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TMI Tax Updates - e-Newsletter
July 29, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Jurisdiction or authority to block any input tax credit - Reason to believe that input tax available in the electronic credit ledger has been fraudulently availed or is ineligible - if there is no positive credit standing in the electronic credit ledger on the date of the order, passed under Rule 86-A, that order would be read to create a lien upto limit specified in the order passed as per Rule 86-A of the Rules. As and when the credit entries arise, the lien would attach to those credit entries upto the limit set by the order passed under Rule 86- A of the Rules. The debit entry recorded in the electronic credit ledger would be read accordingly. - HC
Income Tax
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Revision u/s 263 - addition on account of interest paid to loan creditors - On one hand,AO is treating the alleged loan deposits as non-genuine and adding the same to the income under section 68 of the Act, but on other hand, without proper verification, allowed the interest payment allegedly made to the loan depositors, that would render the assessment order erroneous and prejudicial to the interest of the Revenue - AT
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Exemption u/s 11 - trust which was not registered u/s.12A - Addition of corpus donation - voluntary contribution received by the trust with a specific direction that they form part of corpus of the trust is income of the trust within the meaning of section 11 & 12 of the Income Tax Act, 1961. - AT
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Income deemed to accrue or arise in India - shared services - the CIT(A) has failed to appreciate that the year on year rendition of services by the assessee to the Indian entity proves that technical knowledge is not transferred or made available to the Indian entity for independently function without the aid of the assessee. We therefore agree with the plea of the assessee and hold that the sum received towards shares services were not in the nature of FTS and cannot be brought to tax in India as “FTS” - AT
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Penalty order passed u/s 271AAA - disclosure of undisclosed jewellery and cash - The levy of penalty in not automatic and not mandatory. - considering the facts circumstances, provisions and the ratio of the decision of the Hon’ble Tribunal. We set aside the order of the CIT(A) and direct the assessing officer to delete the penalty and allow the grounds of the appeal in favour of the assessee. - AT
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Proceedings u/s 201(1) - not deducting TDS on the year-end provision - Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. Assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in the month of April, as and when the bills are received, and the payment is made to the payee by deducting TDS. Further, admittedly, assessee has paid interest under section 201(1A) which further demonstrates there was no malafide intention. - AT
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Recovery proceedings - attachment orders - stay petition - The position emerges that there is no dispute on that petitioner has fulfilled the condition of deposit of 20% of amount for staying the effect and operation of order of demand. In the given circumstances, it would be proper that the attached property be released from attachment - HC
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Direct Tax Vivad Se Vishwas Scheme 2020 - whether the amount which was forfeited at the time of auction, is to be credited into the account of the petitioner or is to be credited to the account of the Government, after defraying the expenses of the same, as provided in Rule 58 of Schedule II of the Income Tax Act, 1961? - The entry of ₹ 8,02,500/-, which is there in Form-26AS, is contrary to the orders passed by the authorities as well as contrary to the Rule in question i.e., Rule 58 of the Schedule II of the Income Tax Act, 1961 and is therefore required to be ignored. - HC
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Computing value of perquisites u/s 17(2) - residential accommodation - Merely because assessee is a body or undertaking owned or controlled by the Central Government, it cannot be elevated to the status of Central Government. Thus, the assessee cannot claim that valuation of perquisites in respect of residential accommodation should be computed as in case of an accommodation provided by the Central Government. Therefore, Sl.No.1 of Table 1 of Rule 3 of the Rules does not apply to the assessee. - HC
Customs
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Permission to mutilate the imported goods - 459 packages weighing 55.740 MT of mixed wet strength scrap paper (silicon paper and coated) - seeking allowance of clearance of the goods under the exemption claimed for waste paper - the Revenue has rightly construed the prayer sought for by the Importer and passed the order dated 29.12.2020 permitting provisional release of the cargo subject to certain conditions. Therefore, no error can be attributed to the manner in which the Revenue construed the Letter dated 23.12.2020 - HC
IBC
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CIRP - Whether Appellant is justified to carry the appeal only because the Adjudicating Authority had given directions to produce the Balance Sheets? - The Application under Section 9 of IBC has been pending for long and against the spirit of provisions of IBC. The delay must be affecting the maximization of value of assets. The merits of the application under Section 9 have yet not been adjudicated and decided and so we are not entering in the issue whether there was a pre-existing dispute - It is apparent that for hearing the matter, the Adjudicating Authority needed a particular document which is even otherwise admittedly a public document. If that was so, there was no good reason to file the present appeal and to raise a dispute as has been raised.- AT
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Validity of approved Resolution Plan - statutory dues - it is difficult to find fault with the Resolution Plan as has been approved. There is substance in the submissions made by the Resolution Professional that if the Corporate Debtor was to go in Liquidation, the Appellant would get Nil amount. - AT
Service Tax
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Validity of SCN - Jurisdiction - The service tax are demanded only for other services which all are not covered under the exemption clause and therefore, these facts are to be adjudicated with reference to the documents and evidences. When there is a slightest doubt in respect of the point of jurisdiction is raised, then the benefit of the said doubt is to be given for the Revenue. - HC
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Classification of services - renting of immovable property service or Support Services of Business and Commerce - assessee has rendered composite services whereas as per the assessee, they have rendered only ‘Renting of Immovable Property Service’ - the services rendered by the appellant fall under the category of ‘Renting of Immovable Property service’ and the applicable services tax on such rental or lease charges has been correctly paid. - AT
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CENVAT Credit - input services - services used in setting up their plants - Although setting up the factory is not manufacture in itself, it is an activity directly in relation to manufacture. Without setting up the factory, there cannot be any manufacture. Services used in setting up the factory are, therefore, unambiguously covered as ‘input services’ under Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. - AT
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Levy of service tax - liquidated damages recovered by the appellant for acts of default - consideration for tolerance of an act or not - it is not possible to sustain the view taken by the Commissioner that since BHEL did not complete the task within the time schedule, the appellant agreed to tolerate the same for a consideration in the form of liquidated damages, which would be subjected to service tax under section 66E(e) of the Finance Act. - AT
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Extended period of limitation - The ingredients mentioned in terms of proviso to Section 73(1) has not been fulfilled by the Department and moreover in the present case, the appellant has a bona fide belief that they are not liable to pay service tax on the differential freight amount collected - the issue involved relates to interpretation of provisions of a statute and in such a situation, extended period cannot be invoked. - AT
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Legality and validity of the show-cause notice - pre-show-cause notice consultation dated 12.4.2019 delivering the same to the petitioner assessee at 13.55 hours and calling upon them to remain present before the respondent No.2 at 16.00 hours. - The petitioners having requested for reasonable time for the effective consultation, without considering the said request, the respondent No.2 issued the show-cause notice on the same day i.e. on 12.4.2019. Such a high-handed action on the part of the respondent No.2, not only deserves to be deprecated but to be seriously viewed. - HC
Central Excise
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CENVAT Credit - The adjudicating authority does not dispute the usage of impugned input services for providing the output services but has disallowed the credit only on the ground that these are not connected with the business activity or not necessary for providing output service. In this regard, it is noted that once for the previous period such nexus has been accepted by the department than there is no basis for denial of such nexus for the subsequent period - also, it is a settled position of law that there cannot be two different yardsticks i.e., one for allowing refund and the other for deciding the eligibility of CENVAT credit. - AT
VAT
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Condonation of delay - sufficient cause - Request for Reopening of assessment order for accepting declarations in Form ‘C’ - power of authorities to reopen the proceedings after lapse of four years - no material particulars are placed on record with regard to the date of such closure - as no ‘sufficient cause’ has been made out by the petitioner to explain the delay in filing declarations in Form ‘C’, we are of the opinion no case for directing to reopen the assessment is made out. - HC
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Arrears of sales tax - actual defaulter - collection of arrears after lapse of 14 years - The first respondent has not collected the recovery of sales tax vigilantly from the defaulters. Thus, the actions initiated after lapse of many years cannot be sustained. - HC
Case Laws:
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GST
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2021 (7) TMI 1057
Jurisdiction or authority to block any input tax credit - Reason to believe - purchase with respect to which, adjudication proceedings are underway against the petitioner in accordance with Section 74 of the UP GST Act, 2017 - manner in which an amount may be determined to be due and recoverable from the petitioner - Rule 86A(1)(a)(i) of the State/Central Goods and Services Tax Rules, 2017 - HELD THAT:- Plainly, there can be no dispute that the Act prescribes the manner for determination of any tax not paid or short paid. Section 74 of the Act provides for determination of input tax credit wrongly availed or utilized by reason of fraud etc through the process of adjudication. Section 78 of the Act further mandates that any amount that may be determined under Section 74 of the Act may not be recovered for a period of three months from the date of service of the adjudication order. Here, it may be seen that the recovery provision are contained in Section 79 and the enabling Rules. The recovery Rules fall under Chapter XVIII of the State GST Rules 2017 being Rules 142 to 161. On the other hand, Rule 86-A falls under the Chapter heading IX of the Rules regarding payment of tax - the word 'available' used in the first part of sub-Rules of Rule 86-A would always relate back in time when the assessee allegedly availed input tax credit either fraudulently or which he was not eligible to avail. It does not refer to and, therefore, it does not relate to the input tax credit available on the date of Rule 86-A being invoked. The word has been used in Rule 86-A (1) leave no manner of doubt in that regard. Reason to believe - HELD THAT:- The correctness or otherwise or the sufficiency of the 'reason to believe' is not subject matter of dispute in the instant proceedings. It is the relevancy of that reason to believe with which we are in agreement with Mr. Ghildiyal. Thus, at present, the 'reason to believe' is based on material with the competent authority indicating non-existence of the selling dealer. It is thus alleged the petitioner was not eligible to avail input tax credit as the seller M/s Darsh Dairy Food Products, Agra was a nonexistent dealer. Purchase with respect to which, adjudication proceedings are underway against the petitioner in accordance with Section 74 of the UP GST Act, 2017 - HELD THAT:- The operative portion of sub-rule (1) of Rule 86-A limits the exercise of power (by the authorized officer), to the amount that would be sufficient to cover the input tax that, according to the revenue, had either been fraudulently availed or to which the assessee was not eligible. It is an amount equal to that amount which has to be kept unutilised - the provision of Rule 86-A is not a recovery provision but only a provision to secure the interest of revenue and not a recovery provision, to be exercised upon the fulfillment of the conditions, as we have discussed above, we are not inclined to accept the further submission advanced by the learned counsel for the petitioner that there is any violation of the principle when a legislative enactment requires an act to be performed in a particular way it may be done in that manner or not at all. It also stands to reason, if there is no positive credit standing in the electronic credit ledger on the date of the order, passed under Rule 86-A, that order would be read to create a lien upto limit specified in the order passed as per Rule 86-A of the Rules. As and when the credit entries arise, the lien would attach to those credit entries upto the limit set by the order passed under Rule 86- A of the Rules. The debit entry recorded in the electronic credit ledger would be read accordingly. Petition dismissed.
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Income Tax
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2021 (7) TMI 1106
Benami transactions - Power/authority to allow encashment of the FDRs - petitioners-Deepika Oberoi and Hina Oberoi who were minor at the time of filing this petition under Articles 226/227 of the Constitution of India have sought a writ of certiorari etc. for setting aside the impugned action of the respondent Nos. 1 to 3-Union of India/Income Tax Department whereby they have encashed 4 FDRs. of the petitioners in the denomination of ₹ 20,000/- each made on 6.5.1996 - whether father/mother of the petitioners were having any source of income for creating 4 FDRs. of huge amount in the denomination of ₹ 20,000 each way back in the year 1996? - HELD THAT:- The pleadings of the petitioners are blown away from the statement of their own mother and guardian-Kavita Oberoi wife of deceased Shanti Nath recorded on 6.1.1997 vide Annexure R-2/1 before the Income Tax Authorities. In her statement, she clearly stated that neither she nor her deceased husband had any bank account/locker in any bank in India. She further stated that she had 3 children and her husband was employed as a Munshi with Raj Pal Anand getting ₹ 600/- to ₹ 700/- per month. She also stated that they were living hand to mouth. After the death of her husband, she had rental income of ₹ 300/- per month and was sustaining herself with great difficulty. She also stated that she does not have any jewellery to be kept in anybody's locker and even in her own home. There is nothing on record to show that either the mother or father of the minor petitioners was having any other source of income to invest such huge amount for making 4 FDRs. in the denomination of ₹ 20,000 each made way back in the year 1996. The source of money from the father/mother of the petitioners is not at all traceable since there is no cogent material such as Income Tax Returns on the record of the present case either filed by their father/mother or their relatives to show that the petitioners were having any other known sources of income so that it appears to be convincing and containing grain of truth that there was any other income from any lawful source which had been duly intimated while filing Income Tax Returns in the past years before the said FDRs. were made. We are astonished to observe that 4 FDRs. in the denomination of ₹ 20,000 each made in the year 1996 belonged to the petitioners alongwith others who were not even having account in any bank and were living in penury. As a sequel to our above discussions, we have no hesitation in holding that it was only a 'benami transaction' made by the employer in the name of his employee (driver), namely Shanti Nath. It is not a case of the petitioners that their mother/father had been continuously filing ITRs. showing such income and that it is also not the case of the petitioners that the previous years' ITRs. of the father/mother of the petitioners showing the requisite income for making such FDRs. have not been taken into consideration by the Assessing Authority. The Assessing Authority has rightly acted by assessing and encashing the said FDRs. The petitioners have no locus standi to claim the said FDRs. as they were made as a 'benami transaction'.
