TMI Tax Updates - e-Newsletter
May 6, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax CST, VAT & Sales Tax

Articles

1. Missed charging GST, Golden chance to rectify now by way of Debit note

   By: Venkataprasad Pasupuleti

2. Integrated GST Rebate denied To AA License Holders –The tale of tumult (Re-defining)

   By: Navjot Singh

News

1. Module wise new functionalities deployed on the GST Portal for taxpayers

2. Extension in dates of various GST Compliances for GST Taxpayers

3. Simplification of procedure for import of oxygen cylinders and cryogenic tankers/ containers

4. India begins exports of organic millets grown in Himalayas to Denmark

5. Governor’s Statement - May 5, 2021

6. Cabinet approves strategic disinvestment and transfer of management control in IDBI Bank Limited

Notifications

GST - States

1. F.12 (1)FD/Tax/2021-05 - dated 4-5-2021 - Rajasthan SGST

Amendment in Notification No. F.12(46)FD/Tax/2017-III- 256, dated the 13th November, 2020

2. F.12 (1)FD/Tax/2021-03 - dated 4-5-2021 - Rajasthan SGST

Amendment in Notification No. F.12(46)FD/Tax/2017-Pt-V-147, dated the 31st December, 2018

Income Tax

3. 50/2021 - dated 5-5-2021 - IT

Income tax (15th Amendment), Rules, 2021 - LTC/LTA - Amends Rule 2B - Conditions for the purpose of section 10(5).

4. 46/2021 - dated 4-5-2021 - IT

Central Government specifies the pension fund, namely, the CDPQ Fixed Income XI Inc

5. 45/2021 - dated 4-5-2021 - IT

Central Government specifies the pension fund, namely, the Ivanhoe Logistics India Inc.

6. 44/2021 - dated 4-5-2021 - IT

Central Government specifies the pension fund, namely, the CDPQ Infrastructures Asia III Inc

7. 43/2021 - dated 4-5-2021 - IT

Central Government specifies the pension fund, namely, the Caisse de depot et placement du Quebec

Circulars / Instructions / Orders

DGFT

1. 4/2015-2020 - dated 4-5-2021

Inclusion of agency in Appendix 2G of Appendices and Aayat Niryat Forms of Foreign Trade Policy, 2015-20 in terms of Para 2.55 (d) of HBP 2015-20

Customs

2. PUBLIC NOTICE No. 05/2021 - dated 8-2-2021

ICES Advisory on Budget 2021 related changes in EDI System

Companies Law

3. 09/2021 - dated 5-5-2021

Clarification on spending of CSR funds for ‘creating health infrastructure for COVID care’, ‘establishment of medical oxygen generation and storage plants’ etc.

Highlights / Catch Notes

GST

• Court Grants Bail to Applicant in E-Way Bill Fraud Case Involving Identity Concealment and Tax Evasion.

  Case-Laws - HC : Grant of Bail - generation of e­way bills of 16 firms by concealing the identity of the real purchaser and real seller tax evasion and revenue loss - - Taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, this Court is inclined to grant regular bail to the applicant - Bail application allowed. - HC
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• Petitioner's Registration Cancellation Deemed Improper; Requirements for Revocation Met Despite Input Tax Credit Allegations.

  Case-Laws - HC : Cancellation of registration - to state that registration will not be revived since the petitioner has incorrectly availed of ITC would be putting the cart before the horse. In fact, it is seen that the petitioner has filed monthly returns as well as annual returns for the periods January 2017-18 to September 2019-20 and for financial years 2017-18 and 2018-19 and has also remitted late fee for filing of belated returns. Thus, and these being the only conditions that are to be satisfied by the petitioner for grant of revocation of registration, the cancellation of the registration in this case is incorrect and improper. - HC
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• Court Rules Detention of Goods Unjustified; No Intent to Evade Tax Found, Officer's Suspicion Deemed Unfounded.

  Case-Laws - HC : Detention of goods alongwith vehicle - The petitioner cannot be said to have any intention to evade tax if any mistake is, for the sake of argument without conceding it, has been committed by the transporter - The finding of the officer, the 1st respondent, in the impugned order that the transaction involving the petitioner was 'suspicious' and that the transporter was found 'without proper documents' is perverse and cannot be sustained in these circumstances. - HC
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• Court Criticizes Unnotified Bank Account Freeze; Stresses Need for Transparency and Due Process in Provisional Attachments.

  Case-Laws - HC : Provisional attachment of Bank accounts of petitioner - despite of due service to the bank the bank has chosen not to remain present - being a drastic power, the authority concerned cannot be oblivious of the serious consequences of provisional attachment of the bank account. Even if for the purpose of safeguarding the interest of the government revenue, the bank had chosen to follow the directions from the respondents, not to intimate to the petitioner as to why his account was freezed is wholly impermissible. - HC
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Income Tax

• Assessment Reopening u/s 147 and Addition u/s 68 Reviewed; All Investor Additions Deemed Deleted.

  Case-Laws - AT : Reopening of assessment u/s 147 - Addition u/s 68 - Upon perusal of assessee’s written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has sufficient net worth (shares capital + reserves & surplus) to make investment in the assessee and the percentage of investment made by them in the assessee company is merely in the range of 0.02% to 11.86 % of their respective net worth. - Additions to be deleted - AT
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• Blending Butane and Propane Qualifies as Manufacturing for Additional Depreciation u/s 32(1)(iiia), Says Court.

  Case-Laws - AT : Additional depreciation u/s 32(1)(iiia) - whether the process of blending of butane and propane which is carried out in scientific manner, with use and aid of sophisticated plant and machinery and whether the transformation brought about an entirely new product in the name of LPG and whether such activity is a manufacturing activity so that the assessee is eligible to claim additional depreciation u/s 32(1)(iiia)? - Held Yes - AT
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• UAE Company Entitled to India-UAE Tax Treaty Benefits; Article 29 Limitations Do Not Apply Per Article 4(1)(b).

  Case-Laws - AT : Benefits of India UAE Double Taxation Avoidance Agreement - the assessee company is a resident of the UAE, in terms of requirements of article 4(1)(b) of the Indo-UAE tax treaty, that the limitation of benefits provisions of article 29 of the Indo-UAE tax treaty cannot be pressed into service in this case, and that the assessee is eligible for treaty protection, in respect of its income earned in India, under the Indo UAE tax treaty. - AT
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• Interest u/s 201(1A) Applies Only When Income is Taxable in India; Otherwise, It's Tax Neutral.

  Case-Laws - AT : TDS u/s 195 - interest u/s. 201(IA) - The levy of interest to compensate for the delay in realization of taxes, in the event of the taxability of subject income being upheld, is reasonably protected. In a situation in which, however, no income is held to be taxable in India, no demands under section 201 r.w.s. 195- including demand under section 201(1A) r.w.s. 195., which are inherently in the nature of vicarious liability, survive. Viewed thus, the present dispute is wholly tax neutral. - AT
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• Assessing Officer Needs Direct Evidence to Add On-Money Payments u/s 69B; Other Buyers' Actions Insufficient.

  Case-Laws - AT : Unexplained money - If the Assessing Officer is able to establish on the basis of evidence gathered that the assessee has paid on- money to the extent quantified by him, then he can make the addition under S.69B. On the flip side, if there is no evidence available on record to directly link the assessee towards payment of on-money, then merely on the basis of the fact that some other buyers have accepted payment of on-money, no addition can be made. - AT
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• Court Rules: Long-Term Capital Loss Can Be Carried Forward u/s 74, Overruling Incorrect Tax Interpretation.

