TMI Tax Updates - e-Newsletter
July 14, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Indian Laws

Articles

1. Excessive Delegation rejecting the eligible ITC as ineligible

   By: Senguttuvan Kuppusamy

2. COMPULSORY WITHDRAWAL OF COMPOSITION LEVY

   By: DR.MARIAPPAN GOVINDARAJAN

3. ROLE & SCOPE OF CHARTERED ACCOUNTANT (CA) IN ONLINE AGM DURING COVID -19 ERA

   By: CSLalit Rajput

News

1. Finance Commission holds meeting with the Ministry of Health and Family Welfare

2. Auction for Sale (Re-Issue) of ‘5.09% GS 2022’, Auction for Sale (Re-Issue) of ‘5.79% GS 2030’, Auction for Sale (Re-issue) of ‘GoI Floating Rate Bond 2033’, and Auction for Sale (Re-Issue) of ‘7.19% GS 2060’.

3. For strong, resilient and ‘’Aatma Nirabhar Bharat’’, trade bodies have an important role to play: Shri Piyush Goyal

4. 3 Months Extension for Re import of Cut and Polished Diamonds

5. CBDT provides Utility to ascertain TDS Applicability Rates on Cash Withdrawals

6. Aatma Nirbhar Bharat Package – Progress So Far

Notifications

DGFT

1. 18/2015-2020 - dated 13-7-2020 - FTP

Amendment in Export Policy of textile raw material for masks and coveralls

Indian Laws

2. S.O. 2119(E) - dated 26-6-2020 - Indian Law

Classification of MSMEs and procedure for Udyam Registration

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/CIR/P/2020/120 - dated 13-7-2020

Guidelines for Issue and Listing of Structured Products/ Market Linked Debentures- Amendments

Income Tax

2. 13/2020 - dated 13-7-2020

One-time relaxation for Verification of tax-returns for the Assessment years 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 which are pending due to non-filing of ITR-V form and processing of such returns

Customs

3. PUBLIC NOTICE NO. 21/2020 - dated 9-7-2020

Turant Customs – Turant Suvidha Kendra and other Initiatives for Contactless Customs

4. PUBLIC NOTICE No. 30/2020 - dated 7-7-2020

ICES Advisory 23/2020 — Streamlining of processes in System related to Bonds and First Check BEs

5. PUBLIC NOTICE No. 51/2020 - dated 7-7-2020

Further facilitating trade and streamlining procedure through various Initiatives for Contactless Customs

6. PUBLIC NOTICE NO. -39/2020 - dated 1-7-2020

Notification of Various Sea-Ports, Airports, Inland Container Depot [ICDs] and Land Customs Stations [LCSs] for imports and exports under the export promotion schemes

7. Public Notice-20/2020 - dated 25-6-2020

Paperless Customs — Electronic Communication of PDF Based Copies of Shipping Bill & e-Gatepass to Custom Brokers/ Exportere

8. PUBLIC NOTICE No. 11/ 2020 - dated 25-6-2020

Paperless Customs - Electronic Communication of PDF Based Copies of Shipping Bill & e-Gatepass to Custom Brokers/ Exporters

9. PUBLIC NOTICE NO. 89/2020 - dated 7-6-2020

COVID-19 Facilitation measures-Procedure for assessment in case of non-submission of Original Country of origin Certificates- Amendment to Public Notice No.61/2020

10. PUBLIC NOTICE No. 81/2020 - dated 16-5-2020

COVID-19 Facilitation measure - Uploading of License of Drug Controller in e Sanchit for clearance of Pharma items requiring NOC/Approval from Asst Drug Controller

Highlights / Catch Notes

GST

• Cinema Chain Must Reduce Ticket Prices to Pass GST Savings to Consumers Under CGST Act Section 171, Rule 133 (3)(a.

  Case-Laws - NAPA : Profiteering - supply of Services by way of admission to exhibition of cinematograph films where the price of admission ticket was above one hundred rupees - benefit of reduction in the rate of GST not passed on - contravention of section 171 of CGST Act - The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients.
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• GST Tribunal Delay: Respondents Must Refund Petitioner Within Four Weeks Without Waiting for Tribunal Functioning.

  Case-Laws - HC : Inaction on the part of the respondents of not disbursing the refund amount was owing to the non-functioning of the GST Appellate Tribunal - the petitioner cannot be asked to wait endlessly for the respondents to challenge the order dated 23rd July, 2019. - Refund to be granted within 4 weeks.
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Income Tax

• Tax Deduction u/s 80IC: Tribunal Supports Consistent Claims for New Unit, Not Split Business.

  Case-Laws - AT : Disallowance of deduction u/s 80IC - new unit or came into existence by splitting up or reconstruction of a business already in existence - Principle of consistency - the assessee is eligible to claim deduction under section 80IC of the Act. More so, because this is the fourth year of claim of deduction and in the initial years the Tribunal has held that conditions of sub-section 4 of section 80IC of the Act have been fully complied with by the assessee.
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• Debate Over Computer Repairs Expenses: Capital Expenditure or Not? Dispute on Correct Depreciation Rate - 25% vs. 60.

  Case-Laws - AT : Disallowance of software expenses - Disallowance is in respect of expenditure claimed towards “repairs - computers-annual maintenance” and “Repairs-computers-others” - AO has treated it as capital expenditure on the reasoning that it was towards purchase of licenses and allowed depreciation at the rate of 25% - even if the expenditure is treated as capital, depreciation would be allowable at the rate of 60%
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• Joint Property's Annual Lettable Value Set at Rs. 1,80,000 Under Income Tax Act Section 23(1)(a) Despite Lower Actual Rent.

  Case-Laws - AT : Addition towards the ‘Annual Lettable Value‘(“ALV”) of a property owned - property jointly owned by the assessee - as the rent of ₹ 60,000/- ( ½ share) received by the assessee during the year under consideration is less than the notional lettable value of the aforesaid property which during the year under consideration can safely be taken at ₹ 1,80,000/-, therefore, its ALV has to be taken as per Sec. 23(1)(a) at ₹ 1,80,000/-.
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• Deemed dividends u/s 2(22)(e) of the Income Tax Act are taxable only for shareholders with substantial interest.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - substantial interest in the said concern - The definition does not alter the legal position that dividend has to be taxed in the hands of the shareholder. As such, the dividend within the meaning of cl. (e) of Sec. 2(22) can only be brought to tax in the hands of the shareholder.
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• Section 68: Nil Return Alone Insufficient for Unsecured Loan Additions if Lender's Sources Proven with Strong Evidence.

  Case-Laws - AT : Addition u/s 68 - Unsecured Loan - merely filing Nil return by lender, if the sources are clearly established with overwhelming evidences of the bank statements of all the concerned parties duly supported by the annual accounts, cannot lead to addition in the hands of the borrower.
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• Provisions for Future Losses Deductible Under Income Tax Law, Supported by Accounting Standard 7 and Prior Decisions.

  Case-Laws - AT : Deductibility of the provision for future losses - in the various decisions discussed above it has been held that applicability of AS-7 is acceptable. In this case it has been argued that as the unbilled revenue has been offered for taxation therefore the provision for future losses, as per AS-7 should be allowed. The AO has not pointed out any defect in the estimate or application of AS-7. - deduction for Future loss is allowable.
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• Tax Recalculated for Undisclosed Stock: Assessment Year Changed from 2013-2014 to 2012-2013 Due to Survey Acceptance.

  Case-Laws - AT : Undisclosed stock - relevant assessment year - additions for the financial year 2012-2013 relevant to assessment year 2013-2014 - Once the statements have been accepted by the survey team the tax should be calculated by them for the relevant years accepted by the assessee. In view of the above findings noted by us, it should be taxed in the assessment year 2012-2013. - Additions deleted.
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• Tax Department Wrong to Alter Consistent Accounting Method; Section 145 Amendment Doesn't Justify Change.

  Case-Laws - HC : Method of accounting - Completed contract method of accounts - scope of amendment to Section 145 - Assessee was following completed contract method which was accepted by the department in the past as well and therefore, there is no justification for the assessing officer to change the same.
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Customs

• Customs Appeal Dismissed for Vague Citation of Sections in EOU Debonding Case.

