TMI Tax Updates - e-Newsletter
June 23, 2021

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Non-liability to pay interest against supplementary invoices under GST

   By: Amit Agrawal

2. ATM Cash Withdrawal Rules Changed: RBI

   By: CSLalit Rajput

3. INVESTIGATIONS UNDER GST LAW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Shri Piyush Goyal chairs the review meeting on Single window system for industrial clearances and approvals

2. CCI approves acquisition of additional equity shareholding by Heineken International B.V. of United Breweries Limited

Notifications

GST - States

1. 38/1/2017-Fin(R&C)(208)/1502 - dated 16-6-2021 - Goa SGST

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

2. 38/1/2017-Fin(R&C)(208)/1501 - dated 16-6-2021 - Goa SGST

Amendment in Notification No. 38/1/2017 Fin (R&C)(100)/2805, dated the 08th May, 2019

3. 38/1/2017-Fin(R&C)(208)/1500 - dated 16-6-2021 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin (R&C)(199)/1408, dated the 25th May, 2021

4. 38/1/2017-Fin(R&C)(207)1499 - dated 16-6-2021 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(133), dated the 30th March, 2020

5. 38/1/2017-Fin(R&C)(206)1498 - dated 16-6-2021 - Goa SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-7

6. 38/1/2017-Fin(R&C)(205)1497 - dated 16-6-2021 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(38)/323 dated the 12th January, 2018

7. 38/1/2017-Fin(R&C)(204)1496 - dated 16-6-2021 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(43)/433 dated the 31st January, 2018

8. 38/1/2017-Fin(R&C)(203)1495 - dated 16-6-2021 - Goa SGST

Seeks to rationalize late fee for delay in filing of return in FORM GSTR-3B ; and to provide conditional waiver of late fee for delay in filing FORM GSTR-3B from July, 2017 to April, 2021; and to provide waiver of late fees for late filing of return in FORM GSTR-3B for specified taxpayers and specified tax periods.

9. 638-F.T. - dated 14-6-2021 - West Bengal SGST

Seeks to amend Notification no. 441-F.T. dated 03.04.2020 to exclude government departments and local authorities from the requirement of issuance of e-invoice

10. 637-F.T. - dated 14-6-2021 - West Bengal SGST

Seeks to rationalize late fee imposed under section 47 of the WBGST Act, 2017 for late filing of return in FORM GSTR-7 from tax period of June, 2021 onward

SEZ

11. G.S.R. 424 (E). - dated 16-6-2021 - SEZ

Special Economic Zones (Amendment) Rules, 2021.

Circulars / Instructions / Orders

Income Tax

1. 11/2021 - dated 21-6-2021

Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961

GST

2. 156/12/2021 - dated 21-6-2021

Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020

Customs

3. Instruction No. 14/2021 - dated 21-6-2021

CRCL Module - Forwarding of samples using electronic Test Memo to CRCL and other Revenue Laboratories

Central Excise

4. 1078/02/2021 - dated 22-6-2021

Applicability of Central Excise exemption on Ethanol/ Methanol blended Petrol, and High-speed diesel blended with bio-diesel, when blending is done within the refinery

Highlights / Catch Notes

Income Tax

• Court Rules Against Recomputing Book Profit u/s 115JB; Assessee's Accounts Found Accurate for Excise Duty Provision.

  Case-Laws - AT : MAT computation u/s 115JB - provision made for payment of Excise duty - there is no mistake in the accounts of the assessee and the lower authorities are not justified in rejecting the book profit as per the accounts maintained in terms of Part II and III of Schedule VI of the Companies Act, 1956 as certified by the Accountant and, thereby, recomputing the book profit in terms of section 115JB - AT
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• Housewife's Cash Deposits During Demonetization Cleared u/s 69A, 115BBE; Savings Explained, Additions Deleted.

  Case-Laws - AT : Unexplained money u/s 69A read with 115BBE - acknowledge income/ notional income of House wife - cash deposit in bank during demonetization period - In the present case the assessee had given the explanation to the AO during the assessment proceedings and had submitted that the amount deposited in the bank, were her money saved by her in last many year’s and were kept by her, for herself and for the family in case of emergency need - Assessee had duly explained the source of deposit - Additions deleted - AT
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• Assessee avoids penalty u/s 271(1)(c) by showing reasonable cause per section 273B after revising LTCG return.

  Case-Laws - AT : Penalty u/s 271(1)(c) - additional income offered by assessee by way of LTCG in revised return - it is not in dispute that the assessee filed revised return before issuing notice under section 143(2) of the Act. The assessee has also paid due tax along with interest thereon. In our view, the assessee has shown reasonable cause within the meaning of section 273B and no penalty was leviable in the facts and circumstances of the present case. - AT
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• Court Rules No Tax Deduction Required for Foreign Commission Payments u/s 195 of Income Tax Act.

  Case-Laws - AT : TDS u/s 195 - Disallowance of commission expenditure paid to foreign agents for non-deduction of tax - Assessee has consistently denied that they do not have any permanent establishments in India. Further the commission was remitted to them directly outside India. - The issue is squarely covered in favor of the assessee that foreign commission paid to foreign agents no tax is required to be deducted u/s 195 - AT
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• Court Rules Unexplained Investment Additions u/s 69 Invalid; Payments for Land from Known Sources Verified.

  Case-Laws - AT : Unexplained investment u/s 69 - Addition were made based on the retrieved data from CPU/Computer - source for above payments for agricultural lands have been explained out of known source and hence, addition made towards payments for purchase of agricultural lands and other lands, as unexplained investments u/s.69 of the Act, in the assessments of A.Ys.2012-13 to 2015-16, cannot be sustained under law. - AT
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Customs

• High Court Maintains Detention Order Against Key Suspect in Gold Smuggling Case, Despite Evasion Efforts.

  Case-Laws - HC : Detention Order - Smuggling - foreign Gold - pre-execution stage are not - The Competent Authority has passed the detention order on the premise that the petitioner was the prime character in the smuggling of the gold. Obviously, the petitioner has made himself scarce and is lying low. The live link between the prejudicial activity and the purpose of detention, therefore, cannot be said to have been lost. - HC
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• Pre-Deposits Are Refundable: Challenging Unjust Enrichment and Ensuring Compliance with Circulars for Consumer Welfare Fund Credits.

  Case-Laws - AT : Refund of pre-deposit - Unjust Enrichment - Amount credited to the Consumer Welfare Fund - The attempt to persuade us that this absurdity has been legislatively intended does not evoke resonance from us. It would not be wrong to posit that ‘predeposit’ is contingent not upon orders of the Tribunal but on carrying disputes to the Tribunal. - the competent authorities are directed to ensure compliance with circular - AT
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• Appellant's Penalties Upheld for Customs Duty Evasion and Forgery u/ss 112(a) and 114A of Customs Act.

  Case-Laws - AT : Levy of penalty u/s 112(a) and 114A of CA - Evasion of Customs Duty - Forging of signature - high seas sale - allegation is that appellant had prior knowledge about the importer firms begin dummy - The appellant has failed in his duty as H- Cardholder and actively involved himself in facilitating evasion of customs duty. The appellant was given specific responsibility by revenue by making him an H- Card Holder. He cannot simply pass the blame to his superior G- Card Holder - the charges under section 112(a) of the customs act as well as 114A of the customs act are upheld. - AT
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Central Excise

• Diaper and sanitary napkin packaging is manufacturing, not classified as tissues under the Central Excise Act, 1944. Demand dismissed.

  Case-Laws - AT : Process amounting to manufacture - baby diapers - sanitary napkins - transformation of supplied material into marketable packages necessary for commercial acceptance - The ‘baby diapers’ and ‘sanitary napkins’ are not ‘cleansing or facial tissues, handkerchiefs and towels of paper pulp, paper, cellulose wadding or webs of cellulose fibres’ in the Third Schedule to Central Excise Act, 1944. - Demand set aside - AT
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• CENVAT Credit Refund Approved Despite Procedural Delay in GSTR-3B for Exported Granite Slabs and Tiles.

  Case-Laws - AT : Refund of CENVAT Credit - export of granite slabs and tiles - The appellant has reversed the credit in the GSTR-3B; but there was only a delay in debiting the same and this delay is procedural delay and will not disentitle the appellant from claiming the refund - Rejection of refunds is not sustainable - AT
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• Penalties u/r 26 Require Proof of Intent or Knowledge About Excisable Goods for Justification.

  Case-Laws - AT : Levy of Penalty - Perusal of Rule 26 makes it abundantly clear that unless and until there is sufficient evidence about the mens area/ intent on the part of the appellant which prove that he knew or had reason to believe that excisable goods with which he is involved, he is transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner dealing with such excisable goods, are liable for confiscation, he cannot be penalised under Rule 26. - AT
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VAT

• Dealer's Registration Cancellation and Input Tax Credit Disallowance Contested; Court Rules Retrospective Cancellation Invalid.