  Case-Laws - AT : Treatment of long-term capital loss arising from transfer of shares - denial of carry forward for set-off against Long Term Capital Gain - the Section 74 has not been made and cannot be made otiose. The provisions of Section 10(38) and Section 74 have to be read harmoniously but not antagonistically. We hold that the decision of the ld. CIT (A) is on incorrect interpretation of the provisions of the Act and hence cannot be sustained. - AT
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• Design Costs for T3 Airport Construction Classified as Revenue Expenditure, Not Capital, Due to Lack of Permanent Structure.

  Case-Laws - AT : Nature of expenditure - expenditure on design charges for T3 Airport construction - There was no enlargement of the permanent structure of which the income would be the produce or fruit. When dealing with cases where the question is whether expenditure incurred by an assesses is capital or revenue expenditure, the question must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of the business that it may be regarded as an internal part of the profit- earning process and not for acquisition of an asset or a right of a permanent character. The possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. - AT
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• Revenue Authorities Urged to Apply Preponderance of Probability for Unexplained Income, Beyond Prudent Man's Behavior Test.

  Case-Laws - AT : Unexplained income - The revenue authorities should have given due regard and latitude to human conduct and behaviour while considering the validity and truthfulness of an explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man’s behaviour test. The principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. - AT
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Service Tax

• Court Deems 24% Interest on Delayed Service Tax Payments Unlawful Due to Lack of Specific Collection in Invoices.

  Case-Laws - HC : Rate of interest on delayed payment of service tax - The respondents have quantified interest 24% per annum on the basis of Notification dated 01.03.2016 presuming that the petitioner has specifically collected some amount as service tax and still not deposited with Central Government, whereas the petitioner, in the invoices issued during the period in question did not collect any amount specifically mentioning it as service tax. - The action of the respondents to charge interest @ 24% is arbitrary and not sustainable in the eyes of law - HC
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• Adjudicating Authority Ignores Binding Tribunal Decisions Due to Pending Supreme Court Appeals, Despite No Interim Orders.

  Case-Laws - HC : All the decisions were actually brought to the notice of the adjudicating authority. The adjudicating authority has chosen to disregard them on the ground that the revenue has filed appeal before the Supreme Court questioning some of the decisions. It is admitted that no interim order has been granted by the Supreme Court. It is well settled that merely because a matter is pending before the higher forum, such pendency will not take away the precedential value of the appealed decision. The adjudicating authority ought to have followed the Tribunal decisions which clearly support the stand of the petitioner. The aforesaid Tribunal decisions were binding on the authority. - HC
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Case Laws:

• GST

• 2021 (5) TMI 169
  Grant of Bail - generation of e way bills of 16 firms by concealing the identity of the real purchaser and real seller tax evasion and revenue loss - offence punishable under sections 132(1)(a) of the CGST Act and the CGST Act - HELD THAT:- A close perusal of the complaint prima facie reveals that there are 16 firms, which were part of scrutiny by the investigating agency. As per the case of the prosecution, the applicant is involved in misusing the registration numbers of these 16 firms and the total tax evasion by generating e way bill without revealing the true identity of the real purchaser or real seller is stated to be Rs. 96,047253/ -. The applicant is also ready and willing to deposit some of the amount as per the instructions received by learned advocate Mr.Pandya from the applicant. Taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, this Court is inclined to grant regular bail to the applicant - Bail application allowed.

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• 2021 (5) TMI 168
  Maintainability of appeal - requirement of compliance with mandatory pre-deposit - Section 107 of the Orissa Goods and Service Tax Act (OGST Act), read with Rule 108 of Orissa Goods and Service Tax Rules (OGST Rules) - HELD THAT:- Section 107 of the OGST Act is a mandatory provision and there is no discretion with the appellate authority to waive the requirement of pre-deposit. Even this Court cannot direct the appellate forum to do so contrary to the statute - It is noticed that under Section 107 of the OGST Act upon making a pre-deposit of 10% there is an automatic stay of the balance 90% of demand, which cannot, in the circumstances, be said to be unfair or unreasonable. In that view of the matter the Court is not inclined to entertain the present petition - Petition dismissed.

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• 2021 (5) TMI 167
  Cancellation of registration of petitioners - fake ITC - TNGST Act - HELD THAT:- The contention of the respondents herein that the revival of registration is conditional upon the petitioner satisfying tax dues and substantiating its claim of ITC, is misconceived. What is sought for by the petitioner is revocation/revival of registration only, and in the guise of considering the application for revocation, the authorities cannot embark upon the process of assessment - An assessment would have to be made by the authority in terms of Section 73 or other applicable provision after following the procedure set out therein, and it is only in the course thereof that the officer may consider and decide questions of leviability of tax and claim of input tax credit. Thus to state that registration will not be revived since the petitioner has incorrectly availed of ITC would be putting the cart before the horse. In fact, it is seen that the petitioner has filed monthly returns as well as annual returns for the periods January 2017-18 to September 2019-20 and for financial years 2017-18 and 2018-19 and has also remitted late fee for filing of belated returns. Thus, and these being the only conditions that are to be satisfied by the petitioner for grant of revocation of registration, the cancellation of the registration in this case is incorrect and improper. Petition allowed.

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• 2021 (5) TMI 166
  Detention of goods alongwith vehicle - Intention to evade GST - petitioner alleges that the 1st respondent did not consider the reply of the petitioner and demanded the petitioner to pay tax and penalty for release of the vehicle - HELD THAT:- The 1st respondent had acted mechanically without application of mind to the operational convenience of the transporter - Also for the bonafide action of the transporter, the 1st respondent cannot mulct the petitioner with tax and penalty. The petitioner cannot be said to have any intention to evade tax if any mistake is, for the sake of argument without conceding it, has been committed by the transporter - The finding of the officer, the 1st respondent, in the impugned order that the transaction involving the petitioner was suspicious and that the transporter was found without proper documents is perverse and cannot be sustained in these circumstances. The order of detention in Form GST MOV-06 on 29.12.2020 passed under Section 129(3) of the CGST Act, 2017 by the 1st respondent is set aside - Petition allowed.

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• 2021 (5) TMI 162
  Provisional attachment of Bank accounts of petitioner - despite repeated requests, no information was disclosed by the authority concerned as to why the GST authority exercised such powers - principles of natural justice - HELD THAT:- There are no proceedings against the present petitioner under Sections 62, 63, 64, 67, 73 and 74 of the Act. There is no reason therefore, to invoke section 83 against the writ applicant and proceedings. Since the proceedings are initiated by the authorities in connection with the third parties, invocation of powers under Section 83 are not available with the respondents. Therefore, the order of the provisional attachment in connection with the bank account No.3785569992 of M/s. Global Corporation be interfered with. It is also necessary to note that despite of due service to the bank the bank has chosen not to remain present - being a drastic power, the authority concerned cannot be oblivious of the serious consequences of provisional attachment of the bank account. Even if for the purpose of safeguarding the interest of the government revenue, the bank had chosen to follow the directions from the respondents, not to intimate to the petitioner as to why his account was freezed is wholly impermissible. There are already proceedings initiated under Section 79 against the present petitioner, who is the third party. Against such initiation of proceedings under Section 79 of the Act, no challenge in the present petition is made and a limited prayer is to the actions of initiating proceedings under section 83 and freezing of the account which has already been addressed. The attachment is ordered to be lifted and the petitioner is permitted to operate his bank account - Petition allowed - decided in favor of petitioner.

