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TMI Tax Updates - e-Newsletter
July 21, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Valuation - The additional discount reimbursed by M/s. Castrol, is liable to be added to the consideration payable by the customers or dealers to the appellant. The appellant is liable to pay GST at the applicable rate. - M/s. Castrol is issuing commercial credit notes, hence are not eligible to reduce their original tax liability. Thereby the appellant will not be liable to reverse the ITC attributable to the commercial credit notes issued to them by M/s. Castrol. - AAAR
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Refund of GST - Allegation of fake input tax credit - petitioner was unable to discharge its GST liability in the third half of the year 2020-21 due to financial constraints - It is settled law that a petitioner who files a petition invoking the extra ordinary writ jurisdiction has to come to Court with clean hand. Further, a petitioner who seeks equity must do equity. - HC
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Review application - Permission to carry forward of unutilized CENVAT credit of duty paid - transitional credit - the judgment passed in case of Adfert Technologies Pvt. Ltd. also related to the assessees, who could not file the prescribed statutory Form, i.e. TRAN-I within stipulated time for carrying forward their accumulated ITC, and hence the present application is an effort to re-agitate the entire issue, which is impermissible in review jurisdiction. - HC
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Maintainability of petition - availability of alternative remedy of appeal - Detention of seized goods - In the case on hand, the order is passed under Section 129 of the CGST Act and the goods seized is Arecanut and it is not in respect of any documents. Therefore, the petitioner has an alternative and efficacious remedy of appeal under Section 107 of the CGST Act. - HC
Income Tax
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Exemption u/s 54F - disallowance being long term capital gain on sale of plot - LTCG - section 54F nowhere envisages that the sale consideration obtained by assessee from the original capital asset is mandatorily required to be utilized for purposes of meeting the cost of the new asset and where the investment made by assessee, although not entirely sourced from capital gain, but, was within stipulated time and more than the capital gain earned by him, the assessee was entitled to exemption under section 54F. - AT
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Denial of tax exemption computation u/s 11 - taxability of income at maximum marginal rate, as per proviso to section 164(2) - interest free loans to interested persons - We are of the considered view that the assessee is entitled for exemption u/s11 of the Act in respect of total income for the assessment years 2012-13 and 2013-14 because there is no violations as referred to u/s.13 (1)(c) r.w.s 13(2) of the Act - AT
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Nature of expenditure - Lease hold improvement expenditure - expenses incurred on design and technical consultancy towards improving the exisiting product in the same line of business - Revenue or capital expenditure - As such, it cannot be held as expenditure incurred in the ordinary course of carrying day to day business of assessee. On the other hand, it is for deriving enduring benefit in the long run business plan. - Being so, we hold that the expenditure is in the capital field and to be considered as not allowable. On other hand, the assessee is entitled only for depreciation at applicable rate. - AT
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Rectification u/s 154 - Exemption u/s 11(2) denied - assessee has filed Form no.10 manually - what could not be done by the assessee directly, cannot be achieved indirectly. The assessee in this case has filed appeal against the order u/s. 154 to challenge the intimation order u/s. 143(1), though there was no appeal against the order u/s. 143(1) passed by the CPC. Being so, we are not in agreement with the ld. AR for the assessee so as to exempt the assessee in filing Form 10 manually before the jurisdictional AO. Accordingly, this ground of the assessee is rejected. - AT
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Addition u/s 56(2)(vii)(b) - difference between the stamp duty value and the actual purchase consideration - - DVO has given due consideration for the location of the property and other relevant evidences produced before him by the assessee. The DVO is expert in valuation of the property and as the valuation is based on scientific method, the same cannot be doubted. - AT
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Loss on sale of investment - bonafide loss or not? - As the assessee did purchase the shares from M/s. GRPL and have actually sold the shares and the shares have been subsequently transferred in the name HSIDC, we do not find any merit in the findings of the AO/ CIT(A). The loss incurred by the assessee on the said transaction is a bonafide loss and deserves to be allowed as such claimed by the assessee. - AT
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Addition on account of construction loss claimed - Assuming, the contention/finding of the AO is correct that impugned loss is not allowable for deduction in the year under consideration, then it is incumbent upon the AO to reduce the amount of income which was offered to tax by the assessee in the subsequent assessment year. If it is not done so, then the assessee will suffer to tax 2 times with respect to the same amount in 2 different assessment years which is not desirable under the provisions of law. - AT
Customs
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Conditions of achieving of positive Net Foreign Exchange (NFE) as prescribed in the Special Economic Zone Rules, 2006 - failure to carry out operations as per the requirement of law as prescribed - The fact remains that for the total block period of 5 years, the mandatory NFE obligation of the petitioner had remained in the negative - The petitioner has failed to show any perversity in the findings as recorded by the authorities - HC
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Levy of penalty u/s 117 of CA - non-filing of EGM/shipping bills as required under section 41 of the Customs Act, 1962 - problem of EGM errors which hamper IGST refund processing - In the present case, on receiving notice from department, the appellant has immediately rectified the defect. There is no allegation of continued non-compliance - the penalty imposed is unwarranted - AT
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Levy of late fee charges - delay in filing the bill of entry - sufficient reason for delay in filing the bill of entry was shown or not - Since necessary amendments have to be made in the shipping bill which has to be filed along with necessary documents by the new purchaser, the bill of entry could be filed only after some delay - the late fee imposed are not warranted - AT
VAT
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Rectification of mistake - mistake apparent on the face of record or not - it cannot be stated that non-taking of notice of Email on 25.04.2021 as amounting to violation of principles of natural justice requires re-assessment order to be set aside on that sole ground, when there has been substantial adherence to the principles of natural justice - where error is on the basis of wrong declaration by the petitioner admittedly that has crept in declaration in VAT Form 100 form with respect to sale declaration of November, 2016, the said aspect is kept open to be considered in a substantive remedy of appeal, and no ground is made out for interference in these proceedings. - HC
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Misconduct under Rule 3 of Karnataka Civil Services (Conduct) Rules, 1966 - registration certificate issued without proper verification - Very contents of the reply submitted by respondent reveals that he is aware of loss suffered by State. As respondent admitted loss caused to the State, there is no merit in the observation that loss caused to the State was not established. - HC
Case Laws:
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GST
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2021 (7) TMI 789
Levy of GST - Valuation - supply of Castrol brand Industrial and automotive lubricants bearing HSN code 2710 - discount provided by M/s. Castrol to their dealers through the appellant - amount received as reimbursement of discount or rebate provided by M/s. Castrol as per written agreement between the Principal and their distributors - reversal of proportionate input tax credit - amount shown in the commercial credit not issued to the appellant by M/s. Castrol - applicant paying tax and availing credit received by them from the Principal Company Castrol or their stockists. Whether the discount provided by M/s. Castrol to their dealers through the appellant attracts any tax under GST? - HELD THAT:- Section 15 of the CGST Act states that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of supply are not related and price is the sale consideration for the supply - the discount on the value of supply can be allowed only if the discount granted is in agreement with the provisions of Section 15(3) of the CGST Act, 2017. First scheme of the discount is the one that is known at or prior to the point of time of supply, where the quantum of discount is indicated/reflected in the invoices and the GST is paid on the discounted amount of transaction value. Another scheme of discount offered is on post sale basis, wherein the amount of discount may be known at the point of supply but may not be quantified; or some discounts may not even be known at the time of supply of goods. In both these post sale discounts, discounts are extended through credit notes. These post sale discounts therefore are subjected to GST at the time of supply - the additional discount reimbursed by M/s. Castrol, is liable to be added to the consideration payable by the customers or dealers to the appellant. The appellant is liable to pay GST at the applicable rate. Whether the amount shown in the commercial credit not issued to the appellant by M/s. Castrol attracts proportionate reversal on Input Tax Credit? - HELD THAT:- M/s. Castrol is issuing commercial credit notes, hence are not eligible to reduce their original tax liability. Thereby the appellant will not be liable to reverse the ITC attributable to the commercial credit notes issued to them by M/s. Castrol. Is there any tax liability under GST laws on the appellant for the amount received as reimbursement of discount or rebate provided by M/s. Castrol as per written agreement between the Principal and their distributors? - HELD THAT:- The additional discount in the form of reimbursement of discount or rebate, received from M/s. Castrol over and above the invoice value is liable to be added to the consideration payable by the customer to the appellant for the purpose of arriving at the value of supply of the appellant to the customer as per provisions of Section 15 of the CGST/SGST Act. Further, the customer, if registered, would only be eligible to claim ITC of the tax charged by the appellant only to the extent of the tax paid by the said customer to the appellant. In view of second proviso to Section 16(2) of the CGST/SGST Act.
