Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 16, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
GST
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Levy of IGST - Export of services or not - telecom services - Place of supply - international Inbound Roaming Services (IIR) and International Long Distance (ILD) Services - As per Section 13(2) of the IGST, the place of supply of services, except the services specified in sub-sections (3) to (13), shall be the location of the recipient of services - Vodafone Idea Limited has not supplied services specified in sub-sections (3) to (13) of Section 13. Therefore, the place of service or supply of service supplied by Vodafone Idea Limited is the location of recipient of the service, i.e., location of the FTO, which is outside India. - HC
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Rejection of the transition of the ITC - Levy of penalty for wrongful transition, ineligible credit as well as interest - rejection of transition of ITC - The motives of the petitioner are found to be bondfide in law, since it not only asks for a refund but also states that it is not entitled for transition under GST laws. - Let the refund claim dated 19.07.2017 be processed on merits by the State Taxes Officer/R1, and paid over to the petitioner with interest till 27.12.2017, being the date when the TRAN 1 application was filed by the petitioner, within a period of four weeks from date of receipt of copy of this order. - HC
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Classification of supply - transfer of business by the Airport Authority of India to the M/s. Adani Lucknow International Airport Limited - supply as going concern or not - we find the subject business arrangement is 'transfer of going concern'. As such, we find no merit to vivisect the subject Contract and examine the treatment of aeronautical assets/ non aeronautical assets/ other business assets in the Contract entered between AAI and SPV - As such, the transfer of business by Airports Authority of India to SPV is transfer of a 'going concern' and the same is not covered in clause 4 of schedule II of CGST Act. - AAR
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Classification of supply - supply of services or not - works contract services - composite supply or not - the activities of installation, commissioning, testing, supplying mechanical work and electrical work are not in respect of immovable property as the Machinery and plant is attached to concrete base to prevent vibration/wobble free operation and preventing vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses described above (para 14.5). Hence, the said supply of goods/services by the applicant to JV is not works contract. - AAR
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Profiteering - ervices by way of admission to exhibition of cinematograph films - the profiteering amount is determined as Rs. 2.66,99,340/- 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. - NAPA
Income Tax
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Validity of Warrant of authorization u/s 132 - It was a reasonable belief drawn by the Revenue that the assessee shall not produce or cause to be produced any books of accounts or other documents which would be useful or relevant to the proceedings under the Act. Such believe was not based upon conjectures but on a bona-fide opinion framed in the ordinary conduct of the affairs by the assessee generally. - Revenue may fail or succeed but that would not be a reason to interfere with the search and seizure operations at the threshold, denying an opportunity to the Revenue to unravel the mystery surrounding the investment made by the assessee. - SC
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Denial of deduction u/s 54F - allegation of investment in more than one house by assessee - The conclusion of Ld. AO overlooks the fact that the multi-storied building was subjected to one property tax assessment and pertinently, it has one door number only. In our considered opinion, there is nothing in the statutory provisions which debar the assessee to make separate independent livable units on a single piece of land or obtain more than one electricity connection to claim the deduction. - AT
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Interest u/s. 234C - advance tax - dividend has been received by the assessee only in third and fourth quarters of the financial year - the assessee had duly paid the advance tax on the said dividend income taxable u/s.115BBDA of the Act in the third and fourth quarters of the financial year. Hence, as per the old proviso to Section 234C (1) of the Act, there cannot be any levy of interest u/s.234C of the Act that could be fastened on the assessee for the first two quarters by apportioning dividend income for the whole year. - AT
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Addition u/s 68 - unexplained share premium and share capital - the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. In our considered opinion, the Ld.CIT(A) has erred in confirming the addition u/s 68 of the Act on account of unexplained share premium and share capital. - AT
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Allowable as business expenses - Small contributions to local people and institution on request of employees and business associates - Section 37 of the Act contemplates that any expenditure not being expenditure of the nature described in sections 32 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of the business or profession shall be allowed in computing the income chargeable under the Head “Profits & Gains of Business or Profession”. AO failed to appreciate the nature of business of the assessee and the surrounding social environment where it has been carrying out its business. - AT
Customs
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Duty Drawback - re-export - The petitioner would have been entitled to a drawback of either 85% or 70% depending on when the goods were re-exported, if they had paid 100% customs duty and not filed declarations under Notification 27/02. Since petitioner had not paid 100% duty availing of Notification 27/02 and had already availed of concession as per Notification 27/02, petitioner is not entitled to any drawback. - HC
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Classification of imported goods - gold which are round in shape and have images of gods, saints, temples or historical sites - The claim of the appellant for classification of these imported goods as “articles of gold‟ under CTI 7114 19 10 and benefit of exemption allowed - AT
IBC
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Seeking withdrawal of the CIRP proceedings - in the Terms of Settlement dated 21.04.2022, in Clause 12, it was mentioned that because of the Settlement, the Appellant/Petitioner wished to conditionally withdraw the Section 7 Petition filed against the Corporate Debtor, subject to the Corporate Debtor, Corporate Debtor Group and Confirming Parties (as defined in the Terms of Settlement) unconditionally complying with all covenants contained in the Terms of Settlement. - Order of NCLT modified - AT
VAT
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Amendment to repealed VAT Act post GST era - whether right of filing appeal accrues on the date of order of assessment and requirement of mandatory predeposit introduced by way of amendment does not apply to the orders passed in the assessment years prior to 15th April 2017, is correct or not. - The Legislature has power to remove the defects retrospectively and prospectively by Legislative action so as to cure the defect or inconsistency in the law declared by the Court so as to remove such inconsistency from the statute for effective enforcement of law - when a law is enacted with retrospective effect, it is not considered as an encroachment upon judicial power when the legislature does not directly overrule or reverse a judicial dictum. The legislature cannot, by way of an enactment, declare a decision of the Court as erroneous or a nullity, but can amend the statute or the provision so as to make it applicable to the past. - HC
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Deletion of penalty - Tribunal erred in deleting the penalty imposable on the dealer under Section 42(5) of the OVAT Act, particularly since it came to the conclusion that the levy of tax on the uncollected VAT amount by the dealer was not excusable and upholding the orders of the STO and the JCST in that regard. - HC
Case Laws:
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GST
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2022 (7) TMI 647
Seeking issuance of a writ of mandamus to command the authorities - transitional input tax credit - credit denied on technical ground for not putting the digital signature in the uploaded GSTR TRAN 1 form - seeking permission for rectification of the GST TRAN 1 either through portal or manually for the purpose of claiming transitional credit under Section 140 read with Rule 117 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It is well settled that entitlement of the petitioner to the input tax credit is a vested right and the same cannot be denied on account of procedural problem. This Court accordingly holds that the issue involved in the instant writ petition is squarely covered by the decision in the case of M/s. Das Auto Centre [ 2021 (12) TMI 835 - CALCUTTA HIGH COURT] where it was held that It is clearly clearly brought out the difficulties faced by the assesses and also as to how the assesses having substantially complied with the requirement under law and having been entitled to credit on account of transition to the GST regime which is beyond the purview of the assessee and the assessee cannot be put to prejudice on account of technicalities. Thus, keeping the underlying principle in mind if the matter is examined then we are inclined to lean in favour of the writ petitioners and affirm the directions issued by the learned Single Judge. This Court is of the considered view that liberty is to be granted to the petitioner /assessee to file individual tax credit in GSTR 3B form. If such form is filed in terms of this order, the authorities shall act on the GSTR-3B form filed pursuant to this order - Application allowed.
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2022 (7) TMI 646
Maintainability of intra court appeal - Clause 15 of the Letters Patent Act - seeking grant of one more opportunity of being heard - appellants had already deposited 10 per cent of the disputed tax while preferring the appeal - HELD THAT:- From the perusal of the show cause notice dated 10 th September 2020, it is seen that a search was conducted in the business premises of the appellants and certain physical documents, stakes and accounts for the relevant period were taken and the appellants were directed to produce records of documents in terms of Section 71 (2) of the Act. The show cause notice refers of few dates on which the appellants had sought for time. Those dates and events preceded the issuance of show cause notice dated 10th September 2020. Since, the date of personal hearing was on 18th September 2020, that is during the peak COVID season, the appellants contended that they could not appear before the officer, resulting in the impugned order. Thus, one more opportunity can be granted to the appellants, more particularly, when the appellants had already deposited 10 per cent of the disputed tax while preferring the appeal - appeal disposed off.
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2022 (7) TMI 645
Levy of IGST - Export of services or not - telecom services - Place of supply - Vodafone Idea Limited provides, inter-alia, the services in the nature of international Inbound Roaming Services (IIR) and International Long Distance (ILD) Services to Foreign Telecom Operators (FTOs) - Section 16(3) of the IGST Act - whether provisions of Section 13(2) or Section 13(3) of IGST is applicable to the present case? HELD THAT:- Section 13(2) refers to the place of supply of services as the location of the recipient of services except in cases of Sub-section (3) to (13) of Section 13. Section 13(3) identifies the place of supply of services as the location where the services are actually performed. The provision of section 13(3)(b) is applicable in the case where services are supplied to an individual as Section 13(3) (b) starts with the words service supplied to an individual - in the instant case the said services were supplied to FTO and not to an individual. The FTO had supplied services to their subscriber (individual). Here, the supplier of services is Vodafone Idea Ltd and the recipient of the service is FTO as discussed above. Further, Vodafone Idea Ltd has no idea of subscribers of FTO and therefore question of supplying service to an individual (subscribers) does not arise. Vodafone Idea Ltd had issued invoices to FTO and not to any individual which substantiates that services were not provided to an individual. Vodafone Idea Limited has provided services to FTOs and not to the individual subscribers of FTOs. Therefore Section 13(3)(b) is not attracted. Section 13(3)(b) on which reliance has been placed by the Deputy Commissioner is not applicable. Place of supply of services - HELD THAT:- As per Section 13(2) of the IGST, the place of supply of services, except the services specified in sub-sections (3) to (13), shall be the location of the recipient of services - Vodafone Idea Limited has not supplied services specified in sub-sections (3) to (13) of Section 13. Therefore, the place of service or supply of service supplied by Vodafone Idea Limited is the location of recipient of the service, i.e., location of the FTO, which is outside India. Petition filed by the Revenue dismissed.
