TMI Tax Updates - e-Newsletter
July 25, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Touchstone On Article 14 Of The Constitution

   By: Rachit Agarwal

2. PRODUCT LIABILITY UNDER CONSUMER PROTECTION ACT, 2019

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Finance Minister Smt. Nirmala Sitharaman lauds IT Department for being responsive to people as CBDT observes 160th Income Tax day towards Nation Building

2. Shri Piyush Goyal calls for all nations to enhance transparency in their trade and build trust;

3. Restrictions on Public Procurement from certain countries

4. Finance Minister holds review meeting on Special Window for Stressed Residential Projects to boost investment in the Real Estate Sector

Notifications

Customs

1. 60/2020 - dated 23-7-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

GST - States

2. G.O. Ms. No. 87 - dated 28-5-2020 - Tamil Nadu SGST

Seeks to extend 15 days or till 30-6-2020 (whichever earlier) of time for the issuance of refund order

3. 9/2020-PP2/5520/2020 - dated 11-5-2020 - Tamil Nadu SGST

Supersession Notification No. 5/2020-TNGST, dated the 24th March, 2020

4. 505/2020/6(120)/XXVII(8)/2020/CT-56 - dated 22-7-2020 - Uttarakhand SGST

Seeks to amend Notification No. 431/ 2020/5(120)/XXVII(8) dated 25-6-2020

5. 504/2020/6(120)/XXVII(8)/2020/CT-55 - dated 22-7-2020 - Uttarakhand SGST

Seeks to amend Notification No. 344/2020/5(120)/XXVII(8)/2020/CT-35 dated 20th May, 2020

6. 499/2020/6(120)/XXVII(8)/2020/CT-50 - dated 22-7-2020 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Seventh Amendment) Rules, 2020.

7. 498/2020/6(120)/XXVII(8)/2020/CT-49 - dated 22-7-2020 - Uttarakhand SGST

Seeks to bring into force clause no. 2,12,13 of UKGST (second amendment) ordinance 2020 w.e.f. 30.06.2020.

8. 497/2020/6(120)/XXVII(8)/2020/CT-48 - dated 22-7-2020 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Sixth Amendment) Rules, 2020.

Income Tax

9. 51/2020 - dated 21-7-2020 - IT

U/s 138(1) of IT Act 1961 - Central Government specifies Joint Secretary (Farmers welfare), Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture and Farmers Welfare

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL1/CIR/P/2020/136 - dated 24-7-2020

Relaxations relating to procedural matters – Issues and Listing

2. SEBI/HO/MRD2/DDAP/CIR/P/2020/137 - dated 24-7-2020

Recording of all types of Encumbrances in Depository system

Highlights / Catch Notes

GST

• Court Orders Bank Account De-freeze for Tax Dues Delayed by COVID-19 Lockdown, with Conditions Attached.

  Case-Laws - HC : Attachment of Bank Account of petitioner - realisation of tax dues - case of petitioner is that due to present COVID-19 lockdown situation they are not able to Seattle the dues - respondent is directed to de-freeze the bank account, subject to conditions and directions issued - HC
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• Demand for Deposit of Inadmissible Tax Credit Challenged; Regular Adjudication Process Available for Petitioner.

  Case-Laws - HC : Demand of deposit of inadmissible input tax credit and file DRC-03 challan without initiating any adjudication process - Option is available to the petitioner to opt for Regular adjudicating process, by ignoring the impugned demand notice - HC
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• Court Overturns CGST Registration Cancellation; Revenue Can Restart Proceedings After Ignoring Taxpayer's Response.

  Case-Laws - HC : Cancellation of registration - CGST Act - non-filing of tax returns - the contents of the response from the petitioner have not been taken into consideration at all - order set aside - The Revenue is at liberty to initiate proceedings afresh, if at all, in accordance with law - HC
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Income Tax

• Tribunal Affirms Assessee's Appeal: Insufficient Grounds for Reopening Assessment Due to Non-Disclosure of Material Facts.

  Case-Laws - HC : Validity of Reopening of assessment - validity of reasons to believe - change of opinion - whether these grounds are adequate or not for arriving at a conclusion that there was a non-disclosure of material facts could not be opened for the Court's investigation. Tribunal was right in allowing the assessee's appeal. - HC
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• Section 147: Assessing Officer Must Act Independently, Avoid External Influence for Unbiased Assessment Process.

  Case-Laws - HC : Reopening of assessment u/s 147 - Underlying legal principles is that the independence of the Assessing Officer cannot be interfered or questioned. No person can advice the AO to proceed with the assessment in a particular fashion. It is for the Assessing Officer to assess the books of accounts of the assessee and to frame the assessment. On the other hand, if the AO relies upon the borrowed material, it would be amounting to abdicating his duty as an AO. - HC
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• Section 40(a)(ia) Amendment by Finance Act 2010 Applies Retroactively; Taxpayer Benefits for Timely 2005 Filing.

  Case-Laws - HC : Amendment made to Section 40(a)(ia) by Finance Act, 2010 - retrospective effect - Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act. - HC
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• Tribunal Rules No Distinction Between Gift and Settlement for Property Exchange; No Capital Gains Tax Imposed u/s 49(1)(ii).

  Case-Laws - HC : Capital gain on property - Transfer u/s 2(47) - exchange of properties between the assessee and his brother - Tribunal concluded that the artificial definition made by Lower Authorities with reference to gift and settlement was not appropriate. The Tribunal was of the opinion that for the purpose of Section 49(1)(ii) of the Act, there was no difference between gift and settlement and that in the instant case, the settlement made with the assessee's brother could not attract capital gains on this count. - HC
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• Reopening of Assessment u/s 147 Quashed Due to Change of Opinion on Sales Promotion Expenses Deduction.

  Case-Laws - AT : Reopening of assessment u/s 147 - As the reopening in the case before us had been resorted to by the A.O on the basis of a “change of opinion” as regards the allowability of deduction of the sales promotion expenses, on the same set of facts and material as were there before his predecessor who had framed the regular assessment vide his order passed under Sec. 143(3), order quashed for want of jurisdiction. - AT
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• Unsecured loans can't be added as undisclosed u/s 153A without incriminating evidence found during a search.

