Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 13, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Central Excise
Indian Laws
TMI Short Notes
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of GST - services rendered abroad (export of services) - unjust enrichment - incidence of tax passed to the recipient company or not - burden to prove - GST does not apply to the services rendered abroad as they amount to the export of services. In addition to that the respondent could not establish that the incident of tax has been passed on to the recipient ASCL located in London. Thus, both, the Adjudicating Authority and the Appellate Authority committed error in rejecting the refund of GST of the petitioner. - HC
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Reimbursement of GST - respondent is obliged to serve a welcome drink to the passengers who boarded the subject trains - As correctly concluded by the arbitrator, GST from 01.07.2017 would have to be reimbursed to the respondent by IRCTC, upon the proof of deposit of the same with the concerned statutory authority - IRCTC has already factored GST in the train fare, lends heft to the stand taken by the respondent, that it should be reimbursed GST deposited by it with the concerned statutory authority. - HC
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Maintainability of application for advance ruling - recipient of services - Benefit of Concessional rate of tax - Any provisions of the Law should not be interpreted in a way which defeats the very purpose of the objective and purpose of the legal provision. Thus, in the subject application, the applicant cannot seek an advance ruling in relation to the supply where it is a recipient of services. - AAR
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Valuation - inclusion of stipend paid tot he trainees, as per the agreement - Pure Agent - The amount of stipend received by the applicant from the Entities/Training Institutes and paid in full to the trainees is not taxable at the hands of the applicant. Hence, in view of the submissions made by the applicant and also in agreement with the observations made by the jurisdictional officer, it is held that the stipend paid by Entities/Training Institutes to the applicant to be further paid to the trainees in full does not attract GST and is not required to be added to the taxable valu - AAR
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Classification of goods - PV DC Cables - cables which connect the solar modules & inverters in a photovoltaic system and are used to carry electricity from the SPGS to the inverters - The applicant has not been able to bring clearly out as to how the impugned cables can be considered as parts of the SGPS. In fact, the submissions clearly show that it the impugned cables just carry electricity to the inverters and in our opinion the subject cables cannot be considered as a parts of the SGPS and therefore cannot be covered under Sr. No. 234 mentioned above. - Liable to GST @18% - AAR
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Profiteering - construction service supplied by the Respondent - it is alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in the price - Since there was no basis for comparison of ITC available before and after 01.07.2017, the Respondent was not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicant No. 1 made in this behalf are incorrect and therefore, the same cannot be accepted. - NAPA
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Profiteering - purchase of Duplex Row House - it is alleged that the Respondent had not passed on the benefit of ITC although he had charged GST @12% w.e.f. 01.07.2017 from the said Applicant - Launching of the project, Agreement to sell and Completion Certificate of the project had taken place in the pre-GST regime and hence, there was no post-GST tax rate or ITC structure which could be compared with the pre-GST tax rate and ITC and also the anti-profiteering provisions related to Section 171 were not in existence at that time. Accordingly, it is clear that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it does not qualify to be a case of profiteering. - NAPA
Income Tax
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Claim of refund - TDS on the compensation paid to the petitioner by the respondent No.1 for the acquisition of land - Income received by the petitioner on account of the property acquired by respondent No.1 by private negotiations and sale deed is exempted from tax. The respondent No.1 has already deducted the TDS which it ought not to have deducted. - The Income Tax Department shall process the statement including the correction statement that may be filed under Section 200A more particularly Clause (d) thereof. - The parties shall thereafter take steps for refund of the amount in accordance with the provisions of Income Tax Act and Rules. - HC
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Reopening of assessment u/s 147 - Scope of new Section 148A - conducting inquiry providing opportunity before issuance of notice - We are not satisfied by the reasoning part of the impugned order, more particularly, when the details were supplied by the petitioner. Hence, we are of the opinion that the matter requires consideration and the same is allowed. The impugned order dated 31.03.2022 is hereby quashed and set aside. The matter is remitted back to the respondent- Authority. - HC
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Direct Tax Vivad Se Vishwas Scheme - petitioner failed to furnish Form-4 - Petitioner seeking permission to pay the amount due under the Act alongwith additional fee and interest as owing to illness of his mother, he was residing abroad during April, 2021 to October, 2021 - Petitioner has not been able to point out any provision which shall entail extension of time as a vested right which can be enforced by way of writ petition under Article 226 of the Constitution of India. Trite it is that enforceable right under law is a sine qua non for issuance of a writ in the nature of mandamus. - HC
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Claim of Expenditure on hawala business - Assessee also did not submit any proof of incurring any expenditure. Income was also not assessed on net basis @ 0.30 %. No proof of incurring any expenditure is available on record. Therefore, naturally no expenditure is incurred by assessee. Therefore, the action of the learned CIT – A in granting deduction of 10% of the gross income earned by the assessee is not in conformity with the provisions of Section 37 (1) of the act. - AT
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Income accrued in India - royalty receipt - As noted that the definition of royalty under the ITA, prior to amendment in 2012, as well as the DTAAs under consideration [which are similar/identical to the OECD Model Convention (MC)], necessarily requires grant of a copyright in software to the licensee for the payment to qualify as royalty. Since the payment made by end users and distributors did not involve payment for grant of any right specified under the ICA, payments made by the distributors and end users do not qualify as royalty under the DTAA, as well as the pre-amended provisions of the ITA. Such payments qualify as business income not taxable in India under the DTAA. - AT
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Speculative loss or not - Set off and carry forward of loss arising from derivative transactions in currency segment - In essence, an 'eligible transaction' [as defined in Explanation-I to Section 43(5)] in respect of derivatives transaction [as defined in clause (ac) to Section 2 of Securities Contract (Regulation) Act, 1956] carried out on a recognized Stock Exchange shall not be deemed as Speculative Transaction having regard to exception provided in clause (d) to proviso to Section 43(5) of the Act. - AT
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Levy of penalty on additions of admitted amount during assessment proceedings - CIT(A) deleted the penalty - Company has already liquidated - when the respondent company has already gone into liquidation and is no more in existence the present appeal filed by the Revenue is not maintainable in the present format as liquidator has not come up before the Tribunal despite numerous notices to file the amended form 36A in the present appeal. So in these circumstances present appeal is not maintainable in the present format. - AT
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Bogus accommodation entry receipts - Bogus penny stock transaction - after again having made the disclosure, the assessee tried to cover the amount by claim of expenditure, which were totally an afterthought and assessee could not support the same despite opportunity. - the new plank raised in set aside proceedings has also been correctly rejected by the ld. CIT(A). Firstly, the assessee could not have made a fresh claim and moreover the same also was only ipse dixit, without proper corroborative material. - AT
Corporate Law
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Prosecution for offence under Section 68A - allegation of acquiring shares in fictitious name - Purchase of share jointly in the name of God and in the name of a person - he petitioner had filled up and signed the application form, paid for the shares in the first name of Shri Venkatachalapathy and the second name for himself and the address given is that of the petitioner, which clearly discloses that there is no other intention for the petitioner to commit any impersonation for acquisition and no intention for the petitioner to acquire shares in fictitious name. Hence, there is no evasion or enrichment. - the petitioner acquitted from all the charges. - HC
Indian Laws
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Dishonor of Cheque - rebuttal of presumption - No doubt, in the income tax declaration, P.W. 1 has not declared for having paid the money. But in the cross-examination, P.W. 1 admits that he has not produced any documents to show that he is paying income tax. But he admits that he is an income tax assessee. But non-filing of the document for having paid income tax will not take away the case of the complainant and the petitioner has to explain how the subject matter of cheque had gone to the hands of the said Devraj Urs and what made him to give the said cheque - HC
IBC
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CIRP - resolution plan - claim of priority over other creditors - PF and allied dues, including interest of the employees - the contention of the Learned Counsel for the Respondent that the Penal damages and Interest under Section 14B and 7Q of the EPF & Miscellaneous Act 1952 levied by the Applicant, should be covered under the waterfall mechanism, goes against the well-established position of law. - The PF authorities are entitled to the satisfaction of the full claim in relation to the PF dues including interest. - Tri
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CIRP - Application by the RP to protect the assets of Corporate Debtor - When according to the applicant himself there was no asset of the corporate debtor, and the company had gone into losses and was left with no debtors, the applicant should have performed his duties assigned to him in the Code instead of flogging a dead horse. When the applicant had sought Police assistance, this Adjudicating authority had issued directions, but in spite of that the RP was not diligent enough to make use of it. - Tri
SEBI
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Maintainability of writ petition - alternative and efficacious mechanism - Inordinate delay in issue of Show cause notice (around 16 years) - Issuance of Global Depository Receipts ('GDRs') by the 4th respondent - Courts shall normally refrain from quashing the show cause notice at the initial stage, unless the said show cause notice has been issued without authority or that the same is patently illegal. In the case on hand, the show cause notice has been issued by the authority, who is competent to issue the same and that there is no illegality in the said show cause notice - SAT is fully competent to decide the issue, including appreciation of disputed facts and the petitioners can place both oral and documentary evidence before SAT, which can go in-depth into the issue to render a finding. - HC
Case Laws:
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GST
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2022 (6) TMI 532
Refund of GST - services rendered abroad (export of services) - Principles of unjust enrichment - incidence of tax passed to the recipient company or not - burden to prove - HELD THAT:- The Petitioner has placed on record a copy of the agreement. It shows that the ASCL is located outside of India and the petitioner company is located in India. And the production services are rendered by the petitioner in the U.K. It is, thus, clear that the services rendered by the petitioner fall within the expression export of services . The applicant is entitled to the refund of the amount if the incidence of tax has not been passed on to the recipient of the services. If the incidence of tax has been passed on , petitioner is not entitled to the refund - Agreement executed between the petitioner and the ASCL shows that the approved production budget includes all costs in connection with the production services including the amount of Indian Goods and Services Tax Act. This shows that GST is included in all costs in connection with production services. Petitioner is a service provider and ASCL is the service recipient. This court relying on the Apex court judgment in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] held that when services are rendered abroad, CGST will not apply - In the case at hand also, the petitioner has rendered services to the ASCL abroad i.e. in U.K. Therefore, GST does not apply to the services rendered abroad as they amount to the export of services. In addition to that the respondent could not establish that the incident of tax has been passed on to the recipient ASCL located in London. Thus, both, the Adjudicating Authority and the Appellate Authority committed error in rejecting the refund of GST of the petitioner. Therefore, orders of both the authorities cannot be sustained and need to be set aside. Petition allowed - decided in favor of petitioner.
