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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 3, 2021 Case Laws in this Newsletter: GST Income Tax Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Wealth tax News Highest ever merchandise exports in a quarter (Q1 2021-22, USD 95 billion) in the history of India INDIA’S MERCHANDISE TRADE: Preliminary Data, June 2021 India joins OECD/G20 Inclusive Framework tax deal Shri Piyush Goyal reviews Critical Infrastructure Projects under PMG Facilitation Notifications Customs 58/2021 - dated 1-7-2021 - Cus (NT) Agreements or Arrangements on 'Cooperation and Mutual Administrative Assistance (CMAA) in Customs matters' of India with other countries - Provisions of the said section 151B of Customs Act shall apply to the agreement or arrangement. G.S.R 466 (E) - dated 30-6-2021 - Cus (NT) Corrigendum - Notification No. 41/2018-Customs (N.T.) dated the 14th May, 2018 DGFT 12/2015-2020 - dated 1-7-2021 - FTP Amendment in Policy condition of Sl.No. 55 & 57, Chapter 10 Schedule-2, ITC(HS) Export Policy, 2018 GST - States S.O. 115 - dated 1-7-2021 - Bihar SGST Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021 in exercise of powers under section 168A of BGST Act S.O. 114 - dated 1-7-2021 - Bihar SGST Bihar Goods and Services Tax (Fourth Amendment) Rules, 2021. S.O. 113 - dated 1-7-2021 - Bihar SGST Bihar Goods and Services Tax (Second Amendment) Rules, 2021 S.O. 112 - dated 1-7-2021 - Bihar SGST Provide relief by lowering of interest rate for the month of March and April, 2021 S.O. 111 - dated 1-7-2021 - Bihar SGST Amendment in Notification S.O. 09 dated the 3rd January, 2019 S.O. 110 - dated 1-7-2021 - Bihar SGST Amendment in Notification S.O. 212 dated the 8th May, 2019 S.O. 109 - dated 1-7-2021 - Bihar SGST Amendment in Notification S.O. 206 dated the 23rd December, 2020 S.O. 108 - dated 1-7-2021 - Bihar SGST Bihar Goods and Services Tax (Third Amendment) Rules, 2021 16423-FIN-CTI-TAX-0002/2020 - dated 21-6-2021 - Orissa SGST Seeks to extend the due date for filing FORM GSTR-4 for financial year 2020-21 to 31.07.2021 16419-FIN-CTI-TAX-0002/2020 - dated 21-6-2021 - Orissa SGST Seeks to amend notification no.13898- FIN-CT1-TAX-0002-2020, dated the 7th May, 2021 Money Laundering G.S.R. 461(E) - dated 30-6-2021 - PMLA Central Government extend the period for which small account shall remain operational till 31st December, 2021 Circulars / Instructions / Orders Income Tax 14/2021 - dated 2-7-2021 Guidelines under section 9B and sub-section (4) of section 45 of the Income-tax Act, 1961 Customs 13/2021 - dated 1-7-2021 Online filing of AEO T2 and AEO T3 applications: Launch of Version 2.0 of web-application for filing, real-time monitoring, and digital certification Instruction No. 13/2021 - dated 21-6-2021 Regulating Movement of Indian Sailing vessels (ISVs) (Dhows) Security Issue Highlights / Catch Notes GST Classification of services - services provided by the applicant to its overseas client - export of services or not - Place of supply - intermediary services - The services of the applicant by way of arranging sales of goods shall not be considered as ‘export of service’ as defined under clause (6) of section 2 of the IGST Act, 2017. - AAR Visit to Get Source Income Tax Depreciation on roads in the category of plant and machinery - whether roads developed and maintained by the assessee by agreement with the Government on the State/National Highway is eligible for depreciation as “building”? - the assessee is entitled for depreciation at the rate of 10% - HC Visit to Get Source Reopening of assessment u/s 147 - period of limitation - Once the notice under Section 148 of the Act is issued within the period of limitation by despatching the notice in the Post-Office, the same would be sufficient to meet out the requirements. Section 149 of the Act itself contemplates time limit for notice. - It is possible in many circumstances, the addressee may receive the cover one or two days later or on account of various other reasons, the postal department may deliver after three or four days and all these circumstances are possible. - Thus, the delivery of cover is immaterial - HC Visit to Get Source Reopening of assessment u/s 147 - Eligibility of reasons to believe - Entire recording of reasons to believe formed by the Assessing Officer were produced before the sanctioning authority and after going through the entire reasons recorded by the Assessing Officer the sanction was granted by him. Therefore, all the conditions prescribed under Section 151 of the Act were followed in stricto sensu. - re-opening of the assessment proceeding was conducted on the basis of legally valid sanction accorded by the authority under provisions of Section 151 of the Act. - HC Visit to Get Source Reopening of assessment u/s 147 - A non-speaking order in this regard cannot be sustained and therefore, the impugned order is to be construed as lacking, on application of mind and the objections raised by the petitioner are not considered, nor a finding is given. Contrarily, the impugned order has been passed merely reproducing the provisions of the statute which is insufficient - HC Visit to Get Source Reopening of assessment u/s 147 - Depreciation u/s 32 on all the assets @ 100% of the assets acquired during the year - The assessee has not admittedly produced the invoices in respect of 34% of the claim of depreciation - The law does not provide for statutory presumption in favour of the statutory audit report. The finding of fact on the aforesaid issue has been recorded by all the authorities viz., the Assessing Officer, Commissioner of Income Tax (Appeals) and the tribunal, which is in conformity with Section 37 of the Act. The aforesaid finding cannot be termed as perverse. - HC Visit to Get Source Reopening of assessment u/s 147 - non-disclosure of capital gain - sale of assets which were transferred to the partnership firm as capital contribution - since the transfer of land as a part of capital contribution the partnership firm took place in the year 2008, the same can be assessed only in the AY 2009-10 and not in the AY 2011-12. Therefore, for the year under consideration no amount of capital gain could be said to have taxable. - Reasons lack validity and the AO had proceeded on erroneous premise and there was no sufficient material before the AO to take a prima-facie view that income of the assessee for the year under consideration has escaped assessment. - HC Visit to Get Source Disallowance u/s.80IA in respect of electricity generated in power plant in Rajasthan - CIT(A) had rightly denied the claim of the assessee. We also find that the case laws relied upon by the ld. AR which are also mentioned in the order of the ld. CIT(A) are rendered in the context of captive power units and since, assessee is not a captive power unit, those case laws are not applicable to the assessee herein and distinguishable on facts. - AT Visit to Get Source Deduction u/s 54 - It is settled law that when on an issue there is no jurisdictional High Court decision other Hon’ble High Court decision has to be followed by subordinate Courts and Tribunals. Hence Ld.CIT(a) should have followed the Hon’ble High Court decisions in favour of assessee. - The dismissal of S.L.P without a speaking order by Hon’ble Supreme Court does not in any manner reduce the precedential value of Hon’ble High Court decision. - AT Visit to Get Source Long term or Short term capital gain - holding period of asset - benefit of indexation - Transfer of property - Assessee has acquired a right in the asset and such right is a capital asset and payment of installments as per the terms is only a follow-up action and taking delivery of possession is only a formality. Therefore, the assessee in our opinion has correctly computed the long term capital loss. - AT Visit to Get Source Intimation passed u/s 143 (1) - adjustment made in intimation u/s 143 (1)(a) - both the adjustment made by the centralized processing centre for which assessee disagreed and with respect to the disallowance u/s 36 (1) (va) supported it with several judicial precedents of the jurisdictional honourable High Court as well as the honourable Supreme Court making it clearly beyond the purview of an incorrect claim. - AT Visit to Get Source Disallowance of interest expenses - expense on loan taken from its 100% Holding Company - Once the details are perused, the obvious conclusion is that there is a clear connection between the money borrowed and its utilization for purposes of business of real estate and infrastructural development carried on by the assessee. - There is no merit in the disallowance made by the AO - AT Visit to Get Source Disallowance of Short Term Capital loss incurred on trading of shares - Conclusion drawn by the Revenue authorities on the basis of the common report of Director of Investigation Calcutta which is general in nature and not specific to any assessee so far as, the assessee is concerned. Furthermore, when the assessee was not confronted with any statement and/or material alleged to be the basis of the report of the Investigation Wing of the Department on which the conclusion drawn by the Revenue on human probabilities surmise and conjectures is not sustainable in the eye of law - AT Visit to Get Source Income accruing or arising in India u/s 9(1)(i) - amount received by the assessee from Tata Communications Ltd. (“TCL”) as Standby Maintenance Charges - the Standby Maintenance Charges received by the assessee from TCL could not be assessed as FTS and was its ‘business income’ that was taxable only to the extent of its reference to the “business connection” in India - AT Visit to Get Source Reopening of assessment u/s 147 - Since, in the instant case, admittedly no addition has been made on account of the issue for which the case of the assessee was reopened but addition has been made on some other ground without issuing fresh notice under section 148 after recording reasons under section 147 for escapement of income, therefore, the addition made by the A.O does not survive being not in accordance with Law. - AT Visit to Get Source Income from house property - annual letting value of unsold flats - Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable to be taxed as business income - AT Visit to Get Source Depreciation of printers @ 60% - computer accessories and peripherals such as printers, scanners and servers form an integral part of the computer system and they cannot be used without the computer and therefore they are part of computer system and therefore eligible for depreciation @ 60%.