  Case-Laws - AT : Assessment u/s 153A - Addition of unsecured loans as undisclosed in u/s. 68 - the assessment proceedings were not pending at the time of search. Hence assessment for these assessment years did not abate. Hence no addition in these assessment years under section 153A is permissible without incriminating material found during search. - AT
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Customs

• Court Upholds Detention Order for Smuggling Gold and Currency Under Baggage Rules; No Grounds for Judicial Interference.

  Case-Laws - HC : Detention order - Smuggling - Gold - currency - Baggage Rules - the order of preventive detention is a preventive measure and that predicated on the admissible voluntary statements of the Detenue, which clearly bring out the role of the Detenue in the smuggling of Gold, as well as, other materials placed before the Detaining Authority, the subjective satisfaction of the Detaining Authority, recorded in the Detention Order qua the continued propensity and inclination of the Detenue to continue to indulge into acts of smuggling in a planned manner, to the detriment of the economic security of the country, cannot be faulted and does not warrant interference of this Court in exercising its extraordinary jurisdiction. - HC
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Corporate Law

• Company's Register Rectification: Shares Auctioned Without Shareholder Consent, No Original Certificate or Transfer Form.

  Case-Laws - Tri : Rectification of the register of members of the company - In the instant application, the respondent auctioned the shares without the consent of shareholders and without the original share certificate and transfer form in their possession. - The company has no right to auction and allot the shares to third parties ignoring the right of fully paid-up shareholders. - Tri
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Central Excise

• CENVAT Credit Case: Appellants Argue Show Cause Notice Void Due to Department's Delay Exceeding Limitation Period.

  Case-Laws - AT : Utlization of CENVAT Credit - Period of limitation - Timely scrutiny of Returns by the Department would have shown that there is huge accumulated credit; Department was free to further investigate the matter and issue timely SCN. In view of the same, the appellants have a strong case on limitation and the SCN is barred by limitation. - AT
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• Nestle Milky Bar and Eclairs Qualify for Tax Exemption as 'White Chocolate' Under Chapter 1704.90.

  Case-Laws - AT : Nestle Milky bar and Eclairs - Benefit of exemption - Whether the confectionery products cleared by the appellant under Chapter 1704.90 are 'white chocolate' or not? - The impugned goods i.e. Nestle Milky bar and Nestle Milky bar Eclairs are not excluded for the purpose of exemption contained in the Notifications. - AT
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Case Laws:

• GST

• 2020 (7) TMI 579
  Attachment of Bank Account of petitioner - realisation of tax dues - case of petitioner is that due to present COVID-19 lockdown situation they are not able to Seattle the dues - HELD THAT:- It is stated that after making attachment, the first respondent has deducted a sum of Rs. 12,45,662/- from the bank account of the petitioner maintained in the second respondent Bank. Now, the petitioner wants to make the balance payment within 6 months. This Writ Petition is disposed of, with the following directions: (a) The petitioner shall pay the balance due amount within 6 months from today to the first respondent. (b) If the petitioner fails to make full payment within the above stipulated period, it is open to the first respondent to resort to the remedy available under law to recover the said amount. (c) In view of the undertaking given by the petitioner as stated supra, the first respondent is directed to de-freeze the bank account maintained by the petitioner in the second respondent bank forthwith. ( d) Insofar as the interest claim if any, it is open to the first respondent to issue fresh proceedings to the petitioner and if any such proceedings is issued, it is open to the petitioner to agitate against the same in the manner known to law.

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• 2020 (7) TMI 578
  Demand of deposit of inadmissible input tax credit and file DRC-03 challan without initiating any adjudication process - On bhalf of revenue it is submitted that, the intent behind issuing the impugned letter dated 11th June, 2020 was to give an opportunity to the petitioner to come forward and either explain the transaction or deposit the tax with minimum interest and penalty under Section 74(5) of the CGST Act without going through the adjudication procedure. He clarifies that if after the investigation the respondent is not satisfied with the petitioner s response, it shall follow the adjudication process for recovery. HELD THAT:- The aforesaid statement made by learned counsel for respondent nos. 2 and 3 is accepted by this Court and said respondents are held bound by the same. It is clarified, as a matter of abundant caution, that as the demand is disputed by the petitioner, no coercive steps shall be taken for recovery of the said demand without following the adjudication process.

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• 2020 (7) TMI 577
  Permission to withdraw petition - Cancellation of registration - order No.1 of 2020 Central Board of Indirect Taxes and Customs in S.O. 2064 (E). dated 25.06.2020 - HELD THAT:- The writ petition is dismissed as withdrawn.

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• 2020 (7) TMI 576
  Cancellation of registration - CGST Act - non-filing of tax returns - HELD THAT:- The petitioner has filed a response dated 20.12.2018, which is referred to in the first paragraph of the impugned order itself. In conclusion, however, the respondent proceeds as though there was no response from the petitioner - thus, the contents of the response have not been taken into consideration at all. The respondent is at liberty to initiate proceedings afresh, if at all, in accordance with law - petition allowed.

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• 2020 (7) TMI 575
  Permisstion to withdraw petition - Grant of Bail - evasion of tax - offences under Section 132(1)(a) (b) ( c) (d) read with 132 (1) (i) (ii) of CGST Act - HELD THAT:- Petition dismissed as withdrawn.

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• Income Tax

• 2020 (7) TMI 574
  Refund of income tax inadvertently paid on interest received under Section 28 of the Land Acquisition Act, 1894 for various assessment years - applications filed by the petitioners u/s 119(2)(b) - HELD THAT:- Different High Courts subsequent to the judgment of CIT Vs. Ghanshyam Dass HUF [2009 (7) TMI 12 - SUPREME COURT] have held that tax is payable on the interest received under Section 28 of the Land Acquisition Act, under the head income from other sources . Most of the applications filed by the petitioners are barred by limitation under the same circular dated 9th June, 2015, relied upon by the learned counsel for the petitioners. Keeping in view the limited prayer sought in the writ petitions, the same are disposed of with a direction to the respondent to decide the applications filed by the petitioners within eight weeks in accordance with law. All the rights and contentions of the parties, including the plea of maintainability, are left open.