  Case-Laws - HC : 100% EOU - Debonding of EOU - Commissioner of Customs (Appeals) dismissed the appeal on the ground that, the petitioner had sought to invoke the provisions of Section 35 of the Central Excise Act, 1944 as well as Section 128 of the Customs Act, 1962 and had thereby failed to take recourse to a specific provision - having accepted the appeal on file and proceeded to hear the appeal on merits, the fourth respondent should not have rejected the appeal on the premise that the provisions quoted therein are vague.
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Corporate Law

• CIRP Application Dismissed: No Formal Employment Confirmation from Corporate Debtor's Board; No Legitimate Salary Claim Established.

  Case-Laws - Tri : Maintainability of application - initiation of CIRP - termination of employment - salary and other dues - Since the appointment was made even prior to the incorporation of the Corporate Debtor, it is evident that there could not have been any Board Resolution to discuss, propose or confirm such an appointment. Nothing has been brought on record to indicate that any such confirmation was done subsequently by the Board. In this situation, it cannot be said that any right to payment or claim arose in the hands of the Operational Creditor against the Corporate Debtor, in the absence of any decision from the Board
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Indian Laws

• Court Grants Moratorium on Loan Repayments Due to COVID-19, Citing RBI Circular from March 2020 in Dispute Case.

  Case-Laws - HC : Grant of Moratorium due to COVID-19 pandemic situation - Restraint on respondent from recovering loan repayment instalments/EMI due - RBI Circular dated 27.03.2020 - grievance of the Petitioner relates to compliance/non- compliance by Respondent 5 to 7 of the RBI Circular. - The contentions of the RBI that the dispute is between the Petitioner and Respondents No.5 to 7 is not acceptable since the dispute arises out of the implementation or not of a Circular issued by the RBI.
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Service Tax

• Court Dismisses Case Restoration Application Due to Appellant's Lack of Interest and Callous Approach.

  Case-Laws - AT : Maintainability of application for restoration of case - Bench observed that the Appellant was no longer interested in pursuing the matter and, therefore, dismissed the Appeal in default - The facts stated above leave no manner of doubt that the Appellant had adopted a very callous approach and had not pursued the Appeal or the Restoration Application with any sense of responsibility - Application dismissed.
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• Court Sets Aside Demand on CENVAT Credit Miscalculation for IT and Software Services u/r 6(3A.

  Case-Laws - AT : CENVAT Credit - common input services used for taxable as well as exempt goods - It appeared to Revenue that while calculating the percentage of ineligible credit under Rule 6(3A), appellants have not included the amount of cenvat credit availed on Information Technology and Software Services contending that such ITSS is also a taxable output service, which contention appears to be incorrect - Demand set aside.
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• Court Rules Downlinking Satellite Signals Not Subject to Service Tax Under Reverse Charge Mechanism; Broadcasting Definition Clarified.

  Case-Laws - AT : Levy of Service Tax - Broadcasting service - transmitting signals from outside India - the contention of the Department that the down linking of the signals from the satellite is transmission of signals covered by the definition of ‘broadcasting’ and, therefore, leviable to service tax on the Appellant under a reverse charge mechanism cannot be accepted.
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Case Laws:

• GST

• 2020 (7) TMI 288
  Permission to withdraw petition - Legality and validity of para 10 of the Bringing the Directorate General of Anti-Profiteering under Superintendence, Direction and Control of the National Anti-Profiteering Authority Notification of detailed Guidelines by NAA dated 04th October, 2019 issued by the respondent No.2 as well as the validity of all consequential notices and proceedings initiated by the respondents - HELD THAT:- The present writ petition and application are dismissed as withdrawn.

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• 2020 (7) TMI 287
  Inaction on the part of the respondents of not disbursing the refund amount was owing to the non-functioning of the GST Appellate Tribunal - HELD THAT:- It is apparent that the petitioner has succeeded in appeal vide order dated 23rd July, 2019. Though nearly a year has passed, yet no proceeding has been filed challenging the said order till date. In the opinion of this Court, the petitioner cannot be asked to wait endlessly for the respondents to challenge the order dated 23rd July, 2019. Consequently, the present writ petition is disposed of with a direction to the respondents to refund the amount as directed by the Commissioner (Appeals) vide order dated 23rd July, 2019 within four weeks. During this period, it shall be open to the respondents to file appropriate proceedings in accordance with law. All rights and contentions of the parties including objection, if any, to the maintainability of such proceedings are left open.

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• 2020 (7) TMI 286
  Profiteering - supply of Services by way of admission to exhibition of cinematograph films where the price of admission ticket was above one hundred rupees - benefit of reduction in the rate of GST not passed on - contravention of section 171 of CGST Act - HELD THAT:- The Respondent has resorted to profiteering by way of either increasing the base prices of the service while maintaining the same selling prices or by way of not reducing the selling prices of the service commensurately, despite a reduction in GST rate on Services by way of admission to exhibition of cinematograph films where price of admission ticket is above one hundred rupees from 28% to 18% w.e.f. 01.01.2019 to 30.06.2019. on this account, the Respondent has realized an additional amount to the tune of 30,13,058/- from the recipients which included both the profiteered amount and GST on the said profiteered amount. Thus the profiteering is determined as 30,13,058/- as per the provisions of Rule 133 (1) of the CGST Rules, 2017. The Respondent is therefore directed to reduce the prices of his tickets as per the provisions of Rule 133 (3) (a) of the CGST Rules, 2017, keeping in view the reduction in the rate of tax so that the benefit is passed on to the recipients. The Respondent is also directed to deposit the profiteered amount of 30,13,058/- along with the interest to be calculated @ 18% from the date when the above amount Was collected by him from the recipients till the above amount is deposited. Since the recipients, in this case, are not identifiable, the Respondent is directed to deposit the amount of profiteering of 15,06,529/- in the Central Consumer Welfare Fund (CWF) and 15,06,529/- in the Telangana state as per the provisions of Rule 133 (3) (c) of the CGST Rules, 2017, along with 18% interest. The above amount shall be deposited within a period of 3 months from the date of receipt of this Order failing Which the same shall be recovered by the Commissioner SGST as per the provisions of the SGST Act, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and resorted to profiteering and hence, committed an offence under section 171 (3A) of the CGST Act, 2017. Therefore, he is liable for the imposition of penalty under the provisions of the Section. Accordingly, a notice be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him.

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• Income Tax

• 2020 (7) TMI 285
  Method of accounting - Completed contract method of accounts - scope of amendment to Section 145 of the Act w.e.f. 01.04.1997 and applicable to the current assessment year - HELD THAT:- Assessee is following mercantile system of accounting and as per notes to the accounts, the assessee is following completed contract method of accounting for contracts. The aforesaid method of assessment has been accepted by the department in the past and therefore, in view of law laid down by the Supreme Court in BILAHARI INVESTMENTS PVT. LTD. [ 2008 (2) TMI 23 - SUPREME COURT ] the Commissioner of Income Tax (Appeals) as well as the tribunal has rightly held that there was no justification on the part of the assessing officer to change the earlier method adopted by the assessee and to determine the income on estimate basis. Assessee was following completed contract method which was accepted by the department in the past as well and therefore, there is no justification for the assessing officer to change the same. For the aforementioned reasons the submission made on behalf of the revenue cannot be accepted. By reading the order of the tribunal as a whole, it is evident that the tribunal has taken note of the effect of Section 145 of the Act. Therefore, the aforesaid submission made on behalf of the revenue also does not deserve acceptance.