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2021 (7) TMI 1105
Stay of demand - Recovery proceedings - Deduction u/s 80P denied - Assessing Officer has communicated to the petitioners that the petitioners should pay 20% of the demand and then apply for stay of demand -HELD THAT:- In the matter of Mavilayi Service Co-operative Bank Ltd.[ 2019 (3) TMI 1580 - KERALA HIGH COURT] the question regarding liability of the co-operative societies to pay the income tax assess was decided. The Division Bench of this Court relying on the said judgment in THE ANGADIPPURAM SERVICE CO-OPERATIVE BANK [ 2019 (7) TMI 375 - KERALA HIGH COURT] , has quashed the action on the part of respondents with the direction that the Commissioner of the Income Tax should consider and dispose of the statutory appeals filed by the appellant co-operative societies at the earliest taking note of Full Bench decision in the matter of Mavilayi Service Co-operative Bank Ltd. and till then the recovery and collection of taxes should be kept in abeyance In this view of the matter, in the light of ratio of judgment of this Court, in the matter of The Angadipuram Service Co-operative Bank Ltd. v. The Commissioner of Income Tax (Appeals), the writ petitions are allowed. The 2nd respondent is directed to decide the pending appeals expeditiously and till then the respondents are directed to keep the recovery proceedings pursuant to the assessment order in abeyance.
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2021 (7) TMI 1102
Penalty u/s 271E - contravention of the provision of section 269T of the Act for repayment of loan in cash exceeding the permissible limit - Assessee argued no proper satisfaction was recorded by the assessing officer - HELD THAT:- AO erred in levying penalty u/s 271E of the Act in the case of assessee as firstly revenue failed to prove whether assessee actually received any cash loan or repaid any cash loan from R.C. Upadhya and secondly Ld. AO was not having any jurisdiction to levy the penalty as no assessment proceedings were pending in the case of assessee and thus no satisfaction was recorded by the ld. AO to initiate the penalty. Thus, finding of ld. CIT(A) is set aside and Ld. AO is directed to delete the penalty - Decided in favour of assessee.
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2021 (7) TMI 1101
Levy of penalty u/s 271(1)(c) - addition by estimating the profit at 14.5% as agreed by the assessee for such estimation - HELD THAT:- Hon ble Bombay High Court in the case of CIT vs. Devandas Perumal Co. [ 1982 (1) TMI 27 - BOMBAY HIGH COURT] has held that the presumption contemplated by the Explanation to section 271(1)(c) stood rebutted by the fact that there was no suppression of any sales or inflation of any purchases. The mere fact that the Income-tax Officer proceeded to estimate the net profit at a figure higher than that what was disclosed by the assessee, would not lead to the conclusion that there was a failure to return the correct income arising out of fraud or any gross or willful neglect on the part of the assessee. Hon ble Delhi High Court in the case of Aero Traders Pvt. Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT] has dismissed the appeal filed by the Revenue against the order of the Tribunal, which, in turn, has upheld the order of the CIT(A) deleting the penalty on the ground that addition made by the AO on the basis of estimated profit could not be a subject matter of penalty for concealment of income. in the instant case, the profit of the assessee has been estimated at a rate of 14.5% as against the profit declared at 12.37% and the assessee has given the instances of 6-7% profit declared by other assessees engaged in the same line of business, therefore, we are of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
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2021 (7) TMI 1100
Revision u/s 263 - addition on account of interest paid to loan creditors - Addition u/s 68 treating the same as unexplained and non-genuine - CIT observed that when loan deposits were found to be non-genuine, remained unexplained and added the same to the total income of the assessee, then there would not be any question allowing the alleged interest expenditure thereon - HELD THAT:- Addition made by the AO under section 68 on the loan taken by the assessee treating the same as unexplained and non-genuine has not been disputed before us by the assessee, nor the issue of addition was contested by the assessee further on merit - we are of the view that the reason for invocation of revisionary power by the ld.CIT is obvious and specific because there is an inherent lack of examination/verification of the record at the end of the AO while finalizing the assessment. On one hand,AO is treating the alleged loan deposits as non-genuine and adding the same to the income under section 68 of the Act, but on other hand, without proper verification, allowed the interest payment allegedly made to the loan depositors, that would render the assessment order erroneous and prejudicial to the interest of the Revenue. Interest paid to creditors against unsecured loans is allowable only when loan deposited by the creditor with the assessee are established. Therefore, the conclusion of the AO while finalizing the assessment is contradictory in itself, which render the assessment order erroneous and prejudicial to the interests of the Revenue. CIT is therefore justified in exercise of his power under section 263, which we uphold and the ground of appeal of the assessee is dismissed.
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2021 (7) TMI 1099
Addition being 20% of the expenses debited under the head Computer Expenses - Disallowance on the ground that assessee did not produce proper details - HELD THAT:- The lower authorities have not pointed out any defect in the various details filed by the assessee. It also appears to us that the lower authorities have not gone through the details that pertain to the major amount of the computer, printing and stationery expenses. CIT(A) also without going through the details filed before the A.O. has simply rejected the details filed by the assessee before him on the ground that assessee has not filed any application for admission of additional evidences. When all these details are already on the record of the A.O, therefore, there is no necessity on the part of the assessee to file any application for admission of additional evidence. CIT(A), in the instant case has neither perused the details filed before the A.O. nor applied her mind. We, therefore, set aside the Order of the Ld. CIT(A) and direct the A.O. to delete the addition. Grounds raised by the assessee are accordingly allowed.
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2021 (7) TMI 1098
Addition u/s 56 - difference between the circle rate and actual consideration received - Whether the learned CIT (A) as well as assessing officer was justified in not referring the property in question to the department valuation officer as demanded by the assessee and as per the provision of section 43CA read with section 50C? - HELD THAT:- Undoubtedly, the flat sold by M/s Techmen Buildwell (P) Ltd. for ₹ 55,16,000/- was less than the circle rate since the stamp duty was to be paid by the purchaser at ₹ 59,78,115/-. The difference between the circle rate and the actual sale consideration comes to ₹ 7.73% of the circle rate which is less than 10%. Mumbai bench of the Tribunal in the case of M/s John Flower (India) Pvt. Ltd. [ 2017 (1) TMI 1682 - ITAT MUMBAI ] while considering an identical issue has deleted the addition made by the AO u/s 50C on the ground that such difference is less than 10% of the stamp duty valuation. Since the difference between circle rate and the actual sale consideration in the instant case is about 7.7% of the circle rate, which is less than 10% of the stamp duty valuation, therefore, respectfully following the decision of the Mumbai Bench of the Tribunal, hold that the ld.CIT(A) was not justified in sustaining the addition made by the AO. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed.
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2021 (7) TMI 1097
Levy of the penalty u/s 271D - assessee has violated provision of section 269SS - HELD THAT:- As decided in own case [ 2020 (6) TMI 410 - ITAT DELHI] there is no cash transaction entered into by the assessee with Shri Sant Lal Agarwal, the whole foundation for levy of the penalty u/s 271D has crashed. No information was placed before us by the departmental representative that the above order of the coordinate bench has been challenged or upset by the higher forum. Thus, the finding of the coordinate bench binds us - we do not have any other alternative but to quash the penalty levied by the learned assessing officer and confirmed by the learned CIT A u/s 271D.
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2021 (7) TMI 1096
Rectification of mistake u/s 154 - assessee in default u/s 201(1) for not making TDS on interest payment - Assessee contested that all the form in Form No. 15G and 15H received by the deductor were also submitted to the department and therefore, tax was not deductible thereon - CIT (A) noted that the redrafting of ground of appeal after passing of the order u/s 154 of the Act by the ld AO is not acceptable because it amounts to substitution of appeal which was filed against the order demanding tax and that an appeal against the order of ld AO u/s 154 of the Act is not permissible - HELD THAT:- The fact clearly shows that original order passed u/s 201(1) and 201(1A) of the Act on 24.03.2014 where the Assessee was found to be an assessee in default and also charged interest thereon comprising all the above sum. The appeal before the ld CIT(A) was filed on 23.04.2013, subsequently, on 18.09.2015 the ld AO has rectified the mistake apparent in the order and thereafter reduced the demand. Only issue before him was that the claim of the Assessee that the Assessee obtained Form No. 15G and 15H same were filed before the revenue but the AO did not believe this during the course of passing of the order u/s 201(1A). The ld AO rejected the claim of the Assessee for the reason that though photocopies of all the form produced during the course of inspection as mentioned by ld AO at para No. 11 were available but claim was rejected only for the reason that no proper documentary evidence in support of having delivered this forms to CIT (A) was produced. So the only dispute was whether those forms were submitted before the ld CIT or not. The ld AO noted that Assessee has obtained form No. 15G and 15H from the depositors and filed though the interest paid to them was higher than the maximum chargeable to tax. But it is not the case that Assessee did not have form available with it. The ld CIT(A) at the time of disposal of the appeal did not appreciate that the first proviso inserted w.e.f. 01.07.2012 u/s 201 (1) of the act is applicable in the case of the Assessee and if the Assessee satisfy certain conditions, then it should not held to be an Assessee in default . In fact this proviso is held to be applicable retrospectively by the Hon'ble Delhi High Court. Therefore, the benefit of this proviso should have been granted by the ld CIT(A) to the Assessee. From the orders of the ld AO it is not discernable that how the tax demand of ₹ 3.74 crores was reduced to ₹ 21,28,983/-. In fact that is the error in the order of the ld AO. He should have computed the tax liability of the Assessee with utmost clarity. If the LD AO has not done his duty, the LD CIT (A) ought to have asked the LD AO for the remand report which he did not. Further, the ld CIT(A) in the order was also not correct in holding that the Assessee is not eligible to argue about the reduced demand after passing of the order u/s 154 of the Act and the Assessee should have filed a fresh appeal against the order passed u/s 154 of the Act. We are of the view that approach of the ld CIT(A) is pedantic not correct because it will put additional burden on the Assessee to cross the threshold of the provision of section 154 of the Act of being mistake apparent from the record . By passing an order u/s 154 of the act, in fact ld AO has made the task of ld CIT (A) much simpler. In fact, the mistake is committed by the LD AO who should have charged the right demand of tax from the Assessee. Therefore, it is mistake of the LD AO for which the Assessee cannot be penalized. Looking to the facts and circumstances of the case, as the issue is with respect to non deduction of tax at source on interest provision where Form No 15G and 15H are available with the Assessee or not available with the Assessee which can be verified by the ld DCIT TDS and correct demand could be raised - Appeal filed by the Assessee is allowed for statistical purposes.
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2021 (7) TMI 1087
Penalty u/s. 271(1) (c) - difference between the figures of capital gain initially computed and capital gain lately computed, for taxation - HELD THAT:- Assessee after receiving the notice u/s. 143(2) filed revised computation after coming to the knowledge that the assessee has filed the calculation sheet of the capital gains and offered the same for taxation. Thus, the assessee has admitted the mistake before the Assessing Officer could detect such omission. Thus, it is not a case of furnishing of inaccurate particulars or concealment of income before the AO - Section 271 of the Act comes into picture when there is a failure to furnish returns or there is concealment of income or furnishing of inaccurate particulars before the Assessing Officer. In the present case before the AO, all the relevant facts were already available and the mistake has been rectified by the assessee prior to the mistake pointed out by the Assessing Officer to the assessee during the assessment proceedings. Therefore, the order of the CIT(A) is not correct, as there is no concealment of income or furnishing of inaccurate particulars. The penalty levied u/s. 271(1)(c) of the Act is therefore quashed. The appeal of the assessee is allowed. Thus, it does not amount to inaccurate furnishing of particulars or concealment of income tax. - Decided in favour of assessee.
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2021 (7) TMI 1084
Exemption u/s 11 - trust which was not registered u/s.12A - Addition of corpus donation - HELD THAT:- Income of any trust including voluntary contributions received with a specific direction is not includable in the total income of the trust, if such trust is registered u/s.12A / 12AA of the Income Tax Act, 1961 - conditions precedent for claiming exemption u/s.11 including for voluntary contributions is registration of trust u/s.12A In this case, trust is not registered u/s.12A / 12AA of the Income Tax Act, 1961. Therefore, we are of the considered view that corpus donations received by the trust with a specific direction that they form part of corpus of the trust falls within ambit of income of a trust derived from property held under trust and hence, includable in total income of the trust. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that voluntary contribution received by the trust with a specific direction that they form part of corpus of the trust is income of the trust within the meaning of section 11 12 of the Income Tax Act, 1961. We are of the considered view that there is no error in the findings recorded by the learned CIT(A) to confirm additions made by the Assessing Officer towards disallowance of corpus donations - Decided against assessee.