  Case-Laws - HC : Cancellation of registration certificate of dealer - disallowance of input tax credit - even in the second round of litigation, the respondent no.2 authority has alleged non-genuineness only in respect of some transactions as is apparent from the table at page 3 of the impugned order. Thus, the retrospective cancellation is absolutely contrary to the binding decision of this Court in the first round of litigation. - HC
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Case Laws:

• Income Tax

• 2021 (6) TMI 719
  Assessment u/s 153A - Addition based on statement of third party - HELD THAT:- The decisive issue as per the observation of the Tribunal that there cannot be any addition on mere statement given by the third party. The Hon ble Supreme Court in the case of P.V. Kalyanasundaram, [ 2007 (9) TMI 25 - SUPREME COURT] in the identical set of facts has held that in absence of any corroborative evidences, no addition can be made just based on the statement of third party. - Decided in favour of assessee.

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• 2021 (6) TMI 718
  Disallowance on account of bad - debts written-off - assessee had failed to prove that amount was actually trading liability - AO disallowed the above claim that the assessee has not produced the relevant details of old outstanding debts, therefore, he disallowed the same - CIT-A deleted the addition holding that when the assessee has written off the above sum, debts are already taken into income in earlier years, it is allowable - HELD THAT:- Nothing new was argued by the ld DR and the ld AR also reiterated the arguments before the ld CIT(A). We find that when the assessee has written off a debt in its books of account, which was taken into computation of income in earlier years, it satisfied all the characteristic of allowable bad debt u/s 36(2) of the Act. In view of this we do not find any infirmity in the order of the ld CIT(A) in allowing the claim of bad debt written off. Nature of expenditure - miscellaneous expenditure on working of NEZ PMC - revenue or capital expenditure - HELD THAT:- All the expenditures have been incurred by the assessee on the project and corresponding income of that project has already been offered for taxation. In view of this, the ld CIT(A) held that the above expenditure of the assessee is of revenue in nature and hence deleted the disallowances. We find that the assessee is a contractor, who according to terms of the contract was to acquire the land, create electricity infrastructure thereon and then handover the project after execution to Ministry of Home Affairs with respect to Indo Bangladesh border. The corresponding revenue received for execution of this work was already credited to the project income amount and taxed. The acquisition of land and payment of electricity charges were on account of above project and it did not create any asset in the hands of the assessee but assessee was merely a contract for construction of border outpost on behalf of Ministry of Home Affairs. We find that ld CIT(A) has correctly held that in the hands of the contractor, assessee the above expenditure was merely project expenditure and has note created any capital assets , hence, not a capital expenditure. Disallowances on account of provision of written back - AO made the addition holding that assessee has failed to give the information . - Claim of the assessee is that above provision which is written back during the year cannot be charged to taxed for the reason that the year in which the provision was created , it was already disallowed and in that year the assessee did not claim the above provision as allowable expenditure - CIT-A allowed the claim - HELD THAT:- CIT(A) also examined the details of the provision written back. The complete details as well as the justification is reproduced at para 3.3.2 of his order which clearly shows that the provision made by the assessee in earlier years was never claimed/ allowed to the assessee. The ld CIT(A) also verified the same with respect to the computation of the total income of the assessee for earlier years. Before us the ld DR could not show that these provisions have already been allowed to the assessee in earlier years and therefore, they are required to be taxed in this year u/s 41(1) of the Act. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the addition. Disallowance with respect to the book profit u/s 115JB - provision made for ascertain liability - AO made the addition stating that this is merely a provision and it is for unascertained liability - CIT-A deleted the addition - HELD THAT:- The assessee submitted four different annexure to show that these provisions are for liability incurred by the assessee and are ascertained, accrued provision. The ld CIT(A) examined the list of account along with supporting documents and held that these are not contingent or provision made on ad hoc basis or to cover any uncertain liabilities. He held that the provisions are defined, ascertain, and incurred during the year. The LD DR could not controvert the finding of the LD CIT (A). Revenue appeal dismissed.

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• 2021 (6) TMI 717
  Addition u/s 43B - bonus not credited or paid to the employees Account on or before the due date of filing return of income - AO noted that assessee has made provision for bonus payable to staff - CIT(A) deleted the above disallowances - HELD THAT:- Before us the assessee has submitted the ledger account of the bonus payable, certificate of Chartered Accountant and further the names of each of the employee to whom the bonus was paid showing the names of the employees, designation, amount of bonus and Account No. of the employees to which the sum of the bonus was credited. On the basis of above evidences , it is clear that the above amount was paid on 29/09/2012 which is before the due date of the filing of return of income of the assessee. Hence, as the bonus is credited to the account of the employees before the due date of filing of return of income it cannot be disallowed u/s 43B of the Act. Accordingly, ground No. 1 of the appeal is dismissed. Admission of the additional evidence is by the CIT(A) - HELD THAT:- DR could not show us that which additional evidence is admitted by the ld CIT(A) and what is irregularities if so admitted. On reading of the order of ld CIT(A) we could not find that the CIT(A) has admitted any additional evidences or any such additional evidence is produced before him. In view of this Ground No. 2 of the appeal is dismissed. Addition on account of excess provision made for audit fees - CIT(A) deleted the disallowances for non deduction of tax at source stating that there was no requirement of tax deduction at source - HELD THAT:- Provision of audit fees was based on the advances of each of the branch and the fees is computed head wise for each branch based on the advances and equired audit fees , the amount of out of pocket expenditure as per slab is also worked out. Further, on the amount of audit fee the provision of the services tax was also to be made. The fees for head office and consolidation of the branches in audit was also to be separately worked out. Based on this the assessee made the above provision. In view of this it cannot be said that the provision made by the assessee is unreasonable or without any basis. Anyway the excess provision made by the assessee for this year would also be reversed in the next year when the same is written back and new year s provision is made. Naturally for both the years the tax incidents on the sum is also at the same rate. Naturally, there has to eb some estimation when provision is made, but it cannot be said that it is wayward and without any basis. In spite of this it cannot be said the provision made by the assessee for audit fee was not on the basis of which it was required to be paid. In view of this, we do not find any infirmity in the order of the ld CIT(A) in deleting the disallowances in respect of the audit fees. Addition of ex gratia bonus u/s 43B which according to the AO was not credited or paid before the due date of filing of the return - AO treated it as a bonus and held that as the same is not paid before the due date of filing of the return of income it is disallowed u/s 43B - CIT(A) agreed with the same and held that ex gratia payment is different from bonus which is deductible u/s 36 and held that ex-gratia payment is like salary/ incentive which is allowable u/s 37(1) itself and therefore provision of section 43B does not apply to it - HELD THAT:- It is in the form of allowances to the various employees. The resolution also shows that these ex-gratia was paid in view of the higher banking operation and increase in the work load of the staff. The board also decided that the incentive would be paid to the performing employees only and would not be paid to the employees whose performance is not satisfactory. The bonus is a statutory liability according to the Payment Of Bonus Act. Thus, ex-gratia payment therefore do not partake the character of bonus. Therefore according to us the ld CIT(A) has correctly held that the provision of section 43B of the Act does not apply to ex-gratia payment and deleted the disallowance. . In view of this Ground No. 5 of the appeal is dismissed. Addition on account of exemption/ deduction u/a 80P(2) (d) in respect of dividend income received from other cooperative societies - HELD THAT:- According to section 80P(2)(d) any income by way of interest or dividend derived by the cooperative societies from its investment with any other cooperative societiesis not chargeable to tax under that section. The whole of the income of dividend would be exempt in case of cooperative societies carrying on the business of banking or providing credit facilities to its members. Though the ld CIT(A) held that the dividend income is also tainted with mutuality. However, without discussing this aspect we hold that dividend under the provisions of section 80P(2)(d) the above sum is deductible in the hands of the assessee. Therefore the claim of the assessee is otherwise allowable but for different reasons. Thus, in substance Ground No. 6 and 7 of the appeal of the AO is dismissed. Deduction u/s 36(1)(viia) - Claim which was not involved in the assessment order and nor it was claimed by the assessee in its return of income or allowed by the ld AO - HELD THAT:- Even on reading of the order of the ld CIT(A) we find that he has decided the issue on the basis of judicial presidents only. For the purpose of allowances of the claim u/s 36(1)(viiia) though assessee being a cooperative banking society qualifies for the above deduction in respect of provision of bad and doubtful debts made. However, the claim of the assessee is always restricted by the aggregate average aggregate advance made by the rural branches of the bank. The rural branches of the bank are defined in explanation 1 of that section. Therefore, it would be imperative for the assessee to show that the branches of the assessee are rural branches and what is aggregate average advance to be computed in the prescribed manner of those branches. Unless this is computed the deduction to the assessee cannot be allowed. The ld CIT (A) has allowed the claim of the assessee without verification of these details. Even before us there are no details produced with respect to rural branches. In view of this, we set aside this ground of appeal back to the file of the ld CIT(A) with direction to the assessee to show the rural branches of the assessee and compute their average rural advance as prescribed. Thereafter after giving proper opportunity of hearing to the assessee as well as to the AO, the claim of the assessee may be decided on the merits.