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• 2020 (7) TMI 284
  Undisclosed stock - relevant assessment year - survey proceedings u/s.133A - assessee was agreed to pay self-assessment tax on it by accepting that the stock discrepancy noted - HELD THAT:- We observe from the order passed u/s.143(3) of the assessment year 2012-2013, there is no any single word found in regard to survey proceedings u/s.133A of the Act, whereas the documents were available with the same AO i.e. Ward-2(2), Balasore and the assessee accepted some discrepancy in stock and agreed to pay tax thereon. CIT(A) after taking into account of the two branches, enhanced/modified the assessment made by the AO but has given substantial relief after considering all the submissions and documents available before him. As gone through the statements recorded by the survey team of partners of the firm the total discrepancy in stock declared of 1,30,26,864/-. The total declaration made by them is 1,30,26,864/- only for the assessment year 2012-2013 in which they have undertaken payment of self-assessment tax of 40 lakhs in four installments. Except the above declaration, there are nowhere in the statements recorded during the course of search, any other declaration by the partners. As noted from the order of both the authorities below that they have made additions for the financial year 2012-2013 relevant to assessment year 2013-2014. Once the statements have been accepted by the survey team the tax should be calculated by them for the relevant years accepted by the assessee. In view of the above findings noted by us, it should be taxed in the assessment year 2012-2013. Accordingly, we quash the order of both the authorities below and delete the entire addition made by the AO. Cash balance found in the cash box - As decided the entire issue that declaration should be added in the assessment year 2012-2013, therefore, there is no question for deciding this issue again because the amount in question as stated in this ground is included in the entire amount of declaration made by the partners. Appeal of assessee is allowed.

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• 2020 (7) TMI 283
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As the interest free funds are in excess of the investments, the presumption that arises is that interest free funds have been invested in investments which do not yield taxable income as held in the case of CIT vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . We find no infirmity in the order of the ld. CIT(A). Thus, we uphold the deletion of the disallowance made under Rule 8D(2)(ii) of the Rules. Disallowance made under Rule 8D(2)(iii), CIT(A) has directed the AO to consider only those investments which have earned dividend during the year for the purpose of computation of disallowance under the Rules. This direction is in line with the propositions of law laid down in the case of CIT vs. M/s. REI Agro Ltd. [ 2014 (4) TMI 713 - CALCUTTA HIGH COURT] and in the case of Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI]. Thus, we see no reason to interfere with the direction of the ld. CIT(A) on this issue. Thus we dismiss ground no. 1 of the Revenue. Allowability of deduction us. 80IA - HELD THAT:- Assessee is a developer, and not merely a works contractor and is eligible for deduction u/s. 80- IA. Accordingly, the claim for deduction u/s. 80-IA(4) is hereby allowed. Disallowance of employees contribution to PF ESI - HELD THAT:- This issue is covered in favour of the assessee by the judgement in the case of PCIT vs. Rajasthan State Beverages Corporation Ltd. [ 2017 (7) TMI 1087 - SC ORDER]. Thus we dismiss this ground of the Revenue. Deductibility of the provision for future losses - Revenue s contention is that these are unascertained liability and hence not deductible - HELD THAT:- AO has merely rejected the claim of the appellant by calling it a contingent and unascertained expenditure. However, as per the discussion, in the various decisions discussed above it has been held that applicability of AS-7 is acceptable. In this case it has been argued that as the unbilled revenue has been offered for taxation therefore the provision for future losses, as per AS-7 should be allowed. The AO has not pointed out any defect in the estimate or application of AS-7. In fixed price contracts, the appellant having credited all its revenue, as per the contract, has to provide for all the foreseeable expenses which it is bound to incur as per the contract. The accounting standard AS-7 provides for such an eventuality. In view of the facts discussed above it is observed that the; company has followed AS-7 and has debited the future losses - deduction for Future loss is allowable. Disallowance u/s 14A of the Act while computing book profits u/s 115JB - HELD THAT:- This issue is covered in favour of the assessee by the order of the Tribunal for the AY 2011-12 in assessee s own case as well as the judgement of the Special Bench of the Delhi Tribunal in the case of Vireet Investment Pvt. Ltd.. [ 2017 (6) TMI 1124 - ITAT DELHI]

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• 2020 (7) TMI 282
  TP Adjustment - interest due on outstanding receivable from Associate Enterprises - ALP adjustment u/s. 92C(3) towards Interest @ 7% on Outstanding Receivables from AEs on hypothetical and notional basis - HELD THAT:- The assessee during the year under consideration had not availed any loan from AEs or unrelated third parties and was not incurring any interest cost. The agreement between the assessee and its AE vis- -vis terms of payment within stipulated period of 90 days cannot form basis for holding the existence of International transaction between assessee and its AE, where outstanding is not received within stipulated period. Such is the proposition laid down in Pr. CIT-V vs Kusum Health Care Pvt.Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] especially where working capital adjustment has been allowed to assessee. In any case, the credit period of 90 days is less than credit period of 90 to 120 days of comparables and no adjustment is warranted. In such facts and circumstances and following the ratio laid down by the Hon ble Delhi high Court in Kusum Healthcare Ltd. (supra) and also in line with the findings of the Tribunal in M/s. Global Logic India Ltd. [ 2017 (12) TMI 1052 - ITAT DELHI] we find no merit in making any adjustment on account of interest due on receivable from its AE. - Decided in favour of assessee.

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• 2020 (7) TMI 281
  Addition u/s 68 - Unsecured Loan - Assessee said he has received the above loan from M/s. Maharassa Visions Pvt. Ltd., which is one of the group concerns - HELD THAT:- In this case, the source of money lent is loan from another group company; group company received money from the assessee itself, the transactions is duly reflected in the balance sheets of respective companies. Even the assessing officer himself has stated that source of money lent to the assessee is the assessee itself. If the view of the ld AO is to be believed then, NBFC companies who have limited earning but lent the money out of the money borrowed will never pass the test of section 68 of the act. Thus, merely filing Nil return by lender, if the sources are clearly established with overwhelming evidences of the bank statements of all the concerned parties duly supported by the annual accounts, cannot lead to addition in the hands of the borrower. We allow Ground of the appeal of the assessee, which is against the confirmation of the additions of 5 Crores u/s 68 of the act with respect to above unsecured loan.

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• 2020 (7) TMI 280
  Deduction u/s 80P - claim denied as assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule - HELD THAT:- The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement in the assessment order that there have been disbursement of loans to non-members as well. In the light of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed to non-members of assessee-societies, for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - Appeal filed by the assessee is allowed for statistical purposes.

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• 2020 (7) TMI 279
  Deduction u/s 80P(2)(a)(i) - assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule - HELD THAT:- The narration in loan extracts / audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In this case, such a detailed examination has not been conducted by the A.O s. In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2).

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• 2020 (7) TMI 278
  Exemption u/s 11 - rejecting the application filed by the Welfare Fund u/s 12A - applicant has not established genuineness of the activities of the fund when the memorandum and other documents clearly established the same - exemption u/s 80G - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in the case of Bar Council of Delhi vs. CIT (E) [2020 (7) TMI 171 - ITAT DELHI] we are of the considered view that the appellant trustee committee being established under the Bar Council of Delhi being engaged in safeguarding the rights, privileges and interest of the advocates, its dominant purpose is the advancement of general public utility within the meaning of section 2(15) of the Act, as such, genuineness of its activities and object of charitable purpose is proved, thus entitled for registration u/s 12AA and consequent exemption u/s 80G, shall be exempt from the income-tax as provided u/s 23 of the Advocates Welfare Fund Act, 2001, hence entitled for registration u/s 12AA of the Act and subsequent exemption u/s 80G of the Act. CIT (E) is to provide the registration / exemption to the appellant accordingly. - Decided in favour of assessee.

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• 2020 (7) TMI 277
  Capital asset chargeable to tax u/s. 45 (5) - land in question was situated within Municipal Limits of Faridabad - HELD THAT:- The fact is that the assessment order was framed exparte. The documents filed before us show that the assessee has entrusted his counsel to furnish evidence before the first appellate authority but a perusal of the order of the first appellate authority show that the appellate proceedings were not properly attended. We have also given through the application for the admission of additional evidences. We are of the considered view that these documents go to the root of the matter. Therefore, we deem it fit to restore the entire quarrel to the files of the AO. The assessee is directed to furnish all those documents before the AO and the AO is directed to decide the issue fresh after considering the documents and after giving a reasonable opportunity of being heard to the assessee. - Appeal filed by the assessee is treated as allowed for statistical purpose.