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2021 (7) TMI 1083
Correct head of income - profit on sale of site - capital gain or business income - AO treated the amount received on sale of sites as income from business instead of capital gain and denied exemption u/s. 54F - HELD THAT:- In this case, the purpose and design of assessee in utilization of the land is pointed out towards carrying out adventure in the nature of trade so as to maximise profit from this transaction. As noted earlier, though assessee purchased agricultural land, no agricultural activity has been carried out - as converted into non-agricultural land within 3 months of purchase and later land was converted into small parts of residential units to realise optimum value on sale. The conversion of agricultural land into residential stock in trade of his business of selling the plots of land is for earning profit. In this case, the assessee himself has developed residential plots and then sold it to individual buyers. Therefore, we affirm the findings of the AO that by such plotting of land, the agriculture land has been converted into stock-in-trade in the form of residential plots of assessee s business. The said conversion and development of residential plots has happened by assessee s own admission during and the intent of assessee has thus been demonstrated through his own actions. The fair market value of the asset on the date of conversion as reduced by the cost of acquisition is required to be assessed under the head capital gain in the year(s) the stock-in-trade is sold or transferred. Sales realization of the stock-in-trade over such fair market value is required to be assessed as business income . Therefore, taxability arising on conversion agricultural land into stock-in-trade to the extent it has been sold during the year arises during the impugned assessment year. The matter is accordingly set aside to the file of Assessing Officer to determine the capital gains for fresh consideration in accordance with the provisions of section 45(2) of the Act as well as business income on sale of such plots, after providing opportunity of being heard to the assessee. This issue is accordingly disposed of with the above directions. Appeal of the assessee is partly allowed.
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2021 (7) TMI 1082
Penalty u/s 271(1)(c) - additions on account of notional interest earned from the Foreign Bank Account i.e., HSBC, Geneva - HELD THAT:-CIT(A) deleted the penalty levied by the A.O. u/s 271(1)(c) of the I.T. Act on the ground that the addition with regard to notional interest has been deleted and, therefore, the penalty does not survive. We do not find any infirmity in the Order of the Ld. CIT(A) in deleting the penalty levied by the A.O. on account of notional interest earned from HSBC, Geneva for all these years under consideration. Admittedly, in the quantum proceedings, the Tribunal has already decided the issue in favour of the assessee and the appeal filed by the Revenue has been dismissed [ 2019 (7) TMI 596 - ITAT DELHI ] Since the Tribunal has already upheld the Order of the Ld. CIT(A) in deleting the quantum addition and the Hon ble Delhi High Court [ 2021 (2) TMI 1182 - DELHI HIGH COURT] has already dismissed the appeal filed by the Revenue, therefore, the very basis on which the penalty was levied by the A.O. does not survive. Accordingly, the order of the Ld. CIT(A) for all the five assessment years under appeal deleting the penalty on account of addition of notional interest is upheld. Accordingly, the grounds raised by the Revenue in all the five assessment years under appeal are dismissed.
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2021 (7) TMI 1079
Penalty u/s 271(1)(c) - disallowance on account of expenditure on construction of BQS as capital expenditure - HELD THAT:- If we note that identical issue had arisen before this Tribunal in Assessment Year 2007-08 and 2008-09 in assessee s own case [ 2020 (1) TMI 1481 - ITAT DELHI] respectively and the Department s appeals against the deletion of the penalty imposed in these two years to Assessment Years were dismissed by this Tribunal. There is no case of the revenue that the assessee filed inaccurate particulars of income or concealed the income, as all the details in the original return as well as in the revised return was placed before the AO - Merely changing the stand as to how the trade income/expenditure as to be taken as capital or revenue, does not amount to furnishing of inaccurate of particulars or concealment of income. Therefore, the CIT(A) was right in deleting the penalty. There is no need to interfere with the findings of the CIT(A). The facts are identical in A.Y. 2008-09 as well. Therefore, both the appeals of the revenue are dismissed.
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2021 (7) TMI 1077
Income deemed to accrue or arise in India - receipts from sale of software products is taxable as royalty under Article 12(3) of the India- Sweden Double Taxation Avoidance Agreement (DTAA) and u/s 9(1)(vi) of the Income Tax Act, 1961 - HELD THAT:- As relying on assessee's own case [ 2019 (10) TMI 858 - ITAT DELHI] and [ 2020 (10) TMI 936 - ITAT DELHI] hold that consideration received by the assessee for sale of software cannot be treated as royalty under the provision of section 9(1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA and that the sale of software products by the assessee to its Indian distributors for further sale to end users is not in the nature of transfer of copyright and therefore not taxable in the hands of the assessee as royalty under the provision of section 9 (1)(vi) of the Act as well as Article 12 of the India-Sweden DTAA As rightly pointed out by the learned counsel for the assessee, those decisions of the Hon ble Karnataka High Court, now stand overruled by the decision of the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] as held that copyright is an exclusive right that restricts others from doing certain acts. A copyright is an intangible right, in the nature of a privilege, entirely independent of any material substance Owning copyright in a work is different from owning the physical material in which the copyrighted work may be embodied. Computer programs are categorised as literary work under the Copyright Act. Section 14 of the Copyright Act states that a copyright is an exclusive right to do or authorise the doing of certain acts in respect of a work, including literary work. Hon ble Court took the view that a transfer of copyright would occur only when the owner of the copyright parts with the right to do any of the acts mentioned in section 14 of the Copyright Act, 1957(Copyright Act). The court said that by virtue of Article 12(3) of the DTAA, royalties are payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary work includes a computer program or software. It was held that regarding the expression use of or the right to use , the position would be the same under explanation 2(v) of section 9(1)(vi) because there must be, under the licence granted or sales made, a transfer of any rights contained in sections 14(a) or 14(b) of the Copyright Act. Since the end-user only gets the right to use computer software under a non-exclusive licence, ensuring the owner continues to retain ownership under section 14(b) of the Copyright Act read with sub-section 14(a) (i)-(vii), payments for computer software sold/licenced on a CD/other physical media cannot be classed as a royalty. The grounds raised by the assessee with regard to taxing receipts on sale of off-the-shelf software are allowed. Treatment of receipts from shared services in India to be in the nature of 'fess for technical services' and therefore liable to tax in India - HELD THAT:- Going by the nature of services enumerated in the present case, we are of the view that the services were purely in the nature of back office services and nothing can be regarded as having been made available to the recipient of services. As per the terms of the Service Agreement, it is clear that the assessee only provides corporate back office services to QlikTech India and such services are not consultancy services and the same do not involve transfer of any technical knowledge or skill or experience to the recipient. The CIT(A) has erred in law and on facts in stating that, since the business model and the accounting and financial policies of the business remains the same, the consultancy services could be utilised by the Indian entity in its business year after year, thereby satisfying the 'make available' condition. On the contrary, the CIT(A) has failed to appreciate that the year on year rendition of services by the assessee to the Indian entity proves that technical knowledge is not transferred or made available to the Indian entity for independently function without the aid of the assessee. We therefore agree with the plea of the assessee and hold that the sum received towards shares services were not in the nature of FTS and cannot be brought to tax in India as FTS . The sum in question cannot be taxed as business profits also, as under Article 7(1) of DTAA, as the receipts in question cannot be attributed to the permanent establishment
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2021 (7) TMI 1076
Penalty order passed u/s 271AAA - disclosure of undisclosed jewellery and cash - HELD THAT:- We find that in the assesses case, the search was initiated u/s 132 of the Act on 07.10.2009 which was much before i.e 01.07.2012. At this juncture, it will be appropriate to refer to the provisions of Sec. 271AAA of the Act which are applicable for the cases were the search has been initiated or after 01.06.2007 but before 01.07.2012. The levy of penalty in not automatic and not mandatory. In the quantum appeal, the Hon ble Tribunal has considered the accumulation of jewellary and the rate of jewellary is raising and the assessee has taken into account the value of jewellary in the A.Y.2010-11 and filed the return of income. Further there is no material to suggest that it was purchased in the relevant assessment year. Therefore, considering the facts circumstances, provisions and the ratio of the decision of the Hon ble Tribunal. We set aside the order of the CIT(A) and direct the assessing officer to delete the penalty and allow the grounds of the appeal in favour of the assessee.
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2021 (7) TMI 1075
Revision u/s 263 - scheme or demerger conceived - under assessment of the income for the year under consideration under the provisions of MAT under section 115 JB of the Act as the AO allowed the deduction by way of adjustment of brought forward losses - assessee has claimed business loss and unabsorbed depreciation pertaining to the assessment year 2006-07 and 2007-08 although the same (the assessee) came into existence with effect from the assessment year 2008-09 - As per the PCIT the unabsorbed depreciation and brought forward losses pertain to the assessment years 2006-07 and 2007-08 i.e. pre-existence period the assessee, therefore, the same was not to be allowed to be carried forward such unabsorbed depreciation and brought forward losses under normal as well as under the provisions of MAT under section 115 JB - HELD THAT:- The impugned losses in the year under consideration represents the brought forward amounts from the earlier years. This fact can be verified from the submission of the assessee before the ld. CIT-A in the proceedings of the assessment framed under section 143(3) r.w.s. 263 of the Act. This fact also remained undisputed by the Ld. DR appearing on behalf of the Revenue. Answer to question whether the brought forward amount can be enquired in the year under consideration without disturbing the 1st year (the year of origin ) in which such amounts were incorporated in the books of accounts of the assessee certainly, stands in negative. Whether the Revenue can disturb the impugned amount brought forward from the earlier years, but the learned DR cannot make any satisfactory reply ? - in the absence of any provisions under the law for disturbing the brought forward balances in the year under consideration in the given facts and circumstances, we hold that the learned PCIT has held the assessment order under consideration as erroneous insofar prejudicial to the interest of revenue under the provisions of section 263 of the Act without having any valid jurisdiction. Accordingly, we hold that the order framed under section 263 of the Act is not sustainable and therefore we quash the same. Hence, the ground of appeal of the assessee is allowed.
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2021 (7) TMI 1074
Disallowance u/s 14A r.w.r. 8D - AO noticed that the assessee has earned share income from firms and claimed the same as exempt u/s 10(2A) and the assessee did not make any disallowance u/s 14A - A.R. submitted that the assessee did not incur any expenditure for earning the exempt income - HELD THAT:- Exempt income constitutes fraction of total revenue. With regard to the interest expenses, it is submitted that they have been incurred in respect of project specific loans and no part of the said loans have been diverted to partnership firms. It is in the common knowledge of everyone, the project specific loans can be used for the specific projects and further the usage of loans will also monitored by the bank. Accordingly, in the absence of any material to show that the project specific loan has been diverted for investment in partnership firms, the disallowance out of interest expenditure is not called for - we are of the view that there is no necessity to apply the provisions of rule 8D. Addition of other expenses - Assessee has claimed other expenses of ₹ 14.13 crores, out of which only ₹ 48.52 lakhs alone can be said to be common expenses. A.R submitted that the services and facilities used by assessee from other concerns and also by the other concerns from the assessee have been quantified and cross charged. Hence, overall supervision of the activities of partnership firms by the assessee would be relevant for sec.14A of the Act. Major income of the assessee is from property development, we are of the view that the disallowance u/s 14A of the Act can be made at an adhoc figure of ₹ 2.00 lakhs and the same, in our view, would meet the requirements of section 14A of the Act. We set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to restrict the disallowance to two lakhs rupees u/s 14A of the Act. - Decided partly in favour of assessee.