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2021 (7) TMI 787
Refund of GST - Allegation of fake input tax credit - petitioner was unable to discharge its GST liability in the third half of the year 2020-21 due to financial constraints - Rule 90 of Central Goods and Services Tax Rules - HELD THAT:- It is settled law that a petitioner who files a petition invoking the extra ordinary writ jurisdiction has to come to Court with clean hand. Further, a petitioner who seeks equity must do equity. In commercial/appellate jurisdiction, a Court may have to grant relief if all the ingredients of a statutory provision are satisfied. But this is not so in a writ jurisdiction where relief may be denied to a petitioner on the ground that he has not approached the Court with clean hands, even when he satisfies all the ingredients of a statutory provision. In the present case, none of the findings given in the impugned order like premises of the petitioner being found locked during inspection; the partner of the petitioner not responding to the Summons; and L1 L2 suppliers having issued fake and bogus invoices and passed on fake Input Tax Credit, have been dealt with leave alone challenged. Consequently, this Court is of the view that it would not be appropriate to entertain the present writ petition. Petition dismissed.
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2021 (7) TMI 782
Review application - Permission to carry forward of unutilized CENVAT credit of duty paid - transitional credit - carry forward denied on account of non-filing of prescribed statutory Form i.e. TRAN-1 by the stipulated last date - HELD THAT:- The applicants very fairly concedes that even the appeal filed by the Revenue in ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] against the main / final order, stands dismissed vide UNION OF INDIA ORS. VERSUS ADFERT TECHNOLOGIES PVT. LTD. [ 2020 (3) TMI 188 - SC ORDER] passed by the Hon'ble Supreme Court. That apart, the judgment passed in case of Adfert Technologies Pvt. Ltd. also related to the assessees, who could not file the prescribed statutory Form, i.e. TRAN-I within stipulated time for carrying forward their accumulated ITC, and hence the present application is an effort to re-agitate the entire issue, which is impermissible in review jurisdiction. Review Application is hereby dismissed.
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2021 (7) TMI 780
Constitutional Validity of Rule 117 of Central Goods and Services Tax Rules - time limit for filing TRAN-1 - input tax credit - Section 140 and 174 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The permission is granted to the assessee to file TRAN-1 by affording an other opportunity. The respondents are directed to permit the petitioner to file / revise TRAN-1 electronically on or before 30.07.2021 - Petition allowed.
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2021 (7) TMI 777
Maintainability of petition - availability of alternative remedy of appeal - Detention of seized goods - Arecanut - difference in the quantity as per the invoice and the quantity as per the PV - any notice or an opportunity to explain the case was not provided - principles of natural justice - HELD THAT:- It is very clear from Section 107(1) of CGST Act that any person aggrieved by any decision can file an appeal. Section 121 of CGST ACt bars any appeal against the order or decision pertaining to seizure or retention of books of accounts, register or other documents. In the case on hand, the order is passed under Section 129 of the CGST Act and the goods seized is Arecanut and it is not in respect of any documents. Therefore, the petitioner has an alternative and efficacious remedy of appeal under Section 107 of the CGST Act. The writ petition is disposed off reserving liberty to the petitioner to file an appeal under Section 107 of the CGST Act before the competent authority.
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2021 (7) TMI 755
Withdrawal of appeal - revocation of GST registration by the proper officer - HELD THAT:- In response to the Personal hearing letter, the appellant vide their letter C.No. Nil dated 08.06.2021 received in this office on 10.06.2021 submitted therein that the jurisdictional officer has revoked the cancellation of registration and subsequently all the pending returns are filed till date. Further, they stated that there is no issue remaining in dispute, so it is requested to kindly accept the request for withdrawal of the appeal and oblige. In view of the request letter of the appellant dated 08.06.2021 regarding withdrawal of appeal due to revocation of GST registration by the proper officer in the instant matter - the appellant are allowed to withdraw the appeal - appeal dismissed as withdrawn.
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Income Tax
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2021 (7) TMI 786
Deduction u/s 80IA - lease rent income received from letting out modules of Software Technology park to various lessees would constitute income from business - HELD THAT:- As decided in M/S. TIDAL PARK LTD. [ 2021 (7) TMI 302 - MADRAS HIGH COURT ] against the Revenue and in favour of the assessee income derived from letting out of the property with all amenities and facilities would be income from business and cannot be assessed either as income from house property or as income from other sources. - Decided in favour of assessee.
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2021 (7) TMI 783
Assessment of trust - Exemption u/s 11 - entitled to claim depreciation while computing the income of the appellant u/s. 11 - HELD THAT:- Issue decided against the Revenue and in favour of the Assessee as relying on THE ANJUMAN - E - HIMAYAT - E - ISLAM VERSUS THE ASSISTANT DIRECTOR OF INCOME TAX, EXEMPTIONS - IV, CHENNAI. [ 2021 (4) TMI 1176 - MADRAS HIGH COURT] .
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2021 (7) TMI 775
Addition u/s 56(2)(viib) - valuation of shares - assessee company has received excess sum of ₹ 110 per share on 254166/- shares issued during the year - HELD THAT:- CIT(A) has not found any defect in the valuation report so filed before him. It is also his submission that the fair market value of the equity shares at the time of issue of share was based on the market value of the land as determined by the registered valuer comes to ₹ 137/-, whereas the assessee has issued the shares of ₹ 10/- each at a premium of ₹ 110/- only which is much less than the market value of the shares. As submission of the assessee that the equity shares so issued at a premium were subscribed by the family members of the director and therefore no addition u/s 56(2)(viib) of the Act is called for. We find the assessment in the instant case was completed u/s 144 of the Act due to persistent non-compliance of the assessee to the statutory notices issued by the AO. Although, the assessee has filed certain documents in shape of additional evidences before the learned CIT(A), however, the arguments made before the Tribunal were not made before the learned CIT(A). The argument of the assessee that the shares were subscribed by the family members of the Directors and their relatives was never argued before the learned CIT(A). Since, the full details were not filed before the AO and the powers of the AO during the remand proceedings are limited and the various arguments and case law decisions cited before us were not cited before the lower authorities, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate its case. The assessee is also hereby directed to appear before the AO and produce all the relevant details justifying the issue of shares of face value of ₹ 10/- at a premium of ₹ 110/-.AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose.