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• 2021 (6) TMI 716
  MAT computation u/s 115JB - claim the deduction in respect of provision made for payment of Excise duty in the relevant year - whether P L account prepared are in accordance with provision of part II III of Schedule VI of Companies Act.? - HELD THAT:- The accounts of the assessee are audited under the Companies Act, 1956 and, in terms of Auditor s Report, statement of Profit Loss Account complied with the Accounting Standards in terms of section 211(3C) of the said Act and the same give true and fair view of book profit which are prepared as per Schedule VI of the Companies Act. The prior period expenses/liabilities have been provided on the basis of the direction of the Hon ble Supreme Court since this provision has been made after the order dated 18th October, 2011 of the Hon ble Supreme Court. We find, a somewhat identical issue had come up before the Hon ble Allahabad High Court in the case of CIT, Kanpur vs. J.K. Synthetics Ltd.,[ 1982 (11) TMI 35 - ALLAHABAD HIGH COURT ] wherein held that assessee was entitled to claim the deduction in respect of provision made for payment of Excise duty in the relevant year in as much as the Excise Department had gone up in appeal to the Supreme Court and questioned the correctness of the decision of the High Court. As view has been taken in the various decisions relied on by the ld. Counsel that prior period expenses/liabilities are to be adjusted in computing the net profit u/s 115JB of the IT Act. Since the assessee in the instant case has prepared its Profit Loss Account after providing for liability of Excise Department, administrative charges on molasses, as per the directions of the Hon ble Supreme Court, therefore, we are of the considered opinion that there is no mistake in the accounts of the assessee and the lower authorities are not justified in rejecting the book profit as per the accounts maintained in terms of Part II and III of Schedule VI of the Companies Act, 1956 as certified by the Accountant and, thereby, recomputing the book profit in terms of section 115JB.- Decided in favour of assessee.

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• 2021 (6) TMI 712
  Unexplained money u/s 69A read with 115BBE - acknowledge income/ notional income of House wife - cash deposit in bank during demonetization period - as the case of the assessee that the assessee had collected/ saved the above said sum from her previous saving, given by her husband, son, relatives for the purposes of her and family future - HELD THAT:- The requirement of the section is that money or other asset must be found and the assessee is found to be owner of article specified in the section. Further this provision provides that if the assessee offers no explanation about the nature and source of acquisition of money etc or the explanation offered by the assessee, in the opinion of the AO is not satisfactory then the assessing officer may deem such money etc as income of the assessee for such financial year. In the present case the assessee had given the explanation to the AO during the assessment proceedings and had submitted that the amount deposited in the bank, were her money saved by her in last many year s and were kept by her, for herself and for the family in case of emergency need - this explanation was rejected by the AO on the pretext the assessee was not having income from any business. AO has not brought on record any document, evidence etc to show that the assessee was having any income from any other source other than saving from various activities mentioned elsewhere. No evidence had been brought on record AO, in terms of press statement dated 18/11/2016 and SOP to established that the amount deposited in the account was not of the account holder/ assessee but of somebody else - when the AO had brought on record the evidence of proving that the money belongs to other person and not of the assessee, the amount deposited shall not added as income of the assessee. Assessee had duly explained the source of deposit i.e previous years saving and we have no hesitation to accept the same , as it would been presumed that this small amount of Rs. 2,21, 000/ would have been accumulated or saved by her from various activities undertaken by her for and on behalf of family in last many years . In the decision of Kirti [ 2021 (1) TMI 1123 - SUPREME COURT] women per say cannot be said to be not having income from any activities , as they are presumed to always been doing economic activities in the family for many years, hence in our view the assessee had duly explained the source of her investment. Therefore no additions can be made by lower authority. Further even if we ignore the explanation, for the sake of argument, then also it is for the assessing officer to bring on record some cogent evidence to prove that the amount deposited in the bank was undisclosed income arising from the business or from any other activities. No evidence has been brought on record by the lower authorities. Thus the amount deposited by the assessee during the demonetisation. Cannot be treated as income of the assessee. Hence the appeal of the assessee is allowed.

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• 2021 (6) TMI 709
  Penalty u/s 271(1)(c) - additional income offered by assessee by way of LTCG in revised return - DR submits that the mistake in the original return of income was apparent as the assessee has not offered the additional income, offered in the revised return - as per AO belated return cannot be revised - HELD THAT:- In reply to the show-cause notice under section 274 read with section 271(1)(c) the assessee explained that due to bonafide mistake while filing original return, the LTCG was not offered. The assessee explained that the mistake was due to the fact that sale consideration paid through cheque was not cleared by 31.03.2013. We find that these facts are not disputed by AO - it is not in dispute that the assessee filed revised return before issuing notice under section 143(2) of the Act. The assessee has also paid due tax along with interest thereon. In our view, the assessee has shown reasonable cause within the meaning of section 273B and no penalty was leviable in the facts and circumstances of the present case. The Hon ble Punjab Haryana High Court in CIT vs. Suraj Bhan. [ 2006 (4) TMI 107 - PUNJAB AND HARYANA HIGH COURT] by following the decision of Hon ble Supreme Court in CIT Vs Suresh Chand Mittal [ 2001 (6) TMI 63 - SC ORDER] held that when the assessee files a revised return showing higher income and gives explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. In view of the aforesaid factual and legal discussion, we are of the view that no penalty was leviable on the facts of the present case. Appeal of assessee is allowed.

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• 2021 (6) TMI 706
  Reopening of assessment u/s 147 - Accrual of salary income in India - Addition on account of stamp duty - assessee submitted that when a citizen of India leaves the country for employment and stays outside India for 182 days or more, he becomes a non-resident and income received from services rendered outside India cannot accrue or arise or deemed to accrue or arise in India and cannot be taxed in India - HELD THAT:- No substance in the argument of the ld. Counsel. The AO has made addition being the stamp duty incurred for purchase of the above property. Therefore, it cannot be said that no addition has been made on account of reasons for which the case was reopened. The ld.CIT(A) while deciding the issue has given justifiable reasons while upholding the validity of the reassessment proceedings. The ld. Counsel for the assessee also could not controvert the findings/reasonings given by the CIT(A) on this issue. Accordingly, the order of the CIT(A) upholding the validity of the reassessment proceedings is upheld. Addition of salary - Since the assessee, in the instant case, had stayed outside India for more than 182 days and had received salary from a foreign employer outside India for services rendered outside India, therefore, respectfully following the decision of VDESH KUMAR VERSUS DCIT, CIRCLE-1, GHAZIABAD [ 2018 (8) TMI 58 - ITAT DELHI] set aside the order of the CIT(A) and direct the AO to delete the addition. Addition on account of stamp duty - The same also is liable to be deleted under the facts and circumstances of the case. Admittedly, the AO has not made any addition on account of purchase of immovable property meaning thereby he has accepted the source of that huge amount. Amount towards the stamp duty is concerned, a perusal of the assessment order shows that the amount was paid by Mrs. Vandana Bhardwaj as per the ledger account of M/s Landcraft Developers Pvt. Ltd. which was reproduced by the AO in the body of the assessment order. Therefore, when the money was paid by Mrs. Vandana Bhardwaj, there was no reason for making the addition in the hands of the assessee. CIT(A) had not given any cogent reason as to why 50% shall be added in the hands of the assessee when the payment was admittedly made by Mrs. Vandana Bhardwaj, a fact brought on record by the AO himself. In any case, if the order of the CIT(A) is accepted, then, 50% of the investment in the property also should be borne by the wife of the assessee, Mrs. Vandna Bhardwaj. Thus, the finding of the CIT(A) becomes contradictory. Since the AO himself has given a finding that Mrs. Vandana Bhardwaj had made the cash payment on 03.12.2010 as per the records maintained by M/s Landcraft Developers Pvt. Ltd., therefore, I do not find any reason to sustain 50% addition in the hands of the assessee. We set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. Appeal filed by the assessee is partly allowed.

