TMI Tax Updates - e-Newsletter
June 12, 2021

Case Laws in this Newsletter:

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

Articles

1. DECIPHERING TAXABILITY OF CRYPTOCURRECIES IN GST

   By: DEEPALI MISHRA

News

1. Indian mango promotion programme begins in Bahrain

Notifications

GST - States

1. G.O. (Ms) No.90 - dated 2-6-2021 - Tamil Nadu SGST

Tamil Nadu Goods and Services Tax (Fifth Amendment) Rules, 2021.

Income Tax

2. 72/2021 - dated 9-6-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Competition Commission of India’ in respect of the specified income arising to that Commission

Highlights / Catch Notes

GST

• Understanding TDS Applicability for Contracts Under GST Act Section 51: When Invoices Exceed Rs. 2.5 Lakh.

  Case-Laws - AAR : Interpretation of the term “a contract” - TDS applicability under section 51 of the GST Act - no contract or contract of continuous supply - In the first scenario, since the value of the single invoice is more than ₹ 2.5 lakh, there is no doubt that the tax deduction at source is applicable under section 51 subject to other conditions. In the second scenario, the applicant has clearly stated that the value of supply under a single invoice does not exceed ₹ 2.5 Lakhs and assuming that it is a single transaction as per the purchase order, then tax deduction at source is not applicable on that single transaction or invoice. But if it is a part supply and a part of the continuous supply as per the purchase order, then if the total value of supply as mentioned in the purchase order is more than ₹ 2.5 Lakh, then the provisions of tax deduction at source would become applicable even on this invoice. - AAR
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• Machinery Tax Rates: 6% on Feeder, Dryer, Cleaner; 9% on Weighing Machine under CGST & KGST Acts.

  Case-Laws - AAR : Classification of machinery - The machineries manufactured and sold by the applicant like Automatic Feeder with Breaker, Drying machine, Cleaning and Grading Machine, and Pre-stem remover are taxable at 6% under the CGST Act, 201 7 and 6% under the KGST Act, 2016. - The Automatic Weighing Machine manufactured and sold by the applicant is liable to tax at 9% under the CGST Act, 2017 and 9% under the KGST Act, 2017 - AAR
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• High Court Declares Section 13(8)(b) of IGST Act Unconstitutional for Taxing Overseas Marketing Services as Indian Supply.

  Case-Laws - HC : Constitutional Validity of levy of IGST on supply of services outside India - providing marketing and promotion services - Export of services - By artificially creating a deeming provision in the form of section 13(8)(b) of the IGST Act, where the location of the recipient of service provided by an intermediary is outside India, the place of supply has been treated as the location of the supplier i.e., in India. This runs contrary to the scheme of the CGST Act as well as the IGST Act besides being beyond the charging sections of both the Acts. - Section 13(8)(b) of the IGST is ultra vires besides being unconstitutional - HC
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• Court Denies Bail for Alleged ITC Fraud Involving Fake Invoices and Dummy Firms; Highlights Serious Nature of Offense.

  Case-Laws - HC : Input Tax Credit - dummy and sham firms - fake and fabricated invoices without supply of any physical goods - As the law stands, in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of the public and State. - the petitioner is hand in gloves with the other accused in creation and operation of the non-existent business entities for availing and passing of bogus ITC thereby defrauding the state exchequer - Bail application dismissed - HC
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• Court Upholds Demand for Recovery from Petitioner in Works Contracts Post-GST, Citing Decreased Contract Value, Not GST Amount.

  Case-Laws - HC : Implementation of GST in works contract in post-GST regime - Since the demand of recovery is pertaining to the excess payment received by the Petitioner, we do not see any flaw or illegality in the same as it is clear that the amount which is sought to be recovered from the Petitioner is the decreased value of contract and not the GST amount. The submission of the Petitioner to the contrary is misconceived. - HC
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• Court Rules Expired E-way Bill Alone Doesn't Prove Tax Evasion; Goods Release Ordered Under GST Rule 138(10.

  Case-Laws - HC : Release of detained goods - expiry of E-way bill - Inter-state purchases - Rule 138(10) of the GST Act, 2017 - It was the duty of 2nd respondent to consider the explanation offered by petitioner as to why the goods could not have been delivered during the validity of the e-way bill, and instead he is harping on the fact that the e-way bill is not extended even four (04) hours before the expiry or four (04) hours after the expiry, which is untenable - there was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner merely on account of lapsing of time mentioned in the e-way bill - HC
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• Court Rules GST Fraud Bail Relief Petition Non-Maintainable; Urges Use of Established Legal Remedies u/s 482 CrPC.

  Case-Laws - HC : Maintainability of petition - seeking relief from Bail conditions - GST fraud - The litigant should adopt a proper mechanism provided under the law for redressal of his grievances, instead of not doing so and rushing to this Court asking it to interfere in the matter, exercising the power under Section 482 Cr.P.C. If such practice is allowed, then the litigants would rush to this court moving petitions under Section 482 Cr.P.C., in a hope to get early decision, instead of availing of the remedy provided under the law - HC
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Income Tax

• Interest Payments as FITL Not 'Actual Payment' u/s 43B; No Additions to Taxable Income.

  Case-Laws - AT : Disallowance of interest payment converted into FITL (Funded Interest Term Loans) - the impugned ‘funded interest term loan’ is not a loan transaction but assessee’s contract agreement with the creditor party and therefore, the CIT(A) has held that the same is not exigible to ‘actual payment’ contemplated u/s.43B of the Act. - No additions - AT
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• Tax Exemption on Interest Income for Resident Not Ordinarily Resident with NRI Account u/s 5(2.

  Case-Laws - AT : Levy of tax on interest income - Status of the assessee - Resident but not ordinarily resident - NRI Account - Provisions of Section 5(2) are also not applicable as the amount received is received from assessee's own account outside India and no income has accrued or arisen in India. These funds were also received through banking channels with necessary statutory approvals. Therefore, assessee has proved the sources of receipts and discharged the onus. - AT
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• Assessing Officer's Jurisdiction u/s 147 Invalid Due to Incomplete Assessment and Lack of Valuation Report.

  Case-Laws - AT : Validity of jurisdiction assumed by AO u/s 147 - Assessment was not complete based not valuation report - While a formal rejection of books may not, at times, be possibly necessary an abstract position of law, an implied dissatisfaction on the books could not be gauged either from the original assessment or from the attendant office note. - CIT(A) has also made reference to various other judgments and has come to the conclusion that ingredients of Section 147 of the Act are not fulfilled in the instant case and consequently reopening is not permissible in the facts and circumstances of the case - AT
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• PCIT Challenges AO's Classification of NSEL Trading Income u/s 263; AO's Decision Deemed Accurate, Not Erroneous.

  Case-Laws - AT : Revision u/s 263 - assumption of revisionary jurisdiction by PCIT - once the revenue has accepted the income from trading in commodity on NSEL as business income, then loss which arise from the NSEL trading cannot be termed as Speculation loss. Consequently, the view taken by the AO cannot the termed as erroneous. - AT
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• Assessee Seeks Section 11 Exemption and Section 12AA Registration for Educational Activities, Supported by Necessary Approvals and Affiliations.

  Case-Laws - AT : Exemption u/s 11 - Registration u/s 12AA - imparting education - the assessee was having necessary approval /affiliation from the respective authorities as required by the Commissioner exemption. These permission/ approval now produced by the necessary may not be necessary for the purposes of considering registration, as the same had already been filled with Board at the time of affilliation. Nonetheless now these permission / approval are available, there is no point of denying the registration on the pretext of alleged deficiency. - AT
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• Section 54B Income Tax Exemption Extends to HUFs and Eligible Parents for Agricultural Land Purchases. Favor Taxpayers in Doubt.

  Case-Laws - AT : Entitlement u/s 54B - Benefit of exemption in the hands of HUF - purchase of agriculture land - In the case of individual assessee, the parents of the assessee fulfill criteria, then the benefit can be given. In our considered opinion harmonious interpretation is required to invoked so that the word used in the provisions would not become redundant or otiose . In our view , in case of doubt or confusion ,the benefit of any doubt in respect to taxability or exemption should be given to the assessee rather than to revenue. - AT
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• Interest Rate on Loans to Related Parties Deemed Reasonable u/s 40A(2) Despite Higher Market Rates.

  Case-Laws - AT : Addition u/s 40A(2) - assessee has paid interest to certain related parties and treated interest rate @ 15% reasonable and disallowed excess rate paid to related parties u/s.40A(2) - different banks/NBFC’s are having different interest rates for business loan if any one require loan in emergency from local money lenders then in that case one has to pay interest rate between 48% to 60%. So in our considered opinion in this case difference of interest which was received by the assessee or paid by it is just 1.25% per annum so same cannot be termed as unreasonable. - AT
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Customs

• Settlement Commission Order Stands; Petitioner Must Accept or Face Consequences for Violations.

  Case-Laws - HC : Seeking Modification of order of Settlement Commission - The order of the first respondent Settlement Commission is a package and it is not a substitute for an adjudication order that would have been passed by an adjudicating authority under the Act. It is for the petitioner to take advantage of it as it is or face the consequences by violating it - HC
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Corporate Law

• Petition to Investigate Company Dismissed Due to Lack of Standing; Alleged Abuse of Legal Process and Forum Shopping.

  Case-Laws - Tri : Seeking direction to investigate the affairs of Company by Inspector(s) appointed by the Central Government - freezing of assets of the R-1 Company for a period of 3 years pursuant to the investigation by the Inspector(s) appointed by the Central Government - The Petitioner has no locus standi to file instant Petition, and it wants to order roving enquiry for ulterior purpose by abusing the process of law and resorting to forum shopping - Tri
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IBC

• Moratorium in CIRP under IBC Section 14 doesn't cover bank guarantee encashment unless fraud is involved; IOCL can proceed.