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• Income Tax

• 2021 (5) TMI 157
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- So far as the source of investment up-to AY 2011-12 is concerned, it is the consistent finding of the Tribunal that the assessee had surplus interest free funds to make the investments. As per the observation of Ld. CIT(A), there are fresh investment of Rs. 183 Lacs during the year which could be said to have been sourced out of borrowed funds. However, we find that no such nexus has been established by Ld. AO during assessment proceedings. Another pertinent fact is that own interest free funds far exceeds the investments made by the assessee and therefore, the presumption as drawn in earlier years would still prevail that the investments were sourced out of interest free funds and not out of borrowed funds unless the nexus between the two was established and brought on record by Ld. AO. In the absence of such nexus, the interest disallowance would not be sustainable in law. Therefore we are inclined to delete the interest disallowance made u/r 8D(2)(ii). So far as expenses disallowance u/r 8D(2)(iii) is concerned, Ld.AO is directed to re-compute the same after considering only those investments which have yielded exempt income during the year. Adjustment of disallowance u/s 14A while computing book profits u/s 115JB - HELD THAT:- The matter would stand restored back to the file of Ld. AO on similar lines as directed by Tribunal in order for AY 2010-11 [ 2019 (8) TMI 1694 - ITAT MUMBAI] . The operative portion has already been extracted by us in preceding paragraphs. Depreciation claim on assets given on finance lease - claim was rejected By Ld. AO since the new claim could be made only by revising the return of income - Ld. Sr. Counsel, submitted that the income from the leased assets was specifically mentioned in the respective agreements and the same has been offered as well as assessed as Business Income . This being the case, the assessee would be eligible for the depreciation - HELD THAT:- Upon due consideration of factual matrix, finding strength in arguments of Ld. Sr. Counsel, we are of the considered opinion that correct factual matrix is required to be brought on record. Needless to add that if the income has been offered and assessed as Business Income , the assessee would be eligible to claim the depreciation. Therefore, the impugned order, on this issue is set-aside and the issue is restored back to the file of Ld. AO for fresh adjudication after appreciating the correct facts. - Ground stand allowed for statistical purposes.

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• 2021 (5) TMI 156
  Reopening of assessment u/s 147 - Addition u/s 68 - HELD THAT:- As the primary onus as casted on the assessee in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee s unaccounted money was routed in the books in the garb of share capital. It is trite law that no addition could be made merely on the basis of allegation, suspicion, conjectures or surmises. Upon perusal of assessee s written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has sufficient net worth (shares capital + reserves surplus) to make investment in the assessee and the percentage of investment made by them in the assessee company is merely in the range of 0.02% to 11.86 % of their respective net worth. Hence, on the facts and circumstances of the case and respectfully following the earlier view of Tribunal in assessee s own case [ 2020 (12) TMI 768 - ITAT MUMBAI] , we delete the impugned additions. Consequently, the set-off of losses, as allowable under law, would be available to the assessee. We order so. The Ld. AO is directed to re-compute assessee s income in terms of our above order. No infirmity could be found in Ld. AO s action in reopening the case of the assessee. The stand of Ld. CIT(A), in this regard, stands confirmed.

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• 2021 (5) TMI 155
  Validity of reopening of assessment - long term capital gain s addition made in its hands by invoking Section 50C - assessee alleged fact that the land sold herein is agricultural only than a capital asset u/s.2(14) - HELD THAT:- We find no merit in assessee s first and foremost grievance qua legality of the impugned re-opening since the difference between SRO value and actual price very well formed the tangible material for the Assessing Officer to record his reasons to this effect. Section 50C addition - The Revenue s only argument that the issue of assessee s land sold not forming a capital asset u/s.2(14) of the Act ought not to be allowed to be raised in Section 148/147 proceedings since the same is meant for the specific purpose to tax the income escaping assessment for the benefit of the department only fails to evolve our concurrence since applicability of Section 2(14) herein qua the assessee s land sold goes to the very root of the matter. And also it might lead to the impugned capital gains addition without determination of the nature of the corresponding capital asset. The Revenue further fails to dispute that the case law Sunil Kumar Agarwal [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] holds that Section 50C(2) reference is mandatory even if there is no such prayer from the assessee s side before the Assessing Officer. And that there is no indication about the nearest municipality under Article 243T r.w. Article 243P of the Constitution of India. We thus accept the assessee s identical latter grounds of Section 50C addition and restore the same back to the Assessing Officer for his afresh adjudication after making the necessary reference to the DVO u/s.50C(2) of the Act. Ordered Accordingly.

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• 2021 (5) TMI 154
  Revision u/s 263 - No genuineness of the purchase and sale of shares and profits earned shown - HELD THAT:- We find that while accepting the return of income filed by the assessee all the details and documents filed by the assessee, and satisfied himself with the genuineness of the claims of the assessee. Assessing Officer discharged his duties as an investigator as well as an adjudicator, and took a possible view. Such a view cannot be held as unsustainable in law. Assessing Officer during the course of original assessment proceedings issued a notice u/s 142(1) and called for details and information. AO called for details of purchases/sales/stocks in a particular format. The assessee filed a reply on 09/11/2017. Demat Statements, for the period 01/04/2014 to 31/03/2015, were filed. Copy of contract notes, copies of Bank pass books, copies of ledger accounts of brokers etc. were filed. All the transactions were on the stock exchange platform. Assessing Officer verified the same and he did not find anything adverse, in the claims. This is not a case of non-verification or non-application of mind. The ld. Pr. CIT, in his order passed u/s 263 of the Act, has failed to make out a case that the order of the Assessing Officer is erroneous as well as prejudicial to the interest of the revenue, which is a condition precedent for invoking jurisdiction u/s 263 of the Act. See M/S GITSH TIKMANI, HUF, case [ 2019 (9) TMI 1177 - ITAT KOLKATA] - Decided in favour of assessee.

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• 2021 (5) TMI 153
  Non-issuance of notice u/s 143(2) by the AO who was having valid jurisdiction - transfer of case to different AO after the question of jurisdiction raised by the assessee - Notice u/s 143(2) was issued for the AO not having jurisdiction - HELD THAT:- As assessment order passed u/ s 143(3) of the Act dated 14.03.2015 by the ITO, Ward-5(3), Kolkata is bad in law when a notice u/s 143(2) of the Act was not issued by the jurisdictional assessing officer.We hold that the notice issued by the ITO, Ward-4(3), Kolkata u/s 143(2) of the Act on 12.08.2013 is without jurisdiction and hence non-est in law. It is abinitio void. The assessment order passed by the AO, ITO, Ward-5(3), Kolkata u/s 143(3) of the Act on 14.03.2015 was without issuance of mandatory notice u/s 143(2) of the Act, by the AO having jurisdiction over the assessee. Thus the assessment order passed u/s 143(3) of the Act, without issuance of valid notice u/s 143(2) of the Act is bad in law as held by the Hon ble Supreme Court in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] . Thus we allow the ground nos. 1-4 in favour of the assessee and quash the assessment order passed u/s 143(3) of the Act - Decided in favour of assessee.