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• 2021 (6) TMI 703
  TDS u/s 195 - Disallowance of commission expenditure paid to foreign agents for non-deduction of tax - HELD THAT:- It is not the case of the revenue that export commission income of foreign agent for soliciting orders from outside India was earlier chargeable to tax and CBDT circulars exempted it. Withdrawal of those circulars does not have any impact on taxability of export commission and TDS there on. In the present case It is an established fact that agents are non-residents, operating their business activity outside India, commission payments is related to their service rendered outside India and Revenue could not show that those commission agents have any permanent establishment in India. Assessee has consistently denied that they do not have any permanent establishments in India. Further the commission was remitted to them directly outside India. The issue is squarely covered in favor of the assessee that foreign commission paid to foreign agents no tax is required to be deducted u/s 195 of the Act and, therefore, disallowance u/s 40(a)(ia) has correctly been deleted. Thus, we confirm the order of the Id. CIT (Appeals) and dismiss ground Nos. 1 and 2 of the appeal of AO. Disallowance of commission - Allegation of the AO was that commission paid to Rohit Anand (HUF) is for rendering services, but the commission is paid to HUF - HELD THAT:- In the present case the rendition of the service is not in dispute. The taxability of commission income in the hands of the recipient in the status of Individual or HUF cannot be of relevant consideration to make any disallowance in the hands of the assessee. Thus, when the rendition of service is not in doubt, amount of commission paid is also not questioned, the tax deduction at source on commission is verified and when the payment is made by account payee cheque, in all these combined circumstances we do not find any merit in ground No. 3 of the appeal. Addition on account of interest on investment when the assessee had not sufficient interest free funds available - HELD THAT:- We find that assessee has shown capital of Rs. 28,00,000/- and also interest free loan from family members of Rs. 1,05,90,000/- against which the investment in property is merely Rs. 28,93,600/-, Thus there was enough interest free funds available with the assessee. Thus the action of the Id. Assessing Officer to disallow the interest on the above sum @ 12% out of above interest paid by the assessee of Rs. 13,91,000/- is not correct and hence, correctly been deleted by the Id. CIT (Appeals). DR could not show any error in the order of the Id. CIT (Appeals). Thus, ground No. 4 of the appeal is dismissed.

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• 2021 (6) TMI 696
  Addition u/s 68 - unexplained cash credits - taxability of said cash receipts - HELD THAT:- It is not possible to presume that the unaccounted sales are made from the accounted purchases - the unaccounted sales, in the present case, are from unaccounted purchases only. In such a case, the fair way is to estimate and determine the possible income from such unaccounted sales, is by adopting the gross profit ratio. The ld. CIT(A) has adopted gross profit as the basis for arriving at profit from business. The gross profit ratios of the assessee in accounted business of the rice mill for the Asst. year 2011-12 is about 27% and for Asst. year 2012-13 is about 22%. Therefore, if above gross profit rate is applied, the profit from unaccounted sales of Rs. 5.80 crores and Rs. 1.50 crores, for the A.Ys.2011-12 and 20 12- 12 will be Rs. 1,58,45,600/- and Rs. 33,40,500/-, respectively. Hence, he has directed the Assessing Officer to treat cash receipts of Rs. 5.80 crores and Rs. 1.50 crores, shown in the diary / note book, in F.Ys.2010-l1 and 2011-12, as unaccounted sales and adopt profit from such unaccounted sales, at Rs. 1,58,45,600/- and Rs. 33,40,500/-, respectively, in the A.Ys.2011-12 and 2012- 13. Thus, additions to the extent of Rs. 1,58,45,600/- and Rs. 33,40,500/-, respectively, in the assessments of A.Ys.2011-12 and 20 12-13 are confirmed, in place of unexplained cash credits. The remaining amounts of cash credits assessed in A.Ys.2011-12 and 2012-13 and the total amounts of cash credits assessed in A.Ys.2013-14 to 2015-16 are deleted. The facts remain unchanged. Revenue has failed bring on record any evidence to prove that findings of fact recorded by the ld. CIT(A) is incorrect. Hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the Revenue. Unexplained investment u/s 69 - Addition were made based on the retrieved data from CPU found from the assessee premises - HELD THAT:- All unaccounted investments etc., made by the group, in various financial years, are within the limits of funds received from M/s. True Value Homes P Ltd in the respective years. In other words, there are no unexplained investments in the hands of the assessee in any of the assessment years under consideration. Instead, there is excess funds (sources) over the investments etc., as on 31.03.2015, in the hands of the assessee or its managing director or the group. The Ld. CIT(A) after considering relevant explanation and cash flow statement, had recorded categorical finding that in the absence of any contrary evidences, the above investments of payments for purchase of agricultural lands and other lands, during the financial years 2011-12 to 2014-15 (A.Ys.2012-13 to 2015-16), are deemed to have been made out of cash receipts received from M/s. True Value Homes P Ltd. Consequently, source for above payments for agricultural lands have been explained out of known source and hence, addition made towards payments for purchase of agricultural lands and other lands, as unexplained investments u/s.69 of the Act, in the assessments of A.Ys.2012-13 to 2015-16, cannot be sustained under law. The facts remain unchanged. The Revenue has failed bring on record any evidence to prove that findings of fact recorded by the ld. CIT(A) is incorrect. Hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the Revenue. Unexplained investment u/s.69 towards difference in the bank ledger - HELD THAT:- Having considered relevant fact, we find that the. Ld. CIT(A) has recorded categorical findings that entire investment is fully accounted for in its books and the entire amount was paid through banking channels, including sum of Rs. 5,00,000/- considered as unexplained investment by the AO. We further note that the impugned payment of Rs. 5,00,000/- has been paid on 20-09-2014 by cheque number 00104871 of Indian Bank, Trichy Branch. Therefore, we are of the considered view that the Assessing Officer is not justified in adding sum of Rs. 5,00,000 as unexplained investment u/s.69 of the Act. The ld. CIT(A) after considering relevant fact has rightly deleted addition and hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the Revenue. Addition made u/s 69C towards unexplained expenditure on account of DMK 10th State level conference held in Trichy in the financial 2013-14 - HELD THAT:- We are of the considered view that conference expenses of Rs. 3,00,30,312/- belonged to the DMK party, and the expenses are met by DMK District Secretary Shri KN Nehru. Hence, these expenses cannot be considered as expenses of the assessee, leave alone whether it is explained or unexplained. In addition, there are evidences in the very same retrieved data from CPU, to show that the amount has been received from Shri KN Nehru. Hence, the Assessing Officer is not justified in treating said expenses as unexplained expenses u/s.69C of the Act, in the hands of the assessee company. The CIT(A) after considering relevant facts has rightly deleted addition made by the Assessing Officer towards DMK party expenses u/s 69C of the Act. Hence, we are inclined to uphold findings of the ld. CIT(A) and reject grounds taken by the revenue. Addition u/s 69C as unexplained expenditure towards alleged amount spent for house construction - HELD THAT:- AO was some irrelevant entries which are nowhere connected to the assessee and his office and hence, those entries can only be treated as dumb documents and from those documents, no additions can be made u/s.69C of the Act. We, further noted that the ld. CIT(A) has also recorded a categorical findings that the assessee is having sufficient source to explain cash payments. In case, retrieved entries are considered to be true, then availability of source out of amount received from M/s True Value Homes Pvt. Ltd cannot be ignored. Therefore, we are of the considered view that there is enough source to explain said payment and hence, said payment cannot be considered as unexplained expenditure which can be brought to tax u/s 69C of the Act. Facts remain unchanged. The Revenue has failed to bring on record any evidences to prove the findings of fact recorded by the ld. CIT(A) is incorrect or we can take a different view other than the view taken by the ld. CIT(A).Hence, we do not find any reason to interfere with findings of ld. CIT(A). Hence, we reject grounds taken by the Revenue. Addition u/s 69 as based on three deleted entries from computer CPU - HELD THAT:- impugned entries were retrieved from the tally software books of accounts of M/s GSNR Rice industries Pvt. Ltd and those books are nothing to do with assessee and M/s Narayana Reddiyar Modern Rice Mill. Further, the assessee has denied those entries and any cash payments. Under these facts, it is difficult to accept findings of the AO that said deleted entries of cash payments did actually took place and represents unexplained investments which can be brought to tax u/s 69 of the Act. We further noted that the person who maintained accounts in tally software had explained the reason for entering and later deleting those entries from tally software. Therefore, when the person who entered the entries in computer software had clarified that said entries are not belongs to business affairs of the assessee and further, he had also categorically explained nature and source of such entries and the reason for deletion of entries in the computer software, then those deleted entries cannot be considered as unexplained investments to bring those entries within the ambit of section 69. There is enough source to explain said payment and hence, said payment cannot be considered as unexplained investments which can be brought to tax u/s 69 of the Act. We further noted that the ld. CIT(A) after considering cash flow statement filed by the assessee, very categorically held that the assessee is having source out of amount received from M/s True Value Homes Pvt. Ltd and which is used for making various payments, including payments made for purchase of Agricultural lands. Facts remain unchanged. The Revenue has failed to bring on record any evidences to prove the findings of fact recorded by the ld. CIT (A) is incorrect or we can take a different view other than view taken by the ld. CIT (A). Hence, we do not find any reason to interfere with findings of ld. CIT (A). Accordingly, the ground taken by the revenue is rejected. Estimated notional interest u/s 56 - AO has made addition based on excel sheet as per which the assessee is engaged in money lending business and has advanced loans to various persons - HELD THAT:- CIT(A) has recorded categorical findings that all most all advances claimed to have been given to various persons are accounted in regular books of accounts of M/s Ramjay Trading Company, a proprietorship concern of the assessee. The ld. CIT(A) has further noted that none of these loans are advanced in the financial year 2015-16, relevant to Asst year 2016-17. He further noted there is no details as to how interest of Rs. 1,181,58,712/- was calculated for a loan amount of Rs. 1,88,49,400/-. He further noted that out of total loan amount shown in excel sheet, a sum of Rs. 1,28,79,400/- was accounted in regular books and further entire amount was repaid in earlier financial year. Further, if accounted loans are excluded from total advances as per excel sheet, the balance unaccounted advances is comes to Rs. 59,70,000/. On this balance unaccounted loans, interest @24% is calculated, then it works out to Rs. 14,32,800/-. Therefore, the ld. CIT(A), out of total interest addition of Rs. 1,18,58,712/-, sustained addition of Rs. 14,32,800/- and deleted balance amount of Rs. 1,04,25, 912/-. Facts remain unchanged. The Revenue has failed to bring on record any evidences to prove the findings of fact recorded by the ld. CIT(A) is incorrect or we can take a different view other than the view taken by the ld. CIT(A). Hence, we do not find any reason to interfere with findings of ld. CIT(A).