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2021 (7) TMI 774
Exemption u/s 54F - disallowance being long term capital gain on sale of plot - whether the ld. CIT(A) is correct in holding that as per the provisions of section 54F, the investment in the new asset has necessarily to be made from the net consideration received on the sale of the original asset and not from any other source? - HELD THAT:- In CIT vs. Kapil Kumar Agarwal [ 2015 (12) TMI 1075 - PUNJAB AND HARYANA HIGH COURT] it has been held that section 54F nowhere envisages that the sale consideration obtained by assessee from the original capital asset is mandatorily required to be utilized for purposes of meeting the cost of the new asset and where the investment made by assessee, although not entirely sourced from capital gain, but, was within stipulated time and more than the capital gain earned by him, the assessee was entitled to exemption under section 54F. The assessee s claim for exemption under section 54F of the Act is allowed and the disallowance being long term capital gain on sale of plot, is deleted. Deemed dividend u/s 2(22)(e) - HELD THAT:- It is evident that there was an opening deposit/loan of the assessee, Shri Sudhir Srivastava, in the books of M/s Sun Eye Hospital Laser Center Private Limited. The assessee has given an advance to M/s Sun Eye Hospital Laser Center Private Limited, Lucknow. As rightly contended, there cannot be any addition as per section 2(22)(e). Accordingly, ground Nos.4 5 are accepted and the addition to the extent for deemed dividend under section 2(22)(e) of the Act is deleted.
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2021 (7) TMI 773
Denial of tax exemption computation u/s 11 - taxability of income at maximum marginal rate, as per proviso to section 164(2) - interest free loans to interested persons - AO had denied the benefit of exemption u/s.11 for the reason that during the year under consideration, the income of the trust has been directly or indirectly allowed for the benefit of persons specified in section 13(3) - assessee has not filed return of income on or before due date specified u/s.139 (1) but said returns have been filed on or before due dates specified u/s.139(4) - only allegation is that the trust has given loans to two persons without any security or interest and further said persons are in the nature of managers by whatever name called as referred to u/s 13(3)(cc) of the Act, and thus, said payments violates sections 13(1)(c ) - HELD THAT:- It is clear that interest free advance given to two individuals is not a beneficial / gracious payment made to persons referred to u/s 13(3) of the Act and thus, the same cannot be treated as payment in contravention to section13(1)(c) of the Act. As regards observations of the AO that the assessee has given benefit to the interested persons without any interest or security, we find that said finding of the AO is not on sound footing, because the AO has proceeded on the assumption that the assessee has lent the sum. The transactions between the trust and the consultants was under normal circumstances as a prudent businessman and hence question of charging interest or taking a security against such advance does not arise. Therefore, we are of the considered view that loans given to two consultants would not covered u/s 13(3)(cc ) and thus, not resulting in any benefit directly or indirectly to interested persons so as to attract provisions of section 13(1)(c) of the Act. Consequently, on this ground the benefit of exemption u/s.11 of the Act cannot be denied to the assessee for Asst. year 2012.13, 2013-14 and 2016-17 and 2017-18. Assessment years 2016-17 and 2017-18 AO has denied benefit of exemption u/s.11 of the Act to total income of the Trust on the ground that there is violation referred to u/s.13(1)(c) insofar as, loans given to two individuals - In order to get the benefit of accumulation of income u/s 11(2) of the Act, the assessee is required to file Form No.10 along with return of income before the due date specified u/s.139(1) of the Act. In this case, the assessee has filed Form No.10 electronically for assessment year 2016-17 on 17.10.2016, which is before the extended due date for filing the return of income. Similarly, the assessee has filed Form No.10 electronically on 30.10.2017, which is the extended due for filing the return of income for assessment year 2017-18. However, the assessee has not filed the return of income for both assessment years on or before due date for filing the return of income u/s 139(1) We are of the considered view that the assessee is entitled for exemption u/s 11 of the Act in respect of total income for the assessment years 2012-13 and 2013-14 because there is no violations as referred to u/s.13 (1)(c) r.w.s 13(2) of the Act. Hence, we direct the AO to allow exemption u/s 11 for Asst. year 2012-13 and 2013-14. As regards assessment years 2016-17 and 2017-18, insofar as exemption u/s.11 of the Act is concerned, the assessee is entitled for such exemption because there is no violations as referred to u/s.13(1)(c) of the Act. In this case, the assessee has given reasons for not filing return of income within due date specified u/s.139(1) of the Act, as per which the person in-charge of finance and accounts was suffering from chronic disease and was undergoing medical treatment. Further, due to the person s ill-health, the Trust could not finalize accounts within reasonable time which caused 5 months delay in filing return of income for the relevant assessment years. In our view reasons given by the assessee are bonafide, and hence, we are of the considered view that the authorities concerned are required to condone the delay in filing return of income. As per provisions of section 119(2b) Act, the authority competent to condone the delay in filing return of income is the Pr.CIT. Admittedly, the assessee has filed a petition before the competent authority for condoning the delay in filing return of income. In this case, although the assessee has not filed return of income on or before due date specified u/s.139 (1) of the Act, but said returns have been filed on or before due dates specified u/s.139(4) of the Act. The assessee has filed Form No.10 electronically on or before due date specified u/s.139 (1) of the Act. Insofar as non-filing of return of income u/s.139(1) of the Act, the assessee has moved a petition before the competent authority in terms of CBDT Circular No.6 of 2020 and such application is pending for disposal. Therefore, we are of the considered view that when the assessee has filed return of income on or before due date specified u/s.139 (4) of the Act and claimed accumulation of income by filing Form No.10 before completion of assessment, then the AO should not have rejected exemption claimed by the assessee for accumulation of income u/s.11 (2) of the Act. However, since the matter is pending before the competent authority i.e., Pr.CIT, Central-1 for condonation of delay in filing return of income, we are leaving the issue to the discretion of the authorities concerned for condoning the delay. We are of the considered view that the assessee is entitled for exemption u/s11 of the Act in respect of total income for the assessment years 2012-13 and 2013-14 because there is no violations as referred to u/s.13 (1)(c) r.w.s 13(2) of the Act. Hence, we direct the AO to allow exemption u/s 11 for Asst. year 2012-13 and 2013-14. As regards assessment years 2016-17 and 2017-18, insofar as exemption u/s.11 of the Act is concerned, the assessee is entitled for such exemption because there is no violations as referred to u/s.13(1)(c) of the Act. But, in respect of accumulation of income u/s.11(2) of the Act, we direct the AO to consider the issue after taking note of outcome of petition filed by the assessee before the Pr.CIT, Central-1 for condonation of delay in terms of CBDT Circular No.6 of 2020 and also by considering ratio laid down by the Hon ble Supreme Court in the case of CIT vs. Nagpur Hotel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT ] - Decided partly in favour of assessee statistically.
