Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 31, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
CST, VAT & Sales Tax
Articles
News
Notifications
Companies Law
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G.S.R. 470(E) - dated
28-7-2020
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Co. Law
National Company Law Tribunal and National Company Law Appellate Tribunal (Procedure for investigation of misbehavior or incapacity of Chairperson, President and other Members) Rules, 2020.
Customs
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21/2020 - dated
29-7-2020
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ADD
Seeks to impose definitive Anti-Dumping Duty on import of “Digital Offset Printing Plates” originating in, or exported from People’s Republic of China, Japan, Korea RP, Taiwan and Vietnam
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20/2020 - dated
29-7-2020
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ADD
Seeks to impose provisional anti-dumping duty on imports of Aniline originating in or exported from China PR for a period of six months.
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02/2020 - dated
29-7-2020
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Safeguard
Seeks to continue the levy of Safeguard duty on imports of 'Solar Cells whether or not assembled in modules or panels' for a period of one year , in pursuance of final findings of review investigations issued by DGTR.
GST - States
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FTX.56/2017/Pt-II/556 - dated
22-5-2020
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Assam SGST
Seeks to prescribe the due date for furnishing FORM GSTR-1 for the quarters April, 2020 to June, 2020 and July, 2020 to September, 2020 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year.
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FTX.56//2017/Pt-II/555 - dated
22-5-2020
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Assam SGST
Seeks to specify class of persons, other than individuals who shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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FTX.56//2017/Pt-II/554 - dated
22-5-2020
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Assam SGST
Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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FTX.56//2017/Pt-II/553 - dated
22-5-2020
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Assam SGST
Seeks to specify the class of persons who shall be exempted from aadhar authentication.
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FTX.56//2017/Pt-II/542 - dated
22-5-2020
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Assam SGST
Seeks to provide special procedure for corporate debtors undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.
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FTX.56//2017/Pt-II/541 - dated
22-5-2020
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Assam SGST
Seeks to exempt foreign airlines from furnishing reconciliation Statement in FORM GSTR-9C.
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LG-01-15/2020/4040/LEG - dated
2-7-2020
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Bihar SGST
Bihar Goods and Services Tax (Second Amendment) Ordinance, 2020
Income Tax
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56/2020 - dated
29-7-2020
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IT
Seeks to amend Notification No. 35/2020, dated the 24th June, 2020
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Nature of expenditure - expenditure incurred in the renovation and redecoration of rooms in a hotel - It is only an application of legal principle to the given facts. Therefore, we hold that there is no justification in remanding the matter to the Tribunal or to any other Lower Authority. - the expenditure incurred by the assessee is a revenue expenditure and not a capital expenditure - HC
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Penalty u/s 271F - failure to furnish return of income (ITR) - the assessee’s total income without giving effect to the provision of section 54 come to ₹ 9,37,280/- which exceeds the maximum amount not chargeable to tax. The assessee was therefore required to furnish his return of income and in absence of any reasonable cause shown by the assessee for such failure to file his return of income, the penalty u/s 271F is hereby confirmed. - AT
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Condonation of delay of 349 days in filing the present appeal - when the ld. CIT(A) has decided the appeal of the assessee vide impugned ex-parte order, the delay in filing the appeal is due to mistake on the part of the assessee which cannot be regarded as a deliberate or willful default on the part of the assessee. It is settled proposition of law if the cause of delay as explained by the assessee is found to be factual correct then laps on the part of the assessee cannot be a ground for rejecting the condonation of delay. - AT
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Reassessment proceedings u/s 147/148 - Where the very basis for which reassessment proceedings were initiated doesn’t survive, there is no basis for making the impugned addition towards failure to substantiate the cost of construction so claimed by the assessee. - AT
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Revision u/s 263 - There was no enquiries raised by the AO about the mismatch in the amount of gross receipts shown by the assessee viz a viz reported in the form 26AS on which TDS was deducted. There was no verification carried out by the AO during the assessment proceedings with respect to the amount of gross receipt shown by the assessee viz a viz the gross receipt reported in the form 26AS - Revision upheld - AT
IBC
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Reconsideration of Resolution Plan - The Appellant cannot question the commercial wisdom of the CoC in rejecting the Resolution Plan, with the requisite majority and in approving the Resolution Plan of SPTL. No material irregularity in Corporate Insolvency Resolution Process before the R.P. has been demonstrated - the impugned order has been passed on proper Application of mind. - AT
VAT
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Jurisdiction - Withholding of refund - there is no order passed by the Commissioner recording his satisfaction and since there is no order of the Commissioner, there is no question of affording any opportunity. The Sales Tax Officer has no authority to withhold the amount under Section 39 of the VAT Act. - HC
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Reversal of Input Tax Credit - ection 19(20) which has been invoked to deny the benefit of ITC, has itself been inserted only with effect from 19.08.2010. - Thus the provision could not have been invoked in the present case, for the period, viz. 2008-09 - HC
Case Laws:
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GST
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2020 (7) TMI 696
Constitutional validity and legality of Section 17(5)(c) and Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 and the Delhi Goods and Services Tax Act, 2017 and the Circular No.28 dated 01st January, 2018 - denial of Input Tax Credit - Works Contract - HELD THAT:- Issue Notice. List on 15th September, 2020.