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2021 (7) TMI 1073
Disallowance u/s 14A r.w.r 8D(2)(iii) - HELD THAT:- AO has applied the formula of disallowance without considering the facts of investment pattern, income and total expenses. A.O. has to determine and calculate administrative over heads and compute the total income including exempt income. A.O. has to calculate the percentage of allocating administrative overheads based on total income and exempted dividend income. Further if the disallowance u/sec14A of the Act is worked out, the A.O. has to apply the ratio of special bench decision in the case of ACIT Vs. M/s. Vireet Investments Pvt Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - Where the Coordinate Bench has made a distinctive observations on the investments and only dividend yielding investments has to be considered for the purpose of Average value of investments for disallowance u/s 8D(2)(iii). We set aside the order of the CIT(A) on this disputed issue and for limited purpose remit the disputed issue to the file of the assessing officer to recomputed the disallowance under Rule 8D(2)(iii) of the IT Rules and compare with the allocation of expenses to exempted income earned and allow the claim which is beneficial to the assessee. The assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. We allow the grounds of appeal of the assessee for statistical purposes. Disallowance computed applying Sec 14A and Rule 8D(2) of the I T Rules, the assessee is eligible to make adjustment of disallowance amount while claiming deduction U/sec80IA of the Act in computing the revised profits. Unabsorbed depreciation and accumulated losses of the earlier years prior to initial year of claim u/sec 80IA of the Act have to be adjusted while computing profit of eligible business - HELD THAT:- We Find the Honble High Court Of Madras in the case of M/s Velayudhaswamy Spinning Mills (P) Ltd. [ 2010 (3) TMI 860 - MADRAS HIGH COURT] has observed The Loss in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business, as no such mandate is provided in section 80-IA(5)of the Act. Subsequently the Revenue has challenged the decision before the Hon ble Supreme Court and the SLP was dismissed [ 2016 (11) TMI 373 - SC ORDER] . Accordingly, We follow the ratio of the above judicial decisions and set aside the order of the CIT(A) on this issue and allow the ground of appeal in favour of the assessee. Income tax refund order along with interest u/sec 244A - HELD THAT:- We consider the overall aspects and the ratio of decisions in respect of interest calculation. The assessee should not be deprived of its legitimate right for any further interest, due to the lapses on the part of the income tax department. Accordingly, we direct the assessing officer to grant the interest on refund to the date of refund order and allow this ground of appeal. Voluntary Emission Reduction (VER) credits - Revenue or capital receipt - HELD THAT:- Receipts in connection with the Voluntary Emission Reduction (VER) credits are in the nature of capital receipts - See M/S. DODSON LINDBLOM HYDRO POWER PVT. LTD. [ 2019 (4) TMI 1034 - BOMBAY HIGH COURT] and M/S. MY HOME POWER LTD., [ 2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] Capital gain on Sale of Non convertible debentures - assessee has claimed the cost of acquisition of debenture at ₹ 452/- as against as cost of ₹ 500/- while calculating the capital gains - HELD THAT:- As in the subsequent A.Y.2010-11, the assessee has written off in the financial statements, we are of opinion that this matter requires verification and examination of transactions as discussed above to be decided based on the final outcome of A.Y. 2010-11.Accordingly, we restore this disputed issue for verification and examination by the assessing officer and after satisfaction of facts, the assessing officer is directed to allow the claim of the assessee. The assesse should be provided adequate opportunity of hearing and shall co-operate in submitting the information and we allow this ground of appeal for statistical purpose. Grant deduction of education cess on income tax paid during the year - HELD THAT:- As relying on decision of M/s Sesa Goa Ltd Vs JCIT Panaji [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] were the Honble High court has observed that the Education cess and Higher Education cess are liable for deduction in computing income chargeable under head of profits and gains of business or profession. We considering the ratio of decision discussed above, direct the assessing officer to allow the deduction of cess and allow the ground of appeal of the assessee.
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2021 (7) TMI 1072
Addition of surveillance fee - Income recognition policy - effect of change in accounting policy - assessee company is following mercantile system of accounting - A.O has made addition of surveillance fee which was not offered in the current year but in the subsequent year i.e.A.Y.2013-14 - CIT(A) has accepted the system of accounting of surveillance fee which the assessee company for the first time has adopted in A.Y 2012-13 - HELD THAT:- Method of accounting employed by the assessee is acceptable and is followed by the similar credit rating agencies and the change is bonafide and has been recognized as standard industrial practice. A.O has never doubted the income and has also not accepted the fact of change in accounting policy on revenue recognition as the assessee was following mercantile system of accounting till last financial year. Whereas, in this present assessment year the assessee has bifurcated 60% fees as income of the current year and remaining 40% was carry forwarded and offered in A.Y 2013-14 which cannot be disputed - AR mentioned that due to change in system of accounting policy, the bench mark as applicable to other credit rating agencies are fallowed. When the query was raised to the Ld. AR to explain the basis of offering of fee in 60% and 40% ratio or industry yardstick or standard. AR reply/explanations are not supported by evidences. DR also accepted the fact of offering of income in the A.Y 2013-14 based on the supporting evidences including assessment order u/sec143(3) of the Act filed by the Ld.AR. We find that the CIT(A) relied on the submissions and the accounting policies and has deleted the addition. Whereas, in respect of 100% TDS claim made by the assessee on the 60% income/fee offered for taxation needs to be modified. When the income is recognized, the TDS claim should be restricted to the extent of income offered. In the income tax return filed electronically by the assessee, there is a Schedule of TDS, were there are columns earmarked for set apart/carry forward of income and TDS claim for the Subsequent assessment year, which needs to be opted. CIT(A) has passed a reasoned order and we up hold the same to the extent of deletion of addition of surveillance fee made by the Assessing officer. TDS claim - We modify the CIT(A) order and direct the A.O to restrict the claim of TDS to the extent of income offered in the A.Y.2012-13 and the balance of TDS shall be claimed against the income assessable in the assessment year A.Y.2013-14 and we partly allow the grounds of appeal of the revenue - Appeal filed by the revenue is partly allowed.
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2021 (7) TMI 1071
Proceedings u/s 201(1) - not deducting TDS on the year-end provision - Addition u/s 40(a)(ia) - assessee in default for non-deduction of tax at source - assessee contended that these were end provisions that were reserved in subsequent financial year and based on invoices raised by the vendors were accounted in the books of account after deducting TDS - HELD THAT:- The provision created at the end of the accounting year has not been credited to the relevant parties to whom the payments has to be made for the reason that it was unquantifiable. Further, assessee has suo moto disallowed the said sum under section 40(a)(ia) for non-deduction of TDS. See BIOCON BIOPHARMACEUTICALS PRIVATE LTD [ 2015 (3) TMI 684 - ITAT BANGALORE] Therefore there is a sufficient and reasonable cause for not deducting TDS on the year-end provision. Assessee consistently follows this kind of accounting system for year-end provisions which is subsequently reversed in the subsequent year in the month of April, as and when the bills are received, and the payment is made to the payee by deducting TDS. Further, admittedly, assessee has paid interest under section 201(1A) which further demonstrates there was no malafide intention.
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2021 (7) TMI 1070
Addition u/s 68 - addition of unsecured loans - HELD THAT:- A.O without identifying any particular unsecured loan of Mumbai or Kolkata in the group summary has made addition of difference in opening and closing balance of unsecured loans. We find that the methodology adopted by the A.O cannot be accepted, we on perusal of the group summary found that in the opening balance there are 7 unsecured loan creditors of Mumbai and 6 unsecured loan creditors of Kolkata and some of the loan creditors have been squared off during the year. Whereas, in few cases, additional loans have been accepted and the same is reflected as the closing balances in the ledger account of the group summary provided. AO could have made enquiry in respect of any particular unsecured loan creditor and some of the loan creditors have been repaid which was accepted. Considering the overall facts and evidences, we find the submissions of the Ld.AR are realistic and duly supported by the material and the confirmations on record. A.O cannot make the addition of unsecured loans u/s68 of the Act considering only the opening and closing balance of the unsecured loans in group summary. The unsecured loans may increase or decrease and accrued interest is credited and the actual interest payment by the assessee. Further each unsecured loan account has to be independently dealt and if the loan account does not satisfy the three ingredients of identity, creditworthiness and genuineness of the transaction, the provisions of Sec.68 of the Act are applicable. But in the present case, the assessment order clearly indicates that the A.O has only considered the opening and closing balance of the unsecured creditors without referring to any particular loan creditor - Decided in favour of assessee. Disallowance of repairs and maintenance expenses claimed in profit and loss account - AR submitted that these are the repairs and maintenance expenditure incurred by the assessee to maintain the building in good condition and is an allowable claim - HELD THAT:- type/ nature of expenditure explained above does not qualify for deduction u/s 24 of the Act and they are necessarily incurred for maintaining the school building in usable and good condition for the safety, health and protection of school children. We are of the substantive opinion that the claim of expenses cannot be denied. Assessee has various business activities including the running of the schools and the A.O has not doubted the genuineness of the expenses. Accordingly, we set aside the order of the CIT(A) on this ground of appeal and direct the Assessing officer to delete the addition and allow the ground of appeal in favour of the assessee.
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2021 (7) TMI 1069
Correct head of income - treatment to assessee s leased rental income - Business Income or Income from House Property - HELD THAT:- The issue on merits in AY 2010-11 [ 2019 (9) TMI 310 - ITAT MUMBAI] stood covered in assessee s favor wherein the rental income has finally been accepted as Business Income . The issue in AY 2012-13 [ 2019 (5) TMI 1675 - ITAT MUMBAI] has also attained finality since no appeal was preferred by the department against appellate order for that year. The revisional order passed u/s 263 has already been quashed by the Tribunal. For the stated reasons, no infirmity could be found in the impugned order. Therefore, revenue s appeal stand dismissed. CIT(A) correctly allowed assessee s appeal and directed Ld. AO to assess the rental income as Business Income . - Decided in favour of assessee.
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2021 (7) TMI 1058
Recovery proceedings - attachment orders - stay petition - as submitted petitioner deposited 20% of tax dues earlier, the property would not have been attached - HELD THAT:- Petitioner has been before appellate authority against the assessment order, disputing tax liability for AY 2010-11 and that there has been stay to demand under order passed by respondent No. 2 on 20% of amount of demand been deposited as required. The attachment order has been issued before the stay order and it is being contended that the respondent No. 1 has no authority and power to lift attachment unless 100% of the amount is collected and/or till finalization of dispute before appellate forum. This appears to be a reason which is coming in the way of banks / concerned authority from releasing property from attachment. The position emerges that there is no dispute on that petitioner has fulfilled the condition of deposit of 20% of amount for staying the effect and operation of order of demand. In the given circumstances, it would be proper that the attached property under order dated 25.11.2019 be released from attachment and as such, we allow the petition in terms of prayer clause (b).
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2021 (7) TMI 1056
Direct Tax Vivad Se Vishwas Scheme 2020 - whether the amount which was forfeited at the time of auction, is to be credited into the account of the petitioner or is to be credited to the account of the Government, after defraying the expenses of the same, as provided in Rule 58 of Schedule II of the Income Tax Act, 1961? - HELD THAT:- As rightly observed in the impugned order that the amount which was the forfeited amount could not be credited into the account of the petitioner and was forfeited to the Government as the auction purchaser failed to deposit the balance amount. Moreover, there is no challenge to the said Rules by the petitioner. The Rules being very clear, thus, the amount in question had to be forfeited to the Government and not credited to the petitioner. Even otherwise once the auction was not successful then as per the above-said Rules and also as per the stand of the respondent in the written statement, the property is required to be re-auctioned. In case, the re-auction is successful then the petitioner will have the benefit of the sale proceeds. Thus, considering from any aspect, the impugned action of the respondents is in accordance with law and deserves to be upheld and the first submission of the petitioner deserves to be rejected. With respect to the aspect that the said amount had been credited in the account of the petitioner/assessee and the same was so reflecting in Form-26AS (Annexure P-2 with the writ petition), suffice it to say that any entry inadvertently made and being in violation of the Rules governing the case is required to be ignored. Moreover, even as per the case of the petitioner, the respondent-authority as per order dated 26.04.2018 had carried out the said correction after passing a detailed order and after considering the rule in question. The said order has not been challenged by the petitioner in the present writ petition. The entry of ₹ 8,02,500/-, which is there in Form-26AS, is contrary to the orders passed by the authorities as well as contrary to the Rule in question i.e., Rule 58 of the Schedule II of the Income Tax Act, 1961 and is therefore required to be ignored. The respondent-authorities had thus correctly not given the credit of ₹ 8,02,500/- to the petitioner vide impugned order dated 01.02.2021 (Annexure P-9) and even Form-3 dated 05.02.2021 (Annexure P-10) has been correctly issued and thus, the impugned order does not call for any interference and hence, the writ petition stands dismissed.