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• 2020 (7) TMI 276
  Income accrued in India - Interest income from foreign currency loan and Securities - beneficial ownership of funds - Eligibility of exemption under Article 11(3)(c) of India - assessee placed on record the Tax Residency Certificate (for short TRC ) issued by the Mauritius Revenue Authority evidencing the assessee s tax residence in Mauritius - HELD THAT:- We find that the said issue had been deliberated upon by the Tribunal in the assessee s own case for the preceding years [ 2020 (3) TMI 1242 - ITAT MUMBAI ] wherein in the backdrop of identical fact pattern involved in the said years, it has consistently been held that as per Article 11(3)(c) of the India-Mauritius tax treaty the interest income would not be exigible to tax in India. - Decided in favour of assessee.

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• 2020 (7) TMI 275
  Deemed dividend u/s 2(22)(e) - assessee company has received the loans from a company in which the substantial shareholder(s) of the assessee company are holding substantial interest in the said concern - CIT-A deleted the addition - HELD THAT:- A payment made by a company on behalf, or for the individual benefit, of any such shareholder is treated by cl. (e) to be included in the expression dividend . Consequently, the effect of cl. (e) of s. 2(22) is to broaden the ambit of the expression dividend by including certain payments which the company has made by way of a loan or advance or payments made on behalf of or for the individual benefit of a shareholder. The definition does not alter the legal position that dividend has to be taxed in the hands of the shareholder. As such, the dividend within the meaning of cl. (e) of Sec. 2(22) can only be brought to tax in the hands of the shareholder. Our aforesaid view is fortified by the judgment in the case of CIT Vs. Universal Medicare (P) Ltd. [ 2010 (3) TMI 323 - BOMBAY HIGH COURT ]. Accept the view taken by the CIT(A) that as the assessee company is not a shareholder in either of the aforesaid lender companies viz. (i). M/s Vrisa Creations Pvt. Ltd.; and (ii). M/s Sesha-sai projects Pvt. Ltd., therefore, the amount received from them could not have been brought to tax as deemed dividend within the meaning of Sec. 2(22)(e) in its hands. Accordingly, finding no infirmity in the view taken by the CIT(A), we uphold the same. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (7) TMI 274
  Allowance of expenses u/s 57(iii) against income from other sources - depreciation and car expenses - HELD THAT:- As is discernible from the assessment order for A.Y 2013-14, the A.O had disallowed 50% of the assessee s claim for car depreciation and car expenses primarily for the reason that he had not furnished any evidence with regard to maintenance of any log book. As the fact situation during the year under consideration in context of the aforesaid issue before us remains the same, therefore, after principally agreeing with the view taken by the Tribunal as regards the entitlement of the assessee towards claim for car depreciation and car expenses, we accept the alternative claim of the assessee and restrict the disallowance of car depreciation, car insurance expenses and car expenses to the extent of 50% of the claim raised by the assessee. Accordingly, the A.O is directed to restrict the disallowance as regards the assesse s claim for car depreciation, car insurance expenses and car expenses to the extent of 50% of the claim that was raised by him. Disallowing claim for expenditure incurred towards professional fees - On a perusal of the records, we find that there is no material available on record which would substantiate the claim of the assessee that the professional fees as claimed by him was incurred for availing certain professional services in the course of his business. In fact, the assessee except for harping on his claim that the aforesaid expenses were incurred in lieu of professional advice for issues relating to litigation, tax appeals, accounting and compliances in the course of his business, had however failed to fortify the same on the basis of any corroborative material. - Matter restored before AO for verification. Addition towards the Annual Lettable Value ( ALV ) of a property owned - property jointly owned by the assessee alongwith his brother - HELD THAT:- As per Sec. 23(1), the actual rental receipt as per clause (b) shall be taken as the ALV of a property only where the same is found to be in excess of the notional lettable value contemplated in clause (a). In the case before us, the assessee had failed to explain as to why the notional lettable value of the property of 1,80,000/-( share) that was adopted by him as the ALV of the property in the immediately preceding year i.e A.Y 2011-12 was not to be adopted for the year under consideration. As such, we are of the considered view that as the rent of 60,000/- ( share) received by the assessee during the year under consideration is less than the notional lettable value of the aforesaid property which during the year under consideration can safely be taken at 1,80,000/-, therefore, its ALV has to be taken as per Sec. 23(1)(a) at 1,80,000/-. We thus finding no infirmity in the view taken by the CIT(A) uphold the same. Disallowance of deduction claimed by the assessee in respect of tower rent - assessee s claim for deduction of 30% u/s 24(a) as regards the rent received from the cellular company - assessee had let out space on the terrace of a house property owned by him to a mobile company on which the latter had erected a tower - HELD THAT:- Both of the lower authorities had dismissed the aforesaid claim of deduction raised by the assessee without passing any reasoned order. We are not inclined to subscribe to the manner in which the lower authorities had rejected the assesse s claim for deduction u/s 24(a) insofar the same pertained to the rent received from the cellular company i.e without giving any logical reasoning. In fact, we find that though the CIT(A) had reproduced the exhaustive submissions filed by the assessee in context of the aforesaid issue under consideration of his order, but had failed to adjudicate the same on the basis of a speaking order. In the backdrop of the aforesaid facts, we herein restore the issue to the file of the A.O who is directed to adjudicate the aforesaid claim of the assessee on the basis of a speaking order. Notional lettable value of the property - Flat - Gaurav Palace - HELD THAT:- The impugned property s possession was not handed over to the assessee by the builder. Nothing has been submitted before us that this finding is wrong. In this view of the matter in our considered opinion when the assessee has not gotten possession of the said property there was no question of assessee letting out the same and offering rental income. Hence we do not find any infirmity in the order of the learned CIT appeals on this issue Taxability of unrealized rent in the year of receipt - Vacany allowance - it has been the claim of the assessee that the property in question during the year under consideration was let out and the unrealized rent was to be recovered from the lessee/licensee viz. HCRMP, therefore, such amount of unrealized rent would be brought to tax in the hands of the assessee u/s 25AA of the Act in the year of receipt. - Held that:- in terms of our aforesaid observations we uphold the view taken by the CIT(A) that as the property in question was inherently incapable of being let out during the year under consideration because of the legal constraint imposed by the High Court, therefore, the reasonable rent for which it might be let-out could not be computed. As a consequence, since the computation provisions u/s 23 failed the charging provisions u/s 22 would also fail. As such, the deletion by the CIT(A) of the addition upheld. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (7) TMI 273
  Disallowance of interest u/s 36(1)(iii) - assessee has utilized the interest bearing fund for capital work in progress - A.O relying on the ground that the owned fund available with the assessee were more than the capital work in progress - CIT-A deleted the addition - HELD THAT:- No infirmity emerges from the order of the CIT(A) who had rightly observed that as the assessee had sufficient self-owned funds to justify the investment made towards capital WIP, therefore, no part of the interest expenditure pertaining to interest bearing borrowed funds could have been disallowed u/s 36(1)(iii) of the Act. Insofar the claim of the revenue that they had not accepted the judgment in the case of CIT Vs. HDFC Bank Ltd. (2014) [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] and had filed a SLP before the Hon ble Supreme Court is concerned, we are afraid that the same does not find favour with us. As the operation of the order of the Hon ble High Court in the case of HDFC Bank Ltd. (supra) had not been stayed by the Hon ble Apex Court, therefore, the same holds the ground till date and continues to be binding. Addition u/s 69B - suppressed purchase consideration of the property - HELD THAT:- Adoption of the purchase consideration of the property in question by the A.O was only on the basis of an unsubstantiated and dumb rough notings on a piece of paper seized during the course of the search proceedings. On a perusal of the aforesaid seized document, we find, that the same only refers to a set of figures which on a standalone basis could not have been adopted as the purchase consideration of the property in question. Apart from that, we find that the support drawn by the A.O from the fact that while framing the assessment in the case of the seller i.e M/s Ganesh Paper Mills an addition of 1 crore was made in respect of the transaction under consideration looses all the force as the said addition on appeal had already been deleted by the CIT(A)-29, Delhi, vide his order dated 05.02.2016. Lastly, we find that the landed cost (inclusive of stamp duty and other charges) had been recorded by the assessee in its books of accounts at 14.14 crores i.e an amount in excess of the impugned purchase consideration of 14.01 crores. Accordingly, we are persuaded to subscribe to the view taken by the CIT(A) that in the totality of the facts of the case the addition of an amount of 1 crore made by the A.O towards suppressed purchase consideration of the property in question cannot be sustained and is liable to be vacated. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]

