Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 4, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
CST, VAT & Sales Tax
Articles
News
Notifications
GST
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03/2021 - dated
2-6-2021
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CGST Rate
Seeks to amend notification No. 06/2019- Central Tax (Rate) so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021.
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02/2021 - dated
2-6-2021
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CGST Rate
Seeks to amend notification No. 11/2017- Central Tax (Rate) so as to notify CGST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021.
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01/2021 - dated
2-6-2021
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CGST Rate
Seeks to amend notification No. 1/2017-Central Tax (Rate) to prescribe change in CGST rate of goods.
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03/2021 - dated
2-6-2021
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IGST
Seeks to amend Notification No. 4/2019-Integrated Tax dt. 30.09.2019 to change the place of supply for B2B MRO services in case of Shipping industry, to the location of the recipient.
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03/2021 - dated
2-6-2021
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IGST Rate
Seeks to amend notification No. 06/2019- Integrated Tax (Rate) so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021.
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02/2021 - dated
2-6-2021
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IGST Rate
Seeks to amend notification No. 08/2017- Integrated Tax (Rate) so as to notify CGST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021.
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01/2021 - dated
2-6-2021
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IGST Rate
Seeks to amend notification No. 1/2017- Integrated Tax (Rate) to prescribe change in CGST rate of goods
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03/2021 - dated
2-6-2021
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UTGST Rate
Seeks to amend notification No. 06/2019- Union Territory Tax (Rate) so as to give effect to the recommendations made by GST Council in its 43rd meeting held on 28.05.2021.
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02/2021 - dated
2-6-2021
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UTGST Rate
Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify CGST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021.
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01/2021 - dated
2-6-2021
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UTGST Rate
Seeks to amend notification No. 1/2017- Union Territory Tax (Rate) to prescribe change in CGST rate of goods.
GST - States
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(05/2021) KGST.CR.01/17-18 - dated
3-6-2021
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Karnataka SGST
Seeks to amend Notification (02/2021) No.KGST.CR.01/17-18, dated the 3rd May, 2021
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(04/2021) KGST.CR.01/17-18 - dated
3-6-2021
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Karnataka SGST
Amendment in Notification (15/2020) No.KGST.CR.01/17-18, dated the 12th November, 2020
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(03/2021) FD 55 CSL 2021 - dated
2-6-2021
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Karnataka SGST
Amendment in Notification (06/2019) No. FD 48 CSL 2017, dated the 29th March, 2019
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(02/2021) FD 55 CSL 2021 - dated
2-6-2021
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Karnataka SGST
Amendment in Notification (11/2017)No. FD 48 CSL 2017, dated the 29th June, 2017
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(01/2021) FD 55 CSL 2021 - dated
2-6-2021
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Karnataka SGST
Amendment in Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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S.R.O. No. 351/2021 - dated
5-4-2021
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Kerala SGST
Amendment in Notification G.O.(P) No.66/2020/TAXES. dated 14th May, 2020 and published as S.R.O. No.316/2020
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Transition of unutilized CENVAT credit - rectification of mistake in filing TRAN-1 form - a genuine mistake should not result in the Petitioners’ losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer - HC
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Scope of the Contract - Deduction at source towards GST - Impact of increase rate of GST as 12% from existing tax as 2% or 5% - The tax liability will have to be borne by the respondent Board. The respondents are directed to rework the terms of the contract and enter into a revised agreement with the petitioner. The entire exercise shall be concluded within a period of eight weeks from the date of receipt of a copy of this order. - HC
Income Tax
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Reopening of assessment u/s 147 - excess claim of Deduction u/s 10B - The case of the respondent (Revenue) is that the petitioner was in the habit of making an excess claim under Section 10B of the IT Act, 1961 and this fact came to be knowledge of the Department only when a survey was conducted during March 2010. It is submitted that, this information was not available earlier when the assessment orders were passed both under Section 143(1). - the Income Tax Department would be justified in reopening the assessment u/s 148 - HC
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Reopening of assessment u/s 147 - undisclosed LTCG - when the information was specific with regard to transactions of penny stock entered into by the assessee, and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. - HC
