TMI Tax Updates - e-Newsletter
June 18, 2020

Case Laws in this Newsletter:

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

Articles

1. CBIC LAUNCHED THE E-OFFICE APPLICATION

   By: CSLalit Rajput

2. RESTRICTION ON INPUT TAX CREDIT

   By: DR.MARIAPPAN GOVINDARAJAN

3. GST ON DIRECTOR’S REMUNERATION – FUSION OF GST LAW AND COMPANY LAW

   By: Dr. Sanjiv Agarwal

Notifications

GST - States

1. 44/2020-State Tax - dated 10-6-2020 - Gujarat SGST

Seeks to give effect to the provisions of Rule 67A for furnishing a nil return in FORM GSTR-3B by SMS

2. G.O. (Ms) No. 81 - dated 13-4-2020 - Tamil Nadu SGST

Special procedure for a class of registered persons for furnishing of return and payment of tax

3. G.O. (Ms) No. 80 - dated 13-4-2020 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/79(h-1)/2018 dated 23rd January, 2018

4. G.O. (Ms) No. 79 - dated 13-4-2020 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/1099(e-4)/2018, dated 31st December, 2018

5. G.O. (Ms) No. 78 - dated 13-4-2020 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-3)/2017 dated 29th June, 2017

6. G.O. (Ms) No. 76 - dated 13-4-2020 - Tamil Nadu SGST

Return filing procedures for registered persons having aggregate turnover of upto 1.5 crore rupees

7. G.O. (Ms) No. 69 - dated 13-4-2020 - Tamil Nadu SGST

Special procedure for a class of registered persons for furnishing of return and payment of tax

8. G.O. (Ms) No. 68 - dated 13-4-2020 - Tamil Nadu SGST

Special procedure for corporate debtors undergoing corporate solvency resolution process under the Insolvency and Bankrupts code, 2016

9. G.O. (Ms) No. 67 - dated 13-4-2020 - Tamil Nadu SGST

Seeks to amend Notification No. II(2)/CTR/532(d-4)/2017, dated 29th June, 2017

10. G.O. (Ms) No. 66 - dated 13-4-2020 - Tamil Nadu SGST

Seeks to amend Notification No. II(2)/CTR/532(d-14)/2017, dated 29th June, 2017

11. 378/2020/6(120)/XXVII(8)/2020/CTR - dated 4-6-2020 - Uttarakhand SGST

Notification regarding the rate of tax of fish meal (heading 2301) and articles falling under heading 8483

12. 377/2020/6(120)/XXVII(8)/2020/CT-37 - dated 4-6-2020 - Uttarakhand SGST

Seeks to appoint 21-4-2020 as date for enactment of rule 25 of SGST rules.

SEBI

13. SEBI/LAD-NRO/GN/2020/17 - dated 16-6-2020 - SEBI

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2020.

14. SEBI/LAD-NRO/GN/2020/16 - dated 16-6-2020 - SEBI

Securities and Exchange Board of India (Real Estate Investment Trusts) (Second Amendment) Regulations, 2020

15. SEBI/LAD-NRO/GN/2020/14 - dated 16-6-2020 - SEBI

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020

Circulars / Instructions / Orders

IBC

1. CIRP-11013/1/2020-IBBI - dated 12-6-2020

Reconstitution of the Advisory Committee on Corporate Insolvency Resolution and Liquidation

Companies Law

2. 23/2020 - dated 17-6-2020

Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013

Highlights / Catch Notes

GST

• Court Allows Revision of GST TRAN-1 Form Due to Tax Department's Inaction and Technical Issues; Deadline Set for June 30, 2020.

  Case-Laws - HC : Transition of available Input Tax Credit - revision of Form GST TRAN-1 - The case before us is one where there is a complete lack of understanding and fairness on the part of the Tax Department. The fact that Respondents have done nothing to solve the problem faced by the Petitioner, fueled with the adamant stand before us, contributes to skepticism of GST technical infrastructure, which we feel should and can be easily avoided - Petitioner is permitted to revise TRAN-1 Form on or before 30.06.2020.
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• Petitioner Allowed to Revise GST TRAN-1; Authorities to Review Procedural Lapse from 2019 Communication.

  Case-Laws - HC : Permission to petitioner to file revision of GST TRAN-1 - Whether there is a procedural lapse or otherwise, is the aspects to be gone into and decided by the competent authority, to which the petitioner has already addressed communication way back in August and September, 2019. - It is only after the decision is rendered by the authorities, it will be open for the petitioner to take a further legal recourse in accordance with law.
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• Court Confirms Anticipatory Bail Valid for CGST Act Offenses Under Cr.P.C. Section 438, No Statutory Prohibition Found.

  Case-Laws - HC : Grant of Anticipatory Bail - respondent had issued notice/summons u/s 70 of CGST - the petitioner has reasons to believe that he may be arrested on accusation for having committed non-bailable offence u/s 132(5) of the CGST Act. Therefore, the petition u/s 438 of the Cr.P.C. is maintainable for the offences committed under the CGST Act and there is no statutory bar for invoking or exercising power u/s 438 of the Cr.P.C. for the offence committed under the provisions of the CGST Act.
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Income Tax

• Tribunal Should Recognize Seized Cash as Advance Tax Payment Date: March 15, 2007, for AY 2007-08.

  Case-Laws - HC : Interest u/s 234B and 234C - appellant has offered the cash seized as advance tax against the liability in block assessment - tribunal ought to have held the date of payment of tax by the assessee as 15.03.2007 i.e., the date on which the request was made by the assessee to adjust the cash seized against the advance tax payable towards the tax for the Assessment year 2007-08.
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• Court Rules Mere Suspicion Insufficient for Reopening Assessments u/s 147; Requires Concrete Evidence of Undisclosed Income.

  Case-Laws - AT : Reopening of assessment u/s 147 - AO raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the AO without even an iota of any incriminating tangible material against the assessee or even otherwise. - The words of the statute are "reason to believe" and not "reason to suspect".
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• Income Tax Department Nullifies Protective Addition u/s 179 After Company's Liability is Cleared.

  Case-Laws - AT : Addition of protective assessment - CIT (A) has clearly mentioned that the impugned amount related to the company and the protective addition was solely u/s 179 of the Act in the sole event of liability being fastened upon the company and its subsequent non recovery from the company. From this angle, the protective addition u/s 179 stands nullified as the substantive addition stands deleted in the hands of the company.
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• Reassessment u/s 147 Invalid if Additions Aren't on Notified Issue; CIT(A) Order Set Aside, Additions Deleted.

  Case-Laws - AT : Reopening of assessment u/s 147 - once the additions are not made on the issue for which the notice was issued, the AO is not permitted to make any other addition, accordingly we set aside the order of the Ld.CIT(A) and delete the addition made by the AO.
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• Disallowance in profit calculation u/s 115JB capped at 1% of exempted income, subject to Section 14A and Rule 8D limits.

  Case-Laws - AT : Disallowance while computing the profit u/s 115JB - disallowance limited on an ad-hoc basis @ 1 % of the exempted income under the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the condition that the disallowance shall not exceed the amount of disallowance determined by the authorities below under the provisions of section 14A r.w.r. 8D of Income Tax Rules.
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• Tax Liability Not Ceased: No Evidence Found u/s 41(1) of Income Tax Act; Addition Deleted.

  Case-Laws - AT : Cessation of liability u/s 41(1) - liability is being carried forward for years and the assessee is not able to completely prove the genuineness of the trading liability - since there is no evidence that there is a cessation of liability during the relevant A.Y, we hold that it cannot be brought to tax u/s 41(1) of the Act during the relevant A.Y. The addition is accordingly deleted
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• Assessee Allowed to Offset Losses from 2011-12 and 2012-13 Against Future Income u/s 115JB of Income Tax Act.

  Case-Laws - AT : MAT Computation u/s 115JB - The amount of losses incurred by the assessee for the previous year’s 2012-13 and 2011-12 should be set off against the future income in the manner as specified u/s 115 JB - the assessee has rightly reduced the amount of income for the year under consideration from the brought forward losses/unabsorbed depreciation pertaining to the previous year’s 2012-13 and 2011-12.
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Customs

• Assessing Officer Must Apply Consistent Standards for Palm Oil Importability and Exemption Eligibility.

  Case-Laws - AT : Import of Palm Oil - he imported oil is of Edible Grade or not - The assessing officer cannot hold that the consignment meets standard as per A17.19 while deciding the importability and hold that it does not meet the same standards while deciding the eligibility of the exemption notification. It would have been a different case if the standards prescribed for the exemption notification are different from that for determining the importability but such is not the case.
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• Confiscation of Rifle Cartridges for Sportsman and Coach Overturned; Import Within Legal Limits Set by Arms License.