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2021 (7) TMI 1053
Computing value of perquisites u/s 17(2) - assessee is a Trust constituted under Charitable Endowment Act, 1890 - value of residential accommodation provided by the Central Government or any State Government to the employees either holding office or post in connection with affairs of the Union or of such State or serving with any body or Undertaking under the control of such Government on such deputation - whether the assessee, which is a Trust registered under the Charitable Endowment Act, 1890 can be treated as Central Government as provided in Sl.No.1 of Table 1 appended to Rule 3(1) of the Rules? - HELD THAT:- The assessee, which is a Trust under the 1890 Act, is controlled and financed by the Central Government. The assessee is a Body or an undertaking controlled by the Central Government. governed by the Rules governing the service conditions of the employees of the Central Government. The assessee may be an instrumentality of the State of for the purpose of Article 12 of the Constitution of India. For the purposes of Rule 3, the requirement is that the accommodation should be provided by the Central Government or State Government to the employees either holding office or post in connection with affairs of Union or of State or serving with any body or undertaking under the control of such government from deputation. The aforesaid expression is unambiguous and unclear and therefore, its meaning cannot be expanded to include any body, undertaking under the control of Central Government. Merely because assessee is a body or undertaking owned or controlled by the Central Government, it cannot be elevated to the status of Central Government. Thus, the assessee cannot claim that valuation of perquisites in respect of residential accommodation should be computed as in case of an accommodation provided by the Central Government. Therefore, Sl.No.1 of Table 1 of Rule 3 of the Rules does not apply to the assessee. The substantial questions of law No.1 and No.2 are answered against the assessee and in favour of the revenue. Obligation to establish that the Appellant has provided any concession to the Employees in respect of the accommodation before applying Rule 3 of the Income Tax Rules 1962 - Explanation 1 has been incorporated in Section 17(2) of the Act by Finance Act, 2007 with effect from 01.04.2002. Thus, in view of Explanation 1 to Section 17(2) of the Act, which provides that concession in the matter of rent shall be deemed to have been provided, the substantial question of law No.3 does not arise for consideration in this appeal. The liability is created under Section 17(2)(ii) of the Act by a deeming provision. Therefore, the provisions of Rule 3 of the Rules shall apply to the case of the assessee.
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2021 (7) TMI 1052
Computing value of perquisites under Section 17(2) - assessee is a Trust constituted under Charitable Endowment Act, 1890 - value of residential accommodation provided by the Central Government or any State Government to the employees either holding office or post in connection with affairs of the Union or of such State or serving with any body or Undertaking under the control of such Government on such deputation - whether the assessee, which is a Trust registered under the Charitable Endowment Act, 1890 can be treated as Central Government as provided in Sl.No.1 of Table 1 appended to Rule 3(1) of the Rules? - HELD THAT:- The assessee, which is a Trust under the 1890 Act, is controlled and financed by the Central Government. The assessee is a Body or an undertaking controlled by the Central Government. governed by the Rules governing the service conditions of the employees of the Central Government. The assessee may be an instrumentality of the State of for the purpose of Article 12 of the Constitution of India. For the purposes of Rule 3, the requirement is that the accommodation should be provided by the Central Government or State Government to the employees either holding office or post in connection with affairs of Union or of State or serving with any body or undertaking under the control of such government from deputation. The aforesaid expression is unambiguous and unclear and therefore, its meaning cannot be expanded to include any body, undertaking under the control of Central Government. Merely because assessee is a body or undertaking owned or controlled by the Central Government, it cannot be elevated to the status of Central Government. Thus, the assessee cannot claim that valuation of perquisites in respect of residential accommodation should be computed as in case of an accommodation provided by the Central Government. Therefore, Sl.No.1 of Table 1 of Rule 3 of the Rules does not apply to the assessee. The substantial questions of law No.1 and No.2 are answered against the assessee and in favour of the revenue. Obligation to establish that the Appellant has provided any concession to the Employees in respect of the accommodation before applying Rule 3 of the Income Tax Rules 1962 - Explanation 1 has been incorporated in Section 17(2) of the Act by Finance Act, 2007 with effect from 01.04.2002. Thus, in view of Explanation 1 to Section 17(2) of the Act, which provides that concession in the matter of rent shall be deemed to have been provided, the substantial question of law No.3 does not arise for consideration in this appeal. The liability is created under Section 17(2)(ii) of the Act by a deeming provision. Therefore, the provisions of Rule 3 of the Rules shall apply to the case of the assessee.
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Customs
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2021 (7) TMI 1108
Finalization of assessment order - grievance of respondent/writ petitioner has been that the appellants are not giving effect to the decision of the Appellate Tribunal in M/S. GLOBAL INDUSTRIES VERSUS THE COMMISSIONER OF CUSTOMS COCHIN [ 2011 (2) TMI 742 - CESTAT BANGALORE ] - HELD THAT:- The appellants inform this Court that the appeal filed against Ext.P9 order is pending before the Supreme Court. It is not in dispute that the appeal is pending and the appellants do not have an order of stay in their favour against the implementation of the decision of the CESTAT. The undisputed fact situation is that the Supreme Court has not stayed the operation or implementation of decision of the CESTAT. The appellant is under obligation to implement the order of the CESTAT and ought to have complied with the writ of mandamus issued by this Court - Appeal dismissed.
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2021 (7) TMI 1104
Deemed Export scheme - supplies effected by the petitioner to M/s. Reliance Petroleum Limited for their project at Gujarat - new refinery project or not - applicability of exemption granted under the Customs Notification No. 36 of 1997, dated 11-4-1977 - HELD THAT:- As seen from the impugned orders, without any basis, just based on the Department of Economic Affairs Clarification, the respondents have rejected the petitioner s claim for Customs duty exemption under the Notification dated 13-6-1997 issued by the Ministry of Finance (Department of Revenue). Hence, this Court is of the considered view that the impugned orders, namely, the order in appeal passed by the second respondent dated 5-6-2015 as well as the order of the Original authority dated 25-5-2010 passed by the fourth respondent have been passed by total non-application of mind to the documents produced by the petitioner. The impugned orders passed by the second respondent dated 5-6-2015 as well the order dated 25-5-2010 passed by the fourth respondent will have to be necessarily quashed and the matter remanded back to the original authority, namely, the fourth respondent for fresh consideration on merits and in accordance with law - Petition allowed by way of remand.
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2021 (7) TMI 1066
Permission to mutilate the imported goods - 459 packages weighing 55.740 MT of mixed wet strength scrap paper (silicon paper and coated) - seeking allowance of clearance of the goods under the exemption claimed for waste paper - HELD THAT:- The Government of India, Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade (DGFT), in exercise of powers conferred under Section 3 of the Foreign Trade (D R) Act, 1992 r/w Paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, introduced a policy condition for items under EXIM Code 4810 of Chapter 48 of ITC (HS), 2017, Schedule-I (Import Policy) - This was vide a Notification, dated 31.01.2020 in Notification No. 45/2015-2020. The policy condition for items under EXIM Code 4810 was free, but import of stock lot was prohibited. This prohibition came into force on 31.01.2020. The Importer filed bill of entry on 27.10.2020 well after Notification No.45 came into force. The imported goods were examined at the Tuticorin Port by the Officers attached to the SIIB and on examination, the Officers found that the imported goods were coated paper classifiable under RITC 4810 and coated paperboard classifiable under RITC 4810 and tissue paper classifiable under RITC 4823 imported in the guise of waste paper. The request for mutilation was much after seizure of the goods. On and after 31.01.2020, stock lot goods are prohibited - the Revenue has rightly construed the prayer sought for by the Importer and passed the order dated 29.12.2020 permitting provisional release of the cargo subject to certain conditions. Therefore, no error can be attributed to the manner in which the Revenue construed the Letter dated 23.12.2020 as we are of the clear view that the Letter was for release of the goods and the request for mutilation was only an alternate submission, if the Department is not convinced for release of the goods. The Revenue agreed for release of the goods by way of provisional release subject to certain conditions. Therefore, the Importer cannot state that the order impugned in the writ petition, dated 29.12.2020 was not based on the recommendation given by the Importer. The provisional release of the cargo is allowed, subject to the following conditions: (a) execution of a bond for ₹ 34,65,334/-, (b) production of cash security / bank guarantee for ₹ 12,12,867/- towards redemption fine and penalty, and (c) payment of duty of ₹ 9,43,411/-. Appeal allowed.
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2021 (7) TMI 1051
Scope of the contract - Change in the price of Gold Bars due to change in rates of Customs duty - revision in the price of Gold bars imported, which was still in stock and is not sold till date - appellant submitted that the Corporation could not have insisted for revised payment of customs duty at the enhanced rate as the same has already paid along with the customs duty - whether the Corporation like any other importer of gold has a right to sell the gold after a particular date at the rate fixed by it? - HELD THAT:- Admittedly, the appellant had not made any payment to the respondent- Corporation and the appellant has not sustained any loss from the transaction in question. The issue decided in the case of BANGALORE BULLION TRADERS, BANGALORE VS. MINERALS AND METAL TRADING CORPORATION LIMITED, BANGALORE [ 2003 (2) TMI 546 - KARNATAKA HIGH COURT ] where it was held that incurring loss or making profit in a trade like this is very much inherent in the trade itself and therefore, simply because the petitioners are required to pay the price of the gold at the higher rate, consequent upon the increase in the customs duty and consequential increase in the sales tax etc., it is not the right of the petitioners to insist that the Corporation should sell the gold to them at the rate at which the Corporation imported gold. Appeal dismissed - decided against appellant.
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2021 (7) TMI 1049
Claim due to floods during December 2015 - Both parties made submission that Customs Duty has already been settled and therefore, the order impugned is set aside - HELD THAT:- In view of the fact that the 4th respondent remitted the Customs Duty, there is no further adjudication needs to be entertained with reference to the grounds raised in the present writ petition. The writ petition stands disposed of.
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Corporate Laws
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2021 (7) TMI 1067
Validity of one time settlement - hurried settlement - auction price converted to term loan - various aspects ignored in winding up proceedings - petitioners herein are guarantors of the default unit M/s Ganpati Pulp and Paper Mills Ltd. - HELD THAT:- The hurried One Time Settlement of GSFC with SIL in favour of which even the major part of the auction price was converted into a term loan by GSFC and in the repayment of which, SIL defaulted, still instead of again taking over the assets and re-auctioning them, GSFC chose, for the reasons best known to it to enter into One Time Settlement with SIL at a mere ₹ 60 lakhs and that is a matter to be looked into by the NCLT. The said SIL is also said to have stopped its production activities and the assets of GPPML sold to it under Section 29 way back in the year 1990 are still in disuse or are not being used for any productive activity and that is not only a wastage of assets for the creditors and other stakeholders, but also a national waste. All these aspects cannot obviously be looked into by this Court in writ jurisdiction or even a winding-up Court while seized of the winding-up proceedings, but a Special Body like NCLT can definitely look into all the aspects of the matter as it is vested with the powers of CIRP (Corporate Insolvency Resolution Process) as enacted in the provisions of IBC, 2016, as defined in Chapter-2, Sections 6 to 32A of the IBC, 2016. In the inherent plenary jurisdiction under Article 226 of the Constitution of India read with Clause 15 of the Letters Patent vested in us, while deciding the present Letters Patent Appeal and Special Civil Application No.11116 of 2008, we are therefore of the considered opinion that entire litigation of these two corporate bodies viz. GPPML and SIL deserves to be decided by the NCLT by examining the claims, counter-claims, defences and other relevant aspects of all the parties involved in the matter afresh in respect of both the corporate entities in question GPPML SIL without being influenced by any observations made by any Forum below or OTS Settlement by GSFC SIL nor such transfer of proceedings depends upon filing of the application by any party - the development of new law in the form of IBC is an opportunity for all these stakeholders to get their claims adjudicated and corporate insolvency resolved in a best appropriate manner on the Forum of NCLT which is the most competent body under the law as available now for these issues. The learned Company Judge, who is seized of the winding-up proceedings of Company Petition No.139 of 1985 are requested to consider all the relevant aspects of the matter and then take appropriate decision in the matter to transfer the winding-up proceedings to NCLT, Ahmedabad Bench - petition disposed off.
