TMI Tax Updates - e-Newsletter
June 16, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. 44th GST Council Meeting highlights dt. 12.06.2021

   By: CSLalit Rajput

2. Managing the Taxable Income of Corporates

   By: Manish Gupta

3. BANK’S GOVERNANCE VIA AUDITORS APPOINTMENT

   By: Dr. Sanjiv Agarwal

News

1. India’s Foreign Trade: May 2021

2. Shri Piyush Goyal interacts with the Industry on PLI Scheme on White Goods;

Notifications

Customs

1. 33/2021 - dated 14-6-2021 - Cus

Seeks to rescind notification No. 30/2021-Customs, dated 01.05.2021.

GST

2. 05/2021 - dated 14-6-2021 - CGST Rate

Seeks to provide the concessional rate of CGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021

3. 04/2021 - dated 14-6-2021 - CGST Rate

Seeks to amend notification No. 11/2017- Central Tax (Rate) so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021.

4. 05/2021 - dated 14-6-2021 - IGST Rate

Seeks to provide the concessional rate of IGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021.

5. 04/2021 - dated 14-6-2021 - IGST Rate

Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021.

6. 05/2021 - dated 14-6-2021 - UTGST Rate

Seeks to provide the concessional rate of UTGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021.

7. 04/2021 - dated 14-6-2021 - UTGST Rate

Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify GST rates of various services as recommended by GST Council in its 44th meeting held on 12.06.2021

GST - States

8. 05 /2021 – State Tax (Rate) - dated 14-6-2021 - Bihar SGST

Seeks to provide the concessional rate of BGST on Covid-19 relief supplies, up to and inclusive of 30th September 2021

9. 04 /2021 – State Tax (Rate) - dated 14-6-2021 - Bihar SGST

Seeks to amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

10. 38/1/2017-Fin(R&C)(200)/1469 - dated 9-6-2021 - Goa SGST

Goa Goods and Services Tax (Fourth Amendment) Rules, 2021.

11. 16006-FIN-CTI-TAX-0002/2020 - dated 11-6-2021 - Orissa SGST

Amendment in Notification No. 19869-FIN-CT1-TAX-0022/2017, dated the 29th June, 2017

12. 16002-FIN-CTI-TAX-0002/2020 - dated 11-6-2021 - Orissa SGST

Amendment in Notification No. 11238-FIN-CT1- TAX-0043-2017. dated the 30th March, 2019

13. 15998-FIN-CTI-TAX-0002/2020 - dated 11-6-2021 - Orissa SGST

Seeks to amend notification No. 19829-FIN-CT1-TAX- 0022/2017, dated the 29th June, 2017

14. F.12(77)FD/Tax/2014-26 - dated 14-6-2021 - Rajasthan SGST

Notification regarding 100% rebate on tax for the purchase of Sonamukhi in the course of export outside India

15. F.12(1)FD/Tax/2021-28 - dated 14-6-2021 - Rajasthan SGST

Seeks to provide concessional GST on specified goods, up to 30.09.2021

16. F.12(1)FD/Tax/2021-27 - dated 14-6-2021 - Rajasthan SGST

Seeks to amend notification No. 49/2017- State Tax(Rate) dated 29.06.2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DCR2/CIR/P/2021/576 - dated 15-6-2021

Relaxation from the requirement of minimum vesting period in case of death of employee(s) under SEBI (Share Based Employee Benefit) Regulations, 2014

Highlights / Catch Notes

GST

• Tax Rates for "Ashiana Shubam - Phase IV" Construction in Chennai: 3.75% CGST & 3.75% SGST Under SAC 9954.

  Case-Laws - AAR : Classification of services - Works Contract - activities of construction - The Proposed Modus operandi for construction of ‘Unit’ which is ‘other than affordable residential apartments’ by the applicant in the RREP promoted by them, namely, ‘Ashiana Shubam -Phase IV’ in Maraimalai Nagar Chennai is classifiable under SAC 9954 as ‘Construction Service’ and the applicable rate of tax is CGST @ 3.75% and SGST @ 3.75% - AAR
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• Advance Ruling Application on GST Rate Inadmissible Due to Prior Classification u/s 60 of the Act.

  Case-Laws - AAR : Scope of Advance Ruling application - Classification of goods - it is seen that the classification of the a products and the applicable rate under GST has been decided vide proceedings under Section 60 of the Act, in the case of the applicant. - As per first Proviso to Section 98 (2) of the Act, the present application seeking ruling on the applicable rate on the same products for which the classification and applicable rate stands decided, is not admissible - Application not maintainable. - AAR
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Income Tax

• No Penalty for Incorrect Tax Claims u/s 271(1)(c) Due to Lack of Findings on Concealment or Inaccuracy.

  Case-Laws - AT : Levying the penalty u/s.271(1)(c) - Just for making wrong claims made advertently or inadvertently, therefore, penalty cannot be levied u/s.271(1)(c) of the Act and further the Lower Authorities have not given any findings regarding either “concealment of income” or “furnishing of inaccurate particulars of income” by the assessee. We are of the considered view, this is not a fit case for imposing penalty - AT
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• Exemption Denied: Taxpayer Liable for Long-Term Capital Gains Tax Without Specific Notification u/s 96 RFCTLARR Act 2013.

  Case-Laws - AT : LTCG on compulsory acquisition - In the absence of notification the benefit under section 96 of RFCTLARR Act 2013, cannot be extended to the assessee. In our view the exemption is required to be specifically granted by the statute and it cannot be inferred or drawn. It is the duty of the assessee to make out his case unequivocally, if wanted to get the benefit of exemption that the exemption provided under section 96 of the RFCTLARR Act 2013 is applicable to the assessee.Therefore, the assessee is not liable to pay income tax for long-term capital gain. Needful has not been done by the assessee either before the lower authority or before us. - AT
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• CIT(A) Oversteps Authority by Directing AO to Issue Notice u/s 148; Direction Set Aside for Exceeding Jurisdiction.

  Case-Laws - AT : Powers conferred to CIT(A) u/s 251 - CIT(A) power to direct the AO for issuance of notice u/s 148 - In the present case, Ld.CIT(A) annulled the assessment and further directed to issue notice u/s 148 of the Act. No such power has been granted by the Act, therefore, the impugned direction of Ld.CIT(A) in excess of the jurisdiction conferred by section 251 of the Act, hence the same is set aside. - AT
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• Penalty Waived for Non-Compliance with Section 92D, Rule 10D Due to Valid Justifications u/s 273B.

  Case-Laws - AT : Penalty levied u/s. 271G - nternational transactions - assessee ignoring the provisions of Section 92D of the Act as well as Rule 10D of the Income Tax Rules - Section 273B of the Act provides for reasonable cause and if that is justified, penalty/s. 271G of the Act may not be imposed and when this opportunity is given to the assessee by the statutes itself and the assessee has explained the reasonable causes which was accepted by the Ld. CIT(Appeal) and after perusing such reasons, we are in conformity with the findings of the Ld. CIT(Appeals). - AT
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• Section 11 Exemption Upheld: Commissioner Overturns A.O.'s Disallowance on Salary Payments to Specified Persons Lacking Evidence of Excess.

  Case-Laws - AT : Exemption u/s 11 - salary payments to the specified persons u/s 13(3) - As the salary had been paid to the specified persons against the services provided by them the income from salary had been shown in their individual return of income and nothing is brought on record by the A.O. to substantiate that any extra salary was paid for the administrative function and that the salary was excessive in comparison to any similar case, therefore, the disallowance made by the A.O. was rightly deleted by the ld. CIT(A). - AT
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• Revenue's Challenge on Section 263 Fails as Assessee Firm Complies with Section 142(1) Notice, Assessment Decision Upheld.

  Case-Laws - AT : Revision u/s 263 - The revenue is disputing on non conduct of enquiry, but we find the assessee firm has discharged its burden of proof on submitting the vital requisite details called for by the assessing officer by issue of statutory notice U/sec 142(1) of the Act along with the questioner which cannot be over looked. Since the information was available with the A.O in the course of the assessment, the A.O. has considered the facts, submissions and evidences filed and took a view. - AT
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Indian Laws

• Cheque Dishonor Complaint Filed Timely; Notice Service Validity to be Evaluated by Trial Court, Not u/s 482 Cr.P.C.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - presumption of service of notice - The complaint should have been filed by 03.12.12, Admittedly, the complaint was filed on 19.11.2012 and therefore, at this stage, it cannot be said that no proceedings under Section 138 of the Act could be drawn against the applicant. The Magistrate at the stage of summoning has only to see whether a prima facie case is made out or not - The factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court and not by this Court under the jurisdiction conferred by Section 482 Cr.P.C. - HC
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• Court Rules in Favor of Complainant in Cheque Dishonor Case; Accused Fails to Rebut Presumption of Guilt.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - It is true that the burden of proof on the accused to rebut the presumption is only of preponderance of probabilities and not proof beyond reasonable doubt - But even then the accused has failed to probabalise his defence and therefore, the complainant is successful in proving the guilt of the accused beyond reasonable doubt. - HC
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Service Tax

• Interest Liability on Delayed Refund Starts After 3 Months, Independent of Authority's Decision, As Per Section 11BB.