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2020 (7) TMI 695
Power to conduct search - reason to believe to conduct search, present or not - section 69 of GST Act - HELD THAT:- The assurance given by the learned counsel for the Revenue that no further recovery shall be effected till the demand is raised in accordance with law and that the matter is being kept for 05.08.2020 for further hearing, we direct that no coercive action shall be taken against the petitioner. The respondents shall remain bound by their statement made today till then. However, it is clarified that the grant of interim protection regarding coercive steps shall not debar the respondents from carrying on the investigation till the next date of hearing. List on 05.08.2020.
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Income Tax
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2020 (7) TMI 694
Withholding of Refund - as per respondents since huge outstanding demand has been pending against the petitioner, the AO has initiated proceedings u/s 241A against the petitioner to withheld the refund after following prescribed procedure laid down in the Act - As per HC respondents are directed to refund to the petitioner within two weeks from the date of uploading of this order without fail - HELD THAT:- SLP dismissed.
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2020 (7) TMI 693
Adjustment of resulting demand against the refunds arising to the petitioner pursuant to disposal of rectification applications - HELD THAT:- Issue notice. Mr.Deepak Anand, Advocate accepts notice on behalf of the respondents. Keeping in view the limited prayer sought in the present writ petition, this Court disposes of the same by directing respondent No.2 to dispose of the petitioner s aforesaid rectification application within six weeks by way of a reasoned order and to allow adjustment of resulting demand against refunds arising in previous and subsequent assessment years, if any, in accordance with law.
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2020 (7) TMI 692
Exemption u/s 54 - Whether date Viz., 27.02.2002 cannot be considered as the date of acquisition, while remitting the matter back to the Commissioner of Income-tax (Appeals) for fresh consideration? - HELD THAT:- Since the tribunal has remanded the matter for fresh consideration to the CIT(A), and in the meantime, the Hon'ble Supreme Court in Sanjeev Lal's case [2014 (7) TMI 99 - SUPREME COURT] has rendered a decision, it would be just and proper to permit the CIT(A) to take a decision on merits in its entirety instead of remanding the matter for a limited purpose. We do not propose to render any finding as regards the effect of decision in the case of Sanjeev Lal [cited supra] on the assessee's case and leave it to the decision of the CIT(A) to consider the same and take a decision, in accordance with law. Tax Case Appeal is allowed and the observations made by the tribunal that the date of acquisition cannot be taken as 27.02.2002, is set aside and the matter is remanded to the CIT(A), to take a fresh decision on merits and in accordance with law.
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2020 (7) TMI 691
Eligibility for deduction u/s.10AA - qualification as 'manufacture' - as per revenue assessee is not carrying on any manufacturing at its SEZ Unit - Tribunal allowed deduction - Whether the Tribunal was right in holding that the assessee is carrying on manufacturing activity even though a new product having a distinctive name, character or use was not brought into existence at its SEZ Unit by the assessee as per Special Economic Zone Act 2005? - HELD THAT:- Revenue carried the matter by way of appeal to the tribunal and the tribunal once again re-appreciated the factual position and found that there is a process of 'manufacture' as defined under the SEZ Act, which takes place in the SEZ unit and also pointed out that the AO himself has accepted that the assessee's unit, processed the raw materials by removing 10 to 20% impurities. Cost comparison of the semi finished product with that of the raw material was also referred to and it was also pointed out that the AO could not establish that the assessee has suppressed the purchase cost of semi-finished goods in order to claim higher deduction under Section 10AA of the Act. Certificate issued by the Assistant Development Officer was accepted on the ground that the revenue could not prove the same to be not genuine. Therefore, the tribunal sustained the factual finding recorded by the CIT(A). Entire factual matrix has not only been analyzed by the CIT(A), but, also by the tribunal. Therefore, we are convinced to observe that no question of Law much less any Substantial Question of Law arises for consideration in this appeal.