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2021 (7) TMI 772
Revision u/s 263 - Whether order passed by the AO is hit by provisions to section 263 of the Act or not? - AO has allowed benefit of section 11 12 of the Act to the trust, without appreciating fact that activity carried out by the assessee i.e micro financing is hit by proviso to section 2(15) and hence, entire income should be taxed as an AOP - HELD THAT:- The assessment order passed by the AO is neither erroneous nor prejudicial to the interests of revenue, because the AO has examined the issue at the time of assessment proceedings and has taken one of the possible view, which is supported by higher judicial forum and hence, the view taken by the AO cannot be held to be erroneous and prejudicial to the interests of revenue. Unless the view taken by the AO is unsustainable in law, there is no scope for the PCIT to term the assessment order passed by the AO is erroneous, insofar as it is prejudicial to the interests of revenue. As regards other two points questioned by the PCIT including consultation charges paid to trustees and also loan given to M/s. Viswas Promoters Ltd., Madurai, we are of the considered view that these two issues were not part of show cause notice issued by PCIT and hence, he does not have any power to examine issues other than those find place in show cause notice. Even otherwise, two issues questioned by the PCIT has already been examined by the Assessing Officer, which is evident from fact that the Assessing Officer has issued detailed questionnaire along with notice issued u/s.142(1) dated 13.07.2018, where he has called for details about payments made to related parties and also list of advances made to members. In response, the assessee has filed relevant details. AO after examining details filed by assessee, has accepted fact that activities carried out by the assessee are charitable in nature, which is not hit by proviso to section 2(15) of the Act. Therefore, we are of the considered opinion that the learned PCIT has erred in revising assessment order u/s. 263 of the Act. In this view of the matter and considering facts and circumstances of the case and also by following decision of Chennai Bench of the Tribunal in assessee s own case in [ 2017 (8) TMI 1640 - ITAT CHENNAI] - we are of the considered view that assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interests of revenue and hence, learned PCIT has erred in revising assessment order passed by the Assessing Officer u/s.263 - Appeal filed by the assessee is allowed.
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2021 (7) TMI 771
Nature of expenditure - Lease hold improvement expenditure - expenses incurred on design and technical consultancy towards improving the exisiting product in the same line of business - Revenue or capital expenditure - CIT(A) held that the expenditure of design and technical services incurred towards improving the existing product which has the effect of long-term or enduring benefit to the appellant and therefore, it needs to be capitalized as 'capital expenditure' - HELD THAT:- The assessee has been incurring this expenditure for improving existing products as well as developing of new products, thereby existing business from the existing customers has been increased as well as new additional customers added. It has also resulted in reduction in rejection on account of quality issues. As such, it cannot be held as expenditure incurred in the ordinary course of carrying day to day business of assessee. On the other hand, it is for deriving enduring benefit in the long run business plan. The other contention of the ld. AR is that to meet the matching principle, the company has capitalized 70% of R D expenditure under the head intangible assets and balance 30% has been claimed as revenue expenses by charging it to P L account. However, we observe that 70% shares of assessee company is acquired by M/s. Filtrauto, SA of France, as such the assessee charges only 30% of this expenditure to P L account and 70% of R D expenditure was considered as intangible assets by showing it in the balance sheet and it is not because of matching principle the expenditure was bifurcated as above. Being so, we hold that the expenditure is in the capital field and to be considered as not allowable. On other hand, the assessee is entitled only for depreciation at applicable rate. This ground of assessee is partly allowed for all the assessment years i.e., AYs 2013-14 to 2016-17.
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2021 (7) TMI 770
Addition on account of unaccounted money was invested by the assessee for purchase of property in J.P. Green, Greater Nodia - entries reflected in the loose papers - HELD THAT:- In the instance case, the property was in the name of elder brother of the assessee namely Shri Pradeep Kumar Gupta and his wife Smt. Seema Gupta, the price of ₹ 5.85 Cores mentioned in allotment letter is more than the amount of ₹ 5.65 crores mentioned in the seized documents and considering the fact that the document found in the premises of the assessee does not relate to him but his brother and his wife and further considering the fact that the entire payment has been made through banking channels by his brother and his wife, therefore, in view of the detailed discussion by the learned CIT(A) while deleting the addition, we do not find any infirmity in the same. Accordingly, the order of the learned CIT(A) is upheld and the ground raised by the Revenue is dismissed.
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2021 (7) TMI 769
Rectification u/s 154 - Exemption u/s 11(2) denied - assessee has filed Form no.10 manually - exemption u/s.11(2) was rejected by the CPC while processing return u/s.143(1) of the Act on the reason that assessee has not electronically filed Form 10 along with return of income - HELD THAT:- As per provisions of Rule 17 r.w. Rule 12(2) of the Income-tax Rules, 1962, Form 10 was required to be furnished electronically. Since the assessee has not filed Form 10 electronically, the claim of assessee for exemption u/s.11(2) was denied. The assessee has even failed to file Form 10 manually within the stipulated time. As been filed with the jurisdictional AO along with copy of Board Resolution while submitting the request for rectification u/s.154 on 11.1.2018, though it was dated 25.8.2015. The assessee trust has not filed Form 10 with the jurisdictional AO at the time of filing return of income. According to the assessee, it has not filed Form 10 with the jurisdictional AO as the ACIT, Raichur has informed the assessee that the same is not required to be filed before his office, but has to be filed online in the Income Tax portal. Whereas, in the Income Tax portal the facility to file Form 10 online was not available. Thus it was not filed along with return of income and filed for the first time while submitting the rectification letter u/s. 154 on 11.1.2018. It is an admitted fact that the assessee has filed Form 10 manually before the AO within the due date of filing of return of income for the AY 2015- 16. However, these two assesses failed to file Form 10 electronically, then the AO denied exemption u/s. 11 on the reason that Form 10 was not electronically filed. In such circumstances, the Tribunal held that since the assessee has filed Form 10 manually before the due date of filing of return of income u/s. 139(1) and the filing of Form 10 electronically was on account of amendment of Rule 17 w.e.f. 1.4.2016. In the present case, the assessee has not filed Form 10 manually before the due date of filing return of income u/s. 139(1) of the Act. Being so, the decisions relied on by the ld. AR supra are of no assistance to the assessee. On this count, in our opinion, it is mandatory on the part of assessee to file Form 10 manually though not electronically before the due date of filing of return of income with the jurisdictional AO. Since the assessee has even failed to file Form 10 manually, the assessee cannot seek to rectify the order of intimation passed u/s. 143(1) in the petition filed u/s. 154 on 11.1.2018. Accordingly, the first ground of assessee is dismissed. Intimation order u/s. 143(1) though there was no appeal against the order u/s. 143(1) - In the present case, the assessee has not filed Form 10 manually within the stipulated time i.e., before the due date for filing return of income and therefore the assessee cannot avail the benefit of CBDT Circular to cover its own mistake. The appeal of the assessee is not against the order of AO passed u/s. 143(1), on the other hand it is against the proceedings u/s.154 of the Act. Being so, these two orders stand on a different footing. In other words, what could not be done by the assessee directly, cannot be achieved indirectly. The assessee in this case has filed appeal against the order u/s. 154 to challenge the intimation order u/s. 143(1), though there was no appeal against the order u/s. 143(1) passed by the CPC. Being so, we are not in agreement with the ld. AR for the assessee so as to exempt the assessee in filing Form 10 manually before the jurisdictional AO. Accordingly, this ground of the assessee is rejected. As rightly held by the CIT(Appeals), this issue is not emanating from the order passed u/s.154 of the Act. The assessee cannot use proceedings u/s. 154 to file appeal against the order passed u/s. 143(1) of the Act. Accordingly, we have no hesitation in rejecting this ground of assessee.