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Insolvency & Bankruptcy
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2021 (7) TMI 1093
Compromise and Arrangement - taking back the immovable and movable property or actionable claims of the Corporate Debtor - affected person or not - compromise failure or not - promoters can act as resolution applicant or not - HELD THAT:- In the present case, the Liquidator is playing the role of a Resolution Professional , since the compromise proposal is placed before him, which is equivalent to a Resolution Plan . Further the Resolution Applicants are entitled to be present when the Resolution Plans are opened and placed before the Committee of Creditors as per Scton 30(5) of the Code. At this juncture, they may point out whether one or other Resolution Applicant is ineligible in terms of Section 29(A) of the Code or not. As per the preamended definition Section 29A of the I B Code, the Promoters could be the Resolution Applicant(s) per contra, under the new definition Promoters are not included in the definition of Resolution Applicant as they are not mentioned in Clause (H) of Section 25(2) of the Code. The restriction under Section 29A of the Code shall apply when an ineligible person or any other person acting jointly with such person submits a Resolution Plan . The restriction shall also apply if such person is a connected person to a Resolution Applicant as defined in explanation to Section 29A of the Code - The term connected persons as defined in explanation means, any person who is the promoter or in the management or control of the Resolution Applicant or any person who shall be the Promoter or in management or control of the business of the Corporate Debtor during the implementation of Resolution Plan or the holding Company, subsidiary Company, Associate Company or related party of a person referred to in clauses (i) (ii) of Section 29A of the Code. Any person who is either promoter or in the management or control of the business of the Corporate Debtor is ineligible by default under the I B Code. The Provisions of Section 29A of the Code came into force from 23.11.2017 and further that the requirements of Section 29A of the Code applies to CIRPs initiated after 23.11.2017. Assessment - HELD THAT:- Since the Liquidation order was passed on 20.12.2018 in MA/646/2018 by the Adjudicating Authority and that the Resolution Professional Mr. G.V. Ravikumar was appointed as Liquidator ( Respondent in the instant Appeal ). Added further the Compromise Proposal was given on 24.09.2019 by the Promoter and in reality, the Section 29A of the Code was amended with a retrospective effect from 23.11.2017 and in view of the fact that the retrospective amendment to Section 29A of the Code applies to the Promoter(s) , they are ineligible to project a compromise proposal / arrangement for taking back the immovable and movable properties or actionable claims of the Corporate Debtor in the considered opinion of this Tribunal . Liquidator - HELD THAT:- It is to be remembered that Section 34 of the I B Code, 2016 deals with Appointment of Liquidator and fee to be paid . Section 34(2) of the Code enjoins that on the appointment of a Liquidator , under this Section all powers of the Board of Directors , Key Managerial Personal and the partners of Corporate Debtor as the case may be, shall cease to have effect and shall be vested in the Liquidator . Liquidator s Position - HELD THAT:- Without the Respondent / Liquidator taking necessary steps, no such application to secure a MSME Certificate was to be filed and suffice it for this Tribunal to point out that in the instant Case , the proponents of the scheme obtaining a MSME Registration Certificate on 03.10.2020 without the knowledge of the Liquidator and either ignoring or brushing aside him are clearly unsustainable in the eye of Law - the Liquidator is required to adhere to the procedure prescribed under the Code and before taking steps to sell the Corporate Debtor s Assets (Company) he will take necessary steps as per Section 230 of the Companies Act and that the Adjudicating Authority if situation so warrants is to pass appropriate orders. Before approval of an arrangement or scheme, the Adjudicating Authority by following the principles can allow the Liquidator to form the Committee of Creditors for its opinion to find out whether the arrangement of scheme is viable/feasible one and having correct financial matrix. On a careful consideration of respective contentions and on overall assessment of the whole gamut of the entire facts and circumstances of the present case, this Tribunal comes to an inescapable conclusion that the Adjudicating Authority in the Impugned Order came to the right conclusion that the scheme was proposed by the Ex-directors and promoters of Corporate Debtor and further that a Creditor / Member who is ineligible under Section 29A of the I B Code, 2016 was disqualified to be a proponent of the scheme as per Section 230 of the Companies Act, 2013, which requires no interference in the hands of this Tribunal sitting in Appeal . The Appeal is devoid of merits - Appeal dismissed.
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2021 (7) TMI 1091
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - quantum of outstanding amount - HELD THAT:- In this case it is observed that there is no confirmation of counter claim of corporate debtor from operational creditor, even in the reply to the demand notice, it was unsupported by the invoices, delivery challans and GST payments. Truck Number - one of the consignment number is not correct and all the invoices and deliveries are of one day. Simply making GST payment cannot prove that they have supplied the material to the other side. The Corporate Debtor has never raised that they have due recoverable from the operational creditor prior to the issue of the reply to the demand notice. Rule 46 of CGST Rules, R/w Rule 48 of CGST Rules permits manual GSTIN Number. For the issues is that the Corporate Debtor invoiced is not supported by the purchase order nor a confirmation of account at a later date from the operational creditor. The Corporate Debtor is a healthy company, not substantiated by the corresponding balance sheet of the company as they have not filed the same nor alone this cannot be a sole basis to substantiate that it does not require to go to CIRP. High turnover with positive net worth may reflect good fund flow but it does not substantiate a good cash flow - thus, if the corporate debtor is unable to pay its debt, while debt is legally due and default has occurred, dispute not raised or substantiated prior to the issue of demand notice then the Code can be enforced for timely resolution of Insolvency and Bankruptcy. Thus, prima facie the Corporate Debtor needs CIRP and accordingly, the impugned order of the Adjudicating Authority invoking the provisions of the Code is in right spirit. Hence it needs to be uphold - the appeal is dismissed
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2021 (7) TMI 1086
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - although the contingent liability was existing, the same was not shown in the Annual Return - documents concerned were public document - whether Appellant is justified to carry the appeal only because the Adjudicating Authority had given directions to produce the Balance Sheets? - HELD THAT:- The Application under Section 9 of IBC has been pending before the Adjudicating Authority since December, 2019. Keeping in view Section 9 of the IBC, it was required to be ordered upon in 14 days with Limited Notice to the Corporate Debtor. When above interim order was passed, the matter has been carried to this Tribunal and on 10th August, 2020 relying on the judgment of V. Padmakumar Vs. Stressed Assets Stabilisation Fund Anr. [ 2020 (3) TMI 1244 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , the appeal was sought to be entertained. This Tribunal had then granted stay to the hearing before the Adjudicating Authority. The Adjudicating Authority which is basically dealing with the matter in summary manner, is not bound by the procedure laid down by the Code of Civil Procedure but shall be guided by the principles of natural justice and can regulate its own procedure. Even if Order XI Rule 12 of CPC may be prescribing that any party may without filing affidavit apply to the Court for Discovery of Documents, the same does not stop the Adjudicating Authority from regulating own procedure reading sub-section (2) with sub-section (1) if the Adjudicating Authority in the course of arguments finds that it needs to peruse particular documents. In the present matter the Adjudicating Authority was not dealing with any application filed or sought by the Operational Creditor but while hearing the arguments in the matter which was on pre-admission stage and not yet admitted, the Adjudicating Authority found it necessary to go through the Profit and Loss account and Balance Sheets of the Company. As such it passed the impugned order. The Application under Section 9 of IBC has been pending for long and against the spirit of provisions of IBC. The delay must be affecting the maximization of value of assets. The merits of the application under Section 9 have yet not been adjudicated and decided and so we are not entering in the issue whether there was a pre-existing dispute - It is apparent that for hearing the matter, the Adjudicating Authority needed a particular document which is even otherwise admittedly a public document. If that was so, there was no good reason to file the present appeal and to raise a dispute as has been raised. Appeal is dismissed.
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2021 (7) TMI 1085
Validity of approved Resolution Plan - challenge on the ground that in the Resolution Plan towards statutory dues and claims the approval was settled at Nil Value and the claims stood extinguished - HELD THAT:- The Reply of Respondent No. 2 refers to the approved Resolution Plan at Annexure R-1 page 63 and reference is made to Paragraph 3.5 which deals with proposal for Operational Creditors where the Resolution Applicant stated that Liquidation Value payable towards full and final extinguishment of statutory dues and claims is expected to be Nil and the Liquidation Value is insufficient to meet the dues of even secured Financial Creditors and thus the minimum statutory discharge payable is Nil and so Nil payment has been proposed towards statutory dues and claims. Adjudicating Authority has considered the Revised Position of claims received as on 28th October, 2020 (Paragraph 4 of the Impugned Order) which showed that the amounts claimed by the Financial Creditors admitted were ₹ 20,904,644,307/- and that the dues of Operational Creditors (Workman and Employees) admitted were of ₹ 82,253,253/-. It is recorded that amounts claimed by Operational Creditors (Statutory Dues, Liabilities including outstanding government authority dues, taxes, etc.) were ₹ 4,827,297,551/- (which includes amounts admitted on provisional as well as contingent basis). Then there are dues which were admitted by Operational Creditors (Other than Workmen and Employees and statutory dues) which were of R. 213,192,038/- (including amount admitted on/contingent basis). Considering these amounts and the Liquidation Value, it is difficult to find fault with the Resolution Plan as has been approved. There is substance in the submissions made by the Resolution Professional that if the Corporate Debtor was to go in Liquidation, the Appellant would get Nil amount. The claims made by the Appellant need not be accepted to find fault in the Resolution Plan - appeal dismissed.
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2021 (7) TMI 1081
Seeking setting aside of the rejection of claim of the Applicant by the Liquidator - Section 42 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Applicant charging 12% interest on the outstanding amount is not wrong. Moreover, the contention of the Respondent that the assignment of debt (if it can be so called) in the form of letters of ultimate suppliers, require stamp duty to be paid as mandated under law. However, the Respondent has admitted to the fact that ₹ 3,61,595/- was reflecting in the books of accounts of the Corporate Debtor, on the basis of which the Respondent admitted the said principal amount. Therefore, there are no reason in delving into the approval of the principal amount and the claim of the Applicant including interest is due and payable by the Corporate Debtor. The claim of the Applicant in respect of M/s. Shyam Enterprises cannot be denied, to the extent of the principal amount. And the claim of the Applicant with respect to the interest charged is still unclear, as no proof/documents/evidence have been provided by the Applicant. In the circumstances, the Liquidator shall verify the veracity of the claims of the Applicant with respect to the interest amount and take a decision accordingly. It is seen that the Corporate Debtor was maintaining a running account on ledger basis of both the Applicant as well as the ultimate suppliers. The Liquidator while accepted the claim of ₹ 3,61,595/- of the Applicant in respect of M/s. Sohan Lal Sons, there is no reason why a different and a rather inconsistent logic/approach shall be adopted by the Liquidator in terms of the claim of the Applicant in respect of M/s. Shyam Enterprises, in particular when the Corporate Debtor remained under the shadows of BIFR and hence, isolated itself from any claims/recovery. It is seen that the claim of the Applicant excluding interest amount of ₹ 7,86,276/- (M/s. Shyam Enterprises) is admissible - Liquidator is directed to act in accordance with the observations of this Adjudicating Authority.
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2021 (7) TMI 1080
Seeking approval/revision of Resolution Plan - claim of the applicant is that after the approval of the Resolution Plan, the applicant has approached the GNIDA for sanction of the plan which is still pending for approval by the Respondent - HELD THAT:- Section 60(5)(c) of IBC, 2016 says that any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code shall be considered by the Adjudicating Authority. A bare perusal of the provision of Section 5 (14) of IBC, 2016, shows that the insolvency resolution process period means the period of one hundred and eighty days beginning from the insolvency commencement date and ending on one hundred and eightieth day - this period of 180 days may be extended under Section 12 of IBC, 2016. In view of the amended provision of Section 12 of IBC, 2016, the total period of insolvency resolution process can be of 330 days. Which means, the period so referred to in Section 5(14) of IBC, 2016 is subject to the extension made under Section 12 of IBC, 2016 or till when the Resolution Plan is approved by the Adjudicating Authority. Admittedly, the Resolution Plan has already been approved - the Resolution Plan has already been approved by the Adjudicating Authority on 20.02.2020. Therefore, no insolvency proceeding is pending before the Adjudicating Authority. Section 60 (5) of IBC, 2016 is applicable only if any insolvency resolution or liquidation proceedings of the corporate debtor or corporate person is pending before the Adjudicating Authority and in the instant case, it is seen that no such proceeding is pending before this Authority, therefore, the application filed by the applicant under Section 60 (5) of IBC, 2016 is not maintainable - the prayer of the applicant to give direction of the Respondent/GNIDA for the sanction of the plan is hereby rejected - application dismissed.
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2021 (7) TMI 1078
Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The reasons assigned in the application with respect to initiating liquidation of the corporate debtor appears to be genuine in the present market scenario and convincing. Apart from that the period of CIRP has already expired long back without any resolution plan and therefore, there is no option other than liquidation of the corporate debtor although there was no voting of the CoC for liquidation of the corporate debtor. The liquidation is allowed - application allowed.
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PMLA
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2021 (7) TMI 1065
Provisional attachment of properties - inherited property - property acquired prior to commission of scheduled offence - HELD THAT:- The properties on which the petitioner claims ownership have been attached and the petitioner has been served with a notice dated 14.07.2021 (Annexure P-1 Colly), pursuant to the order of provisional attachment confirmed by the adjudicating authority on 23.06.2021. Prima facie, the documents which are placed on record would show that the nucleus of the property is from inheritance and gift through the family members prior to availing the loan. The non payment and divertion of fund of loan is now subject issue of scheduled offence. The judgment relied on by the petitioner of SEEMA GARG, SAIYRAH @ DEEPIKA GARG, SANGEETA GARG VERSUS THE DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT (PREVENTION OF MONEY LAUNDERING ACT) , GOVT. OF INDIA [ 2020 (3) TMI 460 - PUNJAB HARYANA HIGH COURT] wherein also it has been laid down that the property acquired prior to commission of scheduled offence cannot be attached unless property obtained or acquired from scheduled offence is held or taken outside the country. Therefore, prima facie, if the properties were held by the petitioner prior to the scheduled offence that cannot be subject of attachment by the authority. The another aspect is that Section 26 (3) of the Act, 2002 gives a right to file an appeal and 45 days time has been provided. The facts would suggest that the orders by the adjudicating authority were passed on 23.06.2021 which was received by the petitioner on 05.07.2021, therefore, the limitation to file the appeal still exists up to 19.08.2021 - if the limitation still exists but before that any enforcement order is executed to takeover the property, it would amount to defeat the right which is guaranteed under Section 26 (3) of the Act, 2002. Further as has been stated that the appellate tribunal is non-functional as on date, as such the petitioner cannot be left in lurch when the right has been given by the statute which requires to be appreciated. It is directed that pursuant to the order dated 23.06.2021 notice dated 14.07.2021 in respect of the petitioner for taking over the possession of the aforesaid two properties shall not be given effect to till the next date of hearing - List it after four weeks.