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2020 (7) TMI 690
Effect of application of Section 43CA of the Act and Section 56(2)(vii)(b) of the Income Tax Act, 1961 substituted by Finance Act, 2013 w.e.f 01.04.2014 - scope of total income be substituted by the Valuation assessed by any Authority of a State Government for the purpose of payment of stamp duty - discrimination in application of Section 43CA and Section 56(2)(vii)(b)(ii) of the Act as it is known fact that the levy of stamp duty is a state subject - valuation of the Stamp Valuation Authority - HELD THAT:- Learned counsel for the petitioner Mr. Deepak Kumar Sinha at the outset seeks permission to withdraw this writ petition in order to move before the appropriate Forum. Learned counsel for the Income Tax Department does not object to the prayer. Petition dismissed as withdrawn.
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2020 (7) TMI 689
Certificate u/s 197 - refusal to grant a certificate of deduction of tax at source at NIL rate, on payments to the petitioner company by its customers - petitioner prays to reconsider the petitioner s application and grant Certificate under Section 197 of the Income Tax Act, 1961 for deduction of tax at source at NIL rate - petitioner contends that the impugned order is contrary to the principle of rule of consistency as the 0.9% rate specified in the impugned order is higher than the 0.7% rate of tax deduction at source determined in the immediately preceding year - HELD THAT:- Ms. Lakshmi Gurung, learned counsel accepts notice on behalf of the respondent. She states that the respondent while issuing the impugned certificate has placed detailed reasons on record. Since detailed reasons are stated to be available on record, the present writ petition and the pending application are disposed of with a direction to the respondent to furnish a copy of the reasons to the petitioner within a week. In the event the petitioner is aggrieved by the said reasoned order, it shall be open to the petitioner to file appropriate proceedings in accordance with law.
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2020 (7) TMI 688
Nature of expenditure - expenditure incurred in the renovation and redecoration of rooms in a hotel - capital expenditure or revenue expenditure - appellant is engaged in the business of running a three star hotel - HELD THAT:- Revenue does not dispute the fact that the number of rooms in the assessee s hotel remained at 57 and that there was no increase in the number of rooms and only 18 rooms out of 57 rooms were renovated and repaired - assessee specifically contended that the renovation and repairs neither increases their capacity nor does it empower to revise the basic room tariff because it can be done only after considering further facts such as market condition remaining in Madurai City and with the concurrence of M/s.ITC Limited, as they only have a franchisee agreement with the assessee. Granite and marble used by them will not last long and there is no guarantee and they may develop cracks and lose their shine and even become obsolete in a couple of years. These facts were never disputed before the Assessing Officer or before the CIT(A). As rightly contended by assessee,Tribunal did not consider the issue, but was of the opinion that it was neither the case of the assessee nor that of the Revenue that the claim was for current repairs. Assessment is for the year 2012-13 and the facts are not in dispute. It is only an application of legal principle to the given facts. Therefore, we hold that there is no justification in remanding the matter to the Tribunal or to any other Lower Authority. We hold that the expenditure incurred by the assessee is a revenue expenditure and not a capital expenditure. - Decided in favour of assessee.
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2020 (7) TMI 687
Disallowance u/s 14A r.w.r. 8D - AO made the addition under Rule 8D(2)(iii) - total quantum of exempt income earned by the assessee was much higher than that of the disallowance made by the Ld. AO - HELD THAT:- We have carefully considered the judgment passed by the Hon ble Delhi Bench in the matter of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] as relied upon by the Ld. AR. However, we find that the ratio laid down in the said judgment has not been followed in its true spirit. As we find that while making addition of.5% of the average investment under Rule 8D(2)(iii) the Ld. AO considered the entire investment made by the assessee instead of only those investment which yielded exempt income during the year. Thus, having regard to the entire facts and circumstances of the case we dispose of the appeal by restoring the issue to the file of the Ld. AO for re-computing the disallowance under Section 14A of the Act on the basis of investment which yielded exempt income in the year under consideration as observed by us hereinabove. Assessee s appeal is thus allowed for statistical purpose. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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2020 (7) TMI 686
Exemption of capital gain u/s 54EC being investment made in National High way Authority of India (NHAI) bonds - AO disallowed the exemption as investment in Long Term Specified Asset should be made within six month from the date of transfer of asset - when the transaction of transfer of asset was completed and if the assessee invested the capital gain within six months from the date of transfer of capital asset? - CIT(A) affirmed the action of assessing by taking the view that the transfer deed of the asset is in Guajarati and not readable and thus assessee has not proved - HELD THAT:- In view of the provisions of Registration Act and TP Act, the transfer of immoveable property is complete only when the registration of sale is completed. Though, as per section 47 of Registration Act it may relate back from the date of execution of document. In the present case, initially the document was executed on 8.10.2012, though; it was ultimately registered on 16.01.2013. The date of registration is not disputed by lower authorities. The lower authority denied the claim of assessee on the ground that the document was initially executed on 8.10.2012. No investigation was conducted by the assessing officer to disbelieve the contention of the assessee that finally transaction of transfer of asset was completed only on 16.01.2013. There is no distinction between the transfer of title and the completion of sale; and the title passes only when the document is registered under the Registration Act. The mere fact that such transfer operates from the date of execution is not sufficient to conclude that the title itself passes on the date of execution. Consequently, the transfer in the instant case could not be deemed to have been expected on the date of execution of the document. As we have already held that the sale of the immovable property is complete only on registration of transfer deed as mandated under section 54 of the Transfer of Property Act. There is no dispute that the assessee has invested ₹ 25,00,000/- on 31.05.2013 and ₹ 25,00,000/- on 31.07.2013. Therefore, in view of the aforesaid discussion we are in agreement with the contention of the ld. AR for the assessee that the assessee invested the LTCG in NHAI bond within six month of transfer of asset and is eligible for exemption under section 54EC. - Decided in favour of assessee.
