Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 31, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
GST - States
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(GHN-42) GST-2021/S.11(1) (55) TH - dated
23-6-2021
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Gujarat SGST
Corrigendum - Notification No. 5/2021-State Tax (Rate), dated the 14th June, 2021
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5/2021 -State Tax (Rate) - dated
14-6-2021
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Gujarat SGST
Concessional rate of tax till 30.09.2021 for goods used in Covid-19 relief and management
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4/2021 -State Tax (Rate) - dated
14-6-2021
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Gujarat SGST
Reduction in rate of tax till 30.09.2021 for services related to structure meant for funeral, burial or cremation of deceased
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44/GST-2 - dated
26-7-2021
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Haryana SGST
Notification under section 128 to waive penalty payable for non-compliance of provisions of Notification No.18/GST-2, dated 31st March 2020 under the HGST Act, 2017.
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S. R. O. No. 567/2021 - dated
26-7-2021
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Kerala SGST
Kerala Goods and Services Tax (Third Amendment) Rules, 2021.
Income Tax
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83/2021 - dated
29-7-2021
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IT
Income-tax (21st Amendment) Rules, 2021. - Omission of certain rules and Forms and savings - Electronic furnishing of Forms, Returns, Statements, Reports, orders etc.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - Forward supply - rate of GST - Tertiary Treated Water - In the subject case, the water supplied by the applicant to mahagenco is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable. Hence Entry No. 46 B which pertains to drinking water only is not applicable to the impugned product - TTW supplied by the applicant is “purified Water” and is covered Entry No.24 of Notification No. 01/2017-C.T. (Rate) - AAR
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Seizure and detention of vehicle - considering the prime defence of the petitioner that he is not a registered dealer nor is he dealing in purchase and sale of vehicles and the ambulances have been purchased by the petitioner only for its own use and purpose since the petitioner wants to start a business of proving ambulance service, it would not be appropriate to allow further detention of the vehicles. - HC
Income Tax
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Validity of assessment order - Reference to dispute resolution panel u/s 144C -Failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or a mere irregularity. - This is not a mere irregularity but an incurable illegality. Even the provisions of Section 292B of the IT Act would not protect such an order as Section 292B of the IT Act cannot be read to confer jurisdiction on the Assessing Officer, where none exists. - Order quashed - HC
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Reopening of assessment u/s 147 - Principles of natural justice - this Court is of an opinion that the opportunity provided by the respondent to the petitioner was not properly utilised, but they have utilised the same for the purpose of prolonging the proceedings. Therefore, this Court is of the considered opinion that the principles of natural justice has not been violated in this case, but the opportunities provided are not properly utilised by the petitioner, for which the respondent cannot be faulted. WP dismissed. - HC
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Validity of Reopening of assessment u/s 147 - Non-existing company - This Court is of the considered opinion that, in the present case, the proceedings were continued and the assessment order has already been passed and subsequently, the Writ Petitions are filled, challenging the draft assessment order as well as the final assessment order. In view of the fact that the mistake crept in at the initial stage was identified by the department and subsequently corrected and the proceedings thereafter were continued in the name of the petitioner, there is no reason to interfere with the process of reassessment already completed and it is for the petitioner to redress their grievances, if any exist, by preferring an appeal, in the manner prescribed under the Act. - HC
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Revision u/s 263 - Being conscious of the fact that the original assessment order could not be revised under section 263 of the Act due to bar of limitation, as provided under sub section (2) of section 263 of the Act, learned PCIT, as it appears, has proceeded to revise the assessment order passed under section 143(3) r.w.s. 147 of the Act to get over the hurdle of limitation. This, in our view, is impermissible. - AT
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Revision u/s 263 - estimation of income on bogus purchases - Keeping in view the applicable VAT rate, Ld. AO estimated a further addition of 1.6% against these purchases. - Merely because Ld. Pr. CIT held a view that the estimation should have been at higher rates or entire purchase should have been disallowed, the same would not make the order erroneous - AT
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Revision u/s 263 - There was an error in the assessment order passed by the A.O. in not bringing to tax the interest income in the year under consideration under the head "income from other sources". Once, this interest income is brought to tax in A.Y. 2015-16, closing WIP for A.Y. 2015-16 will be increased to that extent and the income of the assessee chargeable to tax for A.Y. 2016-17 will be reduced consequently. - Revision order by CIT confirmed with modification - AT
Customs
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Imposition of penalty - section 112(b) of Customs Act - smuggling - diamonds - The active role of these Appellant, do not justify imposition of heavy penalty under Section 112(b) of Customs Act 1962 - The DRI investigation has not brought any such evidence except retracted confessional statements to show that Appellants have smuggled rough diamonds into India - The quantum of penalty is reduced - AT
Corporate Law
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Seeking to restore the name of the Company - It is significant to point out here that while considering an Application under Section 252(3) of the Companies Act, 2013, this Tribunal cannot focus only on the past activities, however, is also required to look into the future prospects of the Company and an upward movement in the business cycle of that industry which would result in the generation of revenue - RoC directed to restore the name and change status of Company from "strike off" to "Active" - Tri
Indian Laws
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Dishonor of Cheque - Fraudulent transaction or not - The Court notices that there is no disputes with regard to the signature on the cheuqe and her defence is that the brother-in-law had obtained her signature under the pretext that for emergency purpose this would be required for the use of the cheque in the business. There is an initial admission of the cheque, the presumption under Section 139 of the N.I.Act would come into play. - HC
Service Tax
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Refund of erroneous payment of service tax - the appellant as a LLP, is not required to pay service tax under the reverse charge mechanism during the period under dispute. - It is held that the appellant is entitled to refund of the service tax paid erroneously under reverse charge, as per the refund application - the adjudicating authority is directed to grant refund within a period of 45 days from the date of receipt of a copy of this order with interest - AT
Central Excise
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Condonation of delay - Though there is a considerable delay in filing the appeal, but having regard to the fact that the applicant had approached High Court and, thereafter, had filed a Miscellaneous Application before the Tribunal we consider it appropriate to condone the delay but on imposition of cost upon the Appellant - AT
Case Laws:
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GST
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2021 (7) TMI 1212
Rectification of Mistake - typographical error - error apparent on the face of record or not - HELD THAT:- On perusal of the impugned order, it is noticed that such typographical error has indeed occurred in para No.4.1 and 4.2 and needs correction. Therefore, this corrigendum order is issued, to correct the above mentioned error. Appeal disposed off.
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2021 (7) TMI 1211
Levy of GST - Forward supply - rate of GST - Tertiary Treated Water supplied by the applicant to Maharashtra State Electricity Generating Co. Ltd. (MAHAGENCO) - falling under Entry No. 99 of N/N. 02/2017-Central Tax (Rate), dt. 28-06-2017 or Entry No. 24 of N/N. 1/2017-Central Tax (Rate) dt. 28.06.2017 - HELD THAT:- As per the parameters tested by the applicant, the properties of processed water generated from the sewage is different than the properties of the original sewage water received in the STP plant. Therefore, the Tertiary Treated Water is purified sewage water and since it is purified water. the same will not fall under Sr. No, 99 of Notification 02/2017-C.T. (Rale) dated 28.06.2017. Since the said entry at Sr. No. 99 mentions that water, other than purified , aerated, mineral, distilled, medicinal, ionic, battery. de-mineralized and water sold in sealed container, only will get exemption, therefore the impugned product being purified sewage water will not be exempted - the legislation does not expect, such purified water to be allowed for exemption from GST. In the subject case, the water supplied by the applicant to mahagenco is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable. Hence Entry No. 46 B which pertains to drinking water only is not applicable to the impugned product - TTW supplied by the applicant is purified Water and is covered Entry No.24 of Notification No. 01/2017-C.T. (Rate) dated 28.6.2017. The impugned goods, called as Tertiary Treated Water, is purified water which is sold to MAHACENCO for its further industrial use and falls under Entry No. 24 of Notification No. 01/2017 - the water obtained from sewage is covered under term waters . Hence it is taxable and same would be taxable @ 18% IGST under Entry 24 of Schedule-Ill of Notification No. 1/2017-Central Tax (Rate) dtd. 28.06. 2017 as amended by Notification No. 06/2018 and Central Tax (Rate) dtd. 25.01.2018.
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2021 (7) TMI 1210
Seizure and detention of vehicle - Ambulance van - detention on the ground that the vehicles did not carry e-way bills - case of the petitioner is that the vehicles are purchased not for resale but for the own use and business purpose of the petitioner and in which case, there was no necessity of regenerating an e-way bill - HELD THAT:- When the respondent No.3 has issued a show cause notice for completing the assessment for levying tax with or without penalty, let the petitioner file reply to such show cause notices. It would be open for the Assessing Officer to carry out the assessment, in accordance with law, after considering the reply of the petitioner. However, considering the prime defence of the petitioner that he is not a registered dealer nor is he dealing in purchase and sale of vehicles and the ambulances have been purchased by the petitioner only for its own use and purpose since the petitioner wants to start a business of proving ambulance service, it would not be appropriate to allow further detention of the vehicles. It would be open for the petitioner to file reply to the show cause notices dated 21st July 2021 by 10th August 2021 - Petition disposed off.
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2021 (7) TMI 1166
Refund claim - time limitation - whether the refund application filed by the appellant is time barred by the period of limitations in terms of Section 54 of the CGST Act, 2017? - HELD THAT:- The instant refund application was filed by the appellant on the ground of excess tax payment made by him and it was arised due to not reporting of credit note in GSTR-3B mistakenly and wrongly/erroneously paid the tax on cancelled invoices during the period 2017-18 by filing of GSTR-3B - other remedies are available in the Section 34(2) and Section 39(9) of CGST Act, 2017 but the appellant failed to opt the same and applied the instant refund application on 15-5-2020. The refund application has been rejected by the adjudicating authority by the impugned order on being time barred issue in terms of Section 54 of CGST Act, 2017. There is a settled law that if the statutory provisions are available in the relevant Act, there is no need to draw the inference by applying/interpreting the other statutory provision. In the instant matter the appellant has taken incorrectly recourse of Limitation Act or other Laws by placing reliance of it. The appellant s contention that the relevant date should be taken in the instant case as the date of filing of annual return is not correct/acceptable - In the instant case the appellant filed the refund application on 15-5-2020 for the tax period July, 2017 to March, 2018 which is clearly beyond the two years from the relevant date. The refund claim pertaining to the month of February, 2018 to March, 2018 cannot be disputed on barred by the limitation and contended that the time limit has been extended to 31-8-2020 in terms of Notification No. 35/2020-Central Tax, dated 3-4-2020 as amended by Notification No. 55/2020-Central Tax, dated 27-6-2020 - the appellant did not clarify the date of payment of tax for the month of February, 2018 in the said submission and there is no disputed amount mentioned for the month of March, 2018. The refund application of the appellant is barred by the time limitation in terms of Section 54 of CGST Act, 2017 - Appeal dismissed.