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2022 (6) TMI 531
Reimbursement of Service Tax / GST - Scope of mutual contract - Levy of Service Tax - onboard catering services provided by the respondent under a temporary license issued to it - respondent is obliged to serve a welcome drink to the passengers who boarded the subject trains or not - Goods and Services Tax (GST) on production charges/supply of meals after 01.07.2017 - person liable for financial burden concerning the food which got wasted due to cancellation or the failure of the passengers to turn up - entitlement of relief alongwith interest. HELD THAT:- It is only on 06.04.2017, when IRCTC indicated to the respondent, that unless it gave its unconditional acceptance to the policy framework captured in its communication dated 07.02.2017, its temporary license, which was expiring on 18.06.2017, would not be extended, that the respondent agreed to provide a welcome drink and bear the financial burden qua the same - Faced with this difficult choice, and having regard to the fact that it had already invested funds in the contractual arrangement arrived at with IRCTC, on 12.04.2017, the respondent accepted the terms indicated in the communication dated 07.02.2017, concerning the supply of welcome drink for the period that was to extend beyond 18.06.2017 - the claim of the respondent qua welcome drink was restricted to the period spanning between 19.12.2016 and 18.06.2017. To be noted, the temporary license was extended by IRCTC till 04.07.2018. The learned arbitrator, correctly concluded that IRCTC could not have deducted the amounts expended by them towards serving welcome drink to the passengers from the bills of the respondent. Whether IRCTC is obliged to reimburse the amount deposited by the respondent towards GST levied, with effect from 01.07.2017, on production charges? - HELD THAT:- IRCTC also does not seem to have disputed the fact, that it has recovered GST from the passengers by factoring the same in the train fare - the argument advanced by IRCTC, that it is not obliged to reimburse GST to the respondent, even if it establishes proof of payment of same, seems completely untenable. As correctly concluded by the arbitrator, GST from 01.07.2017 would have to be reimbursed to the respondent by IRCTC, upon the proof of deposit of the same with the concerned statutory authority - IRCTC has already factored GST in the train fare, lends heft to the stand taken by the respondent, that it should be reimbursed GST deposited by it with the concerned statutory authority. Furthermore, IRCTC was in a position to, in fact, perhaps, claim ITC, at least for the period spanning between 01.07.2017 and 31.03.2018. The partial/interim award dated 15.12.2020, rendered by the learned arbitrator is neither patently illegal nor perverse, as was sought to be portrayed by Mr Majithia, on behalf of IRCTC - Appeal dismissed.
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2022 (6) TMI 530
Maintainability of application for advance ruling - recipient of services - Benefit of Concessional rate of tax - works contract service received from the contractors - applicability of Entry No. 3(v) (da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017, as amended time to time - construction of common amenities such as club house, swimming pool and amenities of like nature - HELD THAT:- Sub-section (1) of section 103 of the CGST Act, 2017 categorically speaks that the ruling pronounced is binding only on the applicant and on the concerned officer or the jurisdictional officer in respect of the applicant. If an application is filed by the recipient of goods or services or both on the taxability of his inward supply of goods or services and ruling is pronounced accordingly, such ruling shall be binding only on him and on the concerned officer or the jurisdictional officer of him. In no way, the ruling shall be binding on the supplier of such goods or services. Any provisions of the Law, therefore, should not be interpreted in a way which defeats the very purpose of the objective and purpose of the legal provision. Thus, in the subject application, the applicant cannot seek an advance ruling in relation to the supply where it is a recipient of services. Since provisions of Sec 95 (a) are very clear and unambiguous that only a supplier can file application for advance ruling, hence, the contentions of the applicant are not accepted. Thus, no ruling can be given on the Questions, since the applicant is recipient of services in respect of supplies involved.
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2022 (6) TMI 529
Scope of Advance Ruling application - Levy of Service tax - pure agent or not - Applicant acted in the capacity of being a NEEM facilitator - receiving reimbursement of stipend amounts from the various Trainer Institutes and remitting the same to the trainees - stipend amount forms a part of the taxable value or not - HELD THAT:- In the case of this Authority, Advance ruling means a decision provided by the Authority to an applicant on matters or on questions specified in sub-section (2) of section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the appellant - the question regarding pure agent service, does not pertain to any of the matters specified in clauses (a) to (g) of Section 97 (2) of the CGST Act, 2017 and therefore the same is not answered. Valuation - inclusion of stipend paid tot he trainees, as per the agreement - Pure Agent - HELD THAT:- A monthly stipend shall be paid to the trainees by Trainer Institute by way of issuing a cheque in the name of the Applicant who is required to make such payment to the trainees. The sample agreement submitted mentions that, the Applicant is to act as a Pure Agent of the Trainer Institute. In the case of IN RE: M/S. YASHASWI ACADEMY FOR SKILLS [ 2021 (8) TMI 1017 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] also, the Applicant Company was registered as an Agent under National Employment Enhancement Mission ('NEEM') of the Government of India and acted as a facilitator or extending support for mobilizing the trainees under NEEM Scheme of Government of India as per regulations, under notification issued by All India Council for Technical Education (AICTE), for providing on the job practical training in industries to trainees to enhance their future employability, and for which the applicant entered into agreements with various companies/ organizations (called as industry partners) to impart actual practical training to the students. In the said case also, the applicant in addition to taxable amounts received from its Industry Partners for services rendered, also received Stipends amounts (payable by the Industry Partners to the Trainees) which was paid in full to the trainees - the issue is thus answered in negative.
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2022 (6) TMI 528
Classification of goods - PV DC Cables manufactured and supplied by Leoni Cable Solutions (India) Pvt Ltd to its Customers (who are into business of manufacturer of Solar Power Generating System or EPC Company setting up a solar power plant) - classifiable under Entry number 234 of Schedule I of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017 liable to CGST at 2.5% or under Entry number 395 of Schedule III of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017 liable to CGST at 9%? Whether the impugned cables which connect the solar modules inverters in a photovoltaic system and are used to carry electricity from the SPGS to the inverters can be treated as parts of the SPGS? - HELD THAT:- The applicant is clearly stating that the impugned cables are not a part of the SGPS i.e. the actual System which generates electricity from Sunlight. The impugned cables as per the application have no part to play in the generation of Solar Power which is the function of SGPS. These cables only transfer the electrical energy generated by the SGPS, to the Inverters where such electrical energy is stored for further use - the SGPS generates electrical energy from sunlight and the impugned cables, as any cables, just carries the generated electricity from the SGPS to the Inverters. Further as per Notes to Section XVI of GST Tariff, in Note 2 referring rules for classification of parts of machines, the parts of the articles of heading 8544 have been excluded. The applicant has not been able to bring clearly out as to how the impugned cables can be considered as parts of the SGPS. In fact, the submissions clearly show that it the impugned cables just carry electricity to the inverters and in our opinion the subject cables cannot be considered as a parts of the SGPS and therefore cannot be covered under Sr. No. 234 mentioned above. Another fact to understand is that the said Sr. No. 234 has been totally omitted from Schedule I of Notification No. 01/2017 dated 28.06.2017, vide Notification No. 08/2021 - CTR dated 30.09.2021. Whether the impugned cables can be covered under Sr. No. 395 of Schedule III of Notification No. 01/2017 dated 28.06.2017? - HELD THAT:- The description of goods at Sr. No. 395 of Notification No. 01/2017 CTR dated 28.06.2017 is Insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors. - From a reading of para nos 5.7, 5.7.1 and 5.7.2 it is observed that the description of goods in Sr. No. 395 exactly tallies with the Tariff Entry 85.44 which goes to show the intention of the government to classify the impugned goods under Sr. No. 395 of Schedule III of Notification No. 01/2017 CTR dated 28.06.2017 as amended from time to time. Notification No. 41/2017 - CTR dated 14.11.2017 is effective from 14.11.2017. Prior to this date Sr.No. 395 of Notification No. 01/2017 - CTR dated 28.06.2017 covered only Winding wires; coaxial cables; Optical Fiber (Chapter 85.44) and there was another Heading at Sr. No. 161 of Notification on No. 01/2017 - CTR dated 28.06.2017 which covered the impugned cables - the impugned cables are covered under Sr. No. 395 of Schedule III to Notification No. 01/2017 dated 28.06.2017. Sr. No. 395 (taxable @ 18% GST) as amended by Notification No. 41/2017 - CTR dated 14.11.2017. Therefore Sr. No. 395 is applicable in the instant case only with effect from 14.11.2017.
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2022 (6) TMI 527
Profiteering - construction service supplied by the Respondent - it is alleged that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in the price - violation of the provisions of Section 171 (1) of the CGST Act, 2017 or not - penalty - HELD THAT:- The Authority finds that, it is established that there had been no additional benefit of ITC to the Respondent and hence he was not required to pass on the benefit to the Applicant No. 1 by reducing the price of the flat. The Applicant No.1 could have availed the above benefit only if the above project was under execution/implementation before coming into force of the GST as the Respondent would have been eligible to avail ITC on the purchase of goods and services after 01.07.2017 on which he was not entitled to do so before the above date. Since there was no basis for comparison of ITC available before and after 01.07.2017, the Respondent was not required to recalibrate the price of the flat due to additional benefit of ITC. Hence, the allegations of the Applicant No. 1 made in this behalf are incorrect and therefore, the same cannot be accepted. The Authority finds that the Respondent has not contravened the provisions of Section 171 (1) of the CGST Act, 2017 and there are no merit in the Application filed by the Applicant and the same is accordingly dismissed.
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2022 (6) TMI 526
Profiteering - purchase of Duplex Row House - it is alleged that the Respondent had not passed on the benefit of ITC although he had charged GST @12% w.e.f. 01.07.2017 from the said Applicant - contravention of section 171(1) of GST Act - penalty - HELD THAT:- It is clear from a plain reading of Section 171 (1), that it deals with two situations- one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the said issues, it is apparent from the DGAP's Report and the available record that the Completion Certificate for the project Sahej Valley was issued on 31.03.2016, i.e. prior to the date of introduction of GST through which the provisions of Anti-Profiteering were introduced. In support of the claim, the Respondent has also produced a copy of sale deed for other units sold post completion in October, 2017, to establish that the project was completed in March, 2016 and that no Service Tax/GST was charged on such units sold post completion. Since, the Completion Certificate was obtained for the subject project before the introduction of GST and also there has not been any reduction of GST rate in the instant case, the provisions of Section 171 dealing with Anti-profiteering cannot be made applicable to the said project in the view of the fact that there was no additional ITC which had been utilized by the Respondent, which was relevant for establishing allegation of profiteering. Further, no fresh demand has been raised by the Respondent upon Applicant No.1 in the post-GST regime, only a reminder for previous demand was issued. Launching of the project, Agreement to sell and Completion Certificate of the project had taken place in the pre-GST regime and hence, there was no post-GST tax rate or ITC structure which could be compared with the pre-GST tax rate and ITC and also the anti-profiteering provisions related to Section 171 were not in existence at that time. Accordingly, it is clear that the Respondent had neither benefited from additional ITC nor had there been a reduction in the tax rate in the post-GST period and therefore it does not qualify to be a case of profiteering. As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since, the present Report has been received by this Authority on 31.12.2020 the order was to be passed on or before 30.05.2021 However, due to prevalent pandemic of COVID-19 in the Country this order could not be passed on or before the above date - Hon'ble Supreme Court in Suo Moto Writ Petition (C) no. 3/2020 , vide its Order dated 10.1.2022 [ 2022 (1) TMI 385 - SC ORDER ] has directed that In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, the longer period shall apply. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Therefore, the allegation that the Respondent has not passed on the benefit of ITC in this case is not found sustainable - Application dismissed.