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• 2021 (5) TMI 152
  Additional depreciation u/s 32(1)(iiia) - whether the process of blending of butane and propane which is carried out in scientific manner, with use and aid of sophisticated plant and machinery and whether the transformation brought about an entirely new product in the name of LPG and whether such activity is a manufacturing activity so that the assessee is eligible to claim additional depreciation u/s 32(1)(iiia)? - HELD THAT:- As decided in [ 2017 (8) TMI 197 - SUPREME COURT ] Hindustan Petroleum Corpn. Ltd. process of bottling of gas into cylinders for domestic use by complex technical process undertaken in plant with machinery amounts to production or manufacture of gas cylinders for purposes of deduction under sections 80-I, 80-IA and 80HH. In M/s. Indian Oil Petronas Pvt. Ltd. [ 2019 (4) TMI 1285 - ITAT KOLKATA ] in the process of blending of butane propane which is carried out in scientific manner with use and aid of sophisticated plant machinery, transformation is brought about and entirely new product by the name LPG is obtained. The said object or product i.e. LPG is known to the trade and commerce by its separate distinctive commercial name and it has a different character and its end use is also different. Accordingly provisions of Section 2(29BA) of the Act and also the ratios laid down by the Supreme Court in several decisions, we have no hesitation in holding that the assessee was engaged in manufacture or production of an article or thing and therefore it was eligible for claiming additional depreciation u/s 32(1 )(iia) - Decided against revenue. TDS u/s 195A - dividend distributed to non-resident shareholders - HELD THAT:- In the instant case, the incidence of tax on dividend income is borne by the company paying dividend income by virtue of statute and not by way of any agreement and as such, the rigor of section 195A of the Act would not be applicable. In any event, it may be stated that even if the payment is to be grossed up, yet the rate specified in DTAA (if more favourable) would be applicable to gross up the said payment. Thus, in conclusion, it may be stated that the rate of tax payable on dividend distributed to non-resident shareholders would depend upon the relevant Article of the DTAA entered into between India and the country to which the non-resident belongs, subject to the fulfilment of the conditions stated. The Hon ble Delhi High Court in the case of Pr. CIT v Maruti Suzuki Limited [ 2019 (12) TMI 1080 - DELHI HIGH COURT ] held that the Hon ble Tribunal is within its power to admit the additional ground in respect of claim of refund of tax paid in excess, by following provision of section 115-O of the Act instead of the relevant Article of the applicable DTAA. Thus the relevant Article of the DTAA have to be examined, we are setting aside this matter to the file of the AO for fresh adjudication in accordance with law after admitting this claim of the assessee. The AO shall consider this claim of the assessee and dispose off the case in accordance with law.

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• 2021 (5) TMI 151
  Benefits of India UAE Double Taxation Avoidance Agreement - assessee had taken vessels on the time charter, for transportation of good by ship in the international traffic, as also the assessee s filing of the commercial licence issued by the Department of Economic Development, Government of Dubai, and tax residency certificate - HELD THAT:- On the facts of the present case, the inferences drawn by the authorities below are unsustainable in law, as there is reasonable material on record to substantiate the stand of the assessee that the assessee company was incorporated in UAE, and was managed and controlled wholly in the UAE. In the present case, there is nothing to even suggest that the business activities of the assessee company were not bonafide. There is reasonable evidence before us, and was all along available before the authorities below, that the assessee was having bonafide business in the UAE, and, as such, the lack of bonafides could not be inferred. Once assessee submits reasonable evidence, including the evidence in support of the existence of an office, and dedicated employees, in UAE and the business being carried on from there- as also the financial statements showing the business being carried on from the UAE on a regular and commercial basis, unless the revenue authorities bring on record some material to dispute this position, one cannot proceed to conclude, as the Assessing Officer did, that the business activities of the assessee lacked bonafides. The authorities below were thus clearly in error in holding that the LOB clause was applicable on the facts of this case. We are of the considered opinion that the assessee company is a resident of the UAE, in terms of requirements of article 4(1)(b) of the Indo-UAE tax treaty, that the limitation of benefits provisions of article 29 of the Indo-UAE tax treaty cannot be pressed into service in this case, and that the assessee is eligible for treaty protection, in respect of its income earned in India, under the Indo UAE tax treaty. It is not even in dispute, and rightly so, that under the provisions of article 8(1) of the Indo UAE tax treaty, which provides that profits derived by an enterprise of a Contracting State from the operation by that enterprise of ships in international traffic shall be taxable only in that State , the assessee company is protected from taxation of the income in question in India. AO will give relief accordingly.

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• 2021 (5) TMI 150
  TDS u/s 195 - interest u/s. 201(IA) - payments made to Aviva International Holdings Ltd, UK in July, 2008 for acquiring from it 100% of equity shares - HELD THAT:- For a person to perform the tax withholding obligations on the basis of an amendment in law which was enacted on a date later than the date on which tax withholding obligations were required to be performed, is expecting that person to do the impossible. When a law is nowhere even on the horizon, leave aside the statute, it is wholly impossible for any person to perform the obligations imposed by such a law. The assessee, therefore, cannot be faulted for not deducting tax at source from payments made to Aviva International Holding Ltd UK in respect of purchase of shares in Aviva Global Services, Singapore, which, in turn, are said to derive substantial value from underlying assets in India. Once we come to this conclusion to the effect that there were no lapses on the part of the assessee inasmuch as the related legal provisions were not even in existence at the point of time when the sale of shares took place, i.e., 11th July 2008, we need not deal with the question as to whether the income embedded in the payments in question was at all taxable in India. Quite clearly, therefore, as is held by Hon ble Supreme Court in the case of Engineering Analysis [ 2021 (3) TMI 138 - SUPREME COURT] persons responsible for deducting tax at source cannot be expected to act on the basis of an Explanation when such an explanation was not actually and factually in the statute . It cannot thus be said that, on the facts of this case, tax was deductible under section 195 at the time of making the said payment. We hold so. Once we hold so, the very foundation of impugned demands under section 201 r.w.s. 195 ceases to be sustainable in law, as the entire case of the revenue authorities hinges on Explanation 2 to Section 195, and it s retrospective application. In any event, this issue is entirely tax neutral inasmuch as it is a case in which the person selling the shares, i.e. Aviva International Holdings Ltd UK, is said to have already paid taxes on the capital gains, and independent proceedings in the said matter are in progress, and the matter is said to be pending for adjudication, on merits, before a coordinate bench. In case the taxability of the said income in the hands of the seller is to be upheld, the upholding of levy of interest under section 234B, on the given facts, will only be a natural corollary. Therefore, our upholding the liability under section 201(1A), which could only proceed on the foundational assumption that tax was deductible at source by the person making payment in question, will end up exonerating the person, in whose hands the income is taxable, of liability under section 234B. The levy of interest to compensate for the delay in realization of taxes, in the event of the taxability of subject income being upheld, is reasonably protected. In a situation in which, however, no income is held to be taxable in India, no demands under section 201 r.w.s. 195- including demand under section 201(1A) r.w.s. 195., which are inherently in the nature of vicarious liability, survive. Viewed thus, the present dispute is wholly tax neutral. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.

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• 2021 (5) TMI 149
  Unexplained money - non-compliance of the rules of natural justice - assessee is one of the purchasers of Villa Plot in Emaar Hills Township (P) Ltd. and the villa plots were sold at a price higher than what is recorded in the MOU/Allotment letter of Registered Document - HELD THAT:- As relying on SHRI G. MAHESH BABU VERSUS DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 7, HYDERABAD AND VICA-VERSA [ 2015 (12) TMI 986 - ITAT HYDERABAD] issue relating to payment of on-money requires to be examined afresh by Assessing Officer after confronting evidence/material sought to be relied upon to the assessee and seeking his response on them. The Assessing Officer must also disclose to the assessee the material/information on the basis of which he has quantified the onmoney payment - If the Assessing Officer is able to establish on the basis of evidence gathered that the assessee has paid on- money to the extent quantified by him, then he can make the addition under S.69B. On the flip side, if there is no evidence available on record to directly link the assessee towards payment of on-money, then merely on the basis of the fact that some other buyers have accepted payment of on-money, no addition can be made. With the aforesaid observations, we remit the issue to the file of the Assessing Officer with a direction to re-decide the same afresh in accordance with law, after giving reasonable opportunity to the assessee, duly complying with the principles of natural justice - Assessee s appeal is allowed for statistical purposes.