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2021 (7) TMI 1165
Refund of Input Tax Credit - credit accumulated due to Inverted Tax Structure - time limitation - period July, 2017 to March, 2018 - whether application of refund filed by the appellant is time barred as per Section 54 of CGST Act, 2017 as amended, or not? - HELD THAT:- The due date for filing of refund application for remaining period i.e. for the month of Mar., 2018, has been extended upto 31-8-2020, in terms of the CGST Notification No. 55/2020-Central Tax, dated 27-6-2020 - it is obvious that refund application for the period July, 2017 to February, 2018 is time barred as the same was filed on 13-6-2020. Whereas, the refund application for the month of Mar., 2018 falls within time limits. Whether refund claim for the tax period of March, 2018 is inadmissible or not? - HELD THAT:- The adjudicating authority has rejected the refund for the period of March, 2018, as mentioned inadmissible since the refund amount works out to negative figures as per Rule 89(5) of the CGST Rules, 2017. Thus the adjudicating authority has correctly rejected the refund for the month of March, 2018 by applying the formulae as provided in Rule 89(5) of the CGST Rules, 2017. Whether principle of natural justice has been followed in the instant case or not? - HELD THAT:- The adjudicating authority had issued Show Cause Notice in form of RFD-08 to the appellant, also provided opportunity for personal hearing . However, the appellant neither attended the same on the stipulated day nor filed any reply of the same. Further, the appellant wished to clarify the issue from the adjudicating authority/proper officer through letter via e-mail and the adjudicating authority properly replied to the appellant - there are no merit in the contention of the appellant. Appeal dismissed - decided against appellant.
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2021 (7) TMI 1164
Refund claim - zero-rated supplies - appellant did not furnish the DRC-03 as required in case where the refund is applied again after issuance of deficiency memo - sufficient opportunity of being heard not provided - HELD THAT:- The appellant has filed Refund for ₹ 7,35,253/- for which deficiency memo No. ZW0801200310312 was issued stating that supporting documents attached are incomplete. The appellant filed afresh ARN Receipt AA080120043271Y (GST RFD-01), dated 28-1-2020 for ₹ 7,62,291/- for which the show cause notice No. ZO0802200237580 (RFD-08) was issued by the Proper Officer i.e. Assistant Commissioner, Division-F, Jaipur on 19-2-2020 and served the same through Common Portal. The appellant only received the e-mail dated 26-2-2020 stating that This mail is in reference to the AA080120043271Y; 26-2-2020 filed by you. Sanction Order RFD-06/ZY0802200326224/26-2-2020 has been issued for above mentioned refund application. And has not received the refund order i.e. RFD-06 (ZY0802200326224, dated 26-2-2020) issued by the Proper Officer i.e. Assistant Commissioner, Division-F, Jaipur - it is deduced that the appellant was neither received the Show cause notice (RFD-08) in appropriate manner nor got the opportunity of being heard to put their submission before the proper officer. The Proper Officer while passing the refund order of the appellant neither considered their defence submission/reply nor granted the opportunity of personal hearing - matter remanded with the direction to make necessary verification regarding the correctness of the averment of the appellant - appeal allowed by way of remand.
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Income Tax
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2021 (7) TMI 1208
Validity of assessment order - Transfer pricing - Reference to dispute resolution panel u/s 144C - Assessment Order has been passed without the draft Assessment Order - non providing an opportunity to raise objections before the DRP - whether the provisions contained in Section 144C(1) of the IT Act are mandatory or directory ? - whether there has been a mere procedural error on the part of the AO in passing the final Assessment Order without passing a draft Assessment Order, as required under Section 144C(1) of the IT Act or has there been a jurisdictional error, which strikes to the root of the entire proceedings. HELD THAT:- Assessment Order has been passed without the draft Assessment Order as contemplated under Section 144C (1) of the IT Act - AO ought to have in the first instance forwarded a draft of the proposed order of assessment to Petitioner, as there was a proposed variation prejudicial to the interest of the assessee. This important step has been completely omitted by the Respondent taking away a very necessary right of Petitioner to file objections to the proposed variation with the DRP and the Assessing Officer, which in our view, strikes to the root of the procedure contemplated by Section 144C. Failure on the part of the AO to follow the procedure u/s 144C(1) is not a merely procedural or inadvertent error, but a breach of a mandatory provision. We are also not impressed with the arguments of the Revenue that the AO was under pressure of two charges, as there were timelines to adhere to, since the said timelines from time to time have been extended, the most recent one being to 30th September, 2021. The Revenue ought to have appreciated that the requirement under Section 144C(1) to first pass a draft Assessment Order and to provide a copy thereof to the assessee is a mandatory requirement which gave substantive right to the assessee to object to any variation, that is prejudicial to it. In this case, the order under Section 92CA (3) of the IT Act, proposed to make an adjustment to the arm s length price considered as Nil by Petitioner and to that extent the said adjustment was evidently prejudicial to the interest of Petitioner. Depriving Petitioner of this valuable right to raise objection before DRP would be denial of substantive rights to the assessee, for which, in our view, the Assessing Officer has no power under the statute, as the provision clearly mandates the Assessing Officer to pass and furnish a draft Assessment Order in the first instance in such a case. Failure to follow the procedure under Section 144C(1) would be a jurisdictional error and not merely procedural error or a mere irregularity. The Assessment Order has not been passed in accordance with the provisions of Section 144C of the IT Act. This is not an issue, which involves a mistake in the said order, but it involves the power of the Assessing Officer to pass the order. By not following the procedure laid down in Section 144C(1) to pass and furnish a draft Assessment Order to Petitioner and directly passing a final Assessment Order and without giving Petitioner an opportunity to raise objections before the DRP, there is a complete contravention of Section 144C, the Assessing Officer having wrongly assumed jurisdiction to straight away pass the final order. This is not a mere irregularity but an incurable illegality. Even the provisions of Section 292B of the IT Act would not protect such an order as Section 292B of the IT Act cannot be read to confer jurisdiction on the Assessing Officer, where none exists.We, therefore, quash and set aside the impugned Assessment Order, Demand Notice and Penalty Notice, - WP allowed.
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2021 (7) TMI 1205
Reopening of assessment u/s 147 - re-assessment were passed within or beyond the period of limitation - Time limit for completion of assessment, reassessment and recomputation u/s 153 - interim order passed by the Hon'ble Supreme Court stating that the re-assessment order shall not be framed if not framed so far - Denial of natural justice - HELD THAT:- The knowledge or intimation to the competent authority through the respective learned counsels appearing on behalf of the parties to the lis is one aspect of the matter, which can be construed as non-official communications and cannot be taken into account for the purpose of reckoning the period of limitation under the provisions of the Act. Only when an official communication is effected with the seal of the Court concerned, then alone the period of limitation should reckon and not otherwise. If this administrative procedure is not consistently followed, then there is a possibility that every litigant or the department would take undue advantage of any such unofficial communications, which would lead to confusion and chaos and the sanctity of the period of limitation contemplated is diluted. Therefore, knowledge and oral communications or private communications would not be taken into consideration for the purpose of reckoning the period of limitation as contemplated under the provisions of the statute and only if such communications are officially effected, the said point is to be taken into account for the purpose of reckoning the period of limitation.' On the issue in the matter of reckoning the period of limitation which would have the binding effect and therefore, as per the judgment of the Constitution Bench of the Hon'ble Supreme Court of India, in the case of National Insurance Co. Ltd., Vs. Pranay Sethi and others, [ 2017 (10) TMI 1276 - SUPREME COURT] the judgment of the Hon'ble Supreme Court of India is to be followed as precedent. Moreover, in the case cited supra, the Hon'ble Apex Court, in clear terms, held that mere pronouncement of the order would not be sufficient. The order must be signed, sealed, dated and communicated to the parties, enabling them to understand the reasons and the spirit of the order. This being the principles to be followed, there is no reason whatsoever to accept the contentions raised on behalf of the petitioner and the judgments relied on by the petitioner are of no avail, as the Hon'ble Apex Court, in clear terms, held the manner in which the period of limitation is to be reckoned. This being the factum established and principles to be followed, this Court has no hesitation in arriving a conclusion that the case of the petitioner deserves no appreciation. Principles of natural justice has been violated - It is not the case as if no opportunity was granted to the petitioner. Opportunity was given, but the petitioner has chosen to make a representation to the authorities that they are supposed to wait until the Hon'ble Supreme Court takes up his appeal for hearing. This Court is of the considered opinion that mere filing of an appeal before the High Court or Hon'ble Supreme Court would not preclude the competent authorities from exercising their powers, which is otherwise conferred under the provisions of the Act. Unless any interim order or otherwise is communicated to the authorities, they are bound to proceed under the provisions of the Act, in the manner known to law and therefore, mere filing of the case before the Hon'ble Supreme Court is not a ground to raise that the petitioner was not afforded with opportunity. Even, the petitioner has requested the authorities to wait. The petitioner has no right to make such a request to the Income Tax authorities, stating that they have preferred an appeal and therefore, they should not act under the provisions of the Act. The said submission deserves no merit consideration. The learned Standing Counsel, in this regard, made a submission that the SLP as per the petitioner, was filed on 08.10.2014 and it was taken up for hearing and an interim order was passed on 03.11.2014, after passing of an order of re-assessment by the competent authority on 21.10.2014. This apart, the petitioner has availed the opportunity and submitted their reply on 16.10.2014 and 20.10.2014. However, they made a request to stop all further proceedings till their appeal is taken up for hearing. This Court is of the considered opinion that the processes initiated under any statute need not be stalled unless there is an order from the competent higher authority or by the Court of law. Mere request in this regard is insufficient and if such a request is considered, the very spirit of the Act as well as the power of the authorities to continue the proceedings would be prejudiced and therefore, this Court is of an opinion that the opportunity provided by the respondent to the petitioner was not properly utilised, but they have utilised the same for the purpose of prolonging the proceedings. Therefore, this Court is of the considered opinion that the principles of natural justice has not been violated in this case, but the opportunities provided are not properly utilised by the petitioner, for which the respondent cannot be faulted. WP dismissed.