  Case-Laws - AT : Import of cartridges for use in Rifle with spare barrel by the person who is the shot/sportsmen and a coach - Restricted itmes - The cartridges imported under present bill of entry, is within the quantity permitted under the Arms License as well as the import license issued by DGFT, which is not disputed - the order of confiscation of the consignment is uncalled for.
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Indian Laws

• Cheque Dishonor Case u/s 138: Courts Reject Early Document Production Request in Summon Trial.

  Case-Laws - HC : Dishonor of Cheque - Section 138 of the NI Act - trial of summon case - seeking that complainants be directed to produce documents and accounts - Both the Courts below are absolutely justified in rejecting the application for production of documents at the initial stage.
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Service Tax

• Photobook Printing for Photographers Classified as Non-Taxable Service, Exempt from Service Tax Payments Under Photography Services.

  Case-Laws - AT : Classification of services - Photography service or not - manufacture and sale of photobooks to photography studio or individual photographers who outsourced such work to the respondent against agreed consideration - the activity of printing as job worker is exempted from payment of service.
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• USA Company Provided Manpower Services to Appellant by Seconding Employees Without Direct Salaries Paid by Appellant.

  Case-Laws - AT : Manpower Recruitment and Supply Services - fees paid for secondment of employees - These people continued in employment with the USA company and nothing like salary or remuneration was paid either in Indian or Foreign Currency, to these people by the Appellant - there is no hesitation in holding that the USA company has provided “Manpower Recruitment and Supply Services” to the Appellant.
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• FSE's Recruitment Services for Sports Events Classified Under Manpower Supply Agency by Finance Act.

  Case-Laws - AT : Manpower Recruitment and Supply Services - FSE was in the business of supplying recruiting and providing the players to the sport events organizers like appellant. Hence the services provided by such companies as FSE will be classified as Manpower Recruitment and Supply Agency Services as defined by the Finance Act at relevant times.
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• Mauritius-Based 'Know How' Rights Not Taxable as Intellectual Property Under Reverse Charge Mechanism, Court Rules.

  Case-Laws - AT : Intellectual Property Service - Import of services - reverse charge mechanism (RCM) - know how - the grant of exclusive right to the Appellant by Mauritius Revlon to use the ‘know how’ in any plant in accordance with the processes, specifications and recipes thereof in connection with the manufacture, marketing, sale and distribution of Revlon Products would not fall in the definition of ‘intellectual property right’ so as to make it taxable
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Central Excise

• Extended Limitation Period Inapplicable: No Suppression or Fraud Found, Accurate Records Maintained, Regular Returns Filed.

  Case-Laws - AT : Extended period of Limitation - There is no obligation cast on the appellant to intimate the Department on each and every transaction. The appellant have filed regular returns with the Department and have maintained proper records. Further, the appellant have obtained statement of “cost of production‟ duly certified by the Cost Accountant - The elements of suppression, mis-statement, fraud, etc. are not coming out from the facts and circumstances.
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• No Cash Refund of MODVAT/CENVAT for Closed Factories u/r 5; Section 11B Limits Apply.

  Case-Laws - AT : Refund of the MODVAT/CENVAT in cash - factory is closed - Rule 5 of Cenvat Credit Rules, 2004 - no refund can be sanctioned under Section 11B if the assessee is unable to utilise cenvat credit on account of closure of the manufacturing activities.
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VAT

• State to Investigate Alleged Collusion in Wrongful Tax Credit Disclosure Using Specialized Cybercrime Units.

  Case-Laws - HC : Input Tax Credit - wrongful disclosure of purchase and sales turnover to pass on input tax credit unauthorisedly to various buyers/dealers - petitioner has alleged connivance between the officers of the Commercial Tax Department and the third person who had allegedly accessed the login ID of the petitioner - the respondents directed to take appropriate measures and cause an investigation into the complaint of the petitioner and seek help of the specialised investigation wings of the State concerned with cyber crime
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Case Laws:

• GST

• 2020 (6) TMI 386
  Maintainability of appeal - existence of alternative remedy - appealable order or not - Section 112 of the C.G.S.T. Act, 2017 - HELD THAT:- It is not disputed that the impugned orders are appealable under Section 112 of the C.G.S.T. Act, 2017. The appeal is to be filed within 90 days from the date on which the order sought to be appealed is communicated to the person preferring the appeal - The instant petition has been filed by-passing the remedy of appeal under Section 112 of the Act on the ground that the appellate tribunal has not been constituted till date. The instant petition is disposed of by providing that the petitioner can invoke the remedy of filing appeal before the Tribunal in terms of the provisions of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.

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• 2020 (6) TMI 385
  Transition of available Input Tax Credit - revision of Form GST TRAN-1 - electronic credit ledger under the GST laws does not reflect the entire credit - HELD THAT:- The exactness required in compliance of tax provisions should not be construed so rigidly that permissible flexibility is completely disregarded. In effect, the ITC has been expropriated without any lawful sanction. The ITC that was shown in the returns under the existing laws were taxes that stood paid to the respective Governments for goods or services and were available for adjustment or utilization in accordance with law. Now, on account of a clerical mistake the said taxes paid are being appropriated, without cause, putting the Petitioner in serious jeopardy by subjecting it to further taxation under GST without the benefit of ITC. The case before us demonstrates how the tax department has miserably fallen short of the expectation. It is regrettable that Respondents have failed to address the basic and fundamental problem faced by the Petitioner that occurred while filing a Form, seemingly on account of a bona fide or inadvertent mistake. Instead of offering a restitutive solution they have stonewalled all the attempts made by the Petitioner The injustice and prejudice caused to the Petitioner is profound and it s disillusionment and despair is evident. It cannot be upheld the stand of the respondent which is founded on some illogical understanding of the Rules. We have time and again made adverse remarks on the procedural working of the GST system in several decisions. We may just add that we do not derive any pleasure when we make such observations, as comments of the Court affect the reputation of the administration in the country. Such remarks are made only when we are constrained to do so. The case before us is one where there is a complete lack of understanding and fairness on the part of the Tax Department. The fact that Respondents have done nothing to solve the problem faced by the Petitioner, fueled with the adamant stand before us, contributes to skepticism of GST technical infrastructure, which we feel should and can be easily avoided. Only if Respondents were to engage with the taxpayers with a genuine intention to solve the problems, confidence in the system can be built up and such matters would not reach courts. Petitioner is permitted to revise TRAN-1 Form on or before 30.06.2020 and transition the entire ITC, subject to verification by the Respondents - petition allowed.

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• 2020 (6) TMI 384
  Release of seized goods alongwith vehicle - seizure on the ground that the driver of the conveyance was not able to produce a valid E-way bill - HELD THAT:- In view of the fact that there is a statutory appeal provided against the impugned order, the writ applicant should avail the alternative remedy and prefer an appropriate appeal if he deems fit. At this stage, it is clarified that if the statutory appeal under Section 107 is preferred by the writ applicant and if the appeal is not disposed of at the earliest or in near future, it is always open for the writ applicant to prefer an application under Section 67(6) of the Act for interim release of the conveyance pending the final adjudication of the statutory appeal. Application disposed off.

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• 2020 (6) TMI 383
  Release of seized goods alongwith vehicle - seizure only for the discrepancy in the e-way bill that the vehicle number was not correlated - HELD THAT:- We are of the opinion that we should not interfere with the impugned show cause notice issued by the authority under Section 130 of the Act. We are of the view that the authority should be permitted to adjudicate the show cause notice in accordance with law. However, we deem fit to take into consideration the fact that the goods involved in the present litigation is a consignment of Tobacco and with the onset of monsoon the goods are likely to get damaged. The writ applicant to deposit an amount of 10,00,000/- with the concerned authority towards tax and penalty. To secure the interest of the State, we also direct the writ applicant to furnish Bank Guarantee of 7,00,000/- that is the value of the goods. On deposit of the amount of 10,00,000/- and furnishing of a Bank Guarantee to the tune of 7,00,000/- of a nationalized bank, the authority concerned shall release the goods and the vehicle at the earliest. Application disposed off.

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• 2020 (6) TMI 382
  Permission to petitioner to file revision of GST TRAN-1 - section 140(3) of the Central Goods and Services Tax Act, 2017 - while the case of the petitioner is that mistake committed was procedural, the court considers appropriate not to entertain the petition at this stage - HELD THAT:- Whether there is a procedural lapse or otherwise, is the aspects to be gone into and decided by the competent authority, to which the petitioner has already addressed communication way back in August and September, 2019. The authority of the respondents department has not decided to respond to the same so far. It is only after the decision is rendered by the authorities, it will be open for the petitioner to take a further legal recourse in accordance with law - While not entertaining this petition and not touching the merit part of the case of the petitioner, the respondent Nos. 6 to 8 are directed to respond to the communication of the petitioner within four weeks from the date of receipt of this order. Petition disposed off.