- AO was not justified in restricting the depreciation @ 15% - AT Visit to Get Source IBC Initiation of CIRP - Time limit - Corporate Debtor failed to make repayment of its dues - Term loan granted on 17th March, 2011 and other financial services were referred to the Corporate Debtor as per other agreements referred - When the account become NPA on 15th March, 2016 and there was default, the Corporate Debtor acknowledged liability on 10th July, 2018 as per the document at page 309 and thus, the application filed in 2019 could not be said to be time barred. - AT Visit to Get Source Service Tax Validity of SCN - Levy of penalty - Extended Period of limitation - service tax collected but not paid - The tribunal has affirmed the order passed by the Commissioner of Central Excise (Appeals) by a cryptic order - matter remitted to the Assistant Commissioner to afford an opportunity of hearing to the appellant and to adjudicate the issue with regard to issue of penalty afresh - HC Visit to Get Source Central Excise Refund claim of amount deposited during investigation - it would not be necessary to lodge the protest as is otherwise provided under the Rules. Since the appellant has challenged the amount which got deposited by him during investigation, the protest is very much lodged on his part not as a party to such decision, the plea of limitation should not debar his claim. - AT Visit to Get Source Case Laws: GST 2021 (7) TMI 74 Classification of services - services provided by the applicant to its overseas client - export of services or not - Place of supply - intermediary services or not - HELD THAT:- The supplier of service i.e., the applicant is located in India and the recipient of the service i.e., the overseas supplier of goods to whom the applicant provides services is located outside India. However, the nature of activities going to be undertaken by the applicant towards arranging or facilitating supply of goods envisages the services closely akin to the services provided by an intermediary as defined in clause (13) of section 2 of the IGST Act, 2017. The crux of the definition of term intermediary is lying with the phrase arranges or facilitates the supply of goods or services or both between two or more persons. Another condition which requires to be fulfilled is that the person shall not supply such goods or services on his own account - In the instant case, the applicant has admitted that he procures purchase order for supply of goods from the buyers located in India. He then connects such prospective buyers with the supplier of goods who are located outside the country. The supplier of goods thereafter despatches the goods directly to the buyers. Intermediary services or not - HELD THAT:- It has been admitted by the applicant that the value of supply of services in the form of commission is determined at the rate normally prevalent in the market which is generally 1% or 2% depending on the volume of trade. It clearly establishes the fact that the supply of services as provided by the applicant is inextricably linked with the supply of goods made by the overseas supplier - the applicant being supplier of services by way of arranging or facilitating sales of goods for various overseas suppliers and admittedly the same is not being done on his own account, satisfies all the conditions to be an intermediary as defined in clause (13) of section 2 of the IGST Act, 2017. Place of supply - HELD THAT:- The place of supply is determined under section 13 of the IGST Act, 2017 where location of supplier or location of recipient is outside India. In the present case, the applicant being the supplier of services is located in India and the recipient of services being located outside the country attracts the provisions of the aforesaid section of the Act ibid - the supply shall be treated as an intra-State supply in terms of sub-section (2) of section 8 of the IGST Act, 2017 and tax will be levied accordingly. This transaction will, therefore, not be covered within the definition of export of services as provided in Section 2(6) of IGST Act, 2017 as it is not satisfying one of the conditions of place of supply being outside India, as enumerated in Section 2(6)(iii) of the IGST Act, 2017 and consequently shall not be treated as zero-rated supply as provided in section 16 of the IGST Act, 2017. The services of the applicant by way of arranging sales of goods shall not be considered as export of service as defined under clause (6) of section 2 of the IGST Act, 2017. Income Tax 2021 (7) TMI 73 Depreciation on roads in the category of plant and machinery - whether roads developed and maintained by the assessee by agreement with the Government on the State/National Highway is eligible for depreciation as building ? - HELD THAT:- As relying on M/S. TAMILNADU ROAD DEVELOPMENT COMPANY LTD., CHENNAI [ 2021 (2) TMI 548 - MADRAS HIGH COURT] development done by the assessee by forming the road would qualify as a plant so as to be entitled to depreciation under Section 32 - substantial question of law as answered against the Revenue and in favour of the assessee and it is held that the assessee is entitled for depreciation at the rate of 10%. 2021 (7) TMI 72 Reopening of assessment u/s 147 - TDS liability u/s 195 - notice issued beyond the period of limitation - jurisdictional office difference - 1st respondent jurisdiction to issue notice under Section 148 - when the department came to know that the 2nd respondent is the jurisdictional officer, the files were transferred to the 2nd respondent, who in turn, issued a letter to the petitioner - Since the petitioner is a Non-Resident Indian, he has not filed any Income Tax Returns for the last fifteen years and the said factors are known to the respondents-Income Tax Department also - HELD THAT:- The department issued notice based on the last known address, which is available in the PAN of the assessee. It is not in dispute, the notice under Section 148 of the Act was issued to the address furnished by the petitioner and recorded in the PAN records. Therefore, the department cannot be blamed and in the event of any change of address, it is the duty of the assessee to submit proper application and change the address in PAN, which the petitioner has failed to do. Therefore, he cannot now rely on the ground that the notice under Section 148 of the Act was issued in a wrong note. Even in respect of the subsequent order passed by the 2nd respondent, it is clearly stated that the petitioner has to submit his reply, which should reach the office of the 2nd respondent on or before 14.12.2018, as the case is getting time barred on 31.12.2018. Instead of furnishing the details and producing the documents, the petitioner has chosen to file the Writ Petition, mainly on the ground that the notice was issued beyond the period of limitation. As far as the last date for issuance of notice, under Section 148 of the Act, in the present case is concerned, it is 31.03.2017 and the respondents have produced the postal receipt, showing that the notice was registered before the concerned Post-Office on 31.03.2017. Thus, for all purposes, the notice has been issued on 31.03.2017 and delivery of the cover to the assessee or in the last known address, may not be a deciding factor for the purpose of retaining the period of limitation. Once the notice under Section 148 of the Act is issued within the period of limitation by despatching the notice in the Post-Office, the same would be sufficient to meet out the requirements. Section 149 of the Act itself contemplates time limit for notice. Once the time limit is contemplated and within the time limit, the notice has been despatched from the office of the Income Tax Department, the same would be sufficient to meet out the requirement and delivery of the notice cannot be considered for the purpose of invalidating the notice issued by the authority, before the time limit. It is possible in many circumstances, the addressee may receive the cover one or two days later or on account of various other reasons, the postal department may deliver after three or four days and all these circumstances are possible. Thus, the delivery of cover is immaterial and if the department could able to establish that the notice was issued and despatched before the expiry of limitation, the same would be sufficient to meet out the requirement of Section 149 of the Act. In the present case, the postal receipt is produced to establish that the notice was despatched on 31.03.2017 and therefore, the point of limitation raised stands failed. The authorities once identified that the jurisdictional office is different, then transfer of such files to the jurisdictional office is the procedure to be followed and in the present case, the 1st respondent rightly transferred the case to the 2nd respondent to proceed with reopening of assessment proceedings and the 2nd respondent, in turn, sent a letter to the petitioner/assessee on 06.12.2018 and the petitioner, instead of responding to the letter, has chosen to file the Writ Petition and therefore, this Court is of the considered opinion that the Writ Petition is pre-matured and the petitioner has to establish his case by producing documents and furnishing information to the 2nd respondent, who, in turn, has to follow the procedures contemplated and proceed with re-assessment proceedings - Decided against assessee. 2021 (7) TMI 71 Reopening of assessment u/s 147 - Eligibility of reasons to believe - Notice after the end of 4 years from the end of the relevant assessment year - capital gain on sale of land - nature of land sold - HELD THAT:- Reassessment proceeding initiated is not mere change of opinion , but based upon additional facts which were not at all taken into consideration by the assessing authority. Initiation of the reassessment proceedings was started by issuance of notice under Section 148 Those proceedings are yet to be concluded, as no assessment order has been passed. Yet in this case, only objection filed by the petitioner has been decided. The petitioner will have effective and efficacious remedy against the said assessment order. Reassessment proceeding has been initiated on the basis of material having direct bearing over the case of the assessee which is based on the reason to believe which was recorded by the assessing authority - there is no merit in the contention of the learned counsel for the petitioner that sanction under Section 151 was granted by the competent authority in a mechanical manner. The only requirement for initiating the proceedings under Section 147 beyond the period of 4 years is that the subjective satisfaction of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner on the reasons recorded by the Assessing Officer explaining the circumstances under which according to the Assessing Officer it was a fit case for issuance of notice under Section 148 of the Act. Entire recording of reasons to believe formed by the Assessing Officer were produced before the sanctioning authority and after going through the entire reasons recorded by the Assessing Officer the sanction was granted by him. Therefore, all the conditions prescribed under Section 151 of the Act were followed in stricto sensu. We find that re-opening of the assessment proceeding was conducted on the basis of legally valid sanction accorded by the authority under provisions of Section 151 of the Act. In regard to the argument that the present case falls within the ambit of change of opinion and, therefore, the reassessment proceeding initiated is not maintainable, it has already been considered that the Questionnaire issued prior to completion of assessment proceeding under Section 143(3) of the Act does not indicate anything as regards the inquiry conducted by the Assessing Officer in accordance with the provisions of Section 50C of the Act as well as undervaluation of LTCG In the entire Questionnaire, nowhere this query was made that why the petitioner has shown capital gain on the said land in the ITR when she herself was of the view that the impugned land was and agricultural land and does not fall within the purview of Section 2(14) of the Act and hence, not liable for capital gain. This act of the petitioner per se is contrary in nature and, therefore, based on tangible material the Assessing Officer has initiated the reassessment proceedings, and if the same is examined on the touchstone of reason to believe for issuance of notice under Section 148 of the Act recorded by the Assessing Officer. Thus re-assessment proceeding has been initiated on the basis of the material which has given rise to reason to believe as well as escapement of assessment has been quantified by the Assessing Officer. - Decided against assessee. 2021 (7) TMI 70 Reopening of assessment u/s 147 - non consideration of the objections submitted by the petitioner for reopening of assessment - HELD THAT:- In the present case, reasons are furnished for reopening of assessment. The reasons are to be disposed of in a meaningful manner in view of the fact that the reopening procedures in the present case falls beyond the period of four years and within six years. Thus, the ingredients contemplated in the proviso class is to be complied with. Thus, the consideration of objections and the findings for reopening are of vital and in the absence of any reasons, one cannot form an opinion that reopening of assessment is done with reference to the conditions stipulated in the proviso class to Section 147 of the Act. Conditions under the provisions are mandatory. In order to establish the compliance of conditions, the authority competent must provide reasons stating that the conditions stipulated in the proviso class has been complied with. A non-speaking order in this regard cannot be sustained and therefore, the impugned order is to be construed as lacking, on application of mind and the objections raised by the petitioner are not considered, nor a finding is given. Contrarily, the impugned order has been passed merely reproducing the provisions of the statute which is insufficient and therefore, this Court is inclined to consider the Writ Petition. 