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2022 (7) TMI 644
Maintainability of petition - even before passing any order, the petitioner has rushed to this Court with the petition - reply to SCN was also not given by petitioner - HELD THAT:- It is seen that the petitioner has not only received the show cause notice but also earlier the petitioner was issued with summons and thereafter only DRC-01A has been issued, intimating the tax ascertained as being payable. Now, the show cause notice has been issued, for which, the petitioner has to give reply and thereafter personal hearing would be given, where he can make his submissions along with supporting documents, thereafter only order in original would be passed and it is the procedure as contemplated under law. Hence, this Court is not inclined to entertain the petition. Petition dismissed.
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2022 (7) TMI 643
Rejection of the transition of the ITC - Levy of penalty for wrongful transition, ineligible credit as well as interest - section 42(5) of the TANVAT Act read with Section 9 (2) of the CST Act and Section 174 of the TNGST Act - HELD THAT:- The provisions of Section 42(5) of the TNVAT Act provide for the payment and recovery of tax, penalty etc. and cast a mandate upon the Commercial Taxes Department to refund any excess determined within a period of 90 days from date of order of assessment/revision/appellate order. Where the refund exceeds the stipulated time of 90 days, the Government is liable to pay interest where the amount is not less than one hundred rupees, a sum equal to a sum calculated at the rate of half percent or part thereof for such amount for each month or part thereof. The motives of the petitioner are found to be bondfide in law, since it not only asks for a refund but also states that it is not entitled for transition under GST laws. This Court is unable to appreciate how the petitioner is expected to be aware of the technical difficulties faced by the officer or indeed, why such delay should enure to its detriment - The petitioner is entitled to the claim for refund, prima facie, as evidenced by order dated 30.12.2016 of the first respondent wherein the amount in question has been determined as excess payment and there is no dispute raised in this regard. Levy of penalty and interest - HELD THAT:- Sustaining the penalty and interest would be hypertechnical. No doubt, the petitioner has made an inadmissible claim of transition. While the filing of a TRAN 1 is clearly misconceived, the petitioner is protected by the intention to protect its claim for refund in the face of the unjustified, and admitted delay on the part of the respondents. That apart, the provisions of Section 74 would be applicable only in the case of wrongful availment/utilization of ITC by reason of fraud. The precondition for invocation of Section 74 is that the revenue must establish willful misstatement or suppression to evade tax - In the present case, the question evasion of tax does not arise since it is not an assessment but only determination of the correctness of availment of ITC. In such a case, what would be relevant is to see whether the availment of credit is with the intent of evading tax. Let the refund claim dated 19.07.2017 be processed on merits by the State Taxes Officer/R1, and paid over to the petitioner with interest till 27.12.2017, being the date when the TRAN 1 application was filed by the petitioner, within a period of four weeks from date of receipt of copy of this order. Petition allowed.
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2022 (7) TMI 642
Classification of supply - transfer of business by the Airport Authority of India to the M/s. Adani Lucknow International Airport Limited - supply as going concern or not - clause 4 of schedule II of CGST Act viz-a-viz UPGST - Entry No. 2 of the exemption notification No 12/2017 - Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017 - levy of GST on the transfer of Existing assets ( RAB ), Aeronautical Assets, non-aeronautical assets and Capital work in progress - concession fees paid by M/s. Adani Lucknow International Airport Limited to M/s. Airports Authority of India be treated as consideration for transfer of business or not - levy of GST on Monthly/Annual concession fees charged by the Applicant on the M/s. Adani Lucknow International Airport Limited - levy of GST on the invoice raised by the Applicant for reimbursement of the salary/ staff cost on M/s. Adani Lucknow International Airport Limited - reimbursement claimed of Municipal tax, Property Tax and Water Charges by the Applicant from M/s. Adani Lucknow International Airport Limited - rate of tax - requirement of reversal in accordance with section 17 (2) / (3) of CGST Act viz-a-viz UPGST Act. HELD THAT:- As per sec. 2(17)(d) of the CGST Act, 2017, business includes supply or acquisition of goods including capital goods and services in connection with commencement or closure of business - transfer of assets during transfer of business is included in the definition of business - the activity of transfer of business is in the nature of supply. Whether the transfer of business by Airports Authority of India to M/s. Adani Lucknow International Airport Limited is treated as supply as going concern and covered in clause 4 of schedule II of CGST Act viz-a-viz UPGST? - HELD THAT:- In the present case, there is transfer of business for operation, management and development of the Chaudhary Charan Sungh International Airport, Lucknow (hereinafter referred as CCSI Airport) to SPV for a period of 50 years as per clause 3.1.1 of the concession agreement. Accordingly, we find that under this business arrangement, there is clear cut provision for continuance of business for the foreseeable future. As per Article 16.2 and 16.3 of the agreement, the SPV shall assume control of all Aeronautical Assets, Non Aeronautical assets and Terminal Building on the commercial operation date (hereinafter referred as COD'). Further, we find that as per Article 16.1.1 of the agreement, all revenues, receipts, expenditure and other financial transactions for and in respect of the Airport shall be deemed to be transferred from the AAI to SPV on COD and all rights, obligations and liabilities in respect thereof shall vest exclusively in the SPV until the transfer date - it is not essential to transfer all assets and liabilities against a transaction to qualify for a 'transfer of business. That is to say, that even if some assets are retained by the AAI, and the SPV after such takeover carries out subject business activities without any obstruction then it shall qualify to be a transfer of a business. The business arrangement between AAI and SPV vide Concession Agreement dated 14.02.2020 is squarely covered under transfer of going concern. Schedule II (4) CGST Act stipulates whether the transactions with respect to 'Transfer of Business Assets' to be treated as supply of Goods or supply of services. Having gone through the subject Contract, we find the subject business arrangement is 'transfer of going concern'. As such, we find no merit to vivisect the subject Contract and examine the treatment of aeronautical assets/ non aeronautical assets/ other business assets in the Contract entered between AAI and SPV - As such, the transfer of business by Airports Authority of India to SPV is transfer of a 'going concern' and the same is not covered in clause 4 of schedule II of CGST Act. Whether the transfer of business by M/s. Airports Authority of India to M/s. Adani Lucknow International Airport Limited is covered under the Entry No. 2 of the exemption notification No 12/2017 - Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017? - HELD THAT:- In terms of Sec. 2(52) of CGST Act, 2017, goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply - to be called as goods, it has to be movable property. In case of the judgment given by Andhra Pradesh High Court in case of M/S. PARADISE FOOD VERSUS THE STATE OF TELANGANA, REP. BY SECRETARY, REVENUE (CT) , SECRETARIAT, SAIFABAD, HYDERABAD, AND 2 OTHERS [ 2017 (5) TMI 127 - ANDHRA PRADESH HIGH COURT] in the context of VAT Law, it was held that the business is not movable property and is, therefore, not goods. As business cannot be said to be movable, transfer of business cannot be said to be a transfer of goods. The transfer of business by M/s. Airports Authority of India to M/s. Adani Lucknow International Airport Limited is squarely covered under the Entry No. 2 of the exemption notification No 12/2017 - Central Tax (Rate) dated 28-06-2017 issued u/s Section 11 of CGST Act 2017. Whether the concession fees paid by M/s. Adani Lucknow International Airport Limited to M/s. Airports Authority of India be treated as consideration for transfer of business? - HELD THAT:- Consideration for transfer of business may be as per the terms and conditions of the Contract and there is no restriction on consideration being upfront/ one time/ in instalments. Concession fees is payable by SPV to AAI during the concession period, calculated on a formula based on passenger footfall. The same is part of consideration for transfer of business assets. Whether GST is applicable on Monthly/Annual concession fees charged by the Applicant on the M/s. Adani Lucknow International Airport Limited? If yes at what rate? - HELD THAT:- The monthly/annual concession fees is also part of consideration for transfer of business assets and exempted from GST vide entry no. 2 of Notification No. 12/2017-CT(R) dated 28.06.2017. Whether GST is leviable on the invoice raised by the Applicant for reimbursement of the salary/ staff cost on M/s. Adani Lucknow International Airport Limited ? If yes at what rate? - HELD THAT:- A Simple purview of the points of agreement clearly establishes that payment of salary to the staff (in this case Select Employees) is not the responsibility of the recipient of this service, rather it is the sole responsibility of the AAI to pay emoluments to their Staff. Para 6.5.5 (ii) absolves the Adani Lucknow International Airport Limited (SPV) from paying emoluments to the manpower which is engaged in providing their services in operation of the airport and this manpower can demand or and will receive their emoluments from the AAI only. And para 6.5.5 (iii) makes it imperative upon the recipient of service to pay interest to the Authority at a rate equal to 2% (two percent) above the Bank Rate in case of delay in payment of reimbursement to AAI. Hence this is not case where payment of emoluments to AAI is a part of transfer of business as a going concern, rather it is the supply of manpower services by AAI to SPV. It is amply clear that Select Employees may exercise their choice whether they wish to join the new entity or not, and only upon accepting the offer of employment and joining the new entity, they become a part of the transfer of business as a going concern. Moreover only upon accepting the employment offers, they cease to be employees of the AAI and those who do not accept the offer will not be the part of the transfer of going concern - the deemed deputation period is not a one way road to transfer of business as a going concern, because the employees of AAI may opt or may not opt for employment under the SPV and there may be circumstances in which they do not receive employment offers or they continue their services with the AAI and in this condition they will be redeployed by the AAI and removed from the airport which will be managed and operated by the SPV. Thus there is no case for exemption on the reimbursement of emolument of employees to the AAI as services of manpower supply is provided by one distinct entity to another distinct entity where transfer of business as a going concern is not a precondition nor this supply of manpower services is a corollary to the agreement for transfer of business for the operations management and development of the airport - it appears that reimbursement of cost of emoluments of employees is a consideration for supply of manpower service and not for supply of transfer of business as a going concern and hence taxable @ 18%. Whether GST is applicable on the reimbursement claimed of Municipal tax, Property Tax and Water Charges by the Applicant from M/s. Adani Lucknow International Airport Limited? - If yes at what rate? - HELD THAT:- The issue of reimbursement of municipal tax, property tax and water charges has arisen in pursuance to the terms of Concession Agreement dated 14-2-20 and Supply of Transfer of Going concern Service' is exempt from GST - The re- imbursement of cost is also part of consideration for 'Supply of Transfer of Going concern Service' as such is exempt from GST. Whether any reversal is required in accordance with section 17 (2) / (3) of CGST Act viz-a-viz UPGST Act? - HELD THAT:- If any person is transferring the business as a going concern, then the same will be treated as an exempted supply - Further, as per sec. 17 read with rule 42 of CGST Rules, 2017, in case any registered person is having any exempted supplies, then ITC pertaining to such exempted supplies shall be reversed proportionately.