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• 2020 (6) TMI 381
  Permission to petitioner to file revision of GST TRAN-1 - section 140(3) of the Central Goods and Services Tax Act, 2017 - while the case of the petitioner is that mistake committed was procedural, the court considers appropriate not to entertain the petition at this stage - HELD THAT:- Whether there is a procedural lapse or otherwise, is the aspects to be gone into and decided by the competent authority, to which the petitioner has already addressed communication way back in August and September, 2019. The authority of the respondents department has not decided to respond to the same so far. It is only after the decision is rendered by the authorities, it will be open for the petitioner to take a further legal recourse in accordance with law - While not entertaining this petition and not touching the merit part of the case of the petitioner, the respondent Nos. 6 to 8 are directed to respond to the communication of the petitioner within four weeks from the date of receipt of this order. Petition disposed off.

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• 2020 (6) TMI 380
  Release of detained goods alongwith vehicle - Section 129 (3) of the CGST Act/SGST Act - HELD THAT:- While permitting the petitioner to serve the respondent nos. 2 and 3 both by an e-mode, considering the issue of closure of the business in the pandemic for a long time and also bearing in mind the material which is being carried from Goa Unit of the petitioner to Sanand, Ahmedabad, for preparing one of the necessaries and also noticing that there are two units within the state of Gujarat of the Petitioner registered with the Respondent authorities, we are inclined to accede to the request of release of the goods with truck bearing No. GJ-01-CU-7154 detained in exercise of the powers, pending the service of notice and admission of this matter, subject to the deposit of the entire amount of tax of 14,53,788/- with the department within three days and also the deposit of 1.45 lakhs, 10% of amount of penalty for now with the department, by way of a bank guarantee, initially for the period of 90 days or till the pendency of Petition, whichever is later. On deposit of total amount of tax and furnishing of the bank guarantee with the department within three days as directed, the release of the truck shall be made within 48 hours, with the goods subject to the furnishing of proof of such amount with the respondent no. 2 or 3.

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• 2020 (6) TMI 379
  Grant of Anticipatory Bail - respondent had issued notice/summons to the petitioner as per Section 70 of the Central Goods and Service Tax Act, 2017 summoning him to appear before the Authorized Officer finally on 12.05.2020 - HELD THAT:- On bare reading of Section 69 (1) of the CGST Act, where the Commissioner has reasons to believe if a person committed the offence under Section 132 of the CGST Act, he may, by order, authorize any officer of central tax to arrest such person. Therefore, the petitioner has reasons to believe that he may be arrested on accusation for having committed non-bailable offence under sub-section 5 of Section 132 of the CGST Act. Therefore, the petition under Section 438 of the Cr.P.C. is maintainable for the offences committed under the CGST Act and there is no statutory bar for invoking or exercising power under section 438 of the Cr.P.C. for the offence committed under the provisions of the CGST Act. Therefore, the contention of the learned Special Public Prosecutor cannot be accepted. Summons have been issued by the authorized officer under Section 70 of the CGST Act which clearly goes to show that the petitioner is reasoned to believe that he is apprehending his arrest in the hands of the respondent in case after his appearance before the authorizing officer as per Section 69 of the CGST Act. Therefore, in case the petitioner is arrested, he is likely to remand to the judicial custody, after his production before the Magistrate and by looking to the present COVID-19 situation, if he is remanded to the judicial custody, he will be put to hardship and definitely, his health would likely to affect - The offences are not punishable with death or imprisonment for life. There is no statutory bar in the CGST Act for granting anticipatory bail by exercising power under Section 438 of the Cr.P.C. Merely, there were number of notices/summons issued by the respondent during the lockdown for COVID-19 that itself is not a ground to reject the bail petition. Considering the fact and circumstances of the case, if an anticipatory bail is granted, no prejudice would be caused to the respondent. The petitioner is ordered to be enlarged on bail in the event of his arrest under Section 69 of the CGST Act by the respondent-Authorised Officer, after enquiry under Section 70 of the CGST Act - Petition allowed.

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• 2020 (6) TMI 378
  Grant of Bail - Input Tax Credit - fake bill entries - HELD THAT:- Considering the facts that claim of input tax credit without there being any transaction directly affects the economy of the country, petitioner has claimed input tax credit to the tune of 11.6 crores, the bail application is not entertained. Bail application dismissed.

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• Income Tax

• 2020 (6) TMI 377
  Interest u/s 234B and 234C - appellant has offered the cash seized as advance tax against the liability in block assessment - Date of filing the return of income for the purpose of computation of interest under Section 234B and 234C - HELD THAT:- Asessee has offered a sum of 50 Lakhs on 15.03.2007 towards the advance tax payable for the Assessment year 2007-08. It is also pertinent to mention here that prior to seizure of the cash, the assessee had paid advance tax in four installments on 15.06.2006, 14.09.2006, 14.12.2006 and 08.03.2007, which is evident from statement of total income. Department did not adjust the aforesaid amount even though the cash was available with the department. The aforesaid amount could have been adjusted against the advance tax. We concur with the view taken by High Court of Allahabad, which has been upheld by the Supreme Court. It is also pertinent to note that Explanation 2 to Section 132B has been held to be prospective in nature and the aforesaid position has been settled by Circular No.20/2017 dated 12.06.2017. We hold that the tribunal ought to have held the date of payment of tax by the assessee as 15.03.2007 i.e., the date on which the request was made by the assessee to adjust the cash seized against the advance tax payable towards the tax for the Assessment year 2007-08. The first substantial question of law is answered in favour of the assessee and against the revenue. The orders passed by the Income Tax Appellate Tribunal is hereby quashed and it is directed that date of payment of tax shall be taken as 15.03.2007 i.e., the date on which the request was made by the assessee to adjust the cash seized against the advance tax payable for the Assessment year 2007- 08. Appeal allowed.

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• 2020 (6) TMI 376
  Black Money - role of an appellate authority defined under the Black Money Act - Maintainability of appeal - penalty for failure to furnish the return of income and information - HELD THAT:- Whether the impugned order reflects the adherence to the provisions of the circular of 2015 ibid or in terms of the provisions of the Black Money Act, this Court under Article 226 of the Constitution of India cannot exercise the role of an appellate authority defined under the Black Money Act to deal with the controversy if brought into motion. Petitioner is well within the right to assail the aforementioned order, as the impugned order is dated 17.3.2020 and the limitation in the instant case expired during the lock down but as per the Government directive and judgment of the Full Bench of this Court limitation prescribed already stood extended. Petitioner if so advised shall be at liberty to assail the aforementioned order. Any observation hereinabove would not prejudice the right of the petitioner in case the remedy is availed. In view of what has been noticed, this writ petition sans merit and accordingly, dismissed.

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• 2020 (6) TMI 375
  Reopening of assessment u/s 147 - absence of sufficient material to form satisfaction of the AO that income of the assessee had escaped assessment - validity of reason to believe - non independent application of mind by AO - HELD THAT:- AO in this case had received the only information that the assessee had received a high premium along with share application money. However, this information alone, in our view, does not constitute any tangible material or to say any incriminating material to form a belief by the Assessing Officer that the income of the assessee had escaped assessment or to say in other words that the share application money received by the assessee was an unaccounted money of the assessee. AO has not recorded that he had received any information that the assessee had received share application money from some bogus / paper companies. No information has been pointed out in the reasons recorded or receipt of any bogus transactions undertaken by the assessee. Even the name of the companies form whom the share premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere information that the assessee had received a high premium, in our view, cannot be said to be a reason to form the belief that the income of the assessee had escaped assessment. AO raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the AO without even an iota of any incriminating tangible material against the assessee or even otherwise. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . AO has wrongly and illegally assumed jurisdiction in this case to reopen the assessment. The reasons pointed out by the AO cannot be said to be the reasons to form the belief that income of the assessee had escaped assessment. In view of this, since the assessment order framed by the AO is not sustainable in the eyes of law, the same is accordingly quashed. - Decided in favour of assessee.

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• 2020 (6) TMI 374
  Levy of penalty u/s 271(1)(c) - Defective notice - Whether mere mistake in language used or mere non-striking off of inaccurate portion cannot by itself invalidate the notice under section 274? - addition being the service tax disallowable u/s 43B - HELD THAT:- AO on the basis of the details furnished by the assessee during the course of assessment proceedings, made an addition u/s 43B being the unpaid liability towards service tax. The above liability was shown under the head Current liabilities in the balance sheet. The assessee did not prefer any appeal and thereafter penalty was levied u/s 271(1)(c) of the IT Act which has been upheld by the CIT(A). A perusal of the copy of the notice issued u/s 274 shows that the inappropriate words in the said notice has not been struck off. Even the last line of the said notice only speaks of section 271 and does not even mention section 271(1)(c) . We find, the Delhi Bench of the Tribunal in the case of Sanjay Mittra [ 2018 (10) TMI 132 - ITAT DELHI] had considered an identical issue and following the decision of the Tribunal in the case of Sahiwal Investment Trading Co. vs. ITO [ 2018 (7) TMI 1472 - ITAT DELHI] has cancelled the penalty levied by the AO. Even on merits also we find, the Hon ble Delhi High Court in the case of Noble Hewitt (I) (P) Ltd. [ 2007 (9) TMI 238 - DELHI HIGH COURT] has held that where the assessee did not debit the amount to the P L Account as an expenditure nor did the assessee claim any deduction in respect of the amount where the assessee was following mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. We further find the CIT(A) in assessee s own case for A.Y. 2012-13, deleted the addition of unpaid service tax which was added back by the assessee in its revised computation of income. Issue as to addition u/s 43B on account of non-payment of service tax liability when the same has not been debited in the Profit Loss Account nor claimed as an expenditure has become a debatable issue. It has been held in various decisions that penalty u/s 271(1)(c) is not leviable on account of additions which are debatable issues. We, therefore, are of the opinion that penalty u/s 271(1)(c) of the IT Act, 1961 is not leviable on merit also. We are of the considered opinion that no penalty u/s 271(1)(c) of the Act is leviable. - Decided in favour of assessee.

