Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 27, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Expiry of validity of E-way bill - The GSTN authority is required to consider the feasibility of providing an additional field in the online form to be filled by dealers/transporters to obtain E-way bill, such that an additional field may be provided to feed the vehicle type i.e. normal or ODC etc., as may allow for the validity of the E-way bill to be issued with appropriate validity printed on that form issued to the concerned. - HC
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Valuation of taxable supply - inclusion of cost of Diesel - providing service of transportation of goods by road using trucks - Free of Cost (FOC) material provided by service recipient - The value of diesel filled free of cost (FOC) by the service recipient is not includable in the value of the GTA service proposed to be provided by the Applicant in the facts and circumstances of the present application subject to conditions as mentioned in draft Transport Service Agreement/ contract incorporated in the body of this decision/ruling. - AAR
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Classification of services - Restaurant Service or Outdoor Catering Service - providing services relating to supply of food to the employees of NTPC Anta at the premises rented from them - the activities of selling articles for human consumption at pre-decided rates to the employees of the recipient at canteen of NTPC, Anta by the applicant would be fall under the ‘restaurant service’ and are classifiable under HSN 9963 - AAR
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Classification of goods - Anna Malai Mithai - The product in question i.e., ‘Anna Malai Mithai’ is a product made out of Skimmed Milk Powder, Sugar & Whey Powder as main ingredients with Emulsifiers etc. put up in small sachet/pouch in semi-liquid (paste) consistency, ready for consumption. The product cannot be termed as Dairy Product or Sugar Confectionery - The product would merit classification as Miscellaneous Edible Product as ‘Sweetmeat’ - AAR
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Levy of GST - providing buses on hire (service) - supply of services to BCLL, AICTSL, JCTSL (State Government Co.) - The different tax liability cannot be fastened on identical service by terming them as "rent" and "hire". Further, it may be noted that under the consideration under the agreement in the form of "hire". - supply covered under the agreement entered into by the applicant with AICTSL is eligible for benefit of exemption - AAR
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Classification of supply - administering of COVID-19 vaccination by hospitals - Generally, the primary requirement of the recipient would be the receipt of the vaccine, basing on his choice i.e., Covishield or Covaxin. Thus, the supply of goods constitutes the major supply. The proper administration of the vaccine by the technically qualified personnel as prescribed by the guidelines of the government becomes the ancillary supply, which involves 'service charge'. Hence the taxability of the total transaction in the instant case is based on the tax rate of the principal supply i.e., sale of vaccine @ 5%. - Non an health service - Benefit of exemption no allowed - AAR
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Classification of goods - Ber Berry - containing the ingredients jujube fruit, sugar, salt, permitted preservative (E-211] and mixed spices - The process of manufacture of product of the Applicant is not simple to cover in the chapter 0811. The process of the applicant is preparation of fruit which contained preservative and other ingredients i.e. sugar, salt and some spices also - It is found that as per the ingredients and process for manufacture of product in question given by the Applicant, the said product is not covered under the chapter 0811 and rightly classified/covered under the chapter heading number 2008 of the tariff. - AAR
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Classification of goods - Roof Mounted AC package Unit - the Roof Mounted AC package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in Railway coaches and nowhere else - further, it is observed that as per Section Notes and Chapter Notes, parts suitable for use solely or Principally with the articles of those chapters are covered under chapter 86 to 88. - Thus, the classification of the Roof mounted AC package Unit manufactured as per the specific design and layout provided by the railways (RDSO) and supplied to the Indian Railways only and no where else, falls under chapter 86.07 of the GST Tariff. - AAR
Income Tax
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Assessment u/s 153A - unexplained investment - the Assessing Officer failed to record as to how the documents found during search reflected any undisclosed income of the assessee. Assessing Officer, without even demonstrating/or drawing any nexus of the seized documents with the undisclosed income of the assessee, merely on the ground that the seized documents belong to the assessee initiated proceedings under Section 153C of the Act, which is against the settled position of law in several decisions of this Court. - HC
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Validity of order as exercise of power u/s 281 - jurisdiction of TRO - Certain transfers to be void - validity of purchase of property being land and farm house - t the order impugned in declaring the transfer of the property in favour of the Petitioner as void in terms of Section 281 of the Act, 1961, is without jurisdiction and is, accordingly, set aside. - HC
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Deceleration under Direct Tax Vivad Se Vishwas Act, 2020 - Revival of original declaration / order - validity of second and revised declaration -admittedly, Respondents, pursuant to filing of revised/fresh declaration by the Petitioner dated 23rd January, 2021, entertained the said declaration and examined the same on merits and, thereafter, rejected it vide order dated 15.03.2021 which is our opinion has no legal effect, we are of the opinion that equities would be balanced if we direct the parties to comply with the certificate dated 20.01.2021 issued in favour of the petitioner pursuant to original declaration as per section 5(2) of the scheme i.e. within a period of fifteen days from today. - HC
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Nature of expenditure - addition of write off of investments - the claim of loss accruing or arising as investment in equity shares, non-convertible debentures and zero coupon redeemable preference shares is not capital loss but eligible for deduction in computation of business income as business loss, as held by Hon’ble Madras High Court in the case of Electronic Corporation of Tamilnadu Ltd., for the sale of shares and amount advanced by assessee to various industries towards working capital, the real character of the transaction was those akin to loans and not equity investment. - AT
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Foreign Tax Credit (FTC) under Article 24(2) of the India-UK DTAA read with Section 90 - As the assessee has filed original return of income before the due date of filing of the return and form number 67 was also filed prior to the due date of filing of the return, the learned AO Central processing centre as well as the learned CIT – A has grossly erred in holding that assessee has not filed return of income and form number 67 before the due date of filing of the return. These are on record but lower authorities have ignored it for the reasons best known to them. - AO directed to allow Foreign Tax Credit (FTC) - AT
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Allowable business expenditure - the ld. CIT(A), without considering the same, confirmed the order of the Assessing Officer by noting that the expenses are relating to 2G Spectrum Scam. In our opinion, both the authorities below have disallowed the expenditure claimed by the assessee on the ground that it was relating to 2G Spectrum case. Both the authorities below have not examined the outcome of the Special CBI Court judgement. Further, we are of the opinion that whether the expenses incurred by the assessee relating to business and eligible for claiming deduction or not, one must look into the judgement of the Special CBI Court, where, the Directors and shareholders of the assessee company are accused and both the authorities below have failed to consider the judgement of the Hon’ble Special CBI Court. - AT
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Interest u/s 244A - The rectification order dated 31.07.2020 having failed to calculate interest u/s 244A (which is automatic unless delay is attributable to assessee’s fault), the first appellate authority was within his jurisdiction to have entertained the claim of interest on delayed refund u/s 244A which was repeatedly requested by the assessee - A.O. directed to take a decision in accordance with law and grant interest u/s 244A of the I.T.Act with reference to the delayed refund amount - AT
Indian Laws
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Territorial Jurisdiction of HC to entertain appeal - Orissa High Court or Andhra Pradesh High Court - It is not in dispute that before filing an application under Section 11(6) of the Act before the High Court of Orissa at Cuttack, the respondent – claimant moved an application before the Court at Visakhapatnam under Section 9 of the Arbitration Act. In that view of the matter considering Section 42 of the Arbitration Act, the High Court of Andhra Pradesh at Hyderabad alone would have jurisdiction to decide the subsequent applications arising out of the Contract Agreement and the further arbitral proceedings shall have to be made in the High court of Andhra Pradesh at Amaravati alone and in no other court. - SC
IBC
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CIRP proceedings - NCLT admitted the application - dispute was existing or not - There is no quarrel with the law laid down by this Tribunal that the electronic evidence i.e. email or even whatsapp can also be looked into in order to find out the fact about an existing dispute between the parties which can be used as a shield by the corporate debtor to avoid the attack of the operational creditor with the filing of an application under Section 9 of the Code but in the present case, operational creditor has been shown in the books of accounts of the corporate debtor as sundry creditor and had admitted the debt even in the whatsapp chat but has selectively referred to the chat regarding defect in the supplied goods and raised this issue when the application under Section 9 was filed - AT
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Appellant is subsidiaries or affiliate of the Unitech Limited or not - Unitech Holdings Limited a wholly owned subsidiary of Unitech Limited has shareholding to the extent of 41.95% in the Appellant. - we have no doubt that the Appellant is an affiliate of Unitech Group and Moratorium imposed by the Hon’ble Supreme Court by order dated 20.01.2020 as clarified by further order dated 24.03.2021 was applicable on the Appellant who was also entitled for the benefit of the said orders. Learned Adjudicating Authority committed error in holding that orders dated 20.01.2020 and 24.03.2021 are not applicable to the Appellant who is a joint venture of Unitech Holdings Limited. - AT
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Seeking direction to proposed Resolution Applicant to approach the Committee of Creditors (CoC) for deciding his eligibility under section 29A to submit a resolution plan for consideration - MSME status of the corporate debtor - almost 3 years of the initiation of the CIRP gone - As sufficient opportunity had been given to Mr. C.E. Fernandes for presenting a feasible and viable resolution plan but he eventually failed and withdrew his proposed plan, the next step under section 33 of IBC was undertaken by the Resolution Professional. - Appeal dismissed - AT
Central Excise
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Refusal to de-seal cigarette manufacturing machines and DG sets - validity of the declaration of trade notice - The Excise officer is posted there 24x7 hours to check the production and accordingly, charged the excise duty, therefore, no purpose would be served by keeping the record or insisting the manufacturer to declare the capacity of the machine. It is the responsibility of the Excise Officer to watch 24x7 hrs and check the capacity of production in the factory before removing the goods. - The impugned action of the respondents is wholly without jurisdiction for which the petitioner is liable to be compensated, hence instead of assessing losses caused in this writ petition, it is left to the petitioner to take recourse available under the law against the respondents. - HC
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EOU - achievement of NFE - deemed exports / third party exports - Mere non-mention of the noticee's name or its status in the shipping bills - the performance of the EOU’s is monitored by the Development Commissioner to whom the return showing the export turnover is furnished by the unit in the manner as prescribed. There is not even a whisper in the show cause notice or in the impugned order, that Development Commissioner has while evaluating the export performance of the unit, has denied the benefit of export in respect of these consignments cleared by the appellant in terms of para 6.10 of the Import Export Policy, 2009-14 read with para 6.18 of the Handbook of Procedures, 2009-14. - AT
Case Laws:
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GST
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2022 (7) TMI 1107
Search and seizure - Gold Flake Super Star cigarettes - illicit trade/supply - jurisdiction of CGST Delhi North Commissionerate - reasonsto believe - HELD THAT:- Issue notice, returnable in two weeks. There will be a stay of the impugned judgment till the next date of hearing.
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2022 (7) TMI 1106
Grant of Bail - requirement to make various deposits - HELD THAT:- The appellant, on instructions states that after the initial deposit of Rs. 60 crores, Rs. 40 more crores have been deposited totaling to Rs.100 crore - the appellant will make arrangements to ensure that Rs. 50 more crores is deposited in 12 weeks and another Rs. 50 more crores within 12 weeks thereafter, totaling to Rs. 200 crores. The appellant is granted bail on terms and conditions to the satisfaction of the trial Court apart from have been already stipulated - appeal disposed off.
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2022 (7) TMI 1105
Seeking release of seized goods - Expiry of validity of E-way bill - requirement to deposit of 25% of the disputed demand of penalty - HELD THAT:- Any amount that may have already been deposited by the petitioner shall be adjusted towards the amount required to be deposited under this order - The GSTN authority is required to consider the feasibility of providing an additional field in the online form to be filled by dealers/transporters to obtain E-way bill, such that an additional field may be provided to feed the vehicle type i.e. normal or ODC etc., as may allow for the validity of the E-way bill to be issued with appropriate validity printed on that form issued to the concerned. The above exercise if done may also allow for accurate tracking of vehicles and fewer disputes between the revenue authorities and the transporters with respect to validity period of E-way bills. Here, it may be noted, under Rule 138 of the UPGST Rules, the period of validity of an E-way bill has been provided on the basis of 100 Km of distance covered per day by an ordinary vehicle. Application disposed off.
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2022 (7) TMI 1104
Refund of unutilized input tax credit - rejection of petitioner s appeal on the ground that, it did not reflect zero rated turnover in the returns - suppression of sales turnover or not - period April, 2018 to March, 2019 - section 16(3) of Integrated Goods and Services Tax Act, 2017 (IGST Act) read with section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act), Maharashtra Goods and Services Tax Act, 2017 (MGST Act) and rules framed therein - HELD THAT:- Since the annual returns have been filed and it is not clear whether respondent No.4 got an opportunity to consider the annual returns, the matter has to be remanded to respondent No.4 for de novo consideration. The statement of Mr.Paranjape that copy of the annual returns will be supplied to respondent No.4 within two weeks from today is accepted. The matter is remanded for de novo consideration. Respondent No.4 shall dispose the appeal within four weeks of receiving copy of the annual returns filed - Petition disposed off.