  Case-Laws - AT : Interest on delayed refund - relevant date - The non-payment of refund to the applicant claimant within three months from the date of such application or in the case governed by proviso to Section 11BB, non-payment within three months from the date of the commencement of Section 11BB brings in the starting point of liability to pay interest, notwithstanding the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant needs no interference. - AT
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Case Laws:

• GST

• 2021 (6) TMI 481
  Classification of services - Works Contract - Composite supply - activities of construction carried out by the applicant for its customer under the Construction Agreement - classifiable under Heading 9997, and chargeable to CGST E.1 9% under S.No.35 of Notification No.11/2017-CT (Rate) dated 28.06.2017 or otherwise? - HELD THAT:- Works Contracts were subjected to Sales Tax on the Value of Goods involved in the works and on the labour and Service portion of the same contract, service tax was levied in the Pre-GST Era. These very contracts are treated as supply of service in the GST Era. Going by the extracts of the Minutes of the council meetings, it is evident that the carve out of Para 6 of Schedule II to the Act was only to avoid any legal challenge in view of the same types of contracts considered for taxation under the provisions of Laws under PRE-GST and under GST. This, in no way can be said to establish that Para 5 does not extend to cover composite supplies as claimed by the applicant and this contention holds no merit. In the case at hand, the applicant supplies the prospective buyer, the construction service of the Unit intended for purchase by the buyer in the RREP being developed/ constructed by the applicant and the contract, i.e., the construction agreement is entered into for construction of the said Unit of the project developed by them - in the facts of the case, the applicant being a Promoter of the approved RREP, the construction of a Unit in the said RREP is an activity of Construction of part of the building with the intention for sale. Classification of services - HELD THAT:- The classification of service may be Construction, erection, commissioning, etc of the immovable property and the contract for execution may be a works contract, in which, while providing the service, there is a transfer of property in goods. The mode of supply does not determine the classification of Service. Classification of Service is to be done based on the Scheme of Classification and there are no reason to agree to the contention of the applicant that the service provided by them is not classifiable under SAC 9954 - In the case at hand, the applicant develops RREP along with all the infra structures and constructs the Units of the RREP, i.e., construction of single /multiple dwelling unit and as such it clearly falls under construction services and the contention of the applicant to classify the same under 9997 is thus not entertainable and not tenable under law - In the case at hand, the most specific description being construction services, the subject activity falls under the SAC 9954 and therefore, the classification of service is Construction Service only, for the purpose of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended. The rate for construction of Other than affordable residential apartments , i.e., Unit in the proposed RREP - Ashiana Shubam - Phase IV , by the applicant, promoter of the RREP, is as specified under SI.No. 3 (ia) which is 3.75% CGST and 3.75% SGST and the applicant has to satisfy the conditions stipulated in column (5) of the said entry.

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• 2021 (6) TMI 480
  Maintainability of application - scope of Advance Ruling application - Classification of goods - rate of tax - Dry Coconut (Edible) - Copra (Dry Coconut for milling) - taxable under HSN 08011920 and HSN 1203 respectively or not - HELD THAT:- The first proviso to Section 98(2) makes an application ineligible for admission if the Authority finds that the question raised in the application is already pending or decided in any proceedings in the case of the applicant under any provisions of this Act. It is evident that the classification of the products and the applicable rate under GST, has been taken up in depth while deciding the application made by the applicant seeking Provisional Assessment under Section 60 of the CGST Act, 2017 vide ARN No. ARNAD330820002915E dated 16-08-2020 before the Jurisdictional Authority - it is seen that the classification of the a products and the applicable rate under GST has been decided vide proceedings under Section 60 of the Act, in the case of the applicant. As per first Proviso to Section 98 (2) of the Act, the present application seeking ruling on the applicable rate on the same products for which the classification and applicable rate stands decided, is not admissible - Application not maintainable.

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• 2021 (6) TMI 478
  Grant of Anticipatory Bail - allegation of tax evasion is against the company, M/ Mohan Milk Foods Pvt. Ltd. - Applicants are principal officers of that company or not - HELD THAT:- At present, since the applicants are not shown to be principal or other officers of the company and the director of the company has been granted anticipatory bail, the applicants are found entitled to interim protection. Applicants are directed to be released on interim anticipatory bail till the next date fixed, on their furnishing a personal bond of Rs. 50,000/- each with two sureties of the like amount to the satisfaction of the Station House Officer of the police station concerned OR before the court concerned subject to conditions imposed - application alowed.

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• 2021 (6) TMI 473
  Seeking permission to pay in tranches - financial difficulty on account of coronavirus - appellant paid part of demand and for rest he is seeking time to pay - HELD THAT:- A little leeway should be given to the petitioner. The petitioner is directed to deposit Rs. 2,75,00,000/-, on or before 05.07.2021 - Insofar as the last tranche is concerned, directions qua the same will be issued on the next date of hearing. List the matter on 06.07.2021.

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• 2021 (6) TMI 472
  Seeking release of seized cash - requirement to issue notice u/s 67(7) of the Central Goods Services Tax Act, 2017 - HELD THAT:- Mr. Sharma has relied upon the definition given in Section 2(52) of the CGST Act, 2017 in support of his contention that the expression goods does not include money. List the matter on 19.07.2021.

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• 2021 (6) TMI 471
  Refund of IGST - Refund of Drawback - HELD THAT:- Issue notice - The final relief sought in the writ petition is similar to the relief sought in the captioned application, and hence, the same cannot be granted, at this stage - Application disposed off. List the matter on 27.07.2021.

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• 2021 (6) TMI 470
  Constitutional validity of Sections 69 and 132 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Interestingly, the petitioner, in the present writ petition, is shown as a resident of Delhi, whereas in the writ petition filed before the Punjab and Haryana High Court, the petitioner is shown as a resident of Ludhiana - Mr. Manish says that the two actions are different. This and other aspects will be examined only after the order dated 12.03.2021, passed by the Punjab and Haryana High Court, in the aforementioned writ petition, is placed on record - List the matter on 19.07.2021.

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• Income Tax

• 2021 (6) TMI 479
  Advance ruling application u/s 245R - Income taxable in India - Services under SFS - System fund support services agreement and RSF - Reservation system facility agreement - amounts received by the applicant from ABC India pursuant to system fund support service agreement for provision of marketing, frequency marketing programme ( ABC Rewards ), distribution marketing and pursuant to reservation system facility agreement for reservation system facility - applicant was providing various services to Indian hotels relating to hotel management, marketing and reservation related services under the hotel management agreement and the consideration received in respect of such services were held taxable in India as royalty/fee for included services - HELD THAT:- The payment for all these services was in the form of contribution to systems fund which the owner was obliged to discharge. Clause 10.1 of the agreement stipulated that For the duration of the term, owner shall pay the licensor, or if directed by licensor, its affiliates, the system contribution . As stated by the applicant the services in respect of system funds were provided by the applicant directly to the respective Indian hotels. It was also mentioned in the agreement that manager, licensor and their affiliates derive neither income nor profit from the system fund contributions. In view of the above facts, it is crystal clear that the nature of services rendered by the applicant to Indian hotels under earlier tripartite hotel management agreement was identical with the nature of services as contemplated in the SFS and RSF agreements with ABC India. It is relevant to consider that the applicant was not a signatory to the tripartite agreements entered into prior to April 1, 2019 and the applicant was also not a signatory to the bipartite agreement between ABC India and Indian hotel owner entered into after April 1, 2019. Prior to April 1, 2019 the applicant was providing the services to Indian hotels as an affiliate for which it was receiving the payments directly. The same arrangement continued even after April 1, 2019 and the applicant was providing services to Indian hotels as an affiliate/sub-contractor. The only difference was in the mode of payment of fee for these services. While the payment was being received by the applicant from the hotel owner directly under the previous arrangement, the payment after SFS and RSF was to be routed through ABC India. The precise reason for the change of this model was to attribute the intragroup costs associated with such intra-group profits as mentioned in clause (H) of SFS. As informed by the Revenue the additions made by the Assessing Officer were confirmed by the Commissioner of Income-tax (Appeals) and the issues are now pending before the learned Income-tax Appellate Tribunal and this fact has not been disputed by the applicant. It is found that the questions raised in the present application are in respect of the issues which were already pending before the Income-tax authority in different years. Therefore, the bar under clause (i) of the proviso to section 245R(2) is found squarely attracted in this case. In the present case, the issues pending before the Department were not in respect of different entity, but in respect of the applicant s own case in the earlier years. Further, the issue to be considered here is not in respect of any transaction but about the nature of services rendered. As already mentioned earlier the nature of services rendered by the applicant prior to April 1, 2019 were identical with the services contemplated in SFS and RSF, which is also evident from the questions as raised by the applicant before the appellate authorities. It is found that the issues involved in the questions raised in the present application filed before us were already pending before the Income-tax authority and the bar in terms of clause (i) of the proviso to section 245R(2) is found attracted in this case. Therefore, the application is not admitted and consequently rejected.