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2020 (7) TMI 685
Rejection of books of accounts - Trading addition - GP Estimation - HELD THAT:- Assessee has claimed shortage of 0.55% in Petrol during the year as against 0.60% in the past two years and similarly, the assessee has claimed 0.18% in Diesel during the year which is comparable to A.Y 2011-12 and better than 0.20% claimed in A.Y 2010-11. The same provides a more realistic and rationale basis as compared to monthly comparison and will factor-in the climatic and other factors prevailing throughout the year resulting in such shortages. Even where the Assessing officer intends carrying out monthly comparison, then the shortages claimed in the month of June 2011 should have been compared with shortages in the month of June 2010 and likewise, for other month which however, has not been done in the instant case. Comparative shortages for two months is not reflective of any inconsistent claim of such shortages for the whole year and it is even not the case of the Revenue that similar discrepancies are found in remaining months. Shortages so claimed by the assessee are lower than what has been claimed and allowed by the Revenue in past two years for which the requisite data is available on record and therefore, the same being found comparable cannot be form a rational basis for rejection of books of accounts so maintained by the assessee. Rejection of books of account is hereby set-aside and the consequent trading addition is hereby deleted. Disallowance of various expenses - CIT(A) has restricted such disallowances to 10% which is consistent with the disallowances made in the past years and which has been accepted by the assessee. In the result, we are not inclined to interfere with the findings of the ld CIT(A) and the same is hereby confirmed. Disallowance of salary expenses - claim of the assessee is that the same is fully verifiable for ESI, PF records and has been duly offered to tax, where applicable in their personal tax returns. The matter is accordingly remitted to the file of the Assessing officer to verify the same and where the same is found to be in order, allow the necessary relief to the assessee.
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2020 (7) TMI 684
Levy of penalty u/s 271(1)(b) - non-compliance to the notice issued u/s 142(1) - HELD THAT:- Assessee had already left the country way back in year 2010 and when the notice was issued in July 2017, there was no one available to receive the notice at the last known address, the very service of the notice issued u/s 142(1) is in doubt. CIT(A) has also recorded a similar finding and the AO in his remand report dated 14.06.2019 has also taken note of the fact that the assessee was out of India since 2010 as evidenced by the assessee s passport. In such peculiar facts and circumstances where the assessee was out of the country and he had no knowledge of the subject notice and there is nothing on record that the notice was duly served on the assessee, we find that the assessee s explanation that he could not have complied with the notice is found to be reasonable and the penalty so levied u/s 271(1)(b) - Appeal of the assessee is allowed.