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• 2020 (7) TMI 573
  Validity of Reopening of assessment - validity of reasons to believe - change of opinion - disallowance of improvement cost of land claimed by the assessee and the assessee had shown the sale of the land under the head of short term capital gain - as per AO correct market value of the property that should have been adopted by the assessee @ 50% of value fixed by the District Revenue Officer u/s 50C as two persons including the assessee had done the business and each of them shared the profit on equal ratio - HELD THAT:- The assessee is expected to file his return of income along with his books and documents. It is for the Assessing Officer to consider the same in accordance with law and complete the assessment. The assessee is not there to advice the Assessing Officer as to how he should go about in assessing the income of the assessee, as it is the statutory duty of the Assessing Officer. Admittedly, the Sale Deed dated 02.05.2008, is only the document, which is the subject matter of the assessment. This document was very much available with the Assessing Officer when he completed the assessment under Section 143(3), dated 05.12.2011. At that juncture, all that the Assessing Officer was concerned about is the claim made by the assessee as expenses for the improvement of the land by levelling, sand filling, road laying etc. The stand taken by the assessee was disbelieved, as no material evidence was produced by the assessee to substantiate such expenses. Based on the very same document, the assessment was reopened by serving notice on 26.03.2014, stating that the assessee should have adopted the value of the land as computed by the District Revenue Officer under the Indian Stamp Act for the purposes of computation of the stamp duty payable on such instrument. As rightly pointed out by the learned counsel for the assessee the words or assessable stood inserted by Finance (No.2) Act, 2009 w.e.f., 01.10.2009 and this provision has been held to be prospective and this issue was considered in the case of R.Sugantha Ravindran [ 2013 (3) TMI 271 - MADRAS HIGH COURT]. Therefore, the revenue cannot refer to Section 50C of the Act to non-suit the assessee. As decided in CALCUTTA DISCOUNT COMPANY LIMITED [ 1960 (11) TMI 8 - SUPREME COURT] duty of the assessee is to make full and true disclosure of all primary facts and once it is done, it is for the Assessing Authority to decide what inference of fact or law could be drawn there from. The law does not require the assessee to state the conclusion that could reasonably be drawn from the primary facts and if there were, in fact, some reasonable grounds for thinking that there had been any non-disclosure as regards any primary facts, which could have a material bearing on the question of under assessment , that would be sufficient to give jurisdiction to the ITO to issue notices under Section 34 (1922 Act) and whether these grounds are adequate or not for arriving at a conclusion that there was a non-disclosure of material facts could not be opened for the Court s investigation. Tribunal was right in allowing the assessee s appeal.

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• 2020 (7) TMI 572
  Deduction u/s 32AB - HELD THAT:- Correctness of the finding rendered by the CIT(A) was tested by the tribunal and the tribunal confirmed the finding by observing that the CIT(A) has restored the issue to the file of the Assessing Officer with a direction to verify the evidences to be furnished by the assessee, to show that the purchase of machinery was made during the period under consideration, so as to be eligible for the deduction of the claim under Section 32AB of the Act and pass consequential orders. Interest on deposits in IDBI - whether should be treated as business income purely because the deposits were made to comply with statutory provisions under the Income Tax Act? - HELD THAT:- Tribunal noted that the CIT(A) has held that the interest received by the assessee from the deposits made in IDBI should be treated as business income only. These findings of fact coupled with law was affirmed by the tribunal in the impugned order and we agree with the elaborate reasoning given by the CIT(A). Thus, we find that no substantial question of law arises for consideration in this appeal. - Decided against revenue.

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• 2020 (7) TMI 571
  Reopening of assessment u/s 147 - mandation of formation of belief by the Income Tax Officer - reference to views and objections of the audit party - HELD THAT:- Gujarat High Court in Adani Exports [ 1998 (12) TMI 51 - GUJARAT HIGH COURT] wherein it has been held that though the audit objection may serve as information, the basis of which the Income Tax Officer can act, the ultimate action must depend directly and solely on the formation of belief by the Income Tax Officer on his own, where such information passed on to him by the audit that income has escaped assessment. Underlying legal principles is that the independence of the Assessing Officer cannot be interfered or questioned. No person can advice the AO to proceed with the assessment in a particular fashion. It is for the Assessing Officer to assess the books of accounts of the assessee and to frame the assessment. On the other hand, if the AO relies upon the borrowed material, it would be amounting to abdicating his duty as an AO. Thus, we find that the decision taken by the CIT(A) as affirmed by the tribunal, does not call for any interference. - Decided against revenue.

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• 2020 (7) TMI 570
  Amendment made to Section 40(a)(ia) by Finance Act, 2010 - retrospective effect - HELD THAT:- Substantial questions of law framed for consideration in this appeal were answered against the Revenue in the decision of the Hon ble Supreme Court in the case of CIT Vs. Calcutta Export Company [2018 (5) TMI 356 - SUPREME COURT] as amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act. - Decided against revenue.