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Grant of registration u/s 12AA - The ld. CIT, Exemption had denied the grant of registration by taking into consideration that the corpus donations collected in the preceding financial years had escaped assessment to tax which clearly falls under the realm of the assessment. In view of the settled position of law discussed above, we are of the considered opinion that the grounds on which the ld. CIT, Exemption had rejected the grant of registration are untenable in law. - AT
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Additions on account of cash deposited in bank account - receipts of gifts - since the gifts in the instant case are received from parents, brother and spouse, respectively and the father has withdrawn substantial cash amount from the bank before giving the gift on various dates to his son and the gifts from brother, from mother and from spouse are not huge amounts, therefore, doubting the genuineness of such gifts received from blood relations is not justified. - AT
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Deduction u/s 54F denied - non-payment from the capital gain account within the statutory period - the assessee has not utilised the amount lying in the capital gain account within the statutory period and in fact had surrendered the same during the course of assessment proceedings and, therefore, the said amount is liable to tax - AT
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Reopening of assessment u/s 147 - source of funds for investment in property - No doubt the assessee was not a regular tax payer and thus, no return could be consulted by the Assessing Officer while exercising the powers of re-opening. However, the fact remains that it was incumbent on him to at least check the facts recorded in the Sale Deed carefully ascertaining the extent of the assessee's contribution. - The public at large cannot be put to the mercies of careless, casual, arbitrary or whimsical exercise of power. The order deserves to be quashed on this count itself. - AT
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Depreciation u/s 32(1)(ii) in respect of its “right to collect toll” - the claim of the assessee towards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e “right to collect toll” being in conformity with the mandate of law is found to be in order. - AT
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Disallowance of business loss - AO held that the intention of the assessee was only to set off the rental income against such business loss therefore, disallowed the business loss claimed by the assessee against the rental income - since the Tribunal has already decided this issue in favour of the assessee for earlier year, claim allowed - AT
IBC
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Initiation of CIRP - The Applicant failed to establish the "debt" and "default". Since IBC is a rigorous act, it ought to be exercised with abundant caution. There ought to be no doubt of "alleged debt". Since there are lot of ambiguity regarding supply and payment, the application is dismissed. - Tri
VAT
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Quantum of amount to be deposited for release of detained good - Requirement of furnishing of Bank Guarantee for a sum being twice the amount of tax payable - By effecting a direct sale from Tamil Nadu without obtaining registration, the petitioner at best can be said to have violated the provision relating to the procedure. By the effecting sale from State of Tamil Nadu, the petitioner avoided criss-cross movement of the goods - Therefore, the petitioner cannot be subjected to higher tax as the officers acting as assessing officer under the Central Sales Tax Act, 1956 act as counterparts of each other. - HC
Case Laws:
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GST
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2021 (6) TMI 108
Transition of unutilized CENVAT credit - rectification of mistake in filing TRAN-1 form - HELD THAT:- The taxpayers have filed the TRAN-1 Form within time, however on account of an inadvertent mistake on their part, incorrect details have been submitted via the TRAN-1 Form, and thus, they seek revision/rectification of their TRAN-1 Form. It is seen that since there is no effective mechanism provided for the revision/rectification of TRAN-1 Form, the Petitioners were forced to approach this Court under Article 226 of the Constitution. There is no dispute as to the fact that the Petitioners filed the TRAN-1 Form within the prescribed time, however, they were precluded from claiming their transitional credit on account of inadvertent error on their part due to filling in of wrong details or omissions. In the opinion of this Court, a genuine mistake should not result in the Petitioners losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer. For such reasons, the present set of cases are also allowed. All the petitions in the first, second and third batch are allowed - Respondents are directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form electronically, or to accept the same manually on or before 30th June, 2021.
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2021 (6) TMI 106
Grant of Interim Bail - Constitution of High Power Committee - HELD THAT:- On perusal of direction issued by HPC on 30.4.2021, it is found that no such condition on the basis of which impugned order has been passed by Special Chief Judicial Magistrate, Meerut, therefore, impugned order lacks merit and is liable to be quashed. The order dated 10.5.2021 passed by Special Chief Judicial Magistrate, Meerut is quashed and petition is allowed.
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2021 (6) TMI 104
Credit of refund that was sanctioned based on PMT-03 - ineligible input tax credit - HELD THAT:- Taking note of the order dated 07.04.2021 and the Undertaking of the Department as recorded on 07.04.2021 and the stand of the Department as regards the show cause notice dated 11.09.2020 and in light of the orders passed in this petition on various dates, no further grievance of the petitioner survives for redressal and accordingly further adjudication in the matter does not arise. This petition is disposed off as not calling for any further orders.
