter also the reassessment framed by the AO deserves to be quashed. In view of the aforesaid discussions legal issue raised by the assessee relating to the jurisdiction of A.O for reopening of the assessment is decided in favour of the assessee. Since we have decided the legal issue relating to the validity of the assumption of jurisdiction by the AO to reopening the assessment in favour of the assessee.

  ---

• 2021 (5) TMI 21
  Deduction u/s 80IB - CIT (A) allowing deduction u/s.80IB as restricted on account of allowable interest to partners and remuneration to partners by the AO - HELD THAT:- Before restricting / disallowing claim the AO has not issued show cause notice to the assessee. Before the ld.CIT(A), the assessee explained that the AO has not considered the partnership deed dated 01.04.2006 wherein the partners are not eligible for interest and remuneration. CIT(A) after considering the contents of partnership deed dated 01.04.2006 held that the AO himself accepted the contents of second partnership dated 01.04.2006 and its relevant causes and no such disallowance [interest and remuneration] has been made. We have perused the contents of assessment order for A.Y. 2013-14 dated 11.03.2016 passed under section 143(3) by same Assessing Officer. We find that the observation of ld.CIT(A) that no disallowances in subsequent assessment year is made by AO, are correct. The Hon ble Jurisdictional High Court in PCIT vs. AL Reza Food [ 2017 (3) TMI 1237 - ITAT AHMEDABAD] held that mere incorporation of interest on the partner s capital and remuneration does not signify that same are mandatory in nature. Considering the aforesaid factual and legal position, we affirm the order of ld.CIT(A). Appeal of the Revenue is dismissed.

  ---

• 2021 (5) TMI 20
  Denied deduction claimed u/s. 80IC - profit derived from new industrial undertaking at Haridwar on the ground that new unit at Haridwar was set up by splitting up of existing business at Chennai unit - According to the AO the assessee has split up its existing business and formed new unit, when the deduction claimed u/s.80IC was denied to M/s Arun Plasto Moulders Private Ltd., a sister concern of the assessee - AO has also denied deduction on another ground that assessee has used plant and machinery previously used for any purpose beyond the specified percentage as per Explanation 2 of section 80(IA)(3) rws 80IC - HELD THAT:- DR in light of facts brought out by the learned CIT(A) regarding investments in new plant and machinery installed at new unit at Haridwar. Even if, the plant and machinery installed at new unit is considered as on 31.03.2011, then also assessee has invested a sum of Rs. 1,82,32,810/- as on 31.03.2011 and if amount of used plant and machinery at Rs. 31,20,023/-, is considered to total investment in plant and machinery as on 31.03.2011 at Rs. 1,82,32,810/-, the percentage works out to Rs. 17.11%, which is well within the percentage specified in Explanation 2 of section 80(IA)(3) rws 80IC of the Act. Therefore, we are of the considered view that on this count also reason given by the Assessing Officer to deny deduction claimed u/s.80IC of the Act fails. Coming back to case laws relied on by the counsel for the assessee. The learned counsel for the assessee has relied upon plethora of judicial precedents in support of his arguments. The Hon ble High Court of Delhi in the case of CIT Vs.Ganga Sugar Corporation Ltd.[ 1971 (3) TMI 46 - DELHI HIGH COURT] has considered an identical issue in light of the observations of the Assessing Officer of splitting up or reconstruction of business already in existence. The Hon ble High Court in the context of provisions of section 15C of the Income Tax Act, 1922, which is similar to the provisions of section 80J of the Income Tax Act, 1961 The Hon ble Jurisdictional High Court of Madras in the case of CIT Vs. Premier Cotton Mills Ltd, [ 1999 (2) TMI 41 - MADRAS HIGH COURT] has discussed in more detail the splitting up or reconstruction of already existing business in the context of deduction u/s.80J. In this view of the matter and considering case laws discussed herein above, we are of the considered view that the assessee is eligible for deduction u/s.80IC of the Act in respect of profit derived from new undertaking set up at Haridwar. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards disallowances u/s.80IC of the Act and hence, we are inclined to uphold the findings of the learned CIT(A) and dismiss the appeal filed by the Revenue.

  ---

• 2021 (5) TMI 19
  Excess stock found during survey - AO made addition and also the Gross-Profit (GP) on it - HELD THAT:- Having regard to the working statement of the survey team it cannot be denied that the survey team had physically found stock having selling value of Rs. 1,43,00,000/-. Applying the GP rate of 6.74%, the cost price of such stock works out to Rs, 1,33,97,040/-. As noted earlier, and also at Para 3 of the assessment order, the stock available in the books as on the date of survey was Rs. 1,10,80,923/-. Giving the benefit of the dead stock of Rs. 8,79,415/-, as allowed by the AO at Para 5 of the impugned order, the discrepancy in the stock works out to Rs. 14,36,702/-[Rs. 1,33,97,040 - Rs. 1,10,80,923 - Rs. 8,79,415]. Considering the aforesaid facts and circumstances, we are of the view that the value of excess physical stock found in the course of survey can be reasonably estimated at Rs. 14,36,702/- and G.P rate of 6.74% on it are sustained (BOTH). The CO of the assessee is partly allowed to this extent.

  ---

• 2021 (5) TMI 17
  Capital gain - Additions made u/s 50C - as during that period there was only one purchase and one sale of land and the AO has rightly treated the land transaction liable for capital gain - CIT-A deleted the addition - HELD THAT:- Commissioner (Appeals) deleted the entire addition by taking view that the assessing officer has not given any finding or conducted any independent inquiries that the land sold by assessee can be equated on the same rates. It was also held that no physical inspection has been done; no finding on location of the land, size of the plot has been given. If this land is adjoining to the assessee s land, which could be one of the bases for comparing the rates, has also not been carried out by the assessing officer. The composition of two pieces of land being located in the same area which may be spreading in several kilometer is an absolutely absurd and fallacies comparison. It was further held that by no stretch of imagination, without making any sport physical verification, two piece of land can be compared to work out the fair market value. The assessing officer has simply borrowed the finding of CIT(A)-IV, Surat, without seeing its relevance or reference and applied the fair market value on the assessee s land. No addition under section 50C can be made in absence of any evidence. In our view the ld. Commissioner (Appeals) has passed a reasoned and detailed order after considering all the facts, which we affirm. - Decided against revenue.

  ---

• 2021 (5) TMI 16
  Revision u/s 263 - Share issued at Premium by the assessee - whether the A.O. had made the proper enquiry or not and that the view taken by the A.O. was a possible view in accordance with law or not? - HELD THAT:- CIT was not justified in considering the assessment order passed by the AO as erroneous and prejudicial to the interest of the Revenue, particularly when the AO after making the proper enquiry and considering the various documents furnished by the assessee, had taken a possible view. Therefore, the Ld. Pr. CIT was not justified in considering the assessment order passed by the AO as erroneous on this basis that the assessee could not produce the Directors, as has been held in the aforesaid referred to case of M/s. Technico Metals Pvt. Ltd. Vs. DCIT. [ 2019 (2) TMI 1923 - ITAT CHANDIGARH] In the present case, as we have already pointed out that the AO asked the assessee to furnish the relevant details relating to the shares issued at premium to various companies and the assessee furnished all the relevant documents which were examined by the AO who had taken a possible view, therefore as per the ratio laid down bin MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT] in the aforesaid referred to case, even if the Ld. Pr. CIT did not agree with the view taken by the A.O., the said assessment order passed by the A.O., cannot be treated as an erroneous order and prejudicial to the interest of the Revenue. As regards to the allegation that the assessee could not produce Director of the Investor companies, it is noticed that the assessee furnished confirmatory letters received from the Investing companies alongwith copies of the Balance Sheets, copies of Ledger Accounts of the broker etc and requested to the Ld. Pr. CIT to issue commission as per provisions of Section 131(1)(d) of the Act, since all the Directors of Investing Companies were permanently based in Kolkata which was nearly 1700 Km away from Ludhiana and therefore the assessee requested to AO to issue the commission. However the AO after appreciating the complete documentary evidences placed on record and applying his mind to the facts of the case, accepted the evidences filed by the assessee and had taken a possible view. Ld. Pr. CIT was not justified in exercising his powers under section 263 - Decided in favour of assessee.