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Service Tax
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2021 (7) TMI 1107
Validity of SCN - Jurisdiction - demand of service tax on services provided or received which all are not exempted under the provisions of the Act - petitioner falling under the definition service provider so as to issue show cause notice with reference to certain services rendered by the petitioner, or not - HELD THAT:- This Court is of an opinion that the High Court is expected to be slow in entertaining a writ petition against a show cause notice. A writ against a show cause notice may be entertained only if the said notice is issued by an incompetent authority having no jurisdiction or if an allegation of malafides is raised. Even in case of raising an allegation of malafides, the authorities against whom such an allegation is raised, is to be impleaded as party respondent in his personal capacity. In all other circumstances, the allegations or counter allegations are to be adjudicated with reference to the evidences to be produced by the respective parties and such an exercise cannot be done in a writ proceedings under Article 226 of the Constitution of India. Thus, the High Court is expected to be cautious while entertaining a writ petition filed against the show cause notice. It is not in dispute between the parties that transmission and distribution of electricity are exempted from service tax. Question arises, what all are the services falling under the exemption clause and the other services which all are not covered under the exemption clause. The first respondent has specifically stated that they have issued the show cause notice only in respect of the services stated above, which all are not covered under the exemption clause under the Act. This Court is of the considered opinion that only if the exemption clause is applicable, then alone the jurisdiction point needs to be considered with reference to the facts of the present case. However, in the present case, the first respondent himself has categorically admitted both in the show cause notice as well as in the counter filed by them that specifically exemption is granted for transmission or distribution of electricity by any electricity transmission or distribution utility. The first respondent has made it clear that show cause notice has not been issued demanding service tax for transmission or distribution of electricity. The service tax are demanded only for other services which all are not covered under the exemption clause and therefore, these facts are to be adjudicated with reference to the documents and evidences. When there is a slightest doubt in respect of the point of jurisdiction is raised, then the benefit of the said doubt is to be given for the Revenue. This being the general principles in the present case and the petitioner is also an organisation owned by the State, the first respondent has issued the show cause notice with reference to the services which all are not covered in the exemption clause. The petitioners are directed to submit their explanations, documents and evidences along with legal submissions, if any, within a period of eight weeks from the date of receipt of a copy of this order - on receipt of the explanations from the petitioners, the concerned respondents are directed to proceed with the enquiry by affording opportunity to the petitioners, including personal hearing, as contemplated and complete the process and pass final orders as expeditiously as possible. If the petitioners are aggrieved from and out of the said final orders, to be passed thereafter, they are at liberty to approach the appellate authority for redressal of their grievances. Petition disposed off.
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2021 (7) TMI 1095
Classification of services - renting of immovable property service or Support Services of Business and Commerce - appellant/assessee is the first Electronic Software Technology Park promoted and funded by the Government of Kerala and is a State Government Company - amount received from KSITIL is towards Business Support Service or not - inclusion of notional interest on refundable deposits in value of taxable supply - taxability of sale of space or time for advertisement - bus service plying between the Technopark and Kariyavattom - tour operator service or not - time limitation - interest - penalties. Classification of services - assessee had acquired land and developed ETP by constructing buildings, roads, continuous power and water supply, security service, communication, housekeeping, medical attention including ambulance service etc. - renting of immovable property service or Support Services of Business and Commerce - HELD THAT:- The assessee/appellant is a State Government company and has built up spaces in the buildings or modules for rent or lease to their clients for their business or commerce. The lessees are required to undertake necessary alterations or modifications and certain finishing work and interiors to facilitate occupation of premises. It is also found that supply of electricity and water is incidental to renting of premises. Further it s found that supply of electricity, water and air-conditioning are obligatory and incidental for use of the rented or leased premises. The sale of water and electricity is a transaction of sale of goods and the assessee is not charging any service tax on the sale of water, electricity, airconditioning and supply of electricity by operating DG sets. The charges are collected separately. As per the Department, assessee has rendered composite services whereas as per the assessee, they have rendered only Renting of Immovable Property Service . Further as per the clause (1) of Section 65A which states that a taxable service would be classified in the category which gives the most specific description of the service provided is applicable in the case of the assessee. The rental or lease rental of the building takes into consideration the common facilities and the maintenance of the building and the supply of electricity and water is the transaction of sale of goods and their value cannot be included in the value of the service. Further the TBIC is a different entity registered as a society and eligible for exemption from service tax under Notification No.9/2007 and similarly TSECC has been established for the purpose of facilitating software development of their clients and the transaction of these entities with the concerned units are independent of the lease/rent of premises by the assessee/appellant. The presence of these independent entities in the Technopark pursuing their own objectives does not change or alter the nature of transactions of renting of immovable property by the appellant. Further the services rendered by the assessee clearly satisfy the requirement of definition of Renting of Immovable Property Service as provided under Section 65(105)(zzzz) of the Finance Act, 1994 and taxable from 01.06.2007. Further it is seen from the circular issued by the CBEC in para 3.3, it is clarified as to what is the scope of support service of business or commerce. Thus, the services rendered by the appellant fall under the category of Renting of Immovable Property service and the applicable services tax on such rental or lease charges has been correctly paid. Whether the amount received from KSITIL is towards Business Support Service or not? - HELD THAT:- KSITIL is a 100% State Government undertaking, acting as an apex body for developing infrastructure in the State of Kerala under whose supervision the assessee/appellant has been established. Since KSITIL was a newly promoted company, the budgetary allocation and release of funds by the State Government was delayed and therefore in the meantime, the assessee incurred expenses which were entirely reversed by KSITIL when the State Government released funds to KSITIL - the finding of the learned Commissioner that KSITIL is an associated enterprise is not tenable in law because KSITIL is an independent company. Appellant has not provided any service to KSITIL for consideration. In the absence of any service, the reimbursement of expenses incurred by the appellant cannot be subjected to levy of service tax - the demand of service tax of ₹ 19,08,987/- is without any basis. Whether notional interest on refundable deposits can be included in the value of taxable supply for levy of service tax? - HELD THAT:- There is no finding that the notional interest on refundable deposit has resulted in undervaluation of service of renting of immovable property and further there is no evidence of nexus between the two - the notional interest on refundable deposit cannot be included in the value of taxable service for the purpose of levy of service tax and this issue is decided against the Revenue. Taxability of sale of space or time for advertisement - HELD THAT:- The sale of space or time for advertisement is classifiable independently as defined under Section 65(105)(zzzzm) of the Finance Act, 1994 and not under Business Support Service as confirmed by the Commissioner. Hence the demand of service tax under wrong classification of service is not sustainable in law - this issue is also in favour of the assessee. Whether bus service plying between the Technopark and Kariyavattom is liable to service tax under tour operator service or not? - HELD THAT:- The assessee has submitted declarations from respective vendors confirming remittances of service tax by them under respective registration numbers and has also cited various decisions to buttress their argument that the services fall in the definition of input service as provided in Rule 2(l) of CENVAT Credit Rules, 2004. But the learned Commissioner has not examined the documents submitted by the assessee and the various decisions relied upon by them in support of the fact that the impugned services fall in the definition of input service - the matter needs to be remanded back to the original authority for the purpose of verification of various documents, declarations and the letters issued by the vendors who have paid the service tax for various impugned services. Time Limitation - HELD THAT:- It is not in dispute that levy of service tax on Renting of Immovable Property was levied from 01/06/2007 and the appellant has been paying since then despite the fact that the same having been struck down as unconstitutional and thereafter the Finance Act, 2010 was introduced validation provisions with retrospective effect but the assessee has been paying service tax on Renting of Immovable Property from the very beginning - extended period of limitation cannot be invoked in the absence of suppression of facts. Interest and penalties - HELD THAT:- When the demand itself is not sustainable, the question of payment of interest does not arise and since there was no intention to evade service tax, penalties are also not imposable. Appeal allowed in part and part matter on remand.
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2021 (7) TMI 1094
CENVAT Credit - input services - services used in setting up their plants at the industrial township called Sri City - Rule 2(l) of the Cenvat Credit Rules, 2004 as amended with effect from 1-4-2011 - Department wants to deny them the benefit of the CENVAT credit on the ground that services related to setting up of a factory which were specifically included prior to 1.4.2011 were no longer specifically included post 1.4.2011 - levy of interest and penalty - HELD THAT:- The definition of input service prior to 1.4.2011 had two parts- a main part of the definition and an inclusive part of the definition. This inclusive part specifically included the services availed for setting up the factory. After 1.4.2011, it has three parts- a main part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded. The term manufacture itself is very wide and includes anything incidental or ancillary to manufacture - For a service to qualify as input service under CENVAT Credit Rules, 2004 post 2011, the service in question need not be covered even by the very wide definition of manufacture under section 2(f) of the Central Excise Act. Any service which is used not only in manufacture but also in relation to manufacture will also qualify as input service. The scope of input service is further enlarged with the expression whether directly or indirectly used in the definition of input service. Although setting up the factory is not manufacture in itself, it is an activity directly in relation to manufacture. Without setting up the factory, there cannot be any manufacture. Services used in setting up the factory are, therefore, unambiguously covered as input services under Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT credit on the input services used. The impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1092
Levy of Service tax - amount collected towards liquidated damages - agreement to tolerate breach of timelines stipulated in the contract - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - period involved in all the appeal is after 01.07.2012 - interest - penalty - HELD THAT:- There is substance in the submission advanced by the learned counsel for the appellant that no service tax is payable on the amount collected towards liquidated damages as this issue has been decided by the Tribunal in favour of the appellant in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] where it was held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. Thus, in view of the aforesaid decisions of the Tribunal, it is not possible to sustain the view taken by the Commissioner that since the task was not completed within the time schedule, the appellant agreed to tolerate the same for a consideration in the form of liquidated damages, which would be subjected to service tax under section 66E(e) of the Finance Act. Interest - penalty - HELD THAT:- As service tax could not be levied, the imposition of interest and penalty also cannot be sustained. Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1090
Levy of service tax - liquidated damages recovered by the appellant for acts of default - delayed or deficient supplies by various suppliers - consideration for tolerance of an act or not - penalties - HELD THAT:- There is substance in the submission advanced by the learned counsel for the appellant that no service tax is payable on the amount collected towards liquidated damages as this issue has been decided by the Tribunal in favour of the appellant in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] where it was held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. In view of the aforesaid decisions of the Tribunal, it is not possible to sustain the view taken by the Commissioner that since BHEL did not complete the task within the time schedule, the appellant agreed to tolerate the same for a consideration in the form of liquidated damages, which would be subjected to service tax under section 66E(e) of the Finance Act. Penalty - HELD THAT:- As service tax could not be levied, the imposition of interest and penalty also cannot be sustained. Appeal allowed - decided in favor of appellant
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2021 (7) TMI 1088
Levy of service tax - Customs House Agent Services - business of freight forwarding wherein various activities in relation to transportation of goods in the course of import/export by sea and air undertaken - non-taxable service - non-taxable territory - Circular of the Board No. 197/7/2016-S.T dated 12/08/2016 - extended period of limitation - HELD THAT:- The appellant is authorized to act as a CHA under Customs Housing Agent Licensing Regulations and has been granted a license. Further, it is found that the main revenue of the appellant comes from providing exclusive freight forwarding activity which accounts for substantial income of the appellant. Perusal of the definition of CHA as provided in the Finance Act as well as in Regulation, it is found that the scope of CHA service is restricted only to the licensed activities relating to either (a) entry or departure of conveyances at any Customs Station or (b) import or export of goods at any Customs Station. Further, it is found from the definition of CHA Services that freight forwarding is an activity outside the scope of a CHA s business, and freight forwarding is undertaken to get the goods transported from/to international boundaries to/from the Indian ports and the said activity is not in any way related to CHA s business and CHA is not required to execute these services in the course of CHA s business - further, as per Section 67 of the Finance Act, 1994 only any amount that is payable for the services provided or to be provided shall be included in consideration and any amount received is not related to the services provided cannot be included in Section 67. There are force in the submissions of the learned counsel for the appellant that in case of export freight, no service tax is payable because the said service is non-taxable service and is provided in a non-taxable territory. It is also found that with regard to export freight, the Circular of the Board No. 197/7/2016-S.T dated 12/08/2016 amply clarifies this position. Extended period of limitation - HELD THAT:- The ingredients mentioned in terms of proviso to Section 73(1) has not been fulfilled by the Department and moreover in the present case, the appellant has a bona fide belief that they are not liable to pay service tax on the differential freight amount collected - the issue involved relates to interpretation of provisions of a statute and in such a situation, extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1064
Legality and validity of the show-cause notice - pre-show-cause notice consultation - procedural infraction of impugned SCN - the pre-show-cause notice consultation dated 12.4.2019 calling upon the petitioners at 13.55 hours to remain present before the respondent No.2 at 16.00 hours on the same day - compliance of the Circular dated 10.3.2017 issued by the Board - HELD THAT:- In view of the Circular, it is clear that the Board had made issuance of preshow- cause notice consultation mandatory for the Principal Commissioner/Commissioner prior to the issuance of show-cause notice in cases involving the demands of duty above ₹ 50 lac and that such consultation was to be done by the adjudicating authority with the assessee as an important step towards the trade facilitation and for promoting necessary compliance, as also to reduce the necessity of issuing show-cause notice. Despite such mandatory requirement of the pre-show-cause notice consultation at the instance of the respondent authority, in utter disregard of the said mandate, and without considering the laudable object behind issuing such circular, the respondents issued the impugned pre-show-cause notice consultation dated 12.4.2019 delivering the same to the petitioner assessee at 13.55 hours and calling upon them to remain present before the respondent No.2 at 16.00 hours. The petitioners having requested for reasonable time for the effective consultation, without considering the said request, the respondent No.2 issued the show-cause notice on the same day i.e. on 12.4.2019. Such a high-handed action on the part of the respondent No.2, not only deserves to be deprecated but to be seriously viewed. It is required to be noted that as such the demand made in the impugned show-cause notice was within the prescribed time limit. Now, since the said notice is sought to be set aside on the ground that adequate opportunity of hearing was not given to the petitioners for consultation prior to the issuance of the said notice, the petitioners cannot be permitted to take unfair advantage on the ground that the demand made in the notice had now become time-barred in view of the statutory provisions. The Court hereby sets aside the impugned notice dated 12.4.2019 (Annexure-D) on the ground that the petitioners were not granted an adequate opportunity for the consultation prior to the issuance of the said notice - Petition allowed.