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Income Tax
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2022 (6) TMI 533
Speculative loss or not - Set off and carry forward of loss arising from derivative transactions in currency segment - Eligible transaction in respect of derivatives transaction - HELD THAT:- Section 43(5) of the Income Tax Act defines 'speculative transaction'. As per the Scheme of the Act, a transaction of speculative nature carries a differential treatment qua the non speculative transaction in the matter of set off and carry forward of losses arising therefrom. The proviso to Section 43(5) provides for certain exceptions in varied situation and where the transactions executed fall within any of such exceptions, profit/loss arising from such transactions will not be regarded as derived from speculative business and consequently, will not be deemed to be speculative transaction for the purposes of the Act. We are presently concerned with clause (d) of such exceptions annexed to Section 43(5) of the Act. In view of the clause (d) to Section 43(5), a transaction will not be regarded as 'speculative transaction' where an eligible transaction in respect of trading in derivatives referred to in clause (ac) of Section 2 of Securities Contracts (Regulation) Act, 1956 was carried out in a recognized stock exchange. Explanation-1 to Section 43(5), in turn, defines 'eligible transaction' for the purposes of clause (d) to mean a transaction carried out electronically on screen based systems through a stock broker registered under SEBI Act 1992. In essence, an 'eligible transaction' [as defined in Explanation-I to Section 43(5)] in respect of derivatives transaction [as defined in clause (ac) to Section 2 of Securities Contract (Regulation) Act, 1956] carried out on a recognized Stock Exchange shall not be deemed as Speculative Transaction having regard to exception provided in clause (d) to proviso to Section 43(5) of the Act. We are of the considered view that the assessee in the instant case has complied with all the conditions of clause (d) and Explanation-1 to Section 43(5) of the Act cumulatively so as to treat such currency derivative transaction as eligible transaction for the purposes of exclusion from the ambit of speculative transaction defined under Section 43(5) - This being the position, the loss arising from derivative transaction has been incorrectly disallowed by the AO for being set off and carried forward against non speculative business income in accordance with law and wrongly confirmed by the CIT(A). The action of the CIT(A) is accordingly set aside and the Assessing Officer is directed to restore the claim of the assessee to be non speculative in nature. Appeal of assessee allowed.
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2022 (6) TMI 525
TDS on the compensation paid to the petitioner by the respondent No.1 for the acquisition of land - acquisition of land through direct purchase and private negotiations - distinction is made between the compulsory acquisition resorting to the provisions of the Act, 2013 by issuing notification or by an acquisition through an agreement - petitioner submits that Section 96 read with Section 46 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 specifically exempts payment of income tax on an amount of compensation paid under the award and/or agreement - HELD THAT:- Section 96 of the Act, 2013 unequivocally provides that no income tax or duty shall be levied on any award or agreement made under the Act except under Section 46. Section 46 would not be attracted in the present case. Section 46 would apply to the specified persons. The specified persons includes any person other than (i) Appropriate Government (ii) Government Company, (iii) Association of persons or Trust or Society as registered under the Societies Registration Act, wholly or partially aided by the appropriate Government or controlled by the Appropriate Government. The respondent no.1 is not a specified person within the meaning of Section 46. In view of that, as the exemption under Section 96 would squarely apply, no income tax can be levied in the present matter for the amount of compensation, inter alia respondent No.1 could not have deducted amount of TDS from the amount of compensation paid to the petitioner. Manner in which the TDS as deducted by respondent No.1 can be refunded to the petitioner - The petitioner has relied upon Rule 37BA of the Income Tax Rules, 1962 (hereinafter referred to as the Rules, 1962 ) which provides that credit for tax deducted at source and paid to the Central Government in accordance with provisions of Chapter XVII shall be given to the person to whom payment has been made or credit has been given. (hereinafter referred to as deductee ) on the basis of information relating to deduction of tax furnished by the deductor to the Income Tax Authority. Rule 37BA (3) (i) of the Rules, 1962 further provides that the credit for tax deducted at source and paid to the Central Government shall be given for the assessment year for which such income is assessable. Proviso to Section 200(3) of the IT Act provides that the person may also deliver to the prescribed Authority the correction statement for rectification of any mistake in the statement delivered under the said subsection in such form and verified in such manner as may be verified by the Authority. Clause (d) of Sub-section (1) of Section 200A of the IT Act inter alia provides for determination of the sum payable by, or the amount of refund due to, the deductor. It is the case of the petitioner that her income is exempted from tax and as such she cannot fill Schedule TDS-2 and hence cannot make an application under Section 199 of the IT Act read with Rule 37BA (3)(i) of the Rules, 1962 whereas according to the respondent, the petitioner has to file an income tax return and claim refund. The return would be assessed. Reference is made by the respondent to Section 139 of the IT Act to submit that the refund can be claimed only through fling of return of income within the time prescribed under Section 139. In the present matter, we are not aware whether the petitioner is liable to file return as required under Section 139 of the IT Act. There are various instances under Section 139 wherein a person is required to file return. All those circumstances and instances enumerated therein are not before the Court. In absence thereof, it is not possible for this Court to arrive at a conclusion as to whether the petitioner is required to file return or not before the Income Tax Department. As already held that the income received by the petitioner on account of the property acquired by respondent No.1 by private negotiations and sale deed is exempted from tax. The respondent No.1 has already deducted the TDS which it ought not to have deducted. ORDER (i) The respondent shall file correction statement as provided under provisio to Sub-Section (3) of Section 200 of the IT Act, 1961 within a period of one month from today to the effect that the TDS deducted by the respondent No.1 was not liable to be deducted. (ii) The Income Tax Department shall process the statement including the correction statement that may be filed under Section 200A more particularly Clause (d) thereof. (iii) The parties shall thereafter take steps for refund of the amount in accordance with the provisions of Income Tax Act and Rules.
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2022 (6) TMI 524
TDS u/s 194J - non deduction of tds on expenditure claimed for arbitration work u/s. 40(a)(ia) - HELD THAT:- Sums were paid to arbitrator as fee and clerical expenses and no reasonable explanation was given as to why TDS was not deducted thereupon - The assessee's plea that provisions of section 194J are not attracted has rightly been rejected by the Revenue authorities. Moreover, as noted by the Revenue authorities, the assessee itself in its ledger entry has mentioned that the payment is net of TDS to the arbitrator. Hence, assessee is aware that TDS was to be deducted failure to do so would certainly result in disallowance. Hence, we do not find any infirmity in the addition. Payment of Sum paid as professional fee to Pramodh Engineers - AO Rejected expenditure was that not justified u/s. 37(1) and the assessee has not conducted any business and no vouchers bills in this regard was produced - HELD THAT:- As the assessee was pursuing before the Arbitral Tribunal and in fact on 04.07.2013, a further award in favour of the assessee of Rs. 15.84 Crores was awarded. It is another matter that the assessee has not taken any cognizance of the same in the accounts and no adverse inference by the authorities below is also there. Hence, the plea of professional charges paid Pramodh Engineers for pursuing and following of proceedings at Arbitral Tribunal, without any justification is not at all justified. Hence the reasoning of Revenue Authorities that the same is not for the purpose of business is liable to be rejected. CIT(A) has sustained the addition is absence of documentary evidence - We note that the Ld. CIT(A) examined the bills of professional charges to Pramodh Engineers. There is no dispute that the TDS on the same has been deducted. As held by us above, the same is for the purpose of business wherein the said firm was pursuing arbitration proceedings which as mentioned in the note of account has resulted in Rs. 15.84 crores being awarded in favour of assessee. The narration of the professional fee bill by the payee is not at all material in rejecting the professional fee bill. A professional fee bill is based upon understanding between the assessee and professional service provider. It is assessee who is to be satisfied by the professional services and not the Assessing Officer. It is not the case that the Assessing Officer is sitting into the computation of income of Pramodh Engineers. How Pramodh Engineers narrates and adjusts as professional fee receipt against what expenses is the look out of the Assessing Officer of Pramodh Engineers. The Assessing Officer in the present case or the Ld. CIT(A) for that matter cannot ask the assessee for further evidence of the professional fee bill raised. In this view of the matter, in our considered opinion, the rejection of the three bills of M/s. Pramodh Engineers is not at all justified. Hence, we delete the same as the expenditure is for business purpose; no case is made out for lack of deduction of TDS or the expenditure being bogus. The rest disallowance is to be upheld because no bills of Pramodh Engineers have been submitted. We do not find any infirmity in this regard as the assessee cannot claim any expenditure without furnishing the necessary bills. Accordingly, we partly uphold the order of the ld. CIT(A) as above. Appeal of the assessee is partly allowed.
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2022 (6) TMI 523
Revision u/s 263 - Difference of cash deposited between pre-demonetization period and during demonetization period - difference of opinion - cash actually deposited during demonetization period was not properly examined by the Assessing Officer - HELD THAT:- We find that the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion.we are of the considered opinion that the assessment order dated 14.12.2019 framed u/s. 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Therefore, the assumption of jurisdiction u/s. 263 of the Act by the ld. CIT is bad in law. - Decided in favour of assessee.
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2022 (6) TMI 521
Trust V/S AOP - Eligibility of Exemption u/s 11 - registration granted to the assessee u/s 12AA - HELD THAT:- Tribunal while considering the correctness of the said order noted that the only reason why the assessing officer assessed the income of the assessee as an AOP was on the ground that registration granted to the assessee u/s 12AA was cancelled by the CIT. Tribunal further noted the order of cancellation of registration dated 31.12.2008 was set aside by the Tribunal by an order dated 20.03.2009 and, therefore, direction was issued to the assessing officer to assess the assessee as a trust and not as AOP . As submitted that as against the order passed by the Tribunal dated 20.03.2009, the revenue had preferred an appeal before this Court in [ 2022 (1) TMI 843 - CALCUTTA HIGH COURT] and that by judgment the appeal has been dismissed. We find that there is no error in the order passed by the Tribunal directing the assessee to be assessed as a trust and not as AOP . Decided against the revenue.