  ---

• 2021 (5) TMI 9
  Denying the carry forward of short-term capital loss - HELD THAT:- While determining taxability of the income of an assessee, if provisions of the Act are more beneficial as compared to the tax treaty then the beneficial provisions of the Act will apply in determining the taxability of such income. Thus, having regard to the provisions of section 90(2) of the Act and given that the provisions of section 74 of the Act permit the Assessee to carry forward capital losses to subsequent assessment years, the provisions of the Act are more beneficial than the provisions of the IS treaty. For the year under consideration, the Assessee has filed its return of income in accordance with the provisions of the Act. Based on judicial jurisprudence, the provisions of the IS treaty cannot be trusted upon the Assessee simply because the Assessee is a tax resident of a country with which India has entered into a tax treaty or on account of the mere perception of the AO that the Assessee may claim benefits under the tax treaty in subsequent years. Accordingly, we are of the view that the capital losses incurred from transactions in the Indian capital markets should be construed as income accruing or arising from transactions undertaken in India falling within the scope of section 5 of the Act and therefore, the same should be eligible to be carried forward to subsequent years in accordance with the provisions of section 74 of the Act. We allow this issue of assessee.

  ---

• 2021 (5) TMI 7
  Reopening of assessment u/s 147 - whether the notice issued under section 143(2) of the Act to the assessee barring time limitation is contrary to the provisions of the Act? - HELD THAT:- In the case of CIT Vs. Laxmandas Khandelwal [ 2019 (8) TMI 660 - SUPREME COURT] wherein it was held that according to section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even there be infraction as detailed in the said section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the section does not save complete absence of notice. For section 292BB to apply, the notice must have emanated from the Department. It is only the infirmities in the manner of service of notice that section seeks to cure. The section is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice under section 143(2) of the Act was however issued by Department, the finding rendered by the High Court and the Tribunal and the conclusion arrived at were correct. As held by Kerala High Court in the case of Padinjarkara Agencies Pvt. Ltd., Vs. CIT [ 2017 (8) TMI 724 - KERALA HIGH COURT] after considering the judgment of Hotel Bluemoon cited [ 2010 (2) TMI 1 - SUPREME COURT] held that where adverse orders are passed against assessee only after affording assessee proper opportunity, then Assessment Order passed can be considered as valid. Being so, in our opinion, it is appropriate to remit the issue to the file of CIT(A) to examine whether there is proper service of notice under section 143(2) of the Act before 31.12.2012 in these cases to the assessee after seeing the case records and decide accordingly in the light of judgment of Hotel Bluemoon cited supra.

  ---

• 2021 (5) TMI 4
  Rectification of mistake u/s 154 - Non granting interest under section 244A of the Act on the self assessment tax paid - assessee s refund is arising out of self assessment tax paid - HELD THAT:- This issue is covered by the decision of Hon ble Bombay High Court in the case of Stock Holding Corporation of India Ltd [ 2014 (11) TMI 899 - BOMBAY HIGH COURT ] this mistake apparent from record can be rectified and it is within the purview of rectification under section 154 of the Act. In our view, once the assessee has paid self assessment tax, in case refund arises it would be entitled to interest under section 244A(1)(b) of the Act on the self assessment tax from the date of payment of self assessment tax till the date of actual payment of refund. Hence, we direct the AO accordingly.

  ---

• 2021 (5) TMI 3
  Depreciation by adopting the stamp value as per the provision of Section 50C of the Act instead of value declared as per WDV - HELD THAT:- AO and CIT(A) has taken the value as per the provision of Section 50C of the Act and disallowed the differential depreciation claimed - In our view, while computing the amount of depreciation allowable for a year, what is to be reduced from the opening WDV is the price for which an asset, comprising with a particular block of assets, is sold during the year. There is no provision to substitute this money payable by any other value, either expressly or by implication, much less substantiating fair market value or stamp duty value as per the provision of Section 50C of the Act for the price agreed. As per the scheme of the provision of Section 32 r.w.s 43(6) of the Act, which is a self contained scheme to compute the amount of deprecation allowable under the Act. According to our view, the reference to section 48 of the Act or the termful value of consideration are absent. Therefore, even otherwise, these two sections are not applicable in section 43(6) - assessee relied on the decision of Hon ble Bombay High Court in the case of Cable Corporation of India Ltd. [ 2011 (6) TMI 233 - BOMBAY HIGH COURT ] Thus we are of the view that the provision of Section 50C of the Act will not apply and the claim of the depreciation is allowable. Hence, we allow the claim of the assessee and set aside the order of the lower authorities on this issue. - Decided in favour of assessee.

  ---

• 2021 (5) TMI 2
  Revision u/s 263 - Difference in interest amount as per 26AS and as offered for taxation - HELD THAT:- AO as well as CIT(A) erred in holding that the entire interest belongs to assessee whereas, the assessee has passed on its share in proportion to the actual beneficiaries. It is only the assessee s family members and group entities who have received the interest through the assessee and passed it to its real owner. The assessee has filed complete details before the AO and AO after going through the details of interest as is mentioned in letter dated 05.10.2016 filed before Pr.CIT, the AO framed the assessment originally. The PCIT without looking into these details passed Revision Order for verification purpose only. Even in AY 13-14, i.e. immediately succeeding year in assessee s own case the CIT(A) allowed the claim of the assessee in regard to distribution of proportionate interest received on account of Cadila Health Care Limited as well as Biochem Pharmaceutical industries Limited. Even the same Assessing Officer framed assessment in the hands of the assessee s brother Shri Sheyans Jaswantlal Shah while framing assessment under section 143(3) of the Act for AY 2012-13 and accepted the interest declared in the returned of income. Hence, we are of the view that the assessment framed by AO originally, under section 143(3) of the Act dated 30.01.2015 is neither erroneous nor prejudicial to the interest of the Revenue. Even on facts as discussed above, the assessee has rightly disclosed the interest proportionately in its returned of income for the relevant AY 2012-13. Hence, the Revision Order passed by PCIT is set aside and the appeal of the assessee is allowed.

