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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter June 6, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI Short Notes Customs: Show cause notice issued by Additional Director General-Directorate of Revenue Intelligence is not a proper officer within the meaning of Customs Act, 1962 GST: Writ Petition cannot be a tool to escape the statutory remedies available under the law-Supreme Court of India. Income Tax: Reassessment conducted after 4 years by Income Tax Authorities. Service Tax: Principles of Natural Justice upheld by the Court/s. Indian Laws: Liberal interpretation of limitation law by the supreme court in covid-19 phase. Articles RECENT DEVELOPMENTS IN GST Advance ruling cannot be sought by recipient of works contract services News CCI issues cease and desist order against Amateur Baseball Federation of India for abusing its dominant position Notifications Customs 19/2022 - dated 3-6-2022 - ADD Seeks to extend the levy of ADD on import of Toluene Di-isocyanate (TDI) originating in or exported from China PR, Japan and Korea RP,by amending notification No. 3/2018-Customs (ADD) dated 23-01-2018. Highlights / Catch Notes GST Availability of alternative remedy of appeal - requirement of pre-deposit of 100% of penalty or 25% u/s 107 of CGST Act - If the requirement in law is that the petitioner must deposit only 25% of the penalty to avail such remedy, the petitioner cannot be fastened with the responsibility to pay 100% - HC Visit to Get Source Classification of services - rate of GST - services provided to Nagar Nigam (Local Authority) - services of electrical, lighting, earthing, fixation of junction boxes, poles and cantilevers, cabling infrastructure, design, supply, installation, testing and commissioning of various intelligent traffic management system - the subject Supply is covered vide Sr no 3(vi)(a) of Notification 8/2017-Integrated Tax (R) dated 28-6-17 at Tariff 9954 and liable to 12% IGST rate. It is found that this Integrated Tax Notification comes into play in subject matter as the supply is Inter State Supply. - AAR Visit to Get Source Exemption from GST - letting out on Leave and License Basis of their residential building to LIC for residential purpose of their staff - Applicant is eligible for the exemption from payment of GST on the monthly license fee to be received by them on the proposed letting out on Leave and License Basis - AAR Visit to Get Source Scope of supply - Exemption from GST - services provided by Executive Council of Insurers (ECOI) and ombudsman officers to the aggrieved persons who have grievances against insurance companies/insurers - In fact, it is found that the Insurers, being the persons against whom there is a grievance, are also interested in solving the relevant issues and in this context, it is seen that by deciding on the complaints of the aggrieved persons, the insurance company being party to such disputes are also availing the services of the applicant/Ombudsman. Hence, the impugned activity undertaken by the applicant amounts to 'supply of services'. - the activities of the applicant are not exempt under the said notification - AAR Visit to Get Source Scope of supply - co-operative group housing society - gratuitous payment from an outgoing member - There are no hesitation in holding that the receipt of gratuitous payment from an outgoing member is taxable under the CGST Act, 2017. - AAR Visit to Get Source Income Tax New Rule 44FA. - Form and manner of filing appeal to the High Court on ruling pronounced or order passed by the Board for Advance Rulings under sub-section (1) of section 245W - Income-tax (Sixteenth Amendment) Rules, 2022 - Notification Visit to Get Source Revision u/s 263 - bogus purchase - proof of nexus between the purchases and sales - once submission/reply filed by the assessee, pursuant to enquiry by the Assessing Officer, are accepted by the Assessing Officer then finding on that particular aspect is not necessary to be recorded by the Assessing Officer. Further, it has not been denied in the present case that though the proceedings under section 147 of the Act may have been abated, as a result of search action, all the information filed by the assessee in response to notice(s) under section 143 (2) of the Act, during reassessment proceedings, were available with the Assessing Officer. - AT Visit to Get Source Addition being the income shared with the appellant's spouse - section 5A - Portuguese civil code - in the instant case the appellant was not governed by Portuguese civil code, rather the appellant's spouse though Goan but she loses to be the member of the Portuguese territory, after marrying the appellant who is not the member of the Portuguese territory. Thus, the benefit of the application of section 5A of the income tax act 1961, is not available to the appellant. - AT Visit to Get Source Valuation of property - Herald House, Bahadurshah Zafar Marg, New Delhi - FMV determination - We hold that firstly, the circle rate which has been proposed by the appellant to be applied here in this case for valuing the property is not acceptable, because circle rate are not the right benchmark in all cases for determining the actual market value of property in Delhi especially where the property is located. Here it is found as a matter of fact that even in the sale instance of residential property at Tolstoy Marg, the sale rate was many times higher than the circle rate. In any case, Bahadurshah Zafar Marg and Tolstoy Marg fall in the same zone i.e., Zone – A for the purpose of circle rate and if the property at Tolstoy Marg has been sold at a much higher price than the circle rate, then ostensibly the circle rate cannot be held to be applicable for the property at Bahadurshah Zafar Marg. - AT Visit to Get Source Taxing of the fair market value of the properties owned by AJL u/s 28(iv) - whether the provisions of section 56(2)(viia) is applicable specifically dealing with the shares? - treatment of the transaction of assigning of loan by the AICC to appellant company, whether was a fraudulent transaction or not - the benefit which has arisen as a consequence of adventure in the nature of trade where benefit has been derived in the non-mandatory form i.e.,v in the form of immovable properties of AJL during the year which is taxable u/s 28(iv) and, therefore, it is an income, which has arisen to the assessee, taxable u/s 28(iv). - AT Visit to Get Source Customs Valuation of imported goods - rejection of declared assessable value based on NIDB data - The value of the similar goods were obtained not only from other imports taken from NIDB data but also from the manufacturer’s price lists. Under these circumstances, we find nothing incorrect in the order-in-original rejecting the transaction value under Rule 12 re-determining the value as per Rule 5 and demanding the differential duty along with interest and the Commissioner (Appeals) upholding the same in the impugned order. - AT Visit to Get Source FEMA Offence under FERA - Non-realization of payment towards exported goods - “reasonable steps” to be taken for securing the sale proceeds of exports or not? - concerned buyer in France became bankrupt - The Tribunal has rightly imposed the penalty upon the appellant and this Court does not find any substantial ground or cogent reason to invoke its extraordinary jurisdiction and interfere with the said order. - HC Visit to Get Source Corporate Law Amendments in Rule 8, Rule 10, Form DIR-2 and Form Dir-3 - Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 - Notification Visit to Get Source Micro Finance/Micro Credit as an object in the Object Clause of Memorandum of Association (MoA) of Section 8 companies registered under the Companies Act, 2013-Clarification - Immediate action on the part of RoCs is required as per law, including changing their objects to prevent such companies from carrying out the micro finance activities. - Circular Visit to Get Source Discrepancies in disclosures while preparing Balance Sheet - Period of limitation for filing Complain by the ROC - Condonation of delay - the learned Trial Court overlooked the filing of the application for condonation of delay. The mind has not been applied to the question of condonation of delay and the complaint being within the period of limitation. - Matter restored back - HC Visit to Get Source Seeking restoration of the name of the Company - The RoC is empowered to review this Company even after few years and they can take appropriate measures in accordance with the provisions of the Act. So far as the present case of the Appellant is concerned, simply, because of the failure to file a Financial Statement and returns that too only of the two years should not result the company into striking off their name. These are small companies, business is erratic. - AT Visit to Get Source IBC A selected candidate shall ordinarily be engaged as a Research Associate or Consultant, as the case may be, on contractual basis for a period not less than one year and up to three years - Revision in Monthly remuneration to be paid - Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) (Amendment) Regulations, 2022 - Notification Visit to Get Source Jurisdiction - approval of resolution plan - Power of NCLT / NCLAT over commercial wisdom of the Committee of Creditors (CoC) - This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. - It is thus clear that the decision of the CoC was taken after the members of the CoC, had due deliberation to consider the pros and cons of the Settlement Plan and took a decision exercising their commercial wisdom. Neither the learned NCLT nor the learned NCLAT were justified in not giving due weightage to the commercial wisdom of CoC. - SC Visit to Get Source Liquidation of corporate debtor - disposal of asseets - The mere fact that the Appellants in this Appeal claims that they are interested to offer a higher amount to one which the Corporate Debtor has been auctioned cannot be a ground to entertain this Appeal or interfere with the impugned order. Everyone including the Appellants had ample opportunity before the Adjudicating Authority when proceedings were on to submit appropriate Scheme Under Section 230. - AT Visit to Get Source Initiation of CIRP - Period of limitation -acknowledgement of debts in the Balance Sheet - the acknowledgement in Balance Sheet for FY 2016-17, relied upon by the Financial Creditor, is unequivocal and crystallizes the issue of ‘acknowledgement of debt’ as defined under Section 18 of the Limitation Act, 1963 - this Tribunal is of the earnest view that the Application filed under Section 7 of the Code is well within the period of Limitation. - AT Visit to Get Source Service Tax Recalling of order - Matter was heard ex-parte - it is opined that since the Revenue has already acted upon the impugned final order and has already taken steps to implement the same there seems no justification nor even scope to recall such a final order especially when the proceedings were well in the notice of the applicant since first round of litigation in the impugned matter. - There are no justification in the prayer of the appellant - AT Visit to Get Source Central Excise Standard Operating Procedure (SOP) for NCLT cases in respect of the Insolvency and Bankruptcy Code (IBC) - Order-Instruction Visit to Get Source Entitlement of Interest on delayed refund - relevant date for calculation of time - In the present case, refund arises only after passing of order-in-appeal by the Commissioner (Appeals) dropping the demand. Therefore, there is no occasion to give refund prior to the date of order-in-appeal. Considering that the refund was sanctioned within three months from the date of application and the refund arose consequent to order of Commissioner (Appeals), no interest is payable from the date of deposit of the duty during investigation. - AT Visit to Get Source CENVAT Credit - capital goods or not - lightings, equipments and fixtures falling under Chapter 85 and 94 - denial of Cenvat Credit on the ground that it is not used in relation to manufacture of the final product - From the reading of the definition of inputs with effect from 01.04.2011, all Goods used in the factory of the manufacturer are admissible inputs. - Credit allowed - AT Visit to Get Source CENVAT Credit - inputs issued for production lying in shop floor but not used for the production and the same was destroyed in fire - remission of duty granted - though the input was not used and issued for production, the demand of Cenvat Credit thereon was set aside - the demand of Cenvat Credit in respect of inputs issued for production and lying in shop floor is not sustainable - AT Visit to Get Source Case Laws: GST 2022 (6) TMI 196 Directing release of the petitioners vehicle - Levy of maximum penalty of 50% of the value of the goods or 200% tax payable, whichever is higher - petitioners submitted sufficient documents to raise a prima facie presumption of the petitioners being the owner of the goods - HELD THAT:- Since factual disputes, in respect of the authenticity of the ownership of the petitioners, and the legal question as to the applicability of the Central and the State Acts parallelly or one, in exclusion of the other, have been raised, such adjudication would be de hors the scope of the present appeal. Since it is within the domain of the first Court of learned single Judge, while deciding the writ petition, to adjudicate such questions on merits, even if the single Judge assumes jurisdiction in the teeth of availability of an alternative remedy by way of appeal, it is not intended to usurp such jurisdiction of the learned single Judge in the present appeal, which has been preferred against an interlocutory order. There are no error in the impugned order to justify interference in an intra-court appeal. Application dismissed. 