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2020 (7) TMI 683
Deduction u/s 54 denial - AO disallowed the claim of the assessee on account of the fact that the fresh investment has been made in the name of the assessee s wife and secondly, the assessee has failed to substantiate the cost of construction - HELD THAT:- In the instant case, the assessee has sold a residential house on 29.11.2007 and the same is thus not under dispute. Secondly, the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India. In the instant case, the assessee has purchased a plot of land situated at Plot No. 184, Maruti Nagar, Airport Road, Sanganer, Jaipur on 5.11.2007 and thereafter, has carried out construction of a residential house thereon, which as per valuation report has been carried out during the year 2007-08. The Assessing officer has disallowed the claim of the assessee on account of the fact that the fresh investment has been made in the name of the assessee s wife and secondly, the assessee has failed to substantiate the cost of construction. As far as investment made in the name of the assessee s wife is concerned, we find that the issue is covered in favour of the assessee by decision of the Hon ble Rajasthan High Court in case of Shri Mahadev Balai vs ITO [ 2017 (1) TMI 183 - ITAT JAIPUR]. The ratio of the aforesaid decision though rendered in the context of section 54F of the Act, given the similarity of language employed, will equally apply in the instant case in context of section 54. Further, the decision of Hon ble Madras High Court in case of CIT vs. Natarajan [ 2006 (2) TMI 136 - MADRAS HIGH COURT] rendered in context of section 54 supports the case of the assessee. Therefore, mere fact that the investment has been made in the name of the wife cannot be a reason for disallowance of deduction under section 54. Regarding the cost of the construction, the same is supported by the valuation report where the valuer has determined the cost of construction at ₹ 250481/-. Assessee is eligible for claim of deduction under section 54 - Appeal of the assessee is allowed. Levy of penalty u/s 271(1)(c) - HELD THAT:- As directed to allow the claim of deduction u/s 54, the penalty u/s 271(1)(c) of the Act, being consequential in nature, is hereby directed to be deleted. Penalty u/s 271F - failure to furnish return of income (ITR) - HELD THAT:- In the instant case, the assessee s total income without giving effect to the provision of section 54 come to ₹ 9,37,280/- which exceeds the maximum amount not chargeable to tax. The assessee was therefore required to furnish his return of income and in absence of any reasonable cause shown by the assessee for such failure to file his return of income, the penalty u/s 271F is hereby confirmed. Appeal of the assessee is dismissed.
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2020 (7) TMI 682
Condonation of delay of 349 days in filing the present appeal - Penalty u/s 271(1)(c) - Non issue of notices at the new address of the assessee - appeal of the assessee was decided by impugned ex-parte order - notices issued by the ld. CIT(A) at the old address and the assessee has already sifted to the new address - HELD THAT:- It is clear that after the case was transferred to the jurisdiction of the CIT(A), Ajmer the assessee never appeared and attended the proceedings and consequently the appeal of the assessee was decided by impugned ex-parte order. The assessee has explained the reasons for delay in filing the appeal that the assessee has not received the impugned order and came to know about the same only when the order passed /s 271(1)(c) dated 12.03.2020 was served upon the assessee at the new address through the process server of the Department. There is no dispute about the fact that because of the failure on the part of the assessee to intimate the new address to the CIT(A) the notices issued by the CIT(A) as well as impugned order could not be received by the assessee. We find that explanation of non receipt of the impugned order by the assessee is factually correct however, the reason for such non receipt of the impugned order is the failure on the part of the assessee to give the fresh address to the ld. CIT(A). Therefore,when the ld. CIT(A) has decided the appeal of the assessee vide impugned ex-parte order, the delay in filing the appeal is due to mistake on the part of the assessee which cannot be regarded as a deliberate or willful default on the part of the assessee. It is settled proposition of law if the cause of delay as explained by the assessee is found to be factual correct then laps on the part of the assessee cannot be a ground for rejecting the condonation of delay. The cause of substantial justice has to be preferred then the technical consideration. Therefore, even if there is lapse or inaction on the part of the assessee a justice oriented liberal approach has to be taken while considering the condonation of delay. Accordingly, in the facts and circumstances of the case and in the interest of justice we condone the delay of 349 days subject to cost of 2500/-. When notices issued by the ld. CIT(A) at the old address and the assessee has already sifted to the new address then considering the facts and circumstance of the case as well as in the interest of justice we set aside the impugned order of the ld. CIT(A) and remit the matter to the record of the ld. CIT(A) for deciding the same afresh after giving one more opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2020 (7) TMI 681
Reassessment proceedings u/s 147/148 - notice issued in the name of husband of the assessee - HELD THAT:- A fatal mistake cannot be cured u/s 292B and therefore, for this reason alone, notice u/s 148 and subsequent proceedings should be quashed. Re-assessment proceedings were initiated to assess the escaped income of ₹ 2,89,000/- on account of unexplained investments. No addition has been made by the Assessing Officer towards any unexplained investment. Therefore, the very reason for which re-assessment proceedings were initiated were found satisfactorily explained and no addition has been made, than in such a scenario, any other addition made by the Assessing Officer by way of disallowance of the cost of construction cannot be sustained. Addition under the head income from the head capital gains whereby denied the deduction towards the cost of construction - HELD THAT:- We find that the valuer has stated the year of construction as 2008 and has applied the PWD rates for valuation of cost of construction as relevant for year 2008. Therefore, where there is no construction carried out during the financial year 2009-10 relevant to impugned assessment year, there is no question of any investment made in such property during the year and question of any unexplained investment made during the year under consideration, as so stated in the reasons so recorded, thus, doesn t arise for consideration. Where the very basis for which reassessment proceedings were initiated doesn t survive, there is no basis for making the impugned addition towards failure to substantiate the cost of construction so claimed by the assessee. We find that the cost of construction is supported by the Valuer report which has determined the cost of constriction applying the PWD rates at ₹ 713,150/- as against cost of construction claimed by the assessee amounting to ₹ 639,000/-. In the result, the addition made is hereby deleted and the matter is decided in favour of the assessee.