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2022 (7) TMI 641
Classification of supply - supply of services or not - works contract services - composite supply or not - benefit of Sl. No. 3 (v)(a) of notification no. 11/2017-Central Tax (Rate) as amended vide notification no. 20/2017-Central Tax (Rate) - HELD THAT:- As per Sl. No. 12B of Form GST ARA-01, the applicant is providing sub-contract services in relation to supply and commissioning of machinery and plants, mechanical engineering, electrical works etc. to IV' who has been allotted with a work by RVNL for construction of PEB shed, structure, building, water supply arrangement, drainage, sewerage, road works, track works, power supply and general electrical works, OHE works, signal telecommunication works and supply, installation and commissioning of machinery and plant in connection with setting up of Electric Loco Shed at Saiyedpur Bhitri, Uttar Pradesh. Whether the works awarded to the applicant is a composite supply of the works contract service? - HELD THAT:- It is the Joint Venture Company and not the applicant which has been awarded the contract for construction of Electric Loco Shed. A Joint Venture Company, which is formed by two or more entities, has a separate existence than that of the said entities. The applicant has himself submitted that they are providing sub-contract services in relation to supply and commissioning of machinery and plants, mechanical engineering, electrical works etc. to `JV'. The supply of goods/services by the applicant can't be bundled with the JV which is separate entity, both having their separate GSTINs. As such, the goods/services supplied by the applicant to JV are to be examined for the purpose of their coverage in works contract. In the case of M/S. VIRGO INDUSTRIES (ENGINEERS) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CHENNAI II COMMISSIONERATE, CHENNAI [ 2015 (4) TMI 247 - MADRAS HIGH COURT] the Madras High Court observed that an item fixed to the earth can continue to be movable if the same is capable of being shifted to another place without having to dismantle the same into constituent components and without causing substantial damaging to such individual components. For the goods/services supplied by the applicant to be covered in the works contract, it is necessary that the contracts enumerated therein should relate to immovable property. If the contract is otherwise or if the same results in movables, then it may be a composite supply but-not the works contract - the activities of installation, commissioning, testing, supplying mechanical work and electrical work are not in respect of immovable property as the Machinery and plant is attached to concrete base to prevent vibration/wobble free operation and preventing vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses described above (para 14.5). Hence, the said supply of goods/services by the applicant to JV is not works contract. Whether the benefit of Sl. No. 3(v) of notification no. 11/2017-Central Tax (Rate) as amended vide notification no. 20/2017-Central Tax (Rate) is applicable to the subject works? - HELD THAT:- Sl. No. 3 (v) of the Notification No. 11/2017-Cetral Tax (Rate) dated 28.06.2017, as amended prescribed CGST rate @ 6% for composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, (other than that covered by item (i), (ia), (ib), (ic), (id), (ie) and (if) above) supplied by way of construction, erection, commissioning, or installation, of original works pertaining to railways, including monorail and metro - The rate prescribed vide sl. No. 3 (v) of the Notification No. 11/2017-Cetral Tax (Rate) dated 28.06.2017, as amended is applicable to composite supply of works contract and as the supply entrusted to the applicant vide JV Agreement is not a works contract, the applicant is not entitled for the benefit of the said notification.
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2022 (7) TMI 640
Profiteering - Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees - benefit of reduction in GST rate w.e.f. 01.01,2019, had not been passed on to his recipients by way of commensurate reduction in prices - contravention of provisions of section 171 of CGST Act - penalty - 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% and Services by way of admission to exhibition of cinematograph films where price of admission ticket was one hundred rupees or less were reduced from 18% to 12% w.e.f. 01.01.2019 to 29.02.2020. On this account, the Respondent has realized an additional amount to the tune of Rs. 2,66,99,340/- from the recipients which included both the profiteered amount and GST on the said profiteered amount, Thus the profiteering amount is determined as Rs. 2.66,99,340/- 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. Penalty - HELD THAT:- It has also been found 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 above 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 for the profiteered amount collected from 01.01.2020 to 29.02 2020. Accordingly this Order having been passed today falls within the limitation prescribed under Rule 133 (1) of the CGST Rules, 2017.
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2022 (7) TMI 605
Seeking issuance of writ of mandamus to command the authorities - seeking to allow revision and/or correction of Form GST TRAN-1 either on the portal or manually for the purpose of claiming transitional credit under Section 140 read with Rule 117 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- After going through the materials on record this Court finds that the issue raised in this writ petition is squarely covered by the judgment in the case of M/s. Das Auto Centre [ 2021 (12) TMI 835 - CALCUTTA HIGH COURT] where it was held that It is clearly clearly brought out the difficulties faced by the assesses and also as to how the assesses having substantially complied with the requirement under law and having been entitled to credit on account of transition to the GST regime which is beyond the purview of the assessee and the assessee cannot be put to prejudice on account of technicalities. Thus, keeping the underlying principle in mind if the matter is examined then we are inclined to lean in favour of the writ petitioners and affirm the directions issued by the learned Single Judge. Though the petitioner claims that he has filed GSTR-3B Form on June 1, 2018 but the admitted factual position is that the petitioner ultimately did not get any relief. Therefore, this Court is of the considered view that liberty is to be granted to the petitioner/assessee to file individual tax credit in GSTR-3B Form and if such Form is filed in terms of this order, the authorities shall act on the GSTR-3B Form filed pursuant to this order. The writ petition stands allowed by giving liberty to the writ petitioner/assessee to file individual tax credit in GSTR-3B Forms for the month of August 2022 to be filed in the month of September 2022 and the concerned authority/Assessing Officer would be at liberty to verify the genuineness of the claim of the petitioner and pass orders accordingly.
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Income Tax
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2022 (7) TMI 639
Warrant of authorization u/s 132 - assessee challenged act of authorization for search and seizure on the ground that it is a fishing enquiry and the conditions precedent as specified in Section 132 of the Act are not satisfied - High Court found that none of the reasons to believe to issue authorization met the requirement of Section 132(1)(a), (b) and (c) - HELD THAT:- As per the Revenue, Clauses (b) (c) of Section 132 (1) were satisfied before the warrant of authorization was approved. The satisfaction note was recorded in terms of an assessee whose jurisdictional assessing officer was in the State of the West Bengal. It is the cobweb of accounts of such assessee which are required to be unravelled. It is not unreasonable for the Revenue to apprehend that the assessee would not respond to the summons before the Assessing Officer in the State of West Bengal. It was also alleged that such summons would lead to disclosure of information collected by the Revenue against Sarju Sharma and his group. It was a reasonable belief drawn by the Revenue that the assessee shall not produce or cause to be produced any books of accounts or other documents which would be useful or relevant to the proceedings under the Act. Such believe was not based upon conjectures but on a bona-fide opinion framed in the ordinary conduct of the affairs by the assessee generally. The notice to the assessee to appear before the Income Tax authorities in the State of West Bengal would have been sufficient notice of the material against the Company and its group, to defeat the entire attempt to unearth the cobweb of the accounts by the Company and its associates. Even clause (c) of Section 132(1) is satisfied. The assessee was in possession of Rs.10 crores which was advanced as loan to the Company. The Revenue wishes to find out as to whether such amount is an undisclosed income which would include the sources from which such amount of Rs.10 crores was advanced as loan to a totally stranger person, unconnected with either the affairs of assessee or any other link, to justify as to how a person in Ahmedabad has advanced Rs.10 crores to the Company situated at Kolkata in West Bengal for the purpose of investment in Goa. Revenue may fail or succeed but that would not be a reason to interfere with the search and seizure operations at the threshold, denying an opportunity to the Revenue to unravel the mystery surrounding the investment made by the assessee. As the sufficiency or inadequacy of the reasons to believe recorded cannot be gone into while considering the validity of an act of authorization to conduct search and seizure. The belief recorded alone is justiciable but only while keeping in view the Wednesbury Principle of Reasonableness. Such reasonableness is not a power to act as an appellate authority over the reasons to believe recorded. We would like to restate and elaborate the principles in exercising the writ jurisdiction in the matter of search and seizure under Section 132 of the Act as follows: i) The formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function but administrative in character; ii) The information must be in possession of the authorised official on the basis of the material and that the formation of opinion must be honest and bona fide. It cannot be merely pretence. Consideration of any extraneous or irrelevant material would vitiate the belief/satisfaction; iii) The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or such person will not produce such books of accounts or other documents even if summons or notice is issued to him; or iv) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed; v) Such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the competent authority in which event the Court would be entitled to examine the reasons for the formation of the belief, though not the sufficiency or adequacy thereof. In other words, the Court will examine whether the reasons recorded are actuated by mala fides or on a mere pretence and that no extraneous or irrelevant material has been considered; vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order; vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue; viii) The relevance of the reasons for the formation of the belief is to be tested by the judicial restraint as in administrative action as the Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court shall not examine the sufficiency or adequacy thereof; ix) In terms of the explanation inserted by the Finance Act, 2017 with retrospective effect from 1.4.1962, such reasons to believe as recorded by income tax authorities are not required to be disclosed to any person or any authority or the Appellate Tribunal. In view of the above, we find that the High Court was not justified in setting aside the authorization of search dated 07.08.2018. Consequently, the appeal is allowed and the order passed by the High Court is set aside. As a consequence thereof, the Revenue would be at liberty to proceed against the assessee in accordance with law.