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2021 (6) TMI 102
Scope of the Contract - Deduction at source towards GST - Impact of increase rate of GST as 12% from existing tax as 2% or 5% - G.O.Ms.No.296 Finance (Salaries) Department, dated 09.10.2017 - HELD THAT:- The agreement between the parties was entered into on 25.01.2016. The nature of work was to provide Under Ground Sewerage Scheme to Karaikudi Municipality in Sivagangai District including maintenance of the scheme for five years. The contract price was ₹ 102,63,58,582/- only - There can be no doubt that this contract price included cost factor, profit margin and tax component(TNVAT and Excise Duty). There can also be no doubt that during the relevant time, rate of tax was 2% for civil works contract and 5% for other works contract. There is again no doubt that it has now been enhanced to 12% under the GST. The Government itself has taken a policy decision that this additional tax burden will have to be borne only by the purchaser and not by the contractor. The petitioner's counsel made it clear that the petitioner should not be saddled with tax liability. When the petitioner entered into an agreement with the respondent Board, the contract price comprised three components, namely, cost factor, profit margin and tax component. There cannot be any contest regarding the cost factor and profit margin. The tax liability will have to be borne by the respondent Board. The respondents are directed to rework the terms of the contract and enter into a revised agreement with the petitioner. The entire exercise shall be concluded within a period of eight weeks from the date of receipt of a copy of this order. Petition allowed.
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Income Tax
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2021 (6) TMI 111
Reopening of assessment u/s 147 - excess claim of Deduction u/s 10B - HELD THAT:- The case of the respondent (Revenue) is that the petitioner was in the habit of making an excess claim under Section 10B of the IT Act, 1961 and this fact came to be knowledge of the Department only when a survey was conducted during March 2010. It is submitted that, this information was not available earlier when the assessment orders were passed both under Section 143(1). No merits in the present writ petition. If the accounts were castled to distort the income to show higher profit from EOU operation to claim deduction under Section 10B of the IT Act, 1961, the Income Tax Department would be justified in reopening the assessment under Section 148 of the IT Act, 1961, for the purpose of the proviso to Section 147 of the IT Act, 1961. Facts also indicate that an order was passed for the assessment year 2005-2006 as is evident from the preamble to be final order dated 30.08.2013 of the Tribunal as noted that the submission of the Respondent that this was not the first time the petitioner had claimed deduction under Section 10B of the IT Act, 1961. It appears that for the aforesaid year, CIT(Appeals)-IV vide order dated 21.09.2010, had observed that, Since transfer cost of materials between the EOU and all EOU units has been wrongly recorded the deduction u/s 10B should be restricted to the profits of the EOU units after recording the transfer of the material at the correct cost. . The issue on merits is apparently covered in favour of the petitioner in the case of Scientific Atlanta India Technology Private Ltd [ 2010 (2) TMI 658 - ITAT, CHENNAI ] and similar views in Changpond Technologies (P) Ltd vs ACIT [ 2008 (2) TMI 486 - ITAT MADRAS-A ] and Enercon Wind Farm (Krishna) Ltd. [ 2007 (12) TMI 306 - ITAT MUMBAI ] It is therefore for the petitioner to substantiate its case before the respondent by citing the above decisions and get the issue decided on merits in its favour. Writ petition is dismissed. The Respondent is therefore directed to pass appropriate orders in accordance with law on merits.
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2021 (6) TMI 109
Reopening of assessment u/s 147 - HELD THAT:- The relief claimed in the writ petition is pivoted on the fact that Elegant Real Tech Private Limited, amongst other entities, stood merged with the petitioner, and that the amalgamation scheme filed in that behalf has received the seal of approval by this Court [ 2016 (4) TMI 1408 - DELHI HIGH COURT] The petitioner claims that since Elegant Real Tech Private Limited ceased to exist upon the approval of the amalgamation scheme, the impugned notice could not have been issued qua the said entity. As, perhaps, for this reason, the respondent/revenue has taken a stand before us that it would drop the proceedings against Elegant Real Tech Private Limited, with liberty to initiate/continue the proceedings against the petitioner, as per law.
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2021 (6) TMI 107
TDS u/s 195 - reimbursement of expenses paid paid to M/s. Cerner Corporation, USA - disallowance under section 40(a)(ia) for non deducting TDS - HELD THAT:- Admittedly, the first substantial question of law has been rendered academic. Therefore, it is not necessary for us to answer the same. However, it is directed that the finding of the Tribunal with regard to the first substantial question of law shall not be treated as a precedent and it shall be open for the parties to argue the same in an appropriate case even in subsequent years. Re-computation of section 10A - HELD THAT:- Insofar as the second substantial question of law is concerned, the same has been answered by the Supreme Court in HCL TECHNOLOGIES [ 2018 (5) TMI 357 - SUPREME COURT] . Accordingly, the same is answered against the revenue and in favour of the assessee.