  ---

• 2021 (5) TMI 1
  Disallowance of depreciation claimed on capitalization of preoperative expenses - CIT (A) deleted the addition on the grounds that the capitalization of expenses on the plant machinery has been made in accordance with the accounting standard. - HELD THAT:- Any expenditure on putting up fixed asset will amount to the cost of fixed asset. It is also an accepted standard that AS-1 O regarding accounting for fixed assets issued by the ICAI specifies the components of cost of a fixed asset. Thus, the purchase price of an asset includes import duties, levies and any other cost directly attributable to the asset for bringing it to the working condition. The contention of the learned DR referring to the findings of the Assessing Officer that these expenses are revenue in nature cannot be accepted as in the pre-operative stage, all the expenses are capitalized irrespective their nature in the general parlance. The revenue has not been able to bring any evidence on record that any of the expenditure was not related to the plant machinery. It is an undisputed fact that the assessee has incurred expenditure of Rs. 29 ,22,016 /- in the pre commencement period. Even if all the expenses are revenue in nature, since the expenses were incurred for setting up fixed asset, they have to be capitalised. Section 43(1) defines actual cost to mean actual cost of the asset to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority. In the case of CIT Vs. Food Specialities Limited, (1982 )136 ITR 203 (Delhi), it was held that the Tribunal was right in holding that the expenditure of test runs was a capital expenditure. Therefore, expenses involved in purchase of milk and determining that the factory was in proper working condition and making adjustment does not seem to be anything more than steps in setting up and finalisation of the factory, which is the capital asset. After tests have been carried out, it can be said that the factory had been set up and it is ready for commercial production. Therefore, the expenses can be said to have been incurred as cost of the plant and machinery. In the case of Challapalli Sugars Limited [ 1974 (10) TMI 3 - SUPREME COURT] it has been held that interest of Rs.- X - incurred on borrowed capital for purchase of plant and machinery, accruing to the date of installation of the machinery is a capital expenditure, on which depreciation and development rebate are admissible. From this decision it can be said that if an expenditure which is otherwise of revenue in nature, has been incurred towards acquisition of a capital asset, it will be the cost of the asset provided it has been incurred upto the date of installation of the asset. However, it is also clear that there should a direct nexus between expenditure and putting up of the asset. Hence, keeping in view the facts of the case, provisions of Section 43(1 ), provisions of Section 32 and the judgments of the Hon ble Supreme Court, we hereby decline to interfere with the order of the ld. CIT (A). Interest Income - AO has added an amount being 12 % notional interest on the amount of loan extended to the subsidiary company of the assessee - AO held that the assessee has claimed finance expenses of Rs. 1.89 crores on the loans taken and since the interest bearing funds have been utilized to accord interest free advances to the subsidiary company, the interest receivable by the assessee company needs to be charged - HELD THAT:- As examined the balance sheet and found that the assessee has got paid up capital of Rs. 8 .7 crores for the year ending 31.03 .2006 and Rs. 9 .9 crores for the year ending 31.03.2007. The reserves surplus of the assessee varied between Rs. 26 .3 crores to Rs. 28 .2 crores for the two years. Since, the assessee has indisputably been proven to be having sufficient own funds, no disallowance u/ s 36(1 )(iii) of the Act is called for or no notional charging of the interest is legally acceptable. The assessed is at liberty to use their own funds as they deem fit, keeping in veiw the business contingencies as long as such action doesn t result infarction of any statue or laws in force. We hold that the action of revenue is not backed up by any legal sanction . Hence,the appeal of the revenue on this ground is hereby dismissed. Deemed Dividend and Allotment of Shares - As per the balance sheet, the assessee has received an amount during the financial year 2005-06 as share application money, pending allotment - HELD THAT:- it is clear that the share application money was received in the earlier assessment year 2006 -07 . The AO has mentioned (page 8 of AO) that the amounts have been introduced in the earlier year but went ahead making variation u/s 68 during the instant year. Hence, the addition made by the Assessing Office u/s 68 in the assessment year 2007-08 of the monies received in the earlier assessment year 2006-07 is liable to be quashed. Appeal of the revenue on this ground is allowed. Addition of sundry creditors - sundry creditors have not complied to the notices issued u/ s 133(6 ) - HELD THAT:- List of creditors is on account of the purchases made by the assessee during the year and amount outstanding against them. AO made addition on the grounds that the identity, genuineness and creditworthiness of the sundry creditors because the notices issued u/s 133 (6) have not been complied with. The notices have been duly received by the parties and their failure to reply cannot be attributed as a cause of default by the assessee. The fact that the notices have been duly served demonstrate the existence of the parties - the assessee has been continuously dealing with these parties in subsequent years which could have been verified by the AO as the records available with the revenue. The parities namely, M/s Sutluj Industries Ltd., M/ s Vardhman Trades Ltd., M/s Ruchi Impex by general parlance cannot be said to be non-existing entities. Notwithstanding that, no enquiries have been conducted by the AO to prove or to suspect the transactions to be of bogus in nature. After duly serving and receipt of the notices and failure of the recipient parties, to comply to the notices, cannot make the sundry creditors liable to be treated u/s 68 - Once, the assessee has discharge the onus by furnishing the details to prove the genuineness of the transaction, then the onus shifts on to the revenue to prove that these transactions have not genuine. Such enquiry has not even initiated by the Assessing Officer while bringing the amounts to tax. The addition was made by the AO just because the sundry creditors have not complied to the notices issued u/ s 133(6 ) of the Act. - Decided in favour of assessee. Addition on share premium account - HELD THAT:- On perusal of record and while deciding the issue of deemed dividend and allotment of shares, we have noted that Share Application Money was received in AY 2006-07 and not in AY 2007-08. Hence, on this ground itself, no addition is warranted u/s 68 of the Act. Further, out of total amount received, Rs. 1.19 cr. is against share capital account and Rs. 84,88,000/- against share premium and Rs. 1,80,000/- against forfeiture. Hence, no addition on this account is warranted. The ground of appeal raised by assessee is allowed.

  ---

• Customs

• 2021 (5) TMI 45
  Reassessment of the Bill of Entry - dues are within the Operational debt under IBC or not - It is the case of the petitioner that the amendment to Serial No. 55 to Notification No. 12/2012-Customs dated 17.3.2012vide Notification No. 46/2015- Customs dated 17.9.2015 which increased the rate of duty from 7.5% to 12.5% cannot be said to have come into force on the date of assessment on 17.3.2012 as per the Section 25 of the Customs Act, 1962 as it stood on the date - Alternative remedy of appeal - HELD THAT:- The petitioner has an alternate remedy to file an appeal against the assessment before an Appellate Commissioner under Section 128 of the Customs Act, 1962 against the reassessment in the impugned Bill of Entry - There are no point in relegating the petitioner to work out the remedy before the Commissioner of Customs (Appeals) at this distant point of time straight away without examining the case on merits. The petitioner has also persuaded this court that a final decision may be given on merits as well. Whether the customs duty payable under the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 is an operational debt of the petitioner within the meaning of Section 5 (21) of the IBC Code, 2016 and whether the respondent Customs Department is an operational creditor within the meaning of Section 5 (20) of the IBC Code, 2016? - HELD THAT:- It should be remembered that Insolvency and Bankruptcy Code 2016 was enacted with a view to provide a speedy mechanism for resolving bankruptcy and insolvency of such person. It is being implemented in a phased manner. The provisions of the Companies Act, 1956 which contained provisions for winding up has been regrafted into the IBC, 206 with modification - Under the scheme of the IBC, 2016, any operational creditor or a financial creditor to whom a corporate debtor owes any amount above Rupees One Lakh and above is entitled to file an application for corporate insolvency resolution proceeding against such debtor under Section 9(2) of the IBC, 2016 read with Rule 6 in Form 5 before the NCLT with a fee of Rs. 2,000/- accompanied with documents and records as are required under Section 9(3) and under Regulation 7(2) - If Corporate Resolution Plan filed by Corporate Applicant is approved by the jurisdictional Company Law Board, the creditors are bound by it. Operational debt is incurred by a corporate de btor by failing to meet his liability to pay or clear the Operational debt as defined in Section 5(21) of the IBC, 2016. Thus, tax and duties levied and collected under law can never be treated as Operational deb t as defined in Section 5(21) of IBC, 2016 - As an importer, such a person is liable to pay customs duty under Section 12 of the Customs Act, 1962 at the rates specified under the Customs Tariff Act, 1975, or any other law for the time being in force. The entire tax administration of the country is now in a pell-mell. All the tax authorities will have to make a beeline before the National Company Law Tribunal every time to recover tax dues if under any circumstances proceedings are initiated against corporate debtor under the IBC, 2016. This was not the intention when the Act was enacted - Insolvency and Bankruptcy Code (Amendment) Bill, 2019 has changed the Act. This is evident from a reading of the Statement of Objects and Reasons of the Insolvency and Bankruptcy Code (Amendment) Bill, 2019. Though the definition of Operational Debt in Section 5(21) of the IBC, 2016 is not intended to include crown debt such as taxes and duties payable to the Government and is distinct from the claim and debt as defined in Section 3 (6) and 3(11) of the IBC,2016, as mentioned above in the beginning of the discussion on the second part of this order, this Court is bound by the interpretation placed in the above decision of the Hon ble Supreme Court in Ghanashym Mishra and Sons Vs. Edelweiss Asset Construction, [ 2021 (4) TMI 613 - SUPREME COURT] and the reasons given therein and in the light of the amendment to the IBC, 2016 in 2019 and in the light of the clarification of the Finance Minister when the 2019 bill was put to discussion in the parliament - This Court therefore partly accepts the contention of the petitioner in so far as issue relating to extinguishment of the rights of the respondent customs department to claim the customs duty in the light of the decision of the Hon ble Supreme Court in Ghanashym Mishra and Sons Vs. Edelweiss Asset Construction referred. The case is therefore remitted back the respondent to await clarification to be obtained by the Petitioner from the National Company Law Board as to whether the Corporate Resolution Plan filed by the Corporate Applicant included the customs duty to be paid by the Petitioner on the import under the subject bill of entry - Petition allowed by way of remand.