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2022 (7) TMI 1103
Valuation of taxable supply - inclusion of cost of Diesel - providing service of transportation of goods by road using trucks - contractual scope of the customer - Whether the value of Diesel as filled in the vehicle by applicant, is not required to be included in the value of freight charged by Applicant for the said transportation? - HELD THAT:- The Applicant is about to enter into contract/ Agreement with service recipient for providing GTA services. As per the terms of the draft agreement, the Applicant is required to transport the goods belonging to the service recipient by deploying trucks/ trailers. The scope of service of the Applicant is to provide the truck/ trailer along with the driver and report at the unit of the service recipient Apart from above, the term of agreement provides that the fuel required for carrying out the transport of goods is in the scope of the service recipient and not in the scope of work of the Applicant. That fuel will be in the scope of the service recipient and the Applicant is not concerned, in any manner, with reference to the free of cost fuel. The jurisdictional officer in his report has given the views that GST is not leviable on Free of Cost (FOC) material provided by service recipient to applicant when such goods are in the scope of service recipient as per contractual terms. Transportation Activities - HELD THAT:- GTC has capacity of arranging trucks/trailers listed in Annexure-1 hereto. GTC will undertake transportation activities for ABC and the required trucks/trailers along with the driver and assistant will report at the day/time and place directed by ABC. The trucks/trailers so placed by GTC along with driver and assistance will be required to undertake transportation of the goods in accordance with the instructions of ABC - The activity of safe transportation is critical, and it is incumbent on GTC to ensure that goods are safely transported from point of origin to point of destination. For this, GTC ensures that it has experienced drivers and assistants who have the capacity to undertake transportation of industrial goods on trucks/trailers listed in Annexure-1 and understand load bearing capacity of the given trucks/trailers, maintenance of speed limit on full load, adequate safeguard measures on bad roads and all other measures warranted for safe transportation of goods. GTC is strictly instructed that under no circumstances would any quantity of goods carried in the truck/trailer be disposed of, other than by way of delivery of the goods to the destination against receipt. For any reason, if the consignment is not accepted at the destination point, GTC will take necessary directions from ABC on the next steps. Under no circumstance, the consignment it to be brought back without prior written approval of ABC - Responsibility for any deviation and consequent losses during transportation vests solely on GTC. Consideration - HELD THAT:- The value of fuel, which is in the scope of ABC, shall neither be adjusted with nor by any means affect the payment to be made by ABC against the bills issued by GTC - All payment will be subject to deduction of income tax (TDS/TCS), wherever applicable any other taxes/levies which may be levied by Government from time to time. Responsibilities of GTC - HELD THAT:- GTC would arrange to get all the trucks/trailers weighed first and then place the trucks/ trailers for loading. Before loading the material, dispatch instruction should be handed over along with tare weight slip, thereafter only, truck will be loaded. After loading the truck, the truck should be again weighed, and net weight of the material would be arrived at for preparation of Tax Invoice - GTC will ensure to obtain acknowledgement at the point of destination. At the destination place, goods carrying truck/trailer will be gross weighted and after unloading goods truck/trailer will be tare weighted. Net Quantity would be receipted by ABC. the said results obtained at the destination would be final and no dispute in respect thereof would be entertained by ABC. Responsibilities of ABC - HELD THAT:- It is seen that as per the proposed agreement/contract, the fuel (diesel) is not in the scope of service of the Applicant. The proposed agreement/contract also provides that fuel (diesel) shall not be adjusted with nor affect the payment to be made by the service recipient against the bills issued by the applicant. Given this, as per the proposed contractual terms, the scope of service of the Applicant does not include the fuel (diesel) which is sought to be tilled by the service recipient on free of cost (FOC) basis for the given transportation. As per section 7 CGST Act, all forms of supply of services are considered as supply . It is also seen that Schedule I CGST Act which provides the levying GST on supplies made without consideration. In any case, it stood submitted by the Applicant that the proposed transaction is not being planned with related parties and therefore also Schedule I CGST Act is not applicable. It is seen that section 15 (2)(b) only includes the amount that the supplier is liable to pay in relation to such supply, but which has been incurred by the recipient and not included in the price actually paid or payable. Hence, trigger of section 15 (2)(b) CGST Act can be said to apply when the contractual liability is that of the supplier, but the same stands paid by the recipient. In the issue at hand, it is seen that the contractual liability of FOC diesel is not that of the Applicant. Therefore, FOC diesel cannot be included in the scope of supply proposed to be made by the Applicant. There is no economic gain made by the Applicant and no consideration received in reference to FOC diesel. Since contractual liability of FOC diesel is not proposed to be vested on the Applicant, the present proposed transaction cannot fall under section 15(2)(b) CGST Act. FOC diesel is a condition of the contract and not a consideration of the contract. It is also seen that the Draft GST law proposed to include the following in section 15 (2) CGST Act the value, appropriated as appropriate, of such goods and/or services as a supplied directly and directly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued - the intent of the legislation is required to be seen. Therefore, the present section 15(2)(b) CGST Act cannot be used to include the given transaction since contractual liability on FOC diesel is not being vested on the Applicant. Revenue Neutrality - HELD THAT:- The issue is also revenue neutral inasmuch as even if the value of the free of cost diesel was required to be included in the value of GTA service then also the service recipient of the Applicant would be in a position to take input tax credit of the GST charged on such an invoice raised by the Applicant. The Hon ble Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] has held that where the service provider receives free of cost goods/material from the service recipient, no amount is charged for such goods/material and, therefore, the value of such goods/ materials cannot be included in the gross amount charged by the service provider for the service provided by him. The value of diesel filled free of cost (FOC) by the service recipient is not includable in the value of the GTA service proposed to be provided by the Applicant in the facts and circumstances of the present application subject to conditions as mentioned in draft Transport Service Agreement/ contract incorporated in the body of this decision/ruling.
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2022 (7) TMI 1102
Classification of services - Restaurant Service or Outdoor Catering Service - providing services relating to supply of food to the employees of NTPC Anta at the premises rented from them - rate of tax applicable, for providing such services, on consideration received from NTPC - rate of tax applicable, for providing such services, on consideration received in the form of sale of food items to the employees/workers/others - HELD THAT:- A fixed amount is paid by the NTPC for running and maintenance of canteen. Balance is recovered from those procuring food from the canteen. On the behalf of M/s Indian Coffee Workers Cooperative Society Limited, Mumbai, Shri K. B. Sanjayan, Manager, M/s Indian Coffee House, NTPC, Anta, Rajasthan has acknowledged the aforesaid Service Purchase Order by making signature as Authorised Signatory over it in token of acceptance of the same. Further, on perusal of Bill of Quantity and S. No. 16, 21 24 of the Service Purchase Order dated 28.09.2021, it is find that applicant has provided manpower i.e. Manager, clerk, cook, cleaner, helper etc. for running maintenance of the canteen at NTPC, Anta for a consideration amounting to Rs. 68,45,452/- for a period of 10 months. The activity undertaken by the applicant is covered under Supply as defined under Section 7 (1) of the GST Act, 2017 - the activity of supply of manpower service for running maintenance of the canteen for consideration in the course of business is covered under supply as per section 7 of the CGST Act, 2017 and liable to tax as per section 9 of the CGST Act, 2017. The service provided by the applicant is neither classifiable as Restaurant Service nor Outdoor Catering Service, rather it is classifiable as Temporary staffing services under heading No. 998514 and attracts GST @ 18% as per S. No. 23 (iii) of the Notification No. 11/2017-CT (Rate) dated 28.06.2017 (as amended). Applicable tax rate on the supply made by the applicant - HELD THAT:- In the instant case supply made by the applicant is classifiable under Chapter, Section or Heading 998514 under SI. No 23(iii) of Notification No. 11/2017-CT (Rate) dated 2S.06.2017 as amended time to time and is taxable at the rate of @ 18%. Rate of tax applicable, for providing services, on consideration received in the form of sale of food items to the employees workers others - HELD THAT:- In the present case the canteen is not located in any premises having hotel accommodation services. Rather is it situated at premises of NTPC on a contractual agreement on rent. Hence the case of the applicant is not covered in exclusion in respect of item (ii) of serial number 7 of the table of the said notification No. 11/2017-CT(R) dated 28.06.2017. As far as relevancy of Outdoor catering in respect of applicant s services is concerned, it crystal clear that the supply being undertaken by the applicant is not event based or occasional in nature which is evident from the agreement which provides for the operation of the agreement for a period of 10 months. Thus, the activities of selling articles for human consumption at pre-decided rates to the employees of the recipient at canteen of NTPC, Anta by the applicant would be fall under the restaurant service and are classifiable under HSN 9963 under SI. No. 7(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended time to time and attract 5% GST provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
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2022 (7) TMI 1101
Classification of goods - Anna Malai Mithai - the mithai is containing the ingredients Sugar, Vegetable Fat, Skimmed Milk Powder, Whey Powder, Emulsifier and other permitted Flavor s, which is identical to the commonly known Indian sweet Rabdi - to be classified under the Tariff Heading 2106 as Sweet Meats or under Tariff Heading 0404 as other dairy product consisting of natural milk constituents? HELD THAT:- Chapter 04 essentially covers dairy products and as per Chapter Note 4 of Chapter 04, the heading 0404 applies interalia to products consisting of natural milk constituents whether or not containing added sugar or other sweetening matter or flavoured or containing added fruit or cocoa. Now while chapter head 0401 to 0406 are meant for natural dairy products viz. Milk, Cheese, Butter Milk, Butter, Whey etc. and other products made out of such items, the product in question i.e. Anna Malai Mithai contains Skimmed Milk Powder, Whey Powder, Sugar, Emulsifiers etc. as predominant ingredients, which would not make it appropriate to be classified as a product of natural milk constituents as has been pleaded by the Applicant. By no stretch of imagination, the product in question can be brought under the ambit of Chapter 04 of the HSN. Thus, we definitively rule out the classification of the impugned product under Chapter 04 of the HSN. Classification of the product under Chapter 1704 - HELD THAT:- The Chapter 17 of the HSN is for Sugar Sugar Confectionery . While 1701 to 1703 headings relate to Sugars in different forms, the Heading 1704 mentions Sugar Confectionery. Sugar Confectionery has nowhere been specifically defined under the GST law or under HSN - the product Anna Malai Mithai cannot be terms as Chewing Gum (1704 10 00) or Jelly Confectionery (1704 90 10) or Boiled Sweet (1704 90 20) or Toffee, caramel etc (1704 90 30). Clearly the product is neither a gum nor boiled sweet nor toffee or caramel. That leaves residual entry Others (1704 90 90) if at all the impugned product is to be brought under the purview of Chapter 17. There is no specific entry under Chapter 17 which would encompass the impugned product even by a remote chance. Moreover, the residual entry i.e., Others (1704 90 90) is to take care of other similar products of the same family viz. Sugar Confectionery which do not find specific mention against rest of the subheadings. The impugned product i.e., Anna Malai Mithai is made of Skimmed Milk Powder, Sugar, Whey Powder, Emulsifiers flavours etc. mixed together in a semi-liquid form and packed in elongated pouches/sachets and ready for consumption. The ingredients, process and final shape of the impugned product takes itself out of family of Sugar Confectionery. Impugned product vis-a-vis heading 2106 - HELD THAT:- Chapter 21 essentially covers Miscellaneous Edible Products . Obviously, the term Miscellaneous indicates that this particular chapter would contain all such edible products which are not specifically covered elsewhere under the Tariff. The Chapter Headings further describes various edible preparations such as extracts of Coffee, tea, Yeast, Soups, broths, Sauces etc under Heading 2101 to 2105. Further as is the convention, heading 2106 has been given to include all those items which are not elsewhere specified. Furthermore, 2106 further sub-divides various edible items like Protein Concentrates, Pan Masala, Sharbats, Supari, Custard Powder etc. under Sub-headings 21061000 to 21069080 and to conclude there is a residual entry as Others under 2106 90 99. The product in question i.e., Anna Malai Mithai is a product made out of Skimmed Milk Powder, Sugar Whey Powder as main ingredients with Emulsifiers etc. put up in small sachet/pouch in semi-liquid (paste) consistency, ready for consumption. The product cannot be termed as Dairy Product or Sugar Confectionery - the impugned product viz. Anna Malai Mithai would merit classification as Miscellaneous Edible Product under Chapter Heading 2106 90 99, as Sweetmeat and chargeable to GST as applicable.