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• 2020 (6) TMI 373
  Addition of protective assessment - Liability on directors - documents were found in the possession of the assessee, in view of provisions of section 292C it was to be presumed that these documents belonged to the assessee - HELD THAT:- It is undisputed that the substantive addition in the hands of the company i.e. M/s. G.L. Litmus Events Pvt. Ltd. has already been deleted by the coordinate bench of this Tribunal in [ 2019 (7) TMI 528 - ITAT DELHI] A perusal of the order of the Ld. CIT (A) would further show that he has nowhere confirmed the protective addition on the ground that the said amount was paid by the assessee. Rather, the Ld. CIT (A) has clearly mentioned that the impugned amount related to the company and the protective addition was solely u/s 179 of the Act in the sole event of liability being fastened upon the company and its subsequent non recovery from the company. From this angle, the protective addition u/s 179 stands nullified as the substantive addition stands deleted in the hands of the company. Protective addition in the hands of the assessee does not have any feet to stand on. Since the protective addition was upheld by the Ld. CIT (A) solely for the purposes of section 179 since the substantive addition has been deleted, the basis for protective addition also goes. Therefore, for the reasons stated above we quash the protective addition in the hands of the assessee. - Decided in favour of assessee.

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• 2020 (6) TMI 372
  Reopening of assessment u/s 147 - non admission of rental receipts from M/s NRI Academy and M/s Reliance Infra Limited - HELD THAT:- In the instant case, the reopening of assessment was made on the belief that rental income had escaped assessment. Whereas the rental income does not belong to the assessee and belonged to the HUF of the assessee. Though the PAN number of the assessee is mentioned in the 26AS, the assessee has not claimed the TDS in the return. These issues clearly show that the AO reopened the assessment without proper appreciation of facts. Therefore, we hold that the reopening of assessment is bad in law, accordingly we quash the notice issued u/s 148. The assessee s case is squarely covered by the decision in the case of Swarna Andhra IJMII Integrated Township Development Pvt. Ltd. [2014 (4) TMI 852 - ANDHRA PRADESH HIGH COURT] . Respectfully following the view taken by the Hon ble High Court of Andhra Pradesh, we hold that once the additions are not made on the issue for which the notice was issued, the AO is not permitted to make any other addition, accordingly we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. The appeal of the assessee is allowed.

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• 2020 (6) TMI 371
  Value of closing stock - assessee had included only land cost, but not included the development cost of plots in arriving at the work in progress/closing stock - AO reworked the value of closing stock including the development cost and made the addition representing the difference amount on account of undervaluation of the stock - AO observed that as per Accounting Standard 2, the inventory required to be valued at cost or net realisable value whichever is lower - HELD THAT:- Though the assessee stated that the entire development cost pertained to the plots sold and ready for sale, the assessee had incurred the expenditure for development of roads, levelling of the land, drainage, water tank, street lights, parks etc., for laying the plots, hence the assessee cannot argue that no expenditure was incurred for unsold plots. In the absence of the details with regard to the actual expenditure incurred on sold plots and unsold plots, there is no option except to resort for estimation of income and arrive at the value of closing stock. We, find from the order of the AO and the Ld.CIT(A), against the sale price of 2,500/-, the AO worked out the profit of 1,676/- per plot which is unreasonable. Since, the assessee did not produce the details of the tracks of the land developed and undeveloped out of the total area we are also unable to accept the contention of the assessee that the expenditure was exclusively laid out for the sold plots. Therefore we hold that the CIT(A) has rightly resorted for estimation of the profit.- The department did not bring any other case establishing that the profit of 15% estimated by the Ld.CIT(A) is less in this line of business. Therefore, we are of the view, that no interference is called for in the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.

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• 2020 (6) TMI 370
  Validity of the assessment on the reasoning that it was framed in the name of non-existent company - Admission of additional evidence - HELD THAT:- Admittedly the additional ground of appeal was not raised by the assessee before the authorities below. However, all the facts related to the additional ground of appeal are arising from the order of the authorities below and no additional fact needs to be referred. Further, we also note that the issue raised by the assessee in the additional ground of appeal is legal in nature which can be admitted at any stage during the proceedings in view of the judgment in the case of NTPC Ltd Vs.CIT [ 1996 (12) TMI 7 - SUPREME COURT] . Accordingly, we admit the additional ground of appeal raised by the assessee and proceed to adjudicate the same. Transfer pricing adjustment on specified domestic transactions of sale of finished goods undertaken with the AE - HELD THAT:- In the case of a company, the ld. Commissioner was required to issue a show cause notice against a juridical person contemplated in section 2(31) of the Income Tax Act and if a juridical person ceases to exist then it would not be construed as a person within the meaning of section 2(31) against whom any action can be taken. The Commissioner would not assume proper jurisdiction and such type of defect would not be cured with help of section 292B of the Act, because it is not a procedural irregularity which could be cured. We also note that this Tribunal in the case of Snowhill Agencies Pvt. Ltd. Vs. Pr. CIT [2020 (1) TMI 1029 - ITAT AHMEDABAD] involving identical facts and circumstances has decided the issue in favour of the assessee.We note that the assessment framed under section 143(3) r.w.s. 92CA of the Act is not sustainable. Hence the additional ground of appeal of the assessee is allowed.

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• 2020 (6) TMI 369
  Disallowance u/s 14A read with rule 8D - HELD THAT:- Admittedly the own fund of the assessee exceeds the amount of investment. Accordingly presumption can be drawn that the borrowed fund was not utilised for such investments. Accordingly there cannot be any disallowance of any interest expenses in view of PCIT v. Shreno Ltd.[ 2018 (12) TMI 1145 - GUJARAT HIGH COURT ] held that if the assessee can demonstrate availability of surplus interest free funds for making investment generating tax free income, disallowance under Section 14A of the Act would not be justified. Regarding the disallowance of administrative expenses we find that there was no argument advanced at the time of hearing on such disallowance. Accordingly we confirm the addition towards the administrative expenses. Hence the ground of appeal of the assessee is partly allowed and the ground of appeal of the revenue is dismissed. Disallowance on account of prior period expenses - HELD THAT:- DR at the time of hearing has also not brought anything on record contrary to the argument advanced by the learned AR. Hence respectfully following the principle laid down in the own case of the assessee by this tribunal, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Set off of the unabsorbed depreciation against the income of the current year - HELD THAT:- We find merit in the argument advanced by the assessee. Accordingly we set aside the issue to the file of the AO with direction to allow the set off of the unabsorbed depreciation of the earlier years after considering the appeal of the assessee for the assessment year 2009-10. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Addition for the advance against depreciation - HELD THAT:- It is the case of the assessee that such advances to be adjusted with the power so supplied in the future. We, thus, having regard to the facts and circumstances of the case find no infirmity in the order passed by the Learned C1T(A) in making such direction upon the Ld. AO with the guidelines framed therein in order to grant relief to the assessee if permissible under the law, so as to warrant interference. Hence, we confirm the order passed by the Ld. C1T(A). - Decided against assessee. Disallowance of depreciation on account of change in accounting method - whether the assessee can claim depreciation on the capital spares under the provisions of section 32 of the Act, instead of amortizing the same - HELD THAT:- The assessee can claim the depreciation as per the provisions of section 32 of the Act. The assessee is entitled for the depreciation on the capital spares at the rate of 15% whereas there is no provision under the statute to amortize the capital spares over the period of 14 years. Thus we are of the view that the assessee has changed the accounting policies with respect to the capital spares within the provisions of law. Thus, such change does not contravene any of the provisions of section 32 - Accordingly we hold that there is no infirmity in the action of the assessee for changing its method of depreciation with respect to capital spares. we hold that the order of the learned CIT (A) is not sustainable. Accordingly, we set aside the same and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Disallowance while computing the profit u/s 115JB - computation of Income under section 14A r.w.r. 8D - HELD THAT:- We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon ble Calcutta High Court in the case of CIT v. Jayshree Tea Industries Ltd. [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT ] We note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income under the clause (f) to Explanation-1 of Sec. 115JB of the Act subject to the condition that the disallowance shall not exceed the amount of disallowance determined by the authorities below under the provisions of section 14A r.w.r. 8D of Income Tax Rules. Hence, the ground of appeal of the assessee is partly allowed. Deduction under section 80-IA (4) - HELD THAT:- Assessee did not claim the deduction under section 80-IA (4) of the Act, for the reason that there was no positive income. However, in our considered view if there any positive income in the hands of the assessee on account of the disallowances made by the AO in the assessment proceedings then the assessee in our considered view should be entitled for the deduction under section 80-IA(4) of the Act, as per the provisions of law. As such we do not find any infirmity in the direction of the learned CIT (A). Hence the ground of appeal of the revenue is dismissed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (6) TMI 368
  Capital gain computation - application of Sec. 50 - Short Term Capital Gains - whether the profit on sale of immovable property is liable to tax as short term capital gains STCG or long term capital gains LTCG ? - CIT in treating the profit on sale of asset (vacant land) as Short Term Capital Gains holding that it formed part of block of assets in companies book - HELD THAT:- Bench observed that the audited accounts and computation of income is required to appreciate the arguments of the ld. AR of the assessee but the ld. AR insisted on hearing the appeal without the said documents. In the absence of any documentary evidence in support of assesee s claim that the property sold in question was not a depreciable asset, we find no reason to interfere in the order of the ld.CIT(A). Appeal of the assessee is dismissed.