2022 (6) TMI 195 Availability of alternative remedy of appeal - requirement of pre-deposit of 100% of penalty or 25% u/s 107 of CGST Act - Seeking release of goods vehicle - Physical verification/inspection of the conveyance, goods and documents issued in form GST MOV-2 - section 129[3] of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The petitioner has offered surety and furnished the bank guarantee for 100% of the penalty. The petitioner s remedy as against such order is under Section 107 of the CGST Act, and the petitioner can avail such remedy upon deposit of 25% of the penalty as contemplated under the proviso to Section 107 of the CGST Act. If the petitioner has obtained release of the vehicle against furnishing surety bond and bank guarantee [100% of the penalty] and there is an order as contemplated under section 129[3] of the CGST Act, the petitioner, if aggrieved, must avail permitted remedy under Section 107 of the CGST Act. If the requirement in law is that the petitioner must deposit only 25% of the penalty to avail such remedy, the petitioner cannot be fastened with the responsibility to pay 100% - the writ petition stands disposed of with liberty to the petitioner to avail remedy under Section 107 of the CGST Act upon deposit of 25% of the penalty. Petition disposed off. 2022 (6) TMI 194 Classification of services - rate of GST - composite supply of services - provision of services provided to Shahjahanpur Nagar Nigam (Local Authority) - services of electrical, lighting, earthing, fixation of junction boxes, poles and cantilevers, cabling infrastructure, design, supply, installation, testing and commissioning of various intelligent traffic management system - correct HSN / SAC code - HELD THAT:- The subject Contract Agreement, as enumerated in the brief facts, is a Works Contract Agreement, involving supply of goods and services for implementation of the Project. Vide Schedule II(6)(a) CGST Act, Supply of Works Contract shall be treated as a supply of service. We find that the service recipient is Shahjahanpur Nagar Nigam, Uttar Pradesh which is a local authority. Thus, the subject Supply is covered vide Sr no 3(vi)(a) of Notification 8/2017-Integrated Tax (R) dated 28-6-17 at Tariff 9954 and liable to 12% IGST rate. It is found that this Integrated Tax Notification comes into play in subject matter as the supply is Inter State Supply. M/s Amnex's submission to take into account Notification 24/2017- CT(R) dated 21-9-17, as this Notification pertains to Intra state supply, is dismissed. HSN/ SAC Code of Subject Supply - HELD THAT:- The subject ITMS project is an original works involving both installation, commissioning and maintenance. It is found that Tariff 9954, as mentioned in previous para, is reflected at the said sr. no 3(vi)(a) of Notification 8/2017-IT(R). On reference of SAC 995468: Other installation services n.e.c., it is found that the said SAC description encompasses the ITMS project, which is an original works installation and note that SAC 995468 occurs last in the numerical order of the of Tariff subheading 9954. In this backdrop and for the reason that the subject supply is made to a local authority and the rate being 12% IGST as per said sr no 3(vi)(a) to the said Notification and that Tariff 9954 is reflected at the said sr no 3(vi)(a), it is apt to consider SAC 995468 for the subject works contract, without delving further. 2022 (6) TMI 193 Exemption from payment of GST - monthly license fee to be received by them on the proposed letting out on Leave and License Basis of their residential building to M/s. Life Insurance Corporation of India for residential purpose of their staff - monthly license fee to be received by them on the proposed letting out on Leave and License Basis of their residential building - SI. No. 12 of the Notification No.12/2017-CT(Rate), dated 28-6-2017 and corresponding S.No.12 of Notification No. 12/2017-ST(Rate) under Maharashtra Goods and Service Tax Act, 2017 - HELD THAT:- In the subject case, the supply of service pertains to the Real Estate Sector and can be called Real Estate Services (9972), where such services i.e rental/leasing services are involving own residential property (997211) where the owner i.e. the applicant, of the residential property is supplying Real Estate Service involving its own property - As per the schedule entry of Notification No.12/2017-CT (Rate) dated 28.06.2017 the residential dwelling/property must be given on rent for use as a residence. The entry does not mention as to whom the said services to be supplied. The exemption given in Sr. No. 12 mentioned above is qua the supply of service and not qua the recipient of the supply. We therefore agree with the contention of the applicant that, Serial No.12 of Notification No.12/2017-CT (Rate) and the corresponding Notification under MGST Act, 2017, is very clear wherein it gives exemption to the nature of the property and its usage and not by the status of recipient - It is a fact that the impugned residential properties will be used as residences by the staff of LIC and we therefore hold that, such services will be covered under the above mentioned Sr. No. 12 of Notification No.12/2017-CT (Rate) dated 28.06.2017 as amended. Further, if a residential property was either used or let out for commercial purposes then it would be classified as a service provided and attract GST. Only property let out for residential purposes will be exempt from the GST ambit. The GST applicability is not decided by the nature of the property but by the purpose for which it is used. To reiterate, it is not the nature of the property but the nature of the end use that will determine whether it is a commercial rent or residential rent. The ruling given by the West Bengal Authority for Advance Ruling, Goods and Services Tax, in the case of IN RE: M/S. BORBHETA ESTATE PVT. LTD. [ 2019 (6) TMI 1340 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL] ie referred, where it was held that the Applicant's service of renting/leasing out the dwelling units for residential purpose was, exempt under Si No. 12 of the Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017, as amended from time to time and the Applicant, therefore, was not liable to pay tax on supply of such service. Thus the Applicant is eligible for the exemption from payment of GST on the monthly license fee to be received by them on the proposed letting out on Leave and License Basis of their residential building to M/s. Life Insurance Corporation of India for residential purpose of their staff, as per SI. No. 12 of the Notification No.12/2017-CT(Rate), dated 28-6-2017 and corresponding SI. No. 12 of Notification No.12/2017-ST(Rate) under Maharashtra Goods and Service Tax Act, 2017. 2022 (6) TMI 192 Scope of supply - Exemption from GST - services provided by Executive Council of Insurers (ECOI) and ombudsman officers to the aggrieved persons who have grievances against insurance companies/insurers - payment received by the Life Insurance Council and General Insurance Council on behalf of Executive Council - amount received by Executive Council of insurers from the Life Insurance Council and General Insurance Council. Whether there is any supply rendered by the applicant in the subject case and if it is found that the applicant is undertaking a supply, then in such a case whether there is a supply of goods or services or both? - HELD THAT:- The definition of the term 'supply' is an inclusive definition and has to be understood as encompassing a wide range of activities and keeping the same in mind we find that in the instant case, the applicant entertains complaints made by any person or persons against an insurer and after listening to all the concerned parties, decides on such complaints filed by any person/persons who has a grievance against insurer. This is nothing but services rendered to the said person/persons and therefore can be considered as supply as defined under the GST provisions. In this case, it is observed, that applicant is rendering services to the aggrieved persons who have grievances against insurance companies/insurers. The said service is provided by way of by resolving the disputes of the said aggrieved persons with insurance companies. In fact, it is found that the Insurers, being the persons against whom there is a grievance, are also interested in solving the relevant issues and in this context, it is seen that by deciding on the complaints of the aggrieved persons, the insurance company being party to such disputes are also availing the services of the applicant/Ombudsman. Hence, the impugned activity undertaken by the applicant amounts to 'supply of services'. Whether there is consideration involved in the impugned transaction i.e. whether the applicant is receiving any consideration for the services rendered and from whom? - HELD THAT:- Even though the aggrieved persons do not pay any fees to the applicant, and the amounts are received from Life Insurance and General Insurance Council, it can be said that, in the subject case, the consideration for the impugned supply of services, instead of being paid by the aggrieved complainants are being paid by the said Councils/ insurance companies and satisfy sub-section (a) of the section 2 (31) of the CGST Act 2017 i.e the consideration in the instant case, is not done by the recipient of service (i.e. even if, only the complainants are considered as recipient of the service), rather the payment is made by 'any other person' i.e the Life Insurance and General Insurance Council. Therefore, funds received by applicant are covered under definition of 'consideration' paid for the supply of services as they come under the scope of 'by any other person' - thus, the impugned activities are supply of services, made for a consideration by the applicant. Whether the said supply in the course or furtherance of business? - HELD THAT:- The term business covers the mentioned or similar activities whether or not it is for a pecuniary benefit. In the subject case the activity undertaken by the applicant is covered under the definition of 'business', since the meaning of 'business' is very wide and enlarged due to the inclusive nature of the definition. Hence, the impugned activity undertaken by the applicant is a supply of services and the amounts received by the applicant from the Life Insurance and General Insurance Councils are not exempt from GST - Notification No. 12/2017-CTR dated 28.06.2017 exempts the intra-State supply of services of description as specified in column (3) of the Table mentioned therein from payment of GST. The services rendered by the applicant does not specifically find mention in the said notification. Hence, the activities of the applicant are not exempt under the said notification and consequently, the receipt of the amounts by the applicant from the Life insurance and General Insurance Councils are also not exempt from the levy of GST. Whether payment received by the Life Insurance Council and General Insurance Council on behalf of Executive Council are exempt from GST? - HELD THAT:- The payments are not received by the Life Insurance and General Insurance Council on behalf of the applicant, rather the amounts are paid to the applicant on behalf of the insurance companies. However, this question does not fall under the purview of Section 97 of the CGST Act, 2017 and is therefore not answered. Whether the amount received by Executive Council of Insurers from the Life Insurance Council and General Insurance Council are also exempt from GST? - HELD THAT:- It is already held that the concerned amounts paid by the Life Insurance Council and General Insurance Council to the applicant are taxable and not exempt. 2022 (6) TMI 191 Scope of supply - charges received by the applicant towards upkeep and maintenance from its members - covered under Sec 7 of the CGST Act or not - taxability of receipt of a gratuitous payment from an outgoing member for the time he has resided in the society - no corresponding service being provided separately by the tax payer society - taxability of major repairs to be made in the future for the co-operative housing society, for which amounts are collected - whether the same is taxable at the time of its collection or whether the same would be taxable on utilization of such funds? Whether the charges received by the applicant towards upkeep and maintenance from its members are covered under Sec 7 of the CGST Act? - HELD THAT:- This question raised in the application was withdrawn by the applicant during the course of the Preliminary Hearing. Whether the receipt of a gratuitous payment from an outgoing member for the time he has resided in the society be taxable under the CGST Act, 2017 as there is no corresponding service being provided separately by the tax payer society? - whether the applicant society can legally collect the so called gratuitous and voluntary donation from a transferor of a flat in the society? - HELD THAT:- n the instant case, the contributions are received from the outgoing members who have been members of the society in the past and, have received services from the society as envisaged under the GST Act. Thus, it can be said that, Payment from an outgoing member to a society is a payment made for the services rendered by society to the outgoing member during his stay as a member in society. As outgoing member is satisfied with the quality of services received by him and provided by society during his stay as a member in society. Hence, it is a consideration received to the society against satisfaction of the said member on supply of services received from the society. This is akin to the service charges levied by restaurants on which GST is collected - the contributions are made by the outgoing members only because they have been a part of the said society. It is not that an outsider has given any contribution to the applicant society. The receipt of contribution by the applicant from its members whether outgoing or not, is only because of the fact that the members are or have been a part of the society. If the applicant society had received contributions from outsiders to the effect that the same was a donation then probably on case to case basis it could have been treated differently. The Applicant Society cannot take Voluntary Contributions at all from an outgoing member (transferor of a flat) in view of Bye laws No. 7 (e) and 38 (e) (ix) of the Model Bye laws for Cooperative Housing Societies in Maharashtra. It appears that the applicant is trying to give a colour of 'voluntary and gratuitous' payment for amount received from a Transferor/Outgoing member which is collected and will be used for carrying out Major Repairs in future as is seen from the Affidavit submitted by Shri Chandresh Thakker, Treasurer of the Applicant Society - Activities rendered by the applicant Society to its members are supply of services in view of the amended Section 7 of the CGST Act, 2017 and contributions/charges collected by the Applicant Society from its members are chargeable to tax under the GST Laws. Thus, it appears that each and every outgoing member makes a gratuitous payment to the applicant in gratitude thus leading to a conclusion that all sellers/Transferor of flat in the society, without a single exception are in gratitude towards the Applicant Society. Thus, it appears that the applicant society has laid down norms albeit orally it seems, that there is a compulsion for an outgoing member to show gratitude to the Applicant Society by way of making gratuitous/voluntary payments to the Society - the amounts are collected for smooth transfer of the flat from the Transferor to the Transferee. Thus, 'consideration' includes -any payment made (in the subject case payment is made by the Transferor which is termed as voluntary contribution by the applicant) in money and since the payment is made towards Major Repair Funds of the Society, it is clear that the said payment is for the inducement of, the supply of goods or services or both, either by the recipient if he continues to be a member, or by any other person (meaning, other members) - Thus though the collection of charges of society might be illegal under some other law, but since it is covered by the scope of supply and other ingredients of GST levy, it is taxable. There are no hesitation in holding that the receipt of gratuitous payment from an outgoing member is taxable under the CGST Act, 2017. Whether major repairs to be made in the future for the co-operative housing society, for which amounts are collected, be taxable at all as it is for the members only? And if taxable, whether the same is taxable at the time of its collection or whether the same would be taxable on utilization of such funds? - HELD THAT:- This question raised in the application was withdrawn by the applicant during the course of the Final Hearing and therefore, both the questions are not taken up for discussion. Income Tax 2022 (6) TMI 190 Capitalisation of interest on FDRs earned during the period of construction - utilizing the ECB funds the assessee did not follow the RBI guidelines - Also submitted hat the ITAT has failed to consider the various decisions of the Apex Court including Tuticorin Alkali Chemicals and Fertilizers Limited vs CIT [ 1997 (7) TMI 4 - SUPREME COURT ] - HELD THAT:- This Court vide its order [ 2022 (4) TMI 1233 - DELHI HIGH COURT ] dismissed a similar appeal preferred by the Revenue against the ITAT order passed in assessee s own case for the earlier Assessment Year 2012-13. This Court in [ 2022 (4) TMI 1233 - DELHI HIGH COURT ] held that The judgment passed in Tuticorin Alkali Chemicals (supra) referred to and relied upon by learned standing counsel for the Appellant has been considered and explained subsequently by the Apex Court in Commissioner of Income Tax, Bihar II, Patna vs. Bokaro Steel Ltd., Bokaro [ 1998 (12) TMI 4 - SUPREME COURT ] Keeping in view the aforesaid, this Court is of the opinion that no substantial question of law arises for consideration as the questions sought to be raised in the present appeal are squarely covered by the decisions of the Apex Court as well as this Court. Accordingly, the present appeal is dismissed. 