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• 2021 (6) TMI 695
  Penalty u/ s 271 (1) (c) - Defective notice u/s 274 - violation of the mandatory requirement of law - Interest from FDR with the Bank and the income from Rasleela - HELD THAT:- It is a matter of fact that the assessing officer had issued the notice, without specifically mentioning the provision in which the penalty was sought to be imposed by the assessing officer. Though recently we have passed the decision in the matter of Fairyland v/s DCIT [ 2021 (3) TMI 558 - ITAT AGRA ] wherein we had held that it is the duty of the assessee to demonstrate what prejudice has been caused by non-specific show cause notice and had confirmed the penalty. It is abundantly clear from the reading of the decision of the full bench in the matter of Farhan [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) ] that in case of non-specific notices issued by the assessing officer, it will be violation of the mandatory requirement of law and the doctrine of prejudice cannot be invoked,, hence the penalty order which provided on non-specific notice is required to be struck down. - Decided in favour of assessee.

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• Customs

• 2021 (6) TMI 721
  Detention Order - Smuggling - foreign Gold - pre-execution stage are not - respondents contend that the petitioner has resorted to litigation with a view to delay the execution of the impugned order - HELD THAT:- Undoubtedly, there must be a live and proximate link between the prejudicial activities, as reflected in the grounds of detention, and the stated purpose of detention, namely prevention of those prejudicial activities. An inordinate delay has the tendency to snap the link between the detention order and its purpose. However, the mere fact that a detention order could not be executed for a certain period is not by itself a justifiable ground to quash and set aside the detention order, irrespective of the circumstances which attend its non-execution. The cause for delay is as important as its length. In fact, the cause for delay assumes critical significance. The submission on behalf of the petitioner that the live link between the prejudicial activities and the purpose of detention is snapped on account of lapse of time does not merit countenance. The material on record, on the other hand, indicates that the petitioner resorted to litigative strategy to evade the execution of the detention order. The very same order was impugned before this Court as well as Delhi High Court. For a considerable period, a restraint order was in force. No sooner the writ petition was dismissed by the Delhi High Court, the respondents initiated the proceedings under section 7 of the COFEPOSA Act before the jurisdictional Magistrate. In this backdrop, if the petitioner is allowed to urge the ground of delay, as a factor which snapped live link, it would amount to putting a premium on the disingenunity on the part of the petitioner. The submission on behalf of the petitioner that, in the intervening period, no prejudicial activity has been attributed to the petitioner does not advance the cause of the petitioner. The Competent Authority has passed the detention order on the premise that the petitioner was the prime character in the smuggling of the gold. Obviously, the petitioner has made himself scarce and is lying low. The live link between the prejudicial activity and the purpose of detention, therefore, cannot be said to have been lost. For the foregoing reasons, we are not inclined to interfere with the impugned order on the premise that now there is no live link between the prejudicial activities and the purpose of detention. - Petition dismissed.

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• 2021 (6) TMI 713
  Refund of pre-deposit - Unjust Enrichment - Amount credited to the Consumer Welfare Fund - Concessional rate of duty on the goods imported - Approval of the proposition that discharge of duty liability in full - HELD THAT:- There can be no two opinions that the law, as it stood then, prescribed the deposit of the disputed amount as pre-condition for submitting to the jurisdiction of the Tribunal. It is also unambiguously clear that this requirement could be whittled down only on specific direction of the Tribunal upon consideration of plea of hardship and subject to terms and conditions for safeguarding revenue. Safeguarding the interest of revenue, and, not unnaturally, considering that empowered authority did, in the present dispute, re-determine the duty liability and imposed penalty, is the underlying intent of this prescription - If the proposition of the lower authorities is to be accepted, remittance of duty would be pre-deposit only for those who could satisfy the Tribunal that such payment caused undue hardship or who were prepared to perjure themselves with claims that may not have withstood the scrutiny of the Tribunal. The attempt to persuade us that this absurdity has been legislatively intended does not evoke resonance from us. It would not be wrong to posit that predeposit is contingent not upon orders of the Tribunal but on carrying disputes to the Tribunal. The position adopted in the impugned order that the original authority was, in discarding the claim of the appellant that the payment of differential duty was pre-deposit, is not incorrect cannot be affirmed as legal and proper - the competent authorities are directed to ensure compliance with circular no. 984/8/2014-CX dated 16th September 2014 of Central Board of Excise Customs for disposal of the refund without fail and without delay. Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 710
  Levy of penalty u/s 112(a) and 114A of CA - Evasion of Customs Duty - Forging of signature - high seas sale - allegation is that appellant had prior knowledge about the importer firms begin dummy - HELD THAT:- The charge raised by appellant that he fabricated documents and forged the signature thereby allowing import of machines by fictitious non existing importers leading to loss of custom duty. This evidence is essentially in the shape of the statement of co accused. It is noticed that Shri Manoj Gadhiya has admitted in his statement dated 13.02.2014 that he was looking after over all custom clearance work of this RIPL till he resigned on 1st October 2013. The appellant was fully aware about the fictitious nature of the importers as the documents were being fabricated with his knowledge. He also admitted that he had never met the importer but solely relied on the documents submitted by High Sea Seller. His defense seems to be that once document is self certified he does not have any responsibility. This is just an excuse. The entire responsibility of KYC has been placed on the Customs Brokers. If just self attestation was enough than there was no need to put of responsibility of KYC on Customs Broker. He also admitted to forging of signatures. His only defense seems to be that he was merely an employee following direction of superior and that the Superior Shri Amit Khatu was let off. The appellant has failed in his duty as H- Cardholder and actively involved himself in facilitating evasion of customs duty. The appellant was given specific responsibility by revenue by making him an H- Card Holder. He cannot simply pass the blame to his superior G- Card Holder - the charges under section 112(a) of the customs act as well as 114A of the customs act are upheld. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2021 (6) TMI 708
  Seeking initiation of contempt proceedings against the Respondents - violation of the status quo order to maintain status quo in regard to the share capital and alienation of the shares, assets, tangible as well as intangible - Sections 241 and 242 read with Section 166 of the Companies Act, 2013 - HELD THAT:- Before a contemnor is punished for non-compliance of direction of a Court, the Court must not only be satisfied about the disobedience, but should also be satisfied that such disobedience was wilful and intentional. In order to hold a person guilty of civil contempt, it has to be established by the person alleging contempt that the alleged contemnor was guilty of a wilful breach or a wilful disobedience of an order or a direction, decree etc. of any Court. The emphasis, therefore, has to be on the word wilful . The word wilful means an This Tribunal find force in the explanation offered by the Respondents that as per its bonafide understanding the decision to change the domain name and to collect ticket fees to the account owned by the Respondent No.1 Company herein, was done upon the unilateral termination of the Bipartite Agreement. Since the cancellation of the Agreement is still under dispute, the actions taken thereafter by the Respondents cannot be considered as a wilful disobedience of the status quo order of this Tribunal act or omission which is done voluntarily and with an intent to do something which is forbidden by law or failing to do something which the law requires to be done - There is no allegation in the Contempt Petition that the admitted asset was alienated by the Respondents. The status quo order passed by this Tribunal is still in operation and that all the contentions raised by the Petitioners will be considered while passing the final order in the Company Petition. This Tribunal is of the view that the petitioners failed to establish that there is any wilful disobedience of the orders passed by this Tribunal on 23.09.2020. In the absence of any wilful disobedience, this Court cannot grant the relief sought for by the petitioner - Contempt Petition is dismissed.