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2021 (6) TMI 103
Reopening of assessment u/s 147 - undisclosed LTCG - whether the revenue is justified in reopening the assessment for the year under consideration? - HELD THAT:- Facts mentioned in the affidavit by the revenue could not term as new ground or new reasons to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. AO failed to record an independent finding as to how the income has escaped assessment - AO himself was satisfied with regard to the information and other material on record, he formed an opinion that, the income has escaped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat Ltd., and the AO had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the AO to initiate proceedings under Section 147 of the Act. We do not agree with the contention that, merely on the information, the AO has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. Valid sanction as raised by the learned counsel for the writ applicant - We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the AO and the assumption of jurisdiction on the part of the AO under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render the notice unsustainable. Therefore, the assessee failed to make out a case.
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2021 (6) TMI 101
Condonation of delay - reasons for delay - sufficient cause for delay - HELD THAT:- As assessee was not aware about the assessment order or about the proceedings at the level of the assessment officer. Immediately, when she came into the knowledge about the order, she e-filed the appeal, and in the process delay of 66 days was occurred. To my mind, looking to the quantum of delay of 66 days, and also of the fact that on similar set of facts, in the case of relative of the assessee viz. Kuntalal Mahesh Gandhi for the A.Y.2012-13 to 2014-15, the delay of 870 days has been condoned by the ld.CIT(A), substantial justice demands a practical approach on the part of the ld.CIT(A) in condoning the delay. It is pertinent to take note that by making delay in filing appeal before the ld.CIT(A), the assessee would not achieve anything. Thus, such delay cannot be adopted as a strategy. I condone the impugned delay, and set aside order of the ld.CIT(A) - Appeal of the assessee is allowed for statistical purpose.
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2021 (6) TMI 100
Grant of registration u/s 12AA - corpus donations collected in the preceding financial years had escaped assessment to tax - HELD THAT:- It is a settled position of law that at the time of grant of registration, the ld. CIT, Exemption can only look into two aspects i.e. (i) whether the objects of the trust or society are charitable in nature and (ii) genuineness of the activities of the trust or society in the light of the law laid down by Ananda Social and Educational Trust vs. CIT,[ 2020 (2) TMI 1293 - SUPREME COURT] - It is also equally settled position of law that the grant of registration and assessment are two separate and distinct procedures prescribed under the Income Tax Act. From the perusal of the impugned order, it is clear that the ld. CIT, Exemption had denied the grant of registration by taking into consideration that the corpus donations collected in the preceding financial years had escaped assessment to tax which clearly falls under the realm of the assessment. In view of the settled position of law discussed above, we are of the considered opinion that the grounds on which the ld. CIT, Exemption had rejected the grant of registration are untenable in law. Accordingly, we direct the ld. CIT, Exemption to grant the registration u/s 12AA. - Decided in favour of assessee.
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2021 (6) TMI 99
Levy of penalty proceedings u/s 271(1)(c) - HELD THAT:- During the course of search no incriminating material was found against the assessee for maintaining any such bank accounts with HSBC, Geneva, Switzerland. Whatever information was supplied by the Swiss Authorities subsequently to the Revenue Authorities in India, no such information was provided for the period prior to 01.04.2011. Therefore, it is clear that no information have been provided by the Swiss Authorities that assessee maintained any bank account with HSBC, Geneva, Switzerland in assessment years under appeals i.e., 2006-2007 to 2011-2012. Therefore, it is clear that no incriminating material was found against the assessee so as to make any addition against the assessee. See KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] and MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT] In this reason alone no addition could be made of any unexplained bank deposits or interest earned thereon in any of the assessment years. In view of the above, we set aside the Orders of the authorities below and delete the entire additions.- Decided in favour of assessee. Levy of the penalty u/s 271(1)(c) - HELD THAT:- In assessment years under appeals since quantum addition have already been deleted by us on quantum appeals (supra), therefore, no basis is left for levying of penalty under section 271(1)(c) of the I.T. Act. Further the show cause notices issued by the A.O. on 02.03.2015 prior to levy of the penalty, the A.O. has not mentioned therein specifically for which limb of Section 271(1)(c) the penalty proceedings have been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of such income. therefore, show cause notices issued by the A.O. are illegal and bad in Law and vitiate the entire penalty proceedings - no penalty could be levied against the assessee. In view of the above discussion, we set aside the Orders of the authorities below and cancel the penalty in all the assessment years under appeals. Appeals of the Assessee are allowed.
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2021 (6) TMI 98
Levy of penalty u/s 271(1)(c) - defective notice - As argued notice issued does not specify the limb of Section 271(1)(c) for which the penalty has been levied - HELD THAT:- Hon ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] has also deleted the penalty levied u/s 271(1)(c) when the notice did not mention whether the proceedings were initiated for concealment of particulars or for furnishing of inaccurate particulars of income. We for the reasons stated by the Co-ordinate Bench of Tribunal while deciding the issue for earlier years and for similar reasons and relying in the case of Sahara India Life Insurance [ 2019 (8) TMI 409 - DELHI HIGH COURT] are of the view that AO was not justified in levying the penalty u/s 271(1)(c) of the Act. We accordingly set aside the levy of penalty levied by the AO and thus the ground of the assessee is allowed.