2022 (6) TMI 189 Deduction u/s 80IA - audit report is filed at the appellate stage - Whether provisions of section 80-IA(7) requiring filing of audit report along with return are not mandatory, but directory and if the audit report is filed at any time before framing of assessment, then requirement of section 80IA(7) would be met? - HELD THAT:- As assessee should furnish the audit report along with his return of income, only pursuant to the amendment by the Finance Act, 2020 with effect from 01.04.2020. Prior to that, the requirement of filing the audit report along with the return of income is not mandatory, but directory and the audit report can be filed at any time before framing of assessment, so as to meet out the requirement of section 80IA(7). As also settled law that the taxing statute should be read prospectively and not retrospectively. Applying the said legal proposition to the facts of the present case, wherein it is an admitted fact that the respondent / assessee furnished the audit report during the course of assessment relating to the assessment year 2009-10 and they very well complied with the requirement of section 80IA(7) for claiming deduction under section 80IA - CIT(A) allowed the claim of the respondent / assessee, which was also rightly affirmed by the ITAT and the same do not call for any interference at the hands of this Court. - Decided against revenue. 2022 (6) TMI 188 Revision u/s 263 - bogus purchase - PCIT concluded that assessee has failed to establish the nexus between the purchases and sales during this proceedings - HELD THAT:- PCIT merely alleged that the AO has not conducted any enquiry or made any addition relating to the issues highlighted in information received from Investigation Wing, Mumbai. PCIT also did not mention as to how the issue of bogus purchase from aforesaid 2 entities, in respect of which assessee is alleged to be the beneficiary, is proved in the present case vis- -vis the details filed by the assessee before the Assessing Officer and also produced before the learned PCIT. It is also not the claim of Revenue that the details filed before the Assessing Officer during the reassessment proceedings as well as during proceedings under section 153A of the Act were not sufficient to decide whether the purchases made by the assessee from the aforesaid 2 entities were bogus. Merely by referring to clause (a) and (b) of Explanation 2 to section 263 of the Act, the learned PCIT alleged that the assessment order is erroneous insofar as it is prejudicial to the interest of revenue. Neither in revision proceedings under section 263 nor during the hearing before us, it has been pointed out as to what enquiry was not conducted by the Assessing Officer with regard to the issue of bogus purchase, which can lead to the conclusion that the assessment order is erroneous and prejudicial to the interest of revenue. Further, during the hearing before us it was submitted by the learned DR that mere filing of submissions by the assessee would not lead to the conclusion that same has been considered by the Assessing Officer while passing the assessment order. Thus, in view of the above once submission/reply filed by the assessee, pursuant to enquiry by the Assessing Officer, are accepted by the Assessing Officer then finding on that particular aspect is not necessary to be recorded by the Assessing Officer. Further, it has not been denied in the present case that though the proceedings under section 147 of the Act may have been abated, as a result of search action, all the information filed by the assessee in response to notice(s) under section 143 (2) of the Act, during reassessment proceedings, were available with the Assessing Officer. Therefore, we are of the considered opinion that clauses (a) and (b) of Explanation 2 to section 263 of the Act are not applicable to the facts of the present case and thus the revision order passed by the learned PCIT under section 263 of the Act is set aside. - Decided in favour of assessee. 2022 (6) TMI 187 Reopening of assessment u/s 147 or assessment u/s. 153C - HELD THAT:- Appellant had not proved the existence of conditions precedent for exercise of jurisdiction u/s. 153C - Therefore, the question of jurisdiction to assess the escaped income under the provisions of section 153C does not arise. Therefore, we hold that the AO was justified in initiating the re-assessment proceedings u/s. 147 of the Act. Thus, the ground of appeal no. 1 and 2 stands dismissed. Unexplained investments in the form of on-money consideration to Marvel Group at the time of booking of a flat in the name of wife of the appellant, Mrs. Vidisha Bajoria - HELD THAT:- The case of the AO is that the appellant had paid on-money consideration at the time of booking of a flat in the name of wife of the appellant, Mrs. Vidisha Bajoria to Marvel Group. As undisputed position that the flat was booked in the name of wife of the appellant and also sale deed was executed only in the name of wife of the appellant, Mrs. Vidisha Bajoria. Without going into the sufficiency or otherwise of the evidence indicating the payment of on-money consideration, we are of the considered opinion that even assuming for a moment that such on-money consideration was paid to Marvel Group, the addition, if any, is warranted only in the hands of the wife of the appellant not in the hands of the appellant-assessee. Therefore, we hold that the addition made on account of unexplained investments for payment of on-money consideration at the time of booking of a flat is not warranted. Accordingly, we direct the Assessing Officer to delete the same. Thus, ground of appeal no. 3 stands allowed. 2022 (6) TMI 186 Validity of reopening of assessment u/s 147 - disallowance of loss as non genuine - undue benefit gained through Client Code Modification - assessee is one of the entities which has credited fictitious profit and loss by misusing the Client Code Modification facility in the future and option segments of National Stock Exchange - HELD THAT:- As return of income filed by the assessee was not subjected to scrutiny but was only processed u/s 143(1) of the Act. Subsequently, AO received the specific information indicating that the loss from share transaction claimed by the assessee is non-genuine as such undue benefit was gained through Client Code Modification. Thus, it is very much clear that the Assessing Officer had tangible material to reopen the assessment u/s 147 of the Act. Further, the objection raised by the assessee against reopening of assessment was disposed of by the Assessing Officer by a separate order. We do not find any merit in the grounds raised by the assessee challenging the validity of reopening of assessment under Section 147 of the Act. Loss as non genuine - As it can be seen that the AO in course of assessment proceedings has made inquiry to find out the genuineness of the loss claimed - the result of inquiry did not prove the genuineness of the loss claimed. Even, the assessee was not unable to furnish any conclusive evidence to support its claim that loss is genuine. Before us also, assessee has not brought any material on record to controvert the factual finding of the departmental authorities. In the aforesaid circumstances, we do not find any valid reason to interfere with the decision of learned Commissioner (Appeals). Grounds are dismissed. 2022 (6) TMI 185 Addition u/s 68 - Unsecured loans - proportionate disallowance of interest - CIT(A) had deleted the entire addition made u/s. 68 of the Act and correspondingly deleted the disallowance of interest paid on such loans - HELD THAT:- CIT(A) had granted relief to the assessee based on the remand report of the ld. AO by categorically stating that assessee had proved all the three necessary ingredients of Section 68 of the Act, viz., identity of loan creditors, genuineness of the transactions and creditworthiness of the loan creditors in respect of loans received during the year under consideration. Accordingly, the ld. CIT(A) had deleted the entire addition made u/s. 68 of the Act and correspondingly deleted the disallowance of interest paid on such loans. Since, the ld. AO in his remand report had categorically admitted the fact that fresh loans received during the year was only Rs. 30,00,000/-, the Revenue ought not to have challenged the addition made u/s. 68 of the Act in respect of opening balance of loans. Hon'ble Madras High Court in the case of B Jayalakshmi [ 2018 (8) TMI 208 - MADRAS HIGH COURT ] wherein it was held that where the Commissioner (Appeals) on the basis of remand report of Assessing Officer allowed the claim of the assessee, revenue was not entitled to maintain an appeal before the Tribunal against said order of Commissioner (Appeals). Also appeal of the Revenue would be liable to be dismissed on the ground of low tax effect itself as not maintainable. Apart from this, we also find that assessee had duly proved the three necessary ingredients of Section 68 of the Act in respect of loans received during the year. The ld. CIT(A) had also granted relief to the assessee on merits and categorically held that no addition u/s. 68 of the Act could survive in the instant case. This finding of the ld. CIT(A) had not been controverted by the Revenue before us. Hence, even on merits, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Hence, appeal of the Revenue is dismissed. 2022 (6) TMI 184 Revision u/s 263 by CIT - assessee has claimed partners' remuneration u/s 40(b)(v) - as per CIT deed is not quantified the partners' salary thus accordingly, the assessee is not eligible to get the benefit of section 40(b)(v) related remuneration of the partners - HELD THAT:- The assessee in its partnership deed mentioned the drawing power of the salary is 24 lakh per annum for each partner. In fact more than salary Rs. 24 lakh will be disallowed as per section 40(b)(v) - Here it cannot say that the specific salary is not quantified. The assessment order has not pointed out about anything related to partnership deed. But during calculation of total income the said deed was considered documents was within the record of the proceeding. On basis of remuneration clause in deed two views are different in between the ld. AO ld. Pr CIT. On other hand the disallowance of partners remuneration means the tax was paid by the assessee on Rs. 36 lakhs in its return income. So, the full partnership remuneration is under tax bracket. The general prudence of the law is that the same income cannot be taxed twice. On other hand, the partners are not liable to pay tax on the remuneration which was already paid by the firm in its return of income. The beauty of the section 40(b)(5) is that the remuneration to the partner is fully regulated by the book profit. More book profit more remuneration of partner will be allowed. So as per act the assessee can claim more remuneration but it will be allowed subject to provision 40(b)(5) of the Act depending of its book profit. On the other hand, the same remuneration is taxed in the hands of the assessee. The learned Pr. Commissioner of Income Tax, during issuance of notice under section 263 of the act and also during passing the order under section 263 of the act did not cognizance on the calculation of tax and the benefit of the revenue. We consider the order under section 263 of the act. The two opinions were formed by two Authorities in the question of acceptance of clause of partnership deed related Partners' Remuneration. Respectful consideration of the judgments of Hon'ble Apex court is in the case of Malabar Industrial Company Ltd. vs CIT [ 2000 (2) TMI 10 - SUPREME COURT] in the case of Principal Commissioner of Income-tax, Surat-2 v. Shreeji Prints (P.) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] Here, the view of ld. Assessing Officer being a plausible view could not be considered erroneous or prejudicial to interest of revenue. Accordingly, the order of the ld. AO cannot be considered erroneous or prejudicial to the interest of revenue. - Appeal of assessee allowed. 2022 (6) TMI 183 Reopening of assessment u/s 147 - reassessment order as the assessment order was passed without complying with the mandatory conditions of section 147 to 151 - HELD THAT:- AO did not comply with the procedure as laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Pvt. Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] making the assessment as bad in law. Therefore, in view of the above discussion, we hold that the reassessment made by the AO is bad in law and accordingly the reassessment order is quashed. As the reassessment was held to be bad in law on the preliminary grounds and the very jurisdiction of initiation of proceedings u/s. 148 of the Act - Appeal of assessee allowed. 2022 (6) TMI 182 Addition being the income shared with the appellant's spouse by the application of section 5A of the income tax act 1961 as the appellant is governed by the Portuguese civil code - sharing of income between the husband and the spouse in view of benefit provided under section 5A - HELD THAT:- Admittedly, the appellant assessee originally belongs to the state of Kerala and migrated to Goa in 1979 for employment. It is also not under dispute that the appellant was not borne in Goa and nor his parents are borne in Goa. Thus, before coming to Goa, appellant did not have any connection of himself or his parents to the Portuguese territory. Therefore, as per the domicile certificate produced, the appellant can be said to a resident of Goa but he can't be said to be governed by Portuguese civil code. Since, the appellant's spouse was a Goan but she loses to be the member of the Portuguese territory, after marrying the appellant who is not the member of the Portuguese territory as rightly held by the Ld. CIT(A). In our view, the appellant can't avail the benefit of section 5A of the act. The Judgement of Hon'ble Bombay High Court, in the case of Goa Salaries Taxpayers Association vs Union of India [ 2000 (10) TMI 22 - BOMBAY HIGH COURT] is distinguishable on peculiar facts of the case as in the instant case the appellant was not governed by Portuguese civil code, rather the appellant's spouse though Goan but she loses to be the member of the Portuguese territory, after marrying the appellant who is not the member of the Portuguese territory. Thus, the benefit of the application of section 5A of the income tax act 1961, is not available to the appellant. Appeal of assessee dismissed. 