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• 2020 (7) TMI 569
  Capital gain on property - Transfer u/s 2(47) - acquisition of new property rights - exchange of properties between the assessee and his brother - relinquishment of respective rights in the properties to suit their convenience - whether the arrangement between the respondent assessee and his brother by way of gift settlement deed would amount to transfer within the meaning of Section 2(47)? - there were 85 properties owned by the assessee and his brother, that the assessee relinquished 50% of the share in 30 properties and that he became the absolute owner in respect of other 55 properties - whether tribunal is correct in law in holding that there is no legal difference between settlement and gift overlooking the basic nature of the settlement? - Whether the Tribunal is correct in law in giving relief to the assessee by placing reliance on the definition of gift under Section 122 of the Transfer of Property Act? - HELD THAT:- Tribunal concluded that the artificial definition made by Lower Authorities with reference to gift and settlement was not appropriate. The Tribunal was of the opinion that for the purpose of Section 49(1)(ii) of the Act, there was no difference between gift and settlement and that in the instant case, the settlement made with the assessee s brother could not attract capital gains on this count. There are no reasons as to how the Tribunal came to such a conclusion. We are unable to find any such reasoning in paragraph 15 of the impugned order. Therefore, the said finding is not supported by reasons and hence, not sustainable. Tribunal referred to the decision of the Coordinate Bench in the case of Mr.Abdul Hameed Khan Mohammed [2016 (1) TMI 903 - ITAT CHENNAI] for the assessment year 2011-12. The Tribunal did not assign any reason as to how the said decision of the Coordinate Bench would apply to the assessee s case. Paragraph 14 of the impugned order is also devoid of reasons. Accordingly, the above tax case appeal is allowed, the impugned order is set aside and the matter is remitted back to the CIT(A) for a fresh consideration in accordance with law. Considering the fact that the year, in which, the search and seizure operations were conducted in the place of business of the assessee namely 2011, we direct the CIT(A) to give priority to this case.

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• 2020 (7) TMI 568
  Reopening of assessment u/s 147 - Validity of reason to believe - HELD THAT:- The mandate of law, even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him, that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments in the case of NYK Lime (India) Ltd. [2012 (2) TMI 283 - BOMBAY HIGH COURT] and Purity Tech Textile Pvt. Ltd. Vs. ACIT Anr. [2010 (2) TMI 26 - BOMBAY HIGH COURT ] . As the reopening in the case before us had been resorted to by the A.O on the basis of a change of opinion as regards the allowability of deduction of the sales promotion expenses, on the same set of facts and material as were there before his predecessor who had framed the regular assessment vide his order passed under Sec. 143(3), dated 27.03.2015, the same in light of the aforesaid settled position of law cannot be sustained, and on the said count itself is liable to be vacated. We thus not being able to persuade ourselves to subscribe to the view taken by the CIT(A) as regards the validity of the jurisdiction assumed by the A.O u/s 147 of the Act, set aside his order. Allowable expenses u/s 37 - HELD THAT:- Expenditure incurred by the assessee towards sales promotion expenses viz. (i) conference expenses for doctors, travelling expenses for doctors, other expenses related to doctors and expenses incurred on product reminders given to doctors would not be hit by the Explanation to Sec. 37 of the Act. Accordingly, on the basis of our aforesaid observations, we are of the considered view, that the A.O even otherwise on merits was not justified in disallowing the sale promotion expenses by bringing the same within the realm of the Explanation to Sec. 37(1) of the A ct. Gr ound of appeal No. 2 is allowed. Suppressed production - wastage exceeding the DPCO norms - computation of wastage - HELD THAT:- Wastage up to the limits prescribed by the DPCO norms was to be accepted, we concur with him. At the same time, we are unable to persuade ourselves to subscribe to his view that the excess wastage of raw material would ipso facto lead to an inference of suppressed/unaccounted production carried out by the assessee. In our considered view, the aforesaid observation of the CIT(A) de hors any material evidencing the factum of suppressed/unaccounted production carried out by the assessee, cannot be accepted. Unexplained wastage of raw material, in our understanding can only lead to a consequential addition/disallowance of the cost of such raw material as had been debited by the assessee in its books of accounts for the year under consideration. Accordingly, we modify the order of the CIT(A) and therein direct the A.O to restrict the disallowance in respect of the excess raw material wastage in terms of our aforesaid observations. Ground is partly allowed. Deduction u/s 80IB - HELD THAT:- Claim of the assessee that pursuant to the enhancement made by the A.O, its entitlement for deduction u/s 80IB would also be modified, we are unable to find favour with the same, and concur with the view taken by the CIT(A) who has rightly rejected the same.

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• 2020 (7) TMI 567
  Disallowance u/s 14A read with Rule-8D - HELD THAT:- As observed that the opening balance of investments was Rs. 85.67 Crores, and, thus, investments subjected to Rule-8D were not brought forward from earlier years. It was also observed by the CIT (A) that the AO could not demonstrate that loans were borrowed for making investments in dividend yielding assets only. We find no reason to interfere with this factual finding of the Ld. CIT (A). Assessee had submitted a computation before the AO wherein it was submitted that the disallowance, if any, could not exceed Rs. 8,34,934/- being the costs of treasury operations - As seen that neither the Assessing Officer nor the Ld. CIT (A) has commented on this computation of the assessee. Thus, apparently, the satisfaction, as contemplated and laid down in the case of Maxopp Investment Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT ] to be recorded by the Assessing Officer is completely absent and, therefore, in absence of the required satisfaction, such disallowance could not have been made - since, the Ld. AR has argued that the disallowance may be restricted we, accordingly, restrict the disallowance and direct the AO to delete the remaining disallowance. Ground No.1 of the assessee s appeal stands partly allowed. Addition on account of interest on Income Tax Refund - HELD THAT:- AR has fairly accepted that this amount is taxable in the hands of the assessee. However, while dismissing this ground of the assessee s appeal, we direct that should the interest amount vary subsequently depending on the outcome of the appeals before the Hon ble High Court and the Hon ble Apex Court, the AO should substitute such varied amount as the case may be. Capital subsidy received during the relevant assessment year from the written down value of the respective block of assets - HELD THAT:- It is settled law that the taxation of subsidy, by whatever name called, is determined by the purpose for which the subsidy is granted and not the form/mode/manner in which the subsidy is received/disbursed. We find no reason to interfere with the findings CIT (A) on the issue that the impugned subsidy was a capital receipt. CIT (A) was not correct in directing the AO to reduce the amount of subsidy from the actual cost of fixed assets and, thereafter, allow depreciation on such actual costs so arrived that. We set aside the order of the Ld. CIT (A) on this issue and we direct the Assessing Officer to allow deprecation on the actual cost of assets without reducing the amount of subsidy there from. Thus Ground No.3 of the assessee s appeal stands allowed. Addition on account of license fee - HELD THAT:- It is seen that this issue is covered in favour of the assessee by the following orders of the Hon ble High Court and the Tribunal rendered in assessee s case in the earlier Assessment Years. CIT-DR also could not controvert this fact. In view of the binding judicial precedents in asssessee s own case as enumerated above, we find no reason to interfere with the findings of the CIT (A) on the issue. Claim of depreciation in respect of UPS - 60% OR 15% - HELD THAT:- UPS is to be considered as an integral part of the computers and depreciation is to be allowed @ 60%. Accordingly, in view of the settled legal position, we find no reason to interfere with the findings of the Ld. CIT (A) on this issue also. See CIT vs. BSES Rajdhani Power Limited [ 2018 (2) TMI 299 - ITAT DELHI ]. Depreciation in respect of energy saving and pollution control equipment on the ground that it was not put to use - AO disallowed the claim of depreciation by alleging that the assessee has only established the factum of purchase of assets and not the condition of assets being put to use - HELD THAT:- Provisions of Sec.32 do not mandate such requirement. To assume that having purchased and installed the energy saving devices and pollution control equipment but not putting the same to use is, thus, just a baseless surmise and conjecture which stands negated by the certificates from the Chartered Engineers. Therefore, it is our considered opinion that the Ld. CIT (A) was absolutely correct in holding that having installed the devices, the assessee had extensively put the assets to use for the purposes of business and that under the law, the assessee was not required to monitor the outcome of use of such items in its business. The Hon ble Delhi High Court in the case of CIT vs. Insilco Ltd. reported [ 2009 (2) TMI 31 - DELHI HIGH COURT] had held that it would be more appropriate to understand the expression use as comprehending cases where the machinery is kept ready by the owner for its use in its business.