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2022 (6) TMI 520
Reopening of assessment u/s 147 - Scope of new Section 148A as inserted for conducting inquiry providing opportunity before issuance of notice under Section 148 - HELD THAT:- AO before issuing the notice under Section 148 is required to conduct an inquiry with respect to the information which suggests that income chargeable to tax has escaped assessment and thereafter provide an opportunity of being heard to the assessee by serving upon him a show-cause notice to show cause as to why the notice under Section 148 should not be issued on the basis of the information with the Assessing Officer as per clause A(a). The Assessing Officer has to consider the reply furnished by the assessee, if any, in response to the show-cause notice and thereafter decide on the basis of the material available on record including the reply of the assessee, whether or not it is a fit case to issue a notice under Section 148 by passing an order under clause (d) of Section 148A within one month from the end of the month in which the reply referred to in clause (c) is received by him or otherwise. Therefore, we are of the opinion that that the petitioner ought to have been given an opportunity of hearing and the respondent- Authority thereafter ought to have considered the material produced on record by the petitioner. We are not satisfied by the reasoning part of the impugned order, more particularly, when the details were supplied by the petitioner. Hence, we are of the opinion that the matter requires consideration and the same is allowed. The impugned order dated 31.03.2022 is hereby quashed and set aside. The matter is remitted back to the respondent- Authority. The respondent-Authority shall proceed further with the case under the provisions of Sub-sections (b) and (c) of Section 148A of the Act and shall afford an opportunity of hearing to the petitioner and thereafter pass a detailed order in accordance with law under Section 148A(d) of the Act.
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2022 (6) TMI 519
Reopening of assessment u/s 147 - notice issued to the petitioner u/s 148A(b) - AO is yet to frame assessment/re-assemment in discharge of statutory duty casted upon him u/s 147 - HELD THAT:- As the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. As it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order u/s 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. We find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Thus, the present Writ Petition is dismissed.
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2022 (6) TMI 518
Direct Tax Vivad Se Vishwas Scheme - petitioner failed to furnish Form-4 - Petitioner seeking permission to pay the amount due under the Act alongwith additional fee and interest as owing to illness of his mother, he was residing abroad during April, 2021 to October, 2021 - HELD THAT:- Section 3 of the Act provides that subject to the provisions of the Act where a declarant has filed a declaration to the designated authority in accordance with the provisions of Section 4 in respect of tax arrear, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force the amount payable by the declarant shall be as provided in the table in the said Section. The declaration as referred to in Section 3 has to be made before the designated authority in prescribed format as provided in Section 4(1) of the Act. As per sub-section (2) of Section 4 upon filing such declaration, any appeal pending before the Income Tax Appellate Tribunal or Commissioner (Appeals) in respect of disputed income or disputed interest or disputed penalty or fee and tax arrear shall be deemed to have been withdrawn from the date on which certificate under Section 3 and 4 has been issued by the designated authority. Section 5 of the Act pertains to time and manner of payment. Sub-section (1) of Section 5 provides that the designated authority shall within a period of 15 days from the date of receipt of the declaration by an order determine amount payable by the declarant. As per sub-section (2) of Section 5 the declarant has to pay the amount as determined under sub-section (1) within 15 days of the date of receipt of the certificate and intimate the details of such payments to the designated authority. We are unable to agree with the contention of the counsel for the petitioner that as per Annexure P-4, the offer remained unended. The settlement can never be said to be open ended. It has a terminal point. In the present case, either amount of Rs.1,09,46,846/- was to be paid before 31.03.2021 or an amount of Rs.1,20,41,530/- was to be paid till the last date of payment as notified i.e. 31.10.2021. Petitioner has not been able to point out any provision which shall entail extension of time as a vested right which can be enforced by way of writ petition under Article 226 of the Constitution of India. Trite it is that enforceable right under law is a sine qua non for issuance of a writ in the nature of mandamus. In the absence of there being any right vested in the petitioner to claim extension of the last date or to seek payment of tax with late fee etc., we find no merit in the present writ petition. Consequently, the same is dismissed.
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2022 (6) TMI 517
Exemption u/s 11 - seeking registration u/s 12AA - HELD THAT:- We find that no adverse findings have been recorded by the ld CIT(E) regarding the objects of the assessee society being charitable in nature and genuineness of the activities carried out by the assessee society in pursuit of the said objectives on or before filing the application seeking registration u/s 12AA of the Act. As far as dissolution clause in the trust deed is concerned, we find that once the assessee has submitted to the jurisdiction of the Charity Commissioner and there are inbuilt provisions contained in the Bombay Public Trust Act of 1950 and the scheme so applied and approved by the Charity Commissioner, there is no valid and justifiable reason to reject the application so filed by the assessee society seeking registration u/s 12AA of the Act. We find that the dicta laid down in case of CIT(E) v/s Tara Educational Charitable Trust [ 2017 (8) TMI 377 - BOMBAY HIGH COURT] squarely applies in the facts of the present case and respectfully following the same, the ld CIT(E) is hereby directed to grant registration to the assessee society under section 12AA - Appeal of the assessee society is allowed.
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2022 (6) TMI 516
Penalty u/s 271(1)(c) - Additional income declared during the survey u/s 133A - Penalty imposed as assessee would not have offered its income if the survey had not taken place - CIT-A deleted the penalty - HELD THAT:- As reported income and the assessed income of the assessee remain the same. The AO has imposed penalty only with reference to the amount of Rs.1.50 crore which was suo motu declared by the assessee in the return. In that view of the matter, the ratio laid down in MAK data Pvt. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] has no application to the facts of the extant case as the income under consideration, forming the foundation for the penalty, is not the one which was added by the AO beyond the income returned. Assessee voluntarily offered the income, declared in the survey, in the return of income and the assessment was made without making any addition on that score, we hold that such an income cannot constitute the bedrock for the imposition of penalty u/s.271(1)(c) of the Act. We, therefore, affirm the impugned order - Decided in favour of assessee.
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2022 (6) TMI 515
Approval of u/s 80G - approval denied as activities of the trust were not found eligible for approval - whether CIT(E) has granted registration u/s 12AA after examination genuineness of activities of trust and the registration granted has not been revoked or cancelled than it is not proper for ld. CIT(E) to reject the application of trust for benefit of exemption u/s 80G by holding that the activities of the trust were not found eligible for approval u/s 80G? - HELD THAT:- The order of the Co-ordinate Bench and arguments of ld. AR of the assessee we hold that the assessee is eligible for approval of 80G of the Act since their 12AA registration is granted and continue. Even the assessment proceedings for A. Y. 2016-17 completed with out any adverse observation on the issue and the activities of the trust are in accordance with the condition prescribed. We set aside the order of ld. CIT(E) and direct ld. CIT(E) to grant an approval to the assessee u/s 80G of the Act. Thus, the grounds of appeal raised by the assessee is allowed.
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2022 (6) TMI 514
Claim of Expenditure on hawala business - Allowance of 10% of expenses incurred towards earning commission income received in respect of banking transactions and also in respect of loose papers found during the course of search proceedings - HELD THAT:- Undisputedly assessee is engaged in the carrying on of the hawala business which is proved by the statement of the assessee and corroborated by the incriminating evidences found during the course of search from locker number 464 owned by the assessee. It is also the statement of the assessee. According to the provisions of Section 37 (1) of the act, any expenditure incurred by the assessee wholly and exclusively for the purpose of the business should be granted as deduction to the assessee from the income of business. However the explanation 1 provides that any expenditure incurred by the assessee, which is prohibited by law, is not considered as an expenditure incurred by the assessee wholly and exclusively for the purposes of the business and should not be granted as deduction to the assessee from the income of the business. Apparently, Hawala business carried on by the assessee is opposed to the public policy and is prohibited by the law. Expenditure incurred is in furtherance of hawala business. Assessee also did not submit any proof of incurring any expenditure. Income was also not assessed on net basis @ 0.30 %. No proof of incurring any expenditure is available on record. Therefore, naturally no expenditure is incurred by assessee. Therefore, the action of the learned CIT A in granting deduction of 10% of the gross income earned by the assessee is not in conformity with the provisions of Section 37 (1) of the act. Therefore, we reverse the order of the learned CIT A in allowing deduction at the rate of 10% as expenditure incurred. Accordingly, ground number 1 of the appeal of the learned AO Allowed. Addition based on the incriminating material found during the course of search - Admittedly, incriminating material found during search were for AY 2013-14 only. As on the date of the search, assessment year 2010 11 is a concluded assessment. Therefore, if any addition is required to be made in concluded assessment it has to be based on incriminating material found during the course of search. Admittedly, the seized material pertains to assessment year 2013-14 and not assessment year 2010 11. Therefore, in absence of any incriminating material the learned CIT A has correctly deleted the addition for assessment year 2010 11. Further, for assessment year 2011 12, no scrutiny assessment was pending. Therefore, it is also a concluded assessment as on the date of search. As no incriminating evidences are pertaining to this assessment year, the learned CIT A has correctly deleted the addition. - Decided in favour of assessee.
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2022 (6) TMI 513
TDS u/s 195 - addition u/s 40(a)(i) being amounts paid to non-resident group entities which are in the nature of reimbursement of certain expenses - non admitting additional evidences in the nature of withholding tax-certificates issued by the Appellant on basis of allocation demonstrating the fact that the payments were in the nature of reimbursement and sample invoices of third party in relation to the same - first argument is that on some of the payment, assessee has already deducted tax at source and secondly, part of the expenditure is merely reimbursement of expenditure on which no tax is required to be deducted at source - HELD THAT:- Despite assessee producing the evidence before the learned CIT (A), he rejected the arguments of the assessee without examining the same. As assessee has produced necessary evidence before him, the addition is confirmed only for the reason that same were not produced before the learned Assessing Officer. We find no justification has been given in rejecting the claim of the assessee. In view of this with respect to the disallowance of ₹17 lacs, we set aside the grounds of the assessee to the file of the learned Assessing Officer to examine whether assessee has already deducted tax at source on payment of ₹9,25,546/- and further, the expenditure of ₹8,71,077/- is merely reimbursement of the expenditure. The assessee is directed to produce the relevant details before the Assessing Officer. AO is directed to examine the same and decide the issue in accordance with law. Assessee Appeal is allowed for statistical purposes
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2022 (6) TMI 512
Delay in deposit of PF and ESIC - payment before due date of return of income u/s 139(1) - Scope of amendment - HELD THAT:- The amendment was brought in finance Act 2021 w.e.f. 1-4-2021. The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee shall be applicable prospectively. We considering the overall facts, we are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to assessment year 2018-19. The assessee has deposited the employee's contribution of Provident fund ESIC before the due date of return of income U/s. 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.
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2022 (6) TMI 511
Revision u/s 263 - disallowance of registration expenditure - HELD THAT:- AO without following the directions of the CIT in his revision order has passed assessment order u/s. 143(3) r.w.s. 263 by disallowing the expenses of Rs. 9,43,640/-. We have also noted that the Assessing Officer has wrongly mentioned the disallowance as Rs. 9,43,640/- instead of Rs. 9,40,640/- in his assessment order. The Ground raised by the assessee is also not valid because the CIT while passing the order U/s. 263 has provided a reasonable opportunity to the assessee which is evident from the order of CIT. The directions of the CIT is binding on the AO and the AO has no freedom to examine the issue and take appropriate action, in accordance with law. We therefore find that there is no ambiguity in the order of the Ld. CIT(A) in enhancing the assessment in accordance with order passed U/s. 263 instead of Rs. 9,43,640/- disallowed by the Ld. AO. Therefore, we are of the view that there is no infirmity in the order of the Ld. CIT(A) and no interference is required and accordingly, we uphold the order of the Ld. CIT(A) in this regard and the ground raised by the assessee is dismissed.