2022 (6) TMI 181 Unexplained investment - investment in shares - HELD THAT:- On perusal of the bank statement furnished in the paper-book clearly reveals that out of Rs. 4 lakhs invested in shares of M/s. SSKS Estates Pvt. Ltd., an amount of Rs. 2 lakhs was invested on 09.04.2012 falling in financial year 2012-13 corresponding to assessment year 2013-14. Therefore, the said investment in shares of Rs. 2 lakhs cannot be taken as the investment of the assessee in the impugned assessment year. Thus, what remains is an amount of Rs. 3 lakhs. Out of the said 3 lakhs, admittedly, the assessee has invested an amount of Rs. 2 lakhs in shares of M/s. SSKS Estates Pvt. Ltd. From the materials placed before us, including the bank statement, it is very much clear that the sale proceeds received from sale of shares of M/s. GL Estates Pvt. Ltd. were invested in shares of M/s. SSKS Estates Pvt. Ltd. Therefore, the source of investment qua the shares of M/s. SSKS Estates Pvt. Ltd. stands explained. The balance investments of Rs. 1 lakh is stated to be out of past savings/drawings from the bank account. Considering the length of service of the assessee, it cannot be said that the assessee did not have the capacity to invest Rs. 1 lakh in shares. Thus, in our considered opinion, the source of investment in shares is properly explained. In view of the aforesaid, we delete the addition - Decided in favour of assessee. 2022 (6) TMI 180 Income accrued in India - existence of PE in India under Article 5 of Indo-Switzerland DTAA - racing drivers' stay in India - DTAA between India and Switzerland - whether the racing car driver in the case before us is a driver simplicitor or is he a technical expert ? - HELD THAT:- Ld. counsel could not give a cogent reply nor he could rebut the proposition that the racing car driver is not a technically expert person. Moreover the reference by DRP to OECD commentary in the context of model tax treaty that formula one driver is in the nature of athlete is also germane and has to be considered. As our following discussion would show certain other aspect of the present case need some factual examination. In this view of the matter, in our considered opinion, in the present case, the issue cannot be remitted to the AO to follow the said ruling as requested by assessee. Now coming to the order of the AO passed pursuant to the DRP order, we note that there are two limbs thereof. In the first limb, the DRP has accepted that assessee has no PE existence and the DRP has accepted that the racing car driver came and performed for only three days in India. In this connection, a query was raised as to the actual duration of the said drivers' stay in India in connection with the aforesaid race, the time taken for preparation, finalization conclusion and the certificate of the said drivers' arrival in India and departure in relation to the event. Assessee was not in a position to provide any such detail. As submitted that these aspects are factual aspects and are not readily available and the matter can be remitted to the AO for examination in this regard. We find that the aforesaid is a crucial aspect and has not been examined by the Revenue authorities below, hence we deem it proper to remit the file to the AO to examine the issue in terms of our observation as above. As regards the plank on which the DRP had rejected the assessee's objection is by reference to Article 17 of the model tax treaty that the receipts are in the nature of income derived from service of personal activities of racing car drivers in India. We note that the aforesaid reference in the present case is coming under Article 16 of the DTAA between India and Switzerland which deals with the issue of artists and athletes dealt with by the DRP. We note that this aspect of DRP's direction refers that there was no response from the assessee. But the assessee in grounds has disputed the observation that it has not given any response in this regard. We deem it proper to remit this aspect also to the AO and the assessee shall be granted an opportunity to give the submissions in this regard. 2022 (6) TMI 179 TP Adjustment - AO made a reference to TPO u/s 92CA to determine arms length price as the assessee had entered into specified domestic transaction - Reference to the TPO in respect of specified domestic transactions - claim of expenditure in terms of the provisions of sec. 40A(2)(b) - as submitted provisions of section 92BA of the Income-tax Act 1961 have been amended vide Finance Act 2017 to exclude specified domestic transactions which are contained under section 92BA read with 40A(2)(b) from the purview of transfer pricing regulations - HELD THAT:- Considering the binding effect of the decision rendered in TEXPORT OVERSEAS (P.) LTD. [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT] we respectfully follow the same and hold that the reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec. 92BA is not valid as the said provision is omitted since inception. Accordingly, we direct the AO to delete the additions relating to specified domestic transactions made u/s 92CA of the Act. We notice that the coordinate bench in the case of Texport Overseas Pvt. Ltd. [ 2017 (12) TMI 1719 - ITAT BANGALORE] has restored the matter to the file of the AO under the direction to examine the claim of expenditure in accordance with the provisions of sec. 40A(2)(b) of the Act. Following the same, we restore this issue to the file of the AO with the direction to examine the claim of expenditure in terms of the provisions of sec. 40A(2)(b) of the Act. The various grounds raised by the with respect to transfer pricing adjustments made by the TPO and the direction of the DRP have become infructuous and hence dismissed. The AO is directed to look into the facts afresh and decide the case on merits as per the provisions of law after giving a reasonable opportunity of being heard to the assessee in this regard - Appeal of assessee allowed. 2022 (6) TMI 178 Reopening of assessment u/s 147 against assessee trust after cancellation of registration u/s 12A - jurisdiction of AO - As argued since assessee has surrendered its registration u/s 12A and 12AA therefore, it was no longer an entity that required exemption u/s 11 and consequently DIT (E) or ACIT (E) did not had jurisdiction at the time of issuance of notice u/s 148 - HELD THAT:- The assessment for AY 2011-12 has been reopened in the period when statutorily the appellant was holding certificate of registration u/s 12A/12AA. Once company has been recognized as a charitable institution by grant of registration u/s 12A, then such registration can be cancelled only by an authority under the law and not by voluntary act of the assessee. The act of suo motto surrender of registration is neither permissible under the law nor is dependent upon the voluntary act of the assessee. Even if the assessee had filed letter surrendering its registration, it has no consequence till competent authority acts upon it and accepts the surrender letter and passes the order of cancellation. The order of cancellation of registration is a statutory order which is based on the foundation of certain facts coming on record during the breach of conditions for which registration was granted and such a breach cannot be reckoned from voluntary surrender of registration. The entire process has to be followed in accordance with the statute. Merely because the assessee had filed a letter on 21.03.2016 surrendering its registration u/s 12A or giving its benefit of section 11, does not mean that from the date of the letter, the jurisdiction of the AO automatically got changed. As stated above, at the time of issuance of notice u/s 148, the ACIT or DCIT, Circle Exemption, New Delhi had the valid jurisdiction not only to initiate the proceedings u/s 148 but also pass the assessment order. Insofar as the contention raised by the appellant that, since the assessee had challenged jurisdiction, it was incumbent upon the AO to refer it to the higher authorities in terms of section 124(4). Such a contention is not tenable on the present facts for the reason that the jurisdiction over the assessee lied with the AO, Exemption Circle by virtue of provisions contained u/s 120 of the Act, because here it is a case of jurisdiction assumed by granting registration by the Income-tax Department on the application filed by the assessee which falls within the definition of class of assessee and class of cases as defined under clauses (c) (d) of sub-section (3) of section 120. The appellant ostensibly falls into a specific category of cases and it is not open for the assessee on its own remove itself from specific category of cases and then contend that it should have been assessed by different Assessing Officer. The matter of jurisdiction is not by the choice of the assessee albeit it depends upon the specific provisions contained in sections 120 124. Thus, we do not find any merits in the contention raised in ground no.1 that Assessing Officer did not had jurisdiction either to issue notice or pass assessment order and the same is thus dismissed. Approval from the CIT (E) u/s 151 was obtained prior to the recording of reasons and therefore, it tantamount of rendering the entire proceedings u/s 147/148 bad in law - HELD THAT:- After considering the satisfaction of the CIT (E) accompanied with the detailed reasons recorded by the AO as incorporated it cannot be held prima facie that there was no application of mind or that the approval has been given in a mechanical manner. Ld. CIT (E) has given his detailed reasons as to why he was satisfied with the proposal of the AO. Accordingly, the contention raised by the ld. Sr. Counsel is rejected. The judgments which have been relied upon by him clearly not applicable on the facts of the present case. Eligibility of reasons to believe - HELD THAT:- From a bare perusal of AO s detailed reasons running into 24 pages, there is sufficient material to hold that AO had prima facie reasons to believe especially, the manner in which appellant has taken over the properties of AJL through whatever scheme and how the entity AICC, AJL and Young Indian had common control or management to device such alleged scheme and how the assessee has got benefit by getting the entire shareholding and underlying assets of AJL by merely paying paltry sum - This itself shows strong prima facie reasons to believe for any prudent person that there is definitely escapement of income. It is not a case that it was merely a pretext taken by the Assessing Officer for making roving and fishing enquiry without any basis or material on record. AO has duly applied his mind after incorporating various material and information coming on record and after independently examining the same, he has recorded the reasons. We do not find any infirmity or illegality either in the recording of the reasons or assuming jurisdiction or reopening the case u/s 147 or issuance of notice u/s 148 - No substantial merit in the contention raised by the appellant before us nor do any of the judgments cited and relied upon before us have any application on the present facts. We reiterate that the AO has to have only prima facie reasons to believe based on tangible material or information which, here in this case, there was sufficient material to entertain reasons to believe that entire transaction right from the incorporation of the appellant company till acquiring of 99.999% of shares of AJL and getting control of huge assets of AJL merely for a sum of Rs.50,00,000/-. At least, this factum itself is sufficient to clothe the AO in entertaining reasons to believe and acquiring the jurisdiction u/s 148. We further notice that very recently, Hon ble Supreme Court in the case of DCIT (Central Circle) Vs M/s M R Shah Logistics Pvt Ltd [ 2022 (4) TMI 46 - SUPREME COURT ] held that reopening of the assessment u/s 147 is valid if there is tangible material for the same and the sufficiency of such material cannot be subject to judicial review. Accordingly, ground no.2 raised by the appellant is dismissed. Violation of principles of natural justice - non admission of additional evidences filed by the appellant before the ld. CIT (A) and admission of additional evidences filed before this Tribunal - HELD THAT:- Though we have permitted the parties for arguing on all the evidences filed before the authorities below as well as additional evidences filed before us which were most of them were also filed before the ld. CIT (A) but has been rejected by her. However, some of the additional evidences filed before us has either no relevance or had no material impact on the issues involved. For instances, documents pertaining to valuation report sought u/s 11UA which was only for the purpose of section 56 which is neither the case of the assessee nor the case of the Department, so documents mentioned at Sl.No.12 to 15, 21 22 as incorporated above in the list of additional evidences are not relevant. Secondly, newspaper reports appearing at sl.no.11 is also irrelevant as they are not admissible evidences. There is another evidence which is order of Election Commissioner appearing at sl.no.4 of the list, though has been referred before us may also not be relevant on the issues involved which is the order of Election Commissioner in the case of Indian National Congress. The other documents we shall try to deal in brief and take into consideration which are germane to the issues involved. Insofar as various objections and references filed with regard to valuation part, the appellant has filed specific objections before us which are based on and emanating from Registered Valuer s report, and the finding and observations of the AO and are otherwise relevant, we shall deal it comprehensively and then it may not be relevant to counter each and every part of valuer s report as same has been summarized by the appellant in the written submissions filed before us. So far as documents relating to Dotex, annual accounts of RPG Lifesciences Ltd. etc. mentioned at sl.no.1, 2, 3, 5, 6, 7, 8 10, the same will be discussed and considered for deciding the issue. The assessment order of AJL for AY 2011-12 appearing at Sl.No.9 technically cannot be reckoned as additional evidences therefore, the same is also taken into cognizance. In any case, both the parties have made the detailed submissions and also filed their written submissions on all the points which was raised and argued