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2021 (7) TMI 767
Addition u/s 69B - un-explained investment addition(s) in the nature of on-money payments involving varying sums of money, stated to be based on the alleged incriminating material found/seized during the course thereof - HELD THAT:- This tribunal s co-ordinate bench s order in the assessee s group concern s appeal [ 2021 (7) TMI 718 - ITAT HYDERABAD ] has already decided the very unexplained investment addition issue in assessee s favour.
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2021 (7) TMI 765
Addition u/s 56(2)(vii)(b) - assessee had purchased four immovable properties far below the value determined by the stamp valuation authorities for the purposes of charging stamp duty - difference between the stamp duty value and the actual purchase consideration - HELD THAT:- From perusal of Section 56(2)(vii)(b) of the Act, it reveals that the provision is applicable on purchase of immovable property, if the consideration is less than the stamp duty value of the property by an amount exceeding ₹ 50,000/-. It is also mentioned that in such cases, the difference between stamp duty valuation of the property and actual consideration shown will be treated as 'income from other sources'. The above conditions are squarely applicable in the case of the assessee. DVO has given due consideration for the location of the property and other relevant evidences produced before him by the assessee. The DVO is expert in valuation of the property and as the valuation is based on scientific method, the same cannot be doubted. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. - Decided against assessee. Addition u/s 68B - whether there are well explained sources of investigation made by the assessee - HELD THAT:- No details regarding earlier payments given to M/s Narsing Construction was provided either during assessment proceeding or appellate proceedings. The nature and source of earlier payment to M/s Narsingh Constructions remained unexplained. In the assessment order, the AO has specifically pointed out that an agreement was executed between the parties under the name 'agreement for receiving payment in lieu of cheque', which indicates that cash was received by Shri Banna Ram, the seller of the property, when the cheque issued was dishonored. As per this agreement, cash was paid to the seller by the assessee on 11.12.2013. Thus, there is no doubt that the payment in lieu of dishonored cheque was made in cash by the assessee on 12.11.2013. The claim of the assessee regarding payment through M/s Narsingh Constructions is not established. As far as remaining cash payment is concerned, the AO himself granted benefit to the extent on the basis of withdrawal from bank account. No new facts or circumstances have been brought before us by the AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Addition u/s 69C - assessee paid registration charges in respect of properties - HELD THAT:- AO examined the claim regarding source for payment of registration charges and correctly pointed out that the claim regarding cash received from M/s Shree PVJ Corporation is not correct. The assessee also accepted the above fact during the appellate proceedings before the ld. CIT(A). The assessee also failed to bring any explanation regarding source of making expenditure for registration expenses. No new facts or circumstances have been brought before us by the ld AR in order to controvert or rebut the factual findings recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Appeal of the assessee is dismissed.
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2021 (7) TMI 764
Reopening of assessment u/s 147 - AR has assailed the reassessment proceedings on the ground that original return was scrutinized u/s 143(3) and the case was reopened beyond four years - Bogus purchases - HELD THAT:- There is no allegation by Ld. AO in the recorded reasons to the fact that there was any failure on the part of the assessee during scrutiny assessment. We do not concur with the same since assessment was framed u/s 143(3) on 18/12/2009 whereas search action on tainted group took place on 03/10/2013 which is a subsequent event. The Ld. AO was clinched with tangible material arising out of a subsequent event. This material established possible escapement of income in the hands of the assessee. Therefore, nothing more was required at this stage to reopen the case of the assessee. Ground No.1 stands dismissed. Bogus purchases - Purchases made by the assessee was to undergo strict rules regulations as well as verification by customs authorities. Not only this, the utilization of the same while exporting the goods was also to be demonstrated by the assessee. There is complete one-to-one corelation of the purchases vis- -vis diamonds utilized in exports made by the assessee. The documentary evidences as furnished by the assessee as elaborated by us in para-5 duly support the said propositions. The assessee s books of accounts have duly been audited as per Income Tax Rules and there are no adverse remarks by the Tax Auditor with respect to purchases, utilization of raw material, sale or closing stock. Upon perusal of the Tax Audit Report, it could be gathered that the assessee has maintained complete quantitative details of raw materials, work-in-progress as well as finished goods sold by it. Upon perusal of financial statements, it could be observed that the assessee has reflected Net profit Rate of around 6% in this year as against net Profit Rate of 5.85% in immediately preceding year. We are of the considered opinion that the onus casted upon assessee to substantiate the purchases was duly discharged and the onus was on revenue to dislodge the assessee s submissions as well as documentary evidences. The whole basis of addition is statement made by the tainted group during search operations. The opportunity to cross-examine the same has never been provided to the assessee. It could be concluded that the additions are made merely on the basis of allegations without there being any cogent material in the armory of the revenue. Therefore, considering the facts of the case, we are inclined to delete the impugned additions - Decided in favour of assessee partly.
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2021 (7) TMI 761
Exemption u/s 11 read with section 12AA - Cancellation of registration u/s 12AA - HELD THAT:- In the present case, the assessing officer denied the benefit of exemption only on the ground of cancellation of registration u/s 12AA without assigning any further reason. In the light of the order of the Coordinate bench of this Tribunal [ 2014 (8) TMI 305 - ITAT DELHI] and it being upheld by the Hon ble High Court [ 2017 (7) TMI 1388 - ALLAHABAD HIGH COURT] , the very basis of denial of benefit u/s 11 of the Act, as adopted by the assessing officer, stands vitiated and non-existent. We uphold the order of the CIT (A) allowing the claim of exemption u/s 11 of the Act. Appeals of the Department stand dismissed.
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2021 (7) TMI 760
Disallowance being deduction claimed u/s. 35(1)(ii) in respect of donation - HELD THAT:- The issue in the appeal of the assessee is squarely covered by several judgments passed by Hon'ble Tribunal in the case of S.G. Vat Care P. Ltd. [ 2019 (1) TMI 1694 - ITAT AHMEDABAD] in the case of the Thakkar Govindbhai Ganpatlal HUF [ 2020 (2) TMI 31 - GUJARAT HIGH COURT] , in the case of H.N. Metal Corporation [ 2020 (1) TMI 1477 - ITAT AHMEDABAD] and in the case of Bipin Prabhudas Shah HUF [ 2020 (2) TMI 1456 - ITAT AHMEDABAD] and case of Thakkar Govindbhai Ganpatlal HUF [ 2020 (2) TMI 31 - GUJARAT HIGH COURT] . DR is fair enough not to controvert these undisputed facts that identical issue on similar fact has been adjudicated in favour of the assessee by the aforesaid referred judicial pronouncements.