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2021 (6) TMI 97
Additions on account of cash deposited in bank account - Assessee explained source deposited in the bank to be out of gifts - father of the assessee has not made gifts in cheque and has made the gift in cash - HELD THAT:- During the course of assessment proceedings, the assessee has filed the affidavits of the donors who are parents, brother and spouse, respectively. They are not outsiders or unknown persons. No independent inquiry whatsoever was conducted by the AO either u/s 133 (6) or 131(1) of the Act. Since the gifts in the instant case are received from parents, brother and spouse, respectively and the father has withdrawn substantial cash amount from the bank before giving the gift on various dates to his son and the gifts from brother, from mother and from spouse are not huge amounts, therefore, doubting the genuineness of such gifts received from blood relations is not justified. We accordingly accept the source deposited in the bank to be out of gifts. Thus, in nutshell, as against the addition made by the AO and sustained by the CIT(A), an amount of ₹ 49,85,000/- is accepted as explained. The order of the CIT(A) is modified to this extent and the ground raised by the assessee is partly allowed. Additions on account of rental income - HELD THAT:- We find the assessee has shown to have received an amount as rent in respect of gym equipments given on hire to NIIT Ltd. We find, the AO in the order passed u/s 144 of the Act has made an addition after allowing 30% deduction from the rent u/s 24 of the Act. Since the assessee does not have any house property to let out and the rental income was received out of gym equipments given on hire to NIIT Ltd., therefore, the addition made by the AO and sustained by the CIT(A) is not justified. Accordingly, the order of the CIT(A) sustaining the addition is set aside and the ground raised by the assessee on this issue is allowed. Additions on account of professional income - HELD THAT:- As the professional income has not been doubted by the lower authorities. Since the assessee undoubtedly, is a gym trainer and has received rental income from hiring of gym equipments as well as professional income as a trainer, the various expenses claimed by the assessee cannot be denied completely. At the same time, in absence of sufficient documentary evidences to the satisfaction of the lower authorities as the claim of expenses of various kind cannot be accepted in full. Considering the totality of the facts, we are of the considered opinion that disallowance on estimate basis out of the various expenses shown at ₹ 5,29,355/- will meet the ends of justice.
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2021 (6) TMI 96
Deduction u/s 54F denied - non-payment from the capital gain account within the statutory period - HELD THAT:- The assessee has to utilize the amount deposited in the capital gain account for the purpose of purchase or construction of the new asset within the specified time for availing the benefit of capital gain. Here the assessee has made payments for purchase of a flat. He has paid an amount of ₹ 35.10 lakhs out of the capital gain of ₹ 50lakhs and the balance amount of ₹ 14.90 lakhs was lying unutilized in the capital gain account scheme which was brought to tax by the Assessing Officer and the assessee himself had agreed before him during the course of assessment proceedings. Assessee has made payments subsequently, but, not utilised the capital gain amount lying in the capital gain account scheme before the specified date. Therefore, the action of the ld.CIT(A) confirming the addition is justified. In the instant case, the assessee has not utilised the amount lying in the capital gain account within the statutory period and in fact had surrendered the same during the course of assessment proceedings and, therefore, the said amount is liable to tax. - Decided in against assessee.
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2021 (6) TMI 95
Reopening of assessment u/s 147 - investment in property - full transaction value of the property alleged to be purchased to by the assessee - whether approval granted was assailed as a mechanical exercise of power and hence the order deserves to be quashed - HELD THAT:- In the facts of the present case, when the Sale Deed is taken into consideration, it is clearly evident that it spells out the fact that only part consideration was moving from the assessee and thus if this bare document itself had been seen before the formation of the belief by the A.O. then while recording the reasons the AO would not have recorded the entire consideration as assessee's contribution and would have noticed that there were other contributors also No doubt the assessee was not a regular tax payer and thus, no return could be consulted by the Assessing Officer while exercising the powers of re-opening. However, the fact remains that it was incumbent on him to at least check the facts recorded in the Sale Deed carefully ascertaining the extent of the assessee's contribution. Since the facts set out in the Sale Deed cognizance of which was taken by the Assessing Officer himself while making the addition were un-disputably clear the conclusion that admittedly its proper consideration escaped the notice of not only the A.O. but the approving authority also is clearly evident from record. Thus not finding fault in the manner of the specific words recorded in the order to grant approval, which has been the crux of ld AR's argument the objection is sustained on the fact that no care or attention evidently was taken to consider the bare preliminary facts itself and the power was exercised mechanically without examining the record. An authority vested with the onerous powers of re-opening u/s 147 and granting of approval is expected to exercise its power consciously, carefully and with full awareness. The public at large cannot be put to the mercies of careless, casual, arbitrary or whimsical exercise of power. The order deserves to be quashed on this count itself. On a careful consideration of explanation offered right at the assessment stage partially recorded as find that even on merits the assessee has sufficiently explained the availability of funds. As money transactions from a Middle East country where the assessee's son was working who ultimately shifted to USA. The money transfer details clearly establish sufficiency of funds. No infirmity in the evidences relied upon and available on record has been pointed out. Satisfied by the availability of funds, even on merits, the assessee deserves relief - Decided in favour of assessee.