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• 2021 (6) TMI 463
  Exemption u/s 11 - granting registration u/s.12AA - HELD THAT:- In the interest of justice, one more opportunity should be granted to the assessee since the mandate of Section 12AA of the Act requires that the Ld. CIT(Exemption) should satisfy himself regarding objects of the trust and genuineness of the activities of the trust. That when the requisite details, once it would be filed by the assessee, in such circumstances, CIT(Exemption) would be able to adjudicate the issue on merits. With these observations, we set aside the order of the Ld. CIT(Exemption) and remand the matter back to his file to re-adjudicate while complying with the principles of natural justice and as per law. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (6) TMI 461
  Levying the penalty u/s.271(1)(c) - deduction u/s.54F of the Act was not correct claim as per observation of the Department - HELD THAT:- As assessee had declared the full facts; the full factual matrix or facts were before the AO while passing the assessment order. It is another matter that the claim based on such facts were found to be inadmissible. This is not the same thing as furnishing inaccurate particulars of income as contemplated under Section 271(1) (c). It is settled proposition of the law that a misconceived or wrong claim for deduction or exemption in the return of income filed does not automatically attract penalty under Section 271(1)(c) - Just for making wrong claims made advertently or inadvertently, therefore, penalty cannot be levied u/s.271(1)(c) of the Act and further the Lower Authorities have not given any findings regarding either concealment of income or furnishing of inaccurate particulars of income by the assessee. We are of the considered view, this is not a fit case for imposing penalty - Decided in favour of assessee.

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• 2021 (6) TMI 460
  Deduction u/s 80P - interest income earned on fixed deposits - HELD THAT:- We notice that an identical issue has been considered by the co-ordinate bench in the case of Karkala Co-op S Bank Ltd [ 2021 (2) TMI 854 - ITAT BANGALORE] wherein an identical issue has been restored to the file of AO for examining it afresh. Since the facts are identical, following the decision rendered by the co-ordinate bench, we restore this issue to the file of the AO with similar directions. In the instant case, the assessee has earned both interest income and dividend income. The assessee is entitled for deduction of proportionate cost, administrative and other expenses. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with similar directions. Appeal of assessee is treated as allowed for statistical purposes.

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• 2021 (6) TMI 459
  LTCG on compulsory acquisition - compensation received in lieu of land compulsorily acquired by the government - compensation received to appellant against the acquisition taken exempt in the return of income filed being received to appellant as per RFCTLARR Act - HELD THAT:- It is abundantly clear that no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under RFCTLARR Act. The exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax exemption provided under the existing provisions of Income-tax Act, 1961. This clearly meets the argument of the assessing officer the CIT(A) that exemption under the RFCTLARR Act , are even applicable to non-agricultural. The reading of the provisions of section 105(3) read with fourth schedule made it abundantly clear that the provisions of RFCTLARR Act2013, shall be applicable to the enactments mentioned in fourth schedule, if, the central government, within one year of passing of the Act, issues the notification in that regard mentioning therein that RFCTLARR Act 2013shall apply with such exceptions or modifications to enactment namely The National Highways Act, 1956 (48 of 1956). In the absence of notification the benefit under section 96 of RFCTLARR Act 2013, cannot be extended to the assessee. In our view the exemption is required to be specifically granted by the statute and it cannot be inferred or drawn. It is the duty of the assessee to make out his case unequivocally, if wanted to get the benefit of exemption that the exemption provided under section 96 of the RFCTLARR Act 2013 is applicable to the assessee.Therefore, the assessee is not liable to pay income tax for long-term capital gain. Needful has not been done by the assessee either before the lower authority or before us. As mentioned by the assessing officer in the assessment order, the acquisition award under the National Highway authority act 1956 was passed on 24.2.2014, though cheques were received on 27/1/2015. In our considered opinion, the chargeability of the income is required to be determined in accordance with section 4 and 5 of the Income Tax Act 1961 - Decided against assessee.

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• 2021 (6) TMI 458
  Powers conferred to CIT(A) u/s 251 - CIT(A) power to direct the AO for issuance of notice u/s 148 - whether CIT(A) exceeded its jurisdiction by directing the Assessing Officer to issue notice u/s 148 of the Act for Assessment Year 2011-12 after failing procedure laid down u/s 147, 148 and 151? - HELD THAT:- Ld.CIT(A) is empowered to confirm, reduce, enhance or annul the assessment. In the present case, Ld.CIT(A) annulled the assessment and further directed to issue notice u/s 148 of the Act. No such power has been granted by the Act, therefore, the impugned direction of Ld.CIT(A) in excess of the jurisdiction conferred by section 251 of the Act, hence the same is set aside. Thus, grounds raised by the assessee in this appeal are allowed.

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• 2021 (6) TMI 457
  Business loss v/s speculative loss - loss derived on currency derivative transaction as business loss - loss of the assessee as business loss derived by the assessee on currency derivative transaction - HELD THAT:- We find that the ld. CIT(A) had followed this Tribunal order rendered in assessee s own case for A.Y.2013-14 [ 2018 (1) TMI 938 - ITAT MUMBAI] and had held that the loss is a regular business loss and not speculative in nature. No other contrary decision was pointed out by the revenue before us on the impugned issue. We find that the decision rendered for A.Y. 2013-14 by this Tribunal shall apply mutatis mutandis to the year under consideration also in view of identical facts, except with variance in figures. Hence we do not find any infirmity in the said order. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2021 (6) TMI 456
  Addition u/s.40(a)(ia) in hire charges - HELD THAT:- AO after considering bill submitted by the assessee has accepted claim of hire charges and out of total expenses incurred for the year has allowed deduction for an amount - However, balance amount was disallowed in absence of bills and vouchers. The assessee has filed a paper-book which contains copies of bills issued by M/s. Vardhman Diesel Generators, as per which the assessee has submitted bills and vouchers for total expenditure incurred by the assessee - Therefore, we are of the considered view that the AO was erred in disallowing part of expenses even though he has accepted claim of the assessee regarding part of expenses and has also accepted legal position that there is no requirement of deduction of tax at source on such payment. Disallowance of External service charges - HELD THAT:- It is an admitted fact that one cannot make profit by himself. Therefore, any payment by a Branch office to its Head office is a payment by self, which cannot be considered as a payment to a third party nor bring said payment within the ambit of TDS provision. But, the fact remains that assessee has to file necessary evidences including bills and vouchers to prove that said payment is reimbursement of expenses to its Head office for allocation of common expenses. In this case, the AO as well as the ld.CIT(A) has brought out clear facts to the effect that the assessee has failed to file necessary evidences including agreement between parties and bills vouchers in support of its claim. The issue needs to go back to file of the AO to reconsider the issue that said payment is reimbursement of expenses to its Head office for allocation of common expenses to various Branch offices. In case, the assessee files necessary evidences to prove its claim, then the AO is permitted to cause necessary enquiries and take appropriate decision in accordance with law. Disallowance of payment made to related parties - HELD THAT:- We find that although the assessee claims it has reimbursed a sum to its Head office for allocation of common expenses incurred by Head office and charged off to various Branch offices, but failed to file any evidences including agreement, bills and vouchers in support of its claim. No doubt, payment by self cannot be treated as expenditure in order to invoke TDS provisions, but it is for the assessee to place necessary evidences before the AO to support its case. In this case, the assessee has not placed any evidences before the AO to support its claim. Therefore, we are of the considered view that the issue needs to go back to file of the AO to reconsider afresh in light of claim of the assessee that said payment is reimbursement of expenses to Head office for allocation of common overhead expenses to various Branch offices.In case, assessee files necessary evidences to prove its case, then the AO is directed to cause necessary enquiries and take appropriate decision in accordance with law.