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2021 (7) TMI 1204
Validity of Reopening of assessment u/s 147 - assessment proceedings were continued in the name of the non-existing company - HELD THAT:- The notice under Section 148 was issued in a wrong name. However, close reading of the name of the Company would reveal that the first word 'Sesa' is not alien to the petitioner Company and the very same word is used by the petitioner subsequently. The said mistake was pointed out by the petitioner. The department issued a corrigendum, wherein again they have committed a mistake. The reason stated by the department is that the Company is having the habit of frequently changing their names as well as their registered office and the said conduct of the Company created confusion in the department and therefore, the mistake cannot be a ground to vitiate the entire proceedings. However, in the present case, the Assessing Officer has taken steps to correct the mistake and in letter dated 06.08.2015, the Deputy Commissioner of Income Tax, narrated the entire facts and circumstances for the mistake earlier committed by the department and thereafter, the proceedings were conducted in the correct name of the petitioner and the final assessment order was passed. The petitioner was provided with an opportunity to defend their case in the manner prescribed and there is no dispute between the parties that the assessment order was passed by following the procedures contemplated. This Court is of the considered opinion that, in the present case, the proceedings were continued and the assessment order has already been passed and subsequently, the Writ Petitions are filled, challenging the draft assessment order as well as the final assessment order. In view of the fact that the mistake crept in at the initial stage was identified by the department and subsequently corrected and the proceedings thereafter were continued in the name of the petitioner, there is no reason to interfere with the process of reassessment already completed and it is for the petitioner to redress their grievances, if any exist, by preferring an appeal, in the manner prescribed under the Act. This Court do not find any infirmity or perversity as such, for the purpose of undoing the processes undertaken already, pursuant to the impugned notices issued under Section 148 of the Act and consequently, the Writ Petition stands dismissed.
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2021 (7) TMI 1203
Reopening of assessment u/s 147 - Scheme of Amalgamation, Arrangement and Compromise Adopted - assessee challenges the assessment orders on the ground that the respondent had erred in rejecting the claim of deductions on inventories return off, sundry debtors return off and loans and advances written off as per the Court orders dated 17.12.2007 for the assessment years 2001-02 to 2003-04 on the basis that the said claims were made for the first time in the revised return - maintainability of the revised return beyond the period of limitation as well as the pendency of reopening of the proceedings under Section 148 - HELD THAT:- An affidavit in a writ proceedings is insufficient to make a fact finding with reference to the documents and evidences. Therefore, the importance of an appellate remedy to be exhausted, at no circumstances, be undermined. High Court cannot dispense with the appellate remedy in a routine manner. Writ Petitions are filed on various grounds some times with an idea to avoid delay in disposal of appeals - legislative intention to exhaust the appellate remedy is to be considered by the Court. The legislatures thought fit that by providing an appeal, complete adjudication of facts, circumstances, documents and evidences would be completed. Thus, such a valuable remedy provided has to be exhausted in all circumstances. Petitioner has raised certain legal grounds for the purpose of entertaining a writ petition. All such legal grounds may be pleaded before the appellate authority for effective adjudication. The final fact finding by the appellate authority would be of greater assistance to the High Court for effective disposal of the writ petition. The parties aggrieved must, at the first instance, prefer an appeal, exhaust the same and thereafter, they have to approach the appropriate form. The power of review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority in consonance with the provisions of a statute and rules, but not the decision itself. Therefore, the power of judicial review under Article 226 of the Constitution of India cannot be extended for the purpose of adjudicating the disputed facts with reference to the documents and evidences, which cannot be done at all. Based on the mere affidavit and some xerox copies of the documents, High Court cannot form an opinion with reference to the complete facts. As far as the Income Tax matters are concerned, it involves certain technicalities and intricacies in accountancy. Such intricacies and the expertise are to be exercised by the competent appellate authority of the Department of Income Tax, who is having thorough knowledge about the taxation policies. Therefore, the finding of appellate authority in such circumstances are of paramount importance for the High Court to exercise the power of judicial review. This Court is of the considered opinion that in all these cases, the petitioner has challenged the assessment orders passed admittedly and appeal is contemplated under the provisions of the Act. There is no other reason for the purpose of entertaining a writ petition before exhausting the appellate remedy and therefore, the petitioner-company is at liberty to approach the appellate authority by filing an appeal in a prescribed format and in compliance with the provisions of the Act. In the event of filing any such appeal, the appellate authority shall consider the same on merits and in accordance with law and by affording opportunity to the writ petitioner and dispose of the appeal as expeditiously as possible.
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2021 (7) TMI 1201
Disallowance of provision for payment of ex-gratia - liability and ascertainment of the quantum of liability with reasonable certainty - HELD THAT:- The payment is in reference to the Financial Year 2008- 09 relevant to Assessment Year 2009-10. The order of Managing Director approving payment is stated to be dated 31.03.2010. Prima facie it appears that the quantification of the liability at ₹ 18,90,000/- by the assessee to be true to the extent of ₹ 18,66,328/- which is the actual payment made towards ex-gratia and approved by the Government. We are, however, of the view that the assessee has to furnish the evidence on the basis of which he quantified the liability at ₹ 18.90 lakhs and what is the Rules / Policy under which ex-gratia payments are made and how the quantification made by the assessee is in accordance with the Rules / Policy of the Government in this regard. We therefore deem it fit and appropriate to remit the issue to the AO for fresh consideration with the direction to the assessee to establish conditions necessary for considering the liability in question as ascertained liability on the basis of the principles laid down by the Hon ble Supreme Court in the case of Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] The AO will afford opportunity of being heard to the assessee before deciding the issue. Thus the relevant grounds of appeal of the assessee are treated as allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- The explanation given by the assessee before us is not sufficient to avoid the disallowance in terms of Rule 8D(2)(ii) of the Rules. The assessee has to establish by necessary fund flow statements that burrowed funds on which interest paid was not utilized for the purpose of making investments with yielded tax free income. In these circumstances, we are of the view that the disallowance made by the Revenue authorities by invoking the provisions of section 14A of the Act read with Rule 8D(2)(ii) and 8D(2)(iii) of the Rules deserves to be upheld and the same is upheld. The grounds of appeal are accordingly dismissed. Computation of tax liability under section 115JB - HELD THAT:- We are of the view that the computation of income under section 115JB of the Act is automatic and the conditions laid down in section 115JB of the Act are satisfied. It is not the case of the assessee that in computing the income under section 115JB of the Act, there has been violation of the provisions of those sections. Validity of proceedings under section 148 - It is the plea of the assessee that having initiated proceedings under section 154 of the Act, the AO cannot issue notice under section 148 of the Act on the ground of belief regarding escapement of income - HELD THAT:- We are of the view that the provisions under section 154 and 148 of the Act are for different purposes and so long as conditions for initiating proceedings under section 148 of the Act are satisfied, the initiation of proceedings cannot be held to be invalid. We therefore concur with the view of the CIT(A) on this issue.
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2021 (7) TMI 1200
Revision u/s 263 - deduction claimed u/s 80IA - reopening of assessment occurred in the case of assessee - period of limitation prescribed for revision proceedings - HELD THAT:- A reading of the original assessment order would reveal that the issue relating to deduction claimed under section 80IA was a subject matter therein. In fact, the draft assessment order passed by the assessing officer on the issue of deduction claimed under section 80IA of the Act was disputed before learned DRP and after passing of the final assessment order, the issue relating to claim of deduction under section 80IA of the Act is now pending in appeal before the Tribunal. Therefore, any attempt by the assessing officer to deal with such issue in re-assessment proceedings would have amounted to review of the original assessment order, which is impermissible. Thus, assessment order passed under section 143(3) r.w.s. 147 of the Act cannot be considered as erroneous and prejudicial to the interest of revenue to subject it to proceeding under section 263 of the Act. If, at all, any order of the subordinate authority which could have been considered as erroneous and prejudicial to the interest of revenue in allowing assessee s claim of deduction under section 80IA of the Act, either due to lack of enquiry or otherwise, is the original assessment order passed under section 143(3) r.w.s. 144C of the Act and not the re-assessment order. Therefore, the period of limitation prescribed under section 263(2) of the Act would run from the original assessment order. Being conscious of the fact that the original assessment order could not be revised under section 263 of the Act due to bar of limitation, as provided under sub section (2) of section 263 of the Act, learned PCIT, as it appears, has proceeded to revise the assessment order passed under section 143(3) r.w.s. 147 of the Act to get over the hurdle of limitation. This, in our view, is impermissible. Thus we hold that the impugned order of learned PCIT revising the order passed under section 143(3) r.w.s. 147 of the Act is unsustainable. Accordingly, we quash it. - Decided in favour of assessee.
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2021 (7) TMI 1198
Assessment u/s 153A - Addition on account of gain on sale of investment - HELD THAT:- Following the order passed by coordinate bench of Tribunal in case of Sameer Gupta and Bhawna Gupta [ 2017 (8) TMI 1544 - ITAT DELHI] confirmed by Hon ble Delhi High Court in CIT vs Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] we are of the considered view that when the capital gain earned from the sale of shares were already recorded in the books of accounts and no incriminating material was found during the course of search operation on Jakson Group being run by Sameer Gupta, Bhawana Gupta and Sandeep Gupta, addition made on the basis of sole statement of Sandeep Gupta is not sustainable in the eyes of law, particularly when all the transactions qua sale of shares and capital gain earned during the year under consideration have been duly recorded in the books of accounts. - Decided against revenue.
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2021 (7) TMI 1197
Short deduction of TDS - Addition u/s 194J or 194C - assessee has made payments for purchase of bulk bandwidth data from M/s. Bharti Airtel Ltd., and M/s. Reliance Communications Ltd. - default u/s.201(1) and 201(1A) - HELD THAT:- Payments made by the assessee for bulk purchase of bandwidth from service providers like M/s. Bharti Airtel Ltd., and M/s. Reliance Communications Ltd., cannot be considered as fees for technical services because such services have been provided through optical fiber cable without any human intervention - as per terms of agreement and nature of services between parties, it is clearly in the nature of works contract which comes u/s.194C f the Act. AO as well as the ld.CIT(A) has erred in holding the assessee as an assessee in default u/s.201(1) / 201(1A) of the Act to compute short deduction of TDS and interest thereon. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete additions made towards short deduction of TDS and interest u/s.201(1) / 201(1A) - Appeal filed by the assessee is allowed.