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• 2020 (7) TMI 272
  Exemption u/s 11 - Claim denied as activities carried out by the appellant were in the nature of business and confirmed computation of the excess of income over expenditure of previous year arising out of charitable activity of appellant as Income from business as per the manner - HELD THAT:- As decided in own case [ 2019 (10) TMI 973 - ITAT AHMEDABAD ] Activities carried out by the assessee is for advancement of any other object of general public utility without any intention of the profit motive after considering the provision of the Gujarat Maritime Board Act, 1981 and fact of the case, it cannot be said that the activities carried out by the assessee are in the nature of trade commerce or business. Predominant object of the assessee is to administer control on miner ports in the State of Gujarat and there is no profit motive as demonstrated by the provision of section 73, 74 and 75 of the Gujarat Maritime Board Act, 1981. The Gujarat Maritime Board is under legal obligation to apply the income which arises directly and substantially from the business held under trust for the development of minor ports in the state of Gujarat. Further after following the decision of Hon ble Gujarat High Court in the case of AUDA [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT ] and GIDC, [ 2017 (7) TMI 811 - GUJARAT HIGH COURT ] the fees collected by the assessee is incidental to the object and purpose of attainment of the main object for development of mining ports as enumerated in the provision of the Gujarat Maritime Board Act, 1981,therefore, we consider that activity of the assessee is for advancement of any other object of general public utility and not hit by the proviso to section 2(15) of the act, therefore, the assessee is entitled for exemption u/s. 11. Issue involved has already been decided by this tribunal in the own case of the assessee in its favour. Accordingly we set aside the finding of the learned CIT(A) and direct the AO to allow the benefit of the exemption to the assessee under section 11 and 12 of the Act. Hence the ground of appeal of the assessee is allowed.

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• 2020 (7) TMI 271
  Disallowance of software expenses - Disallowance is in respect of expenditure claimed towards repairs - computers-annual maintenance and Repairs-computers-others - AO has treated it as capital expenditure on the reasoning that it was towards purchase of licenses and allowed depreciation at the rate of 25% - HELD THAT:- While deciding identical issue in assessee s own case in Assessment Year 2009-10 [ 2019 (5) TMI 689 - ITAT MUMBAI] the Tribunal accepting assessee s claim has allowed the deduction claimed as revenue expenditure. The same view was reiterated by the Tribunal while deciding assessee s appeal in Assessment Year 2010-11 [ 2020 (1) TMI 1200 - ITAT MUMBAI] in the orders referred to above. Facts being identical, respectfully following the decisions of the co-ordinate Bench (supra), we allow assessee s claim of deduction. Resultantly, the disallowance made by the Assessing Officer is deleted. Consequently, the depreciation allowed by the Assessing Officer on the expenditure claimed is also reversed. Assessee is bound to succeed with regard to its alternative claim that even if the expenditure is treated as capital, depreciation would be allowable at the rate of 60%. As could be seen, while deciding similar issue in assessee s own case in Assessment Years 2009-10 and 2010-11 (supra), the Tribunal has allowed depreciation at the rate of 60%. This ground is allowed. Disallowance of deduction u/s 35(2)(AB) - AO disallowed weighted deduction at the enhanced rate only because the assessee failed to furnish approval of the competent authority in form 3CM - HELD THAT:- While deciding identical issue in assessee s own case in Assessment Year 2008-09 [ 2018 (7) TMI 1887 - ITAT MUMBAI] the Tribunal while holding that furnishing of form 3CM is mandatory has however restored the issue to the AO for enabling the assessee to furnish the approval in form 3CM. Identical view was expressed by the Tribunal while deciding similar issue in Assessment Years 2009-10 and 2010-11. Before us, the learned Counsel has submitted that though the assessee had applied for approval in form 3CM, as yet, the competent authority has not granted the approval. Considering the above and keeping in view the decisions of the co-ordinate Bench in assessee s own case as referred to above, we restore the issue to the file of the Assessing Officer to enable the assessee to furnish the approval in from 3CM to be obtained from the competent authority. This ground is allowed for statistical purposes. Disallowance of depreciation on additions made to computer software claimed at the rate of 60% - HELD THAT:- While deciding identical claim made by the assessee in Assessment Year 2009-10 [ 2019 (5) TMI 689 - ITAT MUMBAI] the Tribunal has held that the computer software purchased by the assessee is eligible for depreciation at the rate of 60%. The same view was reiterated while deciding assessee s appeal in Assessment Year 20099-10. Respectfully following the consistent view of the Tribunal in assessee s own case, we direct the Assessing Officer to allow depreciation on addition made to computer software at the rate of 60%. This ground is allowed. Disallowance of expenditure under section 14A of the Act read with Rule 8D - HELD THAT:- Legal position is fairly well settled by various judicial precedent including the decision of Hon ble Jurisdictional High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and HDFC Bank Ltd. vs. DCIT [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] that in case assessee has sufficient interest free surplus funds available with it, no disallowance of interest expenditure can be made under Rule 8D(2)(ii). The aforesaid ratio laid down by the Hon ble Jurisdictional High Court is not only binding on the Tribunal, but also on departmental authorities including learned Dispute Resolution Panel and the Assessing Officer. Therefore, in case the aforesaid claim of the assessee regarding availability of surplus interest free funds is found to be correct, no disallowance of interest expenditure under Rule 8(D)(2)(ii) can be made - neither the AO nor Dispute Resolution Panel have properly appreciated the aforesaid contention of the assessee and have not verified the factual position with reference to the financial statements - restore the issue to the Assessing Officer with a direction to verify assessee s claim of availability of surplus interest free funds and delete the disallowance under Rule 8D(2)(ii) of the Rules, in case such funds are available. Disallowance of administrative expenditure under Rule 8D(2)(iii) - as held in Vireet Investment Pvt. Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] such disallowance has to be computed only taking into consideration the investments which have yielded exempt income during the year. Those investments which have not yielded any exempt income during the year have to be excluded from the average value of investments while computing the disallowance under Rule 8D(2)(iii) of the Rules. Disallowance of advertisement and business promotion expenses - expenditure incurred by the assessee was for providing gifts and travel facility to the doctors - AO has disallowed a part of expenditure on the allegation that it is in violation of the Indian Medical Council (Professional Conduct Etiquette and Ethics) Regulations - HELD THAT:- While deciding the issue in assessment year 2009-10 [ 2019 (5) TMI 689 - ITAT MUMBAI] the Tribunal has allowed assessee s claim holding that the Indian Medical Council (Professional Conduct Etiquette and Ethics) Regulations does not apply to the assessee and further, the CBDT circular also applies prospectively. The same view was reiterated by the Tribunal while deciding the issue in assessment year 2010-11. Respectfully following the consistent view of the Tribunal in assessee s own case as discussed above, we allow assessee s claim by deleting the disallowance. Deduction claimed under section 80IC in respect of Baddi unit by allocating a part of interest and R D expenditure - HELD THAT:- As could be seen from the facts on record, this is a recurring issue between the assessee and the Revenue. In Assessment Year 2008-09 [ 2018 (7) TMI 1887 - ITAT MUMBAI] on identical reasoning, the Assessing Officer had allocated a part of the interest and R D expenditure to the Baddi unit, thereby, reducing the deduction claimed by the assessee under section 80IC of the Act. While deciding assessee s appeal on the issue in Assessment Year 2008-09, the Tribunal has restored it to the Assessing Officer for fresh adjudication after considering assessee s claim in the context of facts and materials brought on record. Disallowance of deduction under section 80IC - conditions of section 80IC(4) of the Act have been violated, as the Baddi unit is not a completely new unit but came into existence by splitting up or reconstruction of a business already in existence - HELD THAT:- While deciding assessee s appeal for Assessment Year 2008-09 on the disputed issue, the Tribunal deleted the disallowance though, of course, for a technical reason. However, in Assessment Year 2009-10, the Tribunal has dealt with the issue on merits. After exhaustively dealing with all factual aspects vis- -vis, the conditions of section 80IC(4) of the Act, the Tribunal ultimately concluded that the assessee has complied with all the conditions of section 80IC of the Act. Therefore, the Tribunal held that assessee is eligible to claim deduction under section 80IC of the Act. The same view was expressed by the Tribunal while deciding the issue in Assessment Year 2010-11 (supra). The material facts on the basis of which the Tribunal concluded in favour of the assessee in preceding years are no different in the impugned assessment yea - following the consistent view of the co-ordinate Bench in assessee s own case in Assessment Years 2009-10 and 2010-11, we hold that the assessee is eligible to claim deduction under section 80IC of the Act. More so, because this is the fourth year of claim of deduction and in the initial years the Tribunal has held that conditions of sub-section 4 of section 80IC of the Act have been fully complied with by the assessee. Accordingly, we allow assessee s claim of deduction under section 80IC of the Act. This ground is allowed. Transfer pricing adjustment of guarantee commission - HELD THAT:- Similar nature of dispute arose in assessee s own case in Assessment Year 2008-09 [ 2018 (7) TMI 1887 - ITAT MUMBAI] Tribunal has accepted assessee s claim that guarantee commission for corporate guarantee provided should be charged at 0.5%. Similar view has been expressed by the Tribunal while deciding the issue in assessment years 2009-10 and 2010-11. Facts being identical, respectfully following the view expressed by the Tribunal in the preceding assessment years, we direct the Assessing Officer to compute the ALP of the guarantee commission for providing corporate guarantee to the AEs at 0.5%. Disallowance of deduction claimed u/s 48 - assessee has sold its stake (shares) in PDSPL, erstwhile subsidiary of the assessee engaged in medical diagnostic activities, by entering into a share purchase agreement with SRL - computing capital gain arising out of such transaction assessee has claimed deduction of an amount under section 48 of the Act towards expenditure incurred wholly and exclusively for the purpose of transfer - HELD THAT:- when the deal has been ultimately struck with SRL, why services of three persons was required to broker such deal and secondly, what is the necessity of employing three persons for the very same work. Further, the assessee has to explain the parameters on the basis of which different fee structure was fixed for making payment to the concerned persons. All these factors have not been explained properly by the assessee through credible evidence. Of course, as it appears, aforesaid aspects were also neither examined nor enquired into in earlier stages - issue has to be restored back to the Assessing Officer for fresh adjudication after verifying all relevant facts and if necessary conducting adequate enquiry to ascertain the true nature and character of the expenditure claimed by the assessee.AO must decide the issue after considering all the facts and materials on record, submissions of the assessee and only after providing due and reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance of exemption claimed in respect of interest on tax free bonds - HELD THAT:- if an item of income is not taxable under the provisions of the Act and cannot form part of the computation of total income, merely because the assessee has mistakenly offered it as income it will be forbidden from claiming exemption afterwards during the course of the proceeding. It is trite law, there cannot be any estoppel against law. It is more so in respect of an item of income exempt under section 10 of the Act. The Assessing Officer as per the statutory mandate is duty bound to compute the real and correct income of the assessee. Though, on one hand he is empowered to disallow any wrongful claim made by the assessee, on the other hand, he is also required to allow deduction/exemption/benefit the assessee is legally entitled to. Therefore, keeping in view the aforesaid legal principle, disallowance of assessee s claim purely on technical reason is unsustainable -we restore the issue to the Assessing Officer with a direction to factually verify assessee s claim and allow exemption under section 10(15) . Disallowance u/s 14A read with Rule 8D of the Rules while computing book profit under section 115JB - HELD THAT:- ITAT Special Bench Delhi in ACIT vs. Vireet Investment P. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that no adjustment/disallowance can be made under section 115JB of the Act with reference to section 14A read with Rule 8D of the Rules. However, the Tribunal has directed the Assessing Officer to compute the book profit in consonance with the provisions of section 115JB of the Act read with explanation (1)(f) - we direct the Ld. AO to delete additions made towards book profit computed u/s. 115JB of the Act, in respect of disallowances made u/s. 14A Short grant of credit of TDS - mis-calculation of dividend distribution tax payable and grant of short credit thereof - HELD THAT:- Direct the Assessing Officer to factually verify assessee s claim and allow credit in accordance with law. Disallowance under section 35A relating to Sarabhai Piramal Pharmaceuticals Ltd. (SPPL) - AO continued to disallow the expenditure claimed on the reasoning that trademark does not come within the purview of section 35A of the Act, as it only speaks patents and copyrights - HELD THAT:- Considering the fact that in the preceding assessment years assessee s claim of deduction under section 35A of the Act has been allowed, applying the rule of consistency also assessee s claim of deduction in the impugned assessment year cannot be disallowed.