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2022 (6) TMI 510
Income accrued in India - royalty receipt - payments received by the Appellant on sale of software to Indian resellers/distributors - chargeable to tax under Section 9(1)(vi) of the Income-tax Act, 1961 and under Article 12 of the India- USA DTAA ) - whether payments in different cross-border software transactions, i.e. payments made by end users or distributors (resident as well as non-resident) of software and payments made in respect of software embedded in the hardware, qualify as royalty under the Income Tax Act (ITA) as well as various Double Taxation Avoidance Agreements (DTAAs)? - HELD THAT:- The issue is squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] answered in terms of following the Hon'ble Supreme Court referred to the terms of the agreements entered into with various parties for the use of software and noted that distributors were granted a non-exclusive and non-transferable license to resell the software. Furthermore, end users were granted a limited right to use the software without any right to sub-license, transfer, reverse engineer, modify or reproduce the software, in this light, the Hon'ble Supreme Court examined various provisions of the Copyright Act, 1957 in force in India (ICA) and held that a limited right to use the software, make copies of the software for the purpose for which it was granted and without grant of rights of the copyright owner (such as reproduction, issuing copies, commercial exploitation), does not qualify as grant of a copyright under the ICA. As noted that the definition of royalty under the ITA, prior to amendment in 2012, as well as the DTAAs under consideration [which are similar/identical to the OECD Model Convention (MC)], necessarily requires grant of a copyright in software to the licensee for the payment to qualify as royalty. Since the payment made by end users and distributors did not involve payment for grant of any right specified under the ICA, payments made by the distributors and end users do not qualify as royalty under the DTAA, as well as the pre-amended provisions of the ITA. Such payments qualify as business income not taxable in India under the DTAA. The machinery provisions of withholding under the ITA in respect of payment made to non-resident (NR) taxpayers is triggered only in respect of payments chargeable to tax in India after considering the provisions of the ITA as well as the DTAA. In case where a payment is not chargeable to tax in India under the DTAA, then no withholding is required on such payments. In doing so, the Hon'ble Supreme Court distinguished its earlier decision in the case of PILCOM on the grounds that in that ruling, the SC was concerned with payments to NR sportspersons and the withholding provisions in respect of such persons were governed by different provisions of the ITA which were not linked to the chargeability of income. Accordingly, respectfully following the precedent from the Hon'ble Supreme Court as above, we set-aside the orders of the authorities below and decide the issue in favour of the assessee.
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2022 (6) TMI 509
Estimation of income - bogus purchases - AO treated profit margin @5% of alleged bogus purchases made from various concerns which appeared as hawala dealers and the Ld.CIT(A) restricted the same to 4% - HELD THAT:- Hon'ble Bombay High Court in the case of Pr.CIT v. M/s. Mohommad Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] held that the Tribunal correctly restricted the addition limited to the extent of bringing the Gross Profit rate on purchases at the same rate of other genuine purchases. Thus we direct the Assessing Officer to restrict the addition/disallowance only to the extent of bringing the Gross Profit rate on alleged bogus purchases at the same rate of the other genuine purchases declared by the assessee. We observe that assessee has submitted that it has earned Gross Profit of 10.76% in the transaction involving alleged bogus purchases. Therefore, Assessing Officer is directed to restrict the addition/disallowance to the extent of 1.74% (12.50% - 10.76%) of the alleged bogus purchases. In the result, appeal filed by the assessee is partly allowed.
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2022 (6) TMI 508
Levy of penalty on additions of admitted amount during assessment proceedings - CIT(A) deleted the penalty - Company has already liquidated - Penalty in respect of Redemption premium received by the assessee company, which was disclosed assessee company during the scrutiny proceedings after the issue of notice u/s 143(2) - HELD THAT:- When the respondent company has already gone into liquidation vide order dated (supra) and is no more in existence the present appeal filed by the Revenue is not maintainable in the present format as liquidator has not come up before the Tribunal despite numerous notices to file the amended form 36A in the present appeal. So in these circumstances present appeal is not maintainable in the present format.
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2022 (6) TMI 507
Reopening of assessment u/s 147 - Bogus accommodation entry receipts - HELD THAT:- Assessee has engaged into bogus penny stock transaction, and after our disclosure of amount has not duly honoured the same. CIT(A) as well as A.O. have passed a reasonable and well reasoned order after duly complying with earlier ITAT direction. Nothing is on record on behalf of assessee to rebut the finding that it has engaged into bogus penny stock transaction. Thereafter, after again having made the disclosure, the assessee tried to cover the amount by claim of expenditure, which were totally an afterthought and assessee could not support the same despite opportunity. Moreover, the new plank raised in set aside proceedings has also been correctly rejected by the ld. CIT(A). Firstly, the assessee could not have made a fresh claim and moreover the same also was only ipse dixit, without proper corroborative material. Appeal filed by the assessee is dismissed.
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2022 (6) TMI 485
Reopening of assessment u/s 147 - HELD THAT:- There is a proposal to assess or re-assess the income or re-compute the loss or depreciation allowance or any other allowance or deduction for the assessment year 2015-16. 30 days time has been given to the assessee/petitioner to respond to the notice. We are of the considered view that the petitioner ought to respond to notice rather than rushing to the writ Court. No interference in the matter at this stage is warranted.
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Customs
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2022 (6) TMI 534
Criminal conspiracy - import of Iridium Sponge - Undervaluation of imported goods - opportunity to the Petitioner to cross-examine the witnesses given or not - HELD THAT:- Admittedly, permission to cross examine the witnesses was denied to the petitioner. It is settled principle of law that order passed without following principles of natural justice is a nullity - In the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT ] the permission to cross-examine the witnesses was declined by the Adjudicating Authority. The impugned order passed by the Respondent No.2 does not say that there is no material against the Petitioner in the statement of Naishad B. Kapadia. It has simply declined the permission to cross-examine the witness Naishad Kapadia and other witnesses only on the ground that it will not shed any further light. It is not for the authority to conclude in advance whether the cross-examination would be helpful or not or nothing fruitful would be eilicited in cross-examination. This approach of Respondent No.2 is not correct. Without cross-examining the witness it is impermissible for the Authority to say that no fresh light will be shed. It is true that alternative remedy of appeal to the Appellate Tribunal under section 127A of the Customs Act, 1962 is available to the petitioner. However, when the principles of natural justice are violated doors of this Court cannot be closed for the Petitioner on the ground of availability of alternate efficacious remedy. It is the right of every person to cross-examine the witnesses on whom reliance has been placed by the Authorities - it is deemed appropriate to set aside the impugned order and remand the mater to the Respondent No.2 for deciding afresh with the directions that respondent no.2 shall permit the Petitioner to cross-examine the witness Naishad B. Kapadia. Petition allowed by way of remand.
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2022 (6) TMI 506
Jurisdiction - competency of the DRI to issue show cause notice under Section 28 of the Customs Act 1962 - Whether Tribunal is empowered to remand the case without deciding the issues raised therein on the ground that jurisdiction of the officer to issue show cause notice is under dispute? - HELD THAT:- The issues involved herein have been considered and decided by a Co-ordinate Bench of this Court, in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. BOX CORRUGATORS AND OFFSET PRINTERS [ 2020 (5) TMI 475 - MADRAS HIGH COURT] where it was held that In view of the fact that the learned Tribunal has clearly protected the interest of both the Revenue as well as the Assessee by directing the Assessing Authority to keep the matter pending and maintain status quo till the Hon'ble Supreme Court decides the appeal of the Revenue in the case of Mangli Impex, filed against the decision of the Delhi High Court, we do not find any reason to interfere with the decision of the Tribunal, as in our opinion, no question of law arises for consideration in this appeal. The matters are remanded to the Tribunal with a direction to keep the same pending and await the decision of the Hon'ble Supreme Court in the appeals filed against the decision in UNION OF INDIA VERSUS MANGALI IMPEX LTD. [ 2016 (8) TMI 1181 - SC ORDER] . Petition closed.
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2022 (6) TMI 505
Valuation of re-export consignment - requirement of valuation under Section 14 of the Customs Act, when the impugned consignment was meant for re-export in hard currency, held at customs notified area - Confiscation of goods - violation of principles of natural justice - applicability of Rule 8 of the Customs Valuation (Determination of price of imported Goods) Rules, 1998 - whether appellant is guilty of commercial fraud/money laundering scheme in respect of the impugned consignment, without any such charge either in the show cause notice or its addendum? - levy of penalty when the impugned consignment is neither a restricted nor a prohibited under the EXIM policy or Customs Act - HELD THAT:- It is well settled that every member of a tribunal that is called upon to try issues in judicial or quasi-judicial proceedings, must be able to act judicially; and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, objectively and without any bias. In such cases, the test is not whether in fact a bias has affected the judgment; the test always is and must be, whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal - In S. PARTHASARATHI VERSUS STATE OF A.P. [ 1973 (9) TMI 101 - SUPREME COURT ] the Supreme Court has applied the real likelihood test and restored the decree of the trial court which invalidated compulsory retirement of the Appellant by way of punishment. Mr.Madhu Mohan Damodhar, who originally accorded sanction for prosecution against the appellant, based on the adjudication order, ought not to have later heard and decided the appeal filed by the appellant against the very same adjudication order, on the judicial side, as a member of the CESTAT and on this ground alone, the orders impugned herein, are liable to be set aside - the learned Senior Panel Counsel appearing for the respondent fairly conceded the fact that the officer viz., Mr.Madhu Mohan Damodhar, who passed the sanction order for instituting the prosecution against the appellant company, was a member of the CESTAT, at the time of passing of the final order as well as the miscellaneous order in the appeal filed by the appellant and hence, he agreed for remanding the matter to the CESTAT for fresh consideration. Petition closed.