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• 2020 (6) TMI 367
  Assessment in the name of a non-existent amalgamating company and under a non existent PAN - HELD THAT:- We are in considered agreement with the views so expressed by the coordinate bench, in the light of Maruti Suzuki [ 2010 (7) TMI 84 - DELHI HIGH COURT] . These observations are in the context of the revision proceedings but the principle remains the same, i.e. an entity, which does not exist any longer, cannot be subjected to being framed assessment on. In the present case, assessee, on which assessment is framed and the PAN number used for the said purpose, did not exist in the eyes of law. To this extent, the issue is squarely covered in favour of the assessee. There can be minor variation on the facts of each case, but these minor variations, without having substantive issue on the main facts, donot really matter. The principle laid down in the judicial precedents clearly applies on these facts.We hold that the assessment on a non-existent entity was bad in law. We accordingly set aside the same.

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• 2020 (6) TMI 366
  Cessation of liability u/s 41(1) - liability is being carried forward for years and the assessee is not able to completely prove the genuineness of the trading liability - HELD THAT:- Genuineness of the trade payables or creditors has to be examined in the year in which they originate and that unless the liability becomes unenforceable or is written off by the assessee or is given up by the other party or something is brought on record that there is cessation of liability, the same cannot be brought to tax u/s 41(1) of the Act. Therefore, they are very much applicable to the facts of the case before us and respectfully following the same, since there is no evidence that there is a cessation of liability during the relevant A.Y, we hold that it cannot be brought to tax u/s 41(1) of the Act during the relevant A.Y. The addition is accordingly deleted. - Decided in favour of assessee.

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• 2020 (6) TMI 365
  MAT Computation u/s 115JB - Not allowing the adjustment of lower of the unabsorbed depreciation or business losses while calculating book profit under MAT provision - whether the financial statements prepared by the assessee are amount the books of accounts? - HELD THAT:- To our mind, the financial statements i.e. balance sheet and profit and loss account are compilation of the various figures of the income and expenditure account, fixed assets, investments, sundry debtors, inventories, share capital, loans and liabilities, current liabilities etc which are prepared at the end of the accounting period for providing the information to various interested parties/stakeholders. As such, these financial statements cannot be referred as the books of accounts as alleged by the AO. In holding so, we draw support and guidance from the judgment of Hon ble Madras High Court in the case of CIT vs. Taj Borewells [ 2007 (4) TMI 203 - MADRAS HIGH COURT] . Assessee has already suffered the tax on the accumulated profit and therefore same profit should not be made subject to tax again under the provisions of MAT. In holding so we draw support and guidance from case of CIT vs. Sumi Motherson Innovative Engg. Ltd. [ 2010 (10) TMI 33 - DELHI HIGH COURT ] . The amount of losses incurred by the assessee for the previous year s 2012-13 and 2011-12 should be set off against the future income in the manner as specified under section 115 JB of the Act. Thus we hold that the assessee has rightly reduced the amount of income for the year under consideration from the brought forward losses/unabsorbed depreciation pertaining to the previous year s 2012-13 and 2011-12. Accordingly, we are not convinced with the finding of the authorities below. Accordingly we set aside the order of the learned CIT (A) and direct the AO not to levy the tax under the provisions of MAT. Hence the ground of appeal of the assessee is allowed. Business loss and unabsorbed depreciation - Claim not be allowed to be carried forward for set off while determining the profit under the provisions of MAT - HELD THAT:- At the outset we note that we have already directed to the AO to allow the set off of the brought forward losses/unabsorbed depreciation pertaining to the years 2012-13 and 2011-12 against the income of the current year - Accordingly, we direct the AO to allow the claim of the assessee against the income of the future years until and unless it is exhausted as per the provisions of law.

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• 2020 (6) TMI 364
  Levy of penalty - HELD THAT:- Since the very basis for levy of penalty i.e. issue of quantum has been set aside to the file of the learned AO, we are of the considered opinion that penalty based on such non-existent ground does not survive. In the fitness of things, we set aside the impugned order and remand the issue of penalty to the file of the AO to take a view in consonance with the view to be taken on the aspect of quantum. Appeal of the assessee is allowed, for statistical purposes.

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• Customs

• 2020 (6) TMI 363
  Application of the respondent for obtaining licence under CBLR - Conditions to be fulfilled by the applicants as per clause 5(f) of CBLR - HELD THAT:- The words or in clause (ii) of clause 5(f) of the CBLR, makes the two parts mutually exclusive and independent - Therefore, the words possess a professional degree such as Masters , without any specification of the subject in the said clause, could encompass, in our opinion, the Masters Degree in Science also, which the petitioner did admittedly satisfy. The words such as before the words Masters cannot obliterate the words or and the respondent cannot be compelled to have Masters Degree in Accounting/Finance/Management. Apparently even a partner or director of a partnership firm or a company having sufficient experience, can apply provided, he is a graduate and holds a Masters Degree in any subject or an equivalent degree in Accounting/Finance or Management, CA/MBA/LLB. etc. Before the words is having atleast two years experience in transacting Customs Broker work as G-Card holder; also, there is another or in clause (ii) of clause 5(f) of CBLR. Thus, obviously clause (ii) is in three parts and it permits a person holding (1) Master Degree in any subject or (2) an equivalent to Masters Degree in Accounting/Management/Finance etc., or (3) having an experience of two years as G Card holder, thus a mixture of three categories with no watertight silos in these categories, are given as criteria to apply for such Customs Broker License under CBLR - the contention of the learned counsel for the appellant/Revenue that the words such as before the words Masters in part of clause (ii) should be read with the subjects like Accounting/Finance or Management is not found to be a tenable contention. The respondent herein, Mr.T.Radhakrishnan, prima facie appears to be a highly qualified person or rather overly qualified to hold the Customs Broker Licence, and he fulfills the criteria of eligibility as given in clause 5 of CBLR itself - Appeal dismissed.