  Case-Laws - Tri : Encashment of Bank Guarantees during CIRP period - scope of moratorium u/s 14 of IBC - If bank guarantee is beyond the mentioned amount in the bank guarantee, if the bank guarantee is encashed by indulging into fraud behind the back of the Banks, then it could be understood that this Contract is vitiated the fraud, but in this case, the bank guarantees have remained same and the Corporate Debtor has taken additional financial support to accomplish the contract work. Such availing additional financial support cannot mean that Banks are absolved from the obligation of discharging their part of contract - The Corporate Debtor taking an additional financial support or IOCL not reducing the advance amount from the running bills will not tantamount to indulge in fraud, therefore IOCL is at liberty to encash the bank guarantees. - Tri
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• Section 32A of Insolvency Code Shields Debtors from New Claims Post-Resolution Plan Approval; Validity Upheld by Tribunal.

  Case-Laws - Tri : Fresh claim after approval of resolution plan - Arrears against the Corporate Debtor/Applicant - As soon as the Order approving the Resolution Plan was passed by this Tribunal, and the Plan was put into effect, Section 32A of the Code is attracted. Therefore, R1 is barred from raising any arrears against the Corporate Debtor/Applicant at this juncture - constitutional validity of Section 32A has been upheld. - Tri
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Central Excise

• Court Rules Manufacturing Process for Ready-Mix Concrete Not Exempt from Standard Classification Despite Procedural Differences.

  Case-Laws - HC : Manufacture of RMC at site or not - The petitioners, only because they had not installed either stone crushers with vibrators or sand mill or because they purchased stone aggregates, sand and other raw material from third-party vendors, cannot be permitted to contend that the machinery installed by them and the manufacturing process adopted by them are different and distinct from the machinery installed and process followed for manufacturing RMC. If the petitioners have manufactured RMC, it would be of no significance, given the text of the exemption under the relevant notification and the clarification, that it is used for captive use and not for sale. - HC
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Case Laws:

• GST

• 2021 (6) TMI 387
  Interpretation of the term a contract - TDS applicability under section 51 of the GST Act - no contract or contract of continuous supply - whether the single tax invoice shall be considered as a contract or aggregate value of purchase from a vendor for the whole year be considered as a contract? - HELD THAT:- Coming to the meaning of supply under a contract , it is very well accepted that there must be a supplier and a recipient for a supply to happen and these two persons must be either distinct persons or deemed to be distinct persons under the Act. When there is a supply of goods or services from one person to another, it has to be as a follow up action of an agreement to supply, either written or verbal or implied. There is no precondition that the agreement to supply should always be in writing and the same is governed under the Contract Act, 1872. The agreement to sell and the contract of Sale of Goods as envisaged in the Sale of Goods Act, 1930 also are governed under the Contract Act, 1872. Further, sale of goods is only a subset of supply as envisaged in Section 7(1) of the GST Act and hence all contracts covered under the Sale of Goods Act, 1930 are also contracts under the GST Acts - The agreement between the supplier and the recipient is of prime consideration and if it is for a continuous supply to be made in installments, then the contract would include all the part supplies made and covered under separate invoices. It is in this context, the supply under a contract should be understood and the total value of such supply under a contract, if it exceeds Rs. 2,50,000-00 would be liable for deduction of tax at source, subject to other conditions. The agreement of continuous supply is a contract for scenario no, 3 and 4 and if the amount involved in the supply in this contract exceeds Rs. 2.5 lakhs, then the applicant is supposed to deduct TDS on the payment credited to the vendor - In the first scenario, since the value of the single invoice is more than Rs. 2.5 lakh, there is no doubt that the tax deduction at source is applicable under section 51 subject to other conditions. In the second scenario, the applicant has clearly stated that the value of supply under a single invoice does not exceed Rs. 2.5 Lakhs and assuming that it is a single transaction as per the purchase order, then tax deduction at source is not applicable on that single transaction or invoice. But if it is a part supply and a part of the continuous supply as per the purchase order, then if the total value of supply as mentioned in the purchase order is more than Rs. 2.5 Lakh, then the provisions of tax deduction at source would become applicable even on this invoice.

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• 2021 (6) TMI 386
  Classification of machinery - supply of Automatic Feeder with Breaker, Pre-washer Machine, Drying Machine, Cleaning and Grading Machine, Pre-stem remover, Riffle Washer, Stem Remover, Spin Dryer, Automatic Weighing Machine - classifiable under HSN code 8437 or 8433? - HELD THAT:- In the present context, it s observed that the activities carried on by the applicant involves cleaning, grading, drying and packing of agricultural produces i.e. Raisins and Grapes, which are fruits. Machineries for cleaning, sorting or grading of eggs, fruits or other agricultural produce are covered under HSN 8433 60. All the machines are used for this purpose and hence this is a more specific entry. But in the Description of HSN 8433 clearly says what is covered under HSN 8437 are not covered under HSN 8433 - HSN 8437 deals with machines for sorting, cleaning or grading seed, grain or pulses and the machineries used in the milling industry or machineries used for working of cereals or pulses. Evidently this machinery is for used in cleaning, sorting and grading of raisins and hence not cereals or pulses and hence cannot be covered under HSN 8437. Hence these machineries get squarely covered under HSN 8433 60. The rate of CGST applicable for the supply of these goods is at 6%. Further, there is no specific notification for exemption or reduction of rate of tax in case such machineries are sold to farmers or farmer co-operatives. The applicant has also not brought out any reasons in support of reduced tax rate in this regard - Hence the automatic weighing machine is covered under HSN 8423. The machineries manufactured and sold by the applicant like Automatic Feeder with Breaker, Drying machine, Cleaning and Grading Machine, and Pre-stem remover are taxable at 6% under the CGST Act, 2017 and 6% under the KGST Act, 2016 - The Automatic Weighing Machine manufactured and sold by the applicant is liable to tax at 9% under the CGST Act, 2017 and 9% under the KGST Act, 2017.

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• 2021 (6) TMI 385
  Levy of GST on Grants - Government entity or not - supply of service by a Government controlled Association to State Government, Local Authority or any person specified by State Government, Local Authority against consideration received from State Government, Local Authority - entry no. 9C of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.32/2017 - Central Tax (Rate) dated 13.10.2017 - HELD THAT:- The applicant is a society registered under the Societies Registration Act, 1860 and hence is a society - The applicant has not established whether the applicant society has been set up by an Act of State Legislature or established by the Government. He has only stated that the Nirmiti Kendra is promoted, monitored, overseen and guided by Karnataka Rajya Nirmana Kendra (KARNIK) which itself was registered on 11.06.1991 under the Societies Act and the applicant is registered under the Karnataka Societies Registration Act, 1960 (Karnataka Act 17 of 1960) from 02.04.2008. Nowhere he has established that it was established by the Government - the applicant cannot be covered under the definition of Government Entity and hence the entry no. 9C of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification No.32/2017 - Central Tax (Rate) dated 13.10.2017 is not applicable to the applicant. The supply of service by a Government controlled Association to State Government, Local Authority or any person specified by State Government, Local Authority against consideration received from State Government, Local Authority, in the form of grants is not liable to GST only if the Government controlled Association is covered under the definition of Government Entity and if not, then the same is liable to tax.

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• 2021 (6) TMI 384
  Validity of section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- This petition was filed when the related writ petition No.2031 of 2018 was being heard. Challenge being identical this case was tagged along with writ petition No.2031 of 2018 - By a separate judgment and order passed today, writ petition No.2031 of 2018 has been allowed by declaring section 13(8)(b) of the Integrated Goods and Services Tax Act as ultra vires and unconstitutional. Petition disposed off.

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• 2021 (6) TMI 383
  Constitutional Validity of levy of IGST on supply of services outside India - providing marketing and promotion services - Export of services - Constitutional Validity of section 13(8)(b) and section 8(2) of the Integrated Goods and Services Tax Act, 2017 are ultra vires articles 14, 19, 245, 246, 246A, 269A and 286 of the Constitution of India - HELD THAT:- Part XI of the Constitution of India deals with relations between the Union and the States. Article 245 which is included in Chapter I of the said part lays down the extent of laws made by Parliament and by the legislatures of the states. Clause (1) says that subject to provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India and the legislature of a state may make laws for the whole or any part of the state. As per clause (2), no law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation - what Article 245 contemplates is that while Parliament may make laws for the whole or any part of India, the legislature of a state may make laws for the whole or any part of the state. Further, no law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. It is apparent that section 9 of the CGST Act cannot be invoked to levy tax on cross-border transactions i.e., export of services. Likewise from the scheme of the IGST Act it is evident that the same provides for levy of IGST on inter-state supplies. Import and export of services have been treated as inter-state supplies in terms of section 7(1) and section 7(5) of the IGST Act. On the other hand sub-section (2) of section 8 of the IGST Act provides that where location of the supplier and place of supply of service is in the same state or union territory, the said supply shall be treated as intra-state supply. However, by artificially creating a deeming provision in the form of section 13(8)(b) of the IGST Act, where the location of the recipient of service provided by an intermediary is outside India, the place of supply has been treated as the location of the supplier i.e., in India. This runs contrary to the scheme of the CGST Act as well as the IGST Act besides being beyond the charging sections of both the Acts. Section 13(8)(b) of the Integrated Goods and Services Tax Act, 2017 is ultra vires the said Act besides being unconstitutional - Petition allowed. Second Judge has passed DISSENTING order in [2021 (6) TMI 563 - BOMBAY HIGH COURT]

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• 2021 (6) TMI 382
  Input Tax Credit - dummy and sham firms - fake and fabricated invoices without supply of any physical goods - bogus ITC availed and passed on by the petitioner in collusion with others in the name of 12 fictitious entities - HELD THAT:- The accusations against the petitioner relate to the commission of economic offences which are considered grave and therefore must be viewed seriously. Offences of this nature affect the economy of the country as a whole and usually involve a deep-rooted conspiracy to cause huge loss of public funds wherein the individual would rather achieve personal gains through illicit means than act in the best interest of the society. Although this Court is cognizant of the fact that in some similar matters the accused persons have been admitted to bail, however, every case turns on the facts and circumstances of the case itself - In the instant case, the aspect of conspiracy seems to be forthcoming inasmuch as the co-accused persons have named each other an aspect which is of sanguine consequence. As the law stands, in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of the public and State. The exchange of incriminating documents relating to the non-existent firms between Smruti Ranjan Mohanty and the petitioner, the contrasting statement rendered by the petitioner and the deposition given by Smruti Ranjan Mohanty prima facie leads this Court to form an opinion that the petitioner is hand in gloves with the other accused in creation and operation of the non-existent business entities for availing and passing of bogus ITC thereby defrauding the state exchequer - the nature of supporting evidence, availability of prima facie case against the petitioner, coupled with the fact that a huge amount of public money has been misappropriated and also the fact that further investigation of the case is under progress and taking into account the apprehension of the petitioner in tampering with the evidence. Bail application dismissed.