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• 2021 (5) TMI 148
  Eligibility of exemption u/s 11 - CIT(A) not granting exemption on the pretext of filling of Form 10BB on 06.06.2017 during the pendency of assessment proceedings - HELD THAT:- It is not out of place to mention here that appeal of the assessee for Asst. Year 2014- 15 and 2015-16 has already been allowed by your goodself.It is not the power of the A.O to intervene into the matters o f charging of fees from students and paying salary to staff of school and it is not a criteria on the basis of which exemption u/s 10(23C)(Vi) be denied which has already been granted to the school by the ITAT-Amritsar - There is no discussion as to why the order of the CIT(A) passed in the immediately preceding assessment year which has been upheld by the Co-ordinate Bench was not considered while deciding the issue as SANSKRITI KMV SCHOOL, [ 2019 (5) TMI 1864 - ITAT CHANDIGARH] - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (5) TMI 147
  Computation of book profit u/s.115JB - Deduction u/s.10B computation - HELD THAT:- We find that the appeals filed by the assessee as well as the Revenue challenging the findings of the ld.CIT(A) regarding deduction claimed u/s.10B of the Act has been set aside to the file of the AO by the Tribunal [ 2019 (11) TMI 584 - ITAT CHENNAI] , where the Tribunal has directed the AO to recompute the book profit u/s.115JB of the Act after deciding the issue of deduction u/s.10B Since deduction claimed u/s.10B of the Act, would have a bearing on the recomputation of book profit u/s.115JB of the Act and the very same issue of deduction u/s.10B of the Act is restored to the file of the AO, the computation of book profit also needs to go back to the file of the AO. Therefore, we are of the considered view that the appeal filed by the assessee against the proceedings u/s.154 of the Act and cross objection filed by the assessee challenging computation of book profit u/s.115JB of the Act needs to go back to the file of the AO. Hence, we set aside the appeal as well as the cross objection filed by the assessee to the file of the AO and direct him to reconsider the issue after deciding the issue of deduction claimed u/s.10B of the Act in pursuant to directions of the Tribunal given - Appeal as well as the cross objection filed by the assessee are treated as allowed for statistical purpose.

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• 2021 (5) TMI 146
  Rejection of books of accounts - Estimation of income - assessment in the manner provided u/s.144 - best judgement assessment - HELD THAT:- It is an admitted fact that if books of accounts maintained by the assessee are incomplete or not supported by necessary evidences then the AO is empowered to complete assessment in the manner provided in section 144 of the Act. But fact remains that still in the best judgement assessment, the AO has to bring on record material on the basis of which he has arrived at the conclusion with regard to rate of profit for estimation of income from the business. No doubt, under the best judgement assessment there is an element of guesswork but it should not be arbitrary. While completing the assessment under best judgement assessment, the AO has to bring on record certain material to support his finding with regard to rate of profit admitted for estimation of profit with some comparable cases of similar nature or the profit declared in the similar industry. In this case, although the AO has adopted 5% net profit on gross receipts, but failed to bring on record any comparable case of similar nature nor give reasons for adopting such rate of net profit. On the other hand, the assessee has agreed for estimation of 3% profit on gross receipts considering the nature of business and place of work. Further in the civil construction work, the rate of profit varies from nature of contract executed by the assessee and place of such contracts. No uniform yardsticks can be applied for estimating net profit. Therefore, considering the fact that the assessee is into civil construction business and also the AO has not given any reasons for adopting 5% net profit rate, we are of the considered view that a reasonable profit of 3% on total receipts would meet the ends of justice. Therefore, we direct the AO to estimate 3% profit on total gross receipts received by the assessee for the year.

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• 2021 (5) TMI 145
  Treatment of long-term capital loss arising from transfer of shares - denial of carry forward for set-off against Long Term Capital Gain - whether where income from a particular source is exempt from tax (i.e. incomes exempt under section 10), the gain or loss from transactions such source des not enter into the computation of income as the same gets excluded at the threshold itself, therefore, loss from such source is not available for set off or for carry forward for set- off against income chargeable to tax - HELD THAT:- We find that the Section 74 has not been made and cannot be made otiose. The provisions of Section 10(38) and Section 74 have to be read harmoniously but not antagonistically. We hold that the decision of the ld. CIT (A) is on incorrect interpretation of the provisions of the Act and hence cannot be sustained. LTCG v/s STCG - As the assessee having paid partial sum to the builder has transferred the buying right to the seller. The seller has paid the remaining amount to the builder subsequently - AO held that as per the clause in the purchase agreement which states this agreement shall not be assigned by the apartment allottee without prior permission of the Company and came to the conclusion that the assessee never vested with the right to the property and hence the assessee could not have sold the rights - HELD THAT:- We find that what the assessee has sold is the right and the right arises when the assessee enters into an agreement with the builder in the year 2004-05. Since, such right accrued in the year 2004-05 and the sale took place on 01.05.2012, it attains the nature of sale of Long Term Capital asset and the gains will have to be treated as Long Term Capital Gains . The AO is directed to compute the LTCG after taking into consideration, the amount received on account of sale as per the documents - AO shall also verify and consider the deduction paid to the broker. Income from other sources - HELD THAT:- AO is hereby directed to verify from the records whether the amount was offered to tax income from other sources or not and examined whether the correct figure and recomputed the taxable income.

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• 2021 (5) TMI 144
  Nature of expenditure - expenditure on design charges for T3 Airport construction - revenue or capital expenditure - HELD THAT:- From the records, we find that the amount has been paid by the assessee to M/ s Corus to prepare a detail lay out, drawing of the ceiling for which the assessee was the executor. The payment was made for designing and detailing services for roofing system in respect of T3 terminal at IGAI, Delhi for which DIAL is the concessionaire. The amount has been paid for obtaining technical support, drawings designs. The designs are specific to the Airport and cannot be replicated for any other structure or industrial establishment other than the RGAI.The assessee has not obtained any capital asset by the way of payment made to M/s Corus for designs. There may be cases where expenditure though referable to or in connection with fixed capital is nevertheless allowable as revenue expenditure e.g. expenditure incurred in preserving or maintaining capital assets. This test is therefore clearly not one of universal application. It is true that if disbursement is made for acquisition of a source of profit or income, it would ordinarily be in the nature of capital expenditure. The source of profit or income was the profit making apparatus and this remained untouched and unaltered. There was no enlargement of the permanent structure of which the income would be the produce or fruit. When dealing with cases where the question is whether expenditure incurred by an assesses is capital or revenue expenditure, the question must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of the business that it may be regarded as an internal part of the profit- earning process and not for acquisition of an asset or a right of a permanent character. The possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. Relying on the above propositions considered by the Hon ble Supreme Court in the case of M/ s Empire Jute Company Ltd. [ 1980 (5) TMI 1 - SUPREME COURT ] we hold that the ld. CIT (A) has rightly allowed the deduction. Long Term Capital Gains - AO doubted the sale value of the flat sold by the assessee and referred the matter to the DVO to determine the share market value - difference in value determined by DVO as against the sale value shown by the assessee - HELD THAT:- On going through the provision of Section 50C , we hereby hold that the value determined by the stamp duty authorities or consideration so received or accruing as a result of the transfer to the assessee whichever is more, shall be the value of the property. Hence, the authorities are hereby directed to compute the capital gains taken into consideration, the sale value of Rs. 1,05,00,000/-. The AO may re- verify the value of the property from the registration authorities to confirm the value as submitted by the assessee of Rs. 73,00,000 /- and take action only if found contra. Deduction u/s 40A(2)(b) - payments made to Mr. Arvind Nanda, with regard to the vehicle purchase, payment made to M/ s Intertec on account of job work and the rental payments has been examined - CIT-A deleted the addition - HELD THAT:- On going through the entire factum of the case, we find that the disallowances are purely hypothetical without bringing any tangible material to prove that the payments are over and above the market rates. Hence, we hereby decline to interfere with the order of the ld. CIT (A). Revenue appeal dismissed.