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• 2020 (7) TMI 566
  Assessment u/s 153A - Addition of unsecured loans as undisclosed in u/s. 68 - HELD THAT:- there is no reference whatsoever to the incriminating material found during the course of search upon the assessee on the basis of which this addition of unsecured loan has been done in the hands of the assessee under section 153A. It is settled law that in the interest of justice issue can be raised before quasi judicial authorities without any specific ground raised in grounds of appeal. This is particularly so for legal ground. Moreover no tax can be levied except that leviable as per the provisions of law. It is also settled law that there is no estoppel as to law. If an amount is not exigible to tax as per the provisions of law the same cannot be brought to tax on the ground of concession or otherwise. From the records, it is manifestly clear that the assessment years for assessment year 10- 11 and years preceding to this were not pending at the time of search. Hence assessment for these assessment years did not abate. Hence no addition in these assessment years under section 153A is permissible without incriminating material found during search. In the present case we have already given a finding that the addition is not based upon any incrimination material found upon search in the case of the assessee. This aspect is only of academic interest as addition has not been made by the assessing officer as deemed dividend. In the case of CIT versus Surat Cotton Spinning Weaving Mills [ 1993 (4) TMI 64 - BOMBAY HIGH COURT] once the assessing officer has assessed a particular receipt under a particular head of income the amount is no more available to him for assessment under another head Moreover the issue that in case of search and seizure assessment under section 153 A no addition can be made without incriminating material found during search is settled by honourable Supreme Court in the case of Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] . Since we have already held that these additions are not sustainable in assessment u/s 153A. Decided in favour of assessee.

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• 2020 (7) TMI 565
  Addition on account of deduction of interest expenditure u/s 24 (b) - whether interest was paid on loan which was meant for investment in shares and bonds and not for the purpose of purchasing the property - grievance of the assessing officer is that that above interest expenditure cannot be granted as deduction from income from house property - HELD THAT:- In the previous year has reached at a finding that until the amount has been utilized in the investment of bonds et cetera, no interest can be claimed by the assessee as deduction under the income from house property. However when such bonds have been redeemed and utilized for the purpose of purchase of the property, then the borrowed fund from HSBC bank amounts to utilization of same for the purpose of purchase of the property. As held that since the amount was purchased from the borrowed funds of the HSBC bank, interest paid by the assessee should be allowed as a deduction. The above facts are not disputed by the revenue. Even it was not shown to us that the order of the learned CIT A for assessment year 2011 12 has not been accepted by the revenue and is agitated before the higher forum. In view of this, we do not find any infirmity in the order of the learned CIT A in directing the learned assessing officer to ascertain the interest on funds utilized for acquisition of the property on which rental income has been earned by it during the year and to grant deduction of such interest under section 24 (b) - Decided against revenue. Disallowance u/s 14A read with Rule 8D - CIT- A directed the learned AO to restrict the disallowance to the extent of the exempt income earned - HELD THAT:- CIT-A s direction are in view of the decision of JOINT INVESTMENTS PRIVATE LIMITED VERSUS CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT ]. Also further directed AO to recompute the disallowance to exclude the interest expenditure, which pertains to the income from house property and in respect of the interest expenditure related to the income from other sources - Consider the remaining interest expenditure for the purpose of computation of the disallowance. With respect to the disallowance of 0.5% of the average value of the investment, he directed the learned assessing officer to consider only those bonds, which yielded tax-free income. After hearing the parties on this issues, we do not find any infirmity in the order of the learned CIT A in directing the AO so. As CIT A has followed the order of his predecessor and honourable Delhi High Court. The revenue has not challenged the order of the learned CIT A for assessment year 2011 12, at least as no evidences produced before us. In view of this, we do not find any infirmity in the order of the learned CIT A. Accordingly ground number two and three of the appeal of the AO is dismissed. Addition on account of various business expenses claimed - HELD THAT:- On careful analysis of the order of the learned CIT A, we found that he relied on the order of his predecessor for assessment year 2011 12 wherein all the facets of the allowability of those expenditure have been considered and disallowance has been deleted. We also do not find any infirmity in the order of the learned CIT A in following the order of his predecessor, when revenue could not produce any evidence before us that the order of the CIT A for assessment year 2011 12 has not been accepted by the revenue. - Decided against revenue.