before us on various dates of hearing. Taxing of the fair market value of the properties owned by AJL u/s 28(iv) - whether the provisions of section 56(2)(viia) is applicable specifically dealing with the shares? - treatment of the transaction of assigning of loan by the AICC to appellant company, whether was a fraudulent transaction or not - As contented appellant has acquired the shares of AJL with the intention to use it as launch pad for achieving its objects - HELD THAT:- As provisions of section 56(2)(viia), at the very outset, is not applicable, because the assessee being section 25 company which falls within the ambit and definition of a company in which public are specially interested in section 2(18)(iiaa). Even the ld. Sr. Counsel has agreed that this provision is not applicable but his case was that such transactions will fall u/s 56(2)(viia) and not section 28(iv). However, we have already held that how the entire transaction has led to benefit arising from adventure in the nature of trade so as to fall within section 28(iv) and section 56(2)(viia) has no applicability at all. Accordingly, the judgments which have been cited before us have no relevance. Assessee had also pointed out that now there is a specific provision brought into the statute to cover such nature of transaction u/s 56(2)(x) which has been brought in the statute w.e.f. 01.02.2017 and, therefore, if the legislature intended to cover such transaction u/s 28(iv), there is no requirement of bringing it within the taxable ambit under the deeming provisions of section 56(2)(x). We disagree with him because, the provisions of either section 56(2)(viia) or 56(2)(x) deal with the situation where transaction is made for no consideration or lower consideration and someone transferring the assets to the other. This is a case where the properties are being taken control of under a scheme and designed to acquire the shares of a company under a pre-planned scheme with the connivance of amendment of AJL and AICC. We have already noted above that the applicability of section 28(iv) and benefit derived thereon is due to peculiar facts and circumstances of this case and nature of transaction has been undertaken which has resulted into the benefit of the appellant company in the form of huge immovable properties held by the AJL. Coming to the last limb of the arguments that here it is not the case of real income albeit a notional income, therefore, the real income can be taxed. Here in this case, we have already held that the benefit which has arisen as a consequence of adventure in the nature of trade where benefit has been derived in the non-mandatory form i.e.,v in the form of immovable properties of AJL during the year which is taxable u/s 28(iv) and, therefore, it is an income, which has arisen to the assessee, taxable u/s 28(iv). Thus, in view of our discussion above, we hold that the Department has rightly taxed the amount during the year under section 28(iv) Valuation of property - FMV determination - reference to the Departmental Valuation Officer (DVO) stating that it is beyond the scope of section 142A - computing the Fair Market Value (FMV) beyond the value computed by the DVO - whether value computed by the DVO are erroneous? - HELD THAT:- Herald House, Bahadurshah Zafar Marg, New Delhi - As we find that it is incorrect to suggest that there are any worthwhile restrictions on the use of the property. As discussed above, the nature of the property being commercial, situated in a highly commercial area of Delhi, the DVO has rightly applied the multiplying factor 3 to take into consideration these factors. In the absence of any effective restrictive clause, the cases relied upon by the Ld. Senior Counsel for the Appellant are not applicable and the plea deserves to be rejected and we do accordingly We hold that firstly, the circle rate which has been proposed by the appellant to be applied here in this case for valuing the property is not acceptable, because circle rate are not the right benchmark in all cases for determining the actual market value of property in Delhi especially where the property is located. Here it is found as a matter of fact that even in the sale instance of residential property at Tolstoy Marg, the sale rate was many times higher than the circle rate. In any case, Bahadurshah Zafar Marg and Tolstoy Marg fall in the same zone i.e., Zone A for the purpose of circle rate and if the property at Tolstoy Marg has been sold at a much higher price than the circle rate, then ostensibly the circle rate cannot be held to be applicable for the property at Bahadurshah Zafar Marg. Bahadurshah Zafar Marg also which is near to ITO and has big commercial establishments having high commercial value, therefore, the value of Bahadurshah Zafar Marg at any day would never be much lower than the Tolstoy Marg. Insofar as the appellant s objection to 21% of increase to the value from year to year applied by the DVO, we find that the DVO has taken this basis on the basis of CBDT Circular as cited by him in his report which states that monthly increase of 1.5% or 2% may be adopted which works out to be in the range of 18% to 24% of annual average, which DVO has taken at 21% which appears to be justified. The contention that DVO has erroneously made 21% increase per year by adopting the rate of sale of Tolstoy Marg property which was sold in the year 2008 for arriving at the value in the year 2011, we do not find any reason for such objection because, firstly, Bahadurshah Zafar Marg is a much better location having very high commercial value and in any case, DVO has given suitable discount of 5% for this reason. The DVO has also pointed out that this was the nearest sale instance available. Thus, considering the entire facts and material on record and in the absence of appellant itself giving any FMV, we do not find any infirmity in the valuation of the DVO which has been adopted by the AO and accordingly the valuation of Rs.201.84 crores for the Delhi property, i.e., 5A, Herald House, Bahadurshah Zafar Marg, New Delhi is confirmed. Patna property - Here in this case, property was allotted to the AJL for publication of newspaper which itself has a commercial purpose, however, the activity of the newspaper publication of the AJL was discontinued in April 2008 itself, therefore, the property was, in fact, not being used for the purpose for which it was allotted. Therefore, it is for this reason, commercial rate has been applied. However, insofar as the objection of the appellant that property was encroached and therefore, some deduction should have been given. Since it would be purely an estimate, therefore, we think it would be proper if 15% deduction is allowed on the rate determined at Rs.5,77,52.700/- for the encroachment as well as to take into account that it was leasehold land which though has been extended from time to time until this date the property is still under the ownership of AJL. Accordingly, the valuation of the property for Patna is determined at Rs.4,90,89,795/-. The appellant gets relief to that extent. Panchkula property - We find that insofar as circle rate of Rs.47,000/- per sq.mtr. for Sector 6, Panchkula, nowhere it has been pointed out by the appellant that it is for commercial establishments or for commercial purpose which, here in this case, is allotted for publication of newspaper which now has stopped its operations. Thus, the land was purely available for commercial usage and purposes and the DVO has applied circle rate for commercial purposes along with CPWD plinth area rate. Thus, we do not find any infirmity in the valuation done by the DVO and accordingly, we uphold the valuation of Rs.32,25,60,000/- in respect of Panchkula property. The contention with regard to restrictive use of the property is not tenable. Properties at Lucknow known as Nehru Bhawan and Nehru Manzil - We hold that instead of 22% deduction, a deduction of 30% should be given. Accordingly, the appellant would get relief of extra 8% on the value adopted by the DVO on the valuation adopted for Nehru Manzil. Allow proportionate deduction for shops which stood sold prior to the date of valuation - Instead of giving deduction of 22% as done by the DVO on partly constructed building, give deduction of 30%; and Depreciation should be allowed from AY 1986-87. Mumbai property - The valuation of Mumbai property instead of Rs.132,94,44,480/- is valued at Rs.120,44,44,480/- by reducing the cost of construction of a ground floor (as noted hereinabove) as rate applied by AO was for land plus ground floor shopping complex. Addition of sum received from Dotex as unexplained cash credit u/s 68 - HELD THAT:- One of the contentions raised before us that Dotex belongs to RPG Group, therefore, it is genuine, does not ipso facto lead to an inference that the entire transaction is genuine and establishes the credentials of the company which was under scanner though preliminary enquiry of the Investigation Wing, which found that this company was managed and controlled by established entry operators and this company was used for providing accommodation entries. In the later time, during the relevant financial year, this company may have been taken over by the RPG Group, but that does not wash away the finding of the investigation wing. Be that as may be, what is required to be established here whether the company had creditworthiness to advance such a loan or the transaction of loan is genuine or not, especially in light of results of inquiry conducted by the Investigation wing. The documents which have been filed by the appellant company before us in the form of additional evidences need to be substantiated and corroborated by proper enquiry by the AO. All these documents which have been filed by the appellant are merely papers which need proper examination and substantiation by conducting proper enquiry from the lender company. Dotex should be inquired independently to establish its source of funds and the entire transaction of the loan given to the appellant. Assessing Officer should also provide all the information and material gathered and communicated by the Investigation wing including STR report to the appellant. Accordingly, in the interest of justice, we deem it proper that this matter should be restored back to the file of the Assessing Officer, with the following direction to Assessing Officer Firstly, to examine all the evidences filed by the assessee in the form of additional evidences before us, Secondly, to carry out necessary inquiries from Dotex and also summon himself or through a commission to the Directors or the Principal Officer of Dotex to explain the source and genuineness of the transaction;Thirdly, Assessing Officer should confront all the information and material gathered and communicated by the Investigation wing including STR report to the appellant; and; Lastly, the appellant is also directed to cooperate in such enquiry and lead all such evidence as they consider necessary to establish the credentials and the genuineness of the transaction in support of their explanation given before us. Accordingly, the matter is remanded back to the file of AO for making proper enquiry and adjudicate the issue in accordance with law after giving due opportunity of being heard to the appellant. Accordingly, ground no.10 is allowed for statistical purposes. Disallowance of sum paid for assigning of loan from AJL - HELD THAT:- Since we have already upheld the action of the AO insofar as addition made u/s 28(iv), therefore, the claim for deduction of Rs.50,00,000/- for acquiring the aforesaid business assets and to be allowed as deduction is accepted. Accordingly, we direct AO to allow the deduction of Rs.50,00,000/- from the amount held to be taxable u/s 28(iv) Unexplained expenditure u/s 69C towards raising of loan from Dotex - HELD THAT:- We find that it is a purely notional and hypothetical addition made on the hypothesis that assessee might have incurred expenditure as alleged payment of commission for accommodation entry for raising of loan from Dotex. We find that there is no basis at all for giving such hypothetical addition which is not based on any enquiry or any material on record and we concur with the contention of the appellant that such hypothetical addition made u/s 69C cannot be sustained and the same is directed to be deleted. Customs 2022 (6) TMI 177 Valuation of imported goods - Food Supplements - rejection of declared assessable value based on NIDB data - re-determination of value as per Rule 5 of the Valuation Rules - non-application of mind - it is claimed that the NIDB data does not establish that the contemporaneous imports were of similar goods - allegation of mis-declaration of value is supported by cogent evidence or not. The primary submission of the appellant is that the data derived from NIDB cannot prove that it has mis-declared the value and, therefore, the transaction value should not have been rejected in terms of Rule 12 of the Valuation Rules - HELD THAT:- Once the transaction value is not rejected, the value cannot be re-determined as per the Valuation Rules. It is also the submission of the appellant that there is no evidence of additional consideration for sale and that it has paid for the goods only through banking channels. In the absence of any additional consideration for sale, the declared value must be accepted - the valuation has to be done sequentially as follows: a) If a tariff value is fixed by the Board, it is the value (sub- section 2 of Section 14); b) If no tariff value is fixed by the Board, valuation is as per the transaction value, if necessary, with some additions (as per the first proviso to sub-section 1 of section 14 and as per Rule 10); c) If the transaction value is rejected as per Rule 12 by the proper officer, valuation has to be done as per the value of identical goods (Rule 4); d) If transaction value is rejected and there is no value of identical goods, then it must be as per the value of similar goods (Rule 5); e) If transaction value is rejected and there is no value of identical goods or similar goods, the value must be determined through Deductive method (Rule 7) f) If transaction value is rejected and there is no value of identical goods or similar goods and it is not possible to determine value following deductive method, then value must be determined through computation (Rule 8) g) If the importer so chooses, computational method may be adopted without examining the deductive method first (Rule 6). h) If the transaction value is rejected and there is no value of identical goods or similar goods and if it is also not possible to determine the value through deductive method or computational method, then value may be determined through the residual method by the officer following the above principles (Rule 9). When can the proper officer reject the transaction value? - HELD THAT:- If the officer has reason to doubt the truth and accuracy of the transaction value, he can call for information including documents and evidence. If the information and evidence is presented and after examining it or if no information or evidence as called for is presented, if the proper office has reasonable belief then it shall be deemed that the value