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2021 (7) TMI 1196
Income accrued in India - whether the supply of the software by the assessee company is taxable as royalty under the DTAA between the India and the Sweden or it should be a sale Simpliciter, which is taxable as business income if the assessee has a Permanent Establishment in India? - HELD THAT:- We find that the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] has held that the amounts paid by the resident Indian end-users/distributors to nonresident computer software manufacturer/suppliers as consideration for resale/use of the computer software to end-user license agreement (EULA)/distribution agreements is not for payment of the royalty for the use of copyright in the computer software and that same does not give rise to any income taxable in India. In the instant case before us also software license agreement between the assessee and the customer was for use of the software and therefore corresponding supply of the software is not in the nature of the royalty taxable in India as per DTAA between India and the Sweden. We note that the Ld. DR has also fairly conceded that the dispute is covered by the decision of the Hon ble Supreme Court in the case cited above. Accordingly, following the decision of the Hon ble Supreme Court (supra), we uphold the finding of the Ld. CIT(A) on the issue in dispute. The grounds raised by the revenue are accordingly dismissed.
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2021 (7) TMI 1194
Penalty u/s 271(1)(c) - Bogus purchases - HELD THAT:- Assessing Officer imposed penalty under section 271(1)(c) of the Act on ad hoc basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned CIT(A) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. - Decided against revenue.
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2021 (7) TMI 1193
Penalty u/s 271(1)(c) - addition made on account of bogus purchases - HELD THAT:- Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. DR has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned CIT(A) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. Consequently, we uphold the order passed by the learned CIT(A) by dismissing the grounds of appeal raised by the Revenue.
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2021 (7) TMI 1192
Losses in derivative segment and claim the set-off of the same as normal business loss - Set off of losses incurred in the trading activity on account of derivative segment (futures and options) against the business income during the year without appreciating the fact that AO has rightly treated the losses as speculative loss and not allowed to set off by invoking the provisions of Section 73(1) - HELD THAT:- After considering the ratio of decision of Hon ble Apex Court in Snowtex Investment Ltd.[ 2019 (5) TMI 1165 - SUPREME COURT] that the provisions of Sec.43(5) were amended by Finance Act, 2005. Prior to the amendment, Section 43(5) defined a 'speculative transaction' to mean a transaction in which a contract for the purchase or the sale of any commodity including stocks and shares is settled otherwise than by the actual delivery or transfer of the commodity or scrips. The impact of the amendment by the Finance Act, 2005 was that an eligible transaction on a recognised stock exchange in respect of trading in derivatives was deemed not to be a speculative transaction. With effect from 01/042006, by deeming fiction, trading in derivatives was not to be regarded as speculative transaction when it was carried out on a recognized stock exchange. CBDT Circular dated 27/02/2006 indicated that this amendment was occasioned by the changes which were introduced by SEBI both at the legal and technological level for bringing in greater transparency in the market for derivatives We are of the considered opinion that Ld. CIT(A) has clinched the issue in the correct perspective. The losses arising to the assessee in derivative segment are not to be considered as speculative in nature by virtue of clause (d) to sub-section (5) of Sec.43. The same are to be treated as normal business losses. This being so, the set-off of the same would be allowed in accordance with the law. Ground No.1 of the appeal stand dismissed. Earned profit in trading activity in cash segment and speculation income - There are no losses under both the segments. The ground raised by the revenue is misplaced.
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2021 (7) TMI 1191
Revision u/s 263 - estimation of income on bogus purchases - entities merely provided accommodation entries against commission without delivering actual goods or services - HELD THAT:- The assessee produced requisite details and documentary evidences including stock record and quantitative details of opening stock, closing stock, purchase, sale etc. The corresponding sales made against the purchases were also demonstrated. The copies of purchase invoices as well as ledger extracts were furnished in support of purchase transactions. After considering all these evidences, Ld. AO came to a conclusion that since sales were offered and adequate quantitative details were produced by the assessee, the conclusion which was to be drawn was that the goods were procured from grey market whereas the bills were obtained from accommodating suppliers. In such a case, the only option left was to estimate the suppressed profits on these transactions. Keeping in view the applicable VAT rate, Ld. AO estimated a further addition of 1.6% against these purchases. There facts would show that Ld. AO took one of the possible view with due application of mind which could not be termed as perverse, in any manner. There could be no sale without actual purchase of goods keeping in view the nature of assessee s business. The action of Ld. AO was in conformity with the ratio of various judicial pronouncements as enumerated in para 6.4 of the assessment order. In view of the foregoing, it could very well be said that the view of Ld. AO was one of the possible view which was not contrary to law or unsustainable in law. Merely because Ld. Pr. CIT held a view that the estimation should have been at higher rates or entire purchase should have been disallowed, the same would not make the order erroneous unless it was found that the action of Ld. AO was not in accordance with law or perverse, in any manner. This being the case, the revision could not be held to be justified as per the ratio laid down by jurisdictional High court in Grasim Industries Ltd.[ 2010 (2) TMI 4 - BOMBAY HIGH COURT] . Also see assessee's own case [ 2020 (11) TMI 167 - ITAT MUMBAI] We hold that revisional jurisdiction was invalidly exercised and therefore, liable to be set-aside - Decided against revenue.
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2021 (7) TMI 1189
Denial of exemption u/s. 80P(2)(d) in respect of interest income earned from Co-operative banks - HELD THAT:- In the case of Karkala Co-op. S. Bank Ltd. Vs. ITO [ 2021 (2) TMI 854 - ITAT BANGALORE] the Bangalore bench of Tribunal has considered issue of eligibility of the assessee to claim deduction u/s. 80P(2)(d) and it was held that the assessee is eligible for deduction of expenses incurred for earning the interest income - We set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the AO with the direction to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head - other sources. Denial of deduction u/s. 80P in respect of commission income earned on sale of e-stamps - HELD THAT:- Tax authorities have rejected the claim only on the ground that the Commission income has been earned mainly from outsiders and not mainly from members - HELD THAT:- A perusal of provisions of sec. 80P(2)(c) would show that there is no such restriction prescribed in it. Section 80P(2)(c) prescribes deduction in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b). It further states that the deduction u/s. 80P(2)(c) is allowable to so much of its Profits and gains attributable to such activities as does not exceed the amount prescribed. Thus the quantum of deduction is the amount of profits and gains attributable to the activities subject to the maximum amount prescribed therein. Hence, we are of the view that the assessee would be eligible for deduction u/s. 80P(2)(c) of the Act in respect of commission income on sale of e-stamps, since it is not one of the activities mentioned in clause (a) or (b) We notice that it is necessary to first determine the profits and gains attributable to the activities of earning commission income on sale of e-stamps and then compute deduction u/s. 80P(2)(c) subject to the limits prescribed in the said provision. Accordingly, this issue requires fresh examination at the end of AO. Both the appeals are treated as allowed for statistical purposes.
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2021 (7) TMI 1188
Disallowance u/s. 40A[3] - disallowance of cash payment made by assessee to various vendors for purchase of land - payments made by the appellant as the agent of housing society for purchase of lands on which residential sites were to be formed for the members of the housing society - assessee is a developer and agreed to sell residential sites to society for which it acquired lands - HELD THAT:- The necessity shown by assessee to make the payment in cash is that, the vendors insisted at the last moment in certain cases. It is also noted that the said monies paid in cash to various vendors are out of drawings made from bank accounts and therefore exigency in making the such payment in cash cannot be suspected. In the present facts of the case the reason for making the payments in cash to certain vendors by the assessee has not been found to be incorrect by any of the authorities below. There is no iota of evidence that is brought on record which could cast doubt on the reason for which the payment has been made in cash by assessee. Further it is also not the case of Ld. AO that, the transaction entered into between assessee and the Vendors towards purchase of the land is bogus. Admittedly payments made by the assessee by cheque has been accepted by the Ld. AO. As decided in M.K. Agrotech Pvt. Ltd [ 2019 (1) TMI 37 - KARNATAKA HIGH COURT] once the payee admits the acceptance of the monies in cash and has been credited into their respective accounts the object with which section 40(A)(3) was promulgated stands satisfied. We note that in the present facts of the case the monies received in cash has been recorded in the agreements entered into between the assessee and various vendors. There is no denial of having received the monies in cash by the vendors - Decided in favour of assessee.
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2021 (7) TMI 1187
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of single charge - HELD THAT:- It is an admitted fact that before levy of the penalty A.O. has issued show cause notice in which A.O. has mentioned both the limbs of Section 271(1)(c) of the I.T. Act that assessee have concealed the particulars of your income or furnished inaccurate particulars of such income. Thus the A.O. has not mentioned as to for which limb of Section 271(1)(c) of the I.T. Act penalty shall have to be levied against the assessee. A.O. has issued invalid and defective notice under section 271(1)(c) of the I.T. Act read with Section 274 - As relying on ANANTA GOPAL KARAT case [ 2019 (4) TMI 1992 - ORISSA HIGH COURT] the entire penalty proceedings are vitiated and are liable to be quashed. - Decided in favour of assessee.