  ---

• Corporate Laws

• 2021 (5) TMI 51
  Validity of Section 272(1)(e) of Companies Act, 2013 - seeking declaration that the second proviso to Section 272(3) of the Act, must be read to be applicable to the petitions presented by persons falling under Section 272(1)(e) of the Act - Whether Section 272 (1)(e) is ultra vires Constitution of India? - HELD THAT:- It is settled that when a provision of law is challenged, Courts are required to exercise restraint and be cautious in striking down a provision. It may be profitable to note the decision of the Apex Court in Government of Andhra Pradesh and others Vs. P. Laxmi Devi (Smt) [ 2008 (2) TMI 850 - SUPREME COURT] where it was held that Constitutional validity of the amended Section 47A of the Stamp Act is upheld. The impugned amendment is an economic measure, whose aim is to plug the loopholes and secure speedy realization of stamp duty, thus the said amendment, being an economic measure, cannot be said to be unconstitutional. Whether order dated 18.01.2021 needs any interference? - HELD THAT:- In the case on hand, petitioner is a miniscule shareholder in Devas. It has already filed an application for impleadment before the appropriate forum namely the NCLT. Devas is not aggrieved by the sanction order. Petitioner has all opportunity to urge its contentions before NCLT. At this juncture, there is no order, which has any civil consequences - petitioner has challenged the order dated January 19, 2021 passed by the NCLT before the NCLAT and the NCLAT has disposed of the said appeal by its order dated February 11, 2021 by directing petitioner to file necessary interlocutory application before the NCLT seeking permission to implead itself in the main pending Company Petition. NCLAT has also granted liberty to raise all factual and legal pleas before the NCLT. Petitioner has accepted the said order and proceeded further and filed an application under Rules 11 and 34 of the NCLT Rules, 2016 for impleadment in the main petition. Having held that Registrar and a person authorized by the Central Government fall into different categories, it does not warrant reading down Section 272(3) of the Companies Act - both points for consideration are held in the negative. Petition dismissed with cost of Rs. Five Lakhs payable in the name of the Registrar General of this Court within four weeks from today.

  ---

• 2021 (5) TMI 35
  Application for reservation of the name Reef Center for Wellness and Excellence LLP - Rule 18(5) of the LLP Rules - HELD THAT:- The petitioner had applied for reserving the name REEF Wellness and Excellence LLP and the name was reserved for the petitioner for three months. True, the petitioner could not make an application for registration of LLP within three months. However, the petitioner submitted an application for incorporation of LLP in the said name as per Ext.P3 on 23.01.2020. Defects in the application were noted by the respondents in instalments as per Exts. P4, P5, P7, P9 and P10 and the petitioner was made to file fresh applications time and again - t is evident from Ext.P16 that the word REEF is now included in the names of entities dealing in Class 05 goods in Fourth Schedule to Trade Marks Rules, 2002, namely, Pharmaceutical, veterinary and sanitary preparations, dietetic substances adapted for medical use, food for babies, plasters, materials for dressings; materials for stopping teeth, dental wax; disinfectants, preparation for destroying vermin; fungicides, herbicides. The petitioner proposes to deal in services and his activity may fall under Classes 44, 35 or 41 as is evident from Ext.P4 communication of the respondents. The Hon ble Apex Court considered the issue of registering similar trade name by different entities for difference classes of products, in NANDHINI DELUXE VERSUS KARNATAKA CO-OPERATIVE MILK PRODUCERS FEDERATION LTD. [ 2018 (7) TMI 2176 - SUPREME COURT] . In the said case, the appellant before the Supreme Court was operating a restaurant under the trade mark NANDHINI and the respondent was selling milk and milk products under the mark NANDINI. The Hon ble Apex Court held that as the products of the appellant and respondents fall in different classes, there is no question of confusion or deception in the matter of Trade Mark. The case of the petitioner in fact stands on a stronger footing. The registration of word mark already granted by the respondents are REEFLEC , REEF , REEFIT FORTE , REEFER (HEMATANIC) which are all for products falling under Class 05. The petitioner seeks the name Reef Wellness and Excellence LLP , not for any product but for a service, and that too which does not fall under Class 05. The name proposed by the petitioner cannot be said to be identical or deceptively similar - the respondents are not justified in declining incorporation of LLP as sought for by the petitioner on the ground of similarity of name. Petition allowed.

  ---

• 2021 (5) TMI 27
  Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- It is seen from the records that the Petitioners have filed an affidavit on 23.11.2020 affirming compliance of the order passed by the tribunal dated 13.10.2020. A perusal of the affidavit disclose that the Petitioners have affected the newspaper publication as directed in one issue of the Business Standard (English Edition) and (Hindi Edition) both on 13.11.2020 in relation to the date of hearing of the petition. Further, the Petitioners have also affirmed that the copy of petition have been duly served upon the Registrar of Companies, Regional Director, Northern Region and Income Tax Department, Official Liquidator, in compliance of the order and in proof of the same acknowledgment from the respective offices have also been placed on record. There appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 232 of the companies act, 2013 - Petition allowed.

  ---

• Insolvency & Bankruptcy

• 2021 (5) TMI 23
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and Default - time limitation - Service of notice - hearing not attended - HELD THAT:- In the instant case, the Appellant had come out with a categorical assertion that the notice was served upon the Respondent on 03.02.2020 and later 08.01.2021 and affidavit of service to that effect was filed before th Adjudicating Authority. When that be the fact situation, when the Respondent had failed to appear before the Adjudicating Authority then, it is duty bound to record the absence/ there being no representation of the Respondent, to hold that service was held sufficient and to proceed further, as per Rule 49 of the NCLT Rule, 201Rs. 6 under the caption Ex parte hearing and disposal . Time Limitation - HELD THAT:- In the present case the debt fell due on 01.02.2017 being the date of last invoice raised by the Appellant/Operational Creditor. The Application was filed before the Adjudicating Authority in the year 2019 which is well within the period of Limitation. In reality, the Adjudicating Authority had committed an error in making an observation that the Application suffered from Delay and Latches and the same is clearly unsustainable in the eye of Law, in the considered opinion of this Tribunal . This Tribunal taking note of the fact that the Director of the Respondent through email on 15.11.2017 had assured the Appellant that the Respondent would making the payment towards the dues on monthly instalment basis (since the Respondent was passing through financial crisis) and further only partly settled the dues till February, 2018, and keeping in mind of the vital fact that the court notice was served upon the Respondent on 03.02.2020 and subsequently on 08.01.2021 - this Tribunal comes to an inevitable conclusion that the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench) had committed an error in issuing slew of directions to the Registrar of Companies , Bengaluru to examine whether the corporate Debtor had complied with the statutory requirement and to take appropriate action etc., and suffice it for this Tribunal to make a relevant observation in the present Appeal that such directions issued by the Adjudicating Authority cannot be countenanced in the eye of Law. Appeal allowed.