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• Customs

• 2020 (7) TMI 270
  100% EOU - Debonding of EOU - Commissioner of Customs (Appeals) dismissed the appeal on the ground that, the petitioner had sought to invoke the provisions of Section 35 of the Central Excise Act, 1944 as well as Section 128 of the Customs Act, 1962 and had thereby failed to take recourse to a specific provision - SCN was issued invoking power u/s 28 of the Customs Act, 1962 - time limitation - suppression of facts or not - HELD THAT:- A perusal of Ext.P6 reveals that the order was issued by the third respondent, the Joint Commissioner of Customs. The printed format in which Ext.P6 order is issued indicates that an appeal against the order lies to the Commissioner of Customs. It was in such circumstances that the appeal got to be filed before the fourth respondent. It is true that while filing an appeal, the specific provision under which the appeal is filed should be mentioned. But having accepted the appeal on file and proceeded to hear the appeal on merits, the fourth respondent should not have rejected the appeal on the premise that the provisions quoted therein are vague. Even though the learned Standing Counsel vehemently contended that the fourth respondent had decided the appeal on merits, the findings in Ext.P7 do not support that contention. As far as the legal contention of the notice being time barred is concerned, all that is stated in Ext.P7 is that in the impugned order, the claim of the demand being time barred was found to be not maintainable and certain notifications to hold the appellant liable to duty were cited. This observation in Ext.P7 cannot, under any circumstance, be termed as a finding on merit. That being the case, Ext.P7 is liable to be interfered with. The writ petition is allowed by directing the fourth respondent to consider Appeal No. 92 of 2012 filed by the petitioner afresh and to render a decision on merits.

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• 2020 (7) TMI 269
  Refund of excess Custom Duty paid through DEPB scrip - finalization of provisional assessment - part amount was withheld on the ground that the same was paid by the appellant from the DEPB Scrip and hence not refundable - section 27(1) of the Customs Act, 1962 - HELD THAT:- The CBEC Circular dt.29.04.2013, solely relied upon by the learned Commissioner (Appeals), for denying the refund, has been declared ultra vires by the Hon ble Delhi High Court in the case of ALLEN DIESELS INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2016 (2) TMI 247 - DELHI HIGH COURT] and the Hon ble Madras High Court in the case of M/S ENTERPRISES INTERNATIONAL LTD. VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS (EXPORTS) , THE DEPUTY COMMISSIONER OF CUSTOMS (REFUNDS) [ 2016 (10) TMI 24 - MADRAS HIGH COURT] - Besides, the Hon ble Calcutta High Court in the case of M/S. RONAK OPTIK INDIA ANR. VERSUS UNION OF INDIA ORS. [ 2012 (9) TMI 992 - CALCUTTA HIGH COURT] , have categorically held, that where an assessee is entitled in law to refund of tax paid, it is immaterial whether the payment is in cash or by debit of DEPB, and that the right to refund is not lost by reason of the DEPB scheme. The appellant is entitled to refund of the balance amount of 43,95,212/- which was paid from the DEPB scrip - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2020 (7) TMI 268
  Maintainability of application - initiation of CIRP - termination of employment - salary and other dues - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - legally enforceable debt or not - HELD THAT:- At the very beginning that these proceedings under the Code are summary proceedings, where even if there was a debt, the same should be clear and undisputed and the default, as defined under section 3(12) of the Code should be clearly established. There is no scope for investigation under the Code, further than what has been brought on record. Further, it is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code. The Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] , has inter alia, held that Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardize the financial health of an otherwise solvent company by pushing it into insolvency. The Appointment Letter is placed on record. Since the appointment was made even prior to the incorporation of the Corporate Debtor, it is evident that there could not have been any Board Resolution to discuss, propose or confirm such an appointment. Nothing has been brought on record to indicate that any such confirmation was done subsequently by the Board. In this situation, it cannot be said that any right to payment or claim arose in the hands of the Operational Creditor against the Corporate Debtor, in the absence of any decision from the Board - the payments due to the Operational Creditor depended upon his performance and merit, and at the discretion of the Management. Clauses 17 and 18 of the Appointment Letter also mention a Code of Conduct and binding rules regarding the discipline and conduct of the Petitioner during the course of his employment with the Corporate Debtor. The Operational Creditor had served a Notice dated 10.04.2017 also demanding an amount of 18,25,000/- towards arrears of salary. Notably, this amount is different from the amount mentioned in the Demand Notice sent later on 08.09.2017 under the provisions of the Code (mentioned in this Petition), being 28,37,481, indicating that there was no clarity on the debt even by the calculations of the Petitioner. This would also mean that either there was no valid Demand Notice or there is a defective Petition, which should be dismissed on this ground alone. There was no debt, and/or in any case the same was substantially disputed by the Corporate Debtor with the Petitioner/Operational Creditor, before different forums, as well as per its own records, much prior to the Demand Notice - Petition dismissed.