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• 2021 (6) TMI 455
  Disallowance of weighted deduction u/s.35(2AB) - HELD THAT:- In this case, as per information available on record, the assessee has submitted approval letter from the Competent Authority i.e., Ministry of Science and Technology, Govt. of India, only for an amount of Rs. 59,23,000/-, whereas deduction has been claimed for an amount - Therefore, there is no error in the findings of the AO to disallow weighted deduction claimed u/s.35(2AB) of the Act, for excess deduction. But, alternative claim of the assessee that even if, expenditure is not eligible for weighted deduction u/s.35(2AB) of the Act, but same has been incurred wholly and exclusively for the purpose of business of the assessee, further, there is no bar under the Act to claim deduction towards genuine expenditure incurred for the purpose of business u/s.37(1) of the Act. But, fact remains that there is no information as to what kind of expenditure the assessee has incurred for the purpose of business, whether it is capital expenditure or personal expenditure or revenue expenditure. Therefore, to ascertain facts with regard to nature of expenditure, issue has been set aside to file of the AO and direct him to cause necessary enquiries and take appropriate decision in accordance with law. Addition towards difference in export turnover - AO has made addition towards export turnover on the basis of information available with Income Tax Department and sales declared by the assessee in the P L account, on the ground that the assessee has failed to file necessary reconciliation explaining difference in turnover - HELD THAT:- We find that the AO has made addition towards difference in export turnover on the basis of information available with the Department, but such information was not furnished to the assessee. It is a well settled principle of law that before taking any adverse view, it is bounded duty of the AO to show-cause to the assessee as to why he is proposing such addition and also furnish information relied upon by the AO to arrive at such conclusion. In this case, it is the claim of the assessee that information relied upon by the AO to make addition towards export turnover was not furnished to the assessee. Therefore, we are of considered view that the issue needs to go back to file of the AO to give one more opportunity to the assessee to explain its case. Needless to say, the AO shall furnish information available with the Department to the assessee, so as to explain difference in export turnover as per books of accounts of the assessee. Adhoc disallowance of 10% of printing stationery and sales promotion expenses - HELD THAT:- We find that except stating that disallowance quantified by the AO is excessive and unreasonable, the assessee could not furnish any evidences to support claim of expenditure including bills and vouchers. At the same time, the AO has also failed to give any reason for making adhoc disallowance of 10% of expenses. Considering facts and circumstances of the case and also plea of the assessee that disallowance computed by the AO is excessive and unreasonable, we deem thought it fit to direct the AO to restrict adhoc disallowance to 5% of printing stationery and sales promotion expenses. Disallowance of claim of deferred revenue expenditure written off - HELD THAT:- As assessee has not filed any evidence to prove that it had incurred expenditure for the purpose of registration of products and business in relation to such product has been discontinued for the impugned assessment year. But, fact remains that, before us assessee has filed certain details including ledger extract of certain parties to prove that it had discontinued business with certain parties and on certain products. No doubt, any expenditure incurred for the purpose of business of the assessee can be allowed as deduction whether such business is continued or discontinued. But, fact remains that it is necessary for the assessee to prove that it had incurred expenditure for business of the assessee. In this case, no doubt the assessee has not filed any evidences before lower authorities to prove its case. Therefore, considering the fact that the assessee has not filed any details before the AO and also taking into account it had filed certain additional evidences before us to prove its case, the issue has been set aside to the file of the AO and direct him to reconsider the issue in light of material filed to prove its case. In case, the AO finds that the assessee has placed necessary evidence in support of its claim, then the AO is directed to allow the claim of expenditure.

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• 2021 (6) TMI 454
  Reopening of assessment u/s 147 - validity of reasons to believe - HELD THAT:- From the perusal of the reasons, we find that there is absolutely no mention by the ld. AO in the said reasons recorded about the failure on the part of the assessee to fully and truly disclose material facts that are relevant for the purpose of assessment. Admittedly, the reopening of assessment for the A.Y.2007-08 was made in the instant case beyond four years from the end of the relevant assessment year which triggers applicability of proviso to Section 147. The said proviso categorically states that the ld. AO should bring on record the failure committed by the assessee in not disclosing fully and truly all material facts that are relevant for the purpose of assessment in the original assessment proceedings, before resorting to reopening of the case of the assessee. In view of the fact that failure on the part of the assessee in terms of proviso to Section 147 of the Act was not mentioned in the reasons recorded by the ld. AO, we have no hesitation in quashing the entire re-assessment proceedings as void ab initio. Since the relief is granted to the assessee on the preliminary ground of invalid assumption of jusridiction u/s.147 of the Act, we refrain to give our opinion on the grounds raised on merits and the same are left open. In the result, appeal of the assessee is allowed.

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• 2021 (6) TMI 453
  Disallowance u/s 14A r.w.r. 8D - CIT(A) has held that the assessee has not derived any exempt income in the relevant previous year - HELD THAT:- Section 14A read with Rule 8D applies only in relation to an assessee s exempt income and not otherwise. We therefore affirming the CIT(A) s findings deleting the impugned disallowance. The Revenue fails in its first substantive ground therefore. Addition of interest on capital liabilities - Addition deleted in the CIT(A) s order after admitting additional evidence - HELD THAT:- We notice first of all that the CIT(A) has not admitted any additional evidence at all so as to invoke rule 46A of the Income Tax Rules. It also emerges that the Assessing Officer has disallowed/added the impugned interest @50% going by the assessee s depreciation claim to the said extent only than recording a clearcut finding on facts that the same had not been incurred wholly and exclusively for the purpose of business u/s.37 of the Act. We further find that the Revenue is itself fair enough in not disputing the assessee s entitlement to claim the impugned interest on merits to this effect as well. We thus affirm CIT(A) s findings qua the instant second issue therefore. Disallowing provision made on financial restructuring package - CIT-A deleted the addition admitting additional evidence - HELD THAT:- DR is fair enough not being able to pinpoint any violation of Rule 46A of the Income Tax Rules since the CIT(A) has not admitted any additional evidence filed at the assessee s behest. Coupled with this, it has come on record that the assessee has itself disallowed in its computation, a sum qua expenses qua power purchase cost, finance and employee costs. This is what led the CIT(A) to delete the impugned disallowance/addition. We accordingly affirm the same since there is no rebuttal to correctness thereof coming from the Revenue side. Consumer contribution amortization disallowance - CIT-A deleted the addition - HELD THAT:- CIT(A) has only directed the Assessing Officer to verify the relevant facts at the Assessing Officer s end itself and therefore, the Revenue itself cannot be taken as an aggrieved party per se except the fact that such an exercise of lower appellate jurisdiction is no more exigible as per the Finance Act, 2001 omitting or he may set aside w.e.f.01-06-2001. We thus accept the Revenue s argument in principle but follow the very course of action ourselves and direct the Assessing Officer to verify the necessary facts pertaining to the instant issue.

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• 2021 (6) TMI 452
  Rental Income received by the assessee on leasing properties - income from house property OR profits and gains of business/profession - HELD THAT:- As decided in own case[ 2019 (5) TMI 1875 - ITAT HYDERABAD] we uphold the order of the CIT(A) in directing the AO to treat rental income of the assessee as income from house property, as the decision of the CIT(A) is in consonance with the decision of the ITAT and dismiss the ground raised by the revenue on this issue.

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• 2021 (6) TMI 451
  Addition u/s 40(A)(3) - payments exceeding permiciable limit - expenditure incurred in cash towards purchase of goods - HELD THAT:- We find that there is no dispute that the assessee has made certain payments exceeding Rs. 20,000/- in cash and therefore, the provisions of section 40(A)(3) would get attracted provided the transaction fall under Rule 6DD of IT Rules. The explanation given by the assessee was that all the purchases were made on Saturdays and that too after banking hours. This contention has not been verified by the Assessing Officer. This contention of the assessee falls under clause (j) of Rule 6DD. Therefore, the Assessing Officer is directed to verify the same denovo. Needless to mention that the assessee should be given a fair opportunity of hearing. Assessee s appeal is treated as allowed for statistical purposes.

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• 2021 (6) TMI 449
  Determination of the Arm s Length Price - reference u/s 92CA - HELD THAT:- The undisputed fact is that as per sub-clause (1) of section 92BA the assessee has undertaken the transaction which has exceeded the prescribed limit. It is also not in dispute that vide Finance Act, 2017 w.e.f. 01.04.2017 the said sub-clause (1) of section 92BA has been omitted. We find that the AO has made a reference u/s 92CA having observed that the assessee has entered into specific domestic transaction as the case is covered u/s 92BA of the Act. We have no hesitation to hold that the cognizance taken by the AO u/s 92B clause (1) and reference made to TPO u/s 92CA is invalid and bad in law. Therefore, the consequential order passed by the TPO and DRP is also not sustainable in the eyes of law. Additional ground is accordingly allowed.