  ---

• 2021 (5) TMI 18
  Requirement of submission of Resolution Plan in the name of the Corporate Debtor - eligibility to submit the Resolution Plan in view of the Govt. of India Gazette Notification dated 26th June, 2020 - HELD THAT:- As per the IBBI Regulations, the Corporate Debtor cannot submit a Resolution Plan in the CIR Process. When this issue was argued, the learned counsel for the applicant stated that the applicant is ready to submit the Resolution Plan in the name of the applicant in his individual capacity. Eligibility to submit the Resolution Plan in view of the Govt. of India Gazette Notification dated 26th June, 2020 - HELD THAT:- Considering the revised criteria laid down by the MSME as per Notification dated 26.6.2020, the Corporate Debtor qualified as a MSME under the revised norms. However, the notification was issued after admission of the application for initiation of CIRP considering the covid 19 pandemic in the country. The Resolution Professional further states that the Corporate Debtor meets the statutory requirements and revision in the MSME criteria and the Resolution Professional is ready to accept the Resolution Plan from the applicant, if a direction to that effect is granted by this Tribunal - In SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] , the Hon ble Apex Court made it clear that I B Code envisages maximisation of value of Assets of the Corporate Debtor so that they are efficiently runs as going concerns and in turn will promote entrepreneurship. The liquidation can be ordered as a last resort if there is no Resolution Plan and the Resolution Plans submitted are not fulfilling the criteria laid down therein. Application is disposed off.

  ---

• 2021 (5) TMI 14
  Condonation of delay of 381 days in relation to the main Application filed seeking inter alia to institute and enquire into the conduct of the Resolution Professional - seeking declaration that CIRP culminating with the acceptance of the Resolution Plan of M/s. Hi-tech Bio Products Pvt. Ltd. as null and void and to direct to restart of the CIR process - HELD THAT:- It is evident that the Resolution Plan itself has been approved by this Tribunal against which no appeal seems to have been preferred and even in relation to the rejection of the Applicants being declared as ineligible under Section 29(A) of IBC, 2016 even though Appeals have been preferred up to the highest Court of the land, no worthwhile relief has been granted to the Applicants herein. A Resolution Plan which stood approved by this Tribunal as per the averments contained by the 1st Respondent has been fully implemented in as much as the claimants have been settled as envisaged under the Resolution Plan. Pertaining to the allegations as made against the conduct of the Resolution Professional, it is required to be noted that the appropriate Authority for consideration of the same is the Regulator viz., IBBI, if at all the Applicants have any grievance, the same is required to be made with the IBBI in the capacity as a Regulator and not before this Tribunal so that if it is found true, appropriate action can be taken against the conduct of the Resolution Professional, who conducted the CIRP of the Corporate Debtor. There are no sufficient cause being given in the Application seeking for the condonation of delay of 381 days other than merely stating that due to administrative reasons, there has been a delay - application for COD dismissed.

  ---

• 2021 (5) TMI 13
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Pleadings are completed. This application is filed by Mr. Bishwajeet Bhaskar, who has been authorised by the Board resolution dated 29th May, 2019 to represent the applicant. Ld. Counsel for the petitioner submits that the loan in the form of Inter Corporate Deposit was given under an ICD Agreement dated 10.03.2010 for a sum of Rs. 2,50,00,000/- with interest at the rate of 12 per cent per annum, by M/s. Wardha Power Corporation - The Corporate Debtor is party to the said deed of assignment. The loan ought to have been repaid by the Corporate Debtor, which they failed. The date of the default as per the details provided in the application is 01.03.2019. As per the application total sum of Rs. 5,29,83,826/- is due and payable by Corporate Debtor. The debt and default are proved. The applicant herein has proposed name of Ms. Varalakshmi Narala to act as Interim Resolution Professional - Application admitted - moratorium declared.

  ---

• 2021 (5) TMI 12
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has proved the existence of an Operational debt and its default on the part of the Corporate Debtor and in the absence of any objection being raised by the Corporate Debtor, we are of the considered view that the Corporate Debtor has committed default in the repayment of the Operational debt to the Operational Creditor and in the said circumstances we are constrained to initiate the CIRP in relation to the Corporate Debtor - Further in relation to the Pecuniary Jurisdiction even though the Threshold Limit has been raised to Rs. 1 Crore as and from 24.03.2020 by virtue of a Notification issued under Section 4 of IBC, 2016, as regards the present Application, it is seen that the present Application has been filed on 23.01.2020, which is well before the Notification effected in increasing the threshold limit from Rs. 1 lakh to Rs. 1 Crore as on and from 24.03.2020 and as such this Tribunal has got the Pecuniary Jurisdiction to entertain this Petition, as filed by the Operational Creditor. The Petition, as filed by the Operational Creditor, is required to be admitted under Section 9(5) of the IBC, 2016 - Petition admitted - moratorium declared.

  ---

• 2021 (5) TMI 11
  Seeking direction upon the Responded to consider the offer of the Applicant in a time bound and transparent manner - seeking declaration that the sale of metal scraps and sheds of the Company in Liquidation as null and void - seeking to stay the process of Private Sale of the assets of the Company in Liquidation till further orders by this Hon ble Tribunal - seeking to grant status quo qua sale of sheds by the Respondent - HELD THAT:- On perusal of the record, it is found that reserve price of the Surat material, scrap and sheds was fixed at Rs. 168 crores which the Liquidator succeeded in selling in Private Sale on the price higher than the reserve price in last failed auction at Rs. 168.11 crores. It is also to be mentioned herein that the reserve price is reflected in the Second Amendment to the Advertisement in inviting EoIs at page 75 of IA 136 of 2021 to the tune of Rs. 168 crores and its asset description and price can be seen from page 71-72 of the reply of the Liquidator, wherein the cost of ships and vessel under construction is included in the reserve price as Rs. 121 crores. Furthermore, Applicant of IA 238 of 2021 has paid total Rs. 169.11 crores i.e. higher than the reserve price. On perusal of the record, it is found that the delivery note was executed on 07.12.2020 and the final transfer was made after passing the order of Private Sale. Hence, the allegation that the Liquidator has entered for Private Sale prior to the permission granted by this Adjudicating Authority is not sustainable, in as much as, on 28.11.2020 no transfer has taken place. That apart, Liquidator has given the delivery note only on 07.12.2020 i.e. after getting the permission of Private Sale. It is also pertinent to mention herein that the material was also sold above the Reserve Price as per Regulation 33 of the Liquidation Process Regulations, 2016. Hence, there appears to be no irregularity. Application not maintainable.

  ---

• 2021 (5) TMI 10
  Revision of Resolution Plan - exclusion of time period from the date of rejection of the Applicant s request by the RBI i.e. August 19, 2020 till the date of order of this Tribunal, from the calculation of the timelines envisaged under the approved resolution plan - seeking to enable the applicant to comply with the implementation of the Resolution Pan approved - HELD THAT:- It is seen that what sought for by the Applicant is not a modification of the Resolution Plan which was approved by this Tribunal on 20.07.2020; the Applicant has only sought for the change in the funds infusion mechanism and change in the shareholding pattern. It is also pertinent to observe that none of the stakeholders, including the Monitoring Committee, have raised any objections to the revisal as sought for by the Applicant herein. The Learned Senior Counsel Mr. Arvindh Pandian, appearing on behalf of R1/Monitoring Committee categorically states that There is no bar for ARC to participate as Resolution Applicant . Furthermore, there is no change or modification regarding allocation of funds. The stakeholders of the Corporate Debtor are not affected by this change of infusion of fund sought by the Applicant. The approved Resolution Plan can be implemented in toto. This application seeks for change of shareholding pattern, and infusion of funds, and takeover of debt, between the Resolution Applicants. Since there is no bar as per RBI guidelines and further stakeholders are not affected, this application may be allowed - keeping in mind the preamble to Insolvency and Bankruptcy Code, 2016, this Adjudicating Authority deems it fit to approve the revisions in the Approved Resolution Plan as sought for by the Applicant in order to protect the best interest of all the stake holders of the Corporate Debtor. Accordingly, revision of the resolution plan as regards the amended shareholding pattern necessitated on account of the changed infusion mechanics and the assignment of the debts as observed herein above earlier is permitted to be carried out without affecting the rights of the stakeholders to the resolution process, which includes achieving resolution for the Corporate Debtor and value maximization of its assets as well as the interest of stakeholders - no material terms of the Approved Resolution Plan are sought to be altered and all terms of the Approved Resolution Plan in relation to the rights of the stakeholders are preserved without any modification and all statutory requirements would be complied with for implementation of the Approved Resolution Plan. In exercise of powers conferred under Rule 11 of NCLT Rules, 2016, this Adjudicating Authority hereby exclude the period between 19.08.2020 (rejection of request of UVARC for equity infusion by RBI) and the date of passing this order stands excluded from the timelines for implementing the approved resolution plan in the revised form - Application allowed.