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2021 (7) TMI 1186
Revision u/s 263 - method of accounting adopted by the assessee for revenue recognition - CIT directing the A.O. to adopt percentage completion method to determine the profit of the project as according to AS-7 revised in 2002 w.e.f. 1.4.2003 the completed contract method has been scrapped and ICAI guidelines preferred the percentage completion method and interest on advances received from customers cannot be treated as business income and should be treated as income from other sources - HELD THAT:- We find that this is a peculiar situation where in the immediately preceding assessment year 2014-15, the A.O. made addition disputing the method of accounting adopted by the assessee for revenue recognition, which was project completion method and this addition was deleted by Ld. CIT(A) As noted no appeal has been filed by the revenue against the said order of the Ld. CIT(A) till date, therefore, we safely presume that the department has accepted the order of the Ld. CIT(A) for the assessment year 2014-15 without any further dispute and litigation. Further, since the project was completed during immediately succeeding assessment year 2016-17 and the assessee offered to tax the income accrued to it from the said project and also paid all due taxes etc. thereon. Therefore, we are unable to agree with the allegation of Pr. CIT that the orders of the authorities below are erroneous and prejudicial to the interest of the revenue. Pr. CIT is not empowered to invoke revisionary powers u/s 263 of the Act in such a situation, where a view has been taken by Ld. CIT(A) in the similar facts and circumstances of the case, which has been accepted by the department without any further dispute or litigation. As decided in case of Coffeeday Global Ltd. [ 2021 (3) TMI 1030 - KARNATAKA HIGH COURT] the principle of res judicata does not applicable to tax proceedings and principle of consistency must be followed by the revenue authorities which is a mandate of tax jurisprudence. This principle supports the case of the assessee challenging the invocation of revisionary powers u/s. 263 of the Act. Competent authority including ld. Pr. CIT can call and examine the record of any proceedings under the Act and if he consider that any order passed therein by the 'Assessing Officer' is erroneous and prejudicial to the interest of the revenue legislature, to its wisdom, has not used any word that the order of higher authority i.e. CIT(A) can be reversed by invoking provisions of section 263 of the Act and thus, order of the ld. Pr. CIT revising the first appellate authority of Ld. CIT(A) is not sustainable as per the provisions of the Section 263 of the Act. Amount of interest income has been received from the surplus amount of advance from customers during the period and interest income was earned thereon which was inextricably linked with the project of the assessee and the same was rightly treated as business income and the assessee utilized the same for setting off the interest paid by it - In the present case, undisputedly, the project was completed during immediately subsequent assessment year 2016-17 and all income including impugned interest income was offered to tax and due taxes etc thereon were also paid by the assessee but as we have observed above the tax on the interest income, which was to be charged in A.Y. 2015-16, was paid by delay of one year. The total effect is that the tax on the interest income which was to be received by the department during A.Y. 2015-16 was actually received in A.Y. 2016-17 i.e. after one year and the payment of tax thereon was made by the assessee after one year. Undisputedly, since assessee is a company and rate of tax etc were the same for both the years, thus, we observe that there is no loss of tax on the interest income except delay of one year in receipt due tax by the Revenue. This factual position was emerged and agreed by both the parties during the arguments. We always follow and approve a well recognized principle of tax jurisprudence that the income should be taxed in the right hands in the right relevant period of assessment and all possible leakage of revenue including interest on delayed payment of tax should be taken care and covered in the interest of Revenue. We accordingly up-hold the impugned order of the ld. Pr. CIT passed u/s. 263 to the extent that there was an error in the assessment order passed by the A.O. in not bringing to tax the interest income in the year under consideration under the head income from other sources . Once, this interest income is brought to tax in A.Y. 2015-16, closing WIP for A.Y. 2015-16 will be increased to that extent and the income of the assessee chargeable to tax for A.Y. 2016-17 will be reduced consequently. We modify the impugned order of the Ld. Pr. CIT and direct the A.O. to bring to tax interest income in A.Y. 2015-16 under the head income from other sources and increase the closing work in progress of A.Y. 2015-16 and opening work in progress for A.Y. 2016-17 to that extent and to recalculate tax liability for both the years accordingly within a period of two months. Appeal of the assessee is partly allowed
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2021 (7) TMI 1185
Revision u/s 263 - as per CIT AO erred in allowing deduction claimed for maintenance/compensation related to rental income when only standard deduction of 30% is allowable which amounts to double deduction, on the issue of notional rental income from undivided share of an unrented ancestral building and on the issue of interest u/s.234B - HELD THAT:- Taking note of the decision of the Apex court in the case of Malabar Industrial Co. Ltd. Vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] held that if the A.O. has taken a possible view, it cannot be said that the view taken by him is erroneous nor the order of the AO in that case can be set aside in revision. It is a case of no-enquiry at all on these issues and it is not the case of the assessee that A.O. was made aware that issues have been settled by the Tribunal and accepted by the department. In the light of the above facts since the A.O. has not made any enquiry into the faults pointed out by the CIT, the order passed by the A.O. has to be treated as erroneous as well as prejudicial to the interest of the revenue. CIT gets jurisdiction to invoke revisional jurisdiction u/s.263 of the Act and thus the legal issue raised by the assessee is dismissed. The other issues raised in the other grounds need factual enquiry and verification, so we are not examining the merits of those grounds. So, those grounds of the assessee preferred against the merits of all the issues raised by the Ld. PCIT stand dismissed. Therefore, we do not find any infirmity in the order passed by the Ld. Pr. CIT and the impugned order of the Ld. Pr. CIT is upheld - before parting we direct the A.O. that while he gives effect to the Ld. PCIT's order, he has to take into consideration the rule of consistency raised by the assessee and decide the issue in accordance to law - contentions of the assessee on each issues should be considered by the A.O. while deciding all issues and the issues settled by this Tribunal cannot be disturbed without there being any change in fact or law and in accordance to principles of consistency and in accordance to law. - Decided against assessee.
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2021 (7) TMI 1184
Addition u/s 40A(2) - excessive payment made to its director - HELD THAT:- In the present facts of the case, assessee paid to its director salary and commission being percentage of the profits earned. We find that expenditure was claimed by assessee on account of payment of salary and commission to the director which is not in violation of any prevailing provisions of the Act. Further, it is also stated that the director to whom the payment was made by assessee is also paying taxes being in the highest tax bracket. Facts before us are similar to decision relied by the Ld. AR which has not been refuted by the revenue. In the present fact, Revenue has not made out any cases of tax evasion. However in the interest of Justice we remand this issue back to the Ld. AO only to verify the rate of tax applicable to the director during the year under consideration and to consider the claim of assessee in accordance with the various ratios laid down - Decided in favour of assessee.
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2021 (7) TMI 1182
Assessment u/s 153A - disallowance of claim of 80IA deduction - whether regular assessments in assessee's cases could be held to be pending as per section 153A(1) second proviso or not? - HELD THAT:- We have not come across any such incriminating material relied upon by the learned lower authorities in A.Ys 2010-11 2011-12. We thus decline the Revenue s argument quoting EN Gopa Kumar Vs. CIT [ 2016 (11) TMI 72 - KERALA HIGH COURT] and CIT Vs. Kesarwani Zarda Bhandar [ 2017 (4) TMI 57 - ALLAHABAD HIGH COURT] and CIT Vs. Rajkumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] to hold that the impugned assessments are not sustainable in law since not based on any incriminating material found or seized during the course of search. The same stands quashed in the former twin assessment years 2010-11 and 2011-12. The assessee's corresponding appeals are accepted on the forgoing legal issue thereby rendering all other pleadings on merit being rendered infructuous. Treating the interest income(s) in these twin assessment years as income from other sources than eligible for section 80IA deduction as business income - HELD THAT:- We prima facie notice that the assessee s income from other sources also included dividend from mutual funds and rental receipts, etc. There is no indication at all in the learned lower authorities orders as to whether the assessee had proved the corresponding receipt to have been derived from the eligible undertaking(s) or not. Faced with this situation, we deem it appropriate to restore the instant identical issue back to the AO to be examined afresh subject to the condition that it shall be the duty and responsibility of the tax payer only to prove the foregoing clinching direct nexus between its interest and other income derived from the eligible undertaking within three effective opportunities of hearing. Revision u/s 263 - exercise of the PCIT s revision jurisdiction holding the corresponding assessment dt.31.3.2015 as an erroneous one causing prejudice to the interest of Revenue on the ground that the AO had failed to compute 115JB section MAT qua assessee's provision for bad and doubtful debts of ₹ 1968.10 lakhs as per Expln.(1)(i) - HELD THAT:- As submitted before us that the assessee had very well made simultaneous reduction from the loans and advances on the assets side of the Balance Sheet which amounted to write of of the said debts not hit by the foregoing statutory provision. Mr. Afzal quoted hon ble Gujarat high court s Full Bench decision in CIT Vs. Vodafone Essar Gujarat Limited [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] . We find no merit in the assessee's foregoing argument since it has not placed on record the corresponding books of account suggesting corresponding simultaneous reduction of the loans and advances on the asset side of the Balance Sheet. We thus quote hon'ble apex court landmark decision in Malabar Industrial Company Ltd. 2000 (2) TMI 10 - SUPREME COURT] and hold that the learned PCIT has rightly exercised its 263 revision jurisdiction in the given facts and circumstances of the case.
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2021 (7) TMI 1181
Nature of expenditure - Disallowance of claim of guarantee fees paid to Government of Gujarat - disallowance as revenue expenditure as it is of enduring nature in the assessee's business and hence capital in nature - HELD THAT:- The issue has already been subjected to judicial consideration in The DCIT vs. Gujarat Energy Transmission Corporation Ltd. [ 2019 (9) TMI 376 - ITAT AHMEDABAD] concerning A.Y. 2009-10 and thus is no longer res integra. In parity with the view expressed by the co-ordinate bench, we do not see any error in the conclusion drawn by the CIT(A) in favour of the assessee. Disallowance of prior period expenses - disallowance made on the ground that the expenses under various heads as noted in the assessment order pertained to earlier years and the assessee which is following system of accounting ought to have made provision for expenses in those respective years for eligibility of claim - HELD THAT:- As submitted that the majority of expenditure out of prior period expenses on account of excess provision written back. The explanation appears obscure in the absence of proper details. We simultaneously note that assessee is a State Government Undertaking and its accounts are subjected to review by CAG and therefore it cannot be postulated that there was any deliberateness in not furnishing relevant details before the revenue authorities. The bona fides of the Assessee is also augmented by the facts that the Assessee has reported staggering carry forward losses in its returned income. Thus, there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of A.O. for examining the issue de novo after verifying facts as may be considered necessary and expedient in accordance with law. See ADANI ENTERPRISES LTD. [ 2016 (7) TMI 1564 - GUJARAT HIGH COURT] - The issue raised in its ground of appeal is thus set aside to the file of A.O. in terms of directions noted above. As a result, the ground of assessee's appeal is allowed for statistical purposes.