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• 2021 (6) TMI 704
  Maintainability of petition - illegal removal from the post of Managing Director, in an Extra Ordinary General Meeting - first and foremost contention of the Respondents is that the consent enclosed by the Petitioners is not a valid consent under Section 399 of the Companies Act, 1956 - HELD THAT:- In the present case, the Respondent Company is having a share capital and therefore, either the shareholding requirement or the numerical requirement has to be fulfilled. Section 399(3) of the Act provides that in situations where a group of members chose to initiate an action under Sections 397 and 398 of the Act, any one member can maintain an application on behalf of and for the benefit of the other members, provided the consent in writing of the rest of the members has been obtained - the onus of proving that the shares have been indeed transferred by Respondent No.7 for valuable consideration is on the Petitioner. Prima facie, the Share Certificate on which they seek to rely, in the absence of other mandatory records to establish the transfer of 520 equity shares of the Respondent No.7 to the transferees who supports the original petitioner, is itself not conclusive about the actual date of transfer, as in Annual Returns, since both the dates are different no credence can be given to the document evidencing the share transfer as claimed by the Petitioner, which forces this Tribunal to draw an adverse inference against the consent holders Sl no.1 to 10 about the transfer of shares of the Respondent No.7 as claimed by them. Moreover, the Petitioner produced certain documents relating to the meetings conducted by the Respondent No.7 under the management of the Petitioner to sell the shares. Nowhere it is agreed or stated that these shares are sold to the consenting persons. No records have been produced by the Petitioner to prove that the consenting persons are the shareholders of the Respondent Company. Whether the Petition filed by the Petitioner along with the consent of rest of the shareholders qualify the requirement under Section 399 of the Companies Act, 1956? - HELD THAT:- Regulation 18 does not itself contain the requirement for filing the consent letters. The requirement has been prescribed in Annexure III, which is referred to in Regulation 18. Serial No. 27 of Annexure III contains a list of several documents required to be annexed to petitions relating to the exercise of powers in connection with prevention of oppression or mismanagement under Sections 397, 398, 399(4), 400, 401, 402, 403, 404 and 405. The documents required to be annexed to such petition include where the petition is presented on behalf of members, the letter of consent given by them . These requirements can be said to be mandatory in the sense that non-compliance with any of them would ipso facto result in the dismissal of the petition - In the present case the Petitioner miserably failed to obtain the consent letters from each shareholder who supports the contentions in the Petition. When he filed this Petition the consent in writing of the other petitioners had to be filed at the time of filing the petition and in the absence of the same, the petition is to be dismissed for failure to comply with the requirements as per the Act. The Petitioner herein individually and jointly failed to maintain the petition as they do not conform to the qualifying standards in relation to the shares as prescribed under Section 399 of the Companies Act, 1956 on the date of filing of the Petition - Application disposed off.

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• 2021 (6) TMI 700
  Approval of Composite Scheme of Arrangement - section 230-232 provisions of the Company Act, 2013 read with Insolvency Bankruptcy Code, 2016 and Regulation 32 of IBBI (Liquidation Process) Regulations, 2016 and under Rule 3(1) of the Companies (Compromise, Arrangement Amalgamation) Rules, 2016 - HELD THAT:- On perusal of the documents submitted by the Liquidator of the Corporate Debtor and also the Scheme placed by a Liquidator in relation to a Company under Liquidation under Section 230 of the Companies Act, 2013, the scheme is required to be approved - necessary directions issued for convening the meetings of the stakeholders comprising of Secured Creditors, Unsecured Creditors and other creditors and Members of the Company; however, suitably modified to suit the present instance taking into consideration the facts and circumstances of the case. Application disposed off.

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• 2021 (6) TMI 697
  Approval of scheme of amalgamation - seeking dispensation of meetings of shareholders of both companies - seeking dispensation of the meetings of unsecured creditors of applicant transferor company - HELD THAT:- The value of the debts of the Secured Creditors and Unsecured Creditors, as the case may be shall be in accordance with the records or registers of the Applicant Companies and where the entries in the records or registers are disputed, the Chairman of the meetings shall determine the number of values, as the case may be, for the purposes of the meetings - The Chairman to file an affidavit not less than 7 days before the date fixed for the holding of the meetings and to report to this Tribunal that the directions regarding issuance of notices and advertisement of the meetings have been duly complied with as per Rule 12 of the Companies (CAA) Rules, 2016. In compliance of Sub-section (5) of section 230 and Rule 8 of the Companies (CAA) Rules, 2016, the Applicants Companies shall send a notice of meeting under Subsection (3) of Section 230 read with Rule 6 of the Companies (CAA) rules, 2016 in Form No. CAA.3 along with a copy of the scheme of arrangement and the disclosure mentioned under Rule 6, to (i) The Central Government through the Regional Director, North Western Region, (ii) the Registrar of Companies (Ahmedabad) (iii) the Income-tax authorities, (iv) the Reserve Bank of India (v) the Competition Commission of India and (vi) the Official Liquidator stating that representation, if any, to be made by them shall be made within a period of 30 days from the date of receipt of such notice, failing which it shall be presumed that they have no objection to make on the proposed scheme. The said notice shall be sent forthwith after notice is sent to the creditors of the Companies by registered post or by speed post or by courier or by hand delivery at the office of the authority as required by sub-rule (2) of rule 8 of the Companies (CAA) Rules, 2016. Application disposed off.

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• 2021 (6) TMI 693
  Approval of scheme of Merger - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various directions regarding holding and convening of various meetings were issued - various directions regarding issuance of various SCN for the meetings to be held, were also issued - Application allowed - the scheme is approved.

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• 2021 (6) TMI 690
  Seeking direction to respondent-company to pay back the fixed deposit amounts matured - HELD THAT:- The applicant has placed on record the proof of depositing the amount with the respondent-company by way of copies of the deposit receipts issued and duly signed by the company. The accepted rate of interest payable by the respondent-company on the deposited amount is also specified in the application. In view of the clear documentary proof of deposit by the applicant, this Bench has satisfied with the submissions of the applicant and it is directed that the respondent-company to return the deposit amount along with the contracted rate of interest to the applicant within thirty days from the date of this order - application disposed off.

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• Law of Competition

• 2021 (6) TMI 688
  Approval of scheme of merger (by absorption) - seeking dispensation of the meeting of the equity shareholders, secured creditors and unsecured creditor - sections 230-232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- It is found that no list of shareholders as well as unsecured creditors has been filed. The certificate so issued by the chartered accountant, it only reflects the total number of shareholders ; annexed as annexure L at page No. 411 of the application, however, no descriptive details have been annexed. Further, CA certificate annexed as annexure M at page No. 412 of the application only shows the value of the creditors not the number of creditors, consequent upon which the share- holders are not identified from which consent affidavit ought to be obtained for dispensation of the meeting as sought for. In the instant matter there are large number of shareholders and creditors and none of them has filed their consent/no objection towards the scheme of merger/amalgamation, as such due to want of such written consent by way of affidavit from the side of share- holders/creditors, the prayer for dispensation of the meeting cannot be allowed - applicant-companies shall take steps as per section 230(5) of the Companies Act, by issuing notice to the Central Government through Regional Director (North-Western Region), Ministry of Corporate Affairs, the Income-tax Authorities, Registrar of Companies, Gujarat, RBI, and respective stock exchanges where the company is listed and other Sectoral Regulators. The dispensation of the meeting of the equity shareholders and creditors of the company as prayed for in the application is not allowed.

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• Corporate Laws

• 2021 (6) TMI 687
  Reduction of share capital - extinguishment of shares - whether the proposed reduction of capital by way of extinguishing the shareholding of 24 per cent. shareholder is just and equitable and not prejudicial to the interest of the outgoing shareholder? - HELD THAT:- In IL and FS Engineering and Construction Co. Ltd. v. Wardha Power Co. Ltd. [ 2012 (12) TMI 621 - ANDHRA PRADESH HIGH COURT ] wherein it was held that in the case of a reduction of capital, a court cannot interfere with the discretion and commercial wisdom of the stakeholders and the board of directors. If the reduction is one which is properly passed by the shareholders who are treated equitably and have had the facts explained to them, and provided the creditors are safeguarded, the court will habitually sanction reductions. The net worth of the company as at March 31, 2019 before and after giving effect to the proposed reduction of share capital are INR 3,056.01 lakhs and approximately INR 3,001.26 lakhs (subject to adjustment based on the actual dollar rate on the date of payment), respectively - The capital reduction shall not adversely affect the company s ability to honour its commitments or meet its liabilities or settle the dues of all the creditors in the ordinary course of business and the company would continue to have a positive net worth after giving effect to the capital reduction. Therefore, the present reduction of the share capital shall not prejudice any creditors of the company. The reduction of share capital is contemplated as under the articles of association of the company - the settled law as laid down in several judicial decisions and the vital aspect that the outgoing shareholder, Mr. Gopi Suri Babu, has no objection to the proposed scheme of reduction, but has consented to receive the said consideration upon negotiations and mutual agreement between the parties, this Bench approves the reduction of capital without valuation of actual shares, by carving out an exception considering the extraordinary circumstances of this case. Application disposed off.