  ---

• 2021 (5) TMI 6
  Seeking prohibition from invoking Bank Guarantee given by the applicant - seeking restraint on respondent No. 2 from remitting an amount of Rs. 1,40,42,898/- to respondent No. 1 - HELD THAT:- It is the fact that the Corporate Debtor has executed BG bearing No. 151331BGP00535 (ANNEXURE-3, Page 146) in favour of respondent No. 1 to the tune of Rs. 1,40,42,898/- issued by IDBI, which was valid till 30.07.2016. It was extended from time to time and it is valid till 31st March 2021, as the Adjudicating Authority has extended the same vide order dated 23.12.2020. When Completion Certificate is issued by NEA, whether respondent No. 1 is entitled to invoke PBG executed by the Corporate Debtor? - HELD THAT:- NEA has given Completion Certificate to the applicant even though there are minor pending works as claimed by the applicant and it is also the fact that the project is in commercial operation by NEA - It is further, observed that respondent No. 1 has invoked BG, even though NEA has not resorted to similar invocation - It is true that PBGs are not included under section 14 of the I B Code. However, we have to go into the facts of the case before deciding the issue in question. In the present case NEA has given Completion Certificate to the applicant even though there are minor pending works as claimed by the applicant and it is also the fact that the project is in commercial operation by NEA. The Hon ble Supreme Court in M/S GANGOTRI ENTERPRISES LTD. VERSUS UNION OF INDIA OTHERS [ 2016 (5) TMI 516 - SUPREME COURT ], observed that every case has to be decided with reference to the facts of the case involved therein. Thus, it becomes clear that PBG or regular BG involves only compensation payable to the party, which suffered losses. In the present case it is the contention of the applicant that in absence of invocation of BG by NEA in terms of contract dated 09.09.2011, the question that has to be decided is, can respondent No. 1 invoke BG executed by the Corporate Debtor. Respondent No. 1 has not pointed out that NEA has invoked the BG issued to them. In such case, whether it is correct on the part of respondent No. 1 to invoke BG issued by the applicant, more so when the Corporate Debtor is under CIRP, which certainly result into erosion of value of assets of the Corporate Debtor. Even though the subject matter is PBG, which is not covered under moratorium, but finally any BG is reduced to financial terms. Further, each BG has to be dealt with on merits of each case as decided by the Hon ble Supreme Court in the matter of M/s. Gangotri Enterprises Ltd. Vs. Union of India and others - thus, invocation of BG by respondent No. 1 against the Corporate Debtor appears to be farfetched. In the instant case, the contention of respondent No. 1 that PBG is not covered under moratorium may not hold good. Application restraining respondent No. 1 from invoking Bank Guarantee is allowed - respondent No. 1 are directed to crystallise residuary works, if any, in financial terms and may file claim with the Resolution Professional in this regard - application allowed.

  ---

• 2021 (5) TMI 5
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- As the Respondent was willing to settle the claim of the Petitioner, the Company Petition was earlier disposed of by an Order dated 18.01.2021, by directing the Parties to settle the issue amicably between themselves failing liberty was granted to the Petitioner to approach the Adjudicating Authority with appropriate Petition. Accordingly, the Respondent vide its letter dated 25.01.2021 by inter alia stating that it could not pay its outstanding liabilities due to cash crunch. However, the Respondent failed to pay its admitted debt despite its best efforts and thus filed IA No. 92 of 2021 by seeking to initiate CIRP as prayed for. The Debt and Default in question are not disputed by the Respondent - Application allowed - moratorium declared.

  ---

• Service Tax

• 2021 (5) TMI 31
  Demand of Differential Service Tax - laboratory testing of chemicals and materials for MSME and Government departments - no service tax was remitted for the period from 01.07.2003 to 13.10.2004, (after which petitioner duly registered themselves with the respondent on 14.10.2004 and thereafter, the petitioner has been remitting the service tax and also filing the necessary returns) - HELD THAT:- The learned counsel for the petitioner in KASHMIRI LAL VERSUS GOVT. OF NCT OF DELHI AND ORS. [ 2011 (3) TMI 1811 - DELHI HIGH COURT] passed by the appellate authority in Appeal No.170 of 2010. In the said appeal, the regional testing laboratory, K.Pudur, Madurai, was the appellant. The petitioner is identically placed. The petitioner is also a regional testing laboratory. Therefore, whatever applied to the appellant therein would apply to the petitioner also - The department obviously knew that the petitioner had not paid any tax for the period preceding October, 2004. Therefore, nothing stopped the department from issuing a show cause notice immediately thereafter - Petition allowed - decided in favor of petitioner.

  ---

• 2021 (5) TMI 15
  Refund of CENVAT Credit - claim filed within the time limitation or not - date of filing of refund claim originally to be taken or the date on which rectified claim is submitted is to be taken into account? - HELD THAT:- The authorities below have computed the period of limitation from the date of re-submission of the refund claims. This is against the provisions of law. The date on which the refund claims has been originally submitted is the relevant date that has to be reckoned for computing the limitation of one year - When computed in such a manner, all these refund claims are well within time. The finding in the impugned order that these refund claims are time-barred is, therefore, set aside. Refund claim - denied on the ground that the balance in the Cenvat Account has been brought below the refund claim and, therefore, is not in compliance with Rule 2(g) of the said notification - HELD THAT:- When the debit made by the appellant as evidenced by the ST-3 returns is considered, it would show that both clauses 2(h) as well as 2(g) has been complied. For these reasons, it is found that the rejection of the refund claim for the period April, 2017 to June, 2017 is not sustainable. The appeals are allowed and the Refund Sanctioning Authority is directed to process the refund claims on merits - Appeal allowed.

  ---

• 2021 (5) TMI 8
  Refund of Service tax - Requirement to debit the amount to be claimed as refund claimed on 30.6.2017 or not? - refund denied on the ground that on 30.6.2017 while shifting to GST regime, they have not debited the refund amount from the Cenvat Credit account in terms of Notification No.27/2012-CE (NT) dated 18.6.2012 - HELD THAT:- The provisions of Notification No.27/2012-CE (NT) dated 18.6.2012 are very much clear that the assessee is required to debit the amount of refund claim in Cenvat credit account at the time of filing of refund claim. Therefore, the observations made by both the authorities below are contrary to Notification No.27/2012-CE (NT) dated 18.6.2012. As the appellant has complied with the conditions of Notification No.27/2012-CE (NT) dated 18.6.2012 is evident from the facts of the case. There are no merit in the impugned order rejecting refund claim filed by the appellant, therefore, the same is set aside - appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (5) TMI 41
  Excisability - repacking the tobacco products by scenting - process amounting to manufacture or not - HELD THAT:- In the case of Crane Betel Nut Powder Works vs. Commissioner [ 2007 (3) TMI 6 - SUPREME COURT] , the Hon ble Supreme Court held that manufacture and crushing betel nuts into smaller pieces and sweetening the same with essential/non-essential oils, menthol, sweetening agencies etc., did not result in manufacture of a new and distinct product having a different character and use as end product continues to retain its original character though in a modified form - the facts are entirely different and as far as the judgment of the Hon ble Supreme Court is concerned, the Hon ble Supreme Court held that if the original character is not modified, then it need not be considered as a manufacturing, but in the present case such facts are to be decided only through complete adjudication by the competent authority and by the appellate authority. High Court is not an Expert Body in order to form an opinion with regard to the manufacturing of a product or otherwise. Experts in the Department must conduct an inspection and form an opinion, whether it is a manufacture of product or the raw material is just repacked and sold to the end user. The said nature of proceedings cannot be adjudicated before the High Court, as the scope of the writ proceedings are limited - Prima facie paragraph 13 of the affidavit reveals that some processes are involved in respect of the products sold by the writ petitioner to the end user in the society. All such details are to be adjudicated with reference to the product sold to the end user, the raw materials used and the processes undertook in this regard. The petitioner is at liberty to exhaust the appellate remedy in the manner known to law - Petition disposed off.