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2021 (7) TMI 1180
C apital gain on the sale of agricultural land - computation of capital gain by adopting the rate as on 1.4.1981 - benefit of 54B - HELD THAT:- It is the duty of the revenue, which is a state within the meaning of Article 12 of the Constitution of India, to treat the citizens equally, without discrimination and at par. In the present case the lands of Village Bhokhra were acquired and the compensation were granted to various parties, including the assessee before us. Uniform land rate as applicable on 1.4.1981, were required to be applied for the purpose of computing long capital gain, in respect to all the land holders, unless some special rates were shown to be applicable, as the A.O. had not referred the matter to DVO under section 55A of the ACT. No dissimilarity had been brought to the notice by the ld. DR between the assessee before us Sh. Paramjit Singh' and Sh. Mander Singh where in higher rates of ₹ 70,000/- to ₹ 85,000/- per kanal were applied by AO/CIT(A). It was also not disputed that the land of these assessee were also acquired under the same proceedings and was situated in the same village. We set aside the order passed by the CIT (A) and A.O. and remand the matter back the matter to the file of the assessing officer with the direction to apply the average of rates i.e. ₹ 77, 500/- per Kanal as were applied to in the matter of 'Sh. Paramjit Singh' and Sh. Mander Singh(supra) and work out the LTCG and thereafter grant the benefit of 54B to assessee before us, Needless to say this exercise shall be carried out after following the principle of natural justice and affording the opportunity of hearing to the assessee/s. Appeals of the assessee are allowed for statistical purposes.
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2021 (7) TMI 1174
Assessment u/s.144 treating the cash deposited as unexplained - Addition being the deposits made in the bank account on non-compliances of the notices - HELD THAT:- CIT(A) has admitted the additional evidences furnished by the assessee. The assessee explained that he was an agriculturist and main source of his income was from agricultural activities. In this regard, the assessee has furnished relevant copies of sale of agricultural produce and evidences of incurring expenditure pertaining to agricultural activities. Assessing Officer has raised clarification in his remand report on the additional evidences furnished by the assessee before the ld. CIT(A). To explain the query raised by the Assessing Officer in his remand report and to furnish further evidences required by the Assessing Officer in the remand report, the assessee has asked additional time from the ld. CIT(A). On perusal of the order of the ld. CIT(A) and material on record it is discerned that no specific opportunity was communicated to the assessee in order to make compliance with the further information and evidences sought by the Assessing Officer in the remand report. In light of the above fact and circumstances it would serve the end of justice if an opportunity is provided to the assessee to furnish the additional information and evidences as required by the AO in the remand report. Thus we set aside the order to the AO for deciding afresh after affording opportunity to furnish the information/evidences sought in the remand report - Appeal of the assessee is allowed for statistical purposes.
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2021 (7) TMI 1171
Addition of development expenses - surrender made by assessee in survey operation u/s 133A - During the course of survey, the assessee had surrendered many amount on various heads including, cash unexplained pertaining to Kartar estate and development cost of Kartar estate(project phagwarah) - AO has opined that the amount was income from other sources falling under the group of section 69A to 69 C and was not account of the business income - HELD THAT:- In the present case the assessee was not able to demonstrate the source of investment made for development of Kartar estate ( s. no 4 of surrendered statement )from the books of account of the assessee or otherwise the source of investment .Instead of showing the source of cost incurred for development of project, the assessee had treated the same to be business income in the computation and it claimed set off against the same in the trading account . In our considered opinion , the initial onus is on the assessee to show the source of investment /cost incurred for development of project and thereafter only the same can be treated as business income and as per section 71 of the Act, the losses can be set off against business income only , needful was not done, hence the income disclose during the survey for the cost incurred for development appellate is required to be treated as investment made outside the books of account and is required to be held as income from any other sources. Hence the set off the business losses can not be permitted against the income from any other source.See M/S KIM PHARMA (P) LTD. VERSUS COMMISSIONER OF INCOME TAX. PANCHKULA AND ANOTHER [ 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] - Decided against assessee.
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2021 (7) TMI 1170
Difference in the amount of lease money claimed by the assessee and that confirmed by the Mining Department - HELD THAT:- It is an admitted fact that the account statement received from the mining department is not complete and it doesn t contain the details of payments of royalty for month of December 2011 and January 2012 as admitted by the AO in his remand report dated 24.01.2018. Therefore, the said statement cannot be a sole basis for denying the claim of the assessee where the assessee has submitted the details of actual payment of royalty during the said period of Dec 2011 to Jan 2012. Therefore, on the face of actual payment which has been made and credited to the account of the mining department as so claimed, the claim of the assessee deserve to be allowed - we set-aside the matter to the file of the AO for the limited purposes of verifying the said payments so claimed by the assessee as made to the mining department and where the same is found to be in order, allow the necessary relief to the assessee subject to ₹ 72,79,773/- as claimed by the assessee and which is subject matter of disallowance. The ground of appeal is thus allowed for statistical purposes. Addition u/s 41(1) - HELD THAT:- We find that the liabilities are still being recognized in the books of accounts of the assessee and there is nothing on record in terms of remission/cessation of liability. Therefore, the addition so made is hereby directed to be deleted and the ground of appeal is allowed. TP Adjustment - ALP towards interest on loans to M/s Malmor Enterprises INC USA to whom the loan has been advanced by the assessee - HELD THAT:- The contention that the outstanding loan has been brought forward from preceding year and there is no fresh loan/advance during the relevant previous year, therefore the same cannot be characterized as international transaction during the relevant previous year u/s 92CA(3) of the Act is bereft of any merit. Once a transaction has been characterized as an international transaction and the same continue to remain outstanding during the relevant financial year, there is no necessity to record a fresh finding as far as characterization of the said transaction is concerned and only thing which needs to be determined is determination of ALP as relevant for the relevant year under consideration. In the instant case, the ld CIT(A) following the order of the Coordinate Bench for A.Y 2007-08 has restricted the ALP interest @ 8.9% as against 11.4% applied by the AO. The Revenue is not in appeal before us and the assessee has not been able to establish any alternate basis for determination of ALP, hence, the ground of appeal is hereby dismissed. Disallowance of depreciation claimed by the assessee on plant and machinery - AO has disallowed the depreciation on the plant and machinery as there was no activity towards manufacturing of readymade garments carried on by the assessee during the year and as a result, the assets have not been put to use during the relevant previous year - HELD THAT:- Similar findings have been recorded by the AO in A.Y 2011-12 and against such findings, there is nothing on record that the assessee has challenged the said findings before the appellate authority. Once under similar fact pattern, depreciation claim has been disallowed by the AO and the assessee having not challenged the same and thus accepted the position adopted by the AO, the principle of consistency warrants that no interference is called for - We find that similar contentions have been raised before the ld CIT(A) who has rightly considered the same and disallowance of depreciation claim has rightly been upheld by him. The findings of the ld CIT(A) are hereby affirmed and the ground of appeal is dismissed. Disallowing the interest paid to Banks holding the same as attributable to interest free loans provided by the assessee to its sister concerns - HELD THAT:- Though it is the claim of the assessee that loans/advances in the name of sister concerns in most of the cases have been brought forward from preceding years and have no nexus with interest bearing funds, however, there is nothing on record to substantiate the said contentions. Even where the loans and advances have been lent in earlier years, the onus still lies with the assessee to demonstrate that in the year when the funds were advanced, the same had no nexus with borrowed funds and were from the interest free funds. Given that the loans and advances continue to remain outstanding as well as the fact that loans taken by the assessee continue to remain outstanding and the interest expense have been claimed, proportionate disallowance of interest has been made by the AO and which has rightly been upheld by the ld CIT(A). Therefore, we donot find any infirmity in the findings of the ld CIT(A) and the same are hereby confirmed and the ground of appeal is hereby dismissed. Addition of penalty paid to Mining Engineer, Jaipur for breach of contractual obligations - HELD THAT:- We find that all the contentions raised before us have been raised earlier before the ld CIT(A) and which have been duly considered by him. Merely passing a journal entry in the books of accounts is not determinative of the incurrence of the expenses and claim thereof for tax purposes. There is nothing on record in terms of any demand notice from the mining department or actual payment by the assessee towards such penalty. Though it is the claim of the assessee that the amount has been paid by account payee cheques, however, there is nothing on record to substantiate the said contentions. Therefore, we donot find any infirmity in the findings of the ld CIT(A) and the same are hereby confirmed and the ground of appeal is hereby dismissed. Addition towards disallowance of various expenses - disallowance have been made on the ground that the expenses have been claimed through self-made vouchers and possibility of personal expenses of directors cannot be ruled out - HELD THAT:- Unless the nature and quantum of expenses are specified, merely stating that expenses are supported by self-made vouchers cannot be a reason for disallowance. Further, as far as personal expenses of directors are concerned, only an apprehension has been raised and in any case, the assessee being a corporate entity, where any expenses of directors are incurred/borne by the assessee, what is relevant to examine is whether such expenses have been incurred pursuant to any arrangement or understanding between the two for the purposes of business or not. However, in absence of any specific finding by either of the authorities below, the disallowance so made and sustained is clearly adhoc in nature and the same is directed to be deleted.
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2021 (7) TMI 1169
Revision u/s 263 - A.O has not carried out the independent enquiries or verification and examination of the loan creditors and also fail to verify the fact of repayment of loans were made through account payee cheques - HELD THAT:- We found that the assessee firm has fought a long litigation before the Honorable Tribunal up to the year 2016 being the three rounds of litigation On perusal of the Pr.CIT order we found that the Pr. CIT has only verified the facts of loan and the assessee firm is in the litigation before the Hon ble Tribunal for the third time and the Pr.CIT has not pointed out any specific error in the A.O. order and emphasized only on the status of repayment of loan by account payee cheques and has relied on the observations of the A.O. duly endorsed by the Range Head CIT should specifically point out the error in the order passed by the A.O. which is erroneous and prejudicial to the interest of the revenue. We find that there is no enquiry which was conducted by the Pr.CIT except relying on the A.O. submissions endorsed by the range head. We also observe that the assessee has fought the litigation for the fourth time in the present case before this Hon ble Tribunal. We find the A.O as per the directions of the Honorable Tribunal in order [ 2016 (7) TMI 1618 - ITAT MUMBAI] has taken a possible view considering the litigation for a period of more than 20 years. We are convinced that the order passed by the A.O are on facts, circumstances, possible and reasonable views. We find the action of the Pr. CIT revising the A.O. order with out conducting of enquiry is not tenable. Accordingly we set aside the order of the Pr. CIT and allow the grounds of appeal in favour of the assessee.