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2020 (7) TMI 680
Revision u/s 263 - difference in the amount of gross receipt was not verified by the AO during the assessment proceedings - assessee has shown less amount of gross receipts in comparison to the amount of gross receipt shown in the form 26AS - HELD THAT:- Queries were raised by the AO during the assessment proceedings about the mismatch of the TDS credit claimed by the assessee viz a viz the TDS credit reported in the form 26AS. Similarly, the query was raised regarding the contracts which were completed in the year under consideration. There was no enquiries raised by the AO about the mismatch in the amount of gross receipts shown by the assessee viz a viz reported in the form 26AS on which TDS was deducted. There was no verification carried out by the AO during the assessment proceedings with respect to the amount of gross receipt shown by the assessee viz a viz the gross receipt reported in the form 26AS. It is the settled law that the order of the AO can be held as erroneous insofar prejudicial to the interest of revenue if there was no enquiry conducted by the AO during the assessment proceedings. See MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2000 (2) TMI 10 - SUPREME COURT ] - Decided against assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]
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Insolvency & Bankruptcy
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2020 (7) TMI 679
Reconsideration of Resolution Plan - application of mind by Adjudicating Authority before approving or rejecting a Resolution Plan - irregularities committed by the Resolution Professional and the Committee of Creditors in applying the evaluation matrix under the guise of using the commercial wisdom to the Plan submitted by the Appellant and the successful Resolution Applicant - HELD THAT:- The commercial wisdom of the CoC is paramount, and it has the absolute prerogative to decide the viability and feasibility of the Resolution Plans presented before them and the same is not to be interfered even by the Adjudicating Authority. In the present case, the CoC after evaluating both the Resolution Plan being that of STPL and IMR based on pre-disclosed evaluation criteria approved the Resolution Plan of STPL by a voting share of 95.15% and the same is duly reflected in e-voting result of 31st CoC meeting held on 11th and 12th November 2019 - in the present case, the Resolution Professional received only one Resolution Plan of STPL within the stipulated timeline which was duly recorded in the minutes of 29th CoC meeting held on 30.10.2019. After that, on 07.11.2019, unsuccessful Resolution Applicant IMR approached the R.P. expressing its interest to submit a Resolution Plan, though the period of submission was already expired on 30.10.2019. The Appellant cannot question the commercial wisdom of the CoC in rejecting the Resolution Plan, with the requisite majority and in approving the Resolution Plan of SPTL. No material irregularity in Corporate Insolvency Resolution Process before the R.P. has been demonstrated - the impugned order has been passed on proper Application of mind. The Impugned Order regarding approval of Resolution Plan need not be interfered - appeal dismissed.
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2020 (7) TMI 678
Maintainability of application - initiation of CIRP - default in repayment of outstanding loan amount - scope of financial debt - conflict between the provisions of the IBC, 2016 and the Tea Act, 1953 - HELD THAT:-The term finance account has been defined as the account relating to the temporary finance granted by the lender to the corporate debtor. It has also been mentioned that a resolution under section 293(1)(d) of the Companies Act, 1956 had been passed by the shareholders of the corporate debtor to enable the company and its directors to borrow loans not exceeding ₹ 1,200 crores and avail of temporary finance within the limit of borrowing of the corporate debtor-company. It is also mentioned that the financial creditors were approached by the corporate debtor. It is also mentioned that disbursement could be made in intervals/instalments. The broker is also nominated by the corporate debtor. Interest element also exists. Further, the financial creditors are not in the business of purchase and sale of tea. When we see these terms and conditions, we are totally amused as to on what basis the corporate debtor could claim that this is a transaction of sale and purchase of tea and not of financing. There are no substance in the plea of the corporate debtor that it is not a financial debt within the meaning of section 5(8) of the IBC, 2016 for the simple reason that it also carries interest, whereas, in our considered opinion, if the money is given even without interest, still it has time value of money as it results into an economic advantage to the borrower at free of cost over a period of time when the value of money decreases due to inflation. The transactions of loan/advance are specifically covered under section 5(8)(a) as these have been borrowed against interest. Even, considering the fact of repayment of loan to one of the financial creditors and other surrounding circumstances as well, such claim made by the corporate debtor appears to be of no help particularly when no other material/documentary evidence has been brought on record to show that the tenure of the loan has been extended. Thus, in the background of the facts and circumstances and applicable legal position, as discussed herein above, we are of the considered view that the transaction is of the nature of financial debt within the meaning of provisions of section 5(8) and 5(8)(a) of the IBC, 2016. As per section 5(8)(f) of the IBC, 2016, this transaction has got the trappings of commercial effect of borrowing, hence, for this reason also this is a financial debt. The petition is complete and defect-free - application admitted - moratorium declared.