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2021 (7) TMI 759
Loss on sale of investment - bonafide loss or not? - long term capital loss or business loss - HELD THAT:- The assessee was owner of the shares on the date of transfer by it. It is also not in dispute that the assessee had held the investment for more than 12 months. It is not the case of the revenue that the entire purchase and sale of shares transaction is a sham transaction - When the statute has provided specific provisions then the same have to be construed strictly and must not extend beyond requirements of the language used. For this proposition we draw support from the decision of Hon ble Supreme Court in the case of Gillanders Arbuthnot Company Ltd.. [ 1968 (9) TMI 49 - CALCUTTA HIGH COURT] No adverse inference have been drawn by either of the lower authorities in so far as the value of share of the company M/s. GRPL as on the date of transfer is concerned - As the assessee did purchase the shares from M/s. GRPL and have actually sold the shares and the shares have been subsequently transferred in the name HSIDC, we do not find any merit in the findings of the AO/ CIT(A). The loss incurred by the assessee on the said transaction is a bonafide loss and deserves to be allowed as such claimed by the assessee. - Decided in favour of assessee.
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2021 (7) TMI 758
Exemption u/s 11 - Applicants registration granted u/s 12AA of the Act had been cancelled by the Ld.Pr.CIT - Denial of natural justice - Assessee seeking stay of the operation of the order of the Ld. Pr.CIT as the order had been passed in violation to the principles of natural justice without providing opportunity of being heard and without providing sufficient time to rebut the allegations made in the show cause notice - HELD THAT:- Prima facie case has been made out by the applicants of grave injustice being done to them by the passing of the impugned orders of the Ld.Pr.CIT u/s 12AA(3)(4) of the Act ,to which the present stay applications pertain. Prima facie the applicants have demonstrated denial of fair hearing by the Ld.Pr.CIT while passing the orders cancelling registration pointing out that despite seeking time to file submissions on merits the Ld.Pr .CIT passed his order without affording any such opportunity. .DR was unable to make any strong arguments to rebut the same only pointing out to the opportunity afforded when replies were filed by the assessee raising jurisdictional objections .The said orders undoubtedly have serious adverse implications on the pending assessment proceedings consequent to search action on the assessee. In the absence of registration u/s 12AA of the Act, the income of the assessee no longer remains eligible for exemption u/s 11 and 12 of the Act and further the AO may have his own limitations in conducting a fair investigation on the search material before him when the Ld.Pr.CT on the basis of the very same material has found the activities of the assessee not eligible for registration. Further noting the fact that the limitation for passing the assessment order is 30/09/2021, we are of the view that interest of all would be subserved by an early hearing of the appeals against order of the Ld.Pr.CIT in which the present applications have been filed. The present stay applications relate are directed to be fixed for hearing on 07.07.2021
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2021 (7) TMI 757
Addition on account of construction loss claimed - Matching with Revenue - AO rejected the contention of the assessee i.e. the loss claimed in the year under consideration was offered to tax in the subsequent year when bungalows constructed by the assessee got regularized by the competent authority, on the reasoning that the loss was claimed in the year under consideration which is not permissible under the provisions - HELD THAT:- Admittedly, the construction loss claimed by the assessee in the year under consideration was offered to tax in the subsequent assessment years. This finding of the CIT (A) has not been controverted by the DR at the time of hearing. Thus it can be inferred that, if the amount of loss claimed by the assessee in the year under consideration is disallowed then such disallowance/addition will lead to the double addition which is not desirable under the provisions of law. Assuming, the contention/finding of the AO is correct that impugned loss is not allowable for deduction in the year under consideration, then it is incumbent upon the AO to reduce the amount of income which was offered to tax by the assessee in the subsequent assessment year. If it is not done so, then the assessee will suffer to tax 2 times with respect to the same amount in 2 different assessment years which is not desirable under the provisions of law. Accordingly in the absence of any adverse finding by the AO for the adjustment of the construction loss claimed by the assessee in the year under consideration with the income offered in the subsequent year, we are not convinced with the order of the AO. Accordingly, we do not find any infirmity in the order of the learned CIT (A). Hence, we uphold the same. Thus the ground of appeal of the Revenue is dismissed.
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2021 (7) TMI 756
Transfer pricing adjustments - providing product safety testing certification services and IT enabled services to its subsidiary/ associate enterprises situated at USA - HELD THAT:- With regard to Transfer Pricing adjustment made in respect of Certification Service Segment, an identical issue was examined by the co-ordinate bench in the assessee s own case, and the matter was restored back to the file of AO/TPO with a set of directions for examining is afresh. - Matter restored back to the file of AO/TPO. TP adjustment made in respect of ITES segment. - selection of comparable - HELD THAT:- We notice that the co-ordinate bench has directed exclusion of M/s Infosys BPO Ltd and remanded the remaining four comparable companies to the file of AO/TPO. Consistent with the view taken in the above said case, we direct exclusion of M/s Infosys BPO Ltd and remand the remaining four comparable companies to the file of AO/TPO with similar directions. - Further, AP/TPO directed to include the M/s Crystal Voxx Ltd as a comparable company.
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Customs
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2021 (7) TMI 781
Conditions of achieving of positive Net Foreign Exchange (NFE) as prescribed in the Special Economic Zone Rules, 2006 - failure to carry out operations as per the requirement of law as prescribed - non-fulfilment of obligation on the export turnover and of the NFE as promised - furnishing of APR s giving incorrect information - case of the petitioner necessarily is that the entire block period of 5 years ought to have lapsed and only then a show cause notice should have been issued for the entire period, for non-fulfilling the NFE conditionsof the petitioner necessarily is that the entire block period of 5 years ought to have lapsed and only then a show cause notice should have been issued for the entire period, for non-fulfilling the NFE conditions. HELD THAT:- Annexure-I prescribes that a show cause notice can be issued if the unit continues to be Net Foreign Exchange negative by the end of 3rd year and if the negative performance continues in the 5th year, the Development Commissioner is entitled to initiate penal action as per the provisions of Rule 25. Thus, the petitioner s contention that the entire 5 years period be taken into consideration, is in the teeth of such statutory provisions as contained in Annexure I of the Special Economic Zone Rules, 2006. Although this submission is labeled as a legal submission, it appears to be an argument in desperation and in the present facts an unwarranted hairsplitting. It was for such reason that this argument was never advanced before the authorities below. In any event, it is not the petitioner s case that exclusion of the period beyond 4 years in any manner could have brought about a different situation namely of a position that the petitioner demonstrating that it had complied with the prescribed NFE obligations for the block period. The fact remains that for the total block period of 5 years, the mandatory NFE obligation of the petitioner had remained in the negative - It cannot be overlooked that the show cause notice was issued to the petitioner only after completion of 5 years block period which came to an end on March 31, 2015, as the show cause notice itself was issued on June 24, 2015. Also the original authority has recorded the findings of fact that the petitioner was wrongly carrying forward the cumulative NFE of the earlier block in the APR to the current block to show positive Cumulative NFE, which was to suppress the correct negative position. Such conduct of the petitioner as correctly observed by the authorities was objectionable. The petitioner has failed to show any perversity in the findings as recorded by the authorities - petition dismissed.