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2021 (6) TMI 94
Depreciation u/s 32(1)(ii) in respect of its right to collect toll - whether or not the assessee s claim for depreciation on license to collect toll , an intangible asset, falls within the scope of Sec.32(1)(ii) ? - HELD THAT:- We are of the considered view that the issue as to whether an Infrastructure Development company that had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be eligible for claim of depreciation in respect of its intangible rights i.e right to collect toll under Sec. 32(1)(ii) - See Progressive Construction Ltd. [ 2017 (3) TMI 1167 - ITAT HYDERABAD] and also M/s Atlanta Ltd. Mumbai [ 2018 (2) TMI 1514 - ITAT MUMBAI] , ACIT Vs. M/s PNG Tata Ltd. [ 2019 (8) TMI 347 - ITAT CHENNAI] AND M/s Essel Sagar Damoh Toll Roads Ltd [ 2019 (9) TMI 1545 - ITAT MUMBAI] We, thus, finding ourselves to be in agreement with the view taken by the Tribunal. Accordingly, the claim of the assessee towards depreciation under Sec.32(1)(ii) in respect of its intangible rights i.e right to collect toll being in conformity with the mandate of law is found to be in order. We thus not finding favour with the view taken by the CIT(A) therein set-aside the same. Levy of interest u/s 234B - HELD THAT:- As the levy of interest is mandatory as held by the Hon ble Supreme Court in the case of CIT Vs. Anju M.H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] therefore, the same being consequential, the A.O is directed to recompute the same while giving effect to our aforesaid order. Ad hoc disallowance on account of motor car expenses - HELD THAT:- As the view taken by the CIT-10, Mumbai in his order passed u/s 263 that the assessee had not claimed depreciation on the Honda CRV vehicle that was purchased by it in A.Y 2004-05 is found to be incorrect, therefore, the very assumption drawn by him that the said vehicle was not used by the assessee for its business purposes falls to ground and cannot be sustained. As the assessee had duly claimed depreciation as regards the vehicle in question i.e Honda CRV both in the year of purchase i.e A.Y 2004-05 and the year in question which had been allowed by the department, thus, it can safely or in fact inescapably be concluded that the said vehicle was used by the assessee for its business purpose. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(A) who in our considered view had rightly vacated the ad hoc disallowance of motor vehicle expenses.
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2021 (6) TMI 92
Admission of additional ground - TP Adjustment - inappropriate use of Transactional Net Margin Method ( TNMM ) instead of the Resale Price Method ( RPM ) as the most appropriate method ( MAM ) for benchmarking the Appellant s international transaction of import of dental products from its foreign AE i. e. Dentsply International, USA ( international transaction ) - HELD THAT:- Keeping in view, the judgment of the Hon ble Apex Court in the case of National Thermal Power Co. Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ], the additional ground filed by the assessee is accepted. Selection of MAM - As relying on Mattel Toys (I) (P.) Ltd. Vs DCIT [ 2013 (10) TMI 555 - ITAT MUMBAI ] we hereby direct to revenue to determine Arm s Length Price (ALP) considering Resale Price Method (RPM) as Most Appropriate Method (MAM).
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2021 (6) TMI 87
Disallowance of business loss - AO held that the intention of the assessee was only to set off the rental income against such business loss therefore, disallowed the business loss claimed by the assessee against the rental income - HELD THAT:- Since the CIT(A) while deciding the issue against the assessee has followed the order for AY 2012-13 and since the Tribunal has already decided this issue in favour of the assessee for Assessment Year 2012-13 [ 2020 (2) TMI 1499 - ITAT DELHI] therefore, respectfully following the decision of the Tribunal in assessee s own case for Assessment Year 2012-13, we set-aside the order to the CIT(A) and direct the Assessing Officer to allow the business loss claimed by the assessee which includes an amount paid to the Managing Director. The grounds raised by the assessee are accordingly allowed.