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2022 (7) TMI 1100
Levy of GST - providing buses on hire (service) - supply of services to BCLL, AICTSL, JCTSL (State Government Co.) - Rate of tax - Admissibility of Input tax credit - HELD THAT:- The supply relates to transportation of passengers on behalf of the client, where the buses are operated and maintained by the applicant and management of the route, slops and collection of fee is done by the client. Therefore, the service of transportation of passengers is being provide by the client. The supply being made by the applicant is that of mode of transportation and therefore, in the nature of renting / hiring of the mode of transport. While the Uttarakhand High Court in COMMISSIONER, CUSTOMS CENTRAL EXCISE VERSUS SACHIN MALHOTRA, RAJ KUMAR TANEJA, M/S. SHIVA TRAVELS [ 2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] had held that Renting and Hiring are different activities and are to be treated differently for taxation under the Finance Act. 1994. the Allahabad High Court in ANIL KUMAR AGNIHOTRI VERSUS COMMISSIONER, CENTAL EXCISE KANPUR [ 2018 (1) TMI 171 - ALLAHABAD HIGH COURT] has departed with the Uttarakhand High Court's. Also, the Honorable Gujarat High Court in the matter of Vijay Travels has held that renting and hiring are not different so far as tax treatment for service lax is concerned. The matter is currently before the Honorable Supreme Court. The different tax liability cannot be fastened on identical service by terming them as rent and hire . Further, it may be noted that under the consideration under the agreement in the form of hire . On a joint reading of the terms of the agreement, high court rulings. Entry No. 10 of Notification No. 11/2017 - Central Tax (Rate) and Entry No. 22 of Notification No. 12/2017 - Central Tax (Rale) it appears that supply covered under the agreement entered into by the applicant with AICTSL is covered under Entry No. 22 of Notification No. 12/2017 - Central lax (Rate) and is an exempt services - also para 8 of Board Circular No. 164/20/2021 GST dated 06.10.2021, perused, wherein it has been clarified on the recommendation of the GST Council that giving on hire in Entry No. 22 of Notification No. 12/2017 - Central Tax (Rate) includes renting of vehicles. Once the supply is exempt, the question relating to rate of tax and admissibility of input Tax credit is redundant.
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2022 (7) TMI 1099
Classification of supply - composite supply or not - administering of COVID-19 vaccination by hospitals - administering of COVID-19 Vaccine by clinical establishments (Hospitals) - supply of goods or supply of services - Health care services as per Notification No. 12/2017 Central Tax Rate dated 28.06.2017 or not - administering of COVID-19 vaccination by clinical establishment - exemption from GST or not? Whether administering of Covid -19 vaccine by hospitals is 'supply of goods or services or both goods and services'? - HELD THAT:- Basically, two activities are involved in this transaction, 'sale of vaccine' under 'supply of goods' and 'administering of vaccine' under 'supply of service'. When it comes to administering of the vaccine by hospitals, it involves a combination of two supplies, which are naturally bundled, i.e, 'supply of vaccine' and the 'service component' followed by way of administering the same. In the present case, both the supplies are intrinsically connected with each other, and it is viewed as a single package by the recipient, where he purchases the vaccine and gets it administered subsequently. In order to determine, which of the above two, is the principal supply, it would rather depend upon the normal or frequent practices followed in the area of business or the perception of the consumer / recipient as well. Generally, the primary requirement of the recipient would be the receipt of the vaccine, basing on his choice i.e., Covishield or Covaxin. Thus, the supply of goods constitutes the major supply. The proper administration of the vaccine by the technically qualified personnel as prescribed by the guidelines of the government becomes the ancillary supply, which involves 'service charge'. Hence the taxability of the total transaction in the instant case is based on the tax rate of the principal supply i.e., sale of vaccine @ 5 %. Whether the administration of Covid-19 vaccine by clinical establishments (hospitals) would qualify as Health Care Services as per Notification No.12/2017 Central Tax (Rate) dt. 28.06.2017 or not? - HELD THAT:- In this regard the dominant intention of the recipient is the receipt of the vaccine followed by its administration. In the instant case, there is no doubt that the applicant qualifies to be a clinical establishment but, the supply transaction is predominantly of sale of goods and not the service component of healthcare - It has been settled by various Advance Ruling Authorities that inpatient services are covered under the healthcare services extended by the clinical establishments, which are exempt under GST. By no stretch of imagination, the receipt of vaccine can be considered as inpatient services rendered by the hospitals in this regard. Thus, it is concluded that the exemption is not allowed in the instant case as claimed by the applicant under 'health care services' provided by the 'clinical establishment'. The taxability of the supply is under 'composite supply', wherein the principal supply is the 'sale of vaccine' and the auxiliary supply is the service of 'administering the vaccine' and the total transaction is taxable at the rate of principal supply i.e, 5%. The service charge of administering the vaccine as prescribed by the Central Government from time to time is applicable and inclusive of the total value of the composite supply.
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2022 (7) TMI 1098
Classification of goods - product marketed under brand name Ber Berry , manufactured and supplied by the applicant, containing the ingredients jujube fruit, sugar, salt, permitted preservative (E-211] and mixed spices - to be classified under the Tariff Heading 0810 as Jujube fruit (Ber/Bore) or under Tariff Heading 0811 as fruits cooked by steaming or under the Tariff Heading 2008 as fruits, otherwise prepared or preserved containing added sugar? HELD THAT:- The chapter 8 is covered either fresh fruit or fruit cooked by steaming/boiling in water only whereas the process of the applicant is more than the process covered under chapter 0811. In the applicants case, after the product soaked in hot water, transferred to steamed jacketed tank where it is cooked with steam and at this stage other ingredients i..e. sugar salt, preservative and some spices are added. The process of manufacture of product of the Applicant is not simple to cover in the chapter 0811. The process of the applicant is preparation of fruit which contained preservative and other ingredients i.e. sugar, salt and some spices also - It is found that as per the ingredients and process for manufacture of product in question given by the Applicant, the said product is not covered under the chapter 0811 and rightly classified/covered under the chapter heading number 2008 of the tariff. The case of Harith Budhraja (M/s Bharat Agro) [ 2018 (9) TMI 1864 - APPELLATE AUTHORITY FOR ADVANCE RULING UTTAR PRADESH ] is not applicable as in the instant case, the process of manufacture and ingredient of product i.e. Bery Berry is entirely different. Thus, the product Ber Berry , is rightly classifiable under the chapter heading 2008.
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2022 (7) TMI 1097
Classification of goods - Roof Mounted AC package Unit - to be classified under chapter 86079910 or not? - HELD THAT:- Ongoing through the exclusion clause of the Chapter 86 of the GST Tariff, it is found that the product Roof mounted AC package unit is not covers in the exclusion clause of Chapter 86 and parts of Railway and tramway is covers under chapter 86. In the case of COMMISSIONER OF C. EX., BANGALORE VERSUS SRI RAM METAL WORKS [ 1997 (11) TMI 265 - CEGAT, MADRAS ] the Hon'ble Tribunal has observed that In the case of railways, it goes without saying that the provision of water in the coach is a necessity and the coach can be taken to be complete with the fitment of the water tank. More so, when the water tank becomes ports of the coach itself Tariff Heading 8607 for assessment of the water tank - By applying the same analogy in the instant case also, we observe that the Roof Mounted AC Package Unit , specially meant for the Railways, as per the design and layout provided by them, are integral part of the coach and rightly classifiable under chapter 86.07. Further, applying the same analogy, in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. [ 1999 (9) TMI 284 - CEGAT, NEW DELHI ] the Hon'ble has observed that the Sanitaryware are also design for fitment into the Coach they would be classifiable under Heading 86.07 . Thus, the Roof Mounted AC package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in Railway coaches and nowhere else - further, it is observed that as per Section Notes and Chapter Notes, parts suitable for use solely or Principally with the articles of those chapters are covered under chapter 86 to 88. Thus, the classification of the Roof mounted AC package Unit manufactured as per the specific design and layout provided by the railways (RDSO) and supplied to the Indian Railways only and no where else, falls under chapter 86.07 of the GST Tariff.
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Income Tax
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2022 (7) TMI 1096
Revision u/s 263 - Period of limitation - Reopening of assessment u/s 147 - HELD THAT:- As in response to show cause notice inter alia took a stand that the revisional power could not be exercised in view of the Bar of limitation as contained in Section 263(2) which provides that no Order could be revised after the expiry of two years from the end of the financial year, in which the Order sought to be revised was passed. CIT, however, did not accept the stand of the assessee and set aside the Order passed under Section 143(3) dated 14 December 2007 read with Order dated 16 November 2009 under Section 147 holding the same to be erroneous and prejudicial to the interest of revenue. This Order came to be challenged before ITAT, who vide its Order dated 16 January 2017 allowed the Appeal of the assessee on the ground that Order passed by CIT was passed on 31 March 2011 under Section 263(1) and was, therefore, barred by limitation, as such an Order could be passed only upto 31 March 2010, considering the fact that the Order that was sought to be revived by CIT was passed by AO on 14 December 2007. Not only this, the ITAT held on a question of fact that no notice in terms of Section 263(1) was served on the assessee in respect of the Order passed u/s 143(3) read with Section 147 dated 16 November 2009 and the show cause notice dated 18 March 2011 was only in respect of Order of assessment under Section 143(3) of the Act. We are of the view that the view expressed by ITAT does not warrant any interference and it was rightly held that the Order impugned passed by CIT was barred by limitation in terms of Section 263(2).
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2022 (7) TMI 1095
Assessment u/s 153A - unexplained investment - ITAT confirming the order passed by CIT(A) deleting the additions - Whether ITAT has erred in holding that balance/trial sheet found during search being a public document is not an incriminating material? - HELD THAT:- As in the present case, the Assessing Officer in the satisfaction note has recorded that the documents found during the search pertained to assessee and therefore it is a fit case for initiation of proceedings under Section 153C of the Act. However, the Assessing Officer failed to record as to how the documents found during search reflected any undisclosed income of the assessee. Assessing Officer, without even demonstrating/or drawing any nexus of the seized documents with the undisclosed income of the assessee, merely on the ground that the seized documents belong to the assessee initiated proceedings under Section 153C of the Act, which is against the settled position of law in several decisions of this Court. In the present case, both the CIT (A) as well as ITAT have given concurrent findings of fact that no incriminating materials had been seized during search. Consequently, the contention of learned counsel for the Appellant that incriminating documents or materials had been found and seized at the time of search is contrary to fact. CIT(A) had directed that the transactions need to be scrutinised in the case of the seller of the shares, namely, Triveni Infrastructure Development Company Co. Limited (TIDCO). Also, the same shares had been sold by assessee in the subsequent Assessment Year 2011-2012 at a lesser price as against the addition made by the Assessing Officer which is accepted by the Assessing Officer. Thus no incriminating documents or materials had been found and seized at the time of search. - No substantial question of law.
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2022 (7) TMI 1094
Application u/s 197 - Certificate for deduction at lower rate - seeking a withholding certificate at a lower tax rate of 1.74% - HELD THAT:- This Court finds that the Petitioner s application seeking withholding certificate at a low tax rate has been rejected by Respondent No.1 on the ground that there exists huge outstanding demand on their internal portal. However, in the very first paragraph of the impugned order, the Officer takes note of the observation of the PAN Assessing Officer that a number of rectification applications of the assessee are pending and once they are decided, the demand against the assessee is likely to be reduced to NIL. Consequently, this Court finds that the very foundation for rejection of the application filed by the Petitioner under Section 197 is self-contradictory. Accordingly, this Court set asides the impugned order dated 16th May, 2022 and directs the Respondent No.2 to decide the rectification applications filed by the Petitioner, in accordance with law within six weeks. Needless to state that if any refund is due and payable to the Petitioner, the same shall be refunded not later than eight weeks from today, in accordance with law. This Court clarifies that it has not expressed any opinion on the merit of rectification application. Further, the Respondent No.1 is directed to once again decide the Petitioner s application u/s 197 of the Act qua Sections 194A and 194J of the Act, within two weeks of disposal of the rectification applications.
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2022 (7) TMI 1093
Disallowance u/s 14A r.w.r. 8D - ITAT deleted the addition - scope of amendment made by the Finance Act, 2022 to Section 14A - Amendment is retrospective or prospective in nature - Whether ITAT erred in relying on the decision of this Court in PCIT vs. IL FS Energy Development Company Ltd., [ 2017 (8) TMI 732 - DELHI HIGH COURT] wherein it has been held that no disallowance under Section 14A of the Act can be made if the assessee had not earned any exempt income? - HELD THAT:- A perusal of the Memorandum of the Finance Bill, 2022 reveals that it explicitly stipulates that the amendment made to Section 14A will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. The Supreme Court in Sedco Forex International Drill. Inc. v. CIT, ( 2005 (11) TMI 25 - SUPREME COURT] has held that a retrospective provision in a tax act which is for the removal of doubts cannot be presumed to be retrospective, even where such language is used, if it alters or changes the law as it earlier stood. Consequently, this Court is of the view that the amendment of Section 14A, which is for removal of doubts cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another, [ 2000 (7) TMI 67 - SUPREME COURT] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras ( 1992 (4) TMI 183 - SUPREME COURT] the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench in PCIT vs. IL FS Energy Development Company Ltd ( 2017 (8) TMI 732 - DELHI HIGH COURT] and Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] . As clarified that the order passed in the present appeal shall abide by the final decision of the Supreme Court in the SLP filed in the case of PCIT vs. IL FS Energy Development Company Ltd .