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Central Excise
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2021 (7) TMI 1089
100% EOU - CENVAT Credit - input services - Event Management services - Outdoor Catering services - Mandap or Shamiana Service - Rent-a-Cab service - denial on the account of nexus and also on the ground of absence of such services will not directly have an impact on the quality and efficiency of provisions of taxable services - HELD THAT:- The appellant is a 100% Export Oriented Unit registered under Software Technology Park of India (STPI) scheme and has been availing input services for rendering its output services. Appellant has been claiming refund of accumulated tax credit under Rule 5 of CENVAT Credit Rules, 2004. The adjudicating authority does not dispute the usage of impugned input services for providing the output services but has disallowed the credit only on the ground that these are not connected with the business activity or not necessary for providing output service. In this regard, it is noted that once for the previous period such nexus has been accepted by the department than there is no basis for denial of such nexus for the subsequent period - also, it is a settled position of law that there cannot be two different yardsticks i.e., one for allowing refund and the other for deciding the eligibility of CENVAT credit. In the case of CST, DELHI VERSUS CONVERGYS INDIA PVT. LTD. [ 2009 (5) TMI 50 - CESTAT, NEW DELHI] , it has been held by the Division bench of the CESTAT, Delhi that there cannot be two different yardsticks, one for allowing refund and another for deciding eligibility of CENVAT credit. The impugned order denying the CENVAT credit on impugned services is not sustainable in law more so when refund relating to the impugned services has already been granted to the appellant - Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1063
Maintainability of petition - alternative remedy of appeal was not exhausted - question of facts - HELD THAT:- Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy. The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field - the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The Appellate Authority, being the Final Fact Finding Authority and those findings and facts of law would be of greater assistance for the High Court in exercise of its powers of judicial review under Article 226 of the Constitution of India. Thus, the petitioner is bound to prefer an appeal for the purpose of redressing his grievance. The Writ Petition stands disposed of.
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CST, VAT & Sales Tax
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2021 (7) TMI 1103
Disciplinary action against the officers for granting irregular refund - name of the respondent/writ petitioner was included in the panel of Deputy Commissioner of State Tax, for promotion to the post of Joint Commissioner of State Tax but a stay was invoked and the promotion was not granted - period from 2007-08 and 2008-09 - HELD THAT:- It is admitted position that the name of the respondent/writ petitioner was included in the panel of Deputy Commissioner of State Tax, for promotion to the post of Joint Commissioner of State Tax for the panel year 2019-20. Though application for vacating the interim order passed inI.A.No.2 of 2018 in W.P.No.16392 of 2018 was filed, for reasons which may not detain us, the said application has not been disposed of and, therefore, the interim order passed earlier continues to remain in force. In view of suspension of disciplinary proceeding initiated vide G.O.Rt.No.1074 dated 02.11.2016, this Court, vide order dated 13.05.2020, in I.A.No.1 of 2020 in W.P.No.8628 of 2020, directed the respondents not only to consider the case of the respondent/writ petitioner but also to effect promotion to the post of Joint Commissioner of State Tax expeditiously. The order dated 13.05.2020 was not assailed in any for - Appeal dismissed.
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2021 (7) TMI 1068
Permission for withdrawal of SLP - petitioner contends that the impugned order was passed without giving an opportunity to the petitioner to place their stand before the Court - HELD THAT:- The petitioner is permitted to withdraw the special leave petition and file a review application before the High Court bringing these aspects to the notice of the High Court. The SLP dismissed as withdrawn.
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2021 (7) TMI 1062
Classification of goods - rate of tax - HDPE Bags or HDPE Woven Sacks - exigible to tax @ 4% or 8% respectively or not? - to be classified under Entry-129 of List-C of the OST Rate Chart - HELD THAT:- Entry 136 specifically talks of HDPE woven sacks. Merely because the last portion of Entry No.136 states and other plastic goods except those specified elsewhere in this notification , it would not exclude HDPE woven bags and HDPE woven sacks from Entry 136 - What is included in Entry No.129 is HDPE bags and as held by this Court in State of Orissa v. M/s Auro Plastics [ 2015 (9) TMI 1456 - ORISSA HIGH COURT ] , HDPE bags and HDPE woven sacks are not the same product. With there being no doubt that what was sold by the Petitioner was HDPE woven sacks, which is clearly specified as such in Entry 136, there is no scope to bring it within the ambit of Entry 129. There is no scope therefore for applying the rule of purposive construction . Here we are concerned with a taxing statute where the principle of strict construction has to be applied. In Hansraj Gordhandas v H. H. Dave, Assistant Collector [ 1968 (9) TMI 112 - SUPREME COURT ] , the Supreme Court explained: It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. In the case on hand, there is no ambiguity whatsoever as regards the products included in Entry 129 or Entry 136. Equally, there is no ambiguity that the product sold by the Petitioner is HDPE woven sacks which is included as such in Entry 136 - The commodity sold by the Petitioner for the period in question, is HDPE woven sacks and it is exigible to tax at 8%. The impugned order of the Tribunal and the consequent fresh assessment order of the Assessing Officer dated 23rd November 2020 do not call for any interference - Revision petition disposed off.
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2021 (7) TMI 1061
Condonation of delay - sufficient cause - Request for Reopening of assessment order for accepting declarations in Form C - power of authorities to reopen the proceedings after lapse of four years - sufficient cause for delay present or not - Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT:- The declaration in Form C or Form F or the certificate in Form E-1 or Form E-II under the AP VAT Act is to be filed within the time frame as envisaged in Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 - A perusal of the said Rule shows that the assessee is required to furnish the declaration in Form C or F or E-1 or E-II within three months after the end of the period for which declaration or the certificate relates, i.e., the Assessment Year. Proviso to the Rule, however, empowers the prescribed authority to permit such declarations/certificates beyond the aforesaid time provided sufficient cause to the satisfaction of the authority is shown. In the present case, the assessee was required to file the forms by June, 2013 but has failed to do so. In the meantime, Assessment Order was passed in 2015 which also was not appealed by the assessee. Only in the year 2020, the assessee had approached the Commissioner to accept the declaration in Form C and reopen the assessment. The Commissioner, however, turned down the prayer with the endorsement that he had no power to reopen the assessment after a lapse of four years - The condition precedent for condonation of such delay is sufficient cause . However, sufficient cause even if shown, may permit the authority to condone the delay but does not authorize the Assessing Authority or the Commissioner to reopen the proceeding. There cannot be any dispute over the proposition that a subordinate legislation cannot alter express statutory provisions. Thus, by no stretch of imagination, Rule 12 (7) can be read to empower the Assessing Authority to reopen the assessment after expiry of the time frame as envisaged under Sub-sections (4) and (5) of Section 21 of the AP VAT Act. In such a situation, the remedy available to an assessee for reopening of the assessment is to prefer an appeal before the appellate forum under Section 31 of the AP VAT Act or a Second Appeal under Section 33 thereof against the appellate order - The expression sufficient cause in Rule 12(7) of the Rules must justify the entire period of delay, i.e., commencing three months beyond the assessment year and not from the date of assessment in view of the amendment to the law in 2005. In the present case, there is hardly any explanation offered with regard to the circumstances which stood in the way of the petitioner/assessee to submit declarations in Form C within the stipulated time. A vague averment has been made that the business had closed down. However, no material particulars are placed on record with regard to the date of such closure - as no sufficient cause has been made out by the petitioner to explain the delay in filing declarations in Form C , we are of the opinion no case for directing to reopen the assessment is made out. Petition dismissed.
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2021 (7) TMI 1060
Maintainability of petition - remedy of appeal was not exhausted - petition entertained only on the ground of delay, valid or not - Revision of Assessment - HELD THAT:- The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field - the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. There is no dispute that the impugned orders are appealable under the provisions of the Act, the petitioner is at liberty to file an appeal before the jurisdictional Appellate Authority in a prescribed format and by complying with the procedures contemplated within a period of eight weeks from the date of receipt of a copy of this order - Petition disposed off.
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2021 (7) TMI 1059
Seeking grant of anticipatory bail - fraudulent Input Tax Credit - forged invoices - Sections 408, 420 of IPC - HELD THAT:- The offence is alleged to have committed between 01.01.2020 and 10.03.2021, petitioner was named in the FIR, suspecting his role. It is stated that the petitioner is presently working in the office of the Additional Commissioner of Commercial Taxes (Enforcement), South Zone, Bengaluru. He has been arraigned as accused No.6 in the charge sheet. The charge sheet has been filed keeping open the further investigation of the case under Sections 173(8) of Cr.P.C. The petitioner has undertaken to cooperate with the further investigation of the case and abide by other conditions. The involvement of the petitioner in the alleged offence has to be established by the prosecution during the trial - the relief sought by the petitioner can be granted by directing him to appear before the Investigating Officer and cooperate with the further investigation. Petitioner shall appear before the Investigating Officer within a period of one week from the date of receipt of a copy of this order and in the event of his arrest in Crime, he shall be released subject to conditions imposed - petition allowed.
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2021 (7) TMI 1055
Arrears of sales tax - actual defaulter - collection of arrears after lapse of 14 years - case of petitioner is that recovery of arrears of sales tax is to be made against the defaulter and not against the petitioner - HELD THAT:- The petitioner's are the bonafide purchasers of the property and cannot be liable to attachment. This Court is of the considered opinion that the arrears of sales tax was due in for year 1992 - 93 under the CST Act, 1956 - The arrears of sales tax is to be collected from the second respondent after a lapse of 14 years and meanwhile the property was sold by the third respondent who was one of the Ex-Director of the second respondent Company and other co-owners also there and they are not directors and not connected with the second respondent. The first respondent has not collected the recovery of sales tax vigilantly from the defaulters. Thus, the actions initiated after lapse of many years cannot be sustained. Petition allowed.
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2021 (7) TMI 1054
Input tax credit - benefit of credit to be extended in respect of the transactions occurred prior to the issue of amendment in the Tamil Nadu Act 5 of 2015 - HELD THAT:- The issue decided in TVL. BHARATH TRADERS VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER, SOUTH AVANI MOOLA STREET CIRCLE, MADURAI [ 2019 (8) TMI 1699 - MADRAS HIGH COURT] where it was held that Since the substitution in the present case only seeks to set right an anomaly it necessarily has to be effective from the date of inception of the Act itself, retrospectively. Petition allowed.
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2021 (7) TMI 1050
Maintainability of petition - remedy of appeal was not exhausted - petition entertained only on the ground of delay, valid or not - Validity of assessment order - challenge on the ground that the assessment orders are passed against the provisions of the Tamil Nadu Goods and Services Tax Act, 1956 and in violation of decision of the Hon'ble Division Bench of this Court in various judgments - HELD THAT:- The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field. The finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The petitioner is at liberty to prefer an appeal, before the jurisdictional appellate authority, within a period of four weeks from the date of receipt of a copy of this order, in the prescribed format and complying with the provisions of the Acts and rules and in the event of receiving any such appeal from the petitioner, the appellate authority shall consider the same, on merits - Petition disposed off.
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