  ---

• 2021 (5) TMI 28
  CENVAT Credit - denial on the premise as per Notification No. 02/14-CE (N.T) dt. 20.01.2014 - time limitation - HELD THAT:- There is no provision in law for the appellants to file invoices before the department in time. In these circumstances, As the assessee was allowed credit by the adjudicating authority although the Revenue has filed appeal against those orders before the Commissioner (Appeals). In these circumstances, when the adjudicating authorities are having a divergent view, it is found that the extended period of limitation is not invokable in the facts and circumstances of this case. Admittedly, in the case in hand, the show cause notices have been issued by invoking extended period of limitation, therefore, the denial of credit is barred by limitation. The demand against the appellants is barred by limitation - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (5) TMI 25
  CENVAT Credit - input services - GTA services availed for transportation of goods from the factory to the customer s premises - HELD THAT:- The issue stands covered by the decision of the Tribunal in the appellant s own case M/S. MRF LTD. VERSUS COMMISSIONER OF GST CE, TIRUCHIRAPALLI [ 2019 (11) TMI 1607 - CESTAT CHENNAI] . Further, in page 8 of the impugned orders, the Commissioner (Appeals) has noted that appellants have included the freight charges in the assessable value and discharged excise duty on the same. In such circumstances, the appellants would be eligible to avail credit of the service tax paid on such freight charges for outward transportation of goods upto the buyer s premises. Credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2021 (5) TMI 24
  CENVAT Credit - eligibility to avail credit prior to the Notification No. 02/14 (N.T) dt. 20.01.2014 in terms of Notification No. 01/10-CE dt. 06.02.2010 - invocation of Extended period of limitation - HELD THAT:- There is no provision in law for the appellant to file invoices before the department in time. In these circumstances, it is found that as the assessee was allowed credit by the adjudicating authority although the revenue has filed appeal against those orders before the Commissioner (Appeals). In these circumstances, when the adjudicating authorities are having a divergent view, the extended period of limitation is not invokable in the facts and circumstances of this case. Admittedly, in the case in hand, the show cause notice has been issued by invoking extended period of limitation, therefore, the denial of credit is barred by limitation. Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2021 (5) TMI 54
  Validity of assessment order - orders of the assessment were passed or signed by respondent No.3 on 20.03.2020 as asserted by respondent No.3 or on any date prior to 31.03.2020? - order of assessment is required to be communicated or kept on the file? - HELD THAT:- From a careful analysis of the procedure laid down for manual issuance of assessment orders as contained in clause (III) of the internal circular No.4A of 2020 dated 20.03.2020, we find that particular format is laid down for passing of assessment orders manually. Those must be sealed, dated, stamped and signed before delivering to the assessee, but the stamps and seals should not be carried home. The assessment orders and the demand notices can be stamped on the day the assessing officer attends office. Service of assessment orders and demand notices must be in accordance with the provisions of law and must be followed diligently. While entering the contents of assessment order the assessing officer shall invariably write that the order was passed manually mentioning the date and that it was served on the dealer on the particular date. As per instructions contained in the internal circular No.4A of 2020 dated 20.03.2020, it is specifically stated that assessment orders passed manually shall not be served electronically to the dealers as the speaking orders have to be delivered to the dealers manually. Printout of assessment orders passed manually and entered into the system should not be taken out as it would not be a proper assessment order but just a document created for the purpose of data entry. The assessment order passed manually has to be served manually in which event signature of the person to whom the order is so served has to be obtained as acknowledgment of service and the date of such manual service will be considered for all legal consequences. Such signature or endorsement has to be on the original order or on a separate slip. At least one thing is certain and that is that the assessment orders were stated to have been passed manually on 20.03.2020 under section 23(2) of the MVAT Act and under section 9(2) of the CST Act read with section 23(2) of the MVAT Act for the assessment period 01.04.2015 to 31.03.2016. We have already extracted and discussed about the provisions contained in sub section (2) of section 23 of the MVAT Act as well as section 9(2) of the CST Act. Since the order under section 9(2) of the CST Act is passed by the state tax authority under the state sales tax law, in this case section 23(2) of the MVAT Act, the same therefore assumes significance. As per sub section (2) of section 23 if the dealer does not appear on the date specified in the notice as also does not comply with the terms of the notice, the Commissioner shall assess the dealer to the best of his judgment. The limitation for passing of such assessment order is four years from the end of the year containing the period to which the return relates. Since the assessment period is 01.04.2015 to 31.03.2016, the four year limitation period would expire on 31.03.2020. Therefore, if the assessment order was required to be passed under section 23(2) of the MVAT Act for the aforesaid assessment period, it had to be passed on or before 31.03.2020. The impugned orders of assessment could not have been passed on 20.03.2020 or before 31.03.2020. Those were passed beyond the limitation period of 31.03.2020 and thus are non est in the eye of law. In such a case, question of petitioner not availing the alternative remedy of appeal does not arise - the impugned orders of assessment allegedly dated 20.03.2020 and the related notices of demand also allegedly dated 20.03.2020 are hereby set aside - Petition allowed.

  ---

• 2021 (5) TMI 44
  Failure to furnish audited accounts for the years 2010-11, 2011- 12 2012-13 by the end of the month after expiry of the period of six months, despite notice - Section 53(3) of Tripura VAT Act - Penalty - HELD THAT:- The contention of the petitioner that having filed such audit report for the year 2018-19, cannot raise the lack of prescription for the period in question, cannot be accepted for multiple reasons. Firstly, in the present group of petitions, we are concerned with the period of the years 2010-11, 2011-12, 2012-13. If the petitioner has filed audit report as prescribed under the Chartered Accountants Act for the year 2018-19, it is not estopped from taking a defence in these petitions of the State Legislature not having prescribed the format under the Rules. Further, this is only an oral contention made by the counsel for the department - Neither in the order imposing penalty nor in the affidavits filed in response to these petitions, the department has taken such a stand. As noted, the petitioner had taken the contention of lack of prescription of the audit report in reply to the show-cause notice. While passing the final order of penalty the Superintendent of Taxes has made no reference to the petitioner filing such reports for the subsequent years. Lastly, even if the petitioner has filed such reports for any years subsequent or even previous, its legal contention that in absence of the prescription of the audit report under the Rules, there can be no breach of the condition of sub-section (2) of Section 53, cannot be taken away. Being a pure legal contention, the conduct of the petitioner for a particular period or year, would not estop the petitioner from raising such contention for any other period. The petitioner fairly brought to our notice a decision of Division Bench of this Court in case of Ruchi Soya Industries Ltd. versus the State of Tripura [ 2020 (9) TMI 480 - TRIPURA HIGH COURT] in which a somewhat similar contention was raised by the petitioner to oppose the penalty imposed under sub-section (3) of Section 53 of the TVAT Act - the Division Bench proceeded on the basis that the petitioner therein had not raised this ground of non-availability of prescribed form for the report for its failure to file the same within the prescribed time as required under sub-section (2) of Section 53 of the TVAT Act. In this decision the Court thus did not examine the legal contention which has been raised before us by the petitioner in these petitions. Petition allowed.