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• Customs

• 2020 (7) TMI 564
  Detention order - Smuggling - carrying dutiable or prohibited goods - Gold - currency - Baggage Rules - COFEPOSA Act - HELD THAT:- The subjective satisfaction requisite on the part of the Detaining Authority, the formation of which is a condition precedent to the passing of the Detention Order, gets vitiated only if material or vital documents, which could have a bearing on the issue and would influence the mind of the Detaining Authority, one way or the other, are not placed by the Sponsoring Authority before the Detaining Authority. The assertion of the Detenue that, the said Summons were not relied upon by the Sponsoring Authority or placed before the Detaining Authority does not vitiate the subjective satisfaction recorded by the Detaining Authority, since the same was not relevant for the formation of the subjective satisfaction of the Detaining Authority. Further, the Detenue s assertion that he was not even supplied with a copy of the said Summons is factually incorrect and does not further his case. Coming to the submission qua the Non-Recovery Panchnama , the Sponsoring Authority did not rely upon that document, since the search proceedings did not result in the recovery of any incriminating documents, other than some personal documents of the Detenue, such as PAN Card, Aadhaar Card and Driving License. Therefore, the Panchnama, cannot be said to be material, the non- placement of which would render the Detention Order illegal. In the present case, it is observed that huge volumes of gold had been smuggled into the country, illegally and unabatedly for the last five years and that about 8350 grams of gold has been brought into India during the period from November 2018 to May 2019 by the Detenue camouflaging the same as accessories of garments and buckle rings of bags. It is further observed that the Detaining Authority was justifiably satisfied, founded on the relevant material placed before it by the Sponsoring Authority, that the Detenue demonstrably has the propensity to indulge in the same acts of smuggling, if not prevented by way of the Detention Order from so doing - It is trite to state that the order of preventive detention is a preventive measure and that predicated on the admissible voluntary statements of the Detenue, which clearly bring out the role of the Detenue in the smuggling of Gold, as well as, other materials placed before the Detaining Authority, the subjective satisfaction of the Detaining Authority, recorded in the Detention Order qua the continued propensity and inclination of the Detenue to continue to indulge into acts of smuggling in a planned manner, to the detriment of the economic security of the country, cannot be faulted and does not warrant interference of this Court in exercising its extraordinary jurisdiction. The present writ petition is devoid of merit and the same is accordingly dismissed.

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• 2020 (7) TMI 563
  Condonation of delay in filing appeal - representation of appeal after a delay of five years - no satisfactory cause shown for the delay - HELD THAT:- The appeal itself was presented with a delay of 35 days initially and then after the defects were pointed out, the appeal was re-presented after almost five years. This delay goes unexplained and there is no satisfactory cause shown for having re-presented the appeal after a delay of five years. In the absence of any such plausible explanation for the delay, we do not find any justification to condone the delay - COD application dismissed.

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• 2020 (7) TMI 562
  Refund of SAD - HELD THAT:- Based on the Assistant Commissioner of Customs, through his written instructions dated 12.02.2018, the learned Standing Counsel for the respondents has opined that since the aforesaid order of the CESTAT, dated 12.06.2017 has been accepted by the Committee of Commissioner and they have also sanctioned and disposed of all pending re-fund claims based on the special order and that, similar orders could be passed in the present writ petitions also. In view of the in-principle decision taken by the respondents to re-fund the Special Additional Duty - Petition allowed.

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• Corporate Laws

• 2020 (7) TMI 561
  Maintenance of status quo about fixed assets and shareholding pattern of the Company - principal of lis pendence - HELD THAT:- It is apparent that NCLT has rejected the prayer of R-1 for impleading subsequent purchaser as party to the proceedings. However, directed that the subsequent purchaser s right will be governed by Principal of lis pendence and the issue is kept open. It means such order is not final. Impugned order upheld - appeal disposed off.

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• 2020 (7) TMI 560
  Rectification of the register of members of the respondent-company - Restraint on respondent-company from holding the annual general meeting or extra-ordinary general meeting - section 59(1) of the Companies Act, 2013 - HELD THAT:- The respondent-company in the instant application will fall under the category of unpaid seller who can exercise the above rights only. Nothing more - It is settled law as decided by the hon ble Supreme Court of India in its judgment in TRIVENI SHANKAR SAXENA VERSUS STATE OF U.P. AND OTHERS [ 1991 (12) TMI 285 - SUPREME COURT] that a lien is only a right to retain which is rightfully and continuously in possession belonging to another until the claims are satisfied. It can be acquired either by contract or by operation of law. It is the right of retention of goods. In the absence of delineated process to exercise paramount lien, the respondent-company can exercise lien to the extent of retention of goods ; in this case shares which can be extendable payable to the shareholder - In the instant application, the respondent auctioned the shares without the consent of shareholders and without the original share certificate and transfer form in their possession. The earlier action appears to be illegal and not as per the Companies Act, 2013. As such the answer to the third point is also negative The company has no right to auction and allot the shares to third parties ignoring the right of fully paid-up shareholders. The rental dues claimed by the respondent-company are not supported by a rental/ lease agreement which is agreed by the shareholder - the applicants are declared as the legitimate equity shareholders under Folio No. 50. It is hereby directed that the rectification of the register of members of the respondent-company by re-entering the total number of 100 equity shares belonging to the late husband of the first applicant and late father of the second applicant and third applicant in the share register of the company and further ordering to restore the total shareholding of the applicants as it existed prior to February 8, 2019 forthwith.

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• 2020 (7) TMI 559
  Approval of scheme of Amalgamation - merger of business - no proceedings pending inquiry or investigation in respect of the applicant-company - HELD THAT:- While dispensing with the meetings, this Bench directs that notices be sent to the Central Government through the office of the Regional Director (Northern Region), the Income-tax Authorities, Registrar of Companies, NCT of Delhi and Haryana, official liquidator and other sectoral regulators or authorities as required under sub-section (5) of section 230 of the Companies Act, 2013 who may have significant bearing on the operation of the applicant-companies along with copy of required documents and disclosures required under the provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Copies of the notices along with the proof of dispatch be filed before this Bench along with the affidavit of compliance. All the aforesaid directions are to be complied with strictly in accordance with the applicable law including forms and formats contained in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 as well as the provisions of the Companies Act, 2013 by the applicant. Application allowed.