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Corporate Laws
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2021 (6) TMI 105
Disqualification of Directors under Section 164(2)(a) of the Companies Act, 2013 - direction to respondents herein to permit the petitioners to get reappointed as Directors of any company or to get appointed as Directors of any company without any hindrance - HELD THAT:- The issue involved in these writ petitions is no more a res integra. It is to be stated that the Registrar of Companies (RoC) has been disqualifying the Directors under Section 164(2)(a) of the Companies Act, 2013 by order dated 08.09.2017. Another list was published in the website of the first respondent on 01.11.2017 disqualifying the Directors. Yet another list of Directors were disqualified on 17.12.2018 by the RoC. The notification dated 17.12.2018, which was uploaded in the website by the first respondent on 18.12.2018 was challenged on the strength of the judgment of this Court in BHAGAVAN DAS DHANANJAYA DAS VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES, TAMILNADU CHENNAI [ 2018 (8) TMI 436 - MADRAS HIGH COURT] . However, they were dismissed by this Court, and such orders were passed on 27.01.2020 and 10.02.2020, etc. The said orders were put to challenge in a batch of writ appeals, which were dealt with by the Hon'ble First Bench of this Court in MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, [ 2020 (10) TMI 595 - MADRAS HIGH COURT] where it was held that the publication of the list of disqualified directors by the ROC and the deactivation of the DIN of the Appellants is hereby quashed. Petition allowed.
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2021 (6) TMI 89
Seeking to restore the name of the company in the Register maintained by the Respondent - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is evident from the plea of the Applicant that the Applicant Company seeking for restoration of its name in the register as maintained by RoC on the ground that the Applicant Company was doing business for which it was incorporated and it is in operation and in the circumstances, it is just that the name of the Company should be restored on the Register of Companies as maintained by the Respondent. It is evident that the Applicant Company was struck off on 09.08.2018 and for the two years immediately preceding 09.08.2018, it is incumbent upon the Applicant to show that the Applicant Company was active and running business. A perusal of the Income Tax Acknowledgment and also the Bank Accounts of the Company manifest the fact that the Company was active and carrying on its business activities, however has failed to file the Annual Returns and Financial Statements with the Respondent since incorporation. Under the circumstances, this Tribunal feels that it is 'just' that the name of the Company is required to be restored back in the Register maintained by the Respondent - The Applicant Company has filed sufficient documents in order to demonstrate that the Company is active and carrying on the business and substantiated that it is 'just' that the name of the Applicant Company is required to be restored. Thus, this Tribunal is of the view that the name of the Applicant Company is required to be restored in the Register maintained by the Respondent RoC. Taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register and in the interest of all the stakeholders including members of the Company, its employees as well as the revenue and the Applicant itself who seeks restoration of the name of the Company in the register being maintained by RoC. The Application is allowed.
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Insolvency & Bankruptcy
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2021 (6) TMI 93
Seeking approval of the Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In K. Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon'ble Court observed that the role of the NCLT is 'no more and no less'. The Hon'ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The Resolution Applicant is eligible under section 240A of the Code and satisfies the relevant legal requirements. The Plan needs to be approved as provided under Section 31 of the Code. Application allowed.
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2021 (6) TMI 91
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is clear that the both parties were having business dealings for considerable time and payment were made. Goods were also supplied and some payment were also received by the Applicant. Subsequently, there appears to be some dispute between both the parties - IBC is a very rigorous enactment. Hence, the Adjudicating Authority ought to ensure extreme caution and detailed study before passing a final order of admission. Based on the agreement, documents and submissions made by the parties, it is clear that the Applicant could not prove that the goods were supplied by lorry to the Corporate Debtor address. The lorry details of the consignment, delivery challan in proof of the same are not enclosed. Based on few emails exchanged between the parties and dishonored cheques, it is not appropriate to conclude the debt and default. The Applicant failed to satisfy this Adjudicating Authority that as per the invoices the goods were delivered by a lorry consignment to the address of the Corporate Debtor. Hence, neither the debt nor the default is proved. Since there were business dealings between the parties, it is not possible to pick and choose the invoice and establish that there is alleged debt and consequential default. The transaction involves purchase order, modes of operation as agreed between the parties, the terms and conditions and violations if any, the details of C F agencies. Hence, from alleged debt out of few invoices, one cannot establish the case beyond doubt. The Applicant failed to establish the debt and default . Since IBC is a rigorous act, it ought to be exercised with abundant caution. There ought to be no doubt of alleged debt . Since there are lot of ambiguity regarding supply and payment, the application is dismissed.