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2022 (7) TMI 638
Assessment u/s 153C and 153A - Unexplained investment - Assessee argued as non-adhering to the principle of preponderance of probability as no ordinary prudent person would sell his shares at a loss of 90% within five days of purchase without receiving balance consideration outside books of accounts - HELD THAT:- As in the present case, both the CIT (A) as well as ITAT have given concurrent findings of fact that no incriminating materials had been seized during search. Consequently, the contention of learned counsel for the Appellant that incriminating documents or materials had been found and seized at the time of search is contrary to fact. CIT(A) had directed that the transactions need to be scrutinised in the case of the seller of the shares, namely, Triveni Infrastructure and Development Company Limited (TIDCL). Also, the same shares had been sold by assessee in the subsequent Assessment Year 2011-2012 at a lesser price as against the addition made by the Assessing Officer which is accepted by the Assessing Officer under Section 143(3) of the Act. Keeping in view the aforesaid, this Court is of the opinion that the question of law raised in present appeal has been settled by earlier Division Bench in Kabul Chawla ( 2015 (9) TMI 80 - DELHI HIGH COURT] and no incriminating documents or materials had been found and seized at the time of search. Accordingly, no question of law arises for consideration in the present appeal and the same is dismissed.
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2022 (7) TMI 637
Exemption u/s 11 - registration granted to it u/s 12AA - delay in the Petitioner making a claim for giving effect to the registration u/s 12AA - HELD THAT:- In Dalmia Power Ltd. ( 2019 (12) TMI 991 - SUPREME COURT ) the Supreme Court directed the Department to accept the revised returns filed by the Appellants there for the AY 2016-17 since the delay on account of the schemes of arrangement in amalgamation being sanctioned by the NCLT were not attributable to the Appellant. In the present case too, the Court is of the view that the delay in the Petitioner making a claim for giving effect to the registration u/s 12AA of the Act for the AYs in question cannot be attributed to the Petitioner in the facts and circumstances pointed out hereinbefore. Petitioner to again make an application u/s 119(2)(b) for condoning the delay in filing its revised returns to be considered and processed in accordance with law. The said delay should be taken to have been condoned in the facts and circumstances pointed out hereinbefore. Accordingly, a direction is issued to the Deputy Commissioner of Income Tax (Circle-1), Cuttack (DCIT) to process the revised returns of the Petitioner for the AYs 2003-04, 2004-05 and 2005-06 wherein the Petitioner has asked for the registration under Section 12AA granted to it by the CIT by the order dated 23rd March, 2017 to be given effect to and to consider its claim for exemption thereunder. The assessment order on the revised returns be passed by the DCIT, after hearing the Petitioner, within a period of three months from today and in any event, not later than 10th October, 2022.
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2022 (7) TMI 636
Deduction u/s 54B - Claim denied as agricultural land sold was not used for agricultural purpose for two years preceding the date of sale as the same was held only for a period of 22 months and some part of the land was used for growing grass - HELD THAT:- The Co-ordinate bench of the Tribunal in the case of Majid Khan Nisar Khan [ 2017 (11) TMI 1129 - ITAT PUNE] and Ramesh Narhari Jakhadi [ 1992 (2) TMI 178 - ITAT PUNE] held that the reference to the term two years has been interpreted to mean that not during the whole period of two years, even if the land is used for some days in the earlier year, it would be sufficient for compliance of the provisions of section 54B of the Act. Similarly, the fact that part of the land could not be used for agricultural purpose but grass was grown owing to the conditions of drought does not disentitle the assessee as the land was held for agricultural purposes only. In the light of these decisions, we hold that the reasoning of lower authorities cannot be appreciated. Accordingly, the findings of lower authorities are reversed. Appeal of assessee allowed.
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2022 (7) TMI 635
Exemption u/s 11 - claim not admissible for the reason that the property of the appellant trust was used by an excluded person at a rent much lesser than the market rent - assessee is registered as a charitable organisation with DIT (Exemption), Mumbai under section 12A of the Act and also with Charity Commissioner, Mumbai - HELD THAT:- In the present case, it has not been denied that the entire building is under use and occupation of statutory tenants whose tenancies are protected under the Rent Control Act and the trust is only eligible to the standard rent from the statutory tenants. Thus, any comparison in respect of the rent received by the assessee can only be made with the rent charged to other tenants, who are also statutory tenants, of that building - As pertinent to note that rent charged to Drishti Advertising Pvt. Ltd. was at the rate of Rs. 2.40 per square feet for an area of about 1000 sq. ft. On the other hand, M/s Bullworker Pvt. Ltd. was paying rent at the rate of Rs. 2.06 per square feet for an area of about 4440 sq. ft. The area given on rent to M/s Bullworker Pvt. Ltd. was much more than the area given on rent to Drishti Advertising Pvt. Ltd, vide agreement dated 20/01/2010, and, therefore, the same justifies the difference in the amount of rent received from the aforesaid 2 entities. In addition to above, it is evident from the record that lower authorities did not take into consideration the amount of premium of Rs. 41 lakh paid by Drishti Advertising Pvt. Ltd. in respect of the aforesaid tenancy, over and above the agreed rent, and only considered the rent paid by Drishti Advertising Pvt. Ltd. While determining the rent of any property / premises, area / location / access / amenities, inter-alia, are taken into consideration. In the present case, it has not been denied that the about 1000 square feet office space on the balance of 13th floor, which was given on rent to Drishti Advertising Pvt. Ltd. had access only through the premises of Drishti Advertising Pvt. Ltd. Further, Revenue has also not denied the claim of assessee that the trust office and records were continued to be maintained from the office of Drishti Advertising Pvt. Ltd. As regards the submission of learned DR that market rate determined by the stamp duty authority are higher, it is pertinent to note that dispute in the present case is in relation to rent paid to the assessee trust and not in respect of any sale consideration. In subsequent assessment years (i.e. 2011-12, 2012-13, 2013-14 and 2014-15), wherein also the rent was received from Drishti Advertising Pvt Ltd, return filed by the assessee trust was accepted vide order passed under section 143(3) and exemption under section 11 of the Act was granted. Thus, assessing officer as well as learned CIT(A) were not justified in denying relief to the assessee under section 11, inter-alia, in respect of rent received from Drishti Advertising Pvt. Ltd. Accordingly, ground raised in assessee s appeal is allowed.
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2022 (7) TMI 634
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) - whether the notice was issued for concealment of income or for furnishing inaccurate particulars of income? - HELD THAT:- As in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision supra squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus, respectfully following the said decision we hold that the penalty order passed u/s. 271(1)(c) of the Act by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(1)(c) of the Act for Assessment Years 2000-01 to 2003-04 is quashed. - Decided in favour of assessee.
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2022 (7) TMI 633
Deduction u/s 80-GGA of the Act read with section 35A/80-G - Assessee had not claimed any exemption u/s 11 of the Act and the assessee has been assessed as Association of Persons ( AOP ) - HELD THAT:- The Revenue has not brought to our notice any other contrary binding precedents on this issue. Therefore, respectfully following the decision of SUNFLOWER TRUST C/O. BAJAJ AUTO LTD. VERSUS ITO (E) WARD-2 (2) , NEW DELHI [ 2022 (7) TMI 392 - ITAT DELHI] more particularly in view of the fact that the assessee has not claimed any exemption and has been assessed as AOP and finding of Ld.CIT(A) being contrary to the records. The AO is hereby, directed to grant a deduction u/s 80-GGA of the Act read with section 35A/80-G of the Act claimed by the assessee under Chapter VI-A of the Act. Thus, Ground raised by the assessee is allowed.
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2022 (7) TMI 632
Denial of deduction u/s 54F - allegation of investment in more than one house by assessee - as per ao assessee has made three independent floors and the stilt parking has three car parking - HELD THAT:- As the factual matrix would reveal that the assessee has made investment in one residential building which consist of three floors. For all the three floors, the land tax is paid as a single unit. All the three floors have the same door number - AO has denied the claim merely on the ground that the assessee has made three independent floors and the stilt parking has three car parking. Further, the assessee has taken 6 electricity connections. However, in the light of the fact that units have been constructed on a single piece of land, these factors would not be of much relevance to determine the eligibility to claim deduction u/s 54F. The ground floor has been occupied by the assessee himself whereas each of the other two floors are occupied by two tenants each. The same is one of the factors as considered by AO to deny the deduction. The conclusion of Ld. AO would necessarily mean that the assessee was debarred from making separate units on a single piece of land and secondly, it raises a presumption that complete building should have been used by the assessee for its own residential purposes as a single unit. However, the same is not the intention of the legislature. The only requirement is that the assessee should make investment in one residential house. The conclusion of Ld. AO overlooks the fact that the multi-storied building was subjected to one property tax assessment and pertinently, it has one door number only. In our considered opinion, there is nothing in the statutory provisions which debar the assessee to make separate independent livable units on a single piece of land or obtain more than one electricity connection to claim the deduction. There is also not a condition that the property should be, at all times, used exclusively by the owner himself for his own residential purposes and the same could not be let out. As long as the property is one residential house, the fragmentation of the same into different livable units and to let them in part would not make the assessee ineligible to claim the deduction. Accordingly, the lower authorities, in our considered opinion, has misconstrued the statutory provisions. We would hold that the assessee is eligible to claim the deduction on investment of Rs.249.98 Lacs which shall proportionately stand reduced to Rs.244.30 Lacs as held by Ld. AO in para-14 of assessment order in view of the fact that full sale consideration was not invested in the new house. As per the provisions, the assessee is eligible to claim proportionate deduction only. We order so. AO is directed to re-compute the assessee s income. - Decided partly in favour of assessee.
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2022 (7) TMI 631
Reopening of assessment u/s 147 - Addition u/s 68 - assessee stated that the assessee had no connection whatsoever with Kartika Investments and Victory Tie-up Pvt.Ltd., neither payment was received nor was any payment made to them - whether reason recorded for re-opening by the AO was found to be based on incorrect facts? - HELD THAT:- Looking to the findings of the AO, who has not rebutted the explanation by placing any credible material in support of his allegation that the assessee company has obtained bogus profit through accommodation entry. In the absence of specific finding supported by evidence mere reasoning on the basis of suspicion would not support the allegation. AO has not brought any evidence to prove the correctness of allegation that the assessee procured profit in the present case. In light of the binding precedents on this issue in the case of Sarthak Securities Co.Pvt.Ltd. [ 2010 (10) TMI 92 - DELHI HIGH COURT] re-opening of the assessment cannot be sustained in the present case. Since the re-opening of assessment is based upon purely on guess work hence, cannot be sustained - therefore, hold that the reasons recorded by the AO do not conform to law as there is a gross non-application of mind. Hence, the impugned order is hereby quashed. - Decided in favour of assessee.