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• 2021 (6) TMI 381
  Implementation of GST in works contract in post-GST regime - demand notice issued under Section 61 of the Odisha Goods and Services Act - HELD THAT:- It is seen that the increased value of the contract after inclusion of GST is to be reimbursed by the employer whereas the decreased value of the contract, if any, after inclusion of GST is being recovered from the contractor after calculation. Whenever it is found that the contractor has received excess payment, the same is required to be recovered. The impugned demand notice issued to the Petitioner under Annexure-9 is a result of excess payment made thereof. Since the demand of recovery is pertaining to the excess payment received by the Petitioner, we do not see any flaw or illegality in the same as it is clear that the amount which is sought to be recovered from the Petitioner is the decreased value of contract and not the GST amount. The submission of the Petitioner to the contrary is misconceived. It is made clear that the Petitioner has not challenged the tax liability on works contract nor any of the provisions of GST Act. Clause-30 of the General Conditions of Contract makes the contractor liable to bear all the taxes, cesses, tollage and charges etc. - contention of the Petitioner that after issuance of the OM dated 10th December 2018, the agreement between the contractor and employer stands amended or modified accordingly, does not hold any merit for the reason that, it is a purely contractual obligation between the parties to either agree or disagree. The statute should clearly and unambiguously convey three components of the tax law i.e., the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. In the instant case, three components of the tax, i.e., subject of tax, person liable to pay the tax and rate of tax has been clearly defined in the statute. The OM dated 10th December, 2018 only prescribes the manner/procedure of calculation to determine the amount of tax in a particular eventuality in the transitional period of migration to GST Act with effect from 1st July, 2017 - Petition dismissed.

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• 2021 (6) TMI 380
  Maintainability of petition - alternative efficacious remedy of filing an appeal - Validity of section 16(4) of the Central Goods And Services Tax Act 2017 - benefit of input tax credit - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex-parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. Petition disposed off.

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• 2021 (6) TMI 378
  Release of detained goods - expiry of E-way bill - Inter-state purchases - Rule 138(10) of the GST Act, 2017 - allegation that the e-way bill had expired a day earlier - traffic blockage due to agitation - abuse of power by the officer - HELD THAT:- The admitted facts are that petitioner had dispatched goods on the auto trolley bearing No.TS 07 UF 1008 on 04.01.2020 and the driver of the auto trolley had in his possession tax invoice (Ex.P.2) dt.04.01.2020 as well as e-way bill (Ex.P.3) dt.04.01.2020, and that the distance to be traveled by the auto trolley was only 36 kms - Petitioner alleges that the said auto trolley along with other auto trolleys started for delivery of the paper at 04:33 p.m. on 04.01.2020 to the consignee, but on its way to Bashierbagh since there was a political rally opposing CAA and NRC by political parties, the roads were blocked and the traffic could not move forward or backward; that the driver of the said auto trolley waited till 08:30 p.m. on the road; by that time having realized that the shop of the buyer would be closed, the driver of auto trolley took the goods to his residence with a desire to deliver the goods on the next day. The following day 5.1.2020 being a Sunday, the attempt was made by the driver of the auto trolley to deliver them to the buyer on 6.1.2020 when it was detained at 12.35 pm by issuing detention notice dt.06.01.2020. It was the duty of 2nd respondent to consider the explanation offered by petitioner as to why the goods could not have been delivered during the validity of the e-way bill, and instead he is harping on the fact that the e-way bill is not extended even four (04) hours before the expiry or four (04) hours after the expiry, which is untenable - there was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner merely on account of lapsing of time mentioned in the e-way bill because even the 2nd respondent does not say that there was any evidence of attempt to sell the goods to somebody else on 06.01.2020. On account of non-extension of the validity of the e-way bill by petitioner or the auto trolley driver, no presumption can be drawn that there was an intention to evade tax. There has been a blatant abuse of power by the 2nd respondent in collecting from the petitioner tax and penalty both under the CGST and SGST and compelling the petitioner to pay Rs. 69,000/- by such conduct - The respondents are directed to refund the said amount collected from petitioner within four (04) weeks with interest@ 6% p.a from 20.1.2020 when the amount was collected from petitioner till date of repayment. The 2nd respondent shall also pay costs of Rs. 10,000 to the petitioner in 4 weeks. - Petition allowed.

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• 2021 (6) TMI 377
  Release of prisoners on parole/interim bail for 60 days - HELD THAT:- On perusal of the direction issued by HPC on 30.4.2021. it is found no such condition on the basis of which impugned order has been passed by Special Chief Judicial Magistrate, Meerut, therefore, impugned order lacks merit and is liable to be quashed. The petition is allowed.

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• 2021 (6) TMI 375
  Maintainability of petition - seeking relief from Bail conditions - prayer for withdrawal of the conditions of heavy surety and bank guarantee/FDR - GST fraud - availing Input Tax Credit on the strength of fake invoices - HELD THAT:- It may be mentioned here that admittedly the petitioner had filed a revision petition before the Court of Sessions challenging such conditions. However, it was withdrawn abruptly. The petitioner had taken recourse to proper legal remedy but for the reason best known to him, did not opt to pursue the revision and withdrew it. As far as his approaching this Court under Section 482 Cr.P.C., it needs to be mentioned here that Section 482 Cr.P.C. which saves inherent powers of the High Court, is not a panacea for all the ills. The litigant should adopt a proper mechanism provided under the law for redressal of his grievances, instead of not doing so and rushing to this Court asking it to interfere in the matter, exercising the power under Section 482 Cr.P.C. If such practice is allowed, then the litigants would rush to this court moving petitions under Section 482 Cr.P.C., in a hope to get early decision, instead of availing of the remedy provided under the law - there are no reason to use the power under Section 482 Cr.P.C. since the conditions imposed cannot be terms to be onerous, arbitrary or stringent. There are no reason to use the power under Section 482 Cr.P.C. since the conditions imposed cannot be terms to be onerous, arbitrary or stringent.

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• 2021 (6) TMI 369
  Maintainability of petition - alternative and efficacious remedy of an appeal - time limitation - HELD THAT:- The petitioner has submitted that the impugned order has been passed on 10.12.2020, the writ petition has been filed on 25.02.2021, within three months from the date of the order passed by the Authority. Since under Section 107 sub-clause 4, the period of limitation has been prescribed for three months and he has filed the writ petition before this Court, he submitted that the Appellate Authority can dispose of the appeal on merits without going to the limitation. If the petitioner files an appeal before the Appellate Authority within six weeks from today, the Appellate Authority to decide the appeal on merits in accordance with law without going to the limitation aspect - Pettion disposed off.

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• Income Tax

• 2021 (6) TMI 379
  Recourse to an alternate remedy - Reason to believe that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the Appellate Tribunal or in the High Court - HELD THAT: As has been observed by this Court and other courts including the Supreme Court in several judgments, an alternate remedy is a self-imposed limitation placed on itself by the Court. It does not prevent the Court from entertaining an action, if it, otherwise, has jurisdiction in the matter. [See Calcutta Discount Co. Ltd. vs. ITO [ 1960 (11) TMI 8 - SUPREME COURT ] - Also see Whirlpool Corpn. vs. Registrar of Trade Marks [ 1998 (10) TMI 510 - SUPREME COURT ] In this case, particularly, we do not see any purpose in relegating the petitioner to the alternate forum, in view of the fact that the issue raised stands already covered by the judgment of this Court in Concentrix case [ 2021 (4) TMI 1051 - DELHI HIGH COURT ] there being no dispute qua the facts. As a matter of fact, the Supreme Court, in ABL International Ltd. vs. Export Credit Guarantee Corpn. of India Ltd., [ 2003 (12) TMI 584 - SUPREME COURT ] has observed that even where the facts are disputed, it does not, willy-nilly, restrain a writ Court from entertaining such an action, if it, otherwise, chooses to do so. [Also see Piramal Healthcare Limited vs. Union of India[ 2013 (7) TMI 1166 - DELHI HIGH COURT] .