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• 2020 (6) TMI 362
  Import of Palm Oil - Validity of test reports sent by the chemical examiner of the Customs Department and the reports given by the Port Health Officer - Benefit of N/N. 21/2002-Cus as amended - denial of benefit on the ground that the imported oil is not of Edible Grade - HELD THAT:- Determining the importability of the oil in question and if it is not importable, acting against the imported goods and the importer is the responsibility of the Customs officers. No action has been initiated in the imports which are the subject matter of these appeals because the Revenue accepted the test report of the PHO that it meets the standard as per A 17.19 of the Appendix to the Prevention of Food Adulteration Rules. This is also explicit in the denovo order of the original authority. Having accepted that the consignment meets this standard, Revenue took a diametrically opposite stand with respect to the same consignments and the same standards while determining the eligibility of the exemption notification. In our considered view, such as a contradictory stand is not sustainable. The assessing officer cannot hold that the consignment meets standard as per A17.19 while deciding the importability and hold that it does not meet the same standards while deciding the eligibility of the exemption notification. It would have been a different case if the standards prescribed for the exemption notification are different from that for determining the importability but such is not the case - Revenue, having accepted that the consignments meet standards A17.19 and hence are edible and accepting their importability cannot take a stand that the consignments do not meet the same standards and are therefore not edible, while deciding the eligibility of exemption notifications. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 361
  Import of cartridges for use in Rifle with spare barrel by the person who is the shot/sportsmen and a coach - Restricted itmes - Whether original authorization from DGFT for import of goods being cartridges etc. was required and submission of the same in original to the Custom authorities for clearance is sine qua non, for getting clearance? HELD THAT:- The production of the import license issued by DGFT was necessary for clearance of the goods, being cartridges etc. filed under Bill of Entry No. 8071705 dated 22 January 2015. However, in view of the status of the appellant, being renowned shot/sportsmen and a coach of international repute, winner of Draunacharya Award from the Government of India, there is no reason to disbelieve the appellant that he has not imported any other consignments under the said import license, which has finally expired on 31.1.2015. Admittedly, the Bill of Entry was filed on 22.1.2015 when the import license was valid, satisfying the condition of import for restrictive goods . Further, I find that the Principal Commissioner have issued utilization certificate dated 23 June 2016, which clearly states that the appellant have only imported one consignment earlier on 25 May, 2013 (Rifle with spare barrel), and hence is legally entitled to import the goods under the present bill of entry under dispute. Further non-import of cartridges, more than that permitted under the Import License , is also corroborated from the original Arms License , produced at the time of hearing. The cartridges imported under present bill of entry dated 22.1.2015, is within the quantity permitted under the Arms License as well as the import license issued by DGFT, which is not disputed - the order of confiscation of the consignment under Bill of Entry No. 8071705 dated 22.1.2015 is uncalled for and accordingly, is set aside along with the penalty. The Custom Department is directed to release the goods under Bill of Entry 8071705 dated 22.1.2015 forthwith to the appellant within a period of one month from the date of production or receipt of this order - Appeal allowed.

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• Corporate Laws

• 2020 (6) TMI 360
  Whether Section 391 (6) of the Act empowered this Court to interdict the process, set in motion by the complaint, dated 15th February, 2019, addressed by NSDC to the EOW? HELD THAT:- The criminal proceedings cannot be stayed, under Section 391 (6) of the Act. Civil proceedings alone can be so stayed. In the present case, pursuant to the complaint, dated 15th February, 2019, addressed by NSDC to the EOW, the record reveals that the EOW is merely looking into the matter, for which purpose it had called the applicant, to appear before it, vide the notice dated 23 rd April, 2019 supra. The said notice cannot even be termed a show cause notice , as it merely states that the complaint of NSDC was being looked into, and requested the applicants to appear, before it, in that regard. No action, prejudicial to the applicant, has been proposed in the said communication. The EOW has not called upon the applicant to show cause, with respect to any of the allegations of NSDC, or against any action, proposed to be taken against the applicant pursuant thereto. It is not possible for this Court, therefore, to hold that, at this stage, any proceeding , civil or criminal, is pending against the applicant, as could be stayed under Section 391 (6) of the Act. It is deemed appropriate to express any final opinion thereon, as the complaint, of NSDC, is presently under consideration with the EOW, which would, doubtless, take a view thereon. In the opinion of this Court, no proceeding , as could be stayed under Section 391 (6) of the Companies Act, 1956, initiated by the NSDC, can be said to be presently pending against the applicant - Petition dismissed.

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• 2020 (6) TMI 344
  Maintainability of application before NCLT - Notification dated 24.3.2020 issued by the Ministry of Corporate Affairs, New Delhi - default in the present case was below rupees one Crore - HELD THAT:- This issue has not been discussed by the National Company Law Tribunal at all. The petitioner is therefore permitted to approach against the said order dated 5.5.2020 passed by the National Company Law Tribunal before the National Company Law Appellate Tribunal, or file a review application before the NCLT itself. We are not inclined to entertain the present civil revision petition and we leave it free for the petitioner to approach the National Company Law Tribunal itself or the Appellate Tribunal, as the case may be, for raising the said issue. The amendment Notification dated 24.3.2020 depends upon the facts of the case and unless this issue is first adjudicated by the Tribunal below, this court cannot decide such abstract questions in writ jurisdiction. The present civil revision petition is not maintainable at this stage - Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (6) TMI 351
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The plea of the Corporate Debtor that the Company is a solvent and going concern , cannot be made a ground for delaying the initiation of CIR Process or to keep in abeyance the instant Application as sought for as this Tribunal is required in case of a financial debt which is due and in the event of default as defined under I B Code, 2016, is perforce required to admit the Application and the parties including the Corporate Debtor can have recourse during CIR Process to submit a Plan for restructuring if otherwise not disqualified. It is evident from the documents filed by the individual Financial Creditor in their respective petitions the debt is also not time barred in view of acknowledgments given by the Corporate Debtor to each of the Petitioner banks as contemplated under Section 18 of the Limitation Act, 1963. In any case, there is no denial of liability owed to the individual Financial Creditor by the Corporate Debtor. The Applications, as filed by the Financial Creditors are required to be admitted under Section 7 (5) of the I B Code, 2016. Application admitted - moratorium declared.

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• 2020 (6) TMI 350
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is incumbent upon the Financial Creditor while filing this petition to place on record before this Authority, the Financial Contract and demonstrate without any ambiguity from the financial contract, the amount disbursed as per the loan/debt, the tenure of the loan/debt, the interest payable and the conditions of repayment.ln the present case, it is evident that the Financial Creditor has placed on record the Board Resolution passed by the Corporate Debtor requesting for the Loan Amount of 50,00,000/- and has also attached the Promissory Notes, however, the Financial Creditor has failed to show that the amount has been disbursed by the Financial Creditor for time value of money and admittedly no loan agreement was entered into between the parties setting out the details of the tenure of the loan/debt, the interest payable and the conditions of repayment. On the other hand, it is assumed to be an oral loan agreement. It is an admitted fact that the Resolution Plan does not crystalize the amount that is due and payable to the Financial Creditor - the Resolution Plan has a saving Clause for the Financial Creditor i.e. Clause 4 which states that the Disputed Creditors, i.e. the Financial Creditor herein, shall be paid on the basis of the outcome of the adjudication of the legal proceedings. The claim of the Financial Creditor was rejected by the Resolution Professional at the first instance in its entirety and based on the list of admitted claim given by the Resolution professional, the Resolution Applicant has submitted the Resolution Plan to the Committee of Creditor and the same was also approved by this Tribunal, thereby the amount which is payable to be Financial Creditor has not been crystallized. The Financial Creditor ought to have approached the appropriate forum for the adjudication of the claim. However, the Financial Creditor is now trying to adjudicate the amount that is due and payable by the Corporate Debtor to the Financial Creditor by filing this Application and by agitating this issue once again before this Tribunal. Application dismissed.

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• 2020 (6) TMI 346
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- As per provision of Sub-section (6) of section 60 of I B Code, it is always open to a Creditor to proceed with the suit or arbitration proceeding, if pending, on completion of the Moratorium. However, once a Creditor/ Financial Creditor or Operational Creditor files its claim before the Resolution Professional and the same is taken into consideration by the Successful Resolution Applicant and while submitting the plan or the revised plan providing them same treatment as has been given to the other similarly situated Financial Creditors / Operational Creditors , the Financial Creditors / Operational Creditors , thereafter cannot take the benefit of sub-section (6) of section 60 of the I B Code nor they can pray to pursue the suit or arbitration proceeding or to file a fresh suit or arbitration proceeding for the same claim. In terms of section 31, once the Resolution Plan is found to be in accordance with section 30(2) and is duly approved by the Adjudicating Authority, it is binding on all the stakeholders including the Financial Creditor / Operational Creditor and the Corporate Debtor etc. The approved Resolution Plan including the revised Resolution Plan , as per offer as inconsonance with section 30(2) of the I B Code , the Appellants cannot be allowed to pursue the alternative remedy of suit or arbitration proceeding even if it is pending - the 3rd Respondent ( Successful Resolution Applicant ) to provide Appellant(s) with the same treatment as has been given to the other similarly situated Financial Creditors and pay pro-rata amount i.e., same percentage of claim amount, as made available to other similarly situated Financial Creditors . Appeal disposed off.

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• 2020 (6) TMI 343
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It may be seen that the Corporate Debtor has sought for time and more time on the pretext that negotiation between the parties for settlement are going on, which dissuade the Corporate Debtor from filing any reply and the same goes on to show that the Corporate Debtor has impliedly admitted their liability of payment due to the Operational Creditor. Thus, the Operational Creditor has proved that there is an existence of Operational Debt and the default of such operational debt which is payable by the Corporate Debtor to the Operational Creditor - From the list of invoices filed and the Purchase Order annexed, it is evident that the claim as raised by the Operational Creditor is within the prescribed period of limitation of 3 years and in relation to the Corporate Debtor the registered office of which is situated within the State of Tamilnadu, amenable to its territorial jurisdiction, this Authority has no hesitation in admitting this Petition and initiating the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor. The Petition as filed by the Operational Creditor is required to be admitted under Section 9(5) of the IBC, 2016 - Application admitted - moratorium declared.