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2022 (7) TMI 630
Estimation of income - bogus purchases - HELD THAT:- Though the purchases found to be bogus by the Revenue Authorities but sales by the assessee have been accepted as genuine as against these bogus purchases, we are of the considered view that when sales have been accepted being genuine the entire purchases cannot be treated as non genuine to make addition of the entire bogus purchases amount. Hon ble High Court of Bombay in the case of JK Surface Coatings Pvt. Ltd. ( 2021 (10) TMI 1323 - BOMBAY HIGH COURT] upheld the view taken by the Tribunal that in such circumstances gross profit should be in the range of 5% to 12.5% as reasonable estimation of profit element embedded in the bogus purchases. Thus in the light of the gross profit in the iron and steel business gross profit @ 10%, which is agreed by both the parties to the appeal, is ordered to be added on the bogus purchases - AO is directed to charge the assessee at the gross profit of 10% on the bogus purchases.
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2022 (7) TMI 629
Capital gain - AO had considered the market value of the property based on the value fixed by the builder i.e. Sudarshan Housing and Finance Ltd., which is relevant for the purpose of levy of transfer charges payable to the builder - HELD THAT:- As it is a fact that assessee had filed valuation report dated 16/09/2014 wherein the valuer had valued impugned property at Rs.30,47,633/- and assessee had sold the property for Rs.31,00,000/-. When this valuation report is placed on record, it is incumbent on the part of the lower authorities to either dispute the said valuation report or refer the matter to the ld. Department Valuation Officer (DVO) in terms of Section 50C(2) to determine the fair market value of the property. We find that assessee had indeed objected to adoption of market value of Rs.56,07,907/- and had indeed requested for reference to DVO before the ld. AO. This request has been rejected by the lower authorities without any basis which action, in our considered opinion, is grossly against the provisions of the Act. Hence, in order to meet the ends of justice, we deem it fit and appropriate to remand this issue to the file of the ld. AO, with a direction to refer the valuation of subject mentioned property to the ld. DVO for determination of fair market value and also to consider the value fixed by the stamp duty authority in terms of Section 50C of the Act as on the date of sale and determine the sale consideration as per law. Accordingly, the ground No.1 raised by the assessee is allowed for statistical purposes. Disallowance of brought forward depreciation - Action of the lower authorities ignoring the revised return along with revised computation of income filed by the assessee wherein the assessee seem to rectify the error in the claim of unabsorbed depreciation of earlier year - HELD THAT:- We find that the ld. CIT(A) had accepted to the fact that there was an error in the original return filed by the assessee with regard to set off of unabsorbed depreciation and the same was duly rectified by way of a revised return and revised computation of income. From the perusal of the manner in which total income has been determined by the ld. AO in the assessment order, we find that the ld. AO had completely ignored the revised return of income filed by the assessee as it was filed belatedly. AO accordingly has also ignored the revised computation of income filed by the assessee during the course of assessment proceedings - we find that there cannot be any grievance to the assessee in the instant case as it is an admitted fact that there was an error committed by the assessee in the set off of unabsorbed depreciation for A.Y.2006-07 and A.Y.2010-11 to the total extent of Rs.8,51,508/-. Hence, this error needs to be brought in the computation of total income by the ld. AO which has been rightly done by the ld. AO. Hence, we uphold the action of the ld. AO in this regard. Accordingly, the ground No.2 raised by the assessee is dismissed.
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2022 (7) TMI 628
Income accrued in India - taxation of payments received by the assessee from Indian hotels pursuant to International Marketing Program and Participation Agreement ( IMPPA ) as fees for technical services - HELD THAT:- The International Marketing Program Participation Agreement ( IMPPA ) was initially entered into between International Hotel Licensing Company SARL ( IHLC ), which is the wholly owned, indirect subsidiary of Marriott International Inc. and Indian hotel owners. Under the IMPPA, IHLC was required to provide international advertising, marketing, promotion and sales program to the Indian hotels. Further, the hotel owner was required to contribute to costs and expenses associated with the international advertising, marketing, promotion and sales program for the Hotel at 1.5% of gross revenues, net of taxes, for each accounting period. The said IMPPA was subsequently assigned to the assessee pursuant to Assignment and Assumption Agreement dated 21/07/2008 entered into between IHLC and the assessee. We find that in the case of International Hotel Licensing Company [ 2006 (11) TMI 141 - AUTHORITY FOR ADVANCE RULINGS] held that amounts received by the International Hotel Licensing Company SARI. (referred to as the applicant) from the Indian Hotel owner in connection with the marketing and business promotion activities said to be conducted outside India would be taxable in India. In the present case assessee is an assignee of the IMPPA entered into by IHLC with Indian hotels and under the said agreement, assessee rendered similar services as were considered by learned AAR in the aforesaid ruling. Further, no change in facts was alleged in the present case as were considered by the learned AAR in the aforesaid ruling. In view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) following the learned AAR s ruling in International Hotel Licensing Company Co. (supra). As a result, grounds No. 1 to 5 raised in assessee s appeal are dismissed. Levy of interest under section 234A - HELD THAT:- Assessing Officer is directed to carry out necessary verification whether the return of income was filed by the assessee within time and levy interest under section 234A of the Act, in case of delay, in accordance with law. Levy of interest under section 234B - No interest under section 234B of the Act is leviable, for the year under consideration the present case, in view of decision of Hon ble Supreme Court in DIT v. Mitsubishi Corporation [ 2021 (9) TMI 875 - SUPREME COURT ] . In view of above, addition ground No. 9 is allowed for statistical purpose.
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2022 (7) TMI 627
Interest u/s. 234C charged on the dividend income earned for all the four quarters when actually the said dividend has been received by the assessee only in third and fourth quarters of the financial year - Advance Tax Liability - computation of tax payable u/s.115BBDA of the Act for dividend - Scope of amendment as inserted by the Finance Act 2017 w.e.f. 01/04/2017 - HELD THAT:- As for the year under consideration i.e. A.Y.2018-19, the old proviso as it stood during 2017-21 would apply. If the said provision is applied, the dividend income contemplated u/s.115BBDA of the Act falls under the Exception clause in Clause (d). Admittedly in the instant case, the dividend from M/s. Marico Ltd., was received by the assessee only in third and fourth quarters of the financial year. Admittedly, the assessee had duly paid the advance tax on the said dividend income taxable u/s.115BBDA of the Act in the third and fourth quarters of the financial year. Hence, as per the old proviso to Section 234C (1) of the Act, there cannot be any levy of interest u/s.234C of the Act that could be fastened on the assessee for the first two quarters by apportioning dividend income for the whole year. Hence, we find lot of force in the arguments advanced by the ld. AR and accordingly, allow the grounds raised by the assessee.
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2022 (7) TMI 626
Penalty u/s 271(1)(c) - non-deduction of tax at source from payment made for supply of water - disallowance of deduction claimed u/s 80G - HELD THAT:- By looking into the facts and circumstances and the quantum involved in the appeal, we are of the considered opinion that, the assessee has not made any concealment of income to initiate the penalty proceedings. Therefore, we inclined to delete the penalty. - Decided in favour of assessee.
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2022 (7) TMI 625
Addition u/s 68 - unexplained share premium and share capital - CIT enhancing the income of the assessee u/s 56 (2)(viib) - CIT (A) has rejected the valuation report of the assessee, wherein premium charge of Rs. 40 on each share under Rule 11UA has been found to be without basis - HELD THAT:- On going through the order of A.O and Ld.CIT(A) it is found that the authorities have just brush aside the documents produced by the assessee and without making any enquiry about authenticity of the documents furnished and without bringing any material or making enquiry came to conclusion that the assessee company is not worth enough to fetch the share premium of Rs. 76,00,000/-. The authorities below without verifying the veracity of the documents from the publically available data on the web site of MCA IT Department. Once the assessee provided the names, addresses and Pan, particulars and ROC details of the investors. The Ld. A.O ought to have made further enquiry. Once the assessee furnishes the documents to prove the identity, creditworthiness and genuineness of the transaction. The same cannot be denied in the absence of material contrary brought by the Assessing Officer. The present case, the assessee has substantially provided materials to prove the genuineness of the share holders apart from giving the Pan Card, name and ROC details. In our considered opinion, the Ld.CIT(A) has erred in confirming the addition u/s 68 of the Act on account of unexplained share premium and share capital. Valuation of shares - HELD THAT:- The decision made in Agro Portfolio Pvt. Ltd. [ 2018 (5) TMI 1088 - ITAT DELHI] has been considered Case of Cinestan Entertainment (P). Ltd. [ 2019 (6) TMI 1367 - ITAT DELHI] wherein it is held that the Assessing Officer cannot examined or substituted its own value in place of valuation arrived by the assessee either DCF Method or NAV Method, the commercial expediency has to be seen from the point view of businessman. Further held that if law provides the assessee to get the valuation done from a prescribed expert as per the prescribed method, then the same cannot be rejected because neither the Assessing Officer nor the assessee have been recognized as expert under the law. We are inclined to follow the ratio laid down in the case of Cinestan Entertainment P. Ltd. Supra and hold that the Ld. A.O and CIT(A) have committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method. Ld.CIT(A) while enhancing the income of the assessee u/s 56 (2)(viib) had observed that, such share premium received by the appellant for Rs. 76,00,000/- during the Financial Year 2014-15 relevant to Assessment Year 2015-16 is considered income of the appellant. The Ld. CIT(A) has not provided mandatory opportunity of hearing to the assessee u/s 251 (1) of the Act which ultimately resulted in enhancement of assessed income. The assessee has produced the valuation report before the CIT (A) but the same has not been considered by the CIT(A). The assessee has prepared valuation of the shares in accordance with Rule 11US of the Act for the purpose of Section 56(2) (viib) of the Act, adopting discounted cash flow method. The Ld. CIT(A) failed to understand the valuation of the shares made as per DCF Method and not considered the valuation provided by the assessee. In our opinion, the CIT(A) has committed an error on this count. We are inclined to delete the addition made u/s 68 of the Act and also set aside the order of the CIT(A) in enhancing the income of the appellant u/s 251(1) of the Act by invoking Section 56(2) (viib) of the Act. Accordingly, we allow the Assessee s Grounds of Appeal No. 2 to 5.