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• Service Tax

• 2020 (7) TMI 267
  Delay in adjudication of SCN over 6 years - Validity of adjudication proceeding initiated by the impugned show cause notice dated 10 th September, 2013 and also the personal hearing notice dated 12th December, 2019 - time limitation - challenge on the ground that the adjudication proceeding has become barred by limitation in view of the limitation period of six months/one year, which is maximum time period for adjudication, from the date of issuance of show cause notice as prescribed under Clause (b) of sub-Section (4B) of Section 73 of the Finance Act, 1994. HELD THAT:- Issue Notice. List on 26th August, 2020.

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• 2020 (7) TMI 266
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the quantification of tax liability has not been done completely and investigation is still pending - HELD THAT:- Issue Notice. List on 26th August, 2020.

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• 2020 (7) TMI 265
  Levy of Service Tax - Broadcasting service - service provided by Intelsat (situated outside India) to the Appellant - whether under the Agreement Intelsat has leased out 8MHz bandwidth of its transponder or Intelsat is engaged in transmitting signals? - HELD THAT:- The Transponder Segment Service refers to two bandwidths and Attachments 1(a) and 1(b) each refer to allocated bandwidth 4.00 MHz bandwidth, thus making a total of 8MHz bandwidth. It is also clear from clause 1.0 of Attachment 2 to the Service Order that unless otherwise specified in the Service Order, that portion of the service transponder which comprises the Service to the Appellant shall be power and bandwidth limited, consisting of a Transponder Segment equivalent to the amount of bandwidth specified in the Service Order and associated power on the service transponder. Thus, the monthly fixed payment made by the Appellant to Intelsat relates to the lease of space segment capacity of the transponder and has nothing to do with the signals that are transmitted. The transmission of signals is as a result of the use of the space segment capacity of the transponder of the satellite. The relay station is able to uplink the programme signals which are then reflected to the earth by the Intelsat transponder on the footprint area of the earth. This is so evident from the pictorial representation drawn above. This is also clear from the procedure described by the two experts that frequency uplinked with a particular power is automatically reflected back by the satellite without any alteration/modification of the programme contents with the help of equipments on the satellite and no human intervention takes place. What is important to note is that the fixed charges are purely based on assignment of space segment capacity of a transponder and are not linked to speed and strength of transmission of data/signal. Even under the Revised Carrier Plan dated July 7, 2015, the monthly charges remain at US$ 40,000 per month. A carrier plan is an estimated calculation based on various technical aspects in order to obtain optimum quality of video. It specifies parameters for the desired carrier in a particular space segment on the satellite transponder. A Revised Carrier Plan is drawn when a broadcaster desires to add an additional channel within the located bandwidth. This has to be approved by the Wireless Planning Commission and the concerned Ministry and may result in change of the parameters drawn up in the earlier Carrier Plan. Thus, parameters are arrived at for the optimum utilization of the space segment and to ensure that the transmit power levels will not cause any interference to adjacent carriers and will also not pose any damage threat to the transponders on the satellite. Therefore, the parameters mentioned under the Carrier Plan have no linkage to the fixed monthly charges for the allocation of 8 MHz bandwidth. A bare perusal of section 65A(1) shows that classification of taxable services shall be determined according to the terms of the sub-clauses of clause (105) of section 105. Sub-section (2) of section 65A stipulates that when for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, then the classification shall be effected either under (a) or (b) or (c). Thus, for section 65A(2)(b) to apply, there has to be a classification dispute between two or more taxable services. In the present case, the lease of space segment capacity of the transponder is not taxable as it is subjected to State VAT, being akin to transfer of right to use goods . Even if the transmission of signals, as per the impugned order and as per the submissions of the learned Authorized Representative of the Department, is covered under broadcasting service , then too the rule of classification contained in section 65A of the Finance Act cannot be applied since it involves only one taxable service and one non-taxable service. Thus, the essential character test cannot be applied in the present case. The inevitable conclusion, therefore, that follows is that the contention of the Department that the down linking of the signals from the satellite is transmission of signals covered by the definition of broadcasting and, therefore, leviable to service tax on the Appellant under a reverse charge mechanism cannot be accepted. The Commissioner, therefore, committed an error in holding that Intelsat has provided broadcasting service to the Appellant and so the Appellant has to pay service tax on a reverse charge mechanism. Appeal allowed - decided in favor of appellant.

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• 2020 (7) TMI 264
  CENVAT Credit - common input services used for taxable as well as exempt goods - It appeared to Revenue that while calculating the percentage of ineligible credit under Rule 6(3A), appellants have not included the amount of cenvat credit availed on Information Technology and Software Services contending that such ITSS is also a taxable output service, which contention appears to be incorrect - Rule 6(3A) of Cenvat Credit Rules - HELD THAT:- The allegations in the present case for the period 2008-09 are similar to the allegations for the earlier period 2015-16, and further taking notice that now Revenue, taking notice of the substitution of Rule 6 vide Notification No. 13/2016, which is by way of clarification and ease of doing business, hence the issue is held in favour of the appellant. The appellant shall be entitled to consequential benefits including disposal of the rebate claim in accordance with law, if the same is still pending - Appeal allowed - decided in favor of appellant.

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• 2020 (7) TMI 263
  Maintainability of application for restoration of case - Bench observed that the Appellant was no longer interested in pursuing the matter and, therefore, dismissed the Appeal in default - HELD THAT:- The records indicate that the order dated 22 June, 2018 was sent to the Appellant by registered post with acknowledgement due on 03 July, 2018. A copy of the letter was sent to the Authorized Representative of the Department who has also stated that he received the copy of the order/letter. There is no averment in the Application that this letter sent to the Appellant by registered post was not received by the Appellant. This apart, and as has also been stated in the Application, orders/final orders were uploaded on the website of the Tribunal. This fact has been admitted by the learned Counsel for the Appellant. Such being the position, there is no reason as to why no attempt was made either by the Appellant or the learned Counsel for the Appellant to visit the website of the Tribunal to find out the order passed on the second restoration application. There is no satisfactory explanation that has been offered to explain this enormous delay of 500 days to the satisfaction of the Tribunal. In the present case, the first Restoration Application was dismissed in default and, therefore, the observations made by the Tribunal in Parwati Automotives Pvt. Ltd. would not help the Department. The second Restoration Application has been filed for recall of the order dated 22 June, 2018 and, therefore, would be maintainable as it is not for recall of the order dated 19 April, 2018. The facts stated above leave no manner of doubt that the Appellant had adopted a very callous approach and had not pursued the Appeal or the Restoration Application with any sense of responsibility - Application dismissed.