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2022 (7) TMI 1092
Validity of order as exercise of power u/s 281 - Certain transfers to be void - validity of purchase of property being land and farm house - Certain transfers to be void - validity of purchase of property being land and farm house - t the order impugned in declaring th - pendency of the assessment proceedings against the assessee - assessee had created a charge on the said property and parted with the possession by way of sale deed in favour of the Petitioner during the pendency of the assessment proceedings against the assessee and was, therefore, void in terms of Section 281(1) of the Income Tax Act - HELD THAT:- Incidentally, a Division Bench of this Court in the case of Ms. Ruchi Mehta V/s Union of India [ 2007 (8) TMI 270 - BOMBAY HIGH COURT] which is also impugned in the present petition, followed the ratio of the judgment in Gangadhar s case and declared the order passed by the TRO in terms of Section 281 of the Act, 1961 as void and without jurisdiction. The order was also held to be bad on the ground that no opportunity was at all given to the Petitioner in the said case before exercising jurisdiction under Section 281, which was thus held to be in violation of principles of the natural justice. Be that as it may, following the ratio of the Supreme Court judgment in the case of Tax Recovery Officer V/s. Gangadhar Vishwanath Ranade [ 1998 (9) TMI 1 - SUPREME COURT] as also the view already expressed by the co-ordinate bench in the case of Ms. Ruchi Mehta V/s Union of India, we hold that the order impugned in declaring the transfer of the property in favour of the Petitioner as void in terms of Section 281 of the Act, 1961, is without jurisdiction and is, accordingly, set aside. Respondents would be entitled to proceed in the matter by following the due procedure.
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2022 (7) TMI 1091
Estimation of income - Bogus purchases - ITAT upheld the addition estimated based upon estimated profit at the rate of 12.5% on the total purchases in question - HELD THAT:- We are of the opinion that the view expressed by the Tribunal in upholding the order passed by the learned CIT(A), cannot be said to be in any manner perverse or legally untenable, inasmuch as, if the entire amount were to be held as non-genuine purchases, then it would not be possible to justify as to how the works allotted to the assessee for execution by the semi Government Agencies could be completed. Therefore the argument that the entire amount ought to have been added to the income of the assessee is untenable, especially when the learned CIT(A) in its order as upheld by the Tribunal in the order impugned held that the purchases per se were not in dispute but the parties from whom the purchases are shown to have been made are disputed. The order passed by the Tribunal is legally valid warranting no interference.
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2022 (7) TMI 1090
Assessment u/s 153A - Addition u/s 68 - HELD THAT:- Since no incriminating documents or materials had been found and seized at the time of search as relying on KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] when no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C - Decided in favour of assessee.
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2022 (7) TMI 1089
Deceleration under Direct Tax Vivad Se Vishwas Act, 2020 - Revival of original declaration / order - validity of second and revised declaration - - Treatment to appeal pending before ITAT or Commissioner (Appeals) in respect of the disputed amount and/or tax arrears - HELD THAT:- As after going through the documents available on record including the provisions of The Direct Tax Vivad Se Vishwas Act, 2020 i.e. the Scheme, we are of the considered opinion that revised/fresh declaration filed by Petitioner/declarant dated 23.01.2021 is non-est in the eyes of law and any consequential order passed thereto is of no significance for the reasons stated hereunder. Once a certificate under sub-section (1) of Section 5 is issued by the Designated Authority, any appeal pending before ITAT or Commissioner (Appeals) in respect of the disputed amount and/or tax arrears shall be deemed to have been withdrawn. Meaning thereby, in the instant case, after the declaration of the Petitioner-declarant was accepted by issuance of certificate under Section 5(1) of the Act, dated 20.01.2021 (Annexure-14), appeal pending before ITAT, Ranchi filed on 13.03.2019 (Annexure-9) and the appeal pending before the CIT (Appeals), Ranchi filed on 24.02.2020 pertaining to Assessment Year 2012-13 were deemed to have been withdrawn. Once the said appeals are deemed to have been withdrawn by operation of law, the same cannot be revived or restored merely because a declarant, under mistaken notion, has filed a fresh declaration, which was, subsequently, rejected by the Designated Authority. If the said situation is allowed to operate, the same would have devastating effects and would prejudice the entire Scheme framed by the Parliament. If filing of one declaration after another is permitted, then even the provisions of Section 7 of the Scheme would be rendered futile which provides, inter alia, that any amount paid in pursuance of a declaration, shall not be refundable under any circumstances. An assessee, taking advantage of filing second declaration and its rejection by the Authority, can contend, inter alia, that its original declaration has lost its force in the eyes of law and can claim refund of the amount paid pursuant to the original declaration, which is clearly not the mandate of the Scheme. We have no hesitation in observing that the revised fresh declaration dated 23.01.2021 filed by the petitioner was not maintainable in the eye of law and consequently the order passed thereto is non est in the eye of law. An alternative contention has been raised on behalf of the petitioner it is entitled to the benefit of original declaration filed by it. Since we have held that the second declaration filed by the petitioner was not maintainable and non est in the eye of law, we refrain ourselves from observing further on the others issues raised by the parties including the issue as to whether revised declaration of the petitioner company could have been rejected due to initiation of the criminal prosecution against one of the Directors of the company. Since, admittedly, Respondents, pursuant to filing of revised/fresh declaration by the Petitioner dated 23rd January, 2021, entertained the said declaration and examined the same on merits and, thereafter, rejected it vide order dated 15.03.2021 which is our opinion has no legal effect, we are of the opinion that equities would be balanced if we direct the parties to comply with the certificate dated 20.01.2021 issued in favour of the petitioner pursuant to original declaration as per section 5(2) of the scheme i.e. within a period of fifteen days from today. If petitioner makes deposit of an amount of Rs.9,08,075/- being the amount determined as payable by the petitioner under the certificate dated 20.01.2021 within fifteen days from today, the same shall be accepted by Respondent-authorities and the declaration filed by the petitioner would be deemed to have been satisfied in terms of provisions of the Direct Tax Vivad Se Vishwas Act, 2020.
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2022 (7) TMI 1088
Taxability of Interest received u/s.244A - Whether CIT (A) erred in confirming that the interest received u/s 244A is taxable when the right to receive is under dispute in view of the appeals filed by the department? - CIT (A) held that the interest under Section 244(A) is taxable, pending final determination of the assessments by the Income-Tax Authorities / Appellate Authorities - HELD THAT:- Undisputed facts are that the assessee has received interest u/s.244A of the Act on refund and total interest is Rs.48,46,557/-. The ld.counsel for the assessee stated that this taxability of interest u/s.244A of the Act was allowed in favour of assessee by ITAT in assessment year 1984-85 but he very fairly conceded that this issue is covered against assessee in assessee s own case [ 2009 (3) TMI 901 - ITAT CHENNAI] for assessment year assessment years 2001-02 2002-03. Since, the issue is covered in favour of Revenue and against assessee, respectfully following the Tribunal s decision for assessment years 2001-02 2002-03, we dismiss this issue of assessee s appeal. Disallowance of business expenditure to the extent of 75% and allowing only 25% - CIT-A disallowing the claim for extra-ordinary business expenditure as it is incurred out of commercial expediency and for the purpose of the business of the appellant - HELD THAT:- We noted that the CIT(A) has not doubted the purpose of business i.e., purposes but he has estimated for the reason that the assessee has not maintained separate accounts in respect of these expenditures and the details of employees or visiting officials are not provided. Accordingly, he restricted the allowance of expenditure at 25% and confirmed disallowance of 75% of expenditure. Even now before us, the assessee could not substantiate its claim beyond allowing of expenditure at 25% as allowed by CIT(A). Hence, we dismiss this issue of assessee s appeal and confirm the order of CIT(A). Nature of expenditure - addition of write off of investments made in Ponni Sugars (Orissa) Ltd, claimed by assessee as commercial expediency and business compulsion but authorities below considered this as capital in nature - assessee has made investment in Ponni Sugars (Orissa) Ltd. in the equity capital, non-convertible debentures and zero coupon redeemable preference shares - HELD THAT:- From the above facts and the decision of Hon ble Madras High Court in the case of Tamilnau Industrial Investment Corp. Ltd. [ 2017 (7) TMI 1048 - MADRAS HIGH COURT] and Electronic Corporation of Tamilnadu Ltd., [ 2018 (12) TMI 47 - MADRAS HIGH COURT] we are also of the view that the claim of loss accruing or arising as investment in equity shares, non-convertible debentures and zero coupon redeemable preference shares is not capital loss but eligible for deduction in computation of business income as business loss, as held by Hon ble Madras High Court in the case of Electronic Corporation of Tamilnadu Ltd., for the sale of shares and amount advanced by assessee to various industries towards working capital, the real character of the transaction was those akin to loans and not equity investment. Respectfully following Hon ble Madras High Court decision in the above two cases, we reverse the orders of lower authorities and allow this issue of assessee s appeal.
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2022 (7) TMI 1087
Foreign Tax Credit (FTC) under Article 24(2) of the India-UK DTAA read with Section 90 of the Income-tax Act, 1961 (the Act), while computing the income of the appellant - HELD THAT:- We find that the assessee has filed original return of income which has been ignored by the Central processing centre, Bangalore as well as the National faceless appeal Centre. Even before the National faceless appeal Centre the assessee made a detailed written submission wherein in paragraph number 5 the complete facts are mentioned which is also been reproduced by the National faceless assessment centre but did not consider that assessee has also filed original return of income. As the assessee has filed original return of income before the due date of filing of the return and form number 67 was also filed prior to the due date of filing of the return, the learned AO Central processing centre as well as the learned CIT A has grossly erred in holding that assessee has not filed return of income and form number 67 before the due date of filing of the return. These are on record but lower authorities have ignored it for the reasons best known to them. Further before the National faceless appeal Centre, the learned CIT (A) the assessee submitted the complete facts along with the statement and the acknowledgement number of original return filed, despite this, the learned CIT appeal dismissed the appeal of the assessee by noting wrong facts and giving wrong reasons. Therefore we reverse the orders of the lower authority and direct the learned assessing officer to grant credit of foreign tax credit to the assessee as form number 67 has been filed by the assessee on or before the due date prescribed for filing of the return of income. In the result ground number 1 2 of the appeal are allowed. Depreciation while processing the tax return - Disallowance of claim as assessee mentioned it in serial number 12 (ii) of the schedule BP that relates to the computation of business profit but the depreciation is with respect to the assets of an undertaking engaged in generation and generation and distribution of the power - HELD THAT:- CIT A held that in a filing of the return of income the onus is on the assessee to correctly fill up the return of income and make appropriate claims in the correct return. If incorrect claims are made in the return of income there liable to be rejected. Accordingly the action of the learned assessing officer is upheld. We find that assessee has made an incorrect claim in the return of income by filling up the incorrect column, the Central processing centre found that assessee is not engaged in the business of power generation et cetera and therefore is not entitled to depreciation and therefore disallowed. We find that the learned CIT A has given a correct reason that in e filing of the return it is the duty of the assessee to put the correct amount in the correct column. Thus ground number 3 of the appeal is dismissed. Charging of interest u/s 234A - HELD THAT:- We find that assessee has filed his return of income in time and therefore the interest charged u/s 234A deserves to be deleted. Hence, we delete the same. Ground number 4 of the appeal is allowed. Charging of interest u/s 234B and 234C of the act, which is consequential in nature, and therefore the learned assessing officer is directed to compute the same in accordance with the law. Charging of fees u/s 234F - We find that as the assessee has filed his return of income within the due date prescribed for the impugned assessment year, the above fee is not leviable. Hence, we delete the same.