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• 2021 (6) TMI 368
  Assessment u/s 153C - HELD THAT:- Hon ble Delhi High Court in the case of Pr. CIT v Sarwar Agency (P.)Ltd. [ 2017 (8) TMI 733 - DELHI HIGH COURT ] clearly held that in case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held by the Hon ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the searched person as well as the other person would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place on 7/4/2016 in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. We are of the considered opinion that since the date of search is 07.04.2016, the amendment brought by the Finance Act, 2017 would not be applicable and consequently the order of assessment dated 31.12.2019 passed u/s 153C r.w.s. 144 of the Act is bad and is liable to be quashed. Appeal of the assessee is allowed.

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• 2021 (6) TMI 367
  Intangible asset u/s.32(1)(ii) - asset in the nature of the road project concerned - HELD THAT:- This tribunal s Special Bench s decision in M/s.Progressive Construction Ltd. [ 2014 (11) TMI 401 - ITAT HYDERABAD] has already settled the issue that such a license agreement amounts to an intangible asset in the nature of right to collect toll amounts to an intangible asset u/s.32(1)(ii) of the Act. The Revenue s stand that the assessee ought to have amortised the license fee paid to NHAI as per the CBDT s circular (supra) also fails to make any difference since the same could not be taken as an attempt at the Board s part to deny depreciation relief in any manner; whatsoever. Hon ble apex court s decision Taparia Tools Ltd. Vs. JCIT [ 2015 (3) TMI 853 - SUPREME COURT] holds that the mere option of amortisation would not debar an expenditure claim which is otherwise admissible as per law. We thus affirm the CIT(A) s findings qua the first issue of depreciation disallowance. The Revenue s corresponding grounds are rejected. Disallowance towards provision for periodical maintenance declined in the course of assessment - HELD THAT:- Revenue has nowhere disputed the assessee s liability to maintain the road project even in the assessment findings as well. And also that Section 43B does not cover any of these clauses in principle as it has been observed in the CIT(A) s order. We thus quote the hon ble apex court s landmark decision Chainrup Sampatram Vs. CIT [ 1953 (10) TMI 2 - SUPREME COURT] that an expenditure could be booked at the first sign of probability whereas the converse is not true qua income which has to be recognised as per the conservative system of accounting only. We thus affirm CIT(A) s lower appellate findings under challenge allowing the assessee s periodical maintenance claim going by its agreement clauses than mere estimation based thereupon. Disallowance of interest payment converted into FITL (Funded Interest Term Loans) - AO had invoked Section 43B of the Act towards the impugned provision of interest payment than actual payment of interest sum - HELD THAT:- We notice that there is no rebuttal from the Revenue s side qua the clinching fact that the impugned funded interest term loan is not a loan transaction but assessee s contract agreement with the creditor party and therefore, the CIT(A) has held that the same is not exigible to actual payment contemplated u/s.43B of the Act. We thus decline the Revenue s instant last substantive ground as well.

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• 2021 (6) TMI 366
  Limited scrutiny under CASS - Whether sales turnover / receipts have been correctly offered for tax ? - Whether contract receipts/fees have been correctly offered for tax ? - HELD THAT:- AO has verified and found from the I.T data that the assessee has received contract receipts. He, therefore, accepted it as correct. Whether correct contract receipts have been offered to tax? - In this regard when the Assessing Officer verified the P L A/c and Balance Sheet of the assessee he observed that the assessee has declared the net profit and that it included indirect income also such as interest income on FDR and interest on deposits and also refund of VAT. Since they did not form part of business receipts, he reduced them from the net profit declared by the assessee. AO was right in considering the contract receipts and working out the net profit from business and whether the net profit offered by the assessee was correct and since the assessee has failed to produce the books of account, the Assessing Officer had no option but to estimate the income of the assessee at a percentage of the turnover. Therefore, as rightly held by the CIT (A), the Assessing Officer has restricted himself to the points of limited scrutiny and has not converted limited scrutiny into complete scrutiny as alleged by the assessee and therefore, there was no need for him to obtain the approval of the Pr. CIT before completing the assessment. Therefore, the case law relied upon by the learned Counsel for the assessee are not applicable to the case before us. Therefore, Ground of appeal Nos.1, 2 and 3 are rejected. Correct head of income - Interest income from the fixed deposits made with the Bank - DR supported the orders of the CIT (A) but held that there is no direct nexus between the interest from deposits and the actual business of the assessee i.e., undertaking construction contracts and hence cannot be conside3red as business income of the assessee - HELD THAT:- CIT (A) has held that the interest income from fixed deposits is incidental to the main business activities, but however, he further held that the same cannot be termed as trading receipts or income derived from the business of the assessee as placing reliance upon the decisions of Liberty India vs. CIT [ 2009 (8) TMI 63 - SUPREME COURT ] and decision in the case of DCIT vs. Allied Constructions[ 2006 (11) TMI 242 - ITAT DELHI-A ] To come to this conclusion, we find that in these decisions, the Hon ble Courts have held that there has to be direct nexus between the interest income and the business of the assessee. In the case of Allied Construction (Supra), the Special Bench observed that where FD s made in the Bank were utilized to give bank guarantees or as a performance security, the interest income therefrom cannot be said to have any nexus with the business of the assessee. Assessee has not been able to rebut these findings of the CIT (A) with any evidence or decision to the contrary and therefore, the assessee s ground of appeal No.4 is also rejected. Estimation of net profit at 6% of the gross receipts by the CIT (A) - HELD THAT:- As the average net profit disclosed by the assessee and determined by the Assessing Officer in the earlier A.Y is in the range of 2.5% to 5.8%, we deem it fit and proper to restrict the net profit to 5% of the gross total turnover during the relevant A.Y. In the result, assessee s ground of appeal No.5 is treated as partly allowed.

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• 2021 (6) TMI 365
  Levy of tax on interest income - Status of the assessee - Resident but not ordinarily resident - NRI Account - Receipts brought in India - source of income earned outside India - HELD THAT:- As decided in own case [ 2015 (3) TMI 755 - ITAT HYDERABAD ] provisions of Section 5(2) are also not applicable as the amount received is received from assessee s own account outside India and no income has accrued or arisen in India. These funds were also received through banking channels with necessary statutory approvals. Therefore, assessee has proved the sources of receipts and discharged the onus. It is the Revenue which failed in proving that this amount is unexplained income of assessee. We are of the opinion that various case laws relied by the Revenue does not apply and they are clearly distinguishable. In view of this, we have no hesitation in upholding the order of the CIT(A) and rejecting the Revenue s grounds.

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• 2021 (6) TMI 364
  Addition u/s 68 - unsecured loan received from three firms belongs to assessee group - addition on the ground that said loan transactions are nothing but accommodation entries of assessee own unaccounted income in form of unsecured loans - HELD THAT:- As assessee has discharged burden caste upon u/s. 68 of the Act to prove unsecured loans received from M/s.C.K.Exports, M/s. Mehta Motors General Finance Company and M/s. Swastic Trading Corporation. AO as well as learned CIT(A) without appreciating the evidences filed by assessee has simply made additions on suspicious ground that said sum was undisclosed income of the assessee. Hence, we set aside the order of learned CIT(A) and direct the Assessing Officer to delete additions made towards unsecured loans received from three entities. Appeal filed by the assessee is allowed.

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• 2021 (6) TMI 363
  Assessment u/s 153A - Addition u/s 68 - Search and seizure - incriminating material - penny stock companies - purchase and sale of shares - HELD THAT:- Search and seizure action was conducted on 06.10.2017 and thus on the date of search, the assessment has attained finality and is an unabated assessment on the date of search. We find merit in the arguments of the Ld. A.R. that in the case of unabated assessment year, addition can only be made on the basis of incriminating material found during the course of search and not on the otherwise. In the present case, we have noted that no incriminating material was found during the course of search in relation to the purchase and sale of penny stocks and the authorities below have relied on the general investigation that assessee has made purchase and sale in penny stocks on the basis of documents which are already on records and made huge addition of bogus long term capital gain. AO had discussed the modus operandi of the penny stock companies and operators involved in carrying out the purchase and sale of shares. However, nowhere the AO has referred to incriminating material found during the course of search in relation to purchase and sale of shares. The case of the assessee is squarely covered by the decision of the co-ordinate bench of the Tribunal Smt. Kalpana Mukesh Ruia [ 2021 (1) TMI 93 - ITAT MUMBAI ] wherein an identical issue has been decided by the co-ordinate bench of the Tribunal in favour of the assessee. We, therefore, respectfully following the decision of the coordinate bench of the Tribunal which has been passed after following the decision of the jurisdictional High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] and various other decisions, hold that the addition made by the AO under section 68 69 are without jurisdiction and are directed to be deleted on the jurisdictional issue. Addition u/s 68 - unexplained cash credit by treating the long term capital gain on sale of shares as non genuine - HELD THAT:- We hold that the long term capital gain on the sale of shares of M/s. Blue Circle Services Ltd. is not a bogus capital gain as the AO has solely relied on the report of investigation/survey team and has not carried out any further verification on the basis of documents furnished by the assessee. Similarly, the position of long term capital gain earned on the sale of shares of M/s. Gemstone Investment Ltd. is same as the assessee has filed all the necessary evidences before the AO and AO has failed to carry out any further investigation to prove that the long term capital gain earned by the assessee is bogus and fictitious. Appeal of the assessee is allowed.