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• Insolvency & Bankruptcy

• 2020 (7) TMI 558
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The admitted document executed between the Parties, which is latest in terms of time is the Agreement dated 1st October, 2016 and considering the contents of the same, there are no reason to disagree with the Adjudicating Authority that after the earlier MoU s parties entered in to the execution of an arrangement as seen in the Builder Buyer Agreement dated 1st October, 2016. No doubt, in the primary stage, after the MoU dated 30th May, 2013 two Buyer/Seller Agreements dated 03.06.2013 were executed but then that arrangement appears to have been given up when Parties entered into further three fresh MoU s dated 01.06.2014, 01.06.2015 and 01.06.2016 referring to earlier Cheque of loan dated 01.06.2013. In these circumstances, where record shows the latest arrangement between the Parties of Builder Buyer Agreement dated 01.10.2016 and even possession has been offered on 7th March, 2018 (Page 290), which cannot be said to be beyond the period stipulated in the Agreement, there are no reason to admit the Application under Section 7 as was filed by the Appellant. Appeal dismissed.

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• 2020 (7) TMI 557
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and default or not - Jurisdiction of Tribunal to entertain the appeal - time limitation - HELD THAT:- The last invoice was issued on January 11, 2011. Thereafter, on July 20, 2015 and August 3, 2016, the respondent had admitted the past dues, which were beyond the threshold of limitation. but stated that the respondent was making every effort to effect payment of the relevant amount. Subsequently, both parties had executed a memorandum of understanding on August 16, 2018, whereby the respondent had agreed to make payment within 6 months, i. e., by February 15, 2019. Thus, in view of the section 25(3) of the Indian Contract Act, 1872 which overshadowed section 18 of the Limitation Act, 1963, the matter is within the purview of the law of limitation under article 137 thereof. It is evident from the ledger statement filed by the applicant/operational creditor annexed with the application, that the payment of claim amount of Rs. 1,20,78,456.34 has been defaulted by the respondent/corporate debtor and has been agreed as due and payable. The registered office of the corporate debtor is situated in Jaipur and therefore, this Tribunal has jurisdiction to entertain and adjudicate this application - Hence, this Tribunal is of the view that it is a fit case to initiate the corporate insolvency resolution process (CIRP) against the respondent/corporate debtor as envisaged under the provisions of the Insolvency and Bankruptcy Code, 2016. Application admitted - RP appointed - moratorium declared.

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• PMLA

• 2020 (7) TMI 556
  Grant of Regular bail - Money Laundering - siphoning of funds - the allegation is that the amount was given by RFL to entities which were, directly or indirectly, owned or controlled by the applicant, or in which the applicant otherwise had financial interest, including companies linked to RHC - HELD THAT:- Sanctity must attach to filing of a complaint pursuant to an ECIR. It must, as a matter of law, be taken to be the culmination of investigation into the offence to the extent the offence is defined in that complaint. No one is seeking to prevent or forestall further investigation but for the sake of on-going investigation, this court cannot warp the entire concept of pre-trial imprisonment and bail. Nowhere is it the law that an accused, yet to be tried, is to be kept in custody only on a hunch or a presumption that he will prejudice or impede trial; or to send any message to the society. If anything, the only message that goes-out to the society by keeping an accused in prison before finding him guilty, is that our system works only on impressions and conjectures and can keep an accused in custody even on presumption of guilt. While in certain cases such message may even quench the thirst for revenge of the lay society against a person they believe to be guilty, such action would certainly not leave our criminal justice system awash in glory. An investigating agency must come to court with the confidence that they have arrested an accused, based on credible material, and have filed a complaint or a chargesheet with the certainty that they will be able to bring home guilt, by satisfying a court beyond reasonable doubt. But when an investigating agency suggests that an accused be detained in custody as an undertrial for a prolonged period, even after the complaint or chargesheet has been filed, it appears that the investigating agency is not convinced of its case and so it fears that the accused may get-off by discharge or acquittal; and that therefore the only way to punish the accused is to let him remain in custody as an undertrial. People s trust in the criminal justice system must rest on surer footing than on pre-trial punishment by keeping accused persons in prison. Statistics available on the Delhi Prisons website as on 31.12.2019 show that the proportion of undertrials to convicts in Delhi prisons is about 82 percent to 18 per cent. These numbers are telling. Prison is a place for punishment ; and no punishment can be legitimate without a trial. There must be compelling basis, grounds and reasons to detain an undertrial in judicial custody, which this court does not discern in the present case - It is beyond contention that the consequences of pre-trial detention are deleterious; and that keeping an undertrial in jail seriously jeopardises the preparation of his legal defence. If kept in custody, the applicant will not be able to effectively brief and consult with his lawyers, collate evidence in his defence and thereby defend himself effectively. Thereby the applicant will be denied his right to fair trial guaranteed under Article 21 of the Constitution. There seems to be no rationale for continuing the applicant s judicial custody as an undertrial in this case - this court is persuaded to the applicant to regular bail in the proceedings registered under sections 3/4 of the Prevention of Money Laundering Act 2002 - Bail application allowed.