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2022 (7) TMI 1086
Disallowance u/s 14A r.w.r. 8D - Suo -motto addition made by assessee - Addition of expenses relatable to exempt income by invoking the provisions of section 14A - HELD THAT:- As noted that the assessee has own interest free funds in the shape of share capital and Reserves Surplus to the tune of Rs.97068.63 lakhs and non-current investment i.e., investment giving rise to exempt income is only Rs.114.05 lakhs. It means that the assessee has more interest free funds available with it for making investment in instruments giving rise to exempt income. Neither the AO nor the CIT(A) has recorded any finding that the interest bearing funds have been invested in the instruments giving rise to exempt income. Once the AO has not established that the interest bearing funds have gone into these investments which give exempt income, no disallowance can be made in case the assessee has more interest free funds available with it and claims that the investment is out of those funds which give rise to exempt income. The presumption in view of HDFC Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] clearly goes in favour of the assessee. Hence, respectfully following Hon ble Bombay High Court s decision, we allow this ground of assessee s appeal. Receipt of carbon credit - nature of receipt - capital or revenue receipt - HELD THAT:- As this issue is fully covered in favour of assessee and against Revenue by the decision of Hon ble Madras High Court in the case of Chemplast Sanmar Ltd. [ 2021 (12) TMI 713 - MADRAS HIGH COURT ] wherein the Hon ble Madras High Court has categorically held that carbon credit is in the nature of capital receipts and it cannot be added to the return of income of the assessee or it cannot be part of profit loss account and in any case, it is part of profit loss account, then it can be claimed as deduction. Accordingly, we reverse the orders of lower authorities on this issue and allow this ground of assessee s appeal. Nature of expenditure - Addition of forex forward premium charges - capital or revenue expenditure - HELD THAT:- As none of the authorities below had adjudicated this issue or gone into the details filed before us by assessee now i.e., page Nos.1 to 3 in Annexure A . The assessee is directed to file these details before AO and the AO will go into these details and decide this issue accordingly. Hence, this issue of assessee s appeal is allowed for statistical purposes. Disallowance of expenses relatable to Corporate Social Responsibility (CSR) - HELD THAT:- We noted that this issue stand covered in favour of assessee and against Revenue by the decision of Infosys Technologies Ltd. [ 2013 (7) TMI 451 - KARNATAKA HIGH COURT ] as held that CSR expenditure is our expenditure which facilitates the business hence allowable expenditure under section 37.
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2022 (7) TMI 1085
Reopening of assessment u/s 147 - JD agreement entered - Exemption u/s 54F - provisions of section 2(47)v) and 2(47)(vi) are clearly attracted in this case and the capital gains are to be worked out in the impugned A.Y.- additional ground raised before him for the first-time claiming exemption u/s 54F - HELD THAT:- It is an admitted fact that the assessee had not filed the return of income despite issuance and service of notice u/s 148 of the I.T. Act. As per provisions of section 54F, the assessee is not entitled to deduction u/s 54F, if he has more than one residential flat other than the new asset on the date of transfer of the capital asset. However, it is not known as to whether the assessee owns more than one house other than the new asset since no return was filed and no enquiry was conducted either by the AO or the CIT(A). We find the learned CIT (A) without ascertaining the basic requirement was carried away by the arguments advanced by the assessee before him and allowed the additional ground raised by the assessee which is not a legal one but requires verification of fact. Neither she has verified the facts herself nor called for a remand report and for the reasons best known to her has allowed the claim of exemption u/s 54F of the I.T. Act in respect of 52 flats without addressing the various issues raised by the Assessing Officer in the assessment order. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the learned CIT (A) with a direction to decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. If required, the learned CIT (A) shall call for a remand report from the Assessing Officer. The learned CIT (A) is also directed to consider as to how the assessee is entitled to the benefit of section 54F of the Act when as per the development agreement traced during the course of search and seizure operation in the case of SNR Nirman India Pvt. Ltd the assessee has received 52 constructed flats and whether that will amount to construction of a residential flat. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
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2022 (7) TMI 1084
Reopening of assessment u/s 147 - information received from Investigation Wing - information received from the Investigation Wing that the assessee has accepted accommodation entry - Addition u/s 68 - HELD THAT:- It is obvious from the reasons recorded by the AO for reopening the assessment under section 147 that notice under section 148 has been issued to the assessee only on the basis of the information received from Investigation Wing. Under identical facts and circumstances of the case, the Tribunal has consistently held that the reassessment proceedings are not valid. In the assessee s own case for AY 2010-11. Since the facts of the case are identical to the facts of the case decided by the Tribunal in the case of Nihal Chand Rakyan [ 2017 (12) TMI 1813 - ITAT DELHI] as also in the assessee s own case we hold that the reassessment proceedings initiated by the Ld. AO is invalid. Therefore, assessment framed consequent thereto is ab-initio-void. In the result, appeal filed by the assessee is allowed on the issue of validity of the reassessment proceedings. Since the assessee succeeds on this legal ground, we refrain from adjudicating the issues on merit. - Decided in favour of assessee.
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2022 (7) TMI 1083
Allowable business expenditure - legal and travel expenses incurred as eligible for deduction u/s 37 or not? - AO has disallowed the expenses claimed by the assessee on the ground that the expenditures incurred by the assessee was not for the business purposes and it was relating to 2G Spectrum case and the Directors and shareholders are involved and the expenditures incurred are not for the business of the assessee and it was only relating to legal and travelling expenses to persue the Directors and shareholders case before the Special CBI Court, New Delhi HELD THAT:- As at the time of assessment proceedings, the CBI judgement was not available before the Assessing Officer as the assessment order under section 143(3) of the Act was posted on 27.03.2015 and therefore, there was no occasion for the Assessing Officer to examine the judgement of the CBI Court and consider the issue of legal and travelling expenses incurred by the assessee company are eligible under section 37(1) - Whereas, the ld. CIT(A) passed the appellate order on 30.05.2018 by the time the judgement dated 21.12.2017 of the Hon ble Special CBI Court was available. However, the ld. CIT(A), without considering the same, confirmed the order of the Assessing Officer by noting that the expenses are relating to 2G Spectrum Scam. In our opinion, both the authorities below have disallowed the expenditure claimed by the assessee on the ground that it was relating to 2G Spectrum case. Both the authorities below have not examined the outcome of the Special CBI Court judgement. Further, we are of the opinion that whether the expenses incurred by the assessee relating to business and eligible for claiming deduction or not, one must look into the judgement of the Special CBI Court, where, the Directors and shareholders of the assessee company are accused and both the authorities below have failed to consider the judgement of the Hon ble Special CBI Court. We set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to decide the issue afresh in accordance with law after examining the judgement of Hon ble Special CBI Court. Appeal allowed for statistical purposes.
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2022 (7) TMI 1082
Revision u/s 263 by CIT - appellant had made purchases which is nearly 45% of the total purchases and no form 3CEB was obtained, to examine the arm s length price - HELD THAT:- As it is clear that the show cause notice issued in this regard was incorrect on facts, and there was only a suspicion that there is requirement of TPO was required, and even after all details being provided, there is no conclusion about requirement of such reference to TPO. On the contrary the PCIT had also himself stated that if there is no such transaction with associated enterprises no reference to TPO is required to determine Arms Length Price. The proceedings u/s 263 cannot be initiated just to make any fishing or roving enquiries - selection of the case of the appellant was not on the basis of TP risk parameters, and therefore even in a case where there are international transactions with the associated enterprises, and no reference was made to TPO, the proceedings u/s 263 cannot be initiated simply on this reasons unless there are material facts to indicate that the transactions were not at arms length price. As in the present case, there are no transactions with the associated enterprises, and therefore on this ground of reference to TPO, valid jurisdiction u/s 263 cannot be invoked. Verification of the sundry creditors - In the order u/s 263, nothing adverse has been pointed out in relation to any of the creditors or any irregularities in the account. Simply on the basis of suspicion the order cannot be said to be erroneous when proper enquiry was duly made. It the view taken by the AO after verification is a plausible and permissible view, the CIT cannot exercise the powers under s. 263. Even from the impunged order it is seen that various past assessments had been also made under scrutiny and some of the creditors which are regular creditors, nothing adverse had been stated in relation to these creditors. Even from Glory Exports confirmation from the said party was submitted during the assessment. In the present issue the AO has made proper enquiry on this issue and it is not denied that notices u/s 133(6) had been issued to certain creditors, the nature of assessment order does not bring the case of the revenue within the purview of s.263 and cannot be said to be prejudicial to the interest of revenue. Payment of commission and assortment charges - Nothing material has been pointed out in the impunged order about the inadmissibility of any of the expenditure being incurred by the appellant. All payments are also through banking channel, and due tax deduction at source on such payments had also been made by the appellant, which was also submitted during the assessment proceedings. Thus the issues stands duly examined at the time of assessment, and nothing material has been placed on record to show the error in such judgment. Disallowance out of expenses made - PCIT himself in his order u/s 263 stated that the submissions of the assessee on this issue is found to be acceptable and the adhoc disallowance as made by the AO in the assessment order u/s 143(3) of the Act for A.Y. 2016-17 is not disturb and the same will remain as it is. Thus on this issue the contention of the appellant was accepted by the PCIT, and therefore would not be the subject matter of 263. Even in the case of JR Industries [ 2022 (5) TMI 351 - ITAT JAIPUR ] it was held by Bench that if an issue is decided by CIT(A) in an appeal against the assessment order passed by the AO, then, that issue cannot be subject-matter of proceedings under s. 263. Thus we find that there was no lack of proper enquiry and the original assessment was made after due verification, and PCIT was not justified in invoking the powers under s. 263. The Hon ble Rajasthan High Court also in the case of Laxmi Narayan [ 2017 (11) TMI 1622 - RAJASTHAN HIGH COURT, JAIPUR ] following the decision of Malabar Industrial Corporation [ 2000 (2) TMI 10 - SUPREME COURT] had held that if the enquiry has been duly made, the revision proceeding cannot be initiated. In view of the same the order u/s 263 is quashed. Appeal of assessee allowed.
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2022 (7) TMI 1081
Net profit estimation - undisclosed income - unrecorded receipts / sales - estimated rate of 8% on alleged undisclosed Toll Receipts - assessee is engaged in activity of collection of toll from the commercial vehicles entering in the state of Delhi - HELD THAT:- As perused the material placed available in record including the paper books filed by the assessee. It is settled legal position that unrecorded receipts found during the course of search or otherwise cannot be just added in toto and it cannot be considered as unrecorded income in toto unless there are evidence to that effect. Our attention was drawn by the ld. AR towards the various decisions of Paharganj Grah Nirman Sahkari Samiti Ltd. Ors. [ 2005 (10) TMI 237 - ITAT JAIPUR ] wherein profit was estimated on the unrecorded receipts / sales and same was added as income. Considering the various decisions and the facts and in the circumstances of the case, it is held that the profit element embedded in the unrecorded receipts has to be considered as income and not the entire unrecorded receipts. Accordingly, appeal of the revenue on these grounds is dismissed. Appellant company has offered undisclosed income earned out of unaccounted toll business - CIT(A) has estimated the unrecorded profit @ 8% on unrecorded receipts - On careful consideration of the argument of ld. AR and order of ld. CIT(A) it is seen that the appellant is in business of toll collection and during the course of search evidence of under recording of toll collection was admittedly found. The appellant has offered net profit of Rs. 14 crores in its return filed in response to notice u/s 153A and has stated it is earned out of its under recorded toll collection business. CIT(A) has rightly estimated the income from such unrecorded toll collection receipt @ 8% of the unrecorded receipts. However, there is no merit in the finding of the ld. CIT(A) that this amount is to be added separately and no benefit of telescoping is to be given. It is seen by us that when the appellant has itself offered Rs. 14 crores as income from such unrecorded receipts which is quite more than the estimation of profit so made by ld. CIT(A), therefore separate addition of the aforesaid amount over and above the amount of Rs. 14 crore so declared in the return will tantamount to double addition of the same income and therefore, the same is hereby deleted. Accordingly, the appeal of the appellant company is allowed. CIT-A accepting revised return of income filed by the appellant before the AO - CIT(A) allowed the appeal of the appellant company by considering direct judgement of Gujarat High Court namely CIT Vs. Himgiri Foods Ltd. [ 2010 (3) TMI 756 - GUJARAT HIGH COURT ] wherein the Hon ble Court has held that if after the issuance of an intimation, a revised return is filed u/s 139(5), it is incumbent upon the AO to process the revised return and amend the intimation issued u/s 143(1)(a) on the basis of revised return. The Hon ble Court has also held that an intimation u/s 143(1)(a) of the Act cannot be equated with an assessment framed u/s 143(3) of I.T. Act. Considering the above decision, another decision namely S.R. Koshti [ 2004 (12) TMI 62 - GUJARAT HIGH COURT ] and also Kiran Infra Engineering Ltd. [ 2013 (9) TMI 226 - ITAT CHANDIGARH ] CIT(A) ordered to consider the revised return and income shown therein. The department is in appeal before us. Same argument has been taken as mentioned in the assessment order. We have gone through the facts of the case and legal position on the issue under consideration. Considering the various decisions as referred by the ld. AR and also considered by CIT(A) and there being no contrary decision so cited on behalf of revenue, we find no infirmity in the order of ld. CIT(A) particularly when the revised return was filed within the statutory time limits provided under the Act. In view of the above discussion the ground of appeal taken by the revenue is rejected.