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• 2021 (6) TMI 362
  Validity of jurisdiction assumed by AO u/s 147 - validity of reference made to District Valuation Officer (DVO) u/s 142A - justification of additions towards cost of construction made by the AO on the basis of estimations reached by Valuation officer - HELD THAT:- We notice that the CIT(A) has inter alia observe that the books of accounts have not been rejected in the original assessment proceedings. Coupled with this, the office note of the AO gives an infallible impression that the AO, at the time of original assessment, was broadly satisfied with the correctness of the books. While a formal rejection of books may not, at times, be possibly necessary an abstract position of law, an implied dissatisfaction on the books could not be gauged either from the original assessment or from the attendant office note. We also simultaneously notice that CIT(A) has relied upon the decision rendered in the case of Dhariya Construction [ 2010 (2) TMI 612 - SC ORDER] and held that the valuation report of the DVO cannot constitute a reliable piece of evidence. CIT(A) has also made reference to various other judgments and has come to the conclusion that ingredients of Section 147 of the Act are not fulfilled in the instant case and consequently reopening is not permissible in the facts and circumstances of the case - No error in the conclusion drawn by the CIT(A) in holding so. Without repeating the same, we decline to interfere with the conclusion drawn by the CIT(A) holding the assumption of jurisdiction by the AO u/s.147 of the Act to be bad in law. Reference to the Valuation Officer u/s 142A - HELD THAT:- As not possible for a Valuation Officer to comply with the mandate of reference u/s 142A of the Act viz. (i) issue notice to the assessee for collection of information, (ii) enter the premises under subject matter of reference, (iii) inspect and examine the contemporaneous position on fair value of the project, (iv) apply his mind to the facts available and (v) prepare valuation report. Even after receipt of valuation report, the AO is expected to confront the same to the assessee and give him proper opportunity to defend his position on the contents of valuation report. Apparently not possible to complete the assessment on the basis of such valuation report within the available time frame of one month. AO has completed the assessment on provisional basis as an empty formality with an implicit idea to reopen the case at a later stage in the event of deviations reported in the valuation report. This approach, is not in sync with quasi judicial task of assessment. Such action cannot be endorsed which may lead to drastic civil consequences that may arise from reopening a completed assessment. The action of the AO u/s 147 based on valuation report is not sustainable in law. We thus see no error in the conclusion drawn by the CIT(A) in this regard. Addition made by AO u/s 69B - CIT(A) has deleted the addition made by AO under s. 69B of the Act on the ground that cost of project declared in the books exceed the fair value determined by the DVO - While granting relief to the Assessee, the CIT(A) has inter alia made reference to a tabulated statement showing cost of constructions incurred in various assessment years and observed that the cost of construction as per books stands at Rs. 22, 90, 07,814/- which is excess of Rs. 19,96,15, 400/- determined by AO based on the valuation report. Where the cost of project as tabulated in the first appellate order shown to be in excess of the value determined by the DVO, is found to be true, the whole proceedings would fall flat and become otiose. No rebuttal of such factual observations have been made by Revenue. We thus see no reason to interfere with the appellate order of CIT(A) on findings of facts. Appeal of the Revenue is dismissed.

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• 2021 (6) TMI 361
  Addition towards advertisement and publicity expenses on account of being relating to prior period - HELD THAT:- We observe that both the authorities below have confused the expenses to be on account of repair and maintenance whereas as a matter of fact these expenses were incurred on account of advertisement and publicity. We find merit in the contentions of the assessee that since the bills pertaining to these expenses were received during the year though these bills related to the earlier year, therefore these expenses have to be allowed as pertaining to the current year as the crystalisation has happened during the year. Without prejudice, the assessee has submitted that the year of allowability of expenses should be of no consequences so long as the rate of tax for both the years is uniform. The assessee has placed reliance on the decision of CIT vs. Nagri Mills Co. Ltd. [ 1957 (9) TMI 30 - BOMBAY HIGH COURT ] and also 3 other decisions. We have perused the decisions and found that the case of the assessee is squarely covered by the ratio laid down in the said decisions. We also find that the addition made by the AO is tax neutral. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance Deduction for provisions for bad and doubtful debts on the ground that claim by the assessee was an afterthought - HELD THAT:- We find that the issue raised by the assessee is squarely covered by the decision of the Apex Court in the case of Vijay Bank [ 2010 (4) TMI 46 - SUPREME COURT ] wherein as held that for the purpose of claiming the deduction under section 36(1)(vii) of the Act it is sufficient to debit the profit loss account and correspondingly reduce the amount from sundry debtors and it is not necessary to close the individual account of all debtors in the books. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to allow the deduction. Ground No.2 is allowed. Addition bad and doubtful debts and provisions for the doubtful advances to the book profit computed under section 115JB by treating it as provisions for unascertained liability within the meaning of clause c of explanation to 115JB - HELD THAT:- As we have already decided the issue of provision of bad and doubtful debts in favour of the assessee in ground No.2 directing the AO to allow the same. This grounds is consequential ground and accordingly we are inclined to hold that assessee is entitled to deduction of provisions for bad and doubtful debts and provision for advances while computing book profits. Accordingly, the ground is allowed. Deduction u/s 35ABB - HELD THAT:- Respectfully following the decision of the co-ordinate bench of the Tribunal, we direct the AO to determine the eligible amount in this year also following the decision in A.Y. 2004-05 and allow the same. The ground is allowed for statistical purposes. Addition of loss on account of foreign currency - HELD THAT:- As observe that Ld. CIT(A) has allowed the appeal of the assessee by following the decision of the Apex Court in the case of CIT vs. Woodward Governor [ 2009 (4) TMI 4 - SUPREME COURT ] wherein it has been held that loss resulting from fluctuation in foreign currency is revenue loss as the same is recognised on the basis of accounting policy at the end of each year in respect of outstanding contracts of the assessee. We note that Ld. CIT(A) has allowed the appeal of the assessee following the decision of the Apex Court in the case of CIT vs. Woodward Governor (supra). We therefore find no reason to interfere with the order of Ld. CIT(A). Accordingly, we uphold the order of Ld. CIT(A) by dismissing the ground raised by the Revenue.

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• 2021 (6) TMI 360
  Addition u/s 68 - long term capital gain accruing on sale of listed shares - HELD THAT:- We note that assessee has filed all the evidences comprising summary of sale and purchase of shares, contract notes/broker notes, details of Dmat account/transaction statement, copies of purchase bills, evidences of payment through banking channels along with bank statements etc. We note that the authorities below have relied merely on the report of investigation wing and SEBI by ignoring the facts on record. We note that the assessee has filed all the evidences and the authorities below could not bring out any material to prove that the capital gain earned by the assessee is bogus except the attribution by the investigation wing and SEBI. In view of these facts and circumstances, the order of ld. CIT(A) can not be sustained . Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal of the assessee is allowed.

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• 2021 (6) TMI 359
  Revision u/s 263 - assumption of revisionary jurisdiction by PCIT - order passed u/s 143(3) r.w.s 153A - Disallowance under section 14A - HELD THAT:- As proved during the assessment proceedings u/s 153A of the Act and the only addition made was on account of disallowance under section 14A of the Act. When DR was specifically asked as to how the action of the PCIT is justified, the ld DR simply relied on the order passed u/s 263 of the Act. Thus, we find merits in the contentions of the AR that the said assessment framed under section 143(3) r.w.s. 153A of the Act can not be faulted with and held to be erroneous and prejudicial to the interest of the revenue which is correctly framed by the AO as per the provisions of the Act. Under these circumstances the exercise of jurisdiction under section 263 of the Act can not be held to be valid. We also find merit in the alternative plea of the AR that in the immediately previous year relevant to assessment year 2013- 14, income earned from NSEL was offered as business income and the same was duly accepted by the revenue in the assessment framed u/s 143(3) r.w.s 153A. We note that the Ld. PCIT has not disturbed the previous year. Therefore, once the revenue has accepted the income from trading in commodity on NSEL as business income, then loss which arise from the NSEL trading cannot be termed as Speculation loss. Consequently, the view taken by the AO cannot the termed as erroneous. We are therefore inclined to hold that the jurisdiction under section 263 of the Act was invalidly exercised and consequently the order passed under section 263 of the Act by PCIT is bad in law and is hereby quashed. - Decided in favour of assessee.

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• 2021 (6) TMI 358
  Exemption u/s 11 - Registration u/s 12AA - satisfaction of the lower authority pertaining to genuineness of the activities of the trust - HELD THAT:- Undoubtedly in the present case the activities of the assessee are genuine as is clear from the chart of the activities reproduced herein above - as the assessee is also claiming exemption u/s 10(23) from the respondent for the last three years i.e 2017-18 to 2019-20, which were granted to the assessee for the purposes of imparting the education only. Thus the first condition as stipulated under section 12AA , regarding the genuineness of the activity have duly been proved by the assessee before the Commissioner exemption. We have no doubt about the genuineness of the activities of the assessee i.e the assessee was/is imparting education and imparting of education is a charitable activities u/s 2(15) of the Act. Thus we hold that the activities of the assessee are charitable within the meaning of section 12AA (1) (i) read with 2(15). In the present case the assessee is registered with the object to render services in the field of education by establish and operating schools and educational institutions in respect of any reservation for any caste creed race religion or language. In paragraph 4 of the impugned order it is mentioned that in order to fulfill its objectives the trust has been running a school by the name of the Aryans School at Atri Gardens Sipri Bazar, Jhansi. The Aryans School is an English Medium School, affiliated with CBSE Board, upto Class 12th. Commissioner exemption has sought the information from the assessee, as mentioned by her in with respect to the permissions received from the competent authorities with respect to charitable activities carried out by the assessee, which are material for the purposes of achieving its objects. It is clear that the Commissioner exemption had not specified which are the competent authorities, from which the assessee was required to seek the approval/permission and which according to Commissioner exemption are material for achieving its objects in the absence of specific querry it was not possible for the assessee to answer it. The perusal of these documents shows that the assessee have all the requisite permissions/ approval as are necessary to run the school. All these documents were never sought from the assessee during proceedings before the CIT( Exemp). Hence there was no occasion to produce these documents before the lower authority. The assessee can not be relegated back to the lower authority for the purposes of satisfaction of the revenue, as the assessee can not be made to suffer on account of failure of the lower authority, for giving show cause notice and making enquiries on the said aspects. In the light of the above we find that the assessee was having necessary approval /affiliation from the respective authorities as required by the Commissioner exemption. These permission/ approval now produced by the necessary may not be necessary for the purposes of considering registration, as the same had already been filled with Board at the time of affilliation. Nonetheless now these permission / approval are available, there is no point of denying the registration on the pretext of alleged deficiency. We are of the considered opinion that the assessee is entitled to registration under section12AA of the Income Tax Act 1961. Accordingly, we direct the Respondent to grant registration to the assessee from the date of its application - Appeal of the assessee is allowed.