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• 2021 (6) TMI 447
  Penalty levied u/s. 271G - assessee ignoring the provisions of Section 92D of the Act as well as Rule 10D of the Income Tax Rules - As assessee had entered into international transactions and in respect thereof, he failed to furnish certain documents specified u/s. 92D of the Act r.w.r. 10D - HELD THAT:- When we peruse the notice for penalty proceedings, there also, there is no mention of any specific documents that are required to be filed by the assessee before the Assessing Office - Taking the guidance from M/S LEROY SOMER CONTROLS (INDIA) PVT. LTD. [ 2013 (9) TMI 761 - DELHI HIGH COURT] without naming those documents there cannot be any imposition of penalty u/s. 271G of the Act. In our opinion, the principles of natural justice demands in respect of the right of defense for the assessee whatever proceedings are to be done by any Quasi-Judicial Authority, the first step is the issuance of notice to the assessee and in that said notice all the relevant details should be there so that the assessee gets an opportunity to prepare his defense and unfortunately in this case, it was not done. For this reason also penalty u/s. 271G of the Act is not imposable. Section 273B of the Act provides for reasonable cause and if that is justified, penalty/s. 271G of the Act may not be imposed and when this opportunity is given to the assessee by the statutes itself and the assessee has explained the reasonable causes which was accepted by the Ld. CIT(Appeal) and after perusing such reasons, we are in conformity with the findings of the Ld. CIT(Appeals). DR could not bring out any evidences or place on record any material suggesting no reasonable cause in respect of the assessee. In view thereof, we don t find any reason to interfere with the findings of the Ld. CIT(Appeal) and the same is upheld. The relief provided to the assessee is hereby sustained. Appeal of the Revenue is dismissed.

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• 2021 (6) TMI 446
  Exemption u/s 11 - salary payments to the specified persons under section 13(3) - there was increase in the salary of the specified persons from year to year which was not reasonable since the increase was in the cases of the specified persons and not in the case of other employees - onus to prove the excessiveness of the salary/remuneration paid to the specified persons - CIT-A allowed the claim of the assessee for the salary - HELD THAT:- In the instant case, it is relevant to point out that the A.O. although mentioned that the salary paid was not reasonable, however, he disallowed the entire salary paid to the specified persons without pointing out excessive salary, if any. All the specified persons are having the educational qualifications required for the job assigned to them and they are whole time employees of the assessee society for achieving the object of education for which the assessee society had been formed and are not carrying on any other business/profession. Sarvshri Sanjay Sardana and Sandeep Sardana apart from working as Principals of the schools at Chandigarh and Panchkula respectively are also having additional assignment of Directors of all the schools. The remunerations paid to the specified persons were considered to be genuine in the preceding years however, for the first time, the disallowance was made by the A.O. for the year under consideration. The assessee society had been maintaining regular books of accounts which were duly audited and the returns of income had been filed on the basis of such books of accounts. The payments of salary to the specified persons were made through banking channel and the issue had been examined years to years since A.Y. 1997-98 U/s 143(3) of the Act till the A.Y. 2012-13. Copies of the assessment orders framed u/s 143(3) of the Act for those assessment years are placed of the assessee s compilation. It is relevant to point out that the different Assessing Officers, after proper examination, accepted the salary paid to the specified persons in the earlier years and the first time, the disallowance was made in the assessment framed for the A.Y. 2013-14 by assigning the reason that the salary paid to the specified persons was not reasonable and undue benefit was given to those related persons. No material is brought on record to substantiate that how and in what manner, the salary paid to the specified persons considering their qualifications and the duty assigned to them was not reasonable since no comparable case was brought on record by the A.O. In the present case, the A.O. did not doubt the services rendered and qualifications of the specified persons, he disallowed the salary by observing that it was not reasonable, however, nothing is brought on record to suggest how and in what manner, it was not reasonable or was excessive. As the specified persons possessed the requisite qualifications and rendered the services, therefore, it cannot be held that payment of salary to the specified persons was unreasonable particularly when no comparable case was cited by the A.O. As the salary had been paid to the specified persons against the services provided by them the income from salary had been shown in their individual return of income and nothing is brought on record by the A.O. to substantiate that any extra salary was paid for the administrative function and that the salary was excessive in comparison to any similar case, therefore, the disallowance made by the A.O. was rightly deleted by the ld. CIT(A). The assessee furnished all the details relating to the payment of salary, tuition fee received from the students and nothing is brought on record to substantiate that the expenditure on salary or facilities to the relatives of the trustees of the assessee society were excessive having regard to the fair market value of the services provided by them. Therefore, the A.O. was not justified in making disallowance U/s 13(3) - Decided against revenue. Disallowance on account of rent paid to the specified persons by invoking provisions of Section 13(3) - CIT-A deleted the addition - HELD THAT:- In the present case, it is not in dispute that the assessee provided accommodation to the Principals-cum-Directors of the assessee society who were also managing administrative work from the residential premises. It was not the case of the A.O. that the rent paid was excessive as compared to the similar accommodation. The contention of the ld. Counsel for the assessee that the specified persons had shown the value of the rent as perquisites in their respective hands which has been accepted by the department has not been rebutted and that in earlier years also for the similar payments, no disallowance was made by the department. The payment of rent was not doubted and the A.O. did not bring any material on record to substantiate that the rent paid was excessive and the specified persons to whom accommodation was provided had shown the valuation of the said properties as perquisites in their respective hands. Therefore, the ld. CIT(A) rightly deleted the disallowance made by the A.O. particular when the rent paid for the same accommodation has been accepted in the preceding years - No valid ground to interfere with the findings given by the ld. CIT(A) on this issue. Disallowance on account of interest on unsecured loans paid to the specified persons - CIT-A deleted the addition - HELD THAT:- As assessee was paying interest at a higher rate than the interest paid to the specified persons and Members of the assessee society. In other words, the interest paid by the assessee society to its Members and specified persons was not excessive, therefore, the disallowance made U/s 13(1)(c) of the Act was not justified and the ld. CIT(A) rightly deleted the same. We do not see any valid ground to interfere with the findings of the ld. CIT(A) on this issue. Exemption u/s 11 - Claim denied for the reason that the assessee society was earning high profit year after years - HELD THAT:- In the present case, it is noticed that the issue relating to the exemption U/s 11 of the Act has been settled by the ITAT Chandigarh Bench for the A.Y. 2003-04 which was affirmed by the Hon ble Jurisdictional High Court and the SLP against the judgment of the Hon ble Jurisdictional High Court was dismissed by the Hon ble Apex Court [ 2010 (7) TMI 1196 - SC ORDER] therefore, we do not see any merit in the arguments put forth by the ld. CIT-DR on the issue relating to exemption U/s 11 of the Act. Disallowance of running expenses of the Mercedes cars - Mercedes Cars were purchased and used by the Directors - HELD THAT:- In the present case, nothing is brought on record by the A.O. that the Mercedes Cars given to the Directors for the administrative work relating to the assessee society were used for personal purposes - this contention of the ld. Counsel for the assessee that perquisite values of the cars was being disclosed by the Directors in their individual returns as per the law and accepted by the department was not rebutted. We, therefore, do not see any merit in the submissions of the ld. CIT-DR. Reopening of assessment u/s 147 - salary, rent and interest paid to the specified persons - HELD THAT:- In the present case, it is an admitted fact that the A.O. framed original assessment U/s 143(3) of the Act and before completing the original assessment, the A.O. asked the assessee about the payment of salary, rent and interest by issuing questionnaire - A.O. vide question No. 9 specifically asked the assessee to furnish the details of payments made to the specified persons and vide question No. 12, the details were asked relating to the total receipts as well as the expenditures. The A.O. vide Q.No. 17also asked the details of loans borrowed or repaid, therefore, it is clear that the A.O. asked the assessee specific informations. A.O. properly examined all the details furnished by the assessee and made disallowance also for those expenses which in his view were personal in nature - A.O. considered the expenses relating to the salary to the specified persons amounting to Rs. 1,09,12,261/- as non-genuine. However, the same were considered to be genuine while framing the assessment U/s 143(3) of the Act, so it was a change of opinion. Similar was the position with regard to the rent and the interest. Now the question arises as to whether the assessment can be reopened on the basis of change of opinion. A.O. accepted the claim of the assessee, not only in the earlier years but also in the later years and considered the expenses on account of salary, rent and interest paid to the specified persons as genuine. Moreover, the A.O. for the year under consideration did not bring any material on record to substantiate that the expenses incurred for the specified persons by the assessee were excessive in comparison to the expenses incurred by another comparable cases. A.O. not only asked the assessee to furnish the details relating to the payment made to the specified persons on account of salary, rent and interest but also examined those and thereafter framed the assessment U/s 143(3) of the Act, therefore, the issuance of the notice U/s 148 r.w.s. 147 of the Act, on the basis of the same issue was a mere change of opinion which was not permissible. CIT(A) was not justified in confirming the action of the A.O. in reopening the assessment, therefore, the reassessment framed by the A.O. is quashed. - Decided in favour of assessee.