  ---

• 2021 (5) TMI 40
  Direction to the respondents for issuing C-Forms - inter-state sale - CST Act - amendment of the registration after the death of the sole proprietor of the concern not applied - HELD THAT:- In the present case, it is found that though the petitioner never applied for amendment of the registration after the death of the sole proprietor of the concern, the information in this respect was available with the department and in any case, even after the death of the proprietor the business was continued by the wife of the deceased with the help of the elder daughter who were to inherit the business in succession. A valid registration is necessary for a dealer to claim concessional rate of tax on inter-Sate sale of goods under Section 8 of CST Act. The demand of the petitioner, therefore, for the authorities to issue C-Form without amending the registration, therefore cannot be accepted. However, as noted, since the department has also virtually accepted the succession of the business upon death of the sole proprietor, let the petitioner even now apply for amendment of the registration certificate. If such applications are filed within a period of two weeks from today with supporting documents, the superintendent shall after following the procedure laid down in Section 19(5) T-VAT Act and Rule 16 of the TVAT Rules shall dispose of such application as expeditiously as possible. If he does accept the application, the same would have effect from the date of death of the sole proprietor. If such amendment in the registration is granted it would be open for the petitioner to re-activate the request for grant of C-Form on inter-State transactions which shall be decided on merits. Petition disposed off.

  ---

• 2021 (5) TMI 36
  Levy of tax - manufacturing and sale of non-branded products - confectionery items - to be taxable @ 12% tax under residuary Entry No.40 of Part D of the first schedule of the TNGST Act - HELD THAT:- The issue regarding the manufacturing and sale of non-branded products, which all are not registered under the Trade and Merchandise Marks Act, 1958, then 12% tax cannot be imposed. The said issue has already been decided by this Court in V.R.S. CONFECTIONERY VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER [ 2017 (11) TMI 1315 - MADRAS HIGH COURT] where it was held that confectionery items have been specifically mentioned in entry item-4 (iii) of Part-B of first schedule of the TNGST Act taxable at 4%. In view of the fact that the writ petitions on hand are similar to the same, which was already decided by this Court, this Court is inclined to consider the writ petitions - It is held that petitioners are liable to be taxed only at 4%. If any excess tax amount is collected from the petitioners, the same shall be refunded/adjusted by following the procedures - petition allowed - decided in favor of petitioner.

  ---

• 2021 (5) TMI 34
  Levy of VAT - transfer of right to use the machinery and equipments - Award of contract by ONGC under a work order - deduction of TDS on such transaction - HELD THAT:- It is an undisputed position that identical situation had come up before this Court and by a judgment in case of QUIPPO OIL AND GAS INFRASTRUCTURE LIMITED VERSUS THE STATE OF TRIPURA AND OTHERS [ 2014 (11) TMI 1070 - TRIPURA HIGH COURT] the Court had held that the transaction in question is not exigible to Value Added Tax. This was on the premise that according to the Court the contract comprised mainly of hiring of services and a very small element of transfer of right to use goods was involved. It was held that the intention of the parties was to treat the contract as a contract for hiring of services and it was not permissible to divide the contract into two separate parts namely of engagement of services and transfer of right to use the goods. The State of Tripura had challenged this judgment before the Supreme Court and the SLP was dismissed by an order dated 01.02.2017. Thus, this judgment has achieved finality and the issues so far as this Court is concerned must rest here. It is declared that the respondents shall not be competent to levy Value Added Tax on the transactions between the petitioner and ONGC which are in question. Since this Court had prevented the respondents from levying any such tax pending the petition, there shall be no question of refund - Petition allowed.

  ---

• 2021 (5) TMI 33
  Concessional benefit of rate of tax - restriction on use of C Forms for the inter-state purchases - applicability of circular dated 05.09.2019 - HELD THAT:- It cannot be in dispute that the case on hand is covered by the decision reported in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT] where it was held that Appellant State and the Revenue Authorities are directed not to restrict the use of C Forms for the inter-state purchases of six commodities by the respondent/assessees and other registered dealers at concessional rate of tax and they are further directed to permit online downloading of such declaration in C Forms to such dealers. Questioning the order passed by the Hon ble Division Bench, the Department filed Special Leave to Appeal before the Hon ble Supreme Court Vide order in THE COMMISSIONER OF COMMERCIAL TAXES ANR. ETC. VERSUS THE RAMCO CEMENTS LTD. ETC. [ 2021 (3) TMI 1184 - SUPREME COURT] , the Special Leave Appeals were dismissed. The petitioner is entitled to the inclusion of High Speed Diesel Oil as a commodity in the registration certificate. Let this exercise be carried out within a period of four (4) weeks from the date of uploading of this order - petition allowed.

  ---

• 2021 (5) TMI 32
  Validity of assessment order - contention of the petitioner is that there is a violation of the principles of natural justice in view of the infraction of what has been laid down in Rule 14(5) of the Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT:- The contention of the petitioner s counsel is sustained. Therefore, the order impugned in this writ petition is quashed and the matter is remitted to the appellate authority. A copy of the written statement filed by the departmental representative will be served on the appellant/petitioner herein and thereafter, the appellate authority shall pass orders afresh in accordance with law. When the matter was taken up today, the learned Special Government Pleader produced a copy of the letter dated 24.03.2021 addressed by the Principal Secretary to Government, Commercial Taxes and Registration (A1) Department. It is stated that the Secretary to Government had discussed with the Chairman of Tamil Nadu Sales Tax Appellate Tribunal, Chennai in this regard. It was noted that it is necessary to amend the sub-regulations (2) and (3) of Regulation 9 of Tamil Nadu Value Added Tax Appellate Tribunal Regulations, 2011 to effect distribution of work and confer territorial jurisdiction - The Principal Secretary to Government, Commercial Taxes and Registration Department, Chennai states that after getting necessary proposal from the Commissioner of Commercial Taxes and after obtaining orders from the Government in consultation with the advisory departments of Government, necessary orders will be issued by the Government. Petition allowed.

  ---

• Indian Laws

• 2021 (5) TMI 49
  Dishonor of Cheque - insufficiency of funds - acquittal of the accused - compounding of the offence - HELD THAT:- The respondent bank has received Rs. 8,00,000/- under one time settlement, this Court sees no impediment in accepting the prayer made on behalf of the petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein it has been categorically held that court, while exercising power under Section 147 of the Act, can proceed to compound the offence even after recording of conviction by the courts below. The present matter is ordered to be compounded and impugned judgments of conviction and sentence by the courts below are quashed and set-aside - the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act - petition allowed.

  ---

• 2021 (5) TMI 48
  Dishonor of Cheque - invocation of revisional jurisdiction under Section 397 read with Section 401 of the Code of Criminal Procedure - HELD THAT:- The jurisprudence behind the N.I. Act is that the business transactions are honored. The legislative intention is not to send the people to suffer incarceration because their cheque was bounced. These proceedings are to execute the recovery of cheque amount by showing teeth of penalty loss - Given the judgment passed by Hon ble Supreme Court of India in Damodar S. Prabhu v Sayed Babalal, [ 2010 (5) TMI 380 - SUPREME COURT] , the law is well settled that when the entire money is paid, then the complainant cannot have any objection to such compromise, and 15% of the cheque amount is to be paid by the accused to the Himachal Pradesh State Legal Services Authority. This Court has inherent powers under Section 482 of the Code of Criminal Procedure, further supported by Section 147 of the N.I. Act to interfere in this kind of matter where parties have paid the entire money and where the complainant does not object to clear all the proceedings. Given the entirety of the case and judicial precedents, the continuation of these proceedings will not suffice any fruitful purpose whatsoever - thus, because of the compromise, this is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, is invoked to compound the offence and consequently to quash the proceedings The petitioner is acquitted of the offence under Section 138 of the Act - Petition allowed.

  ---