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• Insolvency & Bankruptcy

• 2021 (6) TMI 722
  Infringement of the rights of petitioner or not - utilization of credit facilities by the defaulter company - wilful defaulter or not - HELD THAT:- It is obvious that the writ court cannot go into a factual consideration of the merits of the allegations made in the notices at the show cause stage, particularly, since there is no flaw in the notices and the petitioner was given adequate opportunity to make written submissions in response thereof, thus adhering strictly to the letter and spirit of Clause 2.6 of the RBI Master Circular. The first impugned notice dated February 26, 2021 cannot be held to be vitiated merely by absence of specific mention of prior refusal by the petitioner, as guarantor, to honour his liability in such capacity. That apart, the legal fiction of dual capacity of the petitioner, that is, as a guarantor on the one hand and as a promoter/whole-time director on the other, ought to be pierced in view of the petitioner being in charge of the management of the defaulting company at the relevant period. A person at the helm of affairs during the period when the alleged default was committed is squarely an officer who is in default, as provided in Section 2(60) of the Companies Act, 2013 - The language of Section 14 of the IBC is very clear as to its object and purpose, which is to attract resolution applicants to make offers to facilitate corporate resolution of the insolvency. Initiation or continuation of recovery proceeding against the corporate debtor itself during such resolution would prove counter-productive to such purpose. A wilful defaulter proceeding does not come within the contemplation of Section 14 of the IBC, which primarily pertains to legal actions to foreclose, recover or enforce security interest, or recovery of any property or the debt-in-question - An act of wilful default, if committed by a promoter/whole-time director/guarantor of the corporate debtor who was in charge at the relevant period, is not obliterated automatically by the filing of an application under Section 7 of the IBC. Section 32A had not been inserted by amendment in the IBC on the date when hearing was concluded in the matter of Gaurav Dalmia (supra). Section 32A, which has been held to be intra vires by the Supreme Court, clearly stipulates that the Corporate Debtor shall not be prosecuted for an offence committed prior to commencement of CIRP once a Resolution Plan has been approved by the Adjudicating Authority - an OTS for settlement of the debt, ipso facto, cannot erase the wilful default of a promoter/director or guarantor, if committed. Moreover, in the present case, the OTS had not reached culmination in view of the instalments pursuant thereto having not been cleared by the petitioner, for whatever reason. As such, there was no concluded OTS in the present case at all. No fault can be found with the issuance of the impugned show-cause notices to justify judicial interference therewith - Petition dismissed.

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• 2021 (6) TMI 702
  Reopening/Revival of application on account of default in payment by the Corporate Debtor - HELD THAT:- In the present case, the prayer of the operational creditor becomes pertinent in light of the fact that the minimum threshold of default under section 4 of IBC 2016 has been raised from Rupees One Lakh to Rupees One Crore vide Notification F. No. 30/09/2020 dated 24th March, 2020 issued by the Ministry of Corporate Affairs. Further, if we did not revive the IBA, it will give further room to the Corporate Debtor to violate settlement arrived before 24.03.2020, they defeat the very spirit of IBC. Hence, if terms of compromise are not honoured, there the IBA shall be reverted to its original position and the Adjudicating Authority shall take up the same for Adjudication. The Hon ble Supreme Court also in the matter of Ess Investments vs. Lokhandwala Infrastructure [ 2020 (6) TMI 597 - SUPREME COURT ] held that the National Company Law Tribunal can restore a Petition which was dismissed as an infructuous one . Application allowed.

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• 2021 (6) TMI 701
  Dissolution of petitioner company - Voluntary liquidation proceedings were in progress - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On examining the submissions made by the Learned Counsel for the Petitioner and after perusing the documents annexed to the Application it appears that the affairs of the Company have been completely wound up and the assets of the Petitioner Company have been completely liquidated and as such the Petitioner Company deserves to be dissolved. The Petitioner Company shall stand dissolved from the date of this order - Petition allowed.

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• 2021 (6) TMI 699
  Seeking direction to the Respondent to handover the vacant possession of a unit of the Corporate Debtor - seeking alternatively to permit the Applicant to take available recourse by filing a suit - denial to vacate the premises - violation of leave and license agreement - HELD THAT:- It is not in dispute that the Respondent has been a tenant in respect of the shop room in the Mall. The Respondent himself had terminated the lease under his email dated 13.07.2020. However, he continued to occupy the premises on the ground that he was not allowed to remove his belongings from the shop room. It is alleged by the Respondent that the terms and conditions of the leave and license agreement dated 03.10.2012 have also been violated by the Mall management and by the Applicant. The detailed appraisal of the terms and conditions of the lease and their ramifications including application of the force majeure clause would require an incisive judicial enquiry. It would not be possible for this Authority to go there into by in a summary proceeding as the present one - Since the Corporate Debtor is under CIRP, it would also be not appropriate for the Respondent to continue in the lease premises. His continuance in the shop would thwart the resolution process and would frustrate the object of the Code. It would accordingly be appropriate to direct the Respondent to handover the vacant possession of the shop room to the Applicant. The Applicant may approach the appropriate judicial forum for realisation of the outstanding rent - Respondent is directed to handover vacant possession of the shop room to the Applicant (or his successor in office) and to remove his belongings therefrom forthwith - Application allowed in part.

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• 2021 (6) TMI 698
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The applicant has established that the loan amount was given and availed by the Corporate Debtor and there is an outstanding of Rs. 1,40,49,015/- along with interest @ 12% per annum amounting total sum of Rs. 1,65,86,165 due and payable by the Corporate Debtor and the Corporate Debtor has committed default in repayment of the amount. Application allowed - moratorium declared.

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• 2021 (6) TMI 692
  Seeking Dissolution of corporate debtor - section 54 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Liquidator has filed necessary documents along with the application. Compliance certificate in form H is enclosed at page Nos. 62-66. The final report is filed at page Nos. 13-14. This IA is filed under regulation 45 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 praying the Adjudicating Authority to order dissolution of the corporate debtor company since liquidation process is complete - The assets of the corporate person have been completely liquidated. As per the final report, the mode of sale of assets was private. There were no other assets to be disposed of and as such the operation of the corporate debtor has been completely wound up. It is evident that there are no other assets for disposal by the liquidator and as such it is a fit case for passing dissolution order in respect of the corporate debtor - the corporate debtor, viz., M/s. Taksheel Solutions Ltd., is ordered to be dissolved, from the date of this order, in terms of section 54(1) of the IBC, 2016, and the corporate applicant stands dissolved. Consequently, the liquidator stands relieved. Application disposed off.

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• 2021 (6) TMI 691
  Dissolution of corporate debtor - section 54 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The assets of the corporate debtor have been completely liquidated - In exercise of the powers conferred under section 54(2) of the I and B Code, this Adjudicating Authority hereby orders the dissolution of the corporate debtor, viz., M/s. H. Sakhiya Fashions P. Ltd. Thus, the corporate debtor shall stand dissolved from the date of this order, i. e., April 20, 2021. The liquidator, namely, Mr. Kailash T. Shah is discharged from his duties and responsibilities as the liquidator of the corporate debtor-company - application allowed.

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• 2021 (6) TMI 689
  Dissolution of Corporate Debtor - section 54 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Perusal of material on record goes to show that assets of the corporate debtor have been completely liquidated and proceeds have been distributed. Moreover, it is not the case that the proposed liquidation/dissolution of the company is going to affect adversely to its shareholders/ creditors or such dissolution is contrary to the provisions of law. The present petition deserves to be allowed in terms of its prayer clause - this Adjudicating Authority in exercise of the power conferred to it under section 54 of the Insolvency and Bankruptcy Code, 2016, orders and direct that the company M/s. Bhoomi Ginning Pressing P. Ltd. shall stand dissolved from the date of this order. Petition allowed.