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• 2021 (6) TMI 445
  Revision u/s 263 - Low Income shown by large contractors, Mismatch in amount paid to related persons u/s. 40A(2)(b) reported in Audit Report and ITR and Higher Turnover reported in Service Tax Return compared to ITR and assessee has deposited large amount of cash in saving bank account - HELD THAT:- Where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the judgment of Hon ble High Court of Bombay in the case of CIT vs. Nirav Modi, [ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] . Now when matter was again re-examined by the Ld. Pr. CIT, before setting aside the issue to the Ld. AO for conducting further enquiry, provision of section 263 of the Act requires that primary enquiry should first be conducted by the Ld. Pr. CIT/CIT so as to find that whether the order is erroneous and prejudicial to the interest of revenue. As relying on DG HOUSING PROJECTS LTD [ 2012 (3) TMI 227 - DELHI HIGH COURT] revisionary powers by Ld. Pr. CIT/CIT can be held to be correct if the Ld. Pr. CIT had examined and verified the said transactions himself and given a finding on merit. In the instant case, this aspect was completely missed out. The information of large cash deposit in Saving Bank Account had come before Ld. Pr. CIT. He should have called for the records so as to find out the details of Saving Bank account in which alleged large cash was deposited. It was not done so. Pr. CIT should have noted that how a partnership firm can open a saving bank account, it was again not done so. It is quite possible that the reasons on the basis of which case of the assessee was selected for scrutiny itself had some short comings or error which at least when Ld. Pr. CIT was issuing the show cause notice should have taken note of. Going through impugned order we find that the Ld. Pr. CIT has only mentioned the reasons and the brief submission made by the assessee and with a very brief analysis of facts just referred to plethora of judgments and held the order of the Ld. AO as erroneous and prejudicial to the interest of revenue which in our view was not correct to a certain extent. We, therefore, are of the considered view that the impugned order u/s. 263 of the Act is partly held to be correct and the direction for setting aside the order of the Ld. AO dated 26.04.2017 is held to be correct only limited to single issue of examining the payment of rent and legal fees made to related person namely Deepak Nenwani (son of partner) during the year as provided in section 40A(2)(a) of the Act regarding the reasonableness of the said expenditure incurred by the assessee.

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• 2021 (6) TMI 444
  Disallowance on account of society commission by treating the same as prior period expenditure - commission was paid under the statutory provision in view of the UP Sugarcane (Regulation of Supply and Purchase) Act, which was crystalized under order dated 19.06.2012 passed by Collector District Magistrate, Bijnor, Uttar Pradesh - HELD THAT:- Keeping in view all the facts and circumstances mentioned above and also by relying upon the decision relied by the assessee we are of the view that the claim of the assessee is liable to be allowable and accordingly we set aside the finding of the CIT(A) on these issues and allowed the claim of the assessee.

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• 2021 (6) TMI 443
  Revision u/s 263 - stamp valuation adopted for sale of flats - assessee has adopted the incorrect sale value in the books of accounts and therefore the difference in sale value has to be added as per the provisions of Sec.43CA - assessee has not provided complete details of payments and the provisions of Sec. 43CA of the Act are applicable from A.Y 2014-15 . The assessee also has failed to produce any letter of allotment of flat specifying the area of the flat and relevant details - HELD THAT:- The assessee has filed the requisite details in respect of flats which includes name of flat owner, date of booking, stamp duty payment dates, date of registration , agreement value and also market value as on the date of registration. Further the agreements of sale were filed in the course of hearing before the A.O. On perusal of the assessment order at page 1 Para 3 the assessing officer has made observations that in respect of the projects, the assesses has furnished the relevant details. The revenue is disputing on non conduct of enquiry, but we find the assessee firm has discharged its burden of proof on submitting the vital requisite details called for by the assessing officer by issue of statutory notice U/sec 142(1) of the Act along with the questioner which cannot be over looked. Since the information was available with the A.O in the course of the assessment, the A.O. has considered the facts, submissions and evidences filed and took a view. In the assessment proceedings the assessee has responded to the clarifications / quires raised by the A.O. and after verification and satisfaction of claims, the assessing officer has passed the order U/sec143(3) of the Act. The assessee firm has offered income on the sale transactions in the Asst Year 2013-14, and these facts are filed before the assessing officer and was accepted by the revenue. The payment of stamp duty and income on flats was offered in AY 2013-14 but only registrations happened on 7/05/2013 which falls in the Asst year 2014-15, Hence there is no loss of revenue to the Income tax department and the provisions of Sec 43CA of the Act are not applicable. Assessing officer order passed u/sec143(3) of the Act does not satisfy the twin conditions of erroneous and prejudicial to the interest of revenue and Accordingly, the revision order passed by the Ld.Pr.CIT is quashed - Decided in favour of assessee.

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• 2021 (6) TMI 442
  Addition u/s 68 - Whether CIT (A) has erred in deleting the addition made by the Ld. AO relying on the additional evidence filed by the assessee without calling for remand report from the Ld. AO? - HELD THAT:- As evident from the paper-book filed before us that the income tax return of the creditors were not filed before the Ld.AO which was filed before the Ld.CIT(A). From the Order of the Ld.CIT(A) we find that he has not stated proper reasons with cogent evidence to substantiate that the transactions of creditors are genuine. Only the conformation statements of the creditors will not suffice to establish the genuineness of the creditors. The onus is on the assessee to prove the genuineness of the creditors with cogent evidence - AO has also powers to examine the creditors U/s.131 or u/s.133(6) of the Act which it appears he has not exercised, probably he might not have had proper details of the creditors at the time of assessment proceedings. Thus the entire matter is required to be revisited by the Ld. AO for fresh consideration. Therefore, in the interest of justice, we hereby remit this issue back to the file of the Ld. AO for de-novo consideration, granting liberty to the assessee to file any fresh evidence before him to substantiate its stand. Estimation of income - AO estimated the income of the assessee @ 8% of the gross receipts and also added the interest income - HELD THAT:- As addition was agreed by the assessee at the time of assessment proceedings as per the Ld.AO. On appeal, the Ld. CIT (A) deleted the addition by stating that the addition was made on hypothetical basis without any evidence. We find that nether the Ld. AO nor the Ld. CIT (A) has come out with a speaking order on the issue. Therefore, in the interest of justice, this issue is also remitted back to the file of the Ld. AO for de-novo consideration. Levy of penalty u/s. 271(1)(c) - HELD THAT:- Since, we have remitted back the quantum appeal back to the file of the Ld. AO for de-novo consideration, We find it appropriate to remit the penalty appeal also back to the file of the Ld. AO in order to pass appropriate order in accordance with law and merit based on the assessment order passed in lieu of the appeal being remanded to the file of Ld.AO by the Bench.

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• 2021 (6) TMI 440
  Vivad se Vishwas Scheme, 2020 - some assessee s have filed declaration in Form No.1 along with undertaking waiving rights for any remedy in Form No. 2 to the designated Authority and has also received Form 3 - HELD THAT:- Taking note of the fact that some assessee s have already filed declaration in Form No.1 along with Form No.2 to the Designated Authority and received Form 3 and some assessee s had already filed form no. 1 2 and awaiting form no. 3 from the designated authority and also the fact that remaining assessee s are willing to file form no. 1 and 2 within the due date prescribed for this purpose, we dismiss the appeals filed by the assessee s as withdrawn. However, a liberty is given to the assessee s to restore the appeals, in the event of the Designated Authority, for any reason reject the application filed by the assessee under section 4 of the said Act. Appeals filed by the assessee are dismissed as withdrawn and the Miscellaneous Petitions are allowed.

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• 2021 (6) TMI 439
  Estimation of income - Bogus purchases - HELD THAT:- Hon ble ITAT has restricted the addition to the extent of 5% of the bogus purchases in the A.Ys. 2009-10 2010-11. The present A.Y. 2011-12 [ 2018 (12) TMI 1861 - ITAT MUMBAI] is having identical facts. The facts are not distinguishable in this year also. The issue is covered by the order of the Hon ble ITAT in the assessee s own case mentioned above. By honoring the order passed by Hon ble ITAT, we restrict the addition to the extent of 5% of the bogus purchase - Appeal filed by the assessee is hereby partly allowed.

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• Customs

• 2021 (6) TMI 474
  Anti-Dumping Duty - imports of solar cells, whether or not assembled into modules/panels - exported from China PR, Thailand and Vietnam - HELD THAT:- The matter requires further examination; but before that Indian Solar Manufacturers Association (ISMA) is arrayed as a party to the proceedings. List the matter on 19.07.2021.