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Corporate Laws
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2022 (6) TMI 504
Prosecution for offence under Section 68A - allegation of acquiring shares in fictitious name - Purchase of share jointly in the name of God and in the name of a person - inspection conducted under Section 209A of the Act - period from 04.05.2006 to 13.06.2006 - failure to verify the physical share certificate of the company - HELD THAT:- It is not in dispute that the payments for the shares were made by the petitioner. It is also not in dispute that the shares were in the name of the Shri Venkatachalapathy and the petitioner jointly. Had the petitioner had any intention, he would not have given his own address for Lord Venkatachalapathy. PW2 admitted that Shri Venkatachalapathy and the petitioner are joint shareholders of the shares and the application was made and signed by the petitioner giving his own address. The petitioner in his reply/Ex. P5 categorically stated that he is the second holder along with Lord Venkatachalapathy/first holder. Thus, the trial Court found fault for the petitioner not filing the appropriate returns under Section 187C of the Act disclosing these facts within the stipulated period. It is seen that PW1 merely filed the complaint and nothing more. It is also seen that the show cause notice, its reply, whether it was considered or not, nothing is available in the complaint, which is improper. Had the petitioner referred to Shri Venkatachalapathy as Lord Venkatachalapathy, the above issue would not arise. The petitioner had filled up and signed the application form, paid for the shares in the first name of Shri Venkatachalapathy and the second name for himself and the address given is that of the petitioner, which clearly discloses that there is no other intention for the petitioner to commit any impersonation for acquisition and no intention for the petitioner to acquire shares in fictitious name. Hence, there is no evasion or enrichment. The petitioner ought not to be prosecuted for offence under Section 68A of the Act. The petitioner ought to have filed the declaration under Section 187C of the Act within the prescribed period. For non filing of declaration, only penalty can be imposed and nothing more. As per Section 55A of the Act, the SEBI authorities would be a right authority to initiate prosecution for offence under Section 68A of the Act relating to issuance and transfer of securities and non payment of dividends - Criminal Revision Case is allowed.
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2022 (6) TMI 503
Dissolution application - HELD THAT:- This Court is convinced that just and reasonable circumstances exist for acceding to the dissolution prayer in the captioned dissolution application - the said company stands dissolved and OL stands discharged.
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2022 (6) TMI 502
Reduction of share capital - Section 66 of the Companies Act, 2013 - HELD THAT:- This Tribunal is of the view that it is just and proper to confirm the Reduction of Share capital of the Applicant Company as resolved by the members of the Company by passing a special resolution and by way of the consents in the form of affidavit. This Tribunal also approves the proposed form of Minutes to be registered under section 66(5) of the Companies Act, 2013. While approving the Reduction of share capital, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law - Application allowed.
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Securities / SEBI
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2022 (6) TMI 522
Maintainability of writ petition - alternative and efficacious mechanism - Inordinate delay in issue of Show cause notice (around 16 years) - Issuance of Global Depository Receipts ('GDRs') by the 4th respondent - As argued petitioners were non-executive directors of the said company between 1998 and 2005 and that in the said capacity of non-executive director, the petitioners were not involved in the day-to-day management and affairs of the said company In the year 2009, the said company amalgamated with the 4th respondent and is no longer in existence. It is the further case of the petitioners that over the past 14 years, they are in no way connected with the company or had any dealings with the company - HELD THAT:- There is no controversy about the fact that the petitioners are non-executive directors. Non-executive directors cannot be held vicariously liable for any act committed by the company unless they have any interest in the affairs of the company or they have involved themselves in the day to-day affairs of the company. However, it is the stand of the respondents that the petitioners were the Chairman/Member of the audit team, which is one of the very crucial teams in the whole of the organisational setup and without whose knowledge and concurrence financial transactions of the nature as pointed out in the show cause notice would not have taken place. However, the said fact is disputed by the learned counsel for the petitioners. Such being the case, this being a disputed question of fact, this Court cannot adjudicate the same in a petition under Article 226 of the Constitution. Therefore, this Court refrains itself from deciding the issue in exercise of its inherent jurisdiction, as this Court is precluded from deciding such disputed questions pertaining to the status of the petitioners as non-executive directors. In the case on hand, the GDRs pertain to the period 2002, whereas, action has been taken on the petitioners only in the year 2018, after a delay of 16 years. However, it is the case of respondents 1 and 2 that while the respondents were investigating certain other transactions pertaining to other companies, it came to light from the submissions made by Banco Efisa, with whom the company had the Credit Charge Agreement, that similar transaction of this nature has been done by the company in the year 2002, which fact was not within the knowledge of respondents 1 and 2 at any earlier point of time. Though it is pointed out that permission of SEBI is not required for floating GDRs, however, for finalising the process, certain procedural aspects codified by the Reserve Bank of India have to be followed of which one is information to be shared with SEBI. However, the petitioners dispute the said fact. The fact remains that respondents 1 and 2 have come out with explanation as to the reason for the delay in issuing the show cause notice. True it is that the delay is enormous, but coupled with the reason assigned for the delay in issuing the notice, this Court is of the considered view that the stand of respondents 1 and 2 with regard to the reason for the delay cannot be brushed aside and has to be taken into consideration holistically. In the case on hand, admittedly, as against the show cause notice issued by respondents 1 and 2, an alternative and efficacious remedy is available to the petitioners before SAT. The said fact is also not disputed by the petitioners. The only claim of the petitioners is that the show cause notice has been issued after an inordinate delay of about 16 years and that the petitioners being non-executive directors, vicarious liability cannot be fastened on them and, therefore, on those grounds, this Court, exercising its inherent jurisdiction could very well quash the show cause notice. As already pointed out above, Courts shall normally refrain from quashing the show cause notice at the initial stage, unless the said show cause notice has been issued without authority or that the same is patently illegal. In the case on hand, the show cause notice has been issued by the authority, who is competent to issue the same and that there is no illegality in the said show cause notice and, therefore, the ratio laid down by the Hon'ble Supreme Court in Mohd. Ghulam Ghouse case [ 2004 (1) TMI 378 - SUPREME COURT] stands squarely attracted to the case of the petitioner and, hence, it is incumbent on the petitioners to submit their explanation to the show cause notice and it would not be right on the part of this Court to assume the robes of the adjudicating authority at the initial stage of show cause notice. SAT is fully competent to decide the issue, including appreciation of disputed facts and the petitioners can place both oral and documentary evidence before SAT, which can go in-depth into the issue to render a finding. This Court, in any way, going into the issues, as raised above, would be nothing but usurping the powers of SAT, which has been vested in it on the basis of a statute. Therefore, the submission of respondents 1 and 2 that the petitioners should ventilate their grievances first before SAT deserves acceptance. One aspect, which lingers in the mind of this Court is the fact concerning inordinate delay in issuing the show cause notice. Though respondents 1 and 2 have placed certain reasons before this Court, which are the cause for the delay, however, this Court cannot brush aside the fact that the delay is so enormous that the reason assigned by respondents 1 and 2 could be taken merely at face value, without putting it through proper appreciation in the manner known to law. Therefore, this Court, in the interest of justice, feels that the interest of both the parties to the lis requires to be safeguarded. This Court while disposes of the writ petitions, is inclined to issue the following directions :- i) The show cause notice issued to the petitioners by respondents 1 and 2 is kept in abeyance for a period of twelve weeks from today. In the meantime, the petitioners are directed to file appropriate petitions/applications before SAT with regard to the issues raised before this Court. ii) On such application/petition being filed by the petitioners, the period of limitation, if any, shall be computed excluding the period when the matter was sub judice before this Court. iii) Further, on such application/petition being filed by the petitioners, SAT shall take up the matters and consider the same on merits and accordance with law and pass orders as expeditiously as possible. iv) Till the time granted by this Court for the petitioners to file petition/application before SAT, no coercive action shall be taken by the respondents 1 and 2 against the petitioners. v) The petitioners are permitted to canvass all the points that have been raised before this Court in the petition/application that may be filed before SAT.
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Insolvency & Bankruptcy
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2022 (6) TMI 501
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:- It is very much clear from the email dated 16.01.2018 and other emails exchanged between the parties that there existed a preexisting dispute between the parties. The Corporate Debtor had also claimed an amount form the Operational Creditor for bad quality of goods and also with regard to rate difference of the goods. It is also pertinent to note that the email dated 16.01.2018 of the Corporate Debtor is well before the issuance of the Demand Notice. The Corporate Debtor has also claimed certain amount from the Operational Creditor towards damages as mentioned in the email dated 16.01.2018. The defense of the Corporate Debtor is not spurious to escape the liability from payment but also requires investigation. As per the settled law laid down by the Hon ble Apex Court in Mobilox Innovations Private Limited V/s Kirusa Software Private Limited, [ 2017 (9) TMI 1270 - SUPREME COURT ] the Adjudicating Authority is to see at this stage whether there is plausible contention which requires further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is thus important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so the Court does not need to be satisfied that the defence is likely to succeed - So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the Adjudicating Authority has to reject the Application. There is no merit in the Company Petition and the same deserves to be dismissed.
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2022 (6) TMI 500
Maintainability of Interlocutory Application - joint/several liability of Respondents to pay the amount claimed in this application - fraudulent/wrongful trading - Section 66 of IBC, 2016 - HELD THAT:- The technical objection regarding the maintainability of this application is raised only for the sake of objecting and hence stands rejected. This application is thus maintainable. Joint/several liability of respondent - HELD THAT:- From the Forensic Audit it is clear that this is a fit case to direct the Respondents to make good the losses caused to the creditors of the Corporate Debtor as the transactions referred to in the earlier paragraphs are fraudulent transactions, holding that the Respondents are personally liable for such deliberate and wilful default. The Respondents 1 to 6 are jointly and severally responsible to pay Rs. 2,94,77,269/- with interest @ 12% per annum to the account of the Resolution Professional of the Corporate Debtor within two weeks from the date of receipt of this order. Application disposed off.
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2022 (6) TMI 499
Seeking release of Statutory electronic and physical Books of Accounts of the Applicants 1-3 to enable them to file their Income Tax and Goods and Service Tax Returns and other statutory filings with the respective departments - seeking release of 8 generators (which includes engine, alternator, and an enclosure), 2 Alternators and its Electrical panels purchased by the 3rd Applicant from 3rd party vendors, subject to submission of Form G and such other conditions - seeking release of generators and motors that belong to Bharat Sanchar Nigam Limited (BSNL), Fertilizers and Chemicals Travancore Ltd (FACT) and the Kerala Minerals and Metals Ltd. (KMML) who are the customers of the 2nd applicant which were brought to the factory for carrying out certain repairs, subject to submission of Form G - seeking release of Mobile Phone of the General Manager - seeking release of John Deere spare parts imported by the 1st Applicant. Whether the reliefs sought for in this application can be granted by this Tribunal? - HELD THAT:- This application has been filed by (i) Cornier Private Limited (ii) Cornier Power Systems Pvt. Ltd and (iii) M/s Whispower Sales Services Pvt.Limited. According to the constitution of applicants herein and the Corporate Debtor, it shows that in the Corporate Debtor Mr.Thomas George and Asha Mary Thomas have 49% shareholding, in 3rd applicant Whispower Generator Sales and Services (P) Ltd. the above persons have 100% shareholding, in 2nd applicant Cornier Power Systems Pvt. Ltd the above persons have 100% shareholding and in 1st applicant cornier Private Limited, the son of Mr.Thomas George and Daughter in Law of Thomas George has 100% shareholding. From the above, it is clear that they are related parties to the Corporate Debtor. This application has been filed by the applicants in order to flout the directions contained the above order. Since the Corporate Debtor s suspended Directors Mr. Thomas George and Mrs. Asha Mary Tomas are having 100% shares in the 2nd and 3rd applicant companies and their son and daughter in law having 100% share in the 1st applicant company, they are estopped from raising such a claim that they want to get the reliefs sought in this application. Strictly speaking the properties mentioned in his application has been admittedly purchased by the 3rd applicant, which is a related party to the Corporate Debtor as per Section 5(24A) of the IBC, 2016 and that the 3rd applicant did not raise such claims over these properties by failing an objection to the Section 66 application while it was adjudicated - Since no third party came forward with such a request and the that the applicants are related parties to the Corporate Debtor, the Liquidator need not release such properties, as those properties are of the Corporate Debtor and the Liquidator have full control over them. Since these applicants are related parties of the Cooperate Debtor, they are approaching with this application raising the issue that the generator and motors belong to BSNL, FACT, and KMML and they are the customers of the 2nd applicant and they brought it for repairs - there are no reason to interfere in the matter and grant any relief to the applicants - application dismissed.