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• Service Tax

• 2021 (6) TMI 707
  Refund of Service Tax - rejection on the ground of time limitation - Rule 5 readwith Section 11B of the Central Excise Act - HELD THAT:- The facts of the case are not in dispute that a dispute between the appellant and the revenue was going on whether they were liable to pay service tax on their activity or not on export of services for the prior period. The appellant for abundant quotation paid service tax during the impugned period. Later on, the dispute was settled in favour of the appellant holding that they are not liable to pay service tax for the earlier period on 16.03.2018 and the appellant has filed refund claim within two months of the decision of this Tribunal. In that, if the relevant date for filing the refund claim is 16.03.2018 for the period in question. In terms of the decision of the Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] , the appellant has filed refund claim within two months from the relevant date. Therefore, the refund claim filed by the appellant is within time. Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 705
  Validity of SCN - On the refund already sanctioned by Tribunal, the Revenue issued two show cause notices to re-adjudicate the matter - error on the part of Revenue - violation of principles of natural justice - HELD THAT:- After the order of this Tribunal dated 16.10.2019, the authorities below were having the two options i. e. either to challenge the order of this Tribunal before higher forum or to comply the direction of this Tribunal passed on 16.10.2019. As the order dated 16.10.2019 has not been challenged by the respondents, the only option left with the respondent to sanction the refund claim suo-motto and to release the same, no refund claim was required to be filed by the appellant again. Instead of sanctioning the refund claim to the appellant, the adjudicating authority has issued two show cause notices illegally to the appellant on 30.01.2020 and 23.04.2020. Therefore, the show cause notices issued to the appellant are illegal and violation of the legal provisions. The act of the issuance of show cause notice to the appellant shows that arrogance of the departmental officers and they has no faith in judiciary. The said act of the departmental officer cannot be appreciated. Further, these type of actions put burden on the Govt. Of India monetarily and otherwise. The refund claim is allowed - also interest on delayed refund is allowed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (6) TMI 715
  CENVAT Credit - input services - Air Travel Charges - Canteen Services - Expenses incurred for hiring furniture for the guest house - Service of subscription of periodicals - lack of application of mind on the part of the respondent - learned Commissioner also ignored few aspects - principles of natural justice - compliance with the pre-deposit - Levy of interest - penalty - HELD THAT:- This is third round of litigation and the demand which was initially made in the first show-cause notice was Rs. 4,73,88,162/- and reduced to Rs. 33,248/- in the impugned order after two rounds of litigation which clearly shows the complete lack of application of mind on the part of the respondent - Further, the learned Commissioner has completely ignored the fact that for the previous period from December 2007 to February 2009, the Commissioner vide Order-in-Original No.10/2013 dt. 27.02.2013 has allowed the credit availed in all the cases in toto without disputing the validity of the credit taken in each of the cases and the Department did not file appeal and accepted the decision of the Commissioner. The learned Commissioner has failed to appreciate that the period involved in the present appeal pertains to March 2010 to October 2010 during that time, the definition of input service had a wide connotation and it is only after the amendment in the definition of input service w.e.f. 01.04.2011, the scope of the input service has been restricted to some extent by creating certain exclusions. Air Travel Charges - HELD THAT:- The same has been used for the purpose of business trips undertaken by the company officials /guests for business related purposes and the same has been held to be input service in the case of Arm Embedded Technologies Pvt. Ltd. Vs. CCE, Cus ST, Bangalore [ 2016 (7) TMI 1207 - CESTAT BANGALORE] - Credit allowed. Canteen Services - HELD THAT:- The outdoor catering was held to be input service prior to 01.04.2011 and during the disputed period, the same fall in the definition of input service - credit allowed. Expenses incurred for hiring furniture for the guest house - HELD THAT:- The said services also fall under the definition of input service as the guest house is used for business purposes - credit allowed. Service of subscription of periodicals - HELD THAT:- The cenvat credit availed in relation to service of subscription of periodicals is an input service. The Department without seeking any clarification/submission, chose to take soft option of confirming demand without going into merits - Credit is allowed. Compliance with the pre-deposit - HELD THAT:- The appellant in compliance of the Final Order deposited Rs. 5 lakhs on 14/08/2014 but the learned Commissioner in spite of two reminders by the appellant, took nearly six years to pass the impugned order, which speaks volumes on how the matter has been dealt by the Department causing unnecessary harassment to the appellant which is a public sector undertaking and is a big revenue contributor in the jurisdiction of Mangalore - for the subsequent period, having the same issue, the Department completely dropped the demand in the show-show cause notice for the amounts Rs. 4,13,60,093/- for the period October 2011 to June 2012. Levy of Interest - HELD THAT:- In the present case, it is not disputed that the appellant has not utilized the cenvat credit and reversed the same as soon as it was pointed out and the fact of availing of cenvat credit was very much in the knowledge of the Department because the appellant has been filing the returns regularly, so the interest is not payable. Levy of Penalty - HELD THAT:- he decision of the Supreme Court in the case of Uniworth Textiles Ltd. cited supra, will apply in this case also. In the said case, Hon ble Supreme Court has elucidated that the burden of proof to establish the malafide, rest heavily with the person who is alleging the malafide. The appellant being a public sector undertaking cannot be attributed to have a malafide intention or mens rea to evade the payment of taxes - Penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 714
  Process amounting to manufacture - baby diapers - sanitary napkins - transformation of supplied material into marketable packages necessary for commercial acceptance - N/N. 4/2006-CE dated 1st March 2006 - HELD THAT:- It is apparent from the schema of deemed manufacture that emergence of goods of another description from any process to which the enumerated goods are subjected to would take it outside the scope of deemed and requiring conformity with the general comprehension of manufacture or be incidental or ancillary to the completion of a manufactured product in section 2(f) of Central Excise Act, 1944. It is not the case of Revenue that the impugned goods, before or after repacking, are not baby diapers or sanitary napkins but that they do correspond to the description in serial no. 55 of the Third Schedule to Central Excise Act, 1944 - As baby diapers or sanitary napkins are not enumerated in the Third Schedule to Central Excise Act, 1944, their incorporation in notification no. 4/2006-CE dated 1st March 2006 does not suffice for excisability under deemed manufacture to be invoked. It offends the validity of a tax demand to be founded on a judgement except for the dispute that it purports to resolve; only the relevant statute, subject to judicial interpretations of such, can save a demand. Even less so is a random culling in which the issue, as well as the resolution, has been carefully obscured - For the impugned order to appropriate that logic for the proposition that the essence of marketability afforded by a process suffices, and to the exclusion of any or all other conditions in a statute, for goods to be deemed to have been manufactured is but semantic contortion for enabling overreach by the tax administrator. The baby diapers and sanitary napkins are not cleansing or facial tissues, handkerchiefs and towels of paper pulp, paper, cellulose wadding or webs of cellulose fibres in the Third Schedule to Central Excise Act, 1944 - demand set aside - appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 711
  Condonation of delay in filing refund claim - Refund of CENVAT Credit - export of granite slabs and tiles - non-reversal of the credit at the time of filing refund claims - procedural lapse or not - HELD THAT:- The adjudicating authority allowed the refunds by holding that non-reversal of the credit at the time of filing refund claims is only a minor procedural lapse and reversal is ensured before sanctioning of the refund; hence the delay was condoned. The eligibility of the appellant to claim refund is not disputed and it is also not disputed that the appellant has debited the amount claimed in the GSTR3B. Also, the Tribunal has consistently held that credit reversed without being utilized considered as if credit has not been taken. Hence the credit reversed in GSTR-3B tantamounts to not been taken credit in clause 1 - when the adjudicating authority has held that the belated debit is only a procedural lapse and technical in nature but the learned Commissioner(Appeals) in the impugned order has not discussed this aspect nor has given any contrary findings. The appellant has reversed the credit in the GSTR-3B; but there was only a delay in debiting the same and this delay is procedural delay and will not disentitle the appellant from claiming the refund - Rejection of refunds is not sustainable - the impugned order rejecting the refunds is not sustainable - appeal allowed - decided in favor of appellant.

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• 2021 (6) TMI 694
  Levy of Penalty under Rule 26 of Central Excise Rules, 1944 - Clandestine removal - incriminating records or not - HELD THAT:- The presumptive decision in absence of any evidence may not be accepted that too when there has been subsequent decisions of this Tribunal based upon the directions of decision of Hon ble Apex Court in the case of COMMISSIONER VERSUS RA. CASTINGS PVT. LTD. [ 2011 (1) TMI 1302 - SC ORDER] wherein it has been held that the appellant is merely commission agent; and that unless and until there is corroborative evidence to support the allegations of providing raw material by the appellant to the main manufacturer without discharging the liability, the alleged guilt, cannot be confirmed against the appellant. Perusal of Rule 26 makes it abundantly clear that unless and until there is sufficient evidence about the mens area/ intent on the part of the appellant which prove that he knew or had reason to believe that excisable goods with which he is involved, he is transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner dealing with such excisable goods, are liable for confiscation, he cannot be penalised under Rule 26. The entire record does not reveal any evidence or the document produced by the Department to reflect or to prove the same. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (6) TMI 720
  Cancellation of registration certificate of dealer with retrospective effect - disallowance of input tax credit - Provisional assessment of goods - denial on the ground that some purchases were not genuine - HELD THAT:- The impugned order passed by the respondent no.2 authority is liable to be quashed and set aside as being wholly without jurisdiction and contrary to the judgement in ARSHIL ENTERPRISE VERSUS STATE OF GUJARAT [ 2020 (4) TMI 306 - GUJARAT HIGH COURT ] passed by this Court inthe first round of litigation - This Court clearly ruled that the retrospective cancellation of registration certificate was not justified in a case wherein the allegations of non-genuineness was only in respect of some transactions and that the retrospective cancellation would also adversely impact the valid and genuine transactions. It was clearly observed that if some past transactions are proved to be invalid, then they can be dealt with in the assessment and action can also be taken against those parties who have entered such invalid transactions. However, all transactions cannot be invalidated by retrospectively cancelling the registration certificate of the dealer. In the present case, even in the second round of litigation, the respondent no.2 authority has alleged non-genuineness only in respect of some transactions as is apparent from the table at page 3 of the impugned order. Thus, the retrospective cancellation is absolutely contrary to the binding decision of this Court in the first round of litigation. The stance of the respondents in the affidavit-in-reply that the judgement of this Court was only on the basis that the respondent - authority had travelled beyond the scope of the show-cause notice is completely misconceived - the respondent - authorities are not remediless in respect of the alleged non-genuine transactions. They can be dealt with in accordance with law in the assessment proceedings. The impugned order retrospectively cancelling the registration certificate of the writ-applicants thereby invalidating even the transactions which are not disputed by the respondents and, therefore, the impugned order deserves to be quashed and set aside - Application allowed.

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