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2021 (7) TMI 768
Maintainability of appeal u/s 129(A) of the Customs Act, 1962 - Provisional release of imported goods - Section 110 A of the Customs Act,1962 - HELD THAT:- The appellants have been cooperating with the investigation and have deposited substantial sums during the investigation only before the passing of any formal adjudicating order confirming the duty. Under the circumstances, it is found that the appellant has established his bona fides. The appellants have requested to set aside the conditions of provisional release. The ends of Justice would be met if the amount of Bank Guarantee to be given is modified suitably, while keeping the condition of Bond as it is - Bank amount for submission of Guarantee is fixed at ₹ 5,00,000 in place of ₹ 30,00,000 and the amount of ₹ 65,79,899/ fixed for Bond remains unaltered - appeal allowed in part.
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2021 (7) TMI 763
Levy of penalty u/s 117 of CA - non-filing of EGM/shipping bills as required under section 41 of the Customs Act, 1962 - problem of EGM errors which hamper IGST refund processing - HELD THAT:- Section 41 thus cast duty upon the person in-charge of conveyance/carrier to file the EGM in relation to the goods which are exported. In case of any omission or error in filing documents, the law provides for opportunity to correct the same. It has to be seen that the proper officer of the Customs has to first verify whether the goods have reached the port. So also, the proper officer has to verify whether the documents regarding the export have been filed including the shipping bills. Only after such verification, the let export order or out of charge is issued. If LEO was issued without EGM being filed, it would imply that the proper officer has endorsed the fact of non-filing of EGM/shipping bill, which may be due to oversight on his part. In any case, there is no allegation of fraud or wilful suppression of documents. So also, there is no allegation in respect of the nature and quantity of the goods exported - Moreover, the appellant has stated that during the relevant period there was no facility to know whether the documents have been correctly uploaded. Later, the department has improved their data-base by including such facility. In such circumstances, the non-filing of shipping bill is a condonable lapse. In Circular No.1/2019-Cus., F.No.450/119/2017-Cus-IV, dated 02.01.2019, the department has put forward resolutions to solve the problem of EGM errors which hamper IGST refund processing. In the present case also, in Para 11 of O-in-O, it is seen stated that the IGST refund claim for these impugned shipping bills could not be processed and delivered to the exporter in time. In the present case, on receiving notice from department, the appellant has immediately rectified the defect. There is no allegation of continued non-compliance - the penalty imposed is unwarranted - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 762
Levy of late fee charges - delay in filing the bill of entry - sufficient reason for delay in filing the bill of entry was shown or not - HELD THAT:- From the records, it is clear that the original importer could not clear the consignment and had to sell the goods to another person. Since necessary amendments have to be made in the shipping bill which has to be filed along with necessary documents by the new purchaser, the bill of entry could be filed only on 14.11.2018. This being the facts which have been properly established by document itself, the view taken by the authorities below that the reasons are not genuine / bonafide cannot sustain. Tribunal in various decisions have analyzed similar facts and have held that the late fee imposed are not warranted - reliance placed in the case of M/S. BLUELEAF TRADING COMPANY VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2019 (5) TMI 672 - CESTAT CHENNAI] and M/S. ECOM GILL COFFEE TRADING PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS TUTICORIN [ 2019 (10) TMI 62 - CESTAT CHENNAI] . Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (7) TMI 785
Liquidation order - purchase of Lot No.4 being a property, which had no interested buyers - inspite of issuance of various advertisements, with regard to sale of property, no interested buyers came forward to purchase the property - HELD THAT:- This Court is satisfied that there is no factual impediment in allowing the prayers of the applicants for purchasing Lot No. 4 of the land in question. ₹ 50 Lakh has admittedly been deposited by the applicants with the Official Liquidator as 20% of the total consideration money in terms of the offer letter. It is also admitted that there is no other buyer for the said plot of land as would be evident by the order dated 14th June, 2019. No other offers have since been received by the Official Liquidator. There is admittedly no such transfer application which is pending before this Court. There is also no proceeding pending in relation to the company (in liquidation) before the NCLT. No person or entity has come forward for reviving the Company (in liquidation). This Court is of the view that these factors sufficiently differentiate the present matter from the case of ACTION ISPAT AND POWER PVT. LTD. VERSUS SHYAM METALICS AND ENERGY LTD. [ 2020 (12) TMI 535 - SUPREME COURT] where it was decided specifically in relation to an application for transfer of the winding up proceedings to the NCLT. It is also evident from the submissions made on behalf of the Official Liquidator that sufficient expenses have been incurred for publishing the four advertisements of the sale notices in newspapers and for valuation of the property. This would amount to circumstances which cannot be reversed if this Court were to abstain from proceeding with the matter - application disposed off.
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Insolvency & Bankruptcy
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2021 (7) TMI 778
Rejection of restructuring plan - Restructuring of debt - rejection due to delay in issuance of tariff plan - outstanding dues on supply of generated power to the WBSEDCL - identification of Stressed Assets - Case of petitioner is that cancellation of the restructuring plan was never communicated formally to the petitioner - formal recall notice of the loans and advances was never issued by the respondent - HELD THAT:- Merely because an instrumentality of State is engaged in business it cannot be put to any more disadvantage than a private player. The State cannot also be required to grant concessions outside the contract and outside what a private player would ordinarily be required to give. Under the garb of requiring fairness in action even State business entities cannot be imposed with terms conditions for non-commercial considerations - One must note that the State entities are required to compete with private corporations who are far too quick opportunistic in commercial matters. While it is indeed true that a State instrumentality is expected to act fairly and in a non-arbitrary manner, the PFC REC are also driven by a profit motive and their functions cannot be fettered to drive them towards financial disadvantage. This would lead to their ruin endanger large number of other power companies and persons dependent on them. Any restructuring proposal or contract like a loan contract is time bound. Time is the essence of such contract. The Petitioners should have known this while accepting the restructuring proposal. The Petitioners did not appear serious about benefitting from the restructuring proposal and the same was a subterfuge to delay the inevitable consequences of its financial failure - The petitioners cannot be allowed to use the model code of conduct, as a rule to cover up their own omissions. The petitioners have not demonstrated that they have fulfilled the conditions of the Initial DSRA or the main DSRA. The petitioner could not have any legitimate expectation of continuation of the restructuring proposal indefinitely. The omissions and failures of the petitioners were duly recorded in the minutes of meeting dated 17th February, 2021, there was substantial notice of cancellation of restructuring proposal. No prejudice could therefore have been caused to the petitioners by non-issuance of a formal recall notice of the loans or cancellation of restructuring proposal. The Petitioners have not been able to indicate exactly which Directions has been violated or has not been followed by the REC and PFC - The 2019 Directions appear to have been referred to in a desperate attempt to attract cause of action under Art. 226. The petitioners were afforded a restructuring proposal essentially by reason of the 2019 Directions and could not take advantage thereof. There is some doubt as to whether the Directions have statutory or binding force. This Court therefore finds no arbitrariness or unfairness in the actions of the respondent no. 3 and 4. There is no violation of Article 14 of the Constitution of India. No violation of Natural Justice is found - this Court is of the view that the disputes between the writ petitioners and the respondent nos.3 and 4 cannot be entertained or decided in the writ jurisdiction of the High Court under Article 226 of the Constitution of India. Petition dismissed.