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2022 (6) TMI 498
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors of the Corporate Debtor - amicable settlement arrived at between parties for repayment - HELD THAT:- This is a fit case for admission and proceed against the Personal Guarantors/ Respondents and initiate Corporate Insolvency Resolution Process. It is also seen from the report of Resolution Professional that he has not recommended for negotiation between the parties for arriving at an amicable settlement for repayment. Invoking Section 100 of IBC, 2016, the petition filed under the provisions of Section 95 of IBC, 2016 is admitted and the Insolvency Resolution Process against the Respondents/Personal Guarantors is initiated and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes the order on the repayment plan under Section 114, whichever is earlier, as provided under Sec 101 of IBC, 2016 - application allowed.
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2022 (6) TMI 497
Validity of Auction Sale - decrease in the value of property - commencement of amount of auction sale - HELD THAT:- On 25.09.2020 when the auction commenced the auction was attended by four persons by Mr. G. Subramanian and Mr. S. Ramalingam also participated. The upset price was reset with the level of Rs. 1,06,55,550/-. It is noteworthy that this upset price of Rs. 1,06,55,550/- is the same upset price on which the auction commenced on 23.09.2020. On perusal of the facts placed, it appears that the auction was not conducted in a transparent manner - Ld. Liquidator could have very well sold the property to the second highest bidder Mr. G. Subramanian for Rs. 1,55,55,550/- at his bid placed at 11:56 AM as per the auction record - No fresh e-auction notice was published by the Liquidator for holding e-auction on 25.09.2020. As late as 24.09.2020 the Liquidator was not clear what he is going to do which is apparent from the email written by the Liquidator to the Financial creditor - From the record of auction placed before us it is clear that the Liquidator allowed Mr. S. Ramalingam, the person who placed a wrong bid on 23.09.2020 and whose EMD the Liquidator had forfeited to participate in the auction held on 25.09.2020. The entire episode smacks of wrongdoings and mala fide on the conduct of the Liquidator in conducting the two auctions on 23.09.2020 and 25.09.2020 - The auction held on 25.09.2020 is hereby set aside. Attachment of property - HELD THAT:- The 1st Respondent has attached the property of the Corporate Debtor vide letter dated 03.02.2016 for the sales tax dues of Rs. 2,11,57,636/- pertaining to the Financial Years 2007-08 to 2014-15. The CIRP in respect of the Corporate Debtor was initiated on 03.12.2018. Thus, it could be seen that the attachment of the property of the Corporate Debtor by the 1st Respondent was made prior to CIRP period. Hence, the prayer of the Liquidator seeking removal of attachment on the property is not maintainable - Application dismissed.
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2022 (6) TMI 496
CIRP - resolution plan - claim of priority over other creditors - PF and allied dues, including interest of the employees - Rejection of revised claim - seeking direction to Respondents to pay off the revised claim of the Applicant on first priority from and out of the liquidation assets/estate of the Respondents - HELD THAT:- Any penal damages and interest levied by the PF Authorities under Section 14B 7Q of the EPF Miscellaneous Act, 1952 would form part of any amount due under Section 11(2) of EPF Miscellaneous Act, 1952. Under the said circumstances, the contention of the Learned Counsel for the Respondent that the Penal damages and Interest under Section 14B and 7Q of the EPF Miscellaneous Act 1952 levied by the Applicant, should be covered under the waterfall mechanism, goes against the well-established position of law. The PF authorities are entitled to the satisfaction of the full claim in relation to the PF dues including interest. Further, it is to be taken note that the entire amount of Rs. 28,43,387/- do not form part of the Liquidation estate - Application disposed off.
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2022 (6) TMI 495
Violation of intellectual property and proprietary rights - injunction restraining the Respondent, its agents, servants and any and all persons acting for and through them from manufacturing, repairing and supplying any and all products/parts of ReGen make WTGs in the Indian Subcontinent - direction to Respondent to hand over to the Applicant any and all purchase orders, invoices, work orders etc. raised for the purpose of manufacture and supply of goods and services to third parties for use in ReGen make WTGs - HELD THAT:- The CIRP was initiated against the Corporate Debtor in IBA/1099/2019, viz. Regen Powertech Private Limited on 09.12.2019 and Mr. Ebenezer Inbaraj was appointed as Resolution Professional. It is placed on record that Resolution Plan in respect of the said Corporate Debtor was approved by this Adjudicating Authority vide order dated 01.02.2022 in IA/460/2021 in IBA/1099/2019 and the approved plan is now in the implementation stage. This Adjudicating Authority has approved the Resolution Plan submitted in respect of Regen Powertech Private Limited on 01.02.2022, in the event of approval of the resolution plan all the prayers sought above turned infructuous and nothing survives in these applications - Application dismissed.
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2022 (6) TMI 494
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:- All the debit notes are entered in the ledger account based on which the Goods Service Department had issued two different show cause notices to the corporate debtor demanding differential input-tax credits availed on the basis of the invoices of the applicant. Further, the applicant had sent incorrect accounts by email dated 30.11.2018, 06.12.2018 and 13.12.2028 asking the respondent to confirm the same. The corporate debtor had categorically denied to accept the said accounts and in reply to various emails of the applicant, corporate debtor had raised dispute. It is clear that a dispute was in existence prior to issuance of the statutory demand notice under Section 8 of the Code. There is sufficient evidence to prove the pre-existence of dispute. Hon ble Supreme Court held in the matter of Mobilox Innovative Private Limited vz. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] that in case of genuine dispute raised by the corporate debtor, the application cannot be admitted The instant application cannot be considered for admission and needs to be rejected.
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2022 (6) TMI 493
CIRP - Application by the RP to protect the assets of Corporate Debtor - Separate Identity of Corporate Debtor - imposing vicarious liability of respondents - piercing of corporate veil by disregarding the false description of corporate debtor created by the holding company - validity of transactions including illegal inter-se sale of shares of the corporate debtor among respondents by the holding company - preferential, undervalued, fraudulent transactions or not - HELD THAT:- There is no illegal or fraudulent transaction done by the said respondents. When according to the applicant himself there was no asset of the corporate debtor, and the company had gone into losses and was left with no debtors, the applicant should have performed his duties assigned to him in the Code instead of flogging a dead horse. When the applicant had sought Police assistance, this Adjudicating authority had issued directions, but in spite of that the RP was not diligent enough to make use of it. Application dismissed.
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2022 (6) TMI 492
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Penalty/liquidated damages levied by Corporate Debtor or not - HELD THAT:- Considering the documents on record admittedly the respondent has never raise any dispute over quantum of claim or delay of applicant. The corporate debtor has failed to place any document on record to show that said imposition of penalty was ever communicated to the applicant before issuance of demand notice. No debit note in this regard was ever issued by respondent. The communications relied upon by respondent are related to period 2016-17, only in respect of delay in completion of project. No penalty or liquidated damages were levied by corporate debtor - Admittedly, in terms of agreement the corporate debtor is not entitle to impose any penalty to the applicant. The respondent even reconciled the accounts of applicant and failed to raise any dispute over claim of applicant during reconciliation. It is not the case of respondent that work order was never completed by applicant. The respondent has already made payments to applicant which shows that there is no defect in performance of contract other than delay in completion, that too a penalty of Rs. 14 lakhs was already levied by SCEI on applicant. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute as laid down by Hon'ble Supreme Court in the matter of Mobilox Innovative Private Limited vs. Kirusa Software Private Limited. [ 2017 (9) TMI 1270 - SUPREME COURT] Thus, it can be concluded that the applicant has established its claim which is due and payable by the corporate debtor and the corporate debtor has failed to prove existence of any preexisting dispute in respect of amount claimed by applicant - application admitted - moratorium declared.
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2022 (6) TMI 491
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:- A conjoint reading of the definition of the terms 'claim' (Section 3(6)); 'debt' (Section 3(11)); 'default' (Section 3(12)) and 'operational debt' (Section 5(21)) make it clear that there is an unpaid operational debt in the instant case and the claim is maintainable before this Tribunal as it arises from a contract in relation to provision of goods though it did not materialize in actual supply of goods. The Corporate Debtor is well aware of its liability to pay the same and its failure to do so is a 'default' in terms of Section 3(12) of the Code. The Petitioner issued Annexure - 11(F) Quotation dated 12.09.2018 to the Respondent-Corporate Debtor where under it was mentioned that out of the total cost of the products, the total advance payment required was Rs. 2,28,62,374.63/-. It was further mentioned therein under the payment terms, 'sixty days from the date of Invoice'. However, the Respondent-Corporate Debtor issued the Annexure - 11(G) Purchase Order dated 25.09.2018 for a total amount of Rs. 9,52,83,286/- out of which the NRE Costs are Rs. 6,21,055/- and under the payment term 'sixty days from the date of Invoice'. It is not in dispute that since the products were not supplied to the Respondent-Corporate Debtor, no Invoice was issued by the Petitioner and hence the payment term of 60 days from the date of Invoice has no relevance. The Petitioner-Operational Creditor failed to prove the debt and default on the part of the Respondent-Corporate Debtor - Petition dismissed.