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• 2021 (6) TMI 354
  TDS u/s 194H - payment made by the appellant to the prepaid distributors is in nature of commission - assessee in default - HELD THAT:- Deduction of TDS on prepaid SIM cards and Recharge cards, different High Courts have taken contrary view by holding that while the service cannot be sold, right to service can always be sold. And Hon ble Karnataka High Court did not agree with the judgment of Hon ble Delhi High court wherein it is held that cellular companies are liable to deduct TDS on the commission paid to Franchise for selling of SIM cards and Recharge cards. The Hon ble Delhi High Court and the Rajasthan High Court have given contrary findings with regard to applicability of Section 194H in case of the appellant for the same transaction in the case of the appellant. On similar transactions of other telecom operators, the Calcutta and Kerala High Courts have upheld applicability of section 194H. The Hon ble Supreme Court in the case of Synco Industries Ltd. [ 2008 (3) TMI 13 - SUPREME COURT] upheld the view taken by majority of the High Courts even though such view was against the assessee. As relying on M/S. VODAFONE WEST LTD., (FORMERLY KNOWN AS VODAFONE ESSAR GUJARAT LTD. [ 2018 (4) TMI 333 - ITAT AHMEDABAD] is not liable to deduct tax u/s.194H and 194J. Therefore, assessee is not in default for such TDS. On the principle of consistency and respectfully following the order of co-ordinate bench and in our considered opinion ld. CIT(A) has passed a detailed and reasoned order. - Decided in favour of assessee.

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• 2021 (6) TMI 349
  Estimation of income - bogus purchases - as per CIT-A profit element embedded in these transactions was to be brought to tax. The estimation was made @12.68% which was nothing but Gross Profit rate shown by the assessee during the year - HELD THAT:- We find that the Sales Turnover was not in doubt and there could be no sale without actual purchase of material keeping in view the assessee s nature of business. The facts of the case made it a fit case to estimate the profit element embedded in these transactions. The Ld. CIT(A), after due consideration of assessee s submissions as well as material on record, estimated the additions @12.68% which is more than enough to take care of the leakage of revenue. Therefore, the estimation could not be termed as unjustified, in any manner. Finding no reason to interfere in the impugned order, we dismiss the appeal.

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• 2021 (6) TMI 346
  Entitlement u/s 54B - Benefit of exemption in the hands of HUF - purchase of agriculture land - Deduction is not admissible for assessment year 2012-13 in the case of an assessee being an HUF - HELD THAT:- Hindu undivided family, entitled to the benefit of 54B, even prior to insertion of the assessee being an individual or his parent, or a Hindu undivided family by the finance act 2013. The assessee is a person subjected to tax under the income tax act. And the person includes even the individual as well as the Hindu undivided family. Benefit of provisions of 54B, cannot be restricted to only individual assessee - The revenue is duty-bound to make out a clear case of debarring the HUF from availing the benefit of section 54F/54B, and the assessee cannot be denied the benefit merely based on the interpretation. If the revenue wanted to tax, the assessee(HUF), then the statute should have provided specifically that the assessee used in 54B, is only restricted to living individual and is not applicable to Hindu undivided family. Further the High Court had not considered that the individual assessee and HUF, can both be used as and when context so desires and it will not lead to any absurdity. In case the assessee is Hindu undivided family, the second part of section 54B i.e of parents of his , would not applicable. In the case of individual assessee, the parents of the assessee fulfill criteria, then the benefit can be given. In our considered opinion harmonious interpretation is required to invoked so that the word used in the provisions would not become redundant or otiose . In our view , in case of doubt or confusion ,the benefit of any doubt in respect to taxability or exemption should be given to the assessee rather than to revenue. On facts of the present case , we find that the assessee within two years of sale of agricultural land, had invested the amount and purchase of land in accordance with the requirement of section 54B and is entitle to the benefit of 54B of the ACT. The assessee HUF, is entitled to the benefit of section 54B, of the act for the assessment year under consideration, as we are of the opinion that the word assessee used in 54B, had always included HUF and further the amendment brought on by the finance act 2013, in section 54 by inserting the assessee being an individual or his parent, or a Hindu undivided family] was classificatory in nature and was introduced by the Ministry with a view to extend the benefit to the Hindu undivided family. The Hindu undivided family,(HUF) has been the recognized as separate tax entity, therefore, before and after amendment , if the agricultural land, which was being used by HUF for two years prior to transfer, has been transferred by the HUF and HUF purchases any other agricultural land within two years of such transfer then it shall be entitled to the benefit of 54B / 54F.

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• 2021 (6) TMI 342
  Estimation of income - Computation of Net profit - CIT (A) estimating the income @ 10% as the assessee is engaged in Real Estate Business and not as Civil Contractor - HELD THAT:- It is apparent that the assessee has grossly erred by not maintaining the particulars of its business. The assessee has also failed to produce the books of accounts and any relevant document concerning the same before Revenue Authorities. Assessee is engaged in the real estate business where the profit is lucrative - if the assessee had earned commission from purchase and sale of immovable asset then the expenditure towards the same will be minimal ie., not beyond 40% of the turnover thus the net profit will be over 50%. The profit margin will be high with respect to purchase and sale of immovable property. Moreover, gross turnover of the assessee is as high as Rs. 16.5 Crs therefore, the provisions of presumptive tax U/s. 44AD of the Act will not at all be applicable nor any positive inference can be drawn from the same in the case of the assessee which the Ld.CIT(A) has relied upon. We are of the view that the order of the Ld. CIT (A) does not have much merit - estimation of net taxable income @ 18% of the turnover would suffice in the case of the assessee. Accordingly, we hereby sustain the Order of the Ld.AO to that extent - Appeal of the Revenue is partly allowed.

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• 2021 (6) TMI 341
  Addition u/s 40A(2) - assessee has paid interest to certain related parties and treated interest rate @ 15% reasonable and disallowed excess rate paid to related parties u/s.40A(2) - HELD THAT:- When a person takes a loan from anyone it depends upon time and circumstances on which interest rate can be determined. In case if anyone to swipe credit card from an ATM and withdraw money out of ATM he has to pay interest rate between 30% to 36% and at a same time, if he approaches credit card issuing bank/NBFC though it takes 2 to 3 days time in that case credit card holder is liable to pay interest rate @ 15% to 24% however different banks/NBFC s are having different interest rates for business loan if any one require loan in emergency from local money lenders then in that case one has to pay interest rate between 48% to 60%. So in our considered opinion in this case difference of interest which was received by the assessee or paid by it is just 1.25% per annum so same cannot be termed as unreasonable. We allow appeal of the assessee.

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• 2021 (6) TMI 340
  Capital gain computation - transfer transaction within the realm of Sec. 50C - tenancy rights determined - HELD THAT:- Variance/difference between the value of the tenancy rights of the property in question that was disclosed by the assessee for the purpose of computing the LTCG on the transfer of the same, as against that determined by the District Valuation Officer-II, Mumbai worked out at a marginal figure of 2.81% thus, the CIT(A) was of the view that as the said variance was well within the tolerable limits the same could safely be ignored. CIT(A) backed by his aforesaid observation had directed the A.O to accept the value disclosed by the assessee for the purpose of computing the LTCG on the transfer of the property in question. We have deliberated at length on the observations of the CIT(A) and are of a strong conviction that no infirmity emerges there from. Observing that the variance in the value of the tenancy rights adopted by the assessee as the sale consideration (as per the deed for transfer of tenancy rights , dated 17.09.2013) and the fair market value of such tenancy rights determined by the District Valuation Officer-II, Mumbai vide his order passed u/s 55A Of the Act, dated 01.06.2017 worked out at a marginal figure of 2.81%, the CIT(A) had rightly directed the A.O to accept the sale consideration reflected by the assessee, as such. Accordingly, concurring with the well reasoned view taken by the CIT(A), we uphold the same. Appeal filed by the revenue is dismissed.

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• Customs

• 2021 (6) TMI 372
  Revocation of CHA License - mis-declaration of description of the imported goods - time limitation - HELD THAT:- The impugned show cause notice is time barred and contrary to the law settled by this Court. The petitioner however appears to have participated in the adjudication of the impugned show cause notice and had acquiesced in it. Initially, the petitioner had filed a preliminary objection dated 23.7.2016. This was received by the office of the 1st respondent on 28.7.2016. Thereafter, the petitioner filed additional written submission on 26.6.2016 and enclosed few case laws - Without awaiting for the adjudication of the impugned show cause notice, the petitioner has rushed to this court by way of the present writ petition on 5.12.2016. Since the petitioner has partly had acquiesced in the said show cause proceedings by participating in the said proceedings, it was not open for the petitioner to file this writ a petition questioning the jurisdiction of the respondent. Petition dismissed.