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2022 (7) TMI 624
Delayed contribution of employees share towards ESI and PF set up for the welfare of the employee u/s 36(1)(va) read with section 2(24)(x) - as per assessee payments were made within the due dates of filing of return u/s 139 - HELD THAT:- As it is find that there was a delay in depositing employee s as well as employer s contribution to the Employee s Provident Fund/ESI fund - the amount was deposited before the due date of the filing of the return. The instant issue is squarely covered by the decision in the case of CIT, Kolkata vs. M/s Vijay Shree Limited [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] which has been further followed by the Coordinate Calcutta Bench of this Tribunal in the case of Harendra Nath Biswas [ 2021 (7) TMI 942 - ITAT KOLKATA] - The ld. DR fairly submitted there is no contrary to the case law cited above. We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2018-19 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. Assessee appeal allowed.
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2022 (7) TMI 623
Penalty u/s 271F - failure to file the return of Income within the assessement year - assessee having two PAN - HELD THAT:- Assessee has filed her return of income at one place i.e. at Kolkata under her PAN AxxxxxxxxB and the transactions done under PAN AxxxxxxxxF are also duly reported and disclosed in the said return of income. No doubt has been shown by the revenue authorities on this contention of the assessee that the assessee has filed its return of income and also the assessee has substantiated the same by providing copies of the same to the revenue authorities during the assessment proceedings. Assessee has also taken the steps to surrender another PAN issued to her to show her bonafide intentions towards the tax compliance. Therefore, we are of the considered view that return of income was duly filed by the assessee and transaction under question were also disclosed which are subject to assessment by the AO, so penalty u/s 271F for failure to furnish the return of income u/s 139(1) of the act cannot be imposed on the assessee hence grounds of the assessee are decided in favour of the assessee, orders of the revenue authorities are set aside being against the principal of natural justice based on technicalities without proper consideration to the merits of the case. Thus, in our view penalty levied u/s. 271F of the Act is invalid. Penalty proceedings u/s 272A(1)(d) - HELD THAT:- Penalty under section 272A (1)(d) can only be imposed on an assessee if the assessee fails to comply towards the notice issued under sub-section (1) of section 142 or sub-section (2) of section 143 of fails to comply with a direction issued under sub-section (2A)of section 142. However in the present case the assessee has shown a responsible conduct at all the times by responding towards the notices issued hence penalty under section 272A (1)(d) cannot be imposed. Accordingly ground rose under appeal No 91/CTK/2021 are allowed to the assessee, orders of the revenue authorities are set aside. Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty - Appeal of assessee allowed.
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2022 (7) TMI 622
MAT applicability of provisions of section 115JB - GTI and total income of the assessee are Nil - HELD THAT:- As in a recent decision in the case of The United Provinces Sugar Co. Ltd. ( 2021 (4) TMI 633 - ITAT KOLKATA] has dealt with the identical issue by holding that the issue whether book profits can be computed u/s 115JB when the GTI and total income of the assessee are Nil and no taxes payable , is adjudicated in favour of the assessee, respectfully following the decision of Hon ble Jurisdictional High Court on this issue. Considering the facts on record and respectfully following the binding judicial precedents including that in the assessee s own case all of which referred above, we hold that provisions of section 115JB are not applicable in the case of the assessee when the GTI and total income of the assessee are Nil and no taxes payable. Accordingly, the ground of appeal of the assessee is allowed. Assessee has claimed that it is not a dividend paying company and, therefore, for this reason also section 115JB is not applicable - As assessee placed reliance on the decision in the case of Neeraj Vanijya Pvt. Ltd. [ 2008 (10) TMI 723 - ITAT KOLKATA] - We find that the contention of the assessee is covered by the said decision and respectfully following the same, we allow this ground in favour of the assessee. Contribution to molasses reserve while arriving at book profit u/s 115JB - HELD THAT:- Since we have already dealt with the issue relating to applicability of section 115JB in the case of assessee whereby we have held that it is not applicable, this ground become infructuous and accordingly is disposed off as infructuous. Small contributions to local people and institution on request of employees and business associates - allowable as business expenses u/s 37(1) or not? - Counsel submitted that inadvertently these were accounted under the head charity and donation in the books of account which cannot be the basis for their disallowance - HELD THAT:- We note that the expenses are towards the community and social welfare activities which have taken place in the vicinity of work area of the assessee but the ld. AO is of the view that this expenditure is not related to the business and disallowed this claim. Section 37 of the Act contemplates that any expenditure not being expenditure of the nature described in sections 32 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of the business or profession shall be allowed in computing the income chargeable under the Head Profits Gains of Business or Profession . AO failed to appreciate the nature of business of the assessee and the surrounding social environment where it has been carrying out its business. From the details tabulated above, giving particulars for each of the payments Depreciation on Molasses Tanks - HELD THAT:- We direct the AO to allow the claim of the assessee on depreciation on molasses tanks by making the correct computation in respect of new assets and the correct written down value (WDV) of the molasses tanks, considering the submissions placed on record. The assessee is already directed to furnish all the details and documentary evidences in support of its claim for due verification by the ld. AO to assist him in arriving at the correct amount of depreciation allowable on the molasses tanks. Accordingly, this ground of the assessee is allowed for statistical purposes
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2022 (7) TMI 621
Disallowance u/s 14A read with Rule 8D(2)(iii) - AO found that the assessee has made substantial investment in mutual funds, dividend on which is exempt - assessee has held shares of a JV Company during the year, such shares being assets which can yield exempt income to the assessee - assessee submitted that the Ld. AO has not recorded the satisfaction as to why there was expenditure relatable to exempt income - HELD THAT:- From the bare reading of the aforesaid observation, it is seen that nowhere AO has noticed the nature of expenditure debited nor he has examined the books of accounts as to what are the expenditure which can be said to be attributable for opening of the dividend income. The conditions laid down in u/s.14A (2) is not being satisfied and accordingly in view of the decision of Godrej Boyce Manufacturing [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] disallowance made u/s. 14A is allowed. Decided in favour of assessee. Nature of expenditure - disallowance of CSR expenses - expenditure of capital nature or personal nature - HELD THAT:- As decided in own case [ 2021 (9) TMI 1405 - ITAT DELHI] the impugned expenditure cannot be held to be capital and it is not in the nature of personal expenditure or for any violation of law. Thus we delete the impugned disallowance of CSR expenses. As regards donation to CM's relief fund, the same is, otherwise allowable as deduction under section 80G(2)(a)(iiihf). - Decided in favour of assessee.
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2022 (7) TMI 620
Disallowance of Common Expenses against deduction claimed under section 80IA - As per assessee Director s remuneration and Auditor s remuneration should be allocated proportionately as calculated by AO and Legal Professional Expenses and Travelling Expenses are found to be acceptable as done by assessee - HELD THAT:- We have considered the order of AO, order of CIT (A) and submissions of assessee. We found force in the contention of assessee that earlier precedents settled in assessee s own case needs to be examined and followed. Hence, on this issue, we restore the matter back to the file of the AO and the ground of appeal is partly allowed. Taxability of Carbon Credit received by assessee - Revenue or capital receipt - HELD THAT:- Following the order passed in case of My Home Power Ltd. [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] we are of the considered view that sale of Renewable Energy Certificate (Carbon Credit) of income received by the assessee is a capital receipt and could not be business receipt or income nor it is directly linked with the business of the assessee nor any asset is generated in the course of business but it is generated due to environmental concern. So the addition by the AO from the sale of Carbon Credit and confirmed by the ld. CIT(A) is not sustainable, hence, ordered to be deleted.
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Customs
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2022 (7) TMI 619
Duty Drawback - re-export - non-export of capital goods within six months - whether petitioner was entitled to any drawback on the customs duty that they had paid, under Section 74 of the said Act read with Notification 27/02 read with Notification 19/1965 read with Notification No.27/2008-Cus dated 1st March 2008 amending Notification 27/02? - HELD THAT:- Notification 27/02 was a concession that was granted to people like petitioner who had no intention of importing the goods for home consumption but who would bring it on lease with an intention to re-export the goods within a period of six months or within a period of six months to one year - The extent of exemption is so much of the duty of customs as in excess of 15% (incase re-exported within six months) and if beyond six months but under one year then so much of the duty of customs as in excess of 30%. In these cases, there is no importation for home consumption envisaged under Section 74. This is a separate class of importers and the Notification 27/02 has been issued under Section 25(1) of the said Act and not under Section 74. There is a duty exemption as provided in Notification 27/02 for those who import machinery or tools for execution of a contract and re-export the same within the prescribed period. This concession was given because the Central Government was satisfied that it was necessary in the public interest so to do, where the importer has taken the goods on lease for use after importation and at the time of importation makes a declaration that the goods are being imported temporarily for execution of a contract. Such conclusions are not prescribed under Section 74 or notification issued under Section 74(2) - the concession given to such importer was that he need not pay the entire 100% of the customs duty payable under the said Act but would pay only 15% or 30%, as the case may be, They do not have to pay the entire 100% and then claim a drawback of 85% or 70%, as the case may be. Notification 27/02 is issued under Section 25(1) of the said Act and not under Section 74 of the said Act. Further, the conditions prescribed under Notification 27/02 are not prescribed under Notification 19/1965 issued under sub-section (2) of Section 74. Further, we agree with Mr. Bangur that the note in Notification 27/2008 is also clarificatory. The petitioner would have been entitled to a drawback of either 85% or 70% depending on when the goods were re-exported, if they had paid 100% customs duty and not filed declarations under Notification 27/02. Since petitioner had not paid 100% duty availing of Notification 27/02 and had already availed of concession as per Notification 27/02, petitioner is not entitled to any drawback. By paying the concessional rate of customs duty at the time of import, petitioner has already availed of the benefit of drawback and as such the drawback payment made was erroneous. The petition stands dismissed with costs in the sum of Rs.1 lakh. This amount to be paid to respondent no.4 alongwith the outstanding amounts of drawback re-payable.
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2022 (7) TMI 618
Classification of imported goods - gold which are round in shape and have images of gods, saints, temples or historical sites - to be classified under Customs Tariff Item, CTI 7114 19 10 and classifying them under CTI 7118 90 00 of the Customs Tariff Act, 1975? - HELD THAT:- Reliance placed in the case of M/S ABANS JEWELS PVT. LTD., M/S. ROOTS NETWORK LLP, M/S. INSAT EXPORT PVT. LTD. AND M/S. KESARI JEWELLERY MARKETING VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS, ACC (IMPORTS) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2022 (4) TMI 1370 - CESTAT NEW DELHI] the Tribunal held that the classification of imported articles of gold which are round in shape and have images of gods, saints, temples or historical sites which are struck in the form of a coin would be under CTI 7114 19 10 - A perusal of the decision passed by the Tribunal in Abhans Jewels does indicate that the factual dispute is similar. The stand of Adjudicating Authority that as the subject goods are classifiable under CTI 7118 90 00, it is clear that the import of gold coins are subject to RBI Guidelines, cannot be sustained - Appeal allowed.