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• Service Tax

• 2020 (6) TMI 353
  Intellectual Property Service - Import of services - reverse charge mechanism (RCM) - inclusion of know how in any other similar intangible property under any law for the time being in force - contention of the Appellant is that there is no law in India for the time being in force which protects know how as an intangible property right and, therefore, the grant of exclusive right to use the know how would not include such a right in the definition of intellectual property right - HELD THAT:- This issue was also examined at length by a Bench of the Tribunal Bangalore in ABB LTD VERSUS C.C.E. S.T. -BANGALORE-LTU [ 2019 (1) TMI 1037 - CESTAT BANGALORE] and it was observed that since know how is not recognized as intellectual property right under Indian law, no intellectual property right service can be said to be provided. It is more than apparent that the grant of exclusive right to the Appellant by Mauritius Revlon to use the know how in any plant in accordance with the processes, specifications and recipes thereof in connection with the manufacture, marketing, sale and distribution of Revlon Products would not fall in the definition of intellectual property right so as to make it taxable under section 65(105) (zzr) of the Finance Act. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 352
  Demand of Service Tax - reverse charge mechanism - Manpower Recruitment and Supply Services - Intellectual Property Right Service - Management and Business Consultant Services - Programme Producer Services - Sponsorship Services - Time Limitation - Principles of Natural Justice - Jurisdiction. Manpower Recruitment and Supply Services - HELD THAT:- If the agreement between Appellant and FSE are examined in terms of the definitions of Manpower Supply Recruitment Agency Services as per Section 65 (105)(k) read with Section 65 (68) of Finance Act, 1994 and the clarification issued by the Board and above decision of Tribunal, we conclude that services provided by M/s FSE are squarely covered under this category. Vijay Amritraj is a separate and distinct legal person from FSE, in which he may be one of the Directors. FSE has entered into agreement with Appellants for causing the appearance and participation of Vijay Amritraj in a tournament organized by the appellant against payment of agreed consideration - there are no doubt in holding that FSE was in the business of supplying recruiting and providing the players to the sport events organizers like appellant. Hence the services provided by such companies as FSE will be classified as Manpower Recruitment and Supply Agency Services as defined by the Finance Act at relevant times. In case of fees paid for secondment of employees of IMC DBA New York, USA for Lakme Fashion Week, an event organized by appellants we find that nothing has been placed on record that during the period of secondment, these employees of their USA counterpart worked in manner so as to create employer employee relationship between the appellants and those persons. These people continued in employment with the USA company and nothing like salary or remuneration was paid either in Indian or Foreign Currency, to these people by the Appellant - there is no hesitation in holding that the USA company has provided Manpower Recruitment and Supply Services to the Appellant. Intellectual Property Service - HELD THAT:- Appellants in the present case undertook to register the trademark of their USA counterparts in India for organizing the event of Lakme Fashion Week. For registering they incurred certain expenses which were paid to them by the USA company. There was no transfer of the right temporarily, by the USA company, nor any permission was granted for use or enjoyment of any intellectual property. Nothing is forthcoming to show that there was such transfer or permission. Revenue has not been able to substantiate that the basis ingredients to hold that USA Company had provided any Intellectual Property Service - impugned order set aside. Management and Business Consultant Services - HELD THAT:- Appellants is part of a group of companies located in India and elsewhere. Certain common facilities are created for usage of all the group companies. In this case, USA company created software and SAP facilities and incurred expenditure for the same. This expenditure has been distributed amongst all the group companies on a proportionate basis depending upon the usage. It is a settled position that the payments made for creation of common facilities in a group company is not payment towards any service rendered, and hence cannot be subjected to Service Tax. Appellants have contended that the services revenues sought to be taxed under the category of Programme Producer Services are not in respect of any services provided but are towards transfer of right to use and hence is an act of sale - HELD THAT:- Issue under consideration was considered by Mumbai Bench of Tribunal in the case of BOARD OF CONTROL FOR CRICKET IN INDIA VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2014 (9) TMI 598 - CESTAT MUMBAI] holding that the activity of recording the live cricket match for providing feed to TV channels is activity covered under the taxable category of Programme Producer Services and will be subjected to Service Tax - Since the issues involved in the present case are identical to the case considered by Mumbai Bench referred above, in our view the order of Commissioner upholding the demand under the category of Programme Producer Services cannot be faulted with. Sponsorship Services - HELD THAT:- In the present case undisputedly Appellant have received certain amounts from sponsor s towards sponsoring the various events and matches organized by them. Appellants do not dispute that the services so provided by them fall in the category of sponsorship services - In respect of the claim made by the appellants that certain payments were received by them towards the sponsorship of sports event, or from the service recipient located outside India, or from service recipients located in India who were located in India, Commissioner should have recorded the finding in terms of the above provisions of the Finance Act, 1994 and the clarification as above issued by the Joint Secretary (TRU). If the claims made are justified these amounts should be deducted from the taxable value - Since the Commissioner has failed to consider these submissions in the light of the above referred clarification issued by the Ministry, the matter needs to go back to the commissioner for consideration of these. Appellants have submitted that demand in respect of the three taxable services received by them against foreign currency expenditure has been made collectively without specifying the quantum of expenditure that can be attributed to each of the services separately - we are setting aside the entire demand made in respect of Foreign Currency Expenditure and remanding back the matter to the Commissioner for determination of value of taxable services in respect of which demands are to be confirmed separately. Appellants should make available to the Commissioner all the information that may be required/ called by him for determination of taxable value in respect of each service separately. Time Limitation - HELD THAT:- The issues which are raised and adjudicated, are all issues which would involve the interpretation of legal provisions. If the appellants claim that a certain issue was of interpretation, then it is for him to establish on the basis of documents and evidence to show that he genuinely had made effort to resolve the doubts that could have arisen in respect of interpretation of law. Appellant cannot have defence, in his own wrong or misinterpretations. In the present case appellants have made the statement without substantiating the grounds on which they could have entertained the interpretation which they followed - In absence of any evidence to that effect we are not in position to agree with this submission of the Appellants. Jurisdiction - HELD THAT:- This is not a show cause notice in terms of Section 73 (1) of the Finance Act, 1994, but is simply a statement of demand made in terms of Section 73 (1A). Section 73 (1A) inserted in Finance Act, 1994 by Finance Act, 2012 - in cases of statement of demands issued in terms of this sub section, the jurisdiction will immediately at the time of issuance itself be vested with the officer adjudicating the earlier show cause notices. There may not be any need to confirm separate jurisdiction in respect of such a statement of demand, because as per the provision in terms of which such statement of demand is issued makes it part of the Show Cause Notice issued earlier. However since the matter is going back to the Commissioner on remand he should resolve any jurisdictional issues which may be there and then proceed to adjudicate this statement of demand. Principles of Natural Justice - HELD THAT:- Natural Justice is back bone of modern judicial system and it is bounden duty of the adjudicator to not only follow the principles of natural justice but show that he is following the said principles. Hence in respect of these the matter could be remanded back on this preliminary ground itself. CENVAT credit - HELD THAT:- We are in agreement with the submissions made by the appellant subject to verification of the reversal made by them of the CENVAT Credit now being demanded from them. Commissioner should in remand proceedings cause a verification of the same and record a proper finding. Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Penalty - HELD THAT:- Since matter is being remitted back to the commissioner for redetermination of the quantum of demand, the amount of penalty are to be redetermined in accordance with the duty demand confirmed in remand proceedings. The matter is remanded back to the adjudicating authority for consideration of the show cause notices in accordance with the observations made in this order. Since matter is pertaining to demand notices issued from the year 2009 onwards, in de novo proceedings Commissioner should adjudicate the matter within six months of receipt of this order, after following the principles of natural justice - Appeal allowed by way of remand.

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• 2020 (6) TMI 348
  Classification of services - Photography service or not - manufacture and sale of photobooks to photography studio or individual photographers who outsourced such work to the respondent against agreed consideration - HELD THAT:- The issue is decided in the case of M/S. VENUS ALBUMS CO. PVT. LTD. VERSUS CCE, CHANDIGARH/LUDHIANA/AMRITSAR [ 2018 (11) TMI 754 - CESTAT CHANDIGARH] where it was held that As the activity of printing has also been exempted from payment of service tax, if we take note of the fact that the activity undertaken by the appellant in relation to photography service then also the activity undertaken by the appellant is not taxable service. Appeal dismissed - decided against Revenue.