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2022 (7) TMI 1080
Delayed payment of employees' contribution to ESI PF account - impact of amendment brought into section 36(1) as well as 43B by Finance Act, 2021 - HELD THAT:- As Relying on SHRACHI BURDWAN DEVELOPERS (P) LIMITE [ 2022 (3) TMI 961 - ITAT KOLKATA] if employees' contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted - Decided in favour of assessee.
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2022 (7) TMI 1079
Depreciation on Temporary Structure - expenditure in relation to renovation of leasehold premises - assessee submitted that these are purely temporary structures on which 100% depreciation has to be allowed - HELD THAT:- Assessee has incurred certain expenditure in relation to renovation of leasehold premises. The details of the same have been mentioned in the AO s order. The items mentioned by no stretch of imagination can be said to be building construction material, hence the Explanation-1 referred by the ld. DR is not applicable. As regards the nature of expenditure, it is clearly emanating that the same is relating to interior design, electrification charges, furniture charges, wallpaper, toughened glass etc. These items are certainly revenue fixtures when used in the rented premises. How they are not temporary is beyond comprehension. Further, AO s hypothesis that these are probably addition in furniture and fixture is a guess-work, not sustainable in law. CIT(A) s observation that the construction made does not appear to be temporary in nature is similar to the guesswork of the AO de hors the facts on record which show that these are temporary furnishing and fixtures in its premises. Such expenditure were duly held to be allowable in the matter of Girdhari Dass Sons [ 1975 (4) TMI 19 - ALLAHABAD HIGH COURT] , and in the case of Peri India Pvt. Ltd. [ 2016 (5) TMI 426 - ITAT MUMBAI] . Accordingly, we set aside the orders of authorities below on this issue and decide the issue in favour of the assessee. Disallowance of depreciation - as argued the Appellant company engage in the business of tour and travel and vehicles have actually been used for carrying the travelers - HELD THAT:- We find that the orders of authorities below in denying depreciation @ 30% on commercial vehicles being used by the assessee in operating touring services leaves no doubt that Revenue authorities have failed to apply any mind. Moreover, even after submitting the RC Book of registration as taxi, ld. CIT (A) has made a bizarre remark that it was obtained with ulterior motives without any material having been brought on record. It is also noted that such depreciation rate was allowed in succeeding years i.e. AYs 2015-16, 2017-18 u/s 143(3). Hence, we set aside the orders of the authorities below on this issue and decide the issue in favour of the assessee. Disallowance of loss incurred on foreign exchange - HELD THAT:- We find that the claim of the assessee has to be examined on the touchstone of Hon ble Supreme Court decision in Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] as affirmed the allowability as revenue expenditure of the foreign exchange fluctuation determined on the basis of Accounting Standard-11 consistently on mercantile basis. Here, no case has been made out that the claim of assessee is not in consonance of this exposition. Hence, respectfully following the precedent, the assessee s ground is allowed. Nature of expenditure - legal professional expenses - Revenue or capital expenditure - HELD THAT:-. We note that we have already set aside the orders of the authorities below on the issue of interior expenditure on interiors held by the authorities below as capital in nature herein above. On the same reasoning, this expenditure is also allowable as revenue expenditure. Hence we set aside the order of the authorities below on this issue and allow the issue in favour of the assessee.
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2022 (7) TMI 1078
Unexplained expenditure for purchase of land - Reliance on seized loose paper - HELD THAT:- We find force in the arguments of ld. AR, we hold the AO is not justified in applying the provisions of section 132(4A) to the assessee. We note from the letter of ADIT (Inv.), which is at Page No. 2 of AO, that itself explains that purchasers have paid amount of Rs.63 lacs and the remaining amount was paid by cheques and RTGS, of which clearly establishes that the appellant-revenue is not clear about the allegation of cash payment by the assessee. Therefore, cash payment of Rs.2 crores as alleged by the Revenue in terms of the seized loose paper cannot be believed. Further, there is no conclusive evidence brought on record by the AO in support of its allegation of that the assessee paid cash of Rs.2 crores to Mr. Zaheeruddin Sallauddin Kokani and there is no indication of assessee s name in the seized loose papers nor in the statement recorded u/s. 132(4A) vide Q. No. 12. Therefore, the addition is made by the AO is not justified in view of discussion made by us hereinabove and the order of CIT(A) in this regard is justified. Thus, the ground No. 1 raised by the Revenue is dismissed. Addition of cash payment to various persons u/s. 40A(3) - HELD THAT:- We find that the transaction in respect of purchase of plot at Adgaon Shivar, Gat No. 598/1, did not materialize and the payment made in cash of Rs.15,00,000/- was refunded to the assessee by way of bank cheques by Mr. Virendra Vijaysingh Pardeshi. Therefore, no addition is justified in this regard and we find no infirmity in the order of CIT(A). Further, payment in cash was made on bank holidays and claim of exception provided in Rule 6DD(j) of the Rules. We note that no expenditure claimed as the said payment was made on cancellation of shathekhat (agreement to purchase). On perusal of impugned order at Page No. 24, we note that the assessee filed calendar for relevant period showing bank holiday, Office Circular No.07/2010 dated 24-11-2010 issued by Chief General Manager (HRD). The CIT(A) considering the bank holidays and circular relied there upon deleted the addition made by the AO. The ld. DR did not bring on record any evidence rebutting the finding rendered by the CIT(A) in terms of exception contemplated in Rule 6DD(j) of the Rules. Therefore, we find no infirmity in the order of CIT(A) in this regard. Regarding the payment made to Mr. Gend Sagar Parasharam and Mr. Kamal Singh Sohansingh Chitodiya we note that the said two payments were made before the Sub-Registrar, Nashik which are part of sale consideration. We find the CIT(A) discussed the said issue in his order at Page No. 25 and by placing reliance on the order of this Tribunal in the case of Dnyaneshwar Jagannath Dhamne [ 2016 (7) TMI 1313 - ITAT PUNE ] which held that the provisions of section 40A(3) of the Act are not attracted as the cash payments are part of sale consideration which are paid before Sub-Registrar i.e. State Government Office. The ld. DR did not bring on record any view contrary to the finding of CIT(A). Therefore, we find no infirmity in the order of CIT(A) and it is justified. DR challenging the finding of CIT(A). In the absence of which, we find no infirmity in the order of CIT(A). Thus, ground No. 2 raised by the Revenue is dismissed. Addition on account of payment made to Kokani family u/s. 40A(3) - HELD THAT:- We note that the payment in cash to an extent of Rs.45,00,000/- were confirmed by the Kokani family before the Sub-Registrar and the said cash payment for forming part of total consideration vide registered sale deed. A contention was raised by the assessee that the said payments were added to the value of closing stock and the same were not claimed as expenditure during the year under consideration. We note that the AO discussed the issue in detailed of the assessment order. On perusal of the same, we note that the cash payments amounting to Rs.45,00,000/- made on insistence of Kokani family members which is part and parcel of total sale consideration vide the registered sale deed. We note that it is a settled position of law that the purchase price is a part of stock-in-trade and no expenditure claimed as deduction in this regard, therefore, in our opinion, no disallowance u/s. 40A(3) is justified. The transaction being genuine no disallowance u/s. 40A(3) of the Act is maintainable. Further, it is also not disputed by the ld. DR that the said cash payment was part of closing stock and no expenditure concerning the same was claimed in the year under consideration. Therefore, we find no infirmity in the order of CIT(A) in this regard and it justified. Thus, the ground No. 3 raised by the Revenue is dismissed.
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2022 (7) TMI 1077
Interest u/s 244A - non-grant of interest for delayed period of 29 months in granting the tax refund - HELD THAT:- Interest u/s 244A shall be granted to the assessee on delayed refund subject to the provision of said section - A.O. while granting refund u/s 237 ought to have calculated interest u/s 244A for the delayed refund, unless the delay is caused by the assessee s fault. The CBDT in its Instruction No.7/2013 dated 15th July, 2013, has endorsed the observation in case of Own motion v. UOI Others in [ 2013 (3) TMI 316 - DELHI HIGH COURT ] wherein, the Hon ble High Court had held that the assessee cannot be denied interest on refund unless the delay is caused by the assessee s fault. When the refund was finally given on 27.07.2020, the A.O. ought to have calculated interest u/s 244A of the I.T.Act while granting refund (For the delayed refund by 29 months). The rectification order dated 31.07.2020 having failed to calculate interest u/s 244A (which is automatic unless delay is attributable to assessee s fault), the first appellate authority was within his jurisdiction to have entertained the claim of interest on delayed refund u/s 244A which was repeatedly requested by the assessee vide its letters dated 05.04.2018, 01.05.2018, 25.05.2018, 02.08.2018, 08.06.2020, 29.10.2020 and 28.02.2022. In the interest of justice and equity, we restore the issue to the files of the A.O. The A.O. is directed to take a decision in accordance with law and grant interest u/s 244A of the I.T.Act with reference to the delayed refund amount (refund credited to assessee s bank account on 27.07.2020). The A.O. shall afford a reasonable opportunity of being heard to the assessee before a decision is taken in the matter. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (7) TMI 1076
Disallowance of interest interest paid to Bank of Baroda and Andhra Bank - purpose of advances given - HELD THAT:- Issue is same as in the AY 2014-15 [ 2018 (5) TMI 799 - ITAT DELHI ] The Tribunal in its order (supra) has recorded the finding that sum given as advance to Gaursons Realtech Pvt. Ltd. was for the purpose of the acquisition of the land and sum deposited as share application with Gaursons Realtech Pvt. Ltd. was for the purpose of the business of the assessee company and therefore, interest applicable to these advances cannot be disallowed. Moreover, it is the contention of the assessee that the Revenue has not established any nexus between the borrowed funds and interest free advances to the related party. The impugned disallowance of interest is entirely based on the assessment order of the preceding AY 2014-15. Not only this, no finding has been recorded by the Ld. AO that the money borrowed has been utilised by the assessee company for purposes other than its business. It has been brought to our notice that the Revenue had gone in appeal before the Hon ble High Court of Delhi against the order of the Tribunal for AY 2014-15 in the case of the assessee and Hon ble High Court [ 2020 (2) TMI 1099 - DELHI HIGH COURT ] upheld the order of tribunal observing there were sufficient interest- free funds available with the assessee, allowing them to advance the loans in question. Thus, the Tribunal, in our view was correct in concluding that it could not be said that it was the interest-bearing loan obtained from Bank of Baroda and Andhra Bank which had been advanced as interest-free loan to M/s Gaursons India Ltd. Thus we hold that the appeal of the Revenue on the issue is without any substance. The Ld. CIT(A) was perfectly justified in deleting the impugned disallowance. We uphold the order of the Ld. CIT(A) on the point and reject ground No. 1 and 2 of the Revenue. Delayed deposit of employee s contribution towards Provident Fund - violation of the provision of section 36(1)(va) of the Act and CBDT Circular No. 22/2015 dated 17.12.2015 - HELD THAT:- As relying on Aimil Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT ] where the assessee company made payment of employee s contributions to Employee s Provident Fund (EPF) after due date of payment under EPF Act but before date of filing of return, the assessee company would be entitled to deduction of such payment. We, therefore, endorse the findings of the Ld. CIT(A) and decide the issue against the Revenue
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Customs
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2022 (7) TMI 1075
Validity of order of Settlement Commission - Petition by revenue - Gross misdeclaration in the description, quantity and value of imported goods - Secondary Defective High Speed Drills/Rods - Respondent approached the Settlement Commission under Section 127 B of the Customs Act, 1962, on receiving the SCN - Whether disclosure made by Respondent No.1 was neither full nor true? - HELD THAT:- It is settled law that this court is not the court of appeal while exercising its jurisdiction under Article 226 of the Constitution of India against the order of Settlement Commission. The Hon ble Apex Court in SANTOGEN TEXTILE MILLS LTD. VERSUS UNION OF INDIA [ 2002 (5) TMI 883 - SC ORDER] upheld the view expressed by Division Bench of this Court in SANTOGEN TEXTILE MILLS LTD. VERSUS UNION OF INDIA [ 2002 (3) TMI 59 - HIGH COURT OF JUDICATURE AT BOMBAY] that this court would only be permitted to examine legality of the procedure and not validity of the order of Settlement Commission. Even in the case that was before this court (Bombay judgment) in Santogen Textile Mills, the court observed that the Hon ble Apex Court in JYOTENDRASINHJI VERSUS SI TRIPATHI AND OTHERS [ 1993 (4) TMI 1 - SUPREME COURT] while considering the scope of writ jurisdiction of the High Court, cautioned the writ court and permitted it to examine the legality of the procedure followed, not the validity of the order, it not being a court of appeal. The court also noted that the Hon ble Apex Court had laid down that the writ court should not be concerned with the decision but with the decision making process. It is true that the finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which this court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review - Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the commission to make a particular order, unless of course the commission itself chooses to, give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is, contrary to any of the provisions of the Act. The appellate power under Article 136 was equated with the power of judicial review, where the appeal is directed against the orders of the Settlement Commission - the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. Petition dismissed.