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2021 (7) TMI 1168
Disallowance u/s 37(1) - security deposit encashment claim - AO observed that encashment of bank guarantee being penal in nature on account of nonperformance of contract at assessee s behest - as per AR impugned encashment of bank guarantee is outcome of failure to perform its contractual obligation only without involving any offence or penal component u/s.37(1) - HELD THAT:- Faced with this issue, we find that a catena of case law (GUJARAT STATE FINANCIAL CORPORATION [ 2013 (8) TMI 78 - GUJARAT HIGH COURT] , NEO STRUCTO CONSTRUCTION LTD. [ 2013 (7) TMI 851 - GUJARAT HIGH COURT] , REGALIA APPARELS (P.) LTD. [ 2013 (7) TMI 114 - BOMBAY HIGH COURT] , Jamna Auto Industries[ 2008 (1) TMI 62 - PUNJAB HARYANA HIGH COURT] and Green Delhi BQS Ltd. [ 2018 (5) TMI 632 - ITAT DELHI] holds that such an encashment of bank guarantee is incurred in the normal course of business than involving any penalty element at all. We adopt the very reasoning herein as well and direct the Assessing Officer to delete the impugned disallowance/addition in issue - Decided in favour of assessee.
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2021 (7) TMI 1167
Disallowance of appellant's claim of deductions u/s 80(P)(2)(d) and 36(1)(vii)(a) - HELD THAT:- Hon'ble apex court s landmark decision in National Thermal Power Co. Ltd.,[ 1996 (12) TMI 7 - SUPREME COURT] as considered in tribunal s Special Bench s decision All Cargo Global Logistics Ltd. [ 2012 (7) TMI 222 - ITAT MUMBAI(SB)] holds that we can very well entertain a new ground going to root of the matter so as to determine correct tax liability of a taxpayer. We go by the very analogy and find that the assessee s foregoing petition seeks to raise its additional substantive ground that it is eligible for Section 36(1)(viii) deduction in respective amounts transferred to special reserve since covered within the definition of; a specified entity; as per the provisions of the Act. DR fails to dispute that neither the Assessing Officer nor the CIT(A) has adjudicated the above clinching issue in their respective orders. We deem it appropriate to restore the impugned issue of Section 80P(2) disallowance claim back to the Assessing Officer to be examined afresh in light of Section 36(1)(viii) of the Act; as applicable in case of the specified entity; as per law, within three effective opportunities of hearing. It is further made clear that it shall be assessee s responsibility only to file all the necessary details. Assessee s appeal is treated as allowed for statistical purposes
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2021 (7) TMI 1163
Assessment u/s 153A - jurisdiction of the AO - HELD THAT:- We are of the view that addition made by the AO has already been deleted by the CIT(A) on merit. The order of the CIT(A) has not been challenged by the Revenue in further appeal - adjudication of legal issue at this stage would only an academic exercise. It is not going to materially affect the assessee in any manner. No other proceedings, in consequence to this proceeding qua the assessee are pending. We do not deem it necessary to devote time energy for resolving an academic litigation. To our mind, to some extent this appeal of the assessee has become redundant. We observe that dismissal of this appeal will not cause any prejudice to other assessee, who may challenge identical notice on account of search conducted at Barter. It will not affect the case of the AO qua other assessees. In future, on account of some proceedings for adjudication on the validity of the notice arises, then the assessee will be at liberty to apply for recall of this order, and may press this ground of appeal. With the above observation, this appeal is dismissed.
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Customs
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2021 (7) TMI 1199
Imposition of penalty - section 112(b) of Customs Act - smuggling - diamonds - existence of mens rea or not - reasons to believe - HELD THAT:- Perusal of the said provisions clearly reveals that the penalty under the said provisions can be imposed wherever there is an element of mensrea or conscious knowledge, which is a sine qua non for imposition of penalty. This is evident from a plain reading of Sections 112(b) of Customs Act, 1962 which uses the expressions which he knows or has reason to believe are liable to confiscation under Section 111 . The facts of the case in hand do not reveal any such element of mensrea or conscious knowledge qua these appellants. The active role of these Appellant, do not justify imposition of heavy penalty under Section 112(b) of Customs Act 1962 - The DRI investigation has not brought any such evidence except retracted confessional statements to show that Appellants have smuggled rough diamonds into India in the night of 12/13-04-2011. The quantum of penalty is reduced - appeal allowed in part.
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Corporate Laws
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2021 (7) TMI 1209
Attachment of premises - Priority of charge/mortgage over the premises - priority over the dues of the Income Tax department or not - commencement of proceedings under the SARFAESI/Securitisation Act - Whether the secured debt assigned in favour of Petitioner has a priority over Government dues/tax dues? - HELD THAT:- The issue decided in the case of THE STOCK EXCHANGE, BOMBAY VERSUS VS. KANDALGAONKAR [ 2014 (10) TMI 368 - SUPREME COURT] while considering the question whether the lien exercised under Rule 43 of the Stock Exchange can be said to be a superior right to the Income Tax dues, which may become payable by virtue of the Stock Exchange being a secured creditor, has held that the Income Tax Act does not provide for any paramountcy of dues by way of Income Tax - Supreme Court while holding thus, referred to its own decision in the case of DENA BANK VERSUS BHIKHABHAI PRABHUDAS PAREKH AND CO. AND OTHERS [ 2000 (4) TMI 36 - SUPREME COURT] where it was held that Government dues have priority only over unsecured debts. Thus, there is no provision in the Income Tax Act which provides for any paramountcy of the dues of the Income Tax department over secured debt. The Petitioner s charge/mortgage over the said premises has priority over the dues of the Income Tax department and the said attachment dated 17th January 2013 by Respondent No.1 cannot come in the way of Petitioner s rights as secured creditor - Respondent No. 1 is directed to, within a period of two weeks from the date of this order, (i) raise the said attachment levied pursuant to the order of attachment dated 17th January 2013 on the said premises viz. office premises No. 1004, 10th Floor, Prasad Chambers, Opera House, Mumbai-400 004 and (ii) to grant and issue No Objection Certificate permitting the Petitioner to sell the said premises. Petition allowed.
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2021 (7) TMI 1177
Seeking to restore the name of the Company in the Register maintained by the Respondent/RoC - Section 252 of the Companies Act, 2013 - HELD THAT:- Upon perusing the documents, it is seen that the Company has not placed on record any document to show that they have been active and carrying on its business operations immediately two years preceding the date of strike off. However, a perusal of other communications which are placed along with the written submissions discloses the fact that the Company is having future prospects of running the same for the purpose of which it was incorporated. It is significant to point out here that while considering an Application under Section 252(3) of the Companies Act, 2013, this Tribunal cannot focus only on the past activities, however, is also required to look into the future prospects of the Company and an upward movement in the business cycle of that industry which would result in the generation of revenue - It is also seen from the records produced before this Tribunal that the Company is proposing to construct a manufacturing unit and has also produced a blue print in relation to the same, which also fortifies the 'just' ground being a factor to be considered by this Tribunal in the process of deciding an Application/Appeal under Section 252(3) of the Companies Act, 2013. The Registrar of Companies, Chennai is ordered to restore the original status of the Applicant Company viz. M/s. Ferco Shutters Seating India Private Limited as if the name of the Company has not been struck off from the Register of Companies with resultant and consequential actions like changing the status of Company from strike off to Active - Application allowed.
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2021 (7) TMI 1176
Seeking to restore the name of the Company in the Register maintained by the Respondent/RoC - Section 252 of the Companies Act, 2013 - HELD THAT:- Taking into consideration the provisions of Section 252 (3) of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register and in the interest of all the stakeholders including members of the Company, its employees as well as the revenue and the Applicant itself who seeks restoration of the name of the Company in the register being maintained by RoC. The Registrar of Companies, Chennai is ordered to restore the original status of the Applicant Company viz. M/s. Shifa Housing Private Limited as if the name of the Company has not been struck off from the Register of Companies with resultant and consequential actions like changing the status of Company from strike off to Active - Application allowed.
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Insolvency & Bankruptcy
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2021 (7) TMI 1179
Liquidation of the Corporate Debtor - appointment of Liquidator - cessation of the moratorium declared under Section 14 of IBC - HELD THAT:- The Applicant has filed Form - H from which it is evident that the Fair value and Liquidation value in respect of the assets of the Corporate Debtor is arrived at ₹ 6.35 Crore and ₹ 5.50 Crore. Since the CoC in its 8th meeting held on 31.03.2021 after discussing and deliberating about the current affairs of the Corporate Debtor by taking into consideration that there was no Eol being received from any prospective Resolution Applicant, even after the same was issued twice and also keeping in view of the fact that the Corporate Debtor is not running its business and based on its commercial wisdom has decided to liquidate the Corporate Debtor. The liquidation of corporate Debtor is ordered - the liquidator is appointed - application allowed.
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2021 (7) TMI 1178
Dissolution of the Company - voluntary liquidation - Section 59(7) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On examining the submissions made by the Learned Liquidator and after perusing the documents annexed to the Application it appears that the affairs of the Company have been completely wound up and the assets of the Applicant Company have been completely liquidated and as such the Applicant Company deserves to be dissolved. Accordingly, in exercise of the powers conferred under Section 59(8) of IBC, 2016, the dissolution of M/s. Angalaparameswari Finance Private Limited is ordered and the Applicant Company shall stand dissolved from the date of this order. Application allowed.
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2021 (7) TMI 1175
Acceptance or rejection of Resolution plan by CoC - Interference allowed with the commercial wisdom of CoC or not - Seeking to set-aside the decision of the Committee of Creditors (COC) of the corporate debtor in approving the resolution plan of the third respondent - HELD THAT:- A bare perusal of the decision in K. Sashidhar [ 2019 (2) TMI 1043 - SUPREME COURT ], made it clear that while rejecting or approving a resolution plan, the commercial wisdom of the COC cannot be interfered or modified by the Adjudicating Authority, as long as the resolution plan approved by the COC satisfies the requirements under Section 30(2) of the Code. The Hon'ble Apex Court in K. Sashidhar and in various subsequent decisions and also the Hon'ble NCLAT have categorically held that the COC while exercising its commercial wisdom can reject the resolution plan of an H1 bidder and can accept the resolution plan of other bidders, keeping in view the various aspects such as feasibility, viability, credit worthiness of the concerned applicant and the source of funds thereto, etc. There are no irregularity, in the decision of the COC in rejecting the resolution plan of the applicant and approving the resolution plan of the third respondent. It is further to be seen that the applicant was very much invited to all the COC meetings upto 18th COC whereunder his plan was discussed, deliberated and the applicant was asked to improve the same. There are no merits in the application - application dismissed.