cannot be determined as per Rule 3 (i.e., based on transaction value with additions, if necessary). While the officer can, in the first place call for information and evidence if he has reason to doubt, at the second stage, he should have not just some reason to doubt but a reasonable doubt. If he has such reasonable doubt, then the transaction value can be rejected. Rejection under Rule 12 requires firstly that the proper officer has some reason to doubt the transaction value and after calling for additional information and investigation should have a reasonable doubt about the transaction value. Once the officer has a reasonable doubt then it shall be presumed that valuation cannot be done as per the transaction value. In this particular case, the appellant has imported goods from a trader based in Dubai and the imported goods were food supplements. When the prices declared by the appellant were compared with the value of contemporaneous imports as per the data available in the NIDB and also as per the manufacturer s price list, there was a vast difference and in some items the declared price was half or less of the manufactured price/contemporaneous import prices - The importer has not produced any license or no objection certificate from the FSSAI regarding the quality and expiry date of the imported goods. He submits that not only is there no positive evidence that the imported goods were of inferior quality and were of short shelf life in any of the bills of entries or supporting documents but it is also impossible for the importer to have imported such goods without a license from the FSSAI. Therefore, the mere assertion of the appellant that they have imported inferior quality goods with short shelf life cannot be accepted. The goods declared transaction value was correctly rejected under Rule 12 of the Valuation Rules by the original authority and such rejection were upheld by the impugned order - The value of the similar goods were obtained not only from other imports taken from NIDB data but also from the manufacturer s price lists. Under these circumstances, we find nothing incorrect in the order-in-original rejecting the transaction value under Rule 12 re-determining the value as per Rule 5 and demanding the differential duty along with interest and the Commissioner (Appeals) upholding the same in the impugned order. As it is found that the duty short levied was correctly demanded under Section 28, penalty imposed under Section 114A also needs to be upheld. Penalty under Section 114AA - HELD THAT:- Revenue has discharged its liability by comparing the declared value with contemporaneous imports as well as with the manufacturer s price list for the same goods and the difference was very large. In some cases the declared price was less than half. In the case of NEHA INTERCONTINENTAL (P) LTD. VERSUS COMMISSIONER OF CUSTOMS, GOA [ 2006 (5) TMI 279 - CESTAT, MUMBAI] , the factual finding of the Tribunal was that the rejection of the goods was only based on NIDB data which is not the case in the present dispute. The goods in question were food supplements and there were manufacturer s price list as well as imports by others of the same product. Appeal dismissed - decided against appellant. Corporate Laws 2022 (6) TMI 176 Discrepancies in disclosures while preparing Balance Sheet - Period of limitation for filing Complain by the ROC - Condonation of delay - Non factoring the previous years figures of Fixed assets and value of inventory - Issuance of summon to face trial filed under Section 211(7) of the Companies Act, 1956 - non-compliances with the provisions of Section 211 of the Companies Act, 1956 - HELD THAT:- It would have been quite simple for this Court to have considered the question of limitation, but for the fact that both the complaints were accompanied with applications for condonation of delay. While taking cognizance, the learned Trial Court has to apply its mind as to whether the complaint presented was within the period of limitation or not. The learned Trial Court must also consider whether there were sufficient grounds to condone the delay that may have occurred in the presentation of the complaint. But in the two cases at hand, clearly, the learned Trial Court overlooked the filing of the application for condonation of delay. The mind has not been applied to the question of condonation of delay and the complaint being within the period of limitation. This Court is left with no choice but to set aside the impugned orders dated 12th July, 2019 and remand the matters back to the learned Trial Court to consider the applications for condonation of delay - Petition allowed by way of remand. 2022 (6) TMI 174 Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- By considering the consent affidavits filed on behalf of the shareholders of both the companies and Unsecured creditors of the Transferee Company to approve the Company Scheme and by waiving their right to participate in such meeting, the meeting of the Shareholders and Unsecured Creditors of the Transferee Company are hereby dispensed with as prayed for. The scheme is approved - application allowed. 2022 (6) TMI 171 Seeking restoration of the name of the Company - it is stated that Appellant Company has filed its Financial Statement till 31st March, 2015 only due to which the Respondent had reasonable cause to believe that the Appellant company was not in operation - also no Income Tax Return annexed - HELD THAT:- The company is liable to pay back all the liabilities and also to ensure the recovery of its money from MVDA amounting to Rs. 71 lakh. It is very much clear that the Appellant Company has filed the Balance Sheet till 31.03.2015. What it has committed a mistake that the Company has not filed the Balance Sheet for Financial Year 2015-16, 2016-17 till notice was issued in Form STK-1 on 25.05.2018 by the Registrar for Removal the name of the Company from Registrar of Companies. Simply non-filing of Financial Statement cannot be a ground for striking off the name of the company, if the company is otherwise in the business or operation of the Company. For a Real Estate Company, it is not possible always to generate the income on year to year basis. It is very much clear that this company applied against the bid of MVDA and it could not succeed. It is also very much clear that this company has given an advance of Rs. 71 lakh to the MVDA as the same is reflected in the Balance Sheet - The ROC is also dissatisfied only on the limited ground that the Appellant company has not filed their Balance Sheet and hence have assumed that they are not doing any business or operation. This power, in any case, always vest with the ROC to take appropriate measures under Section 248, if the RoC has the reasonable cause to believe certain events as enumerated in Section 248 (1) of the Act. The RoC is empowered to review this Company even after few years and they can take appropriate measures in accordance with the provisions of the Act. So far as the present case of the Appellant is concerned, simply, because of the failure to file a Financial Statement and returns that too only of the two years should not result the company into striking off their name. These are small companies, business is erratic. This company is having the share capital hardly Rs.1 lakh as it looks from their Balance Sheet. It has given advance to MVDA of Rs. 71 lakhs naturally by obtaining loans and advances from the Directors and others so that at a later stage they can go for the Real Estate Business. It is deemed fit and proper to restore the name of the company under the umbrella of grounds Just to restore the name of the company - the Appellant shall pay costs of Rs. 4,00,000/- to the Registrar of Companies, New Delhi within 30 days - appeal allowed. Insolvency & Bankruptcy 2022 (6) TMI 173 Jurisdiction - approval of resolution plan - Power of NCLT / NCLAT over commercial wisdom of the Committee of Creditors (CoC) - seeking withdrawal of the application filed under Section 7 of the IBC in view of the Settlement Plan submitted by the appellant - whether the adjudicating authority (NCLT) or the appellate authority (NCLAT) can sit in an appeal over the commercial wisdom of the Committee of Creditors (CoC) or not? - HELD THAT:- Section 12A of the IBC was brought in the statute book on the basis of the said Committee s Report. It could be noticed that though by the Amendment Act No. 26 of 2018, the voting share of 75% of CoC for approval of the Resolution Plan was brought down to 66%, Section 12A of the IBC which was brought in the statute book by the same amendment, requires the voting share of 90% of CoC for approval of withdrawal of CIRP. It could thus clearly be seen that a more stringent provision has been made insofar as withdrawal of CIRP is concerned. Where an application for withdrawal under Section 12A of the IBC is made after the constitution of the Committee, the same has to be made through the interim resolution professional or the resolution professional, as the case may be. The application has to be made in FormFA. It further provides that when an application is made after the issue of invitation for expression of interest under Regulation 36A, the applicant is required to state the reasons justifying withdrawal of the same. The RP is required to place such an application for consideration before the Committee. Only after such an application is approved by the Committee with 90% voting share, the RP shall submit the same along with the approval of the Committee to the adjudicating authority. It could thus be seen that a detailed procedure is prescribed under Regulation 30A of the 2016 Regulations as well. This Court has consistently held that the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the IBC. It has been held that there is an intrinsic assumption, that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts - the provisions under Section 12A of the IBC have been made more stringent as compared to Section 30(4) of the IBC. Whereas under Section 30(4) of the IBC, the voting share of CoC for approving the Resolution Plan is 66%, the requirement under Section 12A of the IBC for withdrawal of CIRP is 90%. It is thus clear that the decision of the CoC was taken after the members of the CoC, had due deliberation to consider the pros and cons of the Settlement Plan and took a decision exercising their commercial wisdom. Neither the learned NCLT nor the learned NCLAT were justified in not giving due weightage to the commercial wisdom of CoC. Appeal allowed - decided in favor of appellant. 2022 (6) TMI 172 Liquidation of corporate debtor - disposal of asseets - Withdrawal of Scheme of arrangement under Section 230 of the Companies Act, 2013 - HELD THAT:- When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process. The Appellate Authority while considering the Appeal filed against the order of the Liquidation has clearly stated that the Appellate Authority is not inclined to interfere with the impugned order. The mere fact that the Appellants in this Appeal claims that they are interested to offer a higher amount to one which the Corporate Debtor has been auctioned cannot be a ground to entertain this Appeal or interfere with the impugned order. Everyone including the Appellants had ample opportunity before the Adjudicating Authority when proceedings were on to submit appropriate Scheme Under Section 230. A Scheme under Section 230 was submitted by Mahalaxmi Continental Limited an Operational Creditor which was a consortium of Operational Creditors including some of the Appellants also. The Scheme was subsequently withdrew by the Applicant. It is amply clear that there is no Scheme under Section 230 which may obviate proceeding in the liquidation. No grounds have been made out to interfere with the impugned orders - Appeal dismissed. 2022 (6) TMI 170 Initiation of CIRP - Period of limitation -acknowledgement of debts in the Balance Sheet - Corporate Debtor failed to make repayment of its dues - Non-Performing Asset - existence of debt and dispute or not - Whether Limitation under Section 7 Application is triggered from 15/06/2013 the date of default or from 31/03/2014 on which date the Bank has classified the Account of the Corporate Debtor as NPA ? - HELD THAT:- In view of this letter, signed and stamped by the Corporate Debtor , the specific Date on which the account was declared as NPA for the purpose of Limitation pales into insignificance. What is pertinent herein is that the Appellant has acknowledged that there is a loan of Rs. 1665.00 Lakhs/- which was taken under various heads that there is an amount which is due and payable as on 31/03/2014 meaning thereby that there is a Debt as defined under Section 3(11) of the Code and a default as defined under Section 3(12) of the Code - the letter signed and stamped by the Corporate Debtor acknowledged, the debt as on 30/03/2014, construes clear acknowledgment of debt as stipulated under Section 18 of the Limitation Act, 1963, thereby granting a fresh period of Limitation for another three years from 30/03/2014, which is nine months from the admitted date of default . Whether an OTS proposal given without Prejudice construes Acknowledgement as stipulated under Section 18 of the Limitation Act, 1963? - HELD THAT:- It remains trite that the question of Limitation is essentially a mixed question of fact and law and in this case a strong foundation has been laid in Part V of the Application. It is noteworthy to state that a document constituting an acknowledgment has to be construed in the context in which it is given. At this juncture, we find it relevant to quote, ITC LIMITED VERSUS BLUE COAST HOTELS LTD. ORS. [ 2018 (3) TMI 932 - SUPREME COURT ], in which the Hon ble Supreme Court dealing with whether Section 3(A) of Section 13 of SARGAESI, was mandatory or directory, took note of the Notices issued by the Financial Creditor and the different proposals made by the Debtor including a Letter of Undertaking saying that they were given without Prejudice . The admission of the debt due and payable is further explicit in the letters dated 20.04.2015 which is reproduced in the aforenoted para 4 wherein the Corporate Debtor has admitted the debt, and has also undertaken to pay the amount and requested the Financial Creditor to verify the amount so that it could be immediately paid . It is significant to mention that in this letter dated 20.04.2015 the phrase without prejudice is omitted - the default amount has already been acknowledged on 31/03/2014, on 20/04/2015 and on 10/08/2016 in confirmation with Section 18 of the Limitation Act, 1963. Whether the Adjudicating Authority was justified in admitting the Section 7 Application holding that the Application was not barred by Limitation ? - HELD THAT:- Section 134 of the Companies Act, 2013 requires that every Balance Sheet shall be signed by not less than two directors of the Company. The Balance Sheet for the Financial Year 2016-2017 evidences acknowledgement of the loan/borrowings and is duly signed on 04.09.2017 by the Chartered Accountant and by both the directors, one of whom is the Appellant himself - In the instant case, the Balance Sheet for the Financial Year 2016-17 and the appended notes to the Financial Statements clearly specify the debt owed to the Financial Creditor . The material on record does not define any caveats forming part of the Financial Statements to prove otherwise. This Tribunal is of the considered view that the acknowledgement in Balance Sheet for FY 2016-17, relied upon by the Financial Creditor, is unequivocal and crystallizes the issue of acknowledgement of debt as defined under Section 18 of the Limitation Act, 1963 - this Tribunal is of the earnest view that the Application filed under Section 7 of the Code is well within the period of Limitation. As regarding the contention of the Learned Counsel for the Appellant that the Corporate Debtor had initiated Proceedings under Section 14 of the SARFAESI Act, 2002 and has recovered some amounts and taken physical possession of some of the assets and therefore the Financial Creditor is precluded from initiating CIRP under IBC, 2016, is without merit, especially keeping in view Section 238 of the Code which overrides other laws. The material on record also shows that the Bank has specifically pleaded that the Application moved under Section 14 of the SARFAESI Act, 2002 on 04/02/2017, was dismissed by the ADM on 03/10/2017 and that the assets were never sold and no money was realized against the same. The documentary evidence on record shows that a Writ Petition was also preferred before the Hon ble Bombay High Court and the Bank was given the liberty to file a fresh Application under Section 14 of the SARFAESI Act, 2002. Appeal dismissed. 