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2021 (6) TMI 90
Requiring physical appearance of Director of the Corporate Debtor for Recording statement in CIRP - Mistaken of identity on the part of the Police Officials in producing him before this Tribunal - HELD THAT:- The statement made by said Mr. A.M. Farook and his representations today cannot be accepted as the IDs which have been produced today are also correlated with the earlier IDs produced before this Tribunal the Photostat copies of which are available on record which are duly signed by the person concerned - Mr. A.M. Farook, who is present today is responsible for production of documents as sought by the Applicant/IRP in the Application which has been filed under Section 19 (2) and 19 (3) of IBC, 2016. Let the same be produced to the IRP by Mr. A.M. Farook within a period of 15 days from today.
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2021 (6) TMI 88
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is not in dispute that last supply has been made in May, 2016 and invoice for the same has been raised on 09.05.2016. The application has been filed on 20.11.2019. It has been claimed by the Corporate Debtor that this application was liable to be dismissed on the ground of limitation itself as there is no acknowledgement by the Corporate Debtor from the date of such invoice till the filing of application under Section 9 by the Operational Creditor. Pre-existing dispute - HELD THAT:- The Corporate Debtor has failed to show that such letters had actually been issued and delivered to the Operational Creditor. Thus, no credibility of such letters exists in law. Having held so, now, the fact is noted that Corporate Debtor has not replied the notice issued under Section 8 of IBC, 2016 and for this reason alone, this application is liable to be admitted particularly when no reasonable cause has been shown even during the course of hearing as to why such reply was not given. Petition allowed - moratorium declared.
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2021 (6) TMI 86
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The corporate debtor has admitted the debt and did not argue the matter during the course of last hearing held on 09.03.2021 - the petitioner has supplied goods to the respondent and the aforesaid chain of events clearly establish that the petitioner is operational creditor. Therefore, in the instant case, the petitioner very well falls within the definition of operational creditor and the amount outstanding is operational debt. The Adjudicating Authority is only required to consider whether there is any default and the debt is due and payable. In the instant case, the applicant has placed on record enough documents evidencing the default and hence, the present application deserves to be admitted - On perusal of the record it is also found that the instant petition filed by the applicant is well within limitation and there is no pre-existing dispute regarding the operational debt from the side of the corporate debtor. The documents produced by the operational creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'operational debt' - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt due and payable to the Applicant. Application admitted - moratorium declared.
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2021 (6) TMI 85
Direction to Respondent to conduct immediate forensic audit of the books of accounts of the Corporate Debtor - direction to issue fresh EOI so as to invite prospective Resolution Applicant(s) in accordance with the Code - HELD THAT:- It is to be mentioned herein that the Hon'ble Supreme Court has reiterated on number of occasion that National Company Law Tribunal (NCLT) or National Company Appellate Tribunal(NCLAT) cannot interfere with the Commercial wisdom of the CoC under limited scope as provided under Section 30 and 31 of IBC, which recently has been observed by the Hon'ble Supreme Court, in KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT] , referring to precedent such as COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] , K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] - While passing the order, it is further observed that the NCLT and NCLAT cannot review the commercial decision exercised by CoC of approving the resolution Plan or rejecting the same and thereby, has given the paramount importance to the decision of the CoC which is to be taken on the basis of the commercial wisdom. There are no merit in the instant application - application not allowed.
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CST, VAT & Sales Tax
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2021 (6) TMI 110
Quantum of amount to be deposited for release of detained good - Requirement of furnishing of Bank Guarantee for a sum being twice the amount of tax payable - Section 71(a) of the TNVAT Act, 2006 read with Section 72 of the TNVAT Act, 2006 - HELD THAT:- Admittedly, the petitioner is not registered under the provisions of the Central Sales Tax Act, 1956 for the sales effected by the petitioner from Tamil Nadu to a buyer in the erstwhile composite State of Andhra Pradesh in Hyderabad - Since the petitioner is not an assessee within the jurisdiction of the respondent, the respondent was justified detaining the goods by giving an option to the petitioner to pay amounts under Section 72(1-a) of the TNVAT Act, 2006. By effecting a direct sale from Tamil Nadu without obtaining registration, the petitioner at best can be said to have violated the provision relating to the procedure. By the effecting sale from State of Tamil Nadu, the petitioner avoided criss-cross movement of the goods - Therefore, the petitioner cannot be subjected to higher tax as the officers acting as assessing officer under the Central Sales Tax Act, 1956 act as counterparts of each other. No useful purpose would be served by asking the petitioner to furnish bank guarantee four times the tax after the detained goods were allowed to be released by the respondents - this Court is inclined to dispose this writ petition by directing the respondent to pass appropriate orders on merits based on the submission of the petitioner within a period of sixty days from the date of receipt of this order - Petition disposed off.
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