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2020 (7) TMI 677
Approval of Resolution Plan - CIRP process - scope of the committee of creditors to look into the matter - HELD THAT:- The unsuccessful resolution applicant has filed this application. There is no merit in the stand of the applicant, the applicant was given opportunities to revise and submit better plan. Both the resolution applicant were treated at par. In fact, this resolution applicant wanted to participate and submit its resolution plan after the deadline. The committee of creditors has allowed the same and has accepted the plan of the applicant for evaluation. Hence, from the records it is clear that the scoring of the successful applicant is more than that of the applicant. Hence, the allegation of this applicant that there is error in marking of score by the committee of creditors is not correct and not acceptable. The evaluation matrix applied was same for both the parties. The opportunities to submit revised resolution plan was given to both the parties. Both the resolution applicants participated in the meeting. Hence, no discrimination apparently on the face of it. Both the resolution applicants were treated at par and equal opportunities were given to submit the plan/revised the plan and to participate in the meetings. There is no discrimination per se - The decision of the committee of creditors to approve the resolution plan of the M/s. Sterlite Power Transmission Ltd., is upheld. Application dismissed.
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CST, VAT & Sales Tax
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2020 (7) TMI 676
Jurisdiction - Withholding of refund - Refund of pre-deposit amount alongwith the interest - the impugned order was passed by the Sales Tax Officer - HELD THAT:- This petition deserves to be allowed on the sole ground that the impugned order was passed by the Sales Tax Officer, who had no authority to withhold the amount under Section 39 of the VAT Act. A plain reading of Section 39 of the VAT Act stipulates that the power is vested in the Commissioner to withhold the refund upon recording an opinion that the revenue would be adversely affected and that too after affording due opportunity to the assessee - In the present case, there is no order passed by the Commissioner recording his satisfaction and since there is no order of the Commissioner, there is no question of affording any opportunity. The Sales Tax Officer has no authority to withhold the amount under Section 39 of the VAT Act. At the best he could have referred the matter to the Commissioner for taking appropriate decision, if he was of the view that the revenue would be adversely affected. That having not been done, the order of the Sales Tax Officer dated 18.10.2019, impugned in the present petition (Annexure-A), cannot be sustained. Normally, an opportunity would be given to the Commissioner to pass an order, but since no such power has been exercised by the Commissioner for the last 5 years, today we are not inclined to grant such liberty. Whether appropriate direction for refund would be given or not - no appeal had been filed before the Supreme Court - HELD THAT:- As per the impugned order, till that date, no appeal had been filed before the Supreme Court. Further the petitioner had succeeded before the Tribunal in August, 2015. The Department took two years to file appeal before the High Court which was dismissed in October, 2018. Thereafter, much later the Department has simply submitted an appeal before Supreme Court on 05.03.2020 and Dairy No.9032 of 2020 was allotted and till date no further progress has been made in the said appeal. Admittedly, the Commissioner has not exercised the powers - the refund should forthwith be made to the petitioner along with admissible interest permissible under law from the date of deposit till the date of actual payment. The impugned order passed by the respondent No.2 is hereby quashed and set aside with further direction to the respondents to refund the amount of ₹ 15 lakhs along with statutory interest within a period of two weeks from the date of production of the certified copy of this order - petition allowed.
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2020 (7) TMI 675
Principles of natural justice - service of notice - Concessional rate of tax - inter-state sales - entire turnover covered by C-Forms - rate of tax applicable under Section 8(1) of the CST Act - HELD THAT:- There has been a grave violation of principles of natural justice in as much as the personal hearing notice dt.30.03.2020 was served at 7.15 p.m. through e-mail and the impugned assessment order was passed on the very next day i.e 31.3.2020 when there was a lockdown prevalent on account of COVID-19 pandemic situation and the petitioner was disabled from availing the personal hearing offered by the 1st respondent. The matter is remitted back to the 1st respondent for fresh consideration - Petition allowed by way of remand.