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• 2021 (5) TMI 143
  Addition u/s 68 - advance received by crossed account payee cheque - HELD THAT:- The assessee from their side reproduced the relevant details and documents to prove the identity, genuineness and creditworthiness of the loan party and the transactions. Since, the amount has already been paid, the assessee could no more exert any influence on the loan party. At the same time, the assessee can be said to have discharged his primary onus with regard to the advance. There was no information with the AO before or during the assessment proceedings to point out any suspicion with regard to the deposit and its sources either in the form of cash deposits or any other enquiries conducted. The addition has been made merely on the grounds that there was no compliance from M/ s Kakade Stone Crusher to the notice issued u/s 133(6). We have also gone through the judgment relied upon by the ld. CIT (A) while confirming the addition. We find that the judgment has been delivered while dealing with the question of genuineness of the huge premium paid on the shares. The addition was confirmed owing to presence of abundant corroborative evidences which is not show in the instant case. Having gone through the entire factum of the case, we hereby hold that the addition made by the AO cannot be sustained as the assessee has discharged the primary onus casted upon them and the revenue has not brought on record to treat the amounts u/ s 68 . Disallowance on account of architect fees - Before us, it was submitted that the architect fee has been paid owing to rendering of services regularly on monthly basis for project management consultation to the management of the company. The Architects are engaged to manage the property of the assessee and are paid for monthly charges as professional fee - DR argued that the assessee is receiving only rental income against which it is claiming standard deduction and interest on borrowings - HELD THAT:- We find that the assessee is receiving rental income against which interest and others statutory deduction are claimed and hence no other deduction on account of maintenance charge or any other nomenclature is not an allowable deduction. Appeal of the assessee on this ground is dismissed. Income from house property - disallowance of interest paid on loan raised for construction of the school building and computation of ALV @ 8% of the total of the land and building - HELD THAT:- Since, the matters stands squarely covered by the earlier order of the case of the assessee [ 2018 (6) TMI 1280 - ITAT DELHI ] in the absence of any material change in the facts of the case, the addition made by the revenue is hereby directed to be deleted.

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• 2021 (5) TMI 142
  Denial of approval u/s. 80G - since the assessee did not reply to the queries raised by the Ld. CIT(E), there was no alternate except to reject the application moved by the assessee for approval u/s. 80G - HELD THAT:- In the present case, it appears that a due and reasonable opportunity of being heard was not provided by the Ld. CIT(E) particularly when the case was fixed for furnishing the details on 16/04/2019 and the assessee sought time of 8-10 days vide email dated 15/04/2019. CIT(E) without commenting upon the request of the assessee, rejected the application moved by the assessee for approval u/s. 80G of the Act by passing the impugned order ex parte. It is well settled that nobody should be condemned unheard as per the maxim audi alterm partem . We therefore, by keeping in view the principles of natural justice, deem it appropriate to set aside the impugned order and restore the matter back to the file of the Ld. CIT(E) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (5) TMI 140
  Disallowance of Expenditure under section 40(a)(ia) - reimbursement of salary cost paid to its related party on the ground that no taxes have been withheld on the same - counsel made submissions that he is ready to produce the evidence that the holding company has deducted TDS on reimbursement of salary - HELD THAT:- We are of the view that once the holding Company MIDCO Limited has deducted TDS on salary to seconded employees, the assessee is not required to deduct TDS on the same salary because there is no markup. Hence, we remit the this issue back to the file of the AO just for the purpose of verification that the holding company MIDCO Limited is deducted the TDS and the assessee is able to prove that the holding company MIDCO Limited has deducted the TDS then no disallowance is to be made but assessee has to produce the evidence before the Assessing Officer. In term of the above, the matter is remanded back to the file of the Assessing Officer. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (5) TMI 131
  Unexplained income - transaction in the bank account of the assessee made by his landlord and related to family members of the landlord - HELD THAT:- From the very beginning, the assessee had made solitary explanation that the said bank account was opened at the instance of Abhishek Agarwal and all the deposits and withdrawals were made by the said Abhishek Agarwal. We found that explanation given by the assessee was not fanciful and sham story. It was plausible and should have been accepted by the revenue authorities, unless there was justification or ground to hold to the contrary. More particularly when the entire explanation was supported by statement of Shri Abhishek Agarwal coupled with bank transactions and affidavit of said Abhishek Agarwal. The revenue authorities should have given due regard and latitude to human conduct and behaviour while considering the validity and truthfulness of an explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man s behaviour test. The principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. Probability means likelihood of anything to be true. Probability refers to appearance of truth or likelihood of being realized which any statement or event bears in light of the present evidence (Murray s English Dictionary). Evidence can be oral even then the same cannot be discarded. More particularly, in the present case, when the assessee has fully discharged his onus by calling Shri Abhishek Agarwal who appeared before the A.O. and got recorded his admission statement coupled with affidavit and the bank statements to the effect that all transactions in the bank account 909010036473994 were of Shri Abhishek Agarwal which have not been rebutted by the department. Therefore, in our view, there was no reason to discard the admission of Shri Abhishek Agarwal. Therefore, keeping in view the totality of facts and circumstances of this particular case, we are of the view that the assessment order and the appellate order falls foul and have disregarded the preponderance of probability test. See JAYA AGGARWAL VERSUS INCOME TAX OFFICER [ 2018 (3) TMI 1358 - DELHI HIGH COURT] - Thus we direct the A.O. to delete the addition - Decided in favour of assessee.

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• Customs

• 2021 (5) TMI 160
  Confiscation - Gold - Seeking interim protection - HELD THAT:- This writ petition is closed. Status quo granted by this Court on 09.03.2021 will continue for a period of two (2) weeks from today.

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• 2021 (5) TMI 132
  Maintainability of appeal - time limitation - appeals were filed before the Commissioner (Appeals) beyond the period of 90 days, which is an admitted fact - HELD THAT:- The appeal before the Commissioner (Appeals) was filed beyond 90 days. As per the provisions of Section 128, learned Commissioner (Appeals) has power to condone the delay of 30 days after the normal period of 60 days. Since the appeal was filed beyond 90 days, learned Commissioner (Appeals) has no power under the statute to condone the delay over and above 90 days, accordingly the appeal was dismissed. This issue has been considered by various Courts including the Hon ble Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] and it was consistently held that the statutory time period of 90 days i.e. 60days plus 30 days, is provided and beyond 90 days no power is vested with Commissioner (Appeals) to condone the delay. The appellate authority has no power to condone the delay beyond the said 30 days - since the Commissioner (Appeals) has no power to condone the delay of beyond 90days, the impugned order does not bear any infirmity - appeal dismissed.