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2021 (7) TMI 1173
Rejection of the claim in relation to the Operational Creditor - non admission of the claim in relation to the Financial Creditor - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is seen from the records that these operational creditors were supplying dairy products and sea foods and other food products to the Corporate Debtor for a long time and as such they are Operational Creditors in relation to the Corporate Debtor. However, it is seen from the written submissions made by the Resolution Professional that after the initiation of the CIRP, the RP has taken steps to keep the Corporate Debtor as a going concern and many of the Trade Creditors who are the Applicants herein have supplied materials during the CIRP period and have also received payments for supply of such materials during the CIRP period. Further, it should be noted that the timelines as envisaged under the Code mandates CIRP to be completed within a period of 330 days and also timelines have been fixed for submissions of the claim by the creditors. Also it must be noted that the RP cannot perpetually accept the claims from the Creditors till the end of the CIRP period as it would defeat the very purpose of the Code. The claim of the Applicants in their capacity as a Trade Creditors/Operational Creditor in respect of the Corporate Debtor cannot be condoned at this belated stage especially when the Resolution Plan is approved by the CoC and is pending before this Tribunal - Application dismissed.
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2021 (7) TMI 1172
Dissolution of Corporate Debtor - 54(1)(a) and Regulation 14 of IBBI (Liquidation Process Regulations 2016 or any other provisions of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is a fact on record that there are no realizable assets held by the Corporate Debtor so as to form a Liquidation Estate and to distribute the proceeds thereof. Accordingly, this Adjudicating Authority in exercise of the powers conferred under Section 54(2) of the I B Code, 2016, deems it proper to pass an order of the dissolution of the Corporate Debtor. Thus Corporate Debtor herein i.e., M/s. Sristek Clinical Research Solutions Limited stands dissolved from the date of this order. Liquidator also stands relieved. In the instant case, however, neither any compromise or arrangement could be arrived at u/s. 230 of the Companies Act, nor any amount was realized or distributed by the Liquidator. Moreover, the only Claimant is the original applicant/Operational Creditor - The original applicant/Operational Creditor shall reimburse the liquidation cost of ₹ 1,09,450/- to the Liquidator - A lump sum fee of ₹ 1,00,000/- will be paid by the original applicant/Operational Creditor to the Liquidator for performing his duties. Application disposed off.
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Service Tax
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2021 (7) TMI 1195
Refund of erroneous payment of service tax - time limitation - submission of required documents - principle of unjust enrichment - HELD THAT:- Rule 2(bc) of Service Tax Rules, refers to the meaning of body corporate in Section 2(7) of the Companies Act, wherein any other body corporate which includes a LLP is specifically excluded from the definition of body corporate. Thus, the appellant as a LLP, is not required to pay service tax under the reverse charge mechanism during the period under dispute. It is held that the appellant is entitled to refund of the service tax paid erroneously under reverse charge, as per the refund application - the adjudicating authority is directed to grant refund within a period of 45 days from the date of receipt of a copy of this order with interest for the period starting after three months from the date of refund application till the date of grant of refund. Appeal allowed - decided in favor of appellant.
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2021 (7) TMI 1183
Levy of service tax - Banking and Other Financial Services - Interest earned from lending of Gold - Safe-vault services allegedly provided to foreign sellers - period from 01.04.2014 to 31.03.2015 - HELD THAT:- The issue decided by Division Bench of the Tribunal in M/S. INDIAN OVERSEAS BANK VERSUS THE COMMISSIONER OF CENTRAL EXCISE ST [ 2020 (3) TMI 751 - CESTAT CHENNAI] and the appeal has been decided in favour of the assess. The submissions, therefore, is that in view of the aforesaid decision, of the Tribunal, the order impugned in the present appeal should be set aside. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (7) TMI 1190
Condonation of delay - Earlier, the petition dismissed by the HC on the ground that the writ petitioner (the appellant herein) had a statutory alternative remedy of preferring an appeal before the Tribunal - HELD THAT:- Against the order passed by the Commissioner on February 23, 2018, the appellant had a statutory alternative remedy of preferring an appeal before the Tribunal. The appellant, however, preferred a writ petition before the High Court on July 16, 2018,which petition was dismissed on July 26, 2018 for the reason that the writ petitioner had a statutory alternative remedy of preferring an appeal before the Tribunal. There is no good reason as to why, after the order was passed by the High Court dismissing a writ petition on the ground that the writ petitioner had a statutory alternative remedy of preferring an appeal before the Tribunal, the applicant preferred a Miscellaneous Application before the Tribunal for compliance of the earlier directions issued by the Tribunal on January 31, 2017. Though there is a considerable delay in filing the appeal, but having regard to the fact that the applicant had approached High Court and, thereafter, had filed a Miscellaneous Application before the Tribunal we consider it appropriate to condone the delay but on imposition of cost upon the Appellant - The delay condonation application is, accordingly allowed on payment of cost of ₹ 1 lakh, which shall be paid by the applicant within a period of one month from today in the account of Prime Minister's National Relief Fund. List this appeal with the office report regarding compliance of the order on August 31, 2021.
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CST, VAT & Sales Tax
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2021 (7) TMI 1206
Validity of the notice issued by the first respondent in proceedings - recovery of arrears of sales tax due - It is contended that there was a failure on the part of the first respondent in initiating action to recover the sales tax arrears, within a reasonable period of time - HELD THAT:- This Court is of the considered opinion that the petitioner purchased the subject property on 31.06.2006. The sales tax defaulter has to pay the arrears of sales tax within a period of 30 days, as contemplated under the provisions of the Act. If the arrears of sales tax is not paid by the defaulter and if no appeal was filed against the order passed by the Original Authority, then the Authority Competent is empowered to initiate action against the defaulter to recover the arrears of sales tax by following the procedures contemplated under the TNGST Act. In the present case, no such action was taken. Contrarily, the arrears of sales tax for the years 2000-2001 and 2001-2002, is sought to be recovered by issuing notice to the third party purchaser of the property in the year 2012. Thus, there is a blatant lapse on the part of the Competent Authorities of the Commercial Tax Department in pursuing the matter for recovery of arrears of sales tax - In the present case, undoubtedly, the second respondent was aware of the proceedings, which were pending before the first respondent. However, he sold the property in the year 2006 probably on the impression that no action was taken by the first respondent for more than six years regarding the sales tax arrears due for the years 2000-2001 and 2001- 2002. Ultimately, the delay caused at the instance of the first respondent- Department is the reason for loss of revenue to the State. It is in the public domain that large scale and wider allegation of corrupt activities, more specifically, in Department like Commercial Tax Department, are prevailing and, people are lamenting about the corrupt activities in collusion with the traders at large in the State. However, no measures are taken to minimise such corrupt activities of the Commercial Tax Department officials with the traders - Government officials are performing the public duties and they play a pivotal role in upholding and achieving the constitutional goals and therefore, there cannot be any compromise in the matter of dealing with such corrupt activities amongst the public servants. The Court is frequently witnessing the cases of this nature, where actions are either not initiated or initiated belatedly allowing the illegality to lapse and allowing the traders to escape from the clutches of law. In these circumstances, painfully the State revenue suffers huge loss. Revenue loss to the State is the loss to the public at large. The monetary losses are neither compensated nor recovered and therefore, the State is deprived in implementing the public welfare policies in favour of common women and men - adequate care is to be taken, so as to ensure that the taxes, as applicable, are collected promptly and the officials, who all are not prudent in execution of law, are dealt with mercilessly. Petition allowed.
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Indian Laws
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2021 (7) TMI 1207
Smuggling - phensedyl codeine cough syrup 100 ml bottle - main argument raised by the Ld. counsel for the petitioner is that there is infirmity in drawing of the samples and the proper procedure has not been followed by the NCB (respondent) at the stage of drawing the samples - HELD THAT:- In the instant case, as per the prosecution 200 bottles of phensedyl codeine cough syrup were recovered. The seized bottles were of the same size and were having batch numbers on them i.e. batch No. PHB7217 PHB7236. Therefore, in these circumstances, since these were cough syrup bottles which are ordinarily available in the market for treating cold and cough, cannot be said to have different concentration of medicines as they are prepared under the same formulation as per their batch numbers. Therefore, there is no infirmity in the manner in which the sample has been drawn. As far as the non compliance of mandatory provisions of Section 50 of the NDPS Act is concerned, the same is a matter of trial. The application lacks merits and the same is, therefore dismissed.
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2021 (7) TMI 1202
Dishonor of Cheque - Fraudulent transaction or not - existing debt or advance payment - presumption available under Section 139 of the N.I.Act - no reply to the notice has been given - whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability? - Section 138 of the Negotiable Instruments Act, 1881. HELD THAT:- While approving the views of different High Courts noted earlier, this is the underlying principle as can be discerned from discussion of the said cases in the judgment of this Court. In M/S. BALAJI SEAFOODS EXPORTS VERSUS MAC INDUSTRIES LTD. [ 1998 (10) TMI 528 - MADRAS HIGH COURT] , the Madras High Court noted that the cheque was not handed over with the intention of discharging the subsisting liability or debt. There is, thus, no similarity in the facts of that case simply because in that case also, loan was advanced. It was noticed specifically therein as was the admitted case of the parties that the cheque was issued as security for the advance and was not intended to be in discharge of the liability, as in the present case. The Court notices that there is no disputes with regard to the signature on the cheuqe and her defence is that the brother-in-law had obtained her signature under the pretext that for emergency purpose this would be required for the use of the cheque in the business. There is an initial admission of the cheque, the presumption under Section 139 of the N.I.Act would come into play. It is also not out of place to make a mention that there is no reply to the notice issued by the complainant. With the elements referred to under the N.I.Act existing on record, it is for the trial Court thereafter to appreciate at an appropriate stage as to whether the defence put forth by the accused are worth accepting and would lead to the stage where this rebuttal can be said to have succeeded. The present complainant is a friend of the brother in law, who has misused such cheque - Private complaint appears to have been filed before the Court of learned Judicial Magistrate First Class, Indore, which has been dismissed. The allegation with regard to the disconnection of the electricity connection permanently from 10.01.2006, the closure of the factory at Sector 21-B and the account being dormant so also, the non-filling of Form No.49 or stamping of the invoice needed under the VAT are some of the issues which are inter connected and require the appreciation at the end of the adducement of the evidence. The petition is dismissed without further elaboration so as to ensure that rights of the either side may not be prejudiced. Interim relief stands vacated.
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