2022 (6) TMI 169 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Pecuniary Jurisdiction/monetary limit involved - HELD THAT:- The last invoice was raised on 28.05.2017, whereas the present application is filed on 01.01.2020, therefore, it is well within the limitation period and since the application was filed prior to the issuance of the notification dated 24.03.2020, by which the minimum threshold has been increased from Rs. 1 lakh to Rs. 1 crore, therefore, the present application is also within the pecuniary jurisdiction of this Bench. The amount of default is also not denied by the Respondent either by filling the reply to the demand notice or even by filling the written synopsis. It is further observed that there is no pre-existing dispute and the application is complete. The Applicant has not proposed the name of IRP. The application fulfills the requirement of Section 9(5)(i) of the IBC 2016. Petition admitted - moratorium declared. 2022 (6) TMI 168 Maintainability of application - initiation of CIRP - Personal Guarantors to Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Application has been filed in respect of debts which are not excluded debts as enumerated under Section 79(15)(e) of the Code. It is noted that no application under Chapter III of Part III of the Code has been admitted before this Adjudicating Authority in respect of the Applicant/Debtor during twelve months preceding the date of submission of the instant Application. The Applicant has filed an affidavit stating that she is not barred in terms of Section 94(4) of the Code. The Application under consideration is in a Form-A format and accompanied with the required fees as prescribed and contains the required details. Thus, prima facie the requirements of Section 94 of the Code are fulfilled. As stipulated under Section 96(1) of the Code interim moratorium commences from the date of filing of the Application under Section 94 or 95. Accordingly, in the instant matter interim moratorium commences from 04.01.2022 i.e., from the date of filing of the instant Application, concerning all the debts, and interim moratorium shall cease to have effect from the date of admission of the Application - As per Rule 6(2) of the Rules, the Guarantor has served a copy of this application to every financial creditor and the corporate debtor for whom the guarantor is a personal guarantor. It is seen that the Guarantor has annexed proof of service to the creditors and Corporate Debtor in form of postal slips. In this respect, the Applicant had been directed to file an affidavit of service to the creditors and Corporate Debtor along with a tracking report, the same has been filed vide Diary No. 225/2022 dated 27.01.2022. Application admitted - moratorium declared. 2022 (6) TMI 167 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - threshold amount to maintain application - HELD THAT:- It transpires from the records that although the Demand Notice was issued in 2019, the Operational Creditor has filed the present application in the year 2021 after a lapse of nearly two years. Further, the Operational Creditor has claimed the default on part of the Corporate Debtor for the amount of Rs. 26,20,992/- which is inclusive of interest @18% per annum calculated from 11.07.2018 till 11.01.2021. However the, said amount is below the pecuniary limit fixed by the Central Government vide notification dated 24.03.2020. The present application is filed on 14.02.2021 and the amount claimed in default is less than Rs. 1 Crore. Therefore, in the light of the notification dated 24.03.2020, the present application does not fulfill the minimum threshold limit to trigger the Corporate Insolvency Resolution Process. The instant Application filed by the Applicant under Section 9 of IBC, 2016 is not maintainable - Application dismissed. 2022 (6) TMI 166 Seeking direction to claim of the applicant submitted on 26.04.2019 as a financial debt owed by the corporate debtor to Vardhman Industries - whether the claims of the applicant have been properly verified before the rejection of the same by the Resolution Professional? - HELD THAT:- From the correspondence between the parties, it is clear that no serious effort was made by the Resolution Professional to classify the debts into financial and operational debts of the applicant. There is no denying the fact that the Resolution Professional needs documents and supporting evidence to decide on the nature of a claim for the purpose of admission of the same. The documents brought on record have not shown any kind of non-compliance by the applicant to any query raised by the Resolution Professional in this regard. The very fact that prior to the CIRP both the applicant and the respondent were under the same management would have ensured a better appreciation of the facts presented by the applicant relating to its claim. In the course of the present proceedings, the Resolution Professional could not justify the rejection of the detailed claim made by the applicant and also his inability to classify the same into operational and financial debts. The Resolution Professionals' statements that after receiving details of the claim he could not change his earlier decision to reject the same on the ground that he was advised not to review his original rejection is against the tenets of equity. To sum up, this rejection of the claim of the applicant could not be justified by the Resolution Professional during the present proceedings. This Bench is of the view that the Resolution Professional has failed in his duty to analyze the evidence placed before him regarding the nature of transactions of the applicant reflected in the books of the corporate debtor and present the complete facts regarding the admissibility of the claims made by the applicant before the CoC. The Resolution Professional in the present case was duty-bound to verify these transactions and put the same before the CoC with the complete factual and legal position rather than reject it summarily - this Bench directs the Resolution Professional to reconsider the claims made by the applicant with reference to the evidence already before him. Release of salary - HELD THAT:- It is noted that there are claims and counter-claims regarding the genuineness of the documents submitted before this Bench especially those relating to the terms and duration of employment and resignation of the applicants. In this context, it is made clear that this Bench does not provide the forum for deciding on the genuineness of the documents placed in the course of the proceedings. The Resolution Professional is directed to reconsider the claims made by the applicants regarding the payments of their salary, gratuity, and other perks strictly as per the terms and conditions laid down at the time of their employment and put up his findings before the CoC. This Bench, however, cannot decide on the claims and counter-claims made regarding the genuineness of the documents relied upon during the present proceedings and the parties may take up these issues before the Competent Judicial Authorities, if they decide to do so. Seeking direction to the Respondent- Resolution Professional to not interfere in the usage Vodafone-Idea Mobile Numbers belonging to the applicant - HELD THAT:- The Resolution Professional is directed not to interfere in the usage of the above mobile numbers and allow the applicant to continue the usage of the SIM cards mentioned in his prayer in his private capacity - Application allowed. Direction to direct Resolution Professional to pay the outstanding amount - HELD THAT:- A perusal of the facts of the present application indicates that there is a continuing dispute regarding a few transactions of supply of cotton yarn made by the applicant to the corporate debtor after the initiation of the CIRP. It is also observed that most payments regarding yarn supplies made by the applicant have been made except in the cases of the disputed transactions of supply of yarn. The reasons for the non-payment by the corporate debtor is attributed to the low quality of yarn supplied by the Applicant. The parties have made claims and counterclaims on the quality issue. This Bench is of the view that the prayers made by the applicant cannot be acceded to - Application dismissed. FEMA 2022 (6) TMI 165 Offence under FERA - Non-realization of payment towards exported goods - reasonable steps to be taken for securing the sale proceeds of exports or not? - concerned buyer in France became bankrupt and therefore, some of the export proceeds against the said consignments could not be realized - HELD THAT:- Any person effecting an export of goods is also responsible, rather duty bound, to also effect the securing of proceeds from such export/sale. The only exception, as per the language of the provision, is permission from the RBI, which if obtained may lead to granting of the leverage of not securing the proceeds within the stipulated and prescribed period. Further, sub-section 3 makes a presumption against the person who has not been able to secure the proceeds from exports that he/she has not taken all reasonable steps so as to recover the amount to be realized from the proceeds of sale. The purpose behind these provisions becomes clearer when seen from the standpoint of the legislature and its intention and purpose of bringing into the Act into existence It is evident from the objective, as specified in the preamble of the Act, that the need at the time of enactment of the Act was to accommodate trade deficit with the aim to also conserve foreign exchange resources in the Country. The purpose behind the Act was to ease out the foreign exchange crunch that the Country was going through. The objective, therefore, was to make such enabling provisions to facilitate due, proper and timely realization of the amount that is accrued by foreign buyer towards goods exported and to also facilitate regularized foreign exchange. Whether the steps taken by the appellant were reasonable steps as have been stipulated under Section 18(3) of the FERA? - There are no established principles or guidelines laid down by law to the question as to what amounts to reasonable steps under Section 18(3) of the FERA, and therefore, the same has to be established in light of the facts and circumstances of each case. In the instant matter, the appellant upon non-realization of payment towards exported goods made attempts to communicate with the buyer in France. The following communications were made by the appellant, as have been enlisted in her reply dated 26th March, 2004, to the Show Cause Notice by the respondent no. 2/ED As it is found that the appellant undertook the basic and primary measures of contacting and communicating with the foreign buyers and approaching the RBI after the lapse of the stipulated time period, however, these fundamental steps in themselves were not sincere, serious and sufficient attempts to effectively cause the recovery of the proceeds of sale. Another relevant factor to be considered is that the Appellate Tribunal reduced the penalty imposed upon the appellant by about 60 percent, that is from Rs. 25,00,000/- to Rs. 15,00,000/-, which in itself is a relief granted to the appellant despite having been found guilty of contravening the provisions of the FERA. In light of the facts and circumstances, contentions raised, arguments advanced and judgments cited, it is found that there is no error in the impugned order dated 30th August, 2016 passed by the Appellate Tribunal in Appeal No. 138/2007. The Tribunal has rightly imposed the penalty upon the appellant and this Court does not find any substantial ground or cogent reason to invoke its extraordinary jurisdiction and interfere with the said order. Accordingly, the instant Criminal Appeal is dismissed. PMLA 2022 (6) TMI 164 Grant of statutory bail under Section 167(2) of the Cr.P.C. - time limitation of 60 days expired - Money Laundering - diversion of large-scale clients funds through shell companies which resulted in huge losses to the investors - misuse of shell companies created by KSBL - HELD THAT:- Section 167(2) of the Cr.P.C. obligates the investigative agencies to complete the investigation in a time bound manner. The object behind incorporating a time limit to complete investigation was explained by a full bench of the Supreme Court in M. RAVINDRAN VERSUS THE INTELLIGENCE OFFICER, DIRECTORATE OF REVENUE INTELLIGENCE [ 2020 (10) TMI 1105 - SUPREME COURT ] where it was held that Once the accused files an application for bail under the Proviso to Section 167(2) he is deemed to have availed of or enforced his right to be released on default bail, accruing after expiry of the stipulated time limit for investigation. Thus, if the accused applies for bail under Section 167(2), CrPC read with Section 36A (4), NDPS Act upon expiry of 180 days or the extended period, as the case may be, the Court must release him on bail forthwith without any unnecessary delay after getting necessary information from the public prosecutor, as mentioned supra. Such prompt action will restrict the prosecution from frustrating the legislative mandate to release the accused on bail in case of default by the investigative agency. From the above decision, it is clear that a time limit for completing investigation was incorporated in order to ensure that the accused does not languish in jail for the investigative authority s failure to complete investigation. It was held that the right to statutory bail accrues on a person if the charge sheet is not filed within the prescribed period of sixty days. The said right to bail is indefeasible and is interlinked with personal liberty as envisaged under Article 21 of the Constitution of