2021 (7) TMI 69 Maintainability of appeal before High Court - Reopening of assessment u/s 147 - reasons furnished is that the assessee has not furnished any TRC Certificate during the scrutiny proceedings of the Assessment Year 2006-07 - petitioner has emphasized that when production of certain certificate is not mandatory and applying the subsequent amendment with retrospective effect by reopening the assessment is not only bad in law, shows the non-application of mind on the part of the respondent - HELD THAT:- This Court is of the considered opinion that an attempt is made by the petitioner to set aside the original Assessment Order on the ground that there was violation of principles of natural justice and the TRC Certificate is not necessary with reference to the Assessment Year 2006-07. This Court is of the considered opinion that the reasons furnished for reopening of assessment in proceedings dated 10.02.2014 reveals that beyond the production of TRC Certificate there are other aspects, which requires an adjudication, which was done by the Assessing Officer and the final order of Assessment was passed in the impugned proceedings dated 21.03.2014. Even in case of violation of principles of natural justice, in all circumstances such cases need not be entertained by the High Court under Article 226 of the Constitution of India by dispensing with the appellate provisions contemplated under the statute. Undoubtedly, every writ petition is filed on one or the other ground, more specifically, violation of the principles of natural justice, discrimination, equality of law or otherwise in violation of statutory provisions. On all these grounds, if the appeal provision is dispensed with, then the High Court is diluting the importance of the appellate provisions contemplated under the Act. Filing an appeal is the Rule. Entertaining a writ petition is an exception. Dispensing with an appeal is an exceptional one, wherein, the High Court could be able to form an opinion that there is an imminent threat or damage, which cannot be compensated or gross injustice, warranting an urgent relief but not otherwise. Therefore, filing of an appeal may be dispensed with by the High Court, only if the urgency and imminency is established and in all other circumstances, the aggrieved persons shall prefer an appeal for the purpose of redressing their grievances by following the procedures contemplated. This being the principles to be followed, this Court is of the considered opinion that the legal grounds as well as the factual discrepancies, which all are disputed, shall be adjudicated by the Appellate Authority and the petitioner is at liberty to approach the Appellate Authority by following the procedures contemplated and in the event of preferring any such appeal, the Appellate Authority shall entertain the appeal . 2021 (7) TMI 67 Reopening of assessment u/s 147 - excess of share value over the market value - notice issued before expiry of 4 years - Addition u/s 56(2)(viib) on the ground that the petitioner-Company has issued 6,00,000 equity shares of face value of ₹ 10 at a premium of ₹ 90/-. - As per AO petitioner-Company failed to obtain achievement targets as per the forecast the value of share should be recomputed and the excess share value received by the petitioner-Company over the market value has to be disallowed as per Section 56(2) - HELD THAT:- In the present case, the appeal filed by the petitioner before the Commissioner of Income Tax (Appeals) reveals that the Assessing Officer erred in adding the excess of share value over the market value of 6,00,000 fresh issue of equity shares invoking Section 56(2)(viib) of the Act. Reasons for reopening of the assessment furnished in proceedings states that during the year, the Company has converted 50,01,514 preference shares into equity shares in the ratio of 10:1 i.e., 500151 equity shares and ₹ 5,00,00,000/- worth debentures into equity shares of ₹ 10/- each at the premium of ₹ 90 per share i.e., 5,00,000 equity shares. The Total of preference shares and debentures converted into equity shares totals to 10,00,151 Nos. In the assessment order passed under Section 143(3) of the Income Tax Act dated 31.03.2016, the difference between the market value and share value in respect of 1000151 equity shares to the tune of ₹ 2,09,33,160/- (1000151*20.93) was not brought to tax under Section 56(2)(viib) of the Income Tax Act, 1961. Therefore grounds of appeal filed by the petitioner before the Commissioner of Income Tax (Appeals) cannot be a ground for the purpose of quashing the reopening of assessment proceedings issued on certain specific grounds. As far as the ground of change of opinion raised by the petitioner is concerned, this Court is of the considered opinion that reading of Explanation 1 and Explanation 2 (c)(i) of Section 147 is unambiguous that even in case of production of Books of Account or other evidence and also in the cases of underassessment, reopening of assessment is permissible. - Decided against assessee. 2021 (7) TMI 66 Reopening of assessment u/s 147 - HELD THAT:- The assessee filed the return for the Assessment Year 2008-09 on 28.09.2008 and the assessment was completed on 07.12.2010. A notice was issued to the assessee on 21.03.2013 under Section 148 of the Act and thereafter, reasons for re-opening the assessment were supplied to the assessee on 07.05.2013. Therefore, the re-opening of assessment is in accordance with law and the same has been rightly held to be so by the Assessing Officer, Commissioner of Income Tax (Appeals) and the tribunal. Therefore, substantial question of law No.1 is answered against the assessee and in favour of the revenue. Depreciation on ATM - whether tribunal was correct in holding that an ATM which performs the functions of a computer such as input, process and output, could not be considered as a 'Computer' or 'Computer System' or Computer Terminal' or 'Computer Peripheral Device' for the purpose of claiming depreciation under the Act at 60%? - HELD THAT:- Issue to be answered in favour of the assessee by a division bench of this court in 'CIT VS. NCR CORPORATION (P) LTD.' [ 2020 (6) TMI 439 - KARNATAKA HIGH COURT] and therefore, for the reasons assigned in the aforesaid judgment, the ATMs are held entitled for depreciation at the rate of 60% as computers. Depreciation u/s 32 on all the assets @ 100% of the assets acquired during the year - procurement of capital assets during the year, ought to have considered furnishing of 73% of the invoices in relation to capital assets acquired during the year as furnishing of substantial evidence relating to capital assets - HELD THAT:- The burden undoubtedly is on the assessee who has claimed depreciation by producing the evidence on record viz., the invoices. In the instant case, the assessee had produced 66% of the invoices and therefore, the depreciation to the extent of 66% has been allowed by the Assessing Officer, Commissioner of Income Tax (Appeals) as well as by the tribunal. The assessee has not admittedly produced the invoices in respect of 34% of the claim of depreciation. It is not the case of the assessee that he is not in possession of the invoices. It is pertinent to note that in JAY ENGINEERING WORKS [ 1978 (2) TMI 94 - DELHI HIGH COURT] the books of accounts of the assessee were burnt in fire and therefore, the statutory audit report was accepted as secondary evidence. The law does not provide for statutory presumption in favour of the statutory audit report. The finding of fact on the aforesaid issue has been recorded by all the authorities viz., the Assessing Officer, Commissioner of Income Tax (Appeals) and the tribunal, which is in conformity with Section 37 of the Act. The aforesaid finding cannot be termed as perverse. For the aforementioned reasons, the substantial question of law No.4 is answered against the assessee and in favour of the revenue. 2021 (7) TMI 65 Assessment of trust - depreciation on assets as application of income towards charitable purpose - AO disallowed the claim of the assessee on the ground that it amounts to giving deductions/exemptions twice - HELD THAT:- As decided in M/S. NATIONAL COLLEGE COUNCIL, TEPPAKULAM, TIRUCHIRAPALLI. [ 2021 (4) TMI 469 - MADRAS HIGH COURT] substantial questions of law, which have been framed in these appeals, have been answered against the Revenue as relying on RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] . - Decided against revenue. 2021 (7) TMI 64 Reopening of assessment u/s 147 - non-disclosure of capital gain - sale of assets which were transferred to the partnership firm as capital contribution - whether the revenue is justified in reopening the assessment for the year under consideration? - assessment sought to be reopened by the revenue mainly on the ground that the assessee had received the amount as referred in the reasons recorded, from the partnership firm namely M/s. Swaminarayan Enterprises against the transfer of his land as capital contribution is chargeable to tax under the head Capital Gain in the hands of partners - HELD THAT:- It appears from the record that the assessee had transferred his land to M/s. Swaminarayan Enterprise as part of capital contribution in the partnership firm as per Partnership Deed duly executed on 15.08.2008. Undisputedly, the land in question was not transferred in the name of Firm. It is a settled law that where immovable property is transferred by a partner to the firm as a capital contribution and registration does not take place by paying stamp duty, the case would be covered under Section 45(3) - As per Section 45(3) of the Act, whenever a partner contributes any capital asset in the partnership firm, then the value of capital asset recorded in the books of account of the firm is to be considered as the full value consideration for the purpose of computing capital gain. In the present case, we find that no any amount was credited by the firm in the account of the assessee as a consideration for the land in question during the year AY 2009-10. The record further indicates that the full value of consideration of the transfer of said land being recorded was NIL. Under such circumstances, we are of the view that since the transfer of land as a part of capital contribution the partnership firm took place in the year 2008, the same can be assessed only in the AY 2009-10 and not in the AY 2011-12. Therefore, for the year under consideration no amount of capital gain could be said to have taxable. Reasons lack validity and the AO had proceeded on erroneous premise and there was no sufficient material before the AO to take a prima-facie view that income of the assessee for the year under consideration has escaped assessment. Information received by the AO is too vague and he proceeded for further verification of the land transactions and income received by the Firm and the assessee from the sale of the constructed flats. Therefore, the reopening of the assessment to carryout roving and fishing enquiry is not permissible in law. No hesitation to hold that the reasons recorded for the reassessment for the year under consideration could not said to have led to formation of any belief that income had escaped assessment within the meaning of Section 147 - Decided in favour of assessee. 