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• Corporate Laws

• 2021 (6) TMI 448
  Approval of Scheme of Arrangement by way of amalgamation - section 230-232 of Companies Act, 2013 - HELD THAT:- Various directions issued, with respect to calling, convening and holding of the meetings of the Shareholders, Secured and Unsecured Creditors or dispensing with the same - application allowed.

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• Insolvency & Bankruptcy

• 2021 (6) TMI 441
  Voluntary Liquidation - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The main intention for the Company management of the Corporate Person decided to wind up the Company, as they felt that the Company is not carrying out any business. The Liquidator has complied with all the conditions and procedural requirements as specified under Section 59 of IBC and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 before initiating voluntary liquidation process of the Corporate Person and we find that the affairs of the Corporate Person have been completely wound up as there is no assets in the Company and as such had voluntarily liquidated itself so as to get dissolved. The Corporate Person, M/s. CONNATE INSURANCE SURVEYORS AND LOSS ASSESSORS PRIVATE LIMITED is hereby dissolved, with immediate effect - Application allowed.

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• Service Tax

• 2021 (6) TMI 462
  Interest on delayed refund - relevant date - to be calculated from the date of expiry of three months with effect from the date of receipt of application for refund or on expiry of the said period with effect from the date on which the order of refund is made - section 11BB of Central Excise Act, 1944 - Circular 398/31/98 dated 2.6.1998 - HELD THAT:- A close reading of Section 11BB, which now governs the question relating to payment of interest on belated payment of interest, makes it clear that relevant date for the purpose of determining the liability to pay interest is not the determination under subsection (2) of Section 11B to refund the amount to the applicant and not to be transferred to the Consumer Welfare Fund but the relevant date is to be determined with reference to date of application laying claim to refund - The non-payment of refund to the applicant claimant within three months from the date of such application or in the case governed by proviso to Section 11BB, non-payment within three months from the date of the commencement of Section 11BB brings in the starting point of liability to pay interest, notwithstanding the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant needs no interference. Circular 398/31/98 dated 2.6.1998 has also been appraised wherein the Board has directed that the responsibility should be fixed for not dispensing for refund /rebate claims within three months from the date of receipt of application. The Board stressed with the provision of section 11BB of Central Excise Act 1944 are attracted automatically for no refund sanction beyond the period of three months hence the jurisdictional Central Excise officer were directed to not to wait of instructions from any superior officer and to ensure that no interest liability is attracted - In the present case such application is the one as was filed on 24.6.2006 which was the first application filed under section 11B(1) of the Act. The appellant is entitled for interest on the entire refund amount with effect from 24.6.2006 - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (6) TMI 450
  Large Taxpayer Unit - Jurisdiction to decide the appeal - Rejection of rebate claim - restriction on inter-unit transfer of credit available to Large Taxpayer Unit - N/N. 21/2014-CE(NT), dated 11.07.2014 - HELD THAT:- From sub-clause (b) of the first proviso of Section 35B in the Central Excise Act, 1944, it can be seen that the Tribunal does not have jurisdiction to decide any appeal if such order relates to a rebate of duty of excise on goods exported. In the present case, the rebate claims filed under Rule 18 of Central Excise Rules, 2002 has been rejected by the department. Whatever may be reason for rejection, since the order relates to a claim of rebate, in our view this Tribunal does not have jurisdiction to decide the appeal. The appeal is dismissed for lack of jurisdiction.

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• Indian Laws

• 2021 (6) TMI 477
  Validity of grant of Bail - Siphoning of funds by respondent No.2 promoter, before they ceased to be in control over the complainant-company - foremost plea put-forth by petitioner is that the trial court while granting bail to respondent No.2, has not taken into consideration the directions issued by this Court in its right perspective - HELD THAT:- The learned trial court had heard the parties at length, noted their contentions and thereafter, held that accused is in custody for one year and four months and he cannot be kept in custody for infinite time; that investigation is complete and prosecution has to clarify why accused should be kept in continued custody and also that tampering of evidence exists in every case till the length of the trial - No doubt at the time of grant of bail, the court is not required to go into the merits of the prosecution case and meticulous observations on the material placed on record are not required to be made, but the court is expected to judiciously apply its mind as to whether a prima facie case against the accused is made out and his continued detention in judicial custody would serve any purpose. In the impugned order, the learned trial court has recorded reasons for granting bail to respondent No. 2, but has failed to consider that the present FIR case pertains to a serious economic offence of high magnitude, where large amount of approximately Rs. 2400 crores including interest has been siphoned off at the behest of respondent No.2 and his brother Malvinder Mohan Singh by diverting it through various financial transactions, by granting loan to the shell companies, of whom they were the Directors or Promoters or beneficiary in interest - the learned trial court has failed to take note of the fact that offences alleged are serious in nature and rather than taking into account the factors that respondent No.2 is behind bars for more than one year and that investigation is complete, however, should have borne in mind the peculiarity of fraud and conspiracy involved in this case and refrained itself from passing a blanket order releasing respondent No.2 on bail. No doubt on the premise that investigation is complete and accused is behind bars for some time and that trial shall take time, bail can be granted but only when the offences alleged are of lesser magnitude. However, the trial court by rendering such an opinion in the present case, lost sight of the enormity of the offence alleged against respondent No.2. It is not disputed that after passing the impugned order dated 03.03.2021, considering the seriousness and gravity of the offence, learned court of Sessions dismissed the bail application of Malvinder Mohan Singh vide order dated 01.04.2021, who has been ascribed a similar role in the present case - the court below had no ground to grant bail to the respondent No.2 vide its impugned order dated 03.03.2021, as the role of respondent No.2 is not less than above named accused by any stretch of imagination. The bail granted to respondent No.2 in this FIR case by the trial court is also set aside - Petition allowed.

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• 2021 (6) TMI 476
  Dishonor of Cheque - examination of witness denied - opportunity to challenge the said order of rejection not granted or failure to avail the opportunity availed - rebuttal of presumption - HELD THAT:- Even in the cross- examination of PW-1, the accused had taken sufficient time. Since the accused failed to utilise the opportunities given to him to cross-examine PW-1, it was taken that the accused had not cross-examined PW-1. It is thereafter, by filing a recalling application, he got an opportunity to cross-examine PW-1. Accordingly, the matter was listed for cross-examination of PW-1 on 08-12-2014. Even on the said date also, he did not cross-examine PW-1, as such, once again, it was taken that there was no cross-examination of PW-1 from the accused s side. Subsequently, the accused made one more similar application for an opportunity to cross-examine PW-1, which was again allowed. Accordingly, on 14-01-2015, he proceeded to cross-examine PW-1. Thus, during the trial also, the accused has adopted delay tactics. The conduct of the accused that through out he has been interested in adopting delay tactics rather than assisting the Court in the disposal of the case on its merit. Still, the Trial Court had given him sufficient opportunities to lead defence evidence after recording the statement of the accused under Section 313 of the Cr.P.C. and also subsequently by allowing his application filed under Section 311 read with Section 91 of the Cr.P.C. Since the accused failed to make use of the opportunities which was sufficiently given to him, the Trial Court has proceeded to reject the similar application filed under Section 311 of the Cr.P.C. and proceeded to pass the impugned judgment - even by rejecting the second similar application filed by the accused under Section 311 of the Cr.P.C., no prejudice has caused to the interest of the accused. As such, the only argument of the learned counsel for the revision petitioner that the accused did not get sufficient opportunity to challenge the subsequent similar application filed under section 311 of the Cr.P.C., is not acceptable. Since the cheque at Ex.P-1 is drawn by the accused, which has been dis-honoured for the reason of insufficiency of funds and since the accused did not pay the cheque amount prior to filing of the complaint by the complainant, the presumption formed in favour of the complainant under Section 139 of the N.I. Act has crystalised in his favour. Resultantly, both the Trial Court as well the Sessions Judge s Court have rightly convicted the accused and upheld the conviction against the accused for the offence punishable under Section 138 of the N.I. Act - the Trial Court has ordered the sentence proportionate to the gravity of the proven guilt against the accused. As such, the impugned judgments do not warrant any interference at the hands of this Court. The Criminal Revision Petition stands dismissed as devoid of any merit.

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• 2021 (6) TMI 475
  Dishonor of Cheque - insufficiency of funds - presumption of service of notice - difficulty in determination of date the cause of action - admission of non-service of first notice by the complainant - Validity of second notice - HELD THAT:- The complaint cannot be thrown at the threshold even if it does not make a specific averment with regard to service of notice on the drawer on a given date. The complaint, however, must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. In the present case, the notice having been sent on 19.09.2012, if the presumption of service of notice within a reasonable time is raised, shall be deemed to have been served, at best within a period of 30 days from the date of issuance thereof i.e. 19.09.2012. The applicant was required to make payment in terms of the said notice within 15 days thereafter i.e. on or about 3.11.2012. The complaint, therefore, should have been filed by 03.12.12, Admittedly, the complaint was filed on 19.11.2012 and therefore, at this stage, it cannot be said that no proceedings under Section 138 of the Act could be drawn against the applicant. The Magistrate at the stage of summoning has only to see whether a prima facie case is made out or not - The factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court and not by this Court under the jurisdiction conferred by Section 482 Cr.P.C. The present application under Section 482 Cr.P.C. is devoid of merit and it is, accordingly, dismissed.