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• 2021 (6) TMI 371
  Modification of order of Settlement Commission - Import of refurbished hard disk - Absolute Confiscation of seized goods - goods seized from petitioner s godown - goods were destroyed in the fire accident - Insurance claim settled by Insurance Company has to be paid to the Customs Department or petitioner when the goods were absolutely confiscated without any redemption fine - HELD THAT:- In the decision of the Hon ble Supreme Court in UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] where it was held that the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to the imposition of simple interest @ 10% per annum was passed in accordance with the provisions of Rule 14 but the High Court wrongly interpreted the said Rule and thereby arrived at an erroneous finding. The facts on record indicate that petitioner has got substantial relief despite past dalliances of violating law. The petitioner had got habituated of importing refurbished hard disk contrary to the provisions of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 and the provisions of the Foreign Trade Management (Development And Regulation) Act, 1992 - first respondent Settlement Commission has ordered absolute confiscation of the seized goods which were in the custody of the petitioner which were allegedly lost in the fire accident in the petitioner s godown in Bangalore. The goods would have absolutely stood vested with the Government in terms of Section 126 of Customs Act, 1962 if adjudication proceedings were allowed to go on or in the alternative, allowed to be redeemed by the petitioner on payment of redemption fine under Section 125 of the Customs Act, 1962. The order of the first respondent Settlement Commission is a package and it is not a substitute for an adjudication order that would have been passed by an adjudicating authority under the Act. It is for the petitioner to take advantage of it as it is or face the consequences by violating it - petition dismissed.

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• Corporate Laws

• 2021 (6) TMI 345
  Seeking direction to investigate the affairs of Company by Inspector(s) appointed by the Central Government - freezing of assets of the R-1 Company for a period of 3 years pursuant to the investigation by the Inspector(s) appointed by the Central Government - HELD THAT:- In the instant case, though the Petitioner has no locus standi even to raise the alleged grievance before statutory Authorities or to approach various Courts/Tribunal, used to file frivolous Applications/Petitions on untenable grounds. The Petitioner did not stop to file its frivolous Petitions/Applications, even when the Central Government has passed a detailed order dated 10th November, 2017, in pursuance to an order passed by Delhi High Court by inter alia holding that there is nothing wrong in the affairs of 3 Companies involved in the instant Application. Therefore, the contentions/allegations of the Petitioner that there are various illegalities committed by Respondent and in all three Companies in question has no substance at all, and they are baseless and liable to be rejected. The Petitioner has no locus standi to file instant Petition, and it wants to order roving enquiry for ulterior purpose by abusing the process of law and resorting to forum shopping - petition dismissed.

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• 2021 (6) TMI 344
  Oppression and Mismanagement - transfer of shares of petitioner, by its nominee directors, without his consent - dispute required to be referred to Arbitrator or not - sale of rights issues of respondent 1 Company, pending the adjudication. Whether transfer of some of shares of the petitioner in R1 Company by its nominee directors R3 R4 to R2 is prima-facie legal and valid? - HELD THAT:- Since R3 R4 were not specifically restrained by the petitioner acting on its behalf while acting as its nominee Directors in R1 Company, such transfer of shares, prima-facie cannot be held to be void in absence of enough material. In any way it can t be held at this stage that the act of transferring the Petitioners shares in R1 Company by R3 R4 is fraudulent transfer. Such finding can t be recorded unless the matter is heard at length - The fact remained that the transfer of shares prima-facie does not appear to be void - issue answered in affirmative. Whether the dispute in between the petitioner and the respondent requires to be referred to the Arbitrator in view of clause 18 of SHA dated 17/1/2018? - HELD THAT:- The mere allegations of fraud simpliciter levelled against R3, R4 R5, are sufficient to hold prima-facie that such allegations may not stand to legal scrutiny for want of sufficient material. The petitioner and R2 have entered into MO A dated 14.11.2017 and shareholding agreement dated 17.01.2018 whereby the R1 has been formed. Both the petitioner and respondents have agreed that the dispute that would arise out of Joint venture activities of R1 Company shall be referred to the arbitration - the matter in dispute except allegation of transfer of shares and rights issues has to be referred to the arbitrator - question answered in the affirmative. Whether the act of respondents selling rights issues of respondent 1 Company, pending the adjudication for passing interim order is prima-facie valid? - HELD THAT:- The respondents raised the funds considering the paramount interest of the R1 Company. At this stage that action can t be described as a mala-fide act - the act of respondents in raising funds for R1 Company by selling rights issue is prima-facie held to be valid. Application allowed.

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• Insolvency & Bankruptcy

• 2021 (6) TMI 357
  Liquidation Order - Applicant is a Financial Corporation providing financial assistance to the MSME Sectors - Section 60(5) r/w Section 52(5) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- It is required to be noted from a reading of Regulation 39B of IRCP Regulations that the Committee of Creditors is required to approve a Plan for contribution for meeting the difference between the two, namely estimated value of the liquid assets if it is less than estimated liquidation costs and the Resolution Professional, the process being prior to Liquidation, shall submit the Plan in relation to sharing of liquidation cost to this Adjudicating Authority both in the case of an application seeking approval of a Resolution Plan or for seeking Liquidation of the Corporate Debtor. At this stage, it is required to be noted that there is no distinction being made between a Financial Creditor having a charge over the assets or not and the term used is COC in general. It is quite evident no distinction has been made in relation to contribution to Liquidation Cost as defined under Section 5(16) of IBC, 2016 read with Regulation 2(1)(ea) of Liquidation Process Regulations as framed by IBBI, be that by a secured financial creditor who chooses to exercise its option to realise on its own its security interest or a secured creditor who relinquishes its security to be aggregated to the Liquidation Estate for realisation and distribution by the Liquidator in accordance with Section 53 of the IBC, 2016 and the water fall mechanism provided thereunder or in relation to a financial creditor not secured at all who will also be covered under Section 53 of IBC, 2016. A secured creditor having a security interest over the entire realizable assets of the Corporate Debtor cannot claim that it would not make a contribution to the estimated liquidation costs on the premise that it had opted to realize the security on its own. However, in this regard, it is also required to be noted that the Liquidator cannot demand fanciful sums and any amount claimed, even a single rupee is required to be properly justified with adequate proof or justification being produced in advance to the financial creditors concerned from whom the amounts are demanded as estimated liquidation costs in terms of Regulations 2A particularly read with Regulation 21A of IBBI (Liquidation Process) Regulations, 2016 from a secured creditor envisaged thereunder as a serious consequence follows in view of its non-adherence. No person is to be prejudiced by the actions of the court (in this case the Tribunal) in view of application pending all along before this Tribunal in IA/1205/2020 as filed by the applicant/secured creditor of which the Liquidator was fully aware as demonstrated by the minutes of the 1st SCC meeting held on 17.11.2020, the action of the Liquidator in making the security interest as part of the Liquidation Estate is unjustified - taking into consideration the date of the order of liquidation and the applicant/secured creditor had approached this Tribunal, we deem it fit that a further period of 3 months be granted to the applicant/secured creditor to complete the sale of security interest for which an option had been exercised by it for a sum not less than Rs. 25 crores as intimated at the time of exercising the option by it to realize the security on its own. Application filed by the Liquidator stands dismissed.

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• 2021 (6) TMI 356
  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:- The default, on the part of the Corporate Debtor is proved from the documents filed and the submissions made by the Learned Counsel by the Operational Creditor. Further, it is also pertinent to note that the default arising in the present Application is much prior to the advent of the Covid-19 pandemic and hence the Corporate Debtor cannot seek shelter also under Section 10A of IBC, 2016. Under the said circumstances, this Tribunal is left with no other option other than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Time Limitation - HELD THAT:- It is evident from the perusal of the Invoices as filed by the Petitioner/Operational Creditor in relation to the Corporate Debtor which discloses that the invoices have been raised commencing from 31.03.2016 to 09.12.2017 and the account being maintained on a running account basis, the present Application under Section 9 of IBC, 2016 has been filed by the Operational Creditor before this Tribunal on 26.09.2019 and as such it falls well within the period of limitation. The Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016 - moratorium declared.

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• 2021 (6) TMI 355
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The failure on the part of the Corporate Debtor in non-adherence of the time schedule as stipulated under the Joint Memo of compromise as entered into between the parties, based on which this Tribunal was induced to dispose of the petition filed earlier, proves that the Corporate Debtor has committed default in payment of the amount due to the Operational Creditor and as such this Tribunal is left with no other option rather than to initiate Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor. 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.

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• 2021 (6) TMI 353
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Whatever dispute mentioned by corporate debtor is only after receiving the section 8 notice which is an after thought to shrug off the liability by the corporate debtor - In the present case, there is no such dispute is pre-existing and the same is a merely a spurious defense. Further, that the proposal for settlement amounts to admission on part of the Corporate Debtor. The operational debt has become due and default has occurred and application being complete needs to be admitted. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The date of default is 16.05.2019, and the present application was filed on 06.12.2019, hence the debt is not time barred and the application is filed within the period of limitation. The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9 (5) of IBC, 2016 - Moratorium declared.

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• 2021 (6) TMI 352
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The default has occurred with respect to the payment of the operational debt due to the Applicant. The corporate debtor has failed to show any existence of dispute as the applicant has clearly established that the claim with respect to quality is an afterthought, in view of email sent by corporate debtor dated 04.05.2016 describing the quality of goods as superior quality technical advantage of high tensile . The corporate debtor has failed to place on record any concrete evidence to prove that there was a genuine dispute which was raised prior to issuance of notice under section 8 and the said was duly communicated time and again to the applicant. The communication of the corporate debtor with its customers cannot be considered as disputes against the transactions with the applicant. There is no such dispute is pre-existing and we are convinced that the present dispute is patently feeble legal argument. The application being complete needs to be admitted - registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The last invoice was raised on 09.08.2016, and the present application was filed on 24.04.2018, hence the debt is not time barred and the application is filed within the period of limitation. The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9(5) of IBC, 2016 - Moratorium declared.