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2020 (7) TMI 674
Completion of assessment - levy of tax on gross and net turnovers - taxability under CST Act - Petitioner contended that the turnover that had been declared in the monthly VAT 200 returns were the service charges, which the petitioner received in the State of Telangana, on which the petitioner is paying service tax under the Finance Act, 1994 - HELD THAT:- When the petitioner had specifically raised a contention that the petitioner has no turnover, which is taxable under the CST Act, 1956, and what was declared by it in the monthly VAT returns is service tax, which the petitioner is receiving in the State of Telangana for allowing Telecom Operators to use the tower facilities erected by it in the State, on which the petitioner was paying service tax under the Finance Act, 1994, the 1st respondent is expected to advert to the said contentions and deal with it in the impugned assessment order. However, the 1st respondent has not done so, while passing the impugned assessment order. The matter is remitted back to the 1st respondent to consider afresh the objections filed by the petitioner - Petition allowed by way of remand.
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2020 (7) TMI 673
Validity of Section 4(8) of the Telangana VAT Act, 2005 read with Section 2(28) Explanation (iv) - Section 65(105)(O) of the Finance Act, 1994, vires to Entry 54 of List II of the VII Schedule to Article 14 and Articles 19(1)(g) and 245 of the Constitution of India - validity of Audit Assessment Proceedings - time limitation. HELD THAT:- The impugned assessment proceedings dt.13.03.2020 for the tax period 2013-14 to 2016-17 passed by the 1st respondent is set aside - the matter is remitted back to the 1st respondent for fresh consideration; the 1st respondent shall permit the petitioner to file additional objections to the notice dt.23.01.2020 issued by the 1st respondent, if the petitioner so desires; afford a personal hearing to the petitioner; and then the 1st respondent shall pass a reasoned order in accordance with law and communicate it to the petitioner.
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2020 (7) TMI 672
Reversal of Input Tax Credit - alleged mismatch between the particulars circulated by the petitioner and the particulars available in the selling/purchasers return of turnover - periods 2010-11 to 2015-16 - TNVAT Act - HELD THAT:- This issue had been considered by this Court in M/s. JKM Graphics Solutions Private Limited V. Commercial Tax Officer [ 2017 (3) TMI 536 - MADRAS HIGH COURT ] and the Court had directed that a suitable central mechanism be evolved within the Department to delve into various aspects of mismatch. Pursuant thereto, a Circular was issued by the Commissioner bearing No.3 of 2019 (Q1/39643/2018 dated 18.01.2019), wherein at paragraph (c) the Commissioner directs the Authorities to keep assessments involving the issue of mismatch in abeyance, however issuing pre-assessment notices in time in order that the assessments are kept alive until such time the central mechanism is put in place. There is no justification for the Assessing Officer in the present matters to have finalized the assessments themselves, being clearly contrary to the directive of the Commissioner. Hence, the impugned orders of assessment are set aside. Petition allowed.
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2020 (7) TMI 671
Reversal of Input Tax Credit - levy of penalty - discounts received by the petitioner from the supplying dealers - packing materials purchased by the petitioner from local registered dealers - TNVAT Act. Reversal of ITC on discounts received by the petitioner from the supplying dealers - HELD THAT:- Since Section 19(20) which has been invoked to deny the benefit of ITC, has itself been inserted only with effect from 19.08.2010. Though a Division Bench of this Court had initially held that the provision would operate retrospectively and impact prior assessment periods as well, the Supreme Court in the case of J JAYAM CO. VERSUS ASSISTANT COMMISSIONER ANR. [ 2016 (9) TMI 408 - SUPREME COURT] reversed the aforesaid conclusion of this Court confirming the position that Section 19(20) would operate only from the date of its insertion, prospectively, i.e., from 19 th August, 2010. Thus the provision could not have been invoked in the present case, for the period, viz. 2008-09 - The invocation of Section 19(20) in the present case is thus not in order and to this extent, the assessment is quashed. Penalty levied under Section 27(4) to this extent is also quashed. Reversal of ITC in regard to packing materials - HELD THAT:- The petitioner has specifically challenged this reversal relying on the provisions of Section 19(2)(ii) of the Act, which permits the grant of input tax on packing materials, containers and label and other materials used for packing goods. This ground has not been referred to or adjudicated upon by the Appellate Authority and hence, the order of the first respondent is quashed and the matter remitted to the files of the Assessing Officer to be redone de novo after taking into account the submissions of the assessee, in accordance with law. Petition disposed off.
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