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• Indian Laws

• 2020 (7) TMI 262
  Grant of Moratorium due to COVID-19 pandemic situation - Restraint on respondent from recovering loan repayment instalments/EMI due - RBI Circular dated 27.03.2020 - grievance of the Petitioner relates to compliance/non- compliance by Respondent 5 to 7 of the RBI Circular. Whether a Writ of mandamus can be issued against a private bank to implement the Circular issued by the RBI dated 27.03.2020? - HELD THAT:- The obligation and duty of the RBI to regulate the financial institutions, its business as also the credit system of the country, by exercising the powers vested with it under the Act - Subsequent to the invocation of the DMA apprehending the adverse impact thereof on the economy of the country, the RBI with alacrity had issued the Circular dated 27.03.2020, in order to discharge its above obligation and duty. The aim, object and intention of the said Circular being to mitigate the burden of debt servicing brought about by disruptions on account of Covid-19 pandemic and to ensure the continuity of a viable business, which is in the interest of the country and as such in the public interest. In the present case, it is not an Employer-employee dispute, recruitment dispute or one relating to contractual terms, but a dispute relating to the enforcement of a Circular issued by the RBI, as that in the case laws relied upon by Mr Holla, Learned Senior Counsel. The said Circular having been issued to protect and preserve the economy of the country on account of the COVID 19 pandemic. The issuance of the Circular is in the public interest, interest of the economy and the country. The enforcement thereof would also come within the purview of enforcing a public duty - a writ petition would be maintainable against the Respondents in the present facts and circumstances for the enforcement of the public duty under the Circular dated 27.03.2020. Is the Circular issued by the RBI dated 27.03.2020 mandatory, directory or discretionary? - Whether the grant of a moratorium is at the discretion of the Bank or as a corollary would it be a right to be exercised by the borrower? - HELD THAT:- All corporate, as well as SME customers, are eligible for a moratorium and it is for the customer to choose whether to avail a moratorium that is to say that the offer for a moratorium having been made by the Bank, it is for the customer to accept the moratorium by choosing to do so and making an application in that regard. Once such a choice is made and an application was submitted, the rest of the process is automatic - Once the banks have in the public domain on their respective websites expressed their solidarity with all their customers and stated that all the customers are eligible for grant of a moratorium, in accordance with RBI guidelines, it is not permissible for such banks to nit-pick and later on, refuse the grant of a moratorium, to the Petitioner, who is otherwise eligible. That is to say the Banks cannot take one stand in the public domain and a contradictory stand while implementing what they have stated in the public domain. Both the RBI and the banks have held out that all customers are eligible for a moratorium. The availing of or otherwise of the moratorium is at the sole discretion of the borrower more so when the borrower would be required to make payment of additional interest, during the said moratorium period. There being no waiver of interest and or the principal amount by the mere grant of a moratorium. Though the Circular issued by the RBI dated 27.03.2020 is discretionary in so far as the power to grant or not a moratorium by a bank, it is mandatory for the Bankto ensure the continuity of viable businesses, in that, the non-grant of a moratorium should not result in adversely affecting the survival and continuity of a viable business. The understanding of the banks by reference to their respective answers to the FAQ s is also in line with the above. All borrowers are eligible to seek for a moratorium, if a borrower were to seek for grant of a moratorium on the ground that continuity of its business would be affected and establish the same, the borrower would as a matter of right be entitled for the grant of moratorium so that such continuity is not adversely affected. Can a request made by a borrower be rejected by a lender on the ground that the loan of the lender is structured and therefore, the lender can recover the amounts due on the making of such structured loan like an Escrow account? - HELD THAT:- It cannot be accepted that the Circular dated 27.03.2020 is not applicable to a structured loan like LRD availed by the Petitioner since the appropriation of the monies of the LRD would have a negative impact on the continuity of the Petitioner itself - There is no distinction in terms of the Policy and Circular, giving a separate treatment to structured loans. Hence Circular is applicable to all loans/advances and facilities extended by a lending institution, including structured loans. Where multiple banks are involved in a loan transaction, can one Bank deny the extension of a moratorium, when another is willing to extend the benefit of a moratorium? - HELD THAT:- The Board approved Policy of Respondent No.5-HDFC apart from not having any objective criteria contained therein, it does not also deal with a situation where there are other loans apart from the structured loan in favour of HDFC Bank. The said Policy reads as if there is only one loan and there is only one lender in respect of such structured loan - The Policy relating to a consortium or multiple bank lending only contemplates that a Bank in the consortium ought to extend the moratorium on terms similar to those offered by HDFC. This would presuppose a situation where Respondent No.5-HDFC has approved and formulated the terms for grant of a moratorium and the other Banks in the consortium have failed to agree to such terms - In the present case, the situation is reverse, in that Respondent Nos.6 and 7 have agreed to extend a moratorium to the Petitioner, however it is on account of refusal on part of Respondent No.5 to grant a moratorium that they have not been able to extend a moratorium to the Petitioner. Thus, even this particular Policy of Respondent No.5 would not be of any assistance to Respondent No.5. The spirit of the Circular is required to be given due importance, it is to be seen to it that the Petitioner continues to be in business, thus helping the economy. Needless to say that the business of the Petitioner provides employment to various people, taxes are paid to the respective authorities, facilities and services are provided to various other companies who depend on the Petitioner. If the business of the Petitioner is disrupted, it is bound to have a cascading effect on all the above and thereby have an adverse impact on the economy. Can a direction be issued to Respondents 1 4 to enforce the Circular dated 27.03.2020 issued by the RBI? - HELD THAT:- There is no default on the part of the Petitioner by itself till 1.3.2020. The RBI cannot in the circumstances contend that the discretion is left to the lender to either grant or refuse the grant of a moratorium and in the same breath contend that it is for the Bank to establish as to why the Petitioner did not qualify for the benefit of Moratorium without stating as to before whom such establishment is to be made. Admittedly, there is no mechanism which is created for redressal of grievance on account of improper implementation or non-implementation of the recovery package or the Circular, there is no forum which has been created for the Petitioner to complain of as regards any of the actions of the Bank or a forum created for the Bank to establish as to how the Petitioner s request has been property rejected. Pending creation of such a forum, this court would have to intervene to provide for a remedy to the aggrieved Petitioner, to give effect to the principle, Ubi jus ibiremedium. Thus, it is held that no directions could be issued to Respondent 1 and 2 Union of India or Respondent No. 3 State of Karnataka, to inturn issue directions to Respondent No.4 - RBI for the implementation of the Circular. The contentions of the RBI that the dispute is between the Petitioner and Respondents No.5 to 7 is not acceptable since the dispute arises out of the implementation or not of a Circular issued by the RBI. RBI is therefore directed to monitor the implementation of the Circular, including verification of whether there are Board-approved policies formulated by each of the lenders, direct all the banks to submit the Board-approved policies for approval to the RBI, to approve such board-approved policy, verify if such a board-approved policy contains objective criteria, set up a proper and effective grievance redressal forum for any aggrieved borrower to approach on account of the improper or non-implementation of the Policy and/or Circular etc.

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• 2020 (7) TMI 261
  Dishonor of Cheque - section 138 of NI Act - case of petitioner is that the cognizance as taken by the impugned order dated 21.12.2018 is beyond the period of limitation, as prescribed by Section 142(b) of the NI Act - HELD THAT:- The limitation in terms of Section 142 of the NI Act for instituting the complaint had expired on 10.12.2018. The complaint has been filed on 21.12.2018 without seeking leave of the court for extension of time for instituting the complaint as provided below Section 142(1)(b) which provides that such complaint has to be filed within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the NI Act. In the case in hand, the cause arose on 11.11.2018 when 15 days from the date of receiving the notice demanding payment of the cheque amount had expired. Thus, the cause of action in terms of Section 142(1)(b) of the NI Act arose on 11.11.2018 on expiry of 15 days in making payment in terms of the notice of demand. As this Court, having considered the materials, has observed that there is no material of Section 420 IPC, at least from the complaint no such material is coming to the fore, and as such, the cognizance under Section 420 IPC was wholly unwarranted. As a result, that part of the order is set aside in exercise of the inherent power as provided under Section 482 CrPC. - Since it has been quite categorically observed that no attempt or application was submitted for satisfying the court how the complainant was prevented from not approaching the court in time, the complaint was wholly time barred. The order dated 21.12.2018 taking cognizance is set aside but considering the mistake in understanding the law, this Court would remand the complaint to the court of the Chief Judicial Magistrate, Khowai by providing the petitioner an opportunity to file an application explaining the reasons for not approaching the court in time so that there can be due consideration under proviso to Section 142(1)(b) of the NI Act, Such application shall be filed within 15 (fifteen) days from today - Revision petition allowed.

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