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• Corporate Laws

• 2021 (5) TMI 163
  Wilful, deliberate and contumacious violation of a common order - allegations are primarily against HVL and consequently against the directors of the companies who have allegedly aided and abetted HVL in committing the contempt - HELD THAT:- The allegations do not fall within the definition of criminal contempt under Section 2(c) of the Contempt of Courts Act, 1971. The proceedings have not been initiated by the court suo moto or on the consent of the Advocate General. The court must be satisfied about the guilt of the alleged contemnor (HVL) beyond reasonable doubt. Contempt being in the nature of quasi-criminal proceedings, the allegations should be strictly construed. The standard of proof to establish contempt, is akin to a criminal proceeding. In this case, mere allegation of violation based on surrounding circumstances and observations made by the CLB and the High Court are not enough. The breach of the order of this court must be proved beyond reasonable doubt - On the one hand, the affidavit of assets and the inventory/interim report of the APL committee give rise to a possible interpretation that the extent of the estate and the controlling interest of PDB can be to the extent admitted by the alleged contemnors. On the other hand, the extent of the estate can also be as contended by the petitioners. Controlling interest however is yet to be conclusively defined and quantified. The APL Committee has not quantified the same. In this case, the extent of control can also be the influence PDB had over the shareholders/Promoter Groups or Person Acting in concert. There is a possibility that the Promoters/Promoter Groups and PACs did not vote in concurrence with the APL Committee s decision in the AGMs where HVL was re-appointed as director. Moreover, there is also no allegation of dissipation or depletion of the estate or transfer of shares in violation of the order of status quo and thus the emphasis laid by Mr. S.N. Mookherjee on the orders of status quo over the shares as also on the orders of the CLB are not relevant in the contempt proceedings. In view of the preponderance of probabilities in the facts of this case, contempt has not been proved beyond reasonable doubt. It is desirable in the larger interest of the parties that the main lis should be decided on the merits first, or else, calling upon the court to decide the alleged contempt will be actually inviting the court to go beyond the order and decide the issues on merits which is beyond the scope of contempt jurisdiction. Unless the court is satisfied beyond reasonable doubt on the assimilation of the facts pleaded by the petitioners and the show-cause filed by the alleged contemnors in response to such allegations, that contempt has been committed wilfully, deliberately and intentionally, the court cannot hold that HVL and the other directors are guilty of contempt. The rival contentions involve an interpretation of the orders passed in the probate proceedings, by the CLB and other documents filed in course of the suit. We are not deciding in this contempt case whether the interpretation of the estate of PDB as given by the respondents or the one given by the petitioners is correct or not. That question has to be decided in the pending appeals. For the purpose of this proceeding, it is sufficient to say that HVL s participation in the Board meetings cannot be termed as contumacious violation of the order of this court as the willful disobedience has not been proved beyond reasonable doubt and there is a possibility that HVL could continue to hold office on the strength of the votes of public shareholders in exclusion to the votes of the APL Committee and the Promoter and Promoter Groups and PACs. The contempt application against HVL is dismissed. Contempt application dismissed.

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• 2021 (5) TMI 141
  Reduction of share capital - Section 66(1) of the Companies Act, 2013 - HELD THAT:- It is seen from the Application and the annexures filed therewith, the shareholders of the Applicant Company has approved the scheme of Reduction of Capital in the Extra ordinary General Meeting held on 16th October, 2019 by way of Special Resolution, passed at this meeting. The Company Petition is allowed for reduction of the share capital of the Company, as per the directions given - Application allowed.

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• 2021 (5) TMI 139
  Initiation of contempt proceedings against the Respondents/Contemnors for wilful disobedience - Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971 - HELD THAT:- The Respondents especially Respondent Nos. 4 5 have breached their own undertakings given by way of Affidavit of undertaking before the Tribunal, and the interim orders passed by NCLAT in question. It is general principle of law that any one, who intentionally violate orders of Court/Tribunal, whether they are party to proceedings or not in question, are liable to be hauled up for Contempt. However, principles of natural justice demands that those parties to be given opportunity before initiating action against them to defend. Since Respondent Nos. 4 5, have furnished their undertakings in question, and basing on that NCLAT passed interim orders in question, other Respondents cannot be directly be taken up contempt proceedings, and Respondent Nos. 4 5 should be held responsible for the contemptuous actions of other Respondents also. The Respondent Nos. 4 5 are committed Contempt of the orders dated 27.08.2019 and 17.02.2020 passed by Hon ble NCLAT and also earlier Affidavit undertaking dated 17.08.2019 filed before NCLT - Respondent Nos. 4 5 are committed Contempt of the orders dated 27.08.2019 and 17.02.2020 passed by Hon ble NCLAT and also earlier Affidavit undertaking dated 17.08.2019 filed before NCLT. Post the Contempt case for further hearing on 03rd May, 2021.

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• 2021 (5) TMI 135
  Sanction of the proposed Scheme of Demerger and Arrangement - Section 230 to 232 read with Section 66 of the Companies Act, 2013 and the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 - HELD THAT:- Considering the entire facts and circumstances of the case and on perusal of the Scheme, reports of the Regional Director and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Demerger and Arrangement appears to be fair and reasonable and is not contrary to public policy and does not appear to be violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013. The Revised Scheme of Demerger and Arrangement (which is enclosed at Page No. 17 to 42 to the Reply affidavit dated 12.03.2021) is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies and their respective Shareholders and Creditors, Employees and all concerned under the Scheme - Application allowed.

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• 2021 (5) TMI 134
  Application for amendment in the scheme of amalgamation - HELD THAT:- The proposed amendment is allowed and the applicant nos. 1, 2, 3, 4 and 6 are directed to file the amended petition along with amended scheme of amalgamation within 2 weeks from the date of this order. Application disposed off.

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• Insolvency & Bankruptcy

• 2021 (5) TMI 138
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- On perusal of the records, it is found that the instant petition was filed on 17.02.2020. A copy of the ledger account has been attached where the last payment has been received through Bank for a sum of Rs. 5,03,366/- on 17.04.2013. The balance confirmation is a letter dated 7th September 2019. In the present case, the last date of the transaction is 17.04.2013 and Balance confirmation is given on 07.09.2019 i.e., beyond the period of 3 years from 17.04.2013. Hence, the claim is barred by the Law of Limitation. Petition dismissed.

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• 2021 (5) TMI 137
  Maintainability of application - RP failed to perform its functions properly - HELD THAT:- Based on the inspection dated 10.01.2020, the applicant has taken possession of the machineries in question and to that effect applicant never protested/raised objection - In that event, admittedly, in view of filing additional affidavit, no prayer of the instant application is required to be redressed. However, during the course of argument, on a number of occasions, the applicant had argued that some parts of the machineries were missing, However, neither the applicant nor the respondent could produce any supporting documents, i.e., list of inspection and/or list of inventory, etc., made during the time of taking possession. Further, it is also a matter of record that on a number of occasions, this Adjudicating Authority made observations/directions of the parties to produce inventories, if any prepared, but both sides have failed to produce. This Adjudicating Authority is not in a position to draw any conclusion. More so, when the applicant, by way of additional affidavit, submitted that except prayer at para E , as said above, other prayers need not be redressed. Hence, nothing remains in the instant application - Application not maintainable and is rejected.