2021 (7) TMI 63 Disallowance u/s.80IA in respect of electricity generated in power plant in Rajasthan - claim was denied by the ld. AO on the ground that the claim does not match with the amount actually realized by the assessee by way of sale proceeds from Rajasthan State Electricity Board - HELD THAT:- Though the deduction u/s.80IA of the Act is granted for generation of electricity i.e. 378208 units, for the purpose of computation of claim of deduction u/s.80IA of the Act, what is relevant is the number of units that were supplied by the assessee to the grid of RSEB. Admittedly, the assessee had entered into an agreement with RSEB wherein the price per unit was pre-fixed at ₹ 4.28 per unit. Hence, for the purpose of computing the profit from that eligible unit, the assessee had received sale proceeds from RSEB only @₹ 4.28 per unit. Hence, profit derived from such eligible unit had to be worked out taking into account sale consideration of ₹ 4.28 per unit, which has been rightly granted by the ld. AO to the assessee. It is totally irrelevant as to at what rate the RSEB sells power to ultimate retail consumers. That rate is absolutely not relevant for the purpose of computation of profit derived from eligible unit for the purpose of computing deduction u/s.80IA of the Act in the hands of assessee herein. Hence, we find that the ld. CIT(A) had rightly denied the claim of the assessee. We also find that the case laws relied upon by the ld. AR which are also mentioned in the order of the ld. CIT(A) are rendered in the context of captive power units and since, assessee is not a captive power unit, those case laws are not applicable to the assessee herein and distinguishable on facts. Accordingly, the grounds raised by the assessee are dismissed. 2021 (7) TMI 62 Condonation of delay - inordinate delay of 934 days - Bogus purchases - HELD THAT:- We note that the AO has passed an order completely devoid of any reasoning. Thereafter, the assessee was pursuing rectification application u/s 154 of the I.T.Act. The reasonable brief of the assessee that the rectification application would succeed cannot be said to be not cogent. In these circumstances, when the petition u/s. 154 was rejected assessee filed an appeal before the Ld.CIT(A). Ld.CIT(A) has treated the reasonable cause for the delay to be not sustainable. In our considered opinion Ld.CIT(A) has completely misled himself by not considering at all the fact that the assessment order passed by the AO was completely devoid of any reasoning whatsoever. Despite the assessee providing all the documentary evidence as required by the AO and the fact that notice u/s. 133(6) having also been complied with. Hence, the reasoning stated by the AO in making the 100% addition is completely bereft of any reasoning whatsoever. He has mentioned that after considering the overall facts and circumstances, he is making 100% addition. In our considered opinion this is not any reasoning whatsoever. Hence, assessee belief that he will succeed in the alternative remedy cannot be brushed aside. In these circumstances, in our considered opinion, the delay of filing appeal before the Ld.CIT(A) was on account of cogent and reasonable reasoning and the same ought to have been condoned. The same is as such condoned. 2021 (7) TMI 61 Deduction u/s 54 - one residential house is eligible for deduction - CIT-A confirming sale consideration determined by Ld. AO on adopting the market value of 2 residential flats - HELD THAT:- We note that the assessment year involved in this case in prior to the amendment restricting the deduction under section 54 to one flat/home. Ld. CIT(A) despite noting that there are various Hon ble High Court decision in favour of assessee chose to follow the ITAT decision to the contrary, by observing that he must follow ITAT decision. Here, we note that Ld.CIT(A) has grossly misled himself with respect to the cannons of judicial discipline. It is settled law that when on an issue there is no jurisdictional High Court decision other Hon ble High Court decision has to be followed by subordinate Courts and Tribunals. Hence Ld.CIT(a) should have followed the Hon ble High Court decisions in favour of assessee. By writing that Hon ble Supreme court has dismissed the SLP against those orders without any discussion on merits, Ld.CIT(A) has further displayed his scant regard to the principle of stare decisis. The dismissal of S.L.P without a speaking order by Hon ble Supreme Court does not in any manner reduce the precedential value of Hon ble High Court decision. Hence, we set aside the order of Ld.CIT(A) and direct that the deduction u/s 54 claimed by the assessee is to be allowed. 2021 (7) TMI 58 Deduction u/s 54F - AO did not allow the claim of developmental expenses in the absence of reliable evidences and disallowed the deduction u/s 54F as the construction of house was already shown to be completed in the individual hands of the assessee - assessee has opted VSVS scheme - HELD THAT:- AO observed that in the income tax returns filed by the assessee in individual capacity for the AY 2009-10 and 2010-11 the said house was shown as self-occupied and interest on house loan was claimed as deduction from house property u/s 24 of the IT Act which shows that the assessee is the sole owner of the said house in individual capacity and the construction of the house was completed during the FY relevant to AY 2009-10 and interest on housing loan was claimed from the AY 2009-10 onwards in his individual income tax returns. In the written submissions filed by the assessee, it has been mentioned that the same addition in respect of same property had been assessed in AY 2008-09 u/s 143(3)/147 of the Act, vide order dated 07/03/2016, against which, the assessee filed appeal before the CIT(A), who had dismissed the appeal of the assessee. As before the Tribunal, the assessee has opted VSVS scheme for the said appeal and Form No. 3 has been issued. The said appeal was disposed off by the coordinate bench of this Tribunal vide order dated 24/02/2021. Considering the submissions of the assessee, we remit this matter to the file of AO for a limited purpose for verification of the same as to whether the same capital gains arising on sale of the same property has been assessed in AY 2008-09 If it is found that the capital gains has been assessed twice on the same property in AY 2008-9 and 2010-11, the proceedings for AY 2010-11 shall be dropped and, if it is found otherwise, the AO can revive the appeal as it is. Accordingly, the grounds raised by the assessee are treated as allowed for statistical purposes 2021 (7) TMI 57 Long term or Short term capital gain - holding period of asset - benefit of indexation - right in the asset - AO referred to the provisions of Section 2(47)(v) and came to the conclusion that as per the definition of transfer under the Income Tax Act, 1961, the transfer date of property is taken to be earlier of the date of registration of sale deed or part payment and possession of the property as per Section 53A of Transfer of Property Act - HELD THAT:- Since the assessee in the instant case was allotted the property vide agreement Dated 11.04.2011 and allotment letter dated 08.07.2011, therefore, he has acquired a right in the asset and such right is a capital asset and payment of installments as per the terms is only a follow-up action and taking delivery of possession is only a formality. Therefore, the assessee in our opinion has correctly computed the long term capital loss. We, therefore, set aside the Order of the Ld. CIT(A) and direct the A.O. to allow the long term capital loss claimed by the assessee. 2021 (7) TMI 56 Unexplained cash credit u/s 68 - CIT-A deleted the addition - HELD THAT:- CIT(A) called for the assessment rcord from M/s M.L. Singhi Associates Private Limited for AY 2012-13 and found that the AO has completed the assessment u/s 143(3) of the Act for AY 2012-13. From the said assessment record he also found that detailed questionnaire was issued by the AO, who examined the source of funds available with the same entity for investment in shares of the assessee company and after being satisfied accepted the claim of the assessee company. It is the settled proposition of law that powers of the learned CIT(A) are co-terminus with that of the Assessing Officer. The learned CIT(A) can do which the AO has failed to do. Since, the learned CIT(A) in the instant case after verification of the assessment record of M/s M.L. Singhi Associates Private Limited, whose assessment was done by the very same Assessing Officer found that it has fully explained the source for making investment in the shares of the assessee company, therefore, we do not find any infirmity in his order in deleting addition. Remaining eleven persons i.e. individuals and corporate entities - we find the AO basically made the addition on the ground that in absence of reply to notice u/s 133(6) of the Act, he could not verify the information/documents filed by the assessee in respect of amount received on account of share capital - as per assessee that all those details were available with the assessee on 31st March, 2015 and the Authorized Representatives of the assessee went to the AO for filing of the same but the AO refused to accept for which those documents were sent by speed post on 31st March, 2015 itself. Although the learned CIT(A) has given a finding that all these concerns are promoters of the assessee company and have sufficient funds available with them and are regular taxpayers, however, due to non receipt of the information u/s 133(6) of the Act, the AO could not verify these details. We deem it proper to restore the issue relating to the remaining 11 parties to the file of the AO with a direction to conduct such enquiries as he deems fit pursuant to the notice u/s 133(6)The grounds raised by the Revenue are partly allowed for statistical purposes. 2021 (7) TMI 54 Intimation passed u/s 143 (1) - adjustment made in intimation u/s 143 (1)(a) - Disallowance made on account of payment of employees contribution to PF - HELD THAT:- On careful reading of the communication of proposed adjustment made u/s 143 (1) (a) which states that the return of income filed by the assessee contains the errors, incorrect claims, inconsistency which attracts adjustment as specified u/s 143 (1) (a) - On careful reading of the provisions of Section 143 (1) of the act we find that it describes a manner of computation of the total income or loss as per the return of income filed by the assessee. Both the adjustment made by the centralised processing centre, it is stated that assessee has made an incorrect claim. Therefore, centralized processing centre has invoked clause 143 (1) (a) (ii) of the act. Thus according to the centralized processing centre the claim of the assessee of deduction of deposit of employees provident fund contribution to the credit of the employees account though beyond the due date described under the respective provident fund act but before the due date of the filing of the return of income is an incorrect claim. We find that the claim of the assessee is supported by the decision of the Honourable jurisdictional High Court and hence it cannot be said to be an incorrect claim. With respect to the second adjustments was merely an error of grouping of an adjustment of income shown in the annual accounts of the assessee for arriving at correct taxable income. It is not the case of the centralized processing centre that income has been incorrectly computed by assessee. Therefore, both the adjustment made by the centralized processing centre for which assessee disagreed and with respect to the disallowance u/s 36 (1) (va) supported it with several judicial precedents of the jurisdictional honourable High Court as well as the honourable Supreme Court making it clearly beyond the purview of an incorrect claim. Profit on sale of assets as per books of accounts - Adjustment proposed is merely an error of grouping which does not make any impact on the total income. The adjustment made by the centralized processing centre has been incorrectly made resulting in double addition - Thus, both the adjustment proposed by the centralized processing centre are not sustainable. The order of the learned CIT A is also not sustainable as he directed learned assessing officer to examine the claim of the assessee. The mandate before the CIT A was only to see whether the above adjustment is in accordance with the law or not. Had it been the issue of examination, the case of the assessee would have been picked up for scrutiny. In view of this, we direct the learned assessing officer to delete both the above adjustment made in intimation u/s 143 (1)(a) of the Act. - Decided in favour of assessee. 