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2022 (7) TMI 1074
Two separate adjudication orders have been passed, which emerge out of a single show-cause notice - HELD THAT:- Issue notice. List the above-captioned matters on 05.09.2022.
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Corporate Laws
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2022 (7) TMI 1073
Seeking grant of regular bail - allegation is that the applicant has played an active role in the fraud committed by the company along with ex-promoters and its associates as he was the statutory auditor for 18 companies - fraud of siphoning of money availed through Credit facilities from banks and then investing the same in the preference shares of BSL for managing its debt equity ratio - HELD THAT:- As regards the legal embargo of Section 212(6), Sub-section-(i) has duly been complied with, as the Public Prosecutor (Ld. CGSC) has been given a chance to oppose the bail application. The Applicant is not guilty of the offence of which he are charged with, and therefore, it is also opined, that he is not likely to commit any further offence while on bail. Hence, sub-section (ii) of Section 212(6) is also complied with, notwithstanding the observations of JAINAM RATHOD VERSUS STATE OF HARYANA ANR [ 2022 (4) TMI 1421 - SUPREME COURT] , where it was held that While the provisions of Section 212(6) of the Companies Act 2013 must be borne in mind, equally, it is necessary to protect the constitutional right to an expeditious trial in a situation where a large number of accused implicated in a criminal trial would necessarily result in a delay in its conclusion. The role of the appellant must be distinguished from the role of the main accused. The Applicant is enlarged on bail subject to the terms and conditions imposed - application disposed off.
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Insolvency & Bankruptcy
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2022 (7) TMI 1072
CIRP proceedings - NCLT admitted the application - dispute was existing or not - service of demand notice - It is submitted that firstly, it has not been the case of the corporate debtor before the Tribunal and has been raised for the first time by the suspended Director in this appeal - Whether notice was duly served at the address of the registered office of the corporate debtor situated in the State of Bihar, taken from the company master data and also upon one of the Director R.K. Gupta who had been participating in the whatsapp chat which satisfies the mandate of Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016? HELD THAT:- From the perusal of the provisions i.e. Section 8 and 9 of the Code, it is apparent that a notice of the unpaid amount to the corporate debtor is a sine qua non. The form and manner of the demand notice is provided in Rule 5 of the Rules of 2016 which says that an operational creditor has to deliver to the corporate debtor a demand notice in Form III or a copy of the invoice attached with notice in Form IV. The demand notice, referred to Section 8(2) of the Code has to be delivered to the corporate debtor at the registered office by hand, registered post or speed post with acknowledgement due or by electronic email service to the Whole Time Director or designated partner or key managerial personnel, if any, of the corporate debtor. The legislature has used the word or in Rule 5(2)(a b) which means that the demand notice could be served either at the registered office or upon the Whole Time Director. It means that service upon one of the entities is the sufficient compliance of Section 8(2) of the Code and both are not necessary. In the case of JYOTI STRIPS PRIVATE LIMITED VERSUS JSC ISPAT PRIVATE LIMITED [ 2021 (2) TMI 204 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH] , it has been held that Section 8 of the Code read with Rule 5 of the Rules provides that service of demand notice has to be served upon the corporate debtor at its registered address. But no such issue was involved in it that in case it is not served upon a Whole Time Director then it would be an insufficient compliance. It is not the case of the appellant that notice was not served upon the whole Time Director. As a matter of fact the notice was served upon R.K. Gupta who is the Director of the Company and had been in conversation with the representative of the operational creditor on whatsapp. Thus, there has been sufficient compliance of Section 8(2) of the Code and even if it is presumed, for the sake of arguments, that no notice was served upon at the registered address i.e. East of Kailash though the operational creditor has been continuously insisting that the registered address of the corporate debtor, obtained from the master data, is of the State of Bihar where the notice was sent. There is no quarrel with the law laid down by this Tribunal that the electronic evidence i.e. email or even whatsapp can also be looked into in order to find out the fact about an existing dispute between the parties which can be used as a shield by the corporate debtor to avoid the attack of the operational creditor with the filing of an application under Section 9 of the Code but in the present case, operational creditor has been shown in the books of accounts of the corporate debtor as sundry creditor and had admitted the debt even in the whatsapp chat but has selectively referred to the chat regarding defect in the supplied goods and raised this issue when the application under Section 9 was filed - the findings recorded by the Tribunal does not call for any interference and are hereby upheld. Appeal dismissed.
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2022 (7) TMI 1071
Appellant is subsidiaries or affiliate of the Unitech Limited or not - Unitech Holdings Limited a wholly owned subsidiary of Unitech Limited has shareholding to the extent of 41.95% in the Appellant. - appointment of Directors in the Appellant Company by the Board of Directors of Unitech Limited - appellant was a joint venture holding of Unitech Holdings Limited - whether the order of Moratorium does not apply to the joint venture? - HELD THAT:- From the facts of the present case, it is clear that Unitech Holdings Limited a wholly owned subsidiary of Unitech Limited has shareholding to the extent of 41.95% in the Appellant. The Appellant is clearly an affiliate . Thus, subsequent events which have been brought on the record by Appellant clearly indicate that Unitech Holdings Limited exercises control over the Appellant and Board of Directors of the Unitech Limited has nominated Directors in the Board of Directors of the Appellant. In view of the order dated 20.01.2020, the Resolution Plan with regard to Unitech Limited was to be filed in the Hon ble Supreme Court. Learned Counsel for the Appellant submitted that the Resolution Plan with regard to group entities of Unitech are also being filed before the Hon ble Supreme Court which is under consideration. There are no doubt that the Appellant is an affiliate of Unitech Group and Moratorium imposed by the Hon ble Supreme Court by order dated 20.01.2020 as clarified by further order dated 24.03.2021 was applicable on the Appellant who was also entitled for the benefit of the said orders. Learned Adjudicating Authority committed error in holding that orders dated 20.01.2020 and 24.03.2021 are not applicable to the Appellant who is a joint venture of Unitech Holdings Limited. The new Board of Directors of Unitech Limited has also taken steps for appointment of Nominee Directors of Board of Directors of the Appellant - the order dated 06.04.2022 passed by the Adjudicating Authority in I.A No. 5608 of 2021 cannot be sustained and is set aside. Section 7 Application filed by the Respondent stands adjourned sine die till the currency of Moratorium as imposed by the orders of the Hon ble Supreme Court dated 20.01.2021 and 24.03.2021.
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2022 (7) TMI 1070
Seeking direction to proposed Resolution Applicant to approach the Committee of Creditors (CoC) for deciding his eligibility under section 29A to submit a resolution plan for consideration - MSME status of the corporate debtor - Eligibility under section 29A to furnish a resolution plan in CIRP of the CD - HELD THAT:- It is noted that the CIRP was initiated against the corporate debtor GEI Industrial Systems Ltd. vide order dated 20.7.2017. While the CIRP was continuing, resolution plans were sought from proposed resolution applicants, and during this process the appellant Mr. C.E. Fernandes, who is a promoter of the corporate debtor, was considered ineligible to submit a resolution plan. The Resolution Professional filed an additional affidavit before the Adjudicating Authority on 22.6.2020, wherein he stated that the corporate debtor would be eligible to be classified as MSME prospectively w.e.f. 1.7.2020. This averment was based on the information received from District Industries Centre, Bhopal vide letter dated 23.5.2019 (attached at pg. 139 of the appeal paperbook) and letter dated 27.5.2019 (attached at pg. 140 of the appeal paperbook). The Resolution Professional also took into account the total investment in the plant and machinery by the corporate debtor to be as Rs. 45.90 crores, and also the definition of MSME which had been modified vide gazette notification dated 1.6.2020 for classification of the corporate debtor as an MSME w.e.f. 1.7.2020. Again, in the 9th meeting of CoC held on 10.2.2020, the CoC deliberated on the feasibility and viability of modified resolution plan dated 30.1.2020 presented by Mr. C.E. Fernandes. The minutes record that while the representatives of ICICI bank and Axis Bank did raise the issue of ineligibility of Mr. C.E. Fernandes under section 29-A of the IBC, the CoC as a body went ahead to consider the modified resolution plan presented by Mr. Fernandes. Thereafter the proposed resolution plan was put for electronic voting and the result of the electronic voting is tabulated at page 43 of the reply of Respondent No. 2/CoC, whereby the resolution plan was rejected with a voting share of 70.60%. Thus it is unambiguously clear from the consideration of the proposed resolution plan of Mr. C.E. Fernandes in its many modified forms which were duly discussed by the CoC in detail. It is worth noting that the CIRP against the corporate debtor was initiated vide order dated 20.7.2017 and the 10th meeting of the CoC took place on 16.6.2020, which is after almost 3 years of the initiation of the CIRP. This time period spent in the CIRP is much more than the time period stipulated under the IBC. Moreover, the CoC, which is constituted of the financial creditors of the corporate debtor, decided in the 10th meeting of the CoC to go for CD s liquidation, directing the Resolution Professional to take next steps as considerable time had already been lost after the completion of stipulated CIRP period, which has resulted in increase in CIRP costs and erosion of assets value of the corporate debtor. As sufficient opportunity had been given to Mr. C.E. Fernandes for presenting a feasible and viable resolution plan but he eventually failed and withdrew his proposed plan, the next step under section 33 of IBC was undertaken by the Resolution Professional. Thus, the CoC, without any prejudice regarding the eligibility of the Appellant under section 29A of IBC, did consider the resolution plan submitted by Mr. C.E. Fernandes and offered suggestions for its modifications/improvements - appeal dismissed.
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2022 (7) TMI 1069
Seeking appointment of Authorized Representatives for financial creditors for the class of creditors for the Home Buyers and Deposit Holders - Section 21(6A) (b) of the IBC,2016 read with Regulation 2(1) (aa), 4A, 16A of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- It is seen from the documents produced that the Applicant/Resolution Professional has complied with all the procedures prescribed under the law. Since this Tribunal is satisfied that Mr. Vibin Vincent and Mrs. Celine P. Thomas who were selected by the Home Buyers and Deposit Holders respectively to act as their Authorized Representative, they may be appointed as the Authorized Representatives of Home Buyers and class of creditors of Deposit Holders. Mr. Vibin Vincent, Insolvency Professional, having Registration Number IBBI/IPA-001/IP-P01997/2020-2021/13134 residing at Chakiath House, Elavoor P.O., Ernakulam, and Mrs. Celine P. Thomas having Registration Number IBBI/IPA-001/IP-P02358/2021-2022/13612 residing at 4B, Tulip, Skyline Riverdale Apartments, Petta, Tripunithura, Ernakulam are appointed as the Authorized Representatives for the Class of Creditors of Home Buyers in the CIR Process and class of creditors of Deposit Holders respectively in the CIR Process in the matter of Samson and Sons Builders and Developers Pvt. Ltd. Application allowed.
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2022 (7) TMI 1068
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - existence of debt and dispute or not - HELD THAT:- The Principal Borrower AGEPL and guarantor had approached the applicant seeking grant of various Credit Facilities. On the representations made by the AGEPL , the Applicant had extended various Credit facilities from time to time for its business purpose. As per the Credit Facilities, AGEPL was obliged to repay the principal sum of Credit along with interest thereon in accordance with repayment schedule as set out in the agreements - For the Credit facilities, Deed of Guarantee was executed by the respondent-personal guarantor towards security for due repayment of the loans and advances granted to principal debtor with interest, cost and expenses from time to time. The AGEPL and the respondent/personal guarantor had failed and/or neglected to make payment as per terms of the said Agreements. That due to failure of the Corporate Debtor to comply the terms and conditions of the loan accounts, the said loan accounts have been classified as NPA as per the guidelines of RBI. The personal guarantor, viz., Mr. Pratyush Kumar Sureka, had executed several personal guarantees lastly on 22.10.2013 in favour of the Applicant to secure the repayment of the principal amount of the Credit Facilities together with all interest, additional interest, liquidated damages, premium on repayments, reimbursement of all costs, charges and expenses and all other obligations payable by AGEPL in respect of the Facility Agreements. The Applicant on 15.07.2021 has issued a Demand Notice in Form B under Rule 7(1) of the IB Rules, 2019 demanding Rs. 25,05,78,059.60/- along with unapplied interest, other charges and costs till repayment in full. The applicant prays for initiation of insolvency resolution process, against the respondent/personal guarantor - It is made known to everyone that on filing this Application by the Applicant/Creditor the interim-moratorium commences in terms of section 96(1)(a) of IBC, 2016. List this matter on 16.08.2022.