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• 2021 (5) TMI 136
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Debtor not only failed to hand over the possession of the flats till date but also failed to return the monies invested by the Petitioners - Financial Creditors - Existence of debt and dispute - HELD THAT:- The Corporate Debtor has clearly defaulted in handing over the possession of the flats to the Petitioners within the mentioned period of the said Agreement and also, defaulted in returning the monies of the petitioners when failed to give possession of the flats. The Bench has no hesitation in concluding that there is a debt and that the Corporate Debtor has committed a default and therefore, it is a fit case for admission. This Bench, on perusal of the documents filed by the Petitioner, is of the view that the Corporate Debtor defaulted in repaying the financial assistance availed. The order of the Consumer Redressal Forum, Rajasthan, directing the Corporate Debtor to deliver the flats, payment of interest and execution of Sale Deed in favor of Petitioner further confirm the admitted position of debt and default by the Corporate Debtor - the existence of debt and default is reasonably established by the Petitioner as a major constituent for admission of a Petition under Section 7 of the Code. Application admitted - moratorium declared.

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• 2021 (5) TMI 133
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - time limitation - pecuniary jurisdiction - HELD THAT:- The Operational Creditor has proved existence of debt and default . Moreover, this application was filed on 30.09.2019. The pecuniary jurisdiction of this Adjudicating Authority, at the time of filing this application was debt due Rs. one lakh and above. Hence, this Adjudicating Authority has jurisdiction to adjudicate this petition. The registered office of the Corporate Debtor is also within the State of Tamilnadu, hence this Adjudicating Authority has jurisdiction. The alleged debt due is between the period from 01.04.2018 to 17.07.2019. Hence, it is well within the period of limitation. The Corporate Debtor has made part payment towards outstanding. The last payment of a sum of Rs. 2,00,000/- was pending. The Corporate Debtor issued cheques and failed to honour the same. This Adjudicating Authority is inclined to admit the Application as has been filed by the Operational Creditor and consequently Corporate Insolvency Resolution Process is initiated - Petition admitted - moratorium declared.

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• PMLA

• 2021 (5) TMI 158
  Grant of Regular Bail - case of applicant is that she was only employee and started her career as data entry operator and was working under main director - HELD THAT:- In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail on executing a personal bond of Rs. 10,000/- - Bail application allowed.

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• Service Tax

• 2021 (5) TMI 164
  Rate of interest on delayed payment of service tax - at what rate petitioner is liable to pay interest i.e. 15% or 24%? - HELD THAT:- Admittedly, the petitioner firm started its service after completing registration formalities in July, 2011 and the respondents have calculated the interest liability from the first quarter of Financial Year 2011-12. If the petitioner firm has started its services in July 2011, there cannot be any demand for the first quarter of 2011-12. As per the contention of respondents, petitioner made delayed payment of service tax between August, 2016 and February, 2017, i.e. the time when aforesaid notification was in force i.e. 14.05.2016. The notification fixed the rate of simple interest @ 24% in case where any amount is specifically collected as service tax and still not deposited with the Central Government on or before the date on which such payment became due whereas rate of 15% is fixed for any other situation - In the case in hand, it is the specific stand of petitioner that it did not specifically collect the tax from the service recipients. The respondents have quantified interest 24% per annum on the basis of Notification dated 01.03.2016 presuming that the petitioner has specifically collected some amount as service tax and still not deposited with Central Government, whereas the petitioner, in the invoices issued during the period in question did not collect any amount specifically mentioning it as service tax. The grant of benefit of cum-tax value in M/S BALAJI MANPOWER SERVICES, FARIDABAD VERSUS UNION OF INDIA AND ORS [ 2019 (10) TMI 540 - PUNJAB AND HARYANA HIGH COURT] , further supports the case of the petitioner. The action of the respondents to charge interest @ 24% in accordance with Notification dated 01.03.2016 is arbitrary and not sustainable in the eyes of law - the impugned order modified to the extent of charging interest @ 15% - petition allowed in part.

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• 2021 (5) TMI 159
  Validity of confirming demand of service tax - discount received from the manufacturers by way of credit notes - principal to principal relationship or not - Adjudicating authority did not follow the decisions of Tribunal since the revenue appeal is pending before the Apex Court - HELD THAT:- A perusal of definition of service would indicate that there must be (i) service provider, (ii) service recipient and (iii) consideration for providing a service. The aforesaid definition also clearly exempts the activity of transfer of title in goods by way of sale - A mere reading of the dealership agreement entered into between the assessee on the one hand and the manufacturers on the other would indicate that the petitioner purchases the goods from the manufacturers by way of sale - Even though the document may be styled as a dealership agreement and the petitioner may have to be conform to certain business standards, if read as a whole, one can come to the safe conclusion that the relationship between the parties was one of seller and buyer on principal to principal basis. Analysis of the documents referred to in the adjudication order to be done - HELD THAT:- The adjudicating authority has not read the document as a whole but instead gave undue emphasis to certain individual clauses occurring in the agreement - the finding of the authority that the relationship between the parties is not on principal to principal basis is clearly unreasonable. All the decisions were actually brought to the notice of the adjudicating authority. The adjudicating authority has chosen to disregard them on the ground that the revenue has filed appeal before the Supreme Court questioning some of the decisions. It is admitted that no interim order has been granted by the Supreme Court. It is well settled that merely because a matter is pending before the higher forum, such pendency will not take away the precedential value of the appealed decision. The adjudicating authority ought to have followed the Tribunal decisions which clearly support the stand of the petitioner. The aforesaid Tribunal decisions were binding on the authority. Petition allowed.

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• CST, VAT & Sales Tax

• 2021 (5) TMI 165
  Validity of Entry tax - non-payment/adjustment of the entry tax for the assessment years 2000-2001 to 2004-2005 - grievance of the petitioner is that though personal hearing notices were dated 01.03.2021, it were served on the petitioner only on 11.03.2021 and thereafter, few days only left for him to attend the personal hearing - Principles of natural justice - HELD THAT:- It is unfortunate that this matter has been prolonged from the year 2001 onwards and various writ petitions have been filed before this Court and from the year 2001, the petitioner had been litigating the notices and assessment orders and therefore, there was enough time for him to be ready with the case - the petitioner has filed the writ petitions on the 20th day of April, 2021, which is two days before the date of personal hearing and had missed the opportunity of personal hearing and therefore, filing of these writ petitions, is only an abuse of process of this Court. Though this Court is not inclined to accept the contention of the petitioner and finds that only because of the attitude of the petitioner, he lost the opportunity of appearing before the authority for personal hearing, taking into consideration the present pandemic times and taking into consideration that the writ petitions have been filed before the date of personal hearing, the respondent shall fix the date of personal hearing on 12.05.2021 for all the assessment years and the petitioner shall appear before the authorities for personal hearing on 12.05.2021 and then pass orders afresh - Petition allowed by way of remand.

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• 2021 (5) TMI 161
  Validity of assessment order - violation of principles of natural justice - the Assessing Authority has, admittedly, afforded sufficient opportunity to the petitioner, however, the petitioner appears to have sought an adjournment on multiple occasions - HELD THAT:- The sequence of events would establish that this is a matter where, in the interests of substantial justice, the petitioner should be granted one more opportunity to substantiate its case before the Assessing Authority and Mr.Jayaprathap also does not object to this suggestion by the Court. Learned counsel for the petitioner would submit that all materials necessary to substantiate the petitioner s case before the Assessing Authority are available and have, in fact, been filed along with the rectification applications itself. The impugned orders are set aside, solely for the purpose of granting an effective opportunity to the petitioner to put forth its case before the authorities. The petitioner will appear before the Assessing Authority on Monday, the 3rd of May, 2021 at 10.30 a.m. along with all/any materials in support of its contention, without expecting any further notice in this regard - Petition allowed.

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