2021 (7) TMI 53 TP Adjustment - Comparable selection - HELD THAT:- Assessee continued to carry on the business of provision of ITES earlier carried on by Vodafone India Services Pvt Ltd and provided such services to the AE. The aforesaid finding of fact has been very clearly recorded by the Tribunal while deciding assessee s appeal in Assessment Year 2008-09 in the order referred to earlier. On a perusal of the aforesaid order of the Tribunal, we find that while considering the issue of comparability of Acropetal Technologies Ltd and eClerx Services Ltd in case of Vodafone India Services Ltd, learned DRP had directed to excluded these two comparables along with some other comparables. The exclusion of these two comparables was also upheld by the Tribunal while deciding the appeal [ 2014 (12) TMI 563 - ITAT MUMBAI] . We are of the view that both Acropetal Technologies Ltd and eClerx Services Ltd cannot be treated as comparables to the assessee. Accordingly, we direct the assessing officer to exclude them from the list of comparables and determine the ALP. As discussed earlier in the order, in course of hearing, learned senior counsel for the assessee has specifically submitted before us that with the exclusion of Acropetal Technologies Ltd and eClerx Services Ltd, the arithmetic mean of the rest of the comparables will work out to 13.91% as against the margin shown by the assessee of 14.9%, requiring no further adjustment. Disallowance of deduction claimed under section 10A in respect of interest income and foreign exchange gain - HELD THAT:- Undisputedly, the assessee has earned the interest income from the deposit made towards bank guarantee and temporary parking of surplus funds. It is evident, the assessee has no other activity of earning income except export of ITES through its 10A unit. Thus, it can be safely concluded that the deposits on which the assessee had earned interest income were on account of its business activity. There cannot be any doubt that deposits made towards bank guarantee is purely in connection with its business activity. As far as the interest on fixed deposit is concerned, it is an accepted factual position that the surplus fund available with the assessee and not immediately required for business was temporarily invested in fixed deposit. Thus, this activity of parking surplus funds in the fixed deposit has to be construed to be in the course of its regular business activity. Our aforesaid view is fully supported by the Full Bench decision of the Hon ble Karnataka High Court in the case of CIT vs Hewlett Packard Global Soft. Ltd [ 2017 (11) TMI 205 - KARNATAKA HIGH COURT] wherein, it is held that all profits and gains including incidental income of an export oriented unit even in the nature of interest on bank deposits or soft loans would be entitled for deduction under section 10A or 10B -Keeping in view the ratio laid down in the aforesaid decisions, we hold that the assessee is eligible to claim deduction under section 10A of the Act in respect of the interest income. Deduction claimed in respect of foreign exchange gain - Taking note of the difference in the language used in both the provisions, the Hon ble Karnataka High Court in CIT vs Motorola India Electronics (P) Ltd [ 2014 (1) TMI 1235 - KARNATAKA HIGH COURT] has held that unlike section 80HHC of the Act, which expressly excluded certain types of income such as foreign exchange gain in EEFC account, etc; however, no such express provision is there in sections 10A / 10B of the Act. The Hon ble Court has held, what is exempted is not merely the profits and gains of the export of articles, but also the income from the business of the undertaking. Proceeding further, the Hon ble Court has observed that since the export proceeds kept in the EEFC account are the income of the business undertaking; hence, the claim of deduction would be allowable. In our considered opinion, the aforesaid decision of the Hon ble Karnataka High Court clinches the issue in favour of the assessee. Hence, we direct the assessing officer to allow assessee s claim of deduction on the foreign exchange gain. Deduction of education cess paid on income-tax - HELD THAT:- Having considered rival submissions, we find that this issue is squarely covered by the decision of the hon ble jurisdictional High Court in case of Sesa Goa Ltd vs JCIT [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] Respectfully following the aforesaid decision, we direct the assessing officer to allow deduction of education cess while computing the income under the head Profits and gains of business or profession . Additional ground is allowed. 2021 (7) TMI 52 Disallowance being 20% of total travelling expenses - as argued these expenses have been incurred on tour and traveling of officers and employees of the company and the purpose of travel was meeting prospective buyers, sellers, visits to difference sites and prospective markets etc. - CIT-A deleted the addition - HELD THAT:- DR has not brought on record any justifiable reason requiring any interference with the conclusions recorded by the Ld CIT (A) in the impugned order on this issue. As noted above, the assessee has filed requisite details of travel expenses not only before the AO but also before Ld. CIT (A). We find no merit in the case of the AO for making an ad hoc disallowance @ 20%. The AO has not even highlighted or pointed out any deficiency in the details submitted by the assessee. Considering this, we find no reason to interfere in the conclusions recorded by the Ld. CIT (A). Grounds 1 2 are hence dismissed. Disallowance of interest expenses - expense on loan taken from its 100% Holding Company - CIT-A deleted the addition - HELD THAT:- We find no merit in the observations of the AO that the assessee has not carried out its business of real estate and infrastructure development during the year under consideration. - DR has not been able to demolish the facts recorded by Ld. CIT (A) wherein it is noted that during the year under consideration, the assessee had made various efforts to enter into business activities. It had undertaken more than 9 projects and also carried inventory of 53.87 crores of traded goods in the form of apartments which was ready for sale and which were also sold subsequently in the future years. The assessee had also participated in joint venture projects outside India. These activities of the assessee were in consonance with its Memorandum of Association. During the year under consideration, the assessee had made fresh borrowings from its holding company. The assessee had submitted details of utilization of this sum which is on record and noted by the Ld CIT (A) - Once these details are perused, the obvious conclusion is that there is a clear connection between the money borrowed and its utilization for purposes of business of real estate and infrastructural development carried on by the assessee. We, therefore, find no merit in the disallowance made by the AO and the impugned order is therefore upheld. Ground No.3 is, therefore, dismissed. 2021 (7) TMI 49 Bogus LTCG - Addition u/s 68 - exemption u/s 10(38) denied - denial of LTCG computed on sale of shares, treating the same as penny stocks - HELD THAT:- Similar issue came up before the coordinate bench of this Tribunal (wherein both the Members are party) in the case of shri Tarun Kumar Goel and Shri Arun Kumar Goel [ 2021 (4) TMI 1014 - ITAT HYDERABAD] wherein the issue has been decided in favour of the assessee. Further, the Hon ble Delhi High Court has decided similar issue in favour of the assessee in the case of Pr. CIT Vs. Smt. Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] wherein held the lower tax authorities are not able to sustain the addition without any cogent material on record - we direct the AO to allow the assessee s claim of exemption u/s 10(38) - Decided in favour of assessee. 2021 (7) TMI 47 Disallowance of Short Term Capital loss incurred on trading of shares - as argued appellant deals in shares and loss incurred on the shares of other companies have been allowed - HELD THAT:- The evidence produced before the Revenue by the appellant in the instant case supports the genuinity of the transaction. No direct material was found and/or relied upon to controvert such evidence filed by the appellant in support of the genuineness of the transactions; the overwhelming evidence filed by the appellant remains and/or uncontroverted. In fact, the Revenue has failed to bring on record any evidence to suggest that the sale of shares by the assessee were not genuine. Conclusion drawn by the Revenue authorities on the basis of the common report of Director of Investigation Calcutta which is general in nature and not specific to any assessee so far as, the assessee is concerned. Furthermore, when the assessee was not confronted with any statement and/or material alleged to be the basis of the report of the Investigation Wing of the Department on which the conclusion drawn by the Revenue on human probabilities surmise and conjectures is not sustainable in the eye of law and, therefore, the rejection of the claim of short term capital loss made by the assessee is liable to be quashed. - Decided in favour of assessee. 2021 (7) TMI 46 Income accruing or arising in India u/s 9(1)(i) - amount received by the assessee from Tata Communications Ltd. ( TCL ) as Standby Maintenance Charges - CIT(A) concluded that the entire amount of turnover (receipts) of Standby Maintenance Charges received by the assessee from TCL was to be treated as its turnover for the purpose of taxation in India - whether the CIT(A) had rightly observed that the Standby Maintenance Charges received by the assessee from TCL was not liable to be taxed as FTS and was to be brought to tax as its business income ? - HELD THAT:- As decided in own case [ 2019 (3) TMI 1893 - ITAT MUMBAI] we find that after exhaustive deliberations the Tribunal had concluded that the Standby Maintenance Charges received by the assessee from TCL could not be assessed as FTS and was its business income that was taxable only to the extent of its reference to the business connection in India Amounts received by the assessee towards Standby Maintenance Charges from TCL were not in the nature of FTS u/s 9(1)(vii) of the Act, and was to be assessed as its business income, and that too only to the extent of its reference to the business connection in India. At the same time, not finding favour with the view taken by the CIT(A) that the entire turnover (receipts from the Indian parties) of Standby Maintenance Charges was liable to be treated as turnover for the purpose of taxation in India, we vacate the same. - Decided in favour of assessee. 2021 (7) TMI 45 Reopening of assessment u/s 147 - Income from undisclosed sources - no explanation to source of cash deposit and the source of property purchased - HELD THAT:- The only person from whom the Assessing Officer could have made enquiry was the assessee herself and the Assessing Officer can make enquiry from the assessee by issuing notice and asking her to explain the source and this is what the Assessing Officer has done. The Assessing Officer has not made additions solely by issuing notice u/s. 148 of the Act, but after giving several opportunities to the assessee to explain the source of her investment. We are of the considered view that there is no error or infirmity in issuing notice u/s. 148 of the Act and initiating reassessment proceedings. We, accordingly, confirm the findings of the ld. CIT(A). To this extent, reopening of the assessment is upheld. Merits of the addition, though the first appellate authority has accepted the additional evidences u/r. 46A of the Rules, but has not examined the explanation of the assessee that the source of cash deposits are duly reflected in her books of account regularly maintained by her. We are of the considered opinion that since the assessee has sought to explain the source of cash deposit from her books of account, the entries need to be examined. Therefore, in the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. 