India. The complaint filed under Section 44(1)(b) of the PMLA is similar to a charge sheet/ final report filed under Section 173(2) of Cr.P.C. In other words, similar to a charge sheet under Section 173(2) of Cr.P.C., a complaint under Section 44(1)(b) of the PMLA is filed after completion of investigation, so that the Special Court can take cognizance under Section 167 of the Cr.P.C. It is relevant to note that the filing of the complaint and subsequent cognizance under PMLA is governed by the provisions of the Cr.P.C. in view of Section 65 of the Cr.P.C. - In the present case, the Respondent contended that a complaint under Section 44(1)(b) of the PMLA was already filed on 19.03.2022. Therefore, the Petitioner is not entitled for statutory bail under Section 167(2) of the Cr.P.C. This Court cannot accept the contention of the Respondent as the investigation was not completed when the complaint dated 19.03.2022 was filed. A perusal of the impugned order dated 08.04.2022 indicates that the Designated Court has returned the application dated 31.03.2022 seeking extension of remand and the bail application dated 01.04.2022. According to this Court, the Designated Court has no power to return the said applications. This Court in DIRECTORATE OF ENFORCEMENT REPRESENTED BY ITS ASSISTANT DIRECTOR HYDERABAD ZONAL UNIT VERSUS KAMMA SRINIVASA RAO, KANCHERLA SRIHARI BABU [ 2022 (2) TMI 1011 - TELANGANA HIGH COURT ] has held that it is incumbent on the Designated Court to pass a reasoned order and not merely return the applications. Neither the Cr.P.C. nor the PMLA contemplates any provision which empowers the Designated Court to return applications seeking remand or applications seeking bail. The Petitioner herein is entitled for statutory bail under Section 167(2) of the Cr.P.C. - Petition allowed. Service Tax 2022 (6) TMI 163 Recalling of order - Matter was heard ex-parte - Condonation of delay in filing present application - sufficient compliance of the provisions of Section 37C(1)(a) of Central Excise Act 1944 or not - Restoration of appeal under Rule 41 of CESTAT Rules 1982 - HELD THAT:- In the present application, appellant has taken the plea of change of address in the year 2012-13 itself. The perusal of the appeal shows that the address given in the appeal is the one which is mentioned to have been closed but on the entire record there is no information provided by the appellant about the closure of its registered premises. The notices have rightly been issued by the department / registry at the available addresses. Since appellant was aware of all the proceedings, it was his duty to follow up his appeal. The appeal remained pending before this Tribunal since the year 2012 to the year 2017. The entire application is miserably silent about any effort of the appellant to enquire about the status of his appeal. The said conduct of the appellant is an outcome of absolute negligence and omission of the act what appellant was supposed to perform after filing of his appeal during said period of five years. It stands clear that lack of bonafides and the apparent negligence on part of the party seeking relief is a significant and relevant fact to be considered while dealing with the situation as one in hand. Hon ble Apex Court in ESHA BHATTACHARJEE VERSUS MANAGING COMMITTEE OF RAGHUNATHPUR NAFAR ACADEMY AND OTHERS [ 2015 (1) TMI 1053 - SUPREME COURT] has held that even the affidavit and supporting certificate may not merit consideration - the application in hand itself has been filed after substantial delay. The appellant is already been observed to be negligent and thus he is held to not to be entitled for the discretionary relief. In the given circumstances, under no stretch of imagination there could be a justification to file an application at the sweet will of the applicant. Further, as per applicant himself, the Department has already acted upon the final order and has issued a recovery notice to the appellant which is mentioned as the date of knowledge of appellant about the impugned final order. But it is opined that since the Revenue has already acted upon the impugned final order and has already taken steps to implement the same there seems no justification nor even scope to recall such a final order especially when the proceedings were well in the notice of the applicant since first round of litigation in the impugned matter. There are no justification in the prayer of the appellant - application dismissed. Central Excise 2022 (6) TMI 175 Rebate claim - duty paid on the exported finished goods - All Industry Rates of Draw back - Non availment of benefit of Cenvat credit or the benefit of rebate of duty paid on the materials used in the manufacture of export products - Rule 18 of the Central Excise Rules, 2002 r/w Notification 19/2004-CE(N.T.), dated 06.09.2004 - HELD THAT:- It is the assertive stand of the appellants that they have not availed double benefit as alleged by the respondent authorities all along - According to the appellants, the N/N. 68/2011-Cus. (N.T.) dated 22.09.2011 would clearly go to show the double benefit only, where drawback of duty paid on inputs/input services and rebate of duty paid on inputs under Rule 18 of CER, 2002 are simultaneously availed. However, the appellants have not availed any rebate of duty paid on inputs/input services and therefore, there is no doubt benefit availed by them, which fact was not taken into account either by the respondent authorities or by the learned Judge. According to the respondents, the appellants are not entitled for doubt benefit and hence, their claim was rightly rejected by the respondent authorities. There are two different facts and circumstances projected by both the appellants and the respondents before this court. It is the firm stand of the appellants that they have not claimed any excess duty draw back, which is stoutly refuted by the learned counsel for the respondents. As such, taking note of the factual dispute arisen with regard to the availment of Cenvat Credit by the appellants, this court is of the view that it would be proper to remit the matter to the authority concerned to redo the entire process - Appeal disposed off. 2022 (6) TMI 162 Maintainability of appeal - non-compliance with the mandatory provision relating to pre-deposit in terms of section 35F of the Central Excise Act 1944 read with section 83 of the Finance Act - barred by time limitation or not - HELD THAT:- When the appellant had clearly stated that it could not make the pre-deposit online and therefore, had sought permission to make the pre-deposit through a bank draft, the Commissioner (Appeals) should have considered this request of the appellant. It has also been brought to our notice that the appellant subsequently made the pre-deposit on April 12, 2021, as is also clear from page-57 of the appeal memo. This fact may be verified by the Commissioner (Appeals) and in case the deposit has been made, he may proceed to decide the application filed by the appellant for condonation of delay. In case, the deposit has not been made, the Commissioner (Appeals) may grant one more opportunity to the appellant to make the pre-deposit. The order dated March 02, 2021 passed by the Commissioner (appeals) is, accordingly, set aside - Appeal allowed. 2022 (6) TMI 161 Entitlement of Interest on delayed refund - relevant date for calculation of time - appellant is seeking interest right from the date of duty deposited during investigation - whether appellant is entitled for interest only after three months from the date of application of refund? - HELD THAT:- The fact is not in dispute that appellant has deposited certain amount during investigation. The appellant neither filed any claim nor refund application but because of demand which was dropped by learned Commissioner (Appeals) only thereafter they filed refund claim. The Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] held that interest on refund is payable only after three months from the date of application. Therefore, since the appellant s refund claim is sanctioned within three months no interest is accrued. As per Clause (ec) of Section 11B (2), the relevant date for filing refund application is one year from the date of order from which the refund arose. In the present case, refund arises only after passing of order-in-appeal by the Commissioner (Appeals) dropping the demand. Therefore, there is no occasion to give refund prior to the date of order-in-appeal. Considering that the refund was sanctioned within three months from the date of application and the refund arose consequent to order of Commissioner (Appeals), no interest is payable from the date of deposit of the duty during investigation. The appellant is not entitled for the interest on refund sanctioned from the date of deposit of duty - appeal dismissed - decided against appellant. 2022 (6) TMI 160 Entitlement of interest on delayed refunds - amount deposited is in the form of pre-deposit - HELD THAT:- Though the appellant have paid the duty on the audit objection the same was paid as a duty only thereafter the appellant has not objected on the payment made by them. The refund application was filed after the commissioner (Appeals) allowed the cenvat Credit. The refund was sanctioned within 2 months from the date of filing application As per the Hon ble Supreme Court in the judgment of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT ], the interest is payable only when there is a delay beyond 3 months from the filing of application of refund. In the present case the refund was sanctioned within 3 months. From Clause (ec) sub-clause of (B) of sub-Section 5(4), for the purpose of relevant date it is the order by which the amount became refundable must be considered. In the present case it is the order of the Commissioner (Appeals) by which the refund became payable to the appellant. Therefore, prior to the date of order of Commissioner (Appeals) there was no cause for granting any refund. Moreover, even the appellant also not sought for any refund prior to the order of the Commissioner(Appeals). The interest is payable only after 3 months from the date of application of refund - In the present case admittedly the refund was sanctioned within 3 months from the date of application. Hence no interest is payable. Appeal dismissed. 2022 (6) TMI 159 CENVAT Credit - capital goods or not - lightings, equipments and fixtures falling under Chapter 85 and 94 - denial of Cenvat Credit on the ground that it is not used in relation to manufacture of the final product - HELD THAT:- Some of the Goods on which the appellant has availed the Cenvat Credit are undisputedly falling under Chapter 85 is clearly covered under the definition of capital Goods under Rule 2(a) of Cenvat Credit Rules, 2004. Therefore, the Goods covered under Chapter 85 is eligible for Cenvat Credit. As regard the Goods falling under Chapter 94, even if it is accepted that the same are not accessories, the said Goods are covered under definition of input. From the reading of the definition of inputs with effect from 01.04.2011, all Goods used in the factory of the manufacturer are admissible inputs. In the present case there is no dispute that all the Goods were used by the manufacturer of final product in their factory. Therefore, the Goods falling under chapter 94 is clearly covered under the definition of inputs in terms of 2(a) of Cenvat Credit Rules. The appellant s are entitled for the Cenvat Credit on the Goods falling under chapter 85 as well as Chapter 94, hence the impugned order is not sustainable and the same is set aside - Appeal is allowed - decided in favor of appellant. 2022 (6) TMI 158 CENVAT Credit - inputs issued for production lying in shop floor but not used for the production and the same was destroyed in fire - remission of duty granted - HELD THAT:- The impugned order that the Learned Commissioner has granted the remission of duty in respect of Goods which is in work in progress. It is also not in dispute that the input in question had been issued for production and the same was lying on the shop floor. The same was admitted by the Commissioner in his order. The reason for not granting the remission is that even though the input was issued for production and lying on shop floor but the same was in form of input as such. Therefore, it was contended that the same was not used in the production. Accordingly, the remission was not granted. it is found that even though the inputs were not put to use in the production but the input were issued for the production and was in the progress of use in the manufacturer of final product. Once the input has been issued for the production and lying on shop floor. The same should be treated as work in progress. Consequently, the demand of Cenvat Credit cannot be made. It can be seen that the facts in that and present case is absolutely identical that though the input was not used and issued for production, the demand of Cenvat Credit thereon was set aside - the demand of Cenvat Credit in respect of inputs issued for production and lying in shop floor is not sustainable - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2022 (6) TMI 157 Benefit of Concessional rate of duty - Local Sales - Inter-state sales against C-Forms - Stock transfer against F-Form - originals of F and C Forms available on record - HELD THAT:- Respondent says that mere production of the original C and F-Forms is not sufficient, the appellant also needs to place on record other evidence to satisfy the respondent/revenue, as to whether inter-state sales and stock transfer of the subject goods, in fact, took place. What emerges is that both counsels realise that perhaps a remand for examination of the relevant documents would be the best way forward in the matter given the factum of discovery of original C and F forms. The matter is remanded to the Tribunal for a de novo examination - Appeal allowed by way of remand. Indian Laws 2022 (6) TMI 156 Dishonor of Cheque - compromise arrived at between the parties - acquittal of the accused - framing of charges - section 147 of Negotiable Instruments Act - HELD THAT:- Having taken note of the fact that both the parties have compromised the matter and in terms of the compromise substantial amount of Rs.2,50,000/- , out of Rs.3,50,000/- has been paid to the complainant/respondent and petitioner-accused has given undertaking to make the remaining payment within a period of one week, this Court sees no impediment in accepting the prayer made on behalf of the petitioner-accused for compounding the offence while exercising power under section 147 of the Act as well as in terms of the law laid down by the Hon ble Apex Court in Damodar S. Prabhu v. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT] , whereby it has been categorically held that Court exercising power under Section 147 of the Act can proceed to compound the offences even in those cases where accused stands convicted. The instant matter is ordered to be compounded and judgment dated 21.03.2022, passed by learned Additional Sessions Judge, Sirmaur, District are quashed and set-aside. The petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act - petition allowed.
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