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Insolvency & Bankruptcy
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2022 (7) TMI 617
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute prior to service of demand notice or not - HELD THAT:- While the operational creditor claims to have submitted all the relevant documents regarding labour compliances, the corporate debtor has been repeatedly asking the operational creditor to submit the relevant documents - it is also noted that the operational creditor, in his e-mail dated 12.11.2016 states that the requirement of labour compliances as contained in (corporate debtor) previous communication as well as meetings are not relevant for the purposes of clearing outstanding dues payable to the operational creditor, but he is still willing to hand over an indemnity letter regarding no legal consequences/damages to be faced by the corporate debtor. No indemnity letter is also found to be handed over to the corporate debtor. It is noted from the reply sent by the corporate debtor to the section 9 application that the corporate debtor had been repeatedly pointing out the deficiency/insufficiency of documents relating to labour law compliances submitted by the operational creditor. At one point in his e-mail dated 12.11.2016, the operational creditor claims that the requirements of labour compliances are not relevant for the purpose of clearing the outstanding dues. The sections on Terms and Conditions and Other Terms and Conditions of the work order dated 17.8.2013 very clearly show that the work order relates to a labour contract and therefore the conditions regarding compliance of all labour laws and Central/State/Local authorities statutory requirements are necessary and have to be done. The Adjudicating Authority, who has relied on the facts and documents presented before it alongwith the section 9 application, has not erred in holding that a pre-existing dispute was present in the case, and has, therefore, correctly rejected the section 9 application - Appeal dismissed.
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2022 (7) TMI 616
Liquidation of the Corporate Debtor - CoC in its 8th Meeting held on 08.01.2022 unanimously resolved to file an application for liquidating the Corporate Debtor - HELD THAT:- In the present case, despite calling EoI twice no Resolution Applications received for the Resolution of the Corporate Debtor. Therefore, the CoC took a decision in their commercial wisdom with a majority voting share to liquidate the Corporate Debtor. The fact remains that the Appellant s settlement proposal was not considered by the CoC for the reasons that it was not viable. This Tribunal comes to an irresistible and inescapable conclusion that the Appellant failed to make out any case either on law or on facts. It is made clear that there is no legal infirmity or illegality in the order passed by the Adjudicating Authority dated 28.04.2022 - Appeal dismissed.
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2022 (7) TMI 615
Seeking withdrawal of the CIRP proceedings initiated against the M/s. Anand Divine Developers Private Limited by the Financial Creditor i.e., ICICI Prudential Venture - Section 12A of the IBC r/w Regulation 30A of the IBBI (CIRP) Regulations, 2016 and Rule 11 of the NCLT Rules, 2016 - HELD THAT:- An Inherent Power, is to be pressed into service by a Tribunal/ an Appellate Tribunal based on the well settled proposition of Law that an Act of Tribunal/ Court of Law, shall cause any prejudice, hardship, inconvenience to an Homo-sapien in the considered opinion of this Tribunal. In aid of delivering justice to the Stakeholders, an Inherent Power can be exercised by a Tribunal. An inherent powers breadth is co-extensive with the necessity. It transpires that the Adjudicating Authority (NCLT), Principal Bench, New Delhi, on 25.05.2022, had allowed I.A. No. 2391 of 2022 filed by the Appellant/Petitioner/Financial Creditor (under Section 12A of the I B Code read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016, for withdrawal of the Corporate Insolvency Resolution Process) initiated against the Respondent/Corporate Debtor, based on the Settlement entered into between the Parties, prior to the formation of the Committee of Creditors. In reality, as per the Terms of Settlement read in terms of the Deed of Adherence, the Respondent in unambiguous and unequivocal terms had consented and agreed for Revival/Restoration of Corporate Insolvency and Resolution Process against the Respondent/Corporate Debtor in the event of any default, being committed thereto. This Tribunal pertinently points out that in the Terms of Settlement dated 21.04.2022, in Clause 12, it was mentioned that because of the Settlement, the Appellant/Petitioner wished to conditionally withdraw the Section 7 Petition filed against the Corporate Debtor, subject to the Corporate Debtor, Corporate Debtor Group and Confirming Parties (as defined in the Terms of Settlement) unconditionally complying with all covenants contained in the Terms of Settlement. In the instant Appeal, the Appellant is an individual whose right is infringed upon by an act complained of, having substantial and tangible, reasonable, grouse and a genuine grievance and as such, the instant Appeal preferred by the Appellant is perfectly maintainable in Law, as opined by this Tribunal. The impugned order dated 25.05.2022, passed by the Adjudicating Authority (NCLT), Principal Bench, New Delhi, in I.A. No. 2391 of 2022 in C.P. IB No. 1101 (PB)/2020, stands modified by this Tribunal and the instant Company Appeal (AT) (INS) No. 703 of 2022 is disposed of.
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2022 (7) TMI 614
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor has neither sent any reply to the notice sent by the Operational Creditor under section 8 nor has sent any reply even to the corrigendum letter dated 13/01/2021 whatever defence it had, had to be stated in the reply to the notice or corrigendum notice, which were duly received by it. Even, on receipt of the notice from this Adjudicating Authority, the Corporate Debtor has not cared even to file its reply to the petition. The contention of the Corporate Debtor that the petition has been filed by the proprietorship concern or the notice has been sent on behalf of the proprietorship concern is misplaced and cannot be accepted. The petition and the affidavit clearly named Mangilal Suthar as the Operational Creditor and the next line is part of his address i.e. proprietor of M. Arts. M.Arts is only the trade name /address of the Operational Creditor and there is no harm if a person files a petition in his own name and addresses himself to be proprietor of his trade name. After all a person has a right to address himself as the proprietor of a proprietorship firm. The contention of the Corporate Debtor is misplaced and cannot be accepted - The Corporate Debtor had infact affirmed the outstanding due vide email and payments certificate dated January 10, 2019. Once an acknowledgment is made for a job having been satisfactorily done, the amount becomes due to the vendor/ the Operational Creditor. The Corporate Debtor in this matter cannot escape the liability simply by beating about amount the bush and taking refuge under one or other clause of the agreement or seeking refuge under any notification that a default has taken place during the period, for which no petition could be filed in the present matter, the facts are quite different. If the Corporate Debtor had any valid defence, it could have been stated so in its reply to notice under section 8 or in reply to even the corrigendum issued by the Operational Creditor, and even if it could not be done, it could have filed its reply to the petition. Even that has not been done in spite of the opportunities given to the Corporate Debtor. At the stage of arguments only, the Corporate Debtor is trying to escape its liability and make odd types of arguments, which cannot be accepted. The petition is otherwise complete in all respects - it is satisfied that the Operational Creditor has proved the outstanding operational debt, and the default in making payment thereof and that this petition deserves to be admitted. Petition admitted - moratorium declared.
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2022 (7) TMI 613
Seeking liquidation of the Corporate Applicant - Corporate Applicant is not carrying on any business since the past three years - Section 33(2) of IBC - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Applicant before the confirmation of Resolution Plan, where the Committee of Creditors decide to liquidate the Corporate Applicant with more than sixty-six percent voting share. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.
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2022 (7) TMI 612
Seeking direction to Resolution Professional to accept the remaining claim up to the date of actual realization - HELD THAT:- It is admitted position the alleged claims arise out of a work executed somewhere in 2014. The Resolution Professional could not have granted anything merely based on the assertion on a particular amount against a particular head and without any supporting documents thereto - This Adjudicating Authority cannot adjudicate upon the question of loss or profit interest etc. This Tribunal in its summary jurisdiction can in no way go into crystallizing the alleged claims. It is clear from the above position the works were executed somewhere in 2015 and the claims have been raised for the first time before the Resolution Professional and that too, as observed by Resolution Professional, without the required documents in support. In the absence of documents sought by the Resolution Professional, the Resolution Professional is right in saying it was not possible for him to grant any claim that has been rejected - there are no error as such by the Resolution Professional. Application dismissed.
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2022 (7) TMI 611
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Section 186 of the Companies Act, 2013 provides for the loans and investments that can be made by a company. According to section 186(2), no company shall directly or indirectly, give any loan to any person or other body corporate exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more. A perusal of the balance sheet of the Financial Creditor reveals that the free reserves and surplus of the Financial Year for the Financial Years 2017-18 and 2018-19 are Rs. 3,09,33,281/- and Rs. 3,80,62,525/- respectively. As such the loan given to the Corporate Debtor is less than 100% of the free reserves of the Company and therefore, the instant petition is not hit by the provision of section 186. The Corporate Debtor has acknowledged his liability towards the Financial Creditor, firstly vide the acknowledgment receipt dated 23rd April 2018 and thereafter vide the settlement agreement. Keeping in view that a default in the payment of a financial debt has occurred by the Corporate Debtor, and there is an acknowledgment of Financial Debt and also that the said application is not barred by limitation, we are of the view that the instant application under section 7 of the Code is complete in all respects. Application admitted - moratorium declared.
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2022 (7) TMI 610
Seeking Voluntary Liquidation of the Petitioner/Corporate person - section 59 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- On perusing the documents annexed to the petition, it appears that the affairs of the Corporate Person have been completely wound up and its assets have been completely liquidated. No liabilities have been left unsatisfied. It is satisfying from the documents on record that the voluntary liquidation is not with the intent to defraud any person. There are no impediments to the dissolution of the Corporate Person and it is ordered accordingly - Application allowed.
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Service Tax
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2022 (7) TMI 609
Seeking Cash Refund of service tax paid on ocean freight - refund sought on the ground that appellant is entitled for Cenvat credit of service tax paid on ocean freight - Section 142(3) read with Section 11B of CEA - HELD THAT:- The identical issue of this Tribunal in the case of GALAXY POLY PLAST INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2022 (7) TMI 567 - CESTAT AHMEDABAD] has remanded the matter holding that Matter remanded to the Adjudicating Authority to decide the case afresh under Section 11B that whether the service tax paid by the appellant on ocean freight is legal and correct or otherwise. Respectfully following the said order, the matter is remanded to the original authority.