2021 (7) TMI 44 TP Adjustment - improper working capital adjustment - HELD THAT:- Advances to suppliers and advances from customers are integral part of working capital adjustment in the same way in which there are trade receivables and trade creditors. Such advances, ergo, cannot be excluded in computing the working capital adjustment. Reference to trade receivables and trade payables in the example given in Annexure to Chapter III of the OECD transfer pricing Guidelines, 2010 should be construed as including advances to suppliers and advances from customers. It is only for simplification purpose that the example refers to trade receivables and trade payables to the exclusion of advances to suppliers and advances from customers. We, therefore, amplify the direction of the ld. CIT(A) to the AO/TPO for adopting the method of working capital adjustment as provided in the example given in Chapter III of the OECD Guidelines by also considering Advances to suppliers and Advances from customers, in the same way as Trade receivables and Trade payables. The figures of Advances to suppliers and Advances from customers, as given by the assessee for the first time before the ld. CIT(A) pertaining to self and the comparables, have not been verified by any authority. These need to be examined and evaluated by observing that only advances to or from customers/suppliers should be included in the computation of working capital of the assessee as well as the qualifying comparables - no advance or outstanding other than relating to purchase or sale of goods should find its place in the computation of working capital. Filter of Manufacturing sales more than 75% of total sales - Exclusion of Fives Cail KCP Ltd. on improper application of one of the accepted filters - The filter under consideration - 'Manufacturing sales not less than 75% of the total sales' - applies at the first level of company selection so that only the companies engaged mainly in manufacturing activity get selected at the entry level. It has no application at the second level of transaction level comparison. If a company has passed the filter and entered the first level, it will have to pass the transaction level comparison also so as to get eligible for inclusion in the final list of comparables. In order to become comparable to an international transaction of Manufacturing, a company will get included only if it is either exclusively in Manufacturing or if it is not so exclusively in manufacturing (having 75% or more as manufacturing), but its segmental information of the Manufacturing is separately available. Adverting to the facts of the extant case, we find that Fives Cail KCP Ltd. passes the filter of Manufacturing sales not less than 75% of the total sales and ex consequenti the company level test is through, but it fails the transaction level test inasmuch as it is albeit largely a manufacturing company but also has service income of 17% of its total revenue and admittedly no segmental information for the Manufacturing activity is available. So, this company having manufacturing activity at 83% cannot be considered as comparable to the international transaction under consideration of 100% Manufacturing activity. We, therefore accord our imprimatur to the exclusion of this company from the list of comparable. 2021 (7) TMI 43 Levy of penalty u/s. 271(1)(c) - addition of notional interest in HDFC Bank account - HELD THAT:- Since the addition has been deleted, the penalty so levied must also be deleted. Sublato Fundamento Cadit Opus, meaning thereby, that in case the foundation is removed, the super structure falls. Since the foundation [addition] has been removed, the super structure i.e. penalty must fall. We, accordingly, direct the ld. CIT(A) to delete the penalty so levied. 2021 (7) TMI 42 Reopening of assessment u/s 147 - as per AO assessee has purchased insurance policy and surrendered the policy within 03 years but in the body of the assessment order, the A.O. has not made any such addition on account of the surrendered insurance policy - HELD THAT:- It is an admitted fact that the A.O. has not made any addition on account of the reasons for which the case of the assessee was reopened but has made certain other additions. We find the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd.,[ 2011 (6) TMI 4 - DELHI HIGH COURT] has held that the A.O. had jurisdiction to re-assess the issues other than the issues in respect of which proceedings are initiated, but, he was not so justified when the reasons for the initiation of those proceedings ceased to survive. Since, in the instant case, admittedly no addition has been made on account of the issue for which the case of the assessee was reopened but addition has been made on some other ground without issuing fresh notice under section 148 after recording reasons under section 147 for escapement of income, therefore, the addition made by the A.O does not survive being not in accordance with Law. The Order of the Ld. CIT(A) is accordingly set aside, and the A.O. is directed to delete the addition - Decided in favour of assessee. 2021 (7) TMI 41 Rectification u/s 154 - mistake which has crept in the order framed under section 143(3) read with section 147 - HELD THAT:- CIT(A) has quashed the rectification order dated 6.4.2016 passed under section 154 of the Act by the AO on the ground that on the date of rectification the appeal of the assessee filed against the order of the AO u/s 143(3) r.w.s. 147 of the Act was pending wherein the addition of bogus purchases was challenged. Therefore the AO has exceeded his jurisdiction u/s 154 . CIT(A) quashed this order by holding that the AO has no power to rectify the order which is sub-judice before the Ld. CIT(A). Therefore, we do not find any infirmity in the order of Ld. CIT(A) as the order passed under section 154 of the Act is without valid jurisdiction and AO has obviously exceeded the jurisdiction. Accordingly, ground No.2 raised by the Revenue is dismissed. 2021 (7) TMI 40 Income from house property - disallowance on account of annual letting value of unsold flats which was lying in closing stock under the head income from house property - HELD THAT:- Since the assessee company‟s main object, is to acquire and held properties and to let out these properties, the income earned by letting out these properties is main objective of the company, therefore, rent received from the letting out of the properties is assessable as income from business. On the very same analogy in the instant case, assessee is engaged in business of construction and development, which is main object of the assessee company. The three flats which could not be sold at the end of the year was shown as stockin-trade. Estimating rental income by the AO for these three flats as income from house property was not justified insofar as these flats were neither given on rent nor the assessee has intention to earn rent by letting out the flats. The flats not sold was its stock-in-trade and income arising on its sale is liable to be taxed as business income. Accordingly, we do not find any justification in the order of AO for estimating rental income from these vacant flats u/s.23 which is assessee‟s stock in trade as at the end of the year. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23 Thus as relying on assessee's own case above [ 2019 (3) TMI 1892 - ITAT MUMBAI] delete addition raised by AO on account of notional income of the vacant flats. Accordingly, these issues are decided in favour of the assessee against the revenue. 2021 (7) TMI 39 Treatment of royalty payment as capital expenditure - disallowance made on license fee by holding it to be capital expenditure - HELD THAT:- Before us, Revenue has not placed any material on record to demonstrate that the orders of Tribunal in assessee's own case in earlier years in A.Y. 2001-02 2002-03 has been set aside/overruled or stayed by higher judicial forum. In such a situation, we are of the view that the AO was not justified in disallowing the payment of license fees on ad hoc basis by holding it to be capital expenditure. We therefore direct the deletion of the addition made by AO. Thus the ground No. 1 of the assessee are allowed. Disallowance u/s. 14A r.w.r.8D - HELD THAT:- It is an undisputed fact that year under consideration is 2006-07 and the AO has proceeded to disallow the expenses by following the methodology prescribed under Rule 8D of the I.T. Rules. We find that provision of Rule 8D for invoking the disallowance under Rule 14A could not be applied to the year under consideration in view of the decision in the case of Godrej Boyce Mfg Co. Ltd.[ 2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein has held that since Rule 8D were notified on 24th March 2008, it would apply from A.Y. 2008-09. Following the aforesaid decision of Hon'ble Bombay High Court, we are of the view that no addition is called for in the present case. We therefore set aside the addition made by the AO thus the ground of the assessee is allowed. Disallowance of transportation is made for the reason that the transpiration was for the transportation of machinery and therefore required capitalization - HELD THAT:- We find that the disallowance has been made by AO on ad hoc basis without bringing any material on record to support his views. In such a situation, we are of the view that the addition made by AO was not justified. We therefore direct its deletion. Thus the ground of assessee is allowed. Depreciation of printers @ 60% - depreciation on computer accessories and peripherals - HELD THAT:- It is the claim of assessee that it being an integral part of computer system, depreciation @60% is allowable. On the other hand, it is the case of Revenue that it is eligible for depreciation @ 15% being the rate applicable to general plant and machinery. In the case of CIT vs. BSES Yamuna Powers Ltd.[ 2010 (8) TMI 58 - DELHI HIGH COURT] has held that computer accessories and peripherals such as printers, scanners and servers form an integral part of the computer system and they cannot be used without the computer and therefore they are part of computer system and therefore eligible for depreciation @ 60%. Revenue has not placed any contrary binding decision in its support. We therefore following the aforesaid decision rendered by Hon'ble Delhi High Court in the case of BSES Yamuna (supra) hold that AO was not justified in restricting the depreciation @ 15%. We therefore set aside the order of AO on this issue. Thus the ground of assessee is allowed. 2021 (7) TMI 37 Depreciation on crawler cranes/trailers - Whether the crawler cranes/trailers are in the nature of Plant Machinery and thus eligible for depreciation @15% and not eligible for higher depreciation of 30%? - HELD THAT:- Coordinate bench decided the issue in favour of the assessee by approving the classification of the assets under the head Motor Vehicle in [ 2017 (12) TMI 644 - ITAT MUMBAI] As relying on respecctive own cases [ 2019 (12) TMI 1508 - ITAT MUMBAI] , [ 2019 (7) TMI 1835 - ITAT MUMBAI] and [ 2019 (12) TMI 1507 - ITAT MUMBAI] we do not find any merit in action of lower authorities for declining higher claim of depreciation at 30% on Crawler Cranes and Dozers. Appeal of the Revenue is dismissed. 