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• 2021 (6) TMI 351
  Maintainability if 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:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of Rs. 67,67,218.30/- that comprises principal amount of Rs. 40,20,500/- due against invoices and Rs. 27,46,717.81/- towards interest - In view of the dismissal of the prior application filed by the applicant against the corporate debtor on the ground of non-compliance of section 9(3)(c), as a precautionary measure, the applicant has filed bankers certificate issued by HDFC bank is annexed. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The Present application is filed within limitation. The date of default is 2014 as per the invoice and the first application was filed in 2017. Thereafter, due to dismissal of the said application on technical ground, fresh application filed in 2018. In 2019 the corporate debtor admitted the debt while settling the matter on 02.09.2019. Hence, the debt is not time barred and the application is filed within the period of limitation. Application admitted - moratorium declared.

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• 2021 (6) TMI 350
  Extension of 4 months over and above the time provided - direction for stay on the Respondent Liquidator against proceedings with the invitation for EOI and accepting EOIs from prospective investors during such additional period of 4 months - HELD THAT:- Once the schedule of general elections is announced by the Election Commission of India, the model code of conduct kicks in and the Government concerned is duty-bound not to take any major policy decisions. The acquisition of shares held by Nicco Corporation Limited in NPRL is indeed a policy decision to be taken at the highest levels of the State Government. For this, it was necessary to have a duly elected government. This process was completed, and the new government was sworn in only on 10.05.2021. The ends of justice will be met if further time of eight weeks is granted as a last opportunity to complete the decision-making process for acquisition of Nicco Corporation Limited s shares in NPRL - application disposed off.

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• 2021 (6) TMI 348
  Seeking invocation and encashment of Bank Guarantees during CIRP period - scope of moratorium u/s 14 of IBC - HELD THAT:- When the guarantee given by a Guarantor does not fall within the ambit of Security Interest provided by the Corporate Debtor, the moratorium that comes into force by Section 14 of the Code is not applicable not only to the bank guarantees, but also to the Surety given to the Corporate Debtor by a guarantor - It is evident that Section 14(1)(c) applies only to the Security Interest created by the Corporate Debtor but not to the guarantee created by third party in favour of the creditor on behalf of the Corporate debtor. It is a well settled preposition that the bank guarantees constitute an independent contract between the Respondent Banks and the Applicant and therefore the Respondent Banks are under obligation to honour the request made by the IOCL, unless and until the transaction is hit by Section 14 of the Code, therefore CIRP cannot be a ground to deny encashment of the bank guarantees. It is evident on record that neither the Corporate Debtor indulged in fraud nor the IOCL had indulged in fraud giving scope to the bankers to raise objections against the bank guarantees because the Banks are under obligation to permit IOCL to encash the bank guarantees. In case, any issue is pending between the banks and the Corporate Debtor, it has to be dealt with the Corporate Debtor, but not with IOCL to whom the guarantee has been given - It is evident on record that work is not complete, so long as work is not complete, the Contractor is at liberty to encash the guarantee because mobilization advance is given so as to facilitate the corporate debtor Contractor to accomplish the work without any impediment, advance bank guarantee cannot be seen as something different from performance bank guarantee. In the performance bank guarantee, guarantee will be taken without even providing any advance. If bank guarantee is beyond the mentioned amount in the bank guarantee, if the bank guarantee is encashed by indulging into fraud behind the back of the Banks, then it could be understood that this Contract is vitiated the fraud, but in this case, the bank guarantees have remained same and the Corporate Debtor has taken additional financial support to accomplish the contract work. Such availing additional financial support cannot mean that Banks are absolved from the obligation of discharging their part of contract - The Corporate Debtor taking an additional financial support or IOCL not reducing the advance amount from the running bills will not tantamount to indulge in fraud, therefore IOCL is at liberty to encash the bank guarantees. Application dismissed.

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• 2021 (6) TMI 347
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Corporate Applicant - existence of debt and dispute or not - HELD THAT:- The Corporate Applicant has enclosed the audited financial statements for the years 2017-18 and 2018-2019, the provisional financial statement as on 31.10.2019 - The registrar of companies and Income Tax department filed reports and stated that they have no objection in allowing the present application - The registered office of the Corporate Applicant is situated at Delhi and therefore this tribunal has jurisdiction to entertain and try this application. The present application is filed on the Performa prescribed under Rule 7 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section 10 of the code and is complete - this Bench is of the view that the Corporate Applicant has defaulted in making payment of its debt to the creditors. Hence, this application is admitted. Application admitted - moratorium declared.

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• 2021 (6) TMI 343
  Fresh claim after approval of resolution plan - state electricity distribution company - Arrears against the Corporate Debtor/Applicant - Resolution plan was already passed and all assets were taken over - HELD THAT:- The Applicant has successfully taken over the assets and operations of the Corporate Debtor by effectively complying with the Resolution Plan. Thus, only the name of the Corporate Debtor is retained and whereas the management of the Corporate Debtor is not at all related to the erstwhile management. Therefore, as soon as the Order approving the Resolution Plan was passed by this Tribunal, and the Plan was put into effect, Section 32A of the Code is attracted. Therefore, R1 is barred from raising any arrears against the Corporate Debtor/Applicant at this juncture - constitutional validity of Section 32A has been upheld. Taking into consideration the intent of the insertion of Section 32A, the submission of R1 is against the principles of Section 32A of the Insolvency and Bankruptcy Code, 2016 - Application allowed.

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• Service Tax

• 2021 (6) TMI 376
  Maintainability of petition - compliance with the requirement of pre-deposit - HELD THAT:- It is undisputed fact that petitioner has filed an appeal before First Appellate Authority against the assessment order, whereby demand was created. It is also undisputed that Board Circulars are binding on department and as per Circular coercive measures for recovery of balance liability are not permissible if appeal is filed alongwith mandatory pre-deposit of 7.5%. The contention of the respondent that petitioner must file appeal before Appellate Authority seems to be highly technical, in view of the fact that petitioner has already filed an appeal against the assessment order whereby demand was created and tax liability intended to be recovered stands stayed in view of Board Circular dated 16.09.2014. Petition allowed.

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• Central Excise

• 2021 (6) TMI 370
  Manufacture of RMC at site or not - TMaintainability of petition - petitioners have not filed this petition impugning the Order-in-original within the statutory period prescribed under Section 35 of the Excise Act - petitioners case hinges on the assertion that the installation at the project site for manufacture of CM (which is exempted) is different from the installations for manufacture of RMC, and they have manufactured controlled CM, as civil contractors executing civil works contract, for captive use at site and not for sale - HELD THAT:- On examining the explanation offered by the petitioners for not filing statutory appeal and because of the absence of the necessary details, has opined in paragraph 16 above that the petitioners are superfluous in their explanation of the delay in availing/failure to avail the appeal remedy. The delay in impugning the Order-in-original, which is not sufficiently explained, must be construed as unreasonable 4 and therefore, the writ petition must fail at this threshold bar. This consideration would be distinct and separate from examining the explanation offered for the purposes of condoning the delay which would be in the teeth of the decision of the Hon ble Supreme Court in OIL NATURAL GAS CORP. LTD. VERSUS GUJARAT ENERGY TRANSMISSION CORPORATION. LTD. AND ORS. [ 2017 (3) TMI 1628 - SUPREME COURT] . Whether a concrete mix manufactured at the site can be classified as RMC will have to be decided based on (1) the plant and machinery set-up for its manufacture, (2) the manufacturing processes involved, (3) the properties of the concrete mix and (4) the manner of delivery. It is undisputed that the petitioners have set-up a batching plant comprising of separate silos and concrete mixer with necessary pumps, piping system and control panel to manufacture concrete mix of required grades and quality as per the contractual terms and the concrete mix manufactured by them was no different from the concrete mix purchased by the petitioner in case of breakdown or maintenance - The petitioners, only because they had not installed either stone crushers with vibrators or sand mill or because they purchased stone aggregates, sand and other raw material from third-party vendors, cannot be permitted to contend that the machinery installed by them and the manufacturing process adopted by them are different and distinct from the machinery installed and process followed for manufacturing RMC. If the petitioners have manufactured RMC, it would be of no significance, given the text of the exemption under the relevant notification and the clarification, that it is used for captive use and not for sale. The writ petition is rejected concluding that the first respondent has rightly classified the concrete mix manufactured by the petitioners at the project site as RMC - petition dismissed.

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• CST, VAT & Sales Tax

• 2021 (6) TMI 374
  Reopening of assessment - burden of proof for reopening of assessment not discharged - assessment based on the details in website is a valid ground or not - HELD THAT:- A learned Single Judge of this court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] has taken note of provisions of the Maharashtra Value Added Tax Act and the rules made thereunder and had exhorted the Commercial Tax Department to follow the aforesaid mechanism to deal with the issue relating to mismatch between the turnover declared in the returns by an assessee and the turnover noticed in the website of the Commercial Tax Department. It was submitted that though, a Review Petition was filed before the learned Single Judge to review the aforesaid decision, a centralised mechanism has been devised by the Government, but it is yet to be implemented. Copy of the centralised mechanism devised by the Commercial Tax Department is not available. It also appears that the Revision Petition has been recently dismissed - Petition dismissed.

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• 2021 (6) TMI 373
  Principles of Natural Justice - cancellation of registration of petitioner - composition taxpayer has not filed returns for a continuous period of six months - HELD THAT:- Though the petitioner has failed to file any reply, before passing the impugned order, the respondent should have called the petitioner for a personal hearing either in person or through video conferencing. As no hearing was held prima-facie, the interim order is liable to be interfered. Therefore, there shall be an interim stay as prayed for till four weeks. Notice to the respondent returnable in four weeks - Post the matter after four weeks.

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