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• 2020 (6) TMI 345
  Extended period of limitation - penalty - Valuation - inclusion of value of SIM cards sold by the appellant during the period 01.04.2006 to 31.12.2006 - HELD THAT:- The issue whether the appellant is required to pay service tax on the value of SIM cards or not, has been settled on 04.08.2011 by the Hon ble Apex Court in the case of Idea Mobile Communication Ltd [ 2011 (8) TMI 3 - SUPREME COURT ]; therefore, extended period of limitation is not invokable. Admittedly, in this case, whole of demand is confirmed against the appellant by invoking extended period of limitation - On limitation itself, impugned order is not sustainable, accordingly, the same is set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (6) TMI 356
  Refund of the MODVAT/CENVAT in cash - factory is closed - Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT:- This issue was examined by the Larger Bench of the Hon ble High Court of Bombay in M/S. GAURI PLASTICULTURE P. LTD., BOMBAY DYEING MANUFACTURING CO. LTD., M/S. SIMPLEX MILLS CO. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, INDORE, THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI IV, THE UNION OF INDIA THROUGH THE COMMISSIONER OF CENTRAL EXCISE MUMBAI I [ 2019 (6) TMI 820 - BOMBAY HIGH COURT] which also examined whether unutilised cenvat credit can be refunded on account of the closure of manufacture activities of the factory. The Hon ble Larger Bench has found that the law has not been laid down by the Hon ble Apex Court and the SLP was merely dismissed on account of the concession made by the ASG. Further, the Larger Bench of Hon ble High Court of Bombay has held that no refund can be sanctioned under Section 11B if the assessee is unable to utilise cenvat credit on account of closure of the manufacturing activities. The ratio of the judgment of the Larger Bench of the Hon ble High Court of Bombay is binding and prevails and accordingly no refund of MODVAT/Cenvat credit can be sanctioned to the respondent - Appeal allowed - decided in favor of Revenue.

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• 2020 (6) TMI 355
  Extended period of Limitation - suppression of facts or not - SCN based on change of opinion of Department - As the appellant was required to manufacture finished goods for supply to Railways out of scrap supplied by Railways, it appeared to Revenue that the inputs (copper rod) were never used in the manufacture of final product and the credit have been taken on the basis of documents only without receipt of inputs - HELD THAT:- The appellant have maintained proper books of accounts and records of their transactions. Admittedly, the whole demand is for the extended period of limitation. The Revenue has only made a bald allegation of suppression of facts, alleging the non disclosure of actual sale value of the scrap received from the Railways. There is no obligation cast on the appellant to intimate the Department on each and every transaction. The appellant have filed regular returns with the Department and have maintained proper records. Further, the appellant have obtained statement of cost of production duly certified by the Cost Accountant, who have considered various elements of cost like raw material, salary and wages, direct expenses and work overheads, quality control cost, administrative overheads, packing cost etc. as required under the Central Excise Valuation Rules read with CAS-4 guidelines (Cost Accounting Standards) as adopted by the Government of India for Central Excise purposes. The elements of suppression, mis-statement, fraud, etc. are not coming out from the facts and circumstances. The show cause notice is only based on change of opinion of Department - the extended period of limitation is not attracted and thus the show cause notice is not maintainable. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 354
  CENVAT Credit - outward transportation of goods - Cement sold by the assessee to their customers on FOR destination basis - place of removal - HELD THAT:- This issue is no longer Res integra. It has been settled by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] and the issues were identical. The Hon ble Apex Court has laid down that where the goods are sold on FOR destination basis i.e., where the ownership of the goods gets transferred only at the buyer s premises also no CENVAT credit is admissible for transportation of goods to the buyer s premises. Credit cannot be allowed - appeal dismissed - decided against appellant.

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• 2020 (6) TMI 349
  CENVAT Credit - denial of credit on the ground that as per N/N. 02/14-CE (N.T.) dt.20.1.2014, the appellant was not entitled to credit prior to the N/N. 01/10-CE dt.6.2.2010 - period i.e. 01.06.2012 to 19.01.2014 - HELD THAT:- Similarly placed assessee was allowed the credit although against those orders, the appeals have been filed by the Revenue before the Commissioner (Appeals), in that circumstance, when the Revenue is having divergent views on the issue, the extended period of limitation is not applicable - Admittedly, in this case, the show cause notice has been issued by invoking the extended period of limitation, therefore, the denial of credit is barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2020 (6) TMI 347
  Valuation - goods transferred to sister concerns when there is also sale price of the same goods to independent consumers through service branches by the respondent herein - allegation that since there is a sale to independent buyers, the same value must also be adopted to the goods transferred by them to their sister concerns - HELD THAT:- When there was a concept of normal price (prior to 2000), a price list would be filed by the assessee and approved by the officers which would show the normal price after appropriate calculations including deductions on account of trade discount, transportation etc. After 2000, the concept which has been introduced was that of transaction value. Therefore, if the same goods are sold by the same assessee at different prices on different dates or to different customers, each such price would be the transaction value for the purpose of determining the Central Excise duty. In this changed law, a doubt had arisen in the minds of the officers as to how deal with the cases where there is sale to independent buyers as well as sale of the same product to sister concerns by the assessee. This has been clarified by the CBEC in the aforesaid Circular categorically holding that the price at which goods are sold to independent buyers cannot be applied to determine the value for sale to related persons. The impugned order is correct and causes for no interference - Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2020 (6) TMI 358
  Principles of Natural Justice - demand of Luxury Tax - petitioner was not served with the order of the appellate court despite the fact that he had approached the office of the 2nd respondent to ascertain the fate of the appeal - HELD THAT:- Since, there is no repealment of Act 23 of 1999 introduced Section 5A for charging of a luxury tax on the building having a specified plinth area or more with effect from on or after 1st April 1999, the action of the respondents in charging the tax and raising the demand cannot be said to be without jurisdiction or lack of competency. There is no justification warranting any interference under Article 226 of the Constitution of India to bring the case within the realm of jurisdiction - petition dismissed.

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• 2020 (6) TMI 357
  Input Tax Credit - wrongful disclosure of purchase and sales turnover to pass on input tax credit unauthorisedly to various buyers/dealers - HELD THAT:- Though the petitioner has alleged connivance between the officers of the Commercial Tax Department and the third person who had allegedly accessed the login ID of the petitioner, the issue would be best left to the respondents to cause a proper and through investigation into the allegation with the help of the economic offences and cybercrime Wing of the state to find out whether indeed there was a misuse of the petitioner s login ID or whether the petitioner was himself/herself masquerading as unknown person to make it seem as if the petitioner s login Id was being misused. The pre-assessment notice as has been prayed for by the petitioner is not quashed - Suffice to state that the respondents shall take appropriate measures and cause an investigation into the complaint of the petitioner and seek help of the specialised investigation wings of the State concerned with cyber crime - This exercise shall be completed within a period of 12 months from date of receipt of this order. During the pendency of the aforesaid investigation, the impugned pre-assessment notice shall be kept in abeyance. Petition disposed off.

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• Indian Laws

• 2020 (6) TMI 359
  Dishonor of Cheque - Section 138 of the NI Act - trial of summon case - seeking that complainants be directed to produce documents and accounts - HELD THAT:- From the provisions contained in Sections 251 to 259 of the Code, it is quite clear that in a summons case what the Court does on the appearance of the accused is to state the particulars of the offence, and to ask him whether he pleads guilty or has any defence to make. If the accused does not plead guilty the Court will proceed to record the evidence on the side of the prosecution, hear the accused and take the evidence that the defence may produce. The Court will then either hold the accused not guilty or convict him. Section 255(3) of the Code empowers the Court to convict the accused of any offence which from the facts admitted or proved he appears to have committed, if the Magistrate is satisfied that the accused would not be prejudiced thereby. It is significant to note that Chapter XX of the Code which deals with trial of summons-cases, does not contemplate a discharge of the accused. It is quite vivid that in summons-cases once offence under Section 138 of the NI Act is registered under the provisions of the NI Act it has to be tried as a summon case and in summon case, there is no provision for recall or revocation of summons already issued to the accused. The accused has to face the trial and he has to be either acquitted or convicted by the said Court and remedy of the accused, if any, to question the order issuing summons to him, is to file a petition under Section 482 of the Code. As such, the order passed by the learned trial Court duly affirmed by the revisional Court holding that in summon-trial of offence under Section 138 of the NI Act the accused cannot be discharged, is an order which does not need interdiction by this Court in exercise of its inherent jurisdiction. Accordingly, both the Courts below are absolutely justified in rejecting the applications filed by the petitioners claiming discharge. The power to issue a summons for the production of a document or a thing is to be exercised whenever the Court considers that its production is necessary or desirable for the purposes of investigation, inquiry, trial or other proceeding. In other words, the power is available to the Court at every stage of proceedings contemplated under the Code. It has to be noticed that this power is available not only to the Court but also to any officer-incharge of a police station and the only condition for the exercise of the power is that the production of the document or the thing should be necessary or desirable for purposes of the proceedings and the only restriction is that contained under sub-section (3) which provides that the provisions of the Section shall not affect Sections 123 and 124 of the Evidence Act or apply to articles in the custody of the Postal or Telegraph authorities. Both the Courts below are absolutely justified in rejecting the application for production of documents at the initial stage - there are nomerit in this batch of petitions under Section 482 of the Code - petition dismissed.

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