2021 (7) TMI 36 TP Adjustment - multiple year data used - HELD THAT:- We direct the ld. TPO to verify the PLI of comparables and assessee by using the current year's data and then work out the ALP of the international transaction. Accordingly, ground No. 3.2 of appeal of the assessee is allowed with above direction. Grant capacity realization adjustment carried out by the assessee with respect to the personnel cost being the first year of operation - Assessee submitted that it has not claimed any ad-hoc adjustment of 37% as claimed by the ld. DRP, but has explained the basis of computation of each of the specific adjustment made with respect to import duty, personnel cost, and depreciation demonstrated - HELD THAT:- Capacity utilization adjustment carried out by the assessee in respect of personnel cost being the first year of operation has not been granted by the lower authorities, we hold that as assessee has submitted complete details of the employees stating their name, designation, experience, educational qualification, role and responsibility and the amount of salary paid, more particularly when there is a disproportionate difference between the salary expenditure incurred by the comparable companies with the salary expenditure of the assessee and there are seconded employees who are necessarily deputed to the assessee for the purpose of development of the business, the claim the assessee needs to be re-examined with the details furnished. This is more so when learned dispute resolution panel accepted that there is a higher depreciation claim in the case of assessee compared to the comparable companies - we set aside ground back to the file of the learned transfer pricing officer with a direction to examine the claim of the assessee that those expenditure on salary of the employees who are working for the development of the business and not for earning the operating profit for the year requires proper adjustment. Import duty adjustment carried out by the assessee on account of huge difference in import duty cost of the assessee as well as of the comparable should also be eliminated from the operating expenses of the assessee - We hold that as necessary consumption of the material is only booked in the profit and loss account for which the materials are imported for onward sale/manufacturing whose revenue has been booked in the profit and loss account, the above adjustment cannot be granted. This is so for the reason that the duty structure of the material imported by the assessee and the sale price of the assessee takes into consideration all these commercial aspects of the trading or operation of the business of the assessee. Naturally, if the import duty factor (rate) is higher when raw materials imported by the assessee naturally the sale price will reflect the recovery of those import duty also from the buyers. Adjustment on account of transfer pricing if any be made only proportionate to the value of control transactions in case of the assessee - HELD THAT:- Issue decided in favour of the assessee that transfer pricing adjustment if any should be made only proportionate to the value of controlled transaction in case of the assessee. In view of the identical issue decided in favour of the assessee in assessee's own case for earlier years, we direct the learned assessing officer accordingly. We allow ground number 4 of the appeal Disallowance of provision for doubtful debts u/s. 37 - claim of the assessee is that the above sum is a bad debt only and not provision for doubtful debts - HELD THAT:- We find that assessee did raise such an objection before the learned dispute resolution panel however; same was not at all dealt with in its direction. In view of this, we set-aside this issue back to the file of the learned assessing officer with a direction to the assessee to furnish the requisite information, the learned assessing officer after considering the claim of the assessee may decide the same in passing the fresh draft assessment order which would once again go before the learned dispute resolution panel. 2021 (7) TMI 35 Reopening of assessment u/s 147 - Estimation of net profit - addition by applying estimated not profit at the rate of 0.20% on the turnover - HELD THAT:- CIT-A has held that the entries appearing in his bank account were related to diamond business carried on by him on commission basis and has estimated the commission @ 0.20% on total turnover taking into account statement of assessee u/s 131 recorded during the remand proceedings before the AO admitting receipt of commission in range of 0.15% to 0.20% and comparative third party cases engaged in similar line of business as referred by the assessee himself during the appellate proceedings. Accordingly, addition of ₹ 10,72,934 was confirmed and remaining addition of ₹ 4,78,35,186/- was deleted. We therefore don t see any infirmity or perversity in the said findings of the ld. CIT(A) who has taken into consideration the entirety of facts and circumstances of the case including the additional evidence, statement of the assessee u/s 131, besides the submissions made by the assessee during the appellate proceedings. Further, the ld CIT(A) has rightly upheld the reopening of assessment u/s 147 and passing of assessment order u/s 144 of the Act. - Decided against assessee. Corporate Laws 2021 (7) TMI 38 Approval of scheme of Merger - seeking holding and dispensing with various meetings - Section 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- The meetings of Equity shareholders of all the Applicant Companies is hereby dispensed with in view of the consent by way of Affidavits received from all Equity shareholders - Since the Applicant Companies have no Secured Creditors, the meetings of Secured Creditors of any of the Applicant Companies are not required to be convened hence dispensed with - Since the Applicant Company No. 4 6 have no Unsecured Creditors, the meetings of Unsecured Creditors of the Applicant Company No. 4 6 are not required to be convened hence dispensed with - The meetings of Unsecured Creditors of Applicant No. 1, Applicant No. 2, Applicant No. 3, Applicant No. 5, Applicant No. 7, Applicant No. 8, Applicant No. 9, Applicant No. 10 and Applicant Transferee Company is hereby dispensed with in view of the consent by way of Affidavits received from all Unsecured Creditors of the above mentioned applicant companies. Various directions regarding issuance of various notices also provided. Application allowed. 2021 (7) TMI 34 Scheme of Arrangement - seeking for dispensation of the meeting of the Equity Shareholders Unsecured Creditors of Applicant Companies - Sections 230 232 of the Companies Act, 2013, R/w Companies (Compromises, Arrangements and Amalgamations) Rules, 2013 - HELD THAT:- The parties have consented for the Scheme and also for dispensation of their meetings for consideration of the Scheme by the Tribunal. The Statutory Auditors/Chartered Accountants of the Demerged and Resulting Companies have issued Certificates by inter alia certifying the details with regard to Equity Shareholder, Unsecured Creditors/Secured Creditors, and compliance of accounting treatment as prescribed U/s. 133 of the Companies Act, 2013 with reference to the Scheme in question. The Companies have disclosed material information with regard to the Scheme in question. In the normal circumstances, it is the prerogative of concerned Companies to take decisions dictated by commercial expediency and evolve Scheme in their mutual business interest, and the Tribunal is only empowered to examine the Scheme broadly, so as to ensure that the Scheme is prepared in accordance with the provisions law and the interest of all the stakeholders of Companies involved, are taken care of by affording due notice of Scheme, etc. - the case is made out by the Applicants for grant of relief as sought for, by dispensing with meetings of the Equity Shareholders and Unsecured Creditors of all the Applicant Companies. Convening and holding of the meetings of the Equity Shareholders of Demerged and Resulting Companies are hereby dispensed with - Convening and holding of the meetings of the Unsecured Creditors of the Applicant Companies are hereby dispensed with - Application allowed. 2021 (7) TMI 33 Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013, read with Companies (Compromises, Arrangements And Amalgamation) Rules, 2016 - HELD THAT:- From a perusal of the material brought on record, it appears that the Scheme of Amalgamation is fair, reasonable and is not detrimental to the Members or Creditors or contrary to public policy. Further, as per the Petition, the Scheme in question will bring consolidation and synergies in business operations; enhance of the scale of operations and reduce overheads, operational, administrative, managerial and other expenditure, will lead to operational rationalization, organizational efficiency and optimal utilization of various resources, etc. On a consideration of the facts of the case, which are not being elaborated here to avoid duplication and repetition, the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of Transferor Company, is hereby sanctioned. Application allowed. Insolvency & Bankruptcy 2021 (7) TMI 60 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - intent of Resolution of Insolvency - malicious intent, or malafides? - Is Application filed collusively - correctness of rejection of application relying on Section 65 of the Code - Doctrine of Corporate Veil - HELD THAT:- The Learned Counsel for the Appellant submits that the Adjudicating Authority had no discretion except to admit the Application filed under Section 7 of the Code. It is emphasised that Section 7 (5) of the Code leaves no discretion to the Court where other ingredients of Section 7 are fulfilled. Section 7 (5) of the Code provides that where the Adjudicating Authority is satisfied that in default has occurred and the Application under Sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed Resolution Professional, it may, by order, admit such Application. Discretion of Adjudicating Authority in relying on section 65 of IBC - HELD THAT:- The use of the phrase 'it may' under Sub-section (5) of section 7 itself leaves the scope of discretion exercised by the Adjudicating Authority in admitting or rejecting the Application. Section 7 (5) (a) lays down parameters about general conditions to admit an Application. However, in the given situation where it appears that Application is filed collusively not with the purpose of Insolvency Resolution but otherwise, then despite fulfilling all the conditions of Section 7(5) of the Code, the Adjudicating Authority can exercise its discretion in rejecting the Application relying on Section 65 of the Code. Based on the law laid down by Hon'ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ], it is clear that even if the Application filed under Section 7 meets all the requirements, then also the Adjudicating Authority has exercise discretion carefully to prevent and protect the Corporate Debtor from being dragged into the Corporate Insolvency Resolution Process mala fide. Thus, the Code prescribes penalties under Section 65 and 75. Furthermore, Section 65 explicitly says that if any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for resolution of Insolvency or liquidation, as the case may, the Adjudicating Authority may impose a penalty - it is clear that the Adjudicating Authority should be very cautious in admitting the Application so that Corporate Debtor cannot be dragged into Corporate Insolvency Resolution Process with mala fide for any purpose other than the resolution of the Insolvency. Therefore, to protect the Corporate Debtor from the mala fide Initiation of CIRP, the law has provided a penalty under sections 65 and 75 of the Code. Before admitting the Application, every precaution is necessary to be exercised so that the insolvency process is not misused for any other purposes other than the resolution of Insolvency. Doctrine of Corporate Veil - HELD THAT:- The doctrine of piercing the corporate veil stands as an exception to the principle that the Company is a legal entity separate and distinct from a shareholder with its own legal rights and obligations. It seems to disregard the separate personality of Company and attribute the acts of the Company to those who are allegedly in direct control of its operation - The concept of the corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned. Even if the petition complies with all requirements of Section 7 of the Insolvency and Bankruptcy Code, 2016, it is filed collusively, not with the intention of Resolution of Insolvency but otherwise. Therefore, it is not mandatory to admit the Application to save the Corporate Debtor from being dragged into Corporate Insolvency Resolution Process with mala fide - thus, the Adjudicating Authority decided that the petition is filed in collusion with the Corporate Debtor and thereby rejected the Petition filed U/S 7 of the Code. Appeal dismissed. 