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• Central Excise

• 2020 (7) TMI 555
  Utlization of CENVAT Credit - one-to-one co-relation between input services and output services required or not - period March 2009 to August 2009 - time bar - scope of SCN - HELD THAT:- The manufacturer of excisable goods can take credit of CENVAT paid on input services and there is no such requirement for one to one co-relation and there is no bar on the utilization of CENVAT credit availed on input services for payment of tax on excisable goods manufactured and cleared. It has been held in numbers of cases that as far as the inputs or input services are availed on payment of duty and as long as they are capable of being used in the provision of service Tax and manufacture of excisable goods credit cannot be denied; there is no requirement of one to one correlation. Time Limitation - HELD THAT:- Timely scrutiny of Returns by the Department would have shown that there is huge accumulated credit; Department was free to further investigate the matter and issue timely SCN. In view of the same, the appellants have a strong case on limitation too and the SCN is barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2020 (7) TMI 554
  Nestle Milky bar and Eclairs - Benefit of exemption under N/N. 6 /2002-CE dated 1.3.2002 as amended with notifications 3/2006 dated 1/3/2006 and 12/2012 dated 17/3/2012 - classification of goods - Whether the confectionery products cleared by the appellant under Chapter 1704.90 are white chocolate or not? - extended periof of limitation - interest and penalties - HELD THAT:- Both the Revenue as well as the appellant do not dispute the classification of the impugned products under CETH 1704. The only difference in the argument is based on the presence or absence of ingredients like cocoa butter and hydrogenated vegetable oils. As per Tariff Entry 1704 refers to sugar confectionery (including white chocolate) not containing cocoa. Chapter 17 does not include sugar confectionery containing cocoa or chocolate (other than white chocolate) in any proportion and sweetened cocoa powder (heading 18.06). HSN Explanatory Notes to Heading 170490 other says that the heading covers most of the sugar preparations which are marketed in a solid or semi-solid form, generally suitable for immediate consumption and collectively referred to as sweetmeats, confectionery or candies - thus, white chocolate can be classified under Chapter 17 and white chocolate composes sugar, cocoa butter, milk powder and flavoring agents, but not containing more than mere traces of cocoa. Whether or not the impugned products merit classification as white chocolate in terms of the HSN Explanatory Notes? - HELD THAT:- Tribunal, Allahabad in the case of M/S MARKO FOODS SHRI NAMAN MANDHYAN, PARTNER, M/S PAHLADRAI CONFECTIONARIES PVT. LTD. SHRI MOHIT VAID DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2018 (9) TMI 14 - CESTAT ALLAHABAD] held that a similar product i.e., Parle 2-in-1 Eclairs and Kismi Toffee and Bar , to be boiled sweets containing no cocoa butter and having 8% fat content, are not white chocolate under Tariff Item 1704 90 30 of Central Excise Tariff and held that the said goods are eligible to benefit of Notification Nos.6/2002-CE, 3/2006-C.E. and 12/2012-C.E. - the Department has not conclusively established that the appellant s claim that the impugned products did not contain cocoa butter during the impugned period with any indisputable proof or test report. The impugned goods i.e. Nestle Milky bar and Nestle Milky bar Eclairs are not excluded for the purpose of exemption contained in the Notifications. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (7) TMI 553
  Principles of natural justice - service of assessment order - contention of the petitioner is to the effect that no orders of assessment have been passed and hence the demands are non-est and invalid - HELD THAT:- Though the orders of assessment appear to have been dispatched, they have been returned and hence have not been served upon the assessee. Learned counsel for the petitioner confirms that copies of the orders of assessment have been received by him now and the same will be duly handed over to the petitioner as well. In the light of the position that the orders of assessment giving rise to the impugned demands admittedly have not been served upon the petitioner, the impugned recovery notice has no legs to stand and is hence quashed. The interim stay of recovery granted on 15.07.2020 will continue for a period of four (4) weeks from today to enable the petitioner to take such action as it may be inclined as against the orders of assessment. Petition disposed off.

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• 2020 (7) TMI 552
  Disbursement of Refund amount - assessment year 2008-2009 - HELD THAT:- In the counter affidavit filed by the respondents, the liability to make refund is admitted. Therefore, the reason now stated through the learned Special Government Pleader cannot be accepted. The respondents are directed to make the petition mentioned refund to the petitioner without any delay. Of course the respondents will also be liable to pay the said amount along with statutory interest. This amount shall be paid within a period of twelve weeks from the date of receipt of a copy of this order. Petiton allowed.

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• 2020 (7) TMI 551
  Validity of assessment order - TNVAT Act - periods 2011-12 and 2012-13 - allegation is that the impugned assessments are passed entirely upon the report of the officials of the Enforcement Wing and do not reflect any independent application of mind on the part of the Assessing Officer - Circular No.3/2019 - HELD THAT:- Even in the case where there is an adverse report by the Enforcement Wing in regard to a particular issue, the Assessing Officer is at liberty and in fact ought to examine the issue independently. This has admittedly not been done in this case. Hence, the impugned orders are quashed and the Writ Petitions allowed.

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• Indian Laws

• 2020 (7) TMI 550
  Grant of Regular Bail - Fraud - siphoning of public money - disbursement of loans to shell entities - HELD THAT:- While a fraction of the money trail of Rs. 2000 crores has been recovered, the other fraction still remains untraced as yet and investigation regarding the same is ongoing, by the Economic Offences Wing as well as independently by SEBI. The SEBI itself is still investigating fraud of about Rs. 600 crores and has recorded the same in its order dated 14.03.2019. Moreover, the loans granted by the Petitioner to the following entities amounting to over Rs. 600 crores are still under investigation. The petitioner being influential is capable of tampering with evidence and influencing witnesses who were his subordinates. As apparent from the various documents and the bail applications themselves, there is no denial of the Complainant Company s funds by the accused persons having been siphoned away. In addition, there is a higher apprehension of the accused persons including petitioner herein absconding as they are aware that they are likely to be convicted. Further, the conduct of the Accused with respect to internal investigation being carried out by AZB Partners is also relevant as the Accused refused to participate in the investigation - In addition, there are various complaints and FIR which have been filed by the Complainant Company and are pending investigation. The Accused has also been made a suspect in another case emanating from FIR No. 189/2019 dated September 23, 2019 which is pending at the stage of cognizance. It is pertinent to note that this is not an isolated instance and there are various other frauds committed by the accused persons. Agencies like SEBI, ED and SFIO are also investigating REL. It is settled law that economic offences are considered to be grave offences especially when public money is involved and that the Courts have to be careful in granting bail in such cases. In view of facts and law discussed and the fact that further investigation is at the crucial stage regarding fraud committed by accused for worth of Rs. 2,000/- crores plus of public money, there is apprehension that the petitioner may tamper with the evidence and influence the prosecution witnesses, therefore, this Court is not inclined to grant bail - Petition dismissed.

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