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2022 (7) TMI 1067
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of counter filed by Corporate Debtor shows that, the Corporate Debtor has not disputed the debt and only disputed the quantum of the debt. As per Section 5(6) of the code, dispute if any as to debt, shall be regarding existence of debt - In the case in hand, the existence of debt is not disputed, as according to corporate debtor, the quantum of debt alone is in dispute. Hence, the operational debt in this case remain undisputed stands admitted and established. Since, it is not the case of corporate debtor that it discharged the said debt, the default also stands established. This Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code - Application admitted - moratorium declared.
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PMLA
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2022 (7) TMI 1066
Permission to travel abroad - Recovery of Bribe amount - certain records were seized regarding the company of the respondent using forged documents/invoices to make bogus entries in the books of its accounts and using the same as genuine - It is the case of the respondent that only two grounds were raised before learned Trial Court that the treatment was available in the country and the respondent may tamper with the evidence - HELD THAT:- As far as availability of the treatment in India is concerned, as per respondent s counsel, the father of the present respondent had died in Apollo Hospital while suffering from the same/similar ailment, so the respondent does not wish to get himself treated in Apollo Hospital, where the requisite CT Scan machine is available - The maxillofacial cyst surgery is to be done by and under the supervision of the Doctors who are treating him regarding his heart ailment. The grandfather and the father of the present respondent had also died with the same heart disease. Even the respondent had undergone major surgery (angiography) in the year 2016 and he is taking blood thinning medicines prescribed by his treating doctors. For removal of maxillofacial cyst, he has to stop taking the said drug. Hence, the supervision, care and treatment under Doctor Ramasamy Danapal based in London is required, who is well aware of the respondent s medical history. A report has been also placed on record by the petitioner obtained from medical Superintendent AIIMS Hospital regarding availability of the treatment of maxillofacial cyst at the Center for Dental Surgery at AIIMS and the 640 Slice CT Scan machine being available in Apollo Hospital - It is the admitted case of both the parties that after the registration of the earlier ECIR in the year 2010, the respondent has travelled abroad on a number of occasions after getting his passport released from the Court and he has never violated any of the terms and conditions, which were imposed by the learned Trial Court. The only change in circumstance is that another ECIR has been registered against him, in which he is on bail and a condition for deposit of passport was put afresh. One of the apprehensions expressed by the present petitioner is that the respondent may tamper with the evidence and he may influence the witnesses. Learned counsel for the respondent has submitted that till date, officials of the petitioner have failed to point out as to what is the evidence abroad, which will be tampered with by the respondent during his treatment period or who are the witnesses who will be influenced by him - the learned Trial Court has rightly allowed the present respondent to travel abroad because he needs to be under the treatment of the concerned Doctor, who knows his medical condition and because of his heart condition, his cyst cannot be removed without a competent Doctor being in charge of his heart condition during procedure, when the cyst is being removed. Merely stating that the treatment for removal of maxillofacial cysts is available in AIIMS where appointment is not available till August, 2022 end and the 640 Slice CT Scan is available in Apollo where the respondent has lost his father during the treatment, cannot be a ground to deny the respondent the permission already granted by the learned Trial Court. If the cyst is to be removed in AIIMS then how the machines available in Apollo Hospital can be of any help? It is deemed proper to put one more condition in addition to the conditions put by the learned Trial Court while granting the permission to the respondent to travel abroad and the said condition is that the respondent shall share all his Mobile numbers with the officials of the petitioner and he shall keep the mobile location on at all times - In case, the respondent violates any of the conditions mentioned in the impugned order as well as the condition put today, the official of the petitioner are at liberty to move the Court of learned Special Judge for recalling the said order. Petition disposed off.
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Service Tax
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2022 (7) TMI 1065
Collection of amount in the name of service tax - mandatory nature of sub-section (2) of Section 73A of the Finance Act, 1994 - It is submitted that, It is for the Central Government to make the deposit to the Consumer Welfare Fund or to refund the amount to the person who has borne the incidence of indirect tax in terms of sub-section (6) of Section 73A of the Finance Act, 1994. Law does not require that the assessee will either refund the amount to the person who has borne the incidence of tax or pay the amount to the Consumer Welfare Fund. Issue notice, returnable within 6 weeks.
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2022 (7) TMI 1064
Levy of Service Tax - VAT liability on subject goods duly paid - HELD THAT:- In the facts of the present case as it is not disputed that the respondent had regularly paid amount towards VAT liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. Appeal dismissed.
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2022 (7) TMI 1063
Refund of CENVAT Credit - rejection of refund on the ground that the appellant did not debit the amount of refund claim in their cenvat credit record/ ledger at the time of filing refund claim, under the admitted fact that such debit was made later on under intimation to Revenue before adjudication of the claim - Rule 5 of Cenvat Credit Rules read with Notification No. 27/2012-CE (NT) - HELD THAT:- The debit of the amount of refund claim in the cenvat credit account suo moto before the adjudication, is sufficient compliance of Condition No. 2(h) of the Notification No.27/2012-CE. Further relying on the ruling of the Hon ble Supreme Court in the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT] , it is further held that the Commissioner (Appeals) have mis-conceived and mis-directed himself by ignoring the ruling of the Hon ble Supreme Court, which is both judicial indiscipline and also in violation of Article 141 of the Constitution of India. The Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of this order along with interest as per Rules (starting from the end of 3 months from the date of filing of the refund claim till the date of grant of refund claim) - Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (7) TMI 1062
Refusal to de-seal cigarette manufacturing machines and DG sets - validity of the declaration of trade notice dated 18.01.2021 - arbitrary and violation of Article 14 of the Constitution of India or not - inconsistent and contrary to the provision of the Central Excise Act, 1944 or not - whether the action of the respondents is legal in keeping the manufacturing machine and DG set under seal and depriving the petitioner to start the business? HELD THAT:- The Central Excise Authorities cannot compel any manufacturer to utilize 50% of the machine hours in shift based on the declared capacity of the machine. The production of any goods always depends on demand in markets, availability of raw material, availability of electricity, manpower, working capital etc. The only provision under the Excise Act is section 3A under which the Central Government can charge the excise duty on the basis of capacity of production in respect of notified goods and admittedly, the cigarette is not notified goods under Section 3A, therefore, apart from Section 3A, Shri Prasad has failed to point out any provision under the Act and Rules under which the Central Government can insist the manufacture to operate the machine up to 50% of its total production capacity machine hours. The respondents have completed the search and investigation and thereafter issued a show cause notice to the petitioner, therefore, there is no need to keep the machine and DG sets under seal. The respondents have already assessed the capacity of the machine by calling Chartered Engineers. When the respondents have already assessed the capacity then there is no question of seeking a declaration about the capacity of the machine under seal from the petitioner. Since there is no mandatory provision in the statute to give production as per the capacity of the machine then the respondents cannot compel any manufacturer to give a declaration or run the factory up to its 50% capacity - The Excise officer is posted there 24x7 hours to check the production and accordingly, charged the excise duty, therefore, no purpose would be served by keeping the record or insisting the manufacturer to declare the capacity of the machine. It is the responsibility of the Excise Officer to watch 24x7 hrs and check the capacity of production in the factory before removing the goods. The impugned action of the respondents is wholly without jurisdiction for which the petitioner is liable to be compensated, hence instead of assessing losses caused in this writ petition, it is left to the petitioner to take recourse available under the law against the respondents. As far as loss of revenue to the Government is concerned, the higher officials of the respondents shall take appropriate action against the responsible officers. The respondents are directed to de-seal the machine and two DG sets forthwith - application disposed off.
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2022 (7) TMI 1061
EOU - achievement of NFE - Demand of Central Excise Duty alongwith Interest and Penalty - Goods cleared directly and also through merchant exporters - it is alleged that in respect of the exports made through Merchant Exporters certain discrepancies such as on some of the shipping bills in respect of these exported goods, the status of the appellant EOU was not shown, in others, the name of the noticee and its status as an EOU was not mentioned - export of goods or not - third party clearances of goods without payment of central excise duty under invoices in DTA - Board's Circular number 03/ 91-Cus dated 24.01.1991 - HELD THAT:- The goods cleared by the appellant and exported through third party have been considered as clearance made in DTA, for making the demand of the duty for the reason that the documents filed for the export of goods did not indicated the name or the status of the Appellant. In view of the adjudicating authority, for this reason the goods which were cleared for exports did not fulfilled the requirement of the Board's Circular number 03/ 91-Cus dated 24.01.1991, and hence were clearance made in DTA - Commissioner admits on the basis of the documents submitted by the appellant that these goods were duly exported. Even the annexure to the show cause notices clearly show that all the goods were cleared against the ARE-1 and hence were cleared for exports only. Annexure to each of the show cause notice is an admission of the fact that goods were cleared for export from the premises of appellant. Also neither the show cause notice nor the impugned order state that the proof of export was not submitted by the appellant/ merchant exporter/ third party exporter, in any of the cases. When the goods were cleared for exports and proof of export submitted in each and every case, the demand made treating these goods to be cleared in DTA, is contrary to the provisions of the Rule 18 of the Central Excise Rules, 2002. In case of any unit whether an EOU or any DTA unit exporting the goods, the proof of export once submitted establishes the factum of export. Impugned order could not have proceeded to demand the Central Excise Duty contrary to the provisions of the Rule 18. It could have been the case of the revenue that in view of the Circular of 1991 and of 2006, the benefit of export for the purpose of determining NFE, for the purpose of evaluating the performance of the unit should have been denied. However the performance of the EOU s is monitored by the Development Commissioner to whom the return showing the export turnover is furnished by the unit in the manner as prescribed. There is not even a whisper in the show cause notice or in the impugned order, that Development Commissioner has while evaluating the export performance of the unit, has denied the benefit of export in respect of these consignments cleared by the appellant in terms of para 6.10 of the Import Export Policy, 2009-14 read with para 6.18 of the Handbook of Procedures, 2009-14. Thus, if the benefit is provided in terms of the statutory provision, the same can be circumscribed/ denied by taking resort to a circular. Thus, there are no merits in the demand made - appeal allowed.
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CST, VAT & Sales Tax
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2022 (7) TMI 1060
Validity of assessment orders - Seeking writ of mandamus staying revenue recovery proceedings or any other steps against the appellant - violation of the provisions contained in Section 25AA of the KVAT Act or not - violation of principles of natural justice - HELD THAT:- The learned Single Judge on finding that the points raised are clear disputed facts and even if the question whether the mandate under Section 25AA of the KVAT Act has been followed by the Assessing Officer, the appellant has got an appellate remedy and so entertaining the said issue in the Writ Petition, is not warranted - It is now settled law that a jurisdictional error or violation of principles of natural justice resulting in travesty of justice are the principal grounds for the invocation of remedy under Article 226 of the Constitution of India. There is no ground to interfere with the judgment of the learned Single Judge - appeal dismissed.
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Indian Laws
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2022 (7) TMI 1059
Territorial Jurisdiction - Maintainability of the application under Section 11(6) of the Arbitration Act before the Orissa High Court - respondent claimant had initiated proceedings under Section 9 of the Arbitration Act in the Court at Vishakhapatnam - Appointment of an Arbitrator to adjudicate the dispute between the parties - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Without deciding the said issue which goes to the root of the jurisdiction of the High Court of Orissa at Cuttack, the said High Court by the impugned order has entertained the application under Section 11(6) of the Act and has appointed the sole arbitrator by observing that since the appellants East Coast Railway, in principle, has not opposed the appointment of an arbitrator, there is little purpose served in relegating the original petitioner to the concerned High Court as that will only delay the adjudication of the disputes. The appellants might not have opposed the appointment of an arbitrator (though the fresh appointment of an Arbitrator was also opposed by the appellants herein) by that itself it will not confer the jurisdiction upon the High Court if otherwise, the High Court had no jurisdiction. It is not in dispute that before filing an application under Section 11(6) of the Act before the High Court of Orissa at Cuttack, the respondent claimant moved an application before the Court at Visakhapatnam under Section 9 of the Arbitration Act. In that view of the matter considering Section 42 of the Arbitration Act, the High Court of Andhra Pradesh at Hyderabad alone would have jurisdiction to decide the subsequent applications arising out of the Contract Agreement and the further arbitral proceedings shall have to be made in the High court of Andhra Pradesh at Amaravati alone and in no other court. In that view of the matter the High Court of Orissa at Cuttack has committed a serious error in entertaining the application under Section 11(6) of the Act before it and appointing the sole arbitrator. The impugned judgment and order passed by the High Court of Orissa at Cuttack in Arbitration Petition No.10 of 2021 and appointing the sole arbitrator is hereby quashed and set aside solely on the ground that the High Court of Orissa at Cuttack would have no jurisdiction to entertain the application under Section 11(6) of the Act with respect to the contract agreement for which the respondent claimant earlier initiated the arbitration proceedings under Section 9 of the Arbitration Act in the Court at Vishakhapatnam. Appeal allowed.
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