2021 (7) TMI 59 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - applicability or nonapplicability of Section 18 of the Limitation Act, 1963 - Corporate Debtor put up a defence that under Section 238A of the I B Code read with Article 137 of the Limitation Act, 1963, the period of limitation was three years and the account having been declared NPA on 15th March, 2016, the Application filed in 2019 was time barred - HELD THAT:- The question with regard to applicability or nonapplicability of Section 18 of the Limitation Act, 1963 is now settled by the Hon ble Supreme Court in recent judgments such as in the matter of SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. [ 2021 (3) TMI 1183 - SUPREME COURT ] and then in Judgement in the matter of LAXMI PAT SURANA VERSUS UNION BANK OF INDIA ANR. [ 2021 (3) TMI 1179 - SUPREME COURT ] and in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL ANR. [ 2021 (4) TMI 753 - SUPREME COURT ]. The Hon ble Supreme Court has dealt with its earlier judgments, and now it is quite clear that Sections 18 19 of the Limitation Act, 1963 and the other provisions of the Limitation Act, as far as may be apply to the proceedings under the I B Code - Thus, Section 18 of the Limitation Act, 1963 applies. The reply filed by the Corporate Debtor which was filed before the Adjudicating Authority clearly shows that the Corporate Debtor had specifically raised issue with regard to limitation and made reference to Section 348A as well as judgments on which the Appellant wants to rely and the issues were specifically raised and the Adjudicating Authority in impugned order considered the issue with regard to limitation and recorded finding as in para 8. Thus, it is not the case where foundation has not been laid. There were pleadings before the Adjudicating Authority. The format has been prescribed by the statute and the Bank had clearly while filing details pointed out even the acknowledgment and had attached the documents. When all this is there, there is no substance in the arguments raised before us that the matter should be remanded back to the NCLT and there should be amendment of pleadings. The pleadings are already there. The issues were dealt with and have been decided. Term loan granted on 17th March, 2011 and other financial services were referred to the Corporate Debtor as per other agreements referred - When the account become NPA on 15th March, 2016 and there was default, the Corporate Debtor acknowledged liability on 10th July, 2018 as per the document at page 309 and thus, the application filed in 2019 could not be said to be time barred. Appeal dismissed - decided against appellant. 2021 (7) TMI 55 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service of notice - existence of debt and dispute or not - HELD THAT:- The case was listed for admission on various dates viz., 19.06.2020, 06.07.2020, 14.08.2020, 02.09.2020, 25.09.2021, 18.01.2021, 28.01.2021, 03.02.2021 and on 04.03.2021. Accordingly, the Adjudicating Authority ordered notice on 19.06.2020 and re-issued notice on 14.08.2020. Further, the Petitioner has served the notice on the Respondent and filed the proof of service. Even then none appeared for the Respondent and no reply has been filed. Further, I.A. No. 28 of 2021 was filed to carry out substituted service of notice on the Corporate Debtor through Paper Publication of the notice in the 'Hindu' and 'Udayavani' newspapers. This IA was disposed of by observing that the service on the Respondent is deemed to have been validly effected, and no further notice is required to be given. The Registry was directed to post the CP for admission. However, on that date also none appeared nor any objections were filed to oppose the claim of the Petitioner. The Respondent Corporate Debtor is deliberately not entering appearance and has no defense to offer on the case made out by the Petitioner in the instant Petition. The debt and default as mentioned in the Petition remain undisputed - The instant Petition is filed in accordance with the extant provisions of the Code and the Rules made thereunder. Petition admitted - moratorium declared. 2021 (7) TMI 51 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Non-Performing Assets and time limitation - Financial Creditors or not - existence of debt and dispute or not - Principles of natural justice - HELD THAT:- It appears that United Bank of India treated Loan Account of the Corporate Debtor as NPA on 31st March, 2018 and the Punjab National Bank treated the Loan Account of the Corporate Debtor as NPA on 6th April, 2019. There are various documents which are in the nature of acknowledgment of the debt outstanding. The Adjudicating Authority has already mentioned that the debt due and outstanding is above ₹ 1/- Lakh. The Appellant is making contradictory submissions claiming that the account of Corporate Debtor stood defaulted with effect from 30th June, 2016 and also claims that there was no debt due and no default. It is clear that in Application under Section 7 of I B Code what Adjudicating Authority has to consider is as observed above and defence available to Corporate Debtor is to show that default has not occurred in the sense that debt is not due. Debt may not be due if it is not payable in law (like a debt may be time barred, for example) as it is not due in fact. Even if debt is disputed, so long as it is due from Corporate Debtor and payable, the application must be admitted. The Adjudicating Authority is required to pass orders regarding to admission or otherwise of the application filed under Section 7 of the I B Code within 14 days. It appears that the Adjudicating Authority did not deny principles of natural justice. Many opportunities were given but the Appellant chose not to take benefit of the same and relied on technicalities. When the Adjudicating Authority was considering application under Section 7 of I B Code, the Appellant appears to have failed to show that the debt was not due or that the debt was not in default. When the debt due was more than ₹ 1/- Lakh and there was default, the Adjudicating Authority was bound to admit the application - there is no substance in the claim made in the appeal that the Banks could have relied on when the account of Corporate Debtor was treated as NPA and the period of limitation should be calculated from a different date, as the accounts were in default since beginning. There is no substance in claim of the Appellant in M/s Megha Granules Pvt. Ltd. vs. Punjab National Bank that order to vacate stay dated 7th January, 2019 was obtained by Respondent No. 2 United Bank of India and so benefit cannot be taken by Respondent No. 1 Punjab National Bank. The order was not vacated specific to United Bank of India - appeal dismissed. Service Tax 2021 (7) TMI 68 Validity of SCN - Levy of penalty - Extended Period of limitation - service tax collected but not paid - entire service tax along with interest was paid before issue of SCN - Penalty u/s 76, 77 and 78 - proviso to section 73(1) of Finance Act - HELD THAT:-The tribunal has affirmed the order passed by the Commissioner of Central Excise (Appeals) by a cryptic order, which reads as under: The impugned order passed by the Commissioner is justified because in this case the appellant has collected the service tax but did not deposit the same in the Govt Treasury which itself shows that there was malafide intention to evade payment of service tax. The appellant was registered with the Service Tax Department and was very well aware of their liability to pay service tax to the Govt. The appellant has not been able to give any reasonable explanation as to why the service tax was not deposited in the Govt. Treasury. It is evident that neither Commissioner of Central Excise (Appeals) nor the tribunal have considered the submissions made on behalf of the appellant and by a cryptic and cavalier manner have decided the appeals - the impugned orders passed by Assistant Commissioner, Commissioner of Central Excise (Appeals) and the tribunal therefore, cannot be sustained in the eye of law - the matter is remitted to the Assistant Commissioner to afford an opportunity of hearing to the appellant and to adjudicate the issue with regard to issue of penalty afresh. Appeal allowed by way of remand. Central Excise 2021 (7) TMI 48 Refund claim of amount deposited during investigation - the appropriation order earlier passed, was set aside - relevant time for refund - what should be the relevant date from which the period of one year is to recon for the impugned refund? - HELD THAT:- Relevant provisions of refund is section 11B of Central Excise Act. Second proviso of (2) to section 11B specifically provide that limitation shall not apply where no duty has been paid under protest - Hon ble Supreme Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] has clarified that when the duty is paid under the order of Court, pending the appeal / reference/ writ petition, it will certainly be payment under protest - In such a case, it is obvious, it would not be necessary to lodge the protest as is otherwise provided under the Rules. Since the appellant has challenged the amount which got deposited by him during investigation, the protest is very much lodged on his part not as a party to such decision, the plea of limitation should not debar his claim. Section 11B of CEA makes it abundantly clear that it is the date of judgement as consequence whereof the amount became refundable. No doubt, the CESTAT s Final order in RAY BAN SUN OPTICS INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2012 (12) TMI 260 - CESTAT, NEW DELHI ], which the amount/duty paid by the appellant was made refundable but the Department opted for continuation of the said litigation by filing an appeal before the High Court. Once that option got exercised, the final judgement about entitlement of appellant to have the refund of said amount/duty paid, is the judgement announced by High Court in the said appeal. Since the said appeal of the Department was dismissed by Hon ble High Court on 21.04.2017 [ 2017 (4) TMI 1154 - ALLAHABAD HIGH COURT ] irrespective of technical ground, the fact remains that entitlement of the appellant to refund of duty paid got finalised only on 21.04.2017 hence the relevant date under section 11B(ec) is none but 21.04.2017. Refund claim is filed on 19.02.2018 which, therefore, is very much within one year thereof, hence, wrongly been held to be barred by time. Appeal allowed - decided in favor of appellant. Wealth tax 2021 (7) TMI 50 Wealth tax assessment - AO treated the lands situated at Dundigal, Bowrampet and Ravada villages as urban lands chargeable to wealth tax - HELD THAT:- We are of the view that once the lands are declared by the govt in its records as agricultural lands, the CWT(A) finding that the assessee failed to produce any evidence that the same are put to use for agricultural purposes is contrary to the law. The assessee has received subsidy announced by the Andhra Govt, which was directly credited into his bank account. We, therefore, set aside the order of CIT(A) and direct the AO to treat the same as agricultural lands. Accordingly, the grounds Nos. 1 to 4 raised by the assessee on this issue are allowed. AO denied exemption u/s 2(ea)(i)(4) of the Act in respect of the residential flat at Banjara Hills - revenue authorities held that the property was let out for a period of two months during the previous year relevant to impugned AY, therefore, the assessee is not eligible to claim exemption u/s 2(ea)(i)(4) - As argued the said flat was purchased by the assessee during the month of September, 2006, the question of holding the property for more than 300 days does not arise and hence, the same should be considered as an exempted asset - We are of the view that since the assessee has purchased the property in the month of September, 2006, the question of holding the property for more than 300 days does not arise and, we direct the AO to consider the said property as exempted asset. Accordingly, the ground no. 5 raised by the assessee on this issue is allowed.
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