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2021 (7) TMI 754
CIRP process - financial creditor or operational creditor - inclusion/exclusion of appellant form CoC - Initially was treated as Financial Creditor but later on was treated as Operational Creditor - grievance of the Appellant is that the Appellant had been excluded from CoC on that day and was not allowed to participate - HELD THAT:- In the present matter, the Appellant was earlier treated as Financial Creditor for the dues claimed by Appellant but later on the Appellant has been treated as Operational Creditor. Order dated 25.11.2019 of the Adjudicating Authority directed the Resolution Professional to consider if debt of Appellant is a Financial Debt and place it before CoC. He did this in 6th CoC Meeting. On the face of it the Lease Deed does not appear to be Financial Lease. As the Resolution Plan is stated to be already approved, when it appears that the Appellant is not a Financial Creditor, we do not wish to go into the technicalities of the manner in which it was excluded from the CoC. The grievance appears to be because orders with regard to excluding UCO Bank was not passed. The Respondent No. 1 does not appear to have filed any appeal against the impugned order in that regard and thus we would not give much indulgence to Respondent No. 1. The appeal is dismissed.
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Central Excise
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2021 (7) TMI 784
Refund of excise duty - benefits under the Northeast Industrial Policy - UPVC Pipes, fittings etc. - N/N. 20/2008-Central Excise dated 27.03.2008 - HELD THAT:- As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there-being any add-ons to the goods manufactured, it is considered that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid application of the petitioner dated 03.04.2021 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured - petition allowed.
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2021 (7) TMI 766
Utilization of CENVAT Credit on Education Cess and Secondary Higher Education Cess, for payment of Excise duty - period post amendment of Cenvat Credit Rules w.e.f. 01.03.2015 - penalty - HELD THAT:- The decision by the Hon ble Delhi High Court in CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER [ 2018 (2) TMI 1264 - DELHI HIGH COURT] has analysed the issue whether Education Cess and Secondary Higher Education Cess can be utilized for payment of service tax / excise duty after the introduction of amendments in Rules 3 (7) (b) of Cenvat Credit Rules,2004 by Notification No.12/2015-CE (NT) dt. 30.04.2015 - The demand raised under the SCN for recovery of the wrongly availed cenvat credit is legal and proper. Penalty - HELD THAT:- Taking into consideration that the issue is of interpretational nature, the equal penalty imposed under Rule 15 (2) of the CENVAT Credit Rules, 2004 read with Section 11AC(c) of the Central Excise Act, 1944 is unwarranted and cannot sustain. Penalty is set aside. Impugned order is modified to the extent of setting aside penalty only without disturbing the confirmation of demand in respect of cenvat credit / duty along with interest - Appeal allowed in part.
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CST, VAT & Sales Tax
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2021 (7) TMI 788
Nature of transaction - Sale or service - installation of Customer premises network equipment by the company - transfer of right to use - dominant purpose is to use the only machinery in the telephone instrument, or to avail telecommunication service - HELD THAT:- The revision is admitted on substantial questions of law. Learned Standing Counsel prays for and is granted time to file reply within four weeks - List this case on 18.08.2021.
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2021 (7) TMI 779
Rectification of mistake - mistake apparent on the face of record or not - petitioner was not afforded an opportunity of personal hearing while passing of the endorsement - violation of principles of natural justice - HELD THAT:- No doubt petitioner has addressed an Email to the Assessing Officer on 25.04.2021 stating that additional statements were being filed along with certain attachments. Additional submission is also enclosed at Annexure-'C'. A perusal of which would reveal that the petitioner had sought to resile from the earlier declaration in VAT Form 240 that has been made pursuant to inadvertent error that has been recorded in the sales record that was reflected in VAT Form 100 filed in the month of November, 2016 where the sale return has been inadvertently mentioned as ₹ 66,80,58,118/- instead of the actual sale return of ₹ 6,60,85,118/-. A perusal of the re-assessment order would indicate that the Assessing Officer has considered substantially the contention of the petitioner regarding discrepancy in VAT Form 240 which is on the basis of an inadvertent error in VAT Form 100 for the month of November, 2016. The Assessing Officer having recorded a finding, the correctness or otherwise including the aspect of filing a revised VAT Form 240 is a matter open to be considered in the substantive remedy and it cannot be stated that non-taking of notice of Email on 25.04.2021 as amounting to violation of principles of natural justice requires re-assessment order to be set aside on that sole ground, when there has been substantial adherence to the principles of natural justice - where error is on the basis of wrong declaration by the petitioner admittedly that has crept in declaration in VAT Form 100 form with respect to sale declaration of November, 2016, the said aspect is kept open to be considered in a substantive remedy of appeal, and no ground is made out for interference in these proceedings. The petitioner shall appear before the respondent to avail of the opportunity of personal hearing and to facilitate consideration of his application for rectification afresh on 09.07.2021 - Petition allowed in part.
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2021 (7) TMI 776
Misconduct under Rule 3 of Karnataka Civil Services (Conduct) Rules, 1966 - registration certificate issued without proper verification - information furnished by the applicant in Form No.1 as required under Rule 9(6) of the Karnataka Sales Tax Rules, 1957, not investigated - HELD THAT:- As the tribunal has quashed the order of punishment on the sole ground that act of respondent issuing registration without proper verification was not a misconduct same requires to be examined. From the enquiry report, it is seen that, applicant had mentioned date of commencement of business as 01.04.1999, which was reported by the Inspector to be incorrect. Respondent, who was the responsible officer, was required to have taken hint to make further enquiry even from the report submitted by the Inspector - Sub-rule 6 of rule 9 very clearly stipulates that the Registering Authority should be satisfied after making such enquiry as he thinks necessary that particulars mentioned as correct and complete. Admittedly, application was incomplete in more than one way. Despite the same, respondent without any more proceeded to issue registration relying upon the recommendation made by the Inspector. Therefore, abdication of duty, failure to perform duty in the manner provided is writ clear in this matter. The tribunal allowed the application and set aside order of punishment only on the ground that allegation against respondent did not amount to misconduct. The reason assigned by tribunal is that Section 10 of the KST Act vested discretion in the Registering Officer about conduct of enquiry and as the officer in this case had got the application particulars verified through the Inspector, who recommended for registration, his decision to issue registration was taken in good faith, which cannot be termed as misconduct - It was also observed that disciplinary authority cannot presume that failure of respondent to verify documents before registration resulted in the dealer indulging in malpractice. The ground that the allegation against respondent did not amount to misconduct does not carry any merit, so also, finding that the charge is not distinct or definite - further in the instant case, respondent was a Commercial Tax Officer and registering authority. The vesting of power of registration is coupled with duty to verify particulars of the applicant seeking registration. The purpose of registration is to enable proper assessment and collection of tax by Government and also to find and prevent evasion of payment of tax. Very contents of the reply submitted by respondent reveals that he is aware of loss suffered by State. As respondent admitted loss caused to the State, there is no merit in the observation that loss caused to the State was not established. Lastly, reference to or reliance upon rule 181 whereunder the function of verification of particulars in the application for registration is assigned to the Commercial Tax Inspector under the Karnataka Value Added Tax Rules, do not avail to respondent as the provisions of the KST Act and rules are not on par with the same. In any case, they do not discharge the obligation cast upon the Registering Officer to verify correctness and completeness of particulars mentioned in the application and to record satisfaction about the same. The impugned order passed by the tribunal is capricious and perverse and is therefore, liable to be set-aside - Petition allowed.
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