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• 2021 (6) TMI 469
  Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - contradictions in evidences - HELD THAT:- The entire evidence of PW-1 is contradictory within itself on several counts and does not inspire any confidence to believe that the accused had issued the cheque at Ex. P-1 to the complainant towards any legally enforceable debt or liability, more particularly towards Ex. P-9. If according to the complainant the accused had entered into several agreements with him of not less than three to four in number and there were several transactions between them and since he could not able to co-relate Ex. P-1 with Ex. P-9, on the contrary, he himself has contradicted the alleged loan transaction and the liability in several manner, it cannot be presumed that there existed any legally enforceable debt payable by the accused in favour of the complainant, as such, towards the same, the accused had issued a cheque at Ex. P-1 to him. On the other hand, the defence taken by the accused that the cheque in question given as a security was misused by the complainant without returning the same even after completion of the sale transaction of the house, appears to be more probable. Both the trial Court and the Sessions Judge s Court without appreciating these aspects, have carried away by the fact that the complainant has produced the dishonoured cheque at Ex. P-1 and an agreement at Ex. P-9 and held that the alleged guilt against the accused has stood proved. Since the said finding now proves to be perverse and erroneous, the same deserves to be set aside - Criminal revision petition allowed.

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• 2021 (6) TMI 468
  Dishonor of Cheque - rebuttal of presumption - Section 118 of Negotiable Instrument Act - HELD THAT:- The evidence on record indicates that on 16.06.2001, the plaintiff issued suit notice-Ex. A3. Even though intimation was sent to the appellant, he did not chose to receive the same. The appellant is not an illiterate villager. He is a government servant. He was working as male nursing assistant. He has not chosen to send any communication. If his signatures had been unlawfully obtained by the plaintiff, certainly, the defendant would have issued legal notice to the plaintiff demanding the return of the documents signed by him. It is true that there was a police enquiry. But then, the police complaint was given after filing of the suit filed by the plaintiff. Even if no presumption is drawn in terms of Section 118 of Negotiable Instrument Act, still as rightly held by the Appellate Court, the plaintiff had established the liability on the part of the defendant. Of-course, the defendant had succeeded in obtaining certain answers from the plaintiff during the course of cross-examination which apparently cast a cloud on the case of the plaintiff. When the plaintiff had not chosen to dispute the signatures in Ex. A1 and A2 and when the filing of the suit is preceded by Ex. A3-suit notice, it has to be necessarily held that the plaintiff had established his case against the defendant on a balance of probabilities. Appeal dismissed.

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• 2021 (6) TMI 467
  Dishonor of Cheque - failure to make repayment of loan taken from a friend - rebuttal of presumption - payment of loan was not established - HELD THAT:- Since the accused neither overcome the objection raised by the complainant nor could able to demonstrate as to how the said Note book act as an evidence about the alleged clearance of the loan of Rs. 6 lakhs, which is the subject matter of the present case, the said Note book at Ex.D-5 would not enure to the benefit of the accused. Therefore, the accused could not able to demonstrate that she has cleared the loan of Rs. 6 lakhs availed by her from the complainant. By looking at the entries mentioned therein showing several withdrawals, payments, credits etc., it cannot be deduced that any particular sum, on any particular day, was made to the complainant by the accused. Merely by looking at the name of the complainant in those statements, it cannot be inferred that those are the payments made by the accused to the complainant and complainant alone, that too, towards the alleged repayment of the loan transaction in question. Furthermore, admittedly the said document was not confronted to PW-1 in his cross-examination. Had the said document been confronted to PW-1 in his cross-examination, he would have given his explanation about the alleged entries, provided his attention were drawn to those entries in the said statement. Since none of those exercise is done by the accused, merely by production of the said statement, which is not self-explanatory regarding the alleged payment said to have been made in favour of the complainant, it cannot be held that the accused had made substantial repayment of the loan to the complainant. There are no erversity, illegality or irregularity in the said finding of the trial Court and the Sessions Judge s Court. As such, the judgment of conviction does not warrant any interference at the hands of this Court - The trial Court has sentenced the accused to pay a fine of Rs. 7,20,000/-, in default of payment of fine amount, to undergo simple imprisonment for a period of six months. It has further ordered that, out of the said fine amount, the accused shall pay Rs. 7,15,000/- to the complainant as compensation under Section 357 of Cr.P.C. and remaining Rs. 5,000/- to be remitted to the State as fine. The Criminal Revision Petition is partly allowed.

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• 2021 (6) TMI 466
  Dishonor of Cheque - insufficiency of funds - documents were sought to be produced on issuance of summons - rebuttal of presumption - HELD THAT:- According to the reply notice issued by the accused, he agreed to provide labour for harvesting the sugarcane and also transport the same to the factory premises. He had to sign some documents and provide blank signed cheque as security for the work undergone by him and he signed the documents prepared by the complainant and handed over blank cheque duly signed by him and the contents of the documents were never explained and the said blank cheque has been misused which was given by the accused as security towards performance of the work. It is needless to say that the complainant who has filed the complaint has to prove his case. The learned Magistrate has further observed that the accused has entered into contract with the complainant/factory and it is the defence of the accused that he has taken loan from State Bank of India/Bank of India, M.K. Hubli, for which the complainant/factory stood as a corporate guarantor and that till the debt is cleared by the complainant, there can be no legally enforceable debt from the accused - To show that there is no legally recoverable debt and for that purpose, the document sought are not required. It has also observed that if the documents sought are summoned then it will be nothing but assuming the powers of the Civil Court to look into the fact of the amounts due/set off such as who is entitled for what amount etc., which is impermissible in a prosecution under Section 138 of the Act. Petition dismissed.

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• 2021 (6) TMI 465
  Dishonor of Cheque - insufficiency of funds - legally enforceable debt between the parties or not - HELD THAT:- The petitioner/accused has not raised any other grounds or addressed any other augments worth to be considered. On the other hand, as observed above, the admitted cheque at Exhibit P-1, of which the accused is the drawer has been dishonoured with the banker s share of insufficient funds as could be seen in the banker s memo at Ex. P-2 and the debit slip at Ex. P-3. The copy of the legal notice at Exhibit P-4 has been admittedly served upon the accused which is further evidenced in the postal receipt and postal acknowledgement card at Exhibits P-5 and P-6 respectively. The reply sent by the accused as per Exhibit D-1 proves to be untenable and could not able to shaken the evidence of the complainant, both oral and documentary and even the evidence of DW-1 also, could not, in any way, succeed in introducing any doubt in the case of the complainant. It is appreciating the evidence placed before them properly, both the Trial Court and the learned Sessions Judge s Court have rightly held the accused guilty of the alleged offence and after convicting him, have awarded proportionate sentence for the proven guilt - there are no illegality, irregularity or impropriety, warranting interference in the impugned judgments of conviction and order on sentence passed by the Trial Court and confirmed by the learned Sessions Judge s Court. Criminal Revision Petition dismissed.

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• 2021 (6) TMI 464
  Dishonor of Cheque - insufficiency of funds - legally recoverable debt or not - failure to probablise the defence - HELD THAT:- Since the materials supplied was of inferior quality, the accused suffered loss and therefore, he requested for return of the advance amount and also the cheque-Ex.P.1. The complainant had not returned the cheque instead, he has misused the same. Therefore, there was no legally recoverable debt and hence the accused has not committed any offence punishable under Section 138 of the N.I. Act. During cross-examination, it is suggested to the witness that he has not produced any letter of authority to represent the complainant partnership firm. However, P.W.1 stated that he was authorized to represent the complainant-partnership firm and later he produced Ex.P.293, which is the authorization letter issued by all the partners in favour of P.W.1. Therefore, the contention of the learned counsel for the petitioner that the complainant is not represented properly does not hold any water. When the complainant is successful in proving that the accused has issued the cheque in question towards legally recoverable debt, the presumption under Sections 118 and 139 of the N.I. Act comes into operation. It is for the accused to rebut these presumptions by placing cogent materials in support of his defence. In the present case, even though the accused has taken the defence as stated above, he failed to probabalise the same. It is true that the burden of proof on the accused to rebut the presumption is only of preponderance of probabilities and not proof beyond reasonable doubt - But even then the accused has failed to probabalise his defence and therefore, the complainant is successful in proving the guilt of the accused beyond reasonable doubt. Revision petition dismissed.

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