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Central Excise
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2022 (6) TMI 490
Levy of penalty u/r 26 of CER - Availment of fraudulent refund under Notification No. 56/2002-CE dated 14.11.2002 - refund availed on the basis of falsified documents and issuance of invoices showing removal of finished goods, namely copper ingots - it is also alleged that no production activity had taken place in the factory premises and only paper transactions were undertaken - HELD THAT:- On the similar set of facts and circumstances, the department in OMEGA ROLLING MILLS P. LTD. VERSUS C.C.G. ST. PALGHAR. [ 2018 (7) TMI 2261 - CESTAT MUMBAI] proceeded against the buyer of the alleged goods M/s. Omega Rolling Mills Pvt. Ltd. On appeal against order dated 28.11.2017 passed by the learned Commissioner (Appeals), Mumbai, this Tribunal has held that based on the investigation conducted by the DGCEI in the premises of M/s VKM, the proceedings were initiated against the appellant, alleging fraudulent availment of Cenvat credit. Since, the order confirming the demands against M/s VKM has already been set aside by the Tribunal vide order on 23.05.2018 on the ground that it had manufactured the impugned goods in its factory, I am of the view that the adjudged demands confirmed against the appellant cannot be sustained for judicial scrutiny. From the above observations made by the Tribunal, the issue is crystal clear that in the present case, the goods were in fact supplies by the appellant M/s. V.K. Metal Works to M/s. Omega Rolling Mills Pvt. Ltd. and the transporter M/s. Kanpur Kashmir Roadways was engaged for facilitating transportation of goods from the appellant s factory to the buyers destination. Hence, the imposition of penalty under Rule 26 ibid on both the appellants cannot be sustained for judicial scrutiny. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2022 (6) TMI 489
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - service of notice upon the respondents/accused persons - rebuttal of presumptions - Section 138 of NI Act - HELD THAT:- The issue as to whether a notice issued upon the director/authorized signatory of the company can be deemed to be a valid notice under Section 138(b) of the Negotiable Instruments Act fell for consideration in BILAKCHAND GYANCHAND CO. VERSUS A. CHINNASWAMI [ 1999 (3) TMI 620 - SUPREME COURT] and RAJNEESH AGGARWAL VERSUS AMIT J. BHALLA [ 2001 (1) TMI 855 - SUPREME COURT] . In the instant appeal, however, it is not the question to be decided as to whether service of notice upon the director and authorized signatory of the company is sufficient to bind the company for liability under Section 138 of the Negotiable Instrument Act. Unlike Himanshu (supra) the appellant/complainant issued notices to both the respondent/company and accused No.2 being the authorized signatory on behalf of the respondent/company. The respondent during trial of the case failed to prove service of notice upon accused No.2. So far as accused No.1 is concerned, it is found from the copy of the notice that the name and address of accused No.1/company was correctly recorded in the demand notice. The postal track report shows that it was served upon the accused No.1/company. During trial of the case the defacto complainant has proved the copy of notice, postal receipt and the postal track report. The postal track shows that the demand notice was served upon the accused No.1/company on 12th April, 2013. The accused however did not examine any witness to rebut the presumption of due service of notice under Section 27 of the General Clauses Act. In the instant case it is found from the copy of the notice that it was addressed respondent No.1/company in its correct address. The postal track report shows that it was duly served upon the respondent No.1/company. Therefore, the court is free to presume that the notice was duly served upon the accused No.1/company under the provision of Section 27 of the General Clauses Act - The question as to whether it was sent to the accused/company or that it was served or not in correct address is a question of fact to be determined from the copy of the notice and the postal track report. The copy of the notice, it is recorded hereinabove contains correct address of the accused No.1/company. The postal track report shows that it was duly served upon the accused/company. There are no alternative but to hold that the demand notice was duly served on 12th April, 2013 to the accused No.1/company - appeal allowed.
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2022 (6) TMI 488
Maintainability of writ petition - Alternative appellate remedy - Allegation of obtaining mining lease by by mis-utilizing the Constitutional posts - violation of Section 9-A of the Representation of Peoples Act, 1951 - whether the respondent no.7 has suffered any disqualification by executing the mining lease is pending before the Election Commission of India? - HELD THAT:- This Court, in order to answer the issue of credentials of the petitioner, has gone across the affidavit and supplementary affidavits filed by the writ petitioner in the writ petitions in order to scrutinize as to whether such credentials have been given or not. From its perusal, it is evident that the petitioner has disclosed that the petitioner is tax payer and engaged in business for his livelihood. The petitioner has no personal interest either direct or indirect in the subject matter of instant Public Interest Litigations. The petitioner obtained information through R.T.I Act and he filed several Public Interest Petitions before this Court, details of which, have been given in preceding paragraphs. It further appears from the supplementary affidavit dated 21.04.2022, in paragraph 3 that prior to him one Late Diwan Indranil Sinha had sent representations with all the details of the companies and documents before the Director, C.B.I as also to other constitutional bodies. Whether, merely on the ground of non-compliance of technicality for filing the Public Interest Litigation, should the Public Interest Litigation be thrown out by the High Court even if incriminating materials have surfaced? - HELD THAT:- Reference in this regard may be made to Rule 3 of the Rules, 2010 wherein it has been stated that only those matter shall be treated as Public Interest Litigation, which involves substantial public interest at redressal of genuine public harm or public injury and for this the Bench hearing the matter shall ensure that there is no personal gain, private motive or oblique motive behind filing the Public Interest Litigation - prima facie consideration for furnishing such detail, the genuineness of public harm or public injury as also issue of personal gain or oblique motive is required to be seen. This Court, therefore, is of the view that even if there is criteria under rule 4 or 5 of the Rules, 2010, and the same has not strictly been followed but if there is prima facie material available indicating genuine public interest, the writ petitions should not and cannot be thrown away. The petitioner can be ousted but not be genuine issues raising the public cause. Doing that will frustrate the cause of justice - The provisions contained in the Rules 6-A and 9 goes to show that it has been carved out as exception to the earlier part of the Rules, i.e., notwithstanding to the provisions contained in Rule, 3, 4, 4-A, 4-B. Thus, the provisions under Rule 3, 4, 4-A and 4-B etc. have to be treated to be directory as it cannot come in the way of exercise of power under Article 226 as per Rule 9. This Court, therefore, is of the considered view that the allegation of mala fide merely because father of writ petitioner was a witness in a criminal case in which he was convicted, however, the judgment of conviction and the order of sentence passed by the trial Court were reversed by the High Court, which was finally affirmed by the Hon ble Supreme Court, is not sustainable. Herein, allegation as per the pleadings available on record is serious in nature, i.e. investment of ill-gotten money through various sources, which is allowed to be laundered at the cost of society jeopardizing interest of the people at large - the issue pertaining to approaching this Court without exhausting the remedy available under the Code of Criminal Procedure is not worth to be considered. This Court, after having answered the issue, as framed by this Court, and on the basis of discussions made, is summing up its view and is of the considered opinion that the writ petitions cannot be thrown away on the ground of maintainability. Petition admitted - To be heard on merit.
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2022 (6) TMI 487
Dishonor of Cheque - Loss of cheque - rebuttal of presumption - convicting and sentencing the petitioner for the offence punishable under Section 138 of the N.I. Act - requirement of interference of this Court by invoking the revisional jurisdiction? - HELD THAT:- I t is clear that though the accused disputed the signature in the cross-examination that signature not belongs to him, the signature available in the vakalath was confronted and he admits the same. It is important to note that though he contends that the notice was not served on him personally, but he categorically admits that notice was taken by his office incharge officer and handed over the notice to him and the same also bears the signature of incharge officer. When such being the case, the petitioner ought to have given the reply to the notice and no such reply was given. In the cross-examination of P.W. 1, specific defence was taken that one Devraj Urs, who is the relative of P.W. 1 had given the cheque in favour of the complainant and the same has been misused since Devraj Urs handed over the said cheque and got filed this case and the same has been denied. No doubt, in the income tax declaration, P.W. 1 has not declared for having paid the money. But in the cross-examination, P.W. 1 admits that he has not produced any documents to show that he is paying income tax. But he admits that he is an income tax assessee. But non-filing of the document for having paid income tax will not take away the case of the complainant and the petitioner has to explain how the subject matter of cheque had gone to the hands of the said Devraj Urs and what made him to give the said cheque - It is only stated that Devraj Urs had taken away several cheques belonging to him and no doubt, the wife of the petitioner had given the complaint in terms of Ex. D.2, but she has not been examined before the Trial Court and both the Courts have taken note of that if she had been examined before the Trial Court, an opportunity was given to the complainant to testify the document of Ex. D.2. The other contention of the petitioner is that P.W. 1 has admitted the relationship with Devraj Urs and mere admission that Devraj Urs is the relative of the complainant does not mean that Devraj Urs had given the cheque in favour of the complainant. I have already pointed out that contra defence was taken in the chief examination and cross-examination and even the petitioner had gone to the extent of denying his signature available in Ex. P.1 and it is not his case that the signature not belongs to him and nowhere in the affidavit he has stated that the said signature not belongs to him, but only in the cross-examination he says the same - there are no force in the contention of the learned counsel for the petitioner to accept the argument that the petitioner has probabalised his case. Loss of cheque - rebuttal of the presumption - HELD THAT:- The Apex Court in the judgment in the case UTTAM RAM v. DEVINDER SINGH HUDAN AND ANOTHER [ 2019 (11) TMI 550 - SUPREME COURT] , held that inconsistencies regarding the amount due, not made out, as amount due stood crystallized in written document against which cheque in question was issued. The defence that the cheque book was lost/stolen or that cheque was misused was completely without basis. The contention of the petitioner cannot be accepted regarding source of income and non-production of income tax declaration regarding payment and the very defence that cheque was stolen was not proved. Apart from that, when the notice was served, no reply was given and he kept quiet and during the course of trial afterthought inconsistent defence was taken and hence there are no merit in the petition. Both the Courts have given anxious consideration with regard to defence which have been taken. There are no error committed by both the Courts. In order to invoke the revisional jurisdiction, there must be an error in the finding of the Trial Court and the Appellate Court and if any perverse order is passed against the cogent evidence available on record, then this Court can exercise the revisional jurisdiction - petition dismissed.
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2022 (6) TMI 486
Rejection of Bail application - Smuggling - Heroin - narcotic substance - case of petitioner is that the entire case of the prosecution is based on suspicion - HELD THAT:- There is sufficient material on record to deny the discretionary relief of bail to the petitioner. Much is sought to be made of the five Ghol fish netted by the petitioner and his crew members over five days of remaining on the high seas by referring to the high market value of the prize catch. The petitioner would be entitled to justify his presence in the fishing boat, at the scene of crime which is sought to be described as a sheer coincidence during the trial. The explanation offered by the petitioner of having responded to the call Mohammed-Mohammed- Ramzan-Ramzan on Channel No.8, instead of Channel No.16 which is the specifically earmarked channel for communication with fishermen and for Ship-to-Ship contact, would also be available to him at that stage. But at the threshold, this appears to be a case where the petitioner has been fishing in troubled waters and as per the respondent No.1/NIA, has got caught in his own net. Records reveal that the chargesheet has been filed by the respondent/NIA on 18.12.2020. As per the said chargesheet, nine Pakistani nationals are still absconding. Further, investigation in the case is still pending. The petitioner has been chargesheeted for a serious offence where the minimum punishment prescribed is of ten years - discretion need not be exercised in favour of the petitioner by interfering with the impugned order, at present. Special leave to appeal is dismissed.
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