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CST, VAT & Sales Tax
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2022 (7) TMI 608
Amendment to repealed VAT Act post GST era - Legislative competence of State of Maharashtra to enact the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017 and the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 to amend the provisions of the Maharashtra Value Added Tax Act, 2002 - incorporation of mandatory pre-deposit for filing appeals against the assessment orders pertaining to all the goods after 16th September 2016 that is post 101 Constitutional Amendment Act, 2016 - right of the assessee to file an appeal without statutory deposit in respect of orders passed for the assessment years prior to 15th April 2017, were taken away by Explanation to Section 26 of the MVAT Act introduced with effect from 15th April 2017 by the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 - whether right of filing appeal accrues on the date of order of assessment and requirement of mandatory predeposit introduced by way of amendment does not apply to the orders passed in the assessment years prior to 15th April 2017, is correct or not. HELD THAT:- There is no substance in the submission made by Mr.Nankani, learned senior counsel for the petitioner that the State Government had no power to legislate including the power to amend the legislation or that such power to legislate of power has been taken away in view of the introduction of Article 246A in the Constitution of India. The argument of the learned senior counsel that post constitutional amendment, the provision of MVAT Act, 2002 virtually has the effect of repealing the MVAT Act, 2002 in so far as all other goods, except the 6 mentioned in Entry-54 of List-II of Schedule-VII of the Constitution are concerned, has no merit - Article 367 of the Constitution of India provides that unless the context otherwise requires, the General Clauses Act, 1897, shall, subject to any adaptations and modifications that may be made therein under Article 372, apply for the interpretation of this Constitution as it applies for the interpretation of an Act of the Legislature of the Dominion of India. Since by carrying out amendment to the provisions of the MVAT Act and that also within a period of one year from the date of introduction of Article 246A of the Constitution of India, the impugned amendment was within the legislative competence of the State Government and has neither overreached nor overruled the effect of the judgment by the Nagpur Bench of this Court in case of M/S. ANSHUL IMPEX PRIVATE LTD., VERSUS STATE OF MAHARASHTRA, THROUGH THE ADDITIONAL CHIEF SECRETARY FINANCE [ 2018 (12) TMI 1279 - BOMBAY HIGH COURT] . There is no merit in the challenge to the constitutional validity thereof. There is no violation of any doctrine of separation of powers as sought to be canvassed by the learned senior counsel for the petitioners. The petitioners have also not disputed the proposition of the law that the State Government has power to legislate for the purpose of removing or curing any defect - there is no encroachment on the part of the State Government upon the power of the judiciary by carrying out the amendment in the provision of MVAT in any manner whatsoever. There is no merit in the submission of the learned senior counsel for the petitioners that in the amending Act though the explanation starts with the words for removal of doubts , the same does not invariably mean that the explanation is clarificatory. It is neither an absolute right nor an ingredient of natural justice, the principles of which must be followed in all judicial and quasi-judicial litigations. It is always be circumscribed with the conditions of grant. At the given time, it is open for the legislature in its wisdom to enact a law that no appeal shall lie or it may lie on fulfillment of pre-condition, if any, against the order passed by the Authority in question. After considering various provisions providing for such condition of deposit as condition precedent for entertaining of the appeal, the Hon ble Supreme Court held that in no circumstance the said provision can be said to be onerous as prayed for or in violation of Articles 14 or 19(1) (g) of the Constitution of India. A perusal of the impugned explanation added by the State Government by Ordinance of 2017 w.e.f. 15th April, 2017 irrespective of the date of the commencement of the original proceedings indicates that the same is clarificatory in nature and takes away the effect of the judgment of the Nagpur Bench of this Court in case of M/s. Anshul Impex Private Ltd. - There is no substance in the submission made by the learned senior counsel for the petitioner that the impugned amendment directly or indirectly overrules or overreaches the judgment in case of M/s. Anshul Impex Private Ltd. The Legislature has power to remove the defects retrospectively and prospectively by Legislative action so as to cure the defect or inconsistency in the law declared by the Court so as to remove such inconsistency from the statute for effective enforcement of law - when a law is enacted with retrospective effect, it is not considered as an encroachment upon judicial power when the legislature does not directly overrule or reverse a judicial dictum. The legislature cannot, by way of an enactment, declare a decision of the Court as erroneous or a nullity, but can amend the statute or the provision so as to make it applicable to the past. The legislature has the power to rectify, through an amendment, a defect in law noticed in the enactment and even highlighted in the decision of the court. This plenary power to bring the statute in conformity with the legislative intent and correct the flaw pointed out by the Court can have a curative and neutralizing effect. There is no substance in the submission of the learned senior counsel for the petitioners that the impugned explanation violates Article 14 of the Constitution of India, or discriminates between two assessees in the same assessment year, or causes delay in passing assessment orders attributable to the Government or otherwise. The impugned amendment would apply only for those orders which are passed only after 15th April, 2017 and not to the prior orders being passed by exercising the legislative power of the State Government. The argument of the petitioner that the amendment violates Article 14 of the Constitution of India on the ground that two sets of assessees are discriminated against insofar as the pre-condition of deposit for entertaining the appeal is concerned has no merit - the impugned amendment also does not take away vested right of the assessee to file an appeal as sought to be canvassed by the learned senior counsel for the petitioner. Under unamended section 26(6) of the MVAT Act, there was no condition prescribed that the Appellate Authority or the Tribunal as the case may be was bound to admit the appeal and to grant stay without imposing any condition for deposit of the part or whole of the disputed amount by the appellant. In our view, the right of appeal which was already provided under section 26 of the MVAT Act has been protected and is not taken away by virtue of sections 6A, 6B and 6C inserted in the said section 26(6) or by inserting explanation to section 26(6C) of the MVAT Act but is only made conditional. The principles laid down by the Division Bench of this Court in case of HARESH NAGINDAS VORA, SACHIN LAXMICHAND SHAH VERSUS UNION OF INDIA, PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) [ 2017 (6) TMI 964 - BOMBAY HIGH COURT] apply to the facts of this case. In the facts of this case, the petitioner has not made out the case of legislative incompetence on the part of the State Government to make the amendment to the provisions of the MVAT including the explanation inserted to section 26(6B). The State of Maharashtra has legislative competence to enact the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2017 and the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 to amend the provisions of the Maharashtra Value Added Tax Act, 2002 to incorporate a condition/modifying the earlier condition for entertaining an appeal for a mandatory pre-deposit for filing appeals against the assessment orders pertaining to all the goods after 16th September 2016 that is post 101 Constitutional Amendment Act, 2016 - the explanation to section 26 of the MVAT Act introduced by the Maharashtra Tax Laws (Amendment and Validation) Act, 2019 does not take away the right of the assessee to file an appeal without statutory deposit in respect of the orders passed for the assessment year prior to 15th April, 2017. The said explanation also does not nullify the decision of the Division of this Court of Nagpur Bench in case of M/s. Anshul Impex Private Ltd. Thus, it is declared that the explanation inserted in 2019 amendment w.e.f. 15th April, 2017 would apply to those orders which are passed after 15th April, 2017and not to the prior orders. All earlier orders are governed by the original provisions of Section 26(6) and not by the amendment. Both the provisions i.e. old Section 26(6) and the amendment introduced by Sub Section 6A, 6B and 6C to Section 26 and the explanation thereto will apply and co-exist. Application disposed off.
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2022 (7) TMI 607
Deletion of penalty levied under Section 42(5) of the OVAT Act - illegality committed by the fora below in levying tax on the uncollected value added tax amount by the Opposite Party-dealer or not - Section 42(5) of the OVAT Act - HELD THAT:- The question is whether there is any discretion in the STO not to impose the penalty under Section 42 (5) of the OVAT Act? In this context, it may be noticed that this Court in M/s. National Aluminium Company Ltd. v. Deputy Commissioner of Commercial Taxes [ 2021 (3) TMI 1024 - ORISSA HIGH COURT ] noticed the distinction between the penalty imposable under Section 43(2) of the OVAT Act and the default penalty that stands attracted under Section 42(5) of the OVAT Act where it was held that The Court notes that under Section 42 (5) of the OVAT Act the penalty levied is equal to twice the amount of tax assessed under Section 42(3) or 42(4) pursuant to an audit assessment - There is no discretion with the Assessment Officer (AO) to reduce this amount of penalty. In the present case, there is no manner of doubt that the assessment was as a result of the AVR and was made under Section 42(4) of the OVAT Act. The consequence of the penalty attracted under Section 42(5) of the OVAT Act was automatic - It will be straightway noticed that the very wording of Section 42 (5) indicates that once as assessment is completed under Section 42(4) of the OVAT Act, the penalty leviable under Section 42(5) automatically follows. There is no discretion in the STO unlike the penalty imposable under Section 43(2) of the OVAT Act. The Court is of the view that in the present case the Tribunal erred in deleting the penalty imposable on the dealer under Section 42(5) of the OVAT Act, particularly since it came to the conclusion that the levy of tax on the uncollected VAT amount by the dealer was not excusable and upholding the orders of the STO and the JCST in that regard. Consequently, the question framed is answered in the affirmative i.e. in favour of the Department and against the Dealer. The revision petition is allowed.
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2022 (7) TMI 606
Seeking a direction to the respondents to refund a sum of Rs.21,55,781/- along with interest due thereon @ 1.25% per month in terms of Clause (c) of Sub-Rule (8) of Rule 35 of the APVAT Rules - HELD THAT:- It is to be noted here that as per Section 38 (1)(a) of the APVAT Act, 2005, a refund is to be made within 90 days from the date of claim made by the dealer. As stated above, the claim was made nearly a year. But, no amount has been released or credited to the account of the petitioner. The plea urged by the respondents is that they are awaiting fund clearance for refund of the amount. The Writ Petition is disposed of directing the respondents to refund the amount which the petitioner is entitled to with interest calculated therein as per the provisions of Section 38 (1)(a) of APVAT Act, 2005 r/w. Sub-Section 6 of APVAT Rules, 2005, within a period of three (3) months from the date of receipt of this order. There shall be no order as to costs.
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