TMI Tax Updates - e-Newsletter
July 5, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

• Commerce Ministry’s Logistics Division unveils plans for ‘Freight Smart Cities’;

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Notifications

GST - States

• 14/2021 - State Tax - dated 23-6-2021 - Jharkhand SGST
  Seeks to extend specified compliances falling between 15.04.2021 to 30.05.2021 till 31.05.2021 in exercise of powers under section 168A of JGST Act.

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• 13/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Third Amendment) Rules, 2021

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• 12/2021 - State Tax - dated 23-6-2021 - Jharkhand SGST
  Amendment in Notification No. 83/2020 – State Tax, dated the 29th January, 2021

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• 11/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Seeks to extend the due date for furnishing of FORM ITC-04 for the period Jan-March, 2021 till 31st May, 2021

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• 10/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Amendment in Notification No. 21/2019- State Tax, dated the 28th June, 2019

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• 09/2021-State Tax - dated 23-6-2021 - Jharkhand SGST
  Amendment in Notification No. 76/2018– State Tax, dated the 24th January, 2019

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• 08/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Amendment in Notification No. 49 – State Tax, dated the 29th June, 2017

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• 07/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Jharkhand Goods and Services Tax (Second Amendment) Rules, 2021

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• 06/2021 – State Tax - dated 23-6-2021 - Jharkhand SGST
  Seeks to Amendment in Notification No. 89/2020 – State Tax, dated the 29th January, 2021

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Income Tax

• 76/2021 - dated 2-7-2021 - IT
  Income tax Amendment (18th Amendment), Rules, 2021 - Amends Rule 8AA and inserts new Rule 8AB - Attribution of income taxable under sub-section (4) of section 45 to the capital assets remaining with the specified entity, under section 48.-

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Circulars / Instructions / Orders

GST - States

• Trade Circular No. 12 T of 2021 - dated 2-7-2021
  Clarification regarding applicability of GST on supply of food in Anganwadis and Schools
• Trade Circular No. 13 T of 2021 - dated 2-7-2021
  Clarification regarding applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity)
• Trade Circular No. 14 T of 2021 - dated 2-7-2021
  Clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination)
• Trade Circular No. 15 T of 2021 - dated 2-7-2021
  Clarification regarding rate of tax applicable on construction services provided to a Government Entity, in relation to construction such as of a Ropeway on turnkey basis-reg.
• Trade Circular No. 16 T of 2021 - dated 2-7-2021
  GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS
• Trade Circular No. 17 T of 2021 - dated 2-7-2021
  GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them
• Trade Circular No. 18 T of 2021 - dated 2-7-2021
  Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System

Highlights / Catch Notes

GST

• Detention of goods alongwith vehicle - detention of goods on the ground that out of the two e-way bills generated by the petitioner validity of one of them had expired - While permitting the GST authorities to carry on assessment if the competent authority is of the opinion that there has been any infraction of any rules, regulations or statutory requirement. However, pending such adjudication the goods and the vehicle may be released, subject to condition of making deposit of 25% amount (or bank guarantee )- HC
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• Continuous Blocking of the electronic credit ledger beyond one year - Input tax credit - fake invoices issued by non-existing firms - Rule 86(A)(1) - The continuance of blockage of petitioner’s electronic credit ledger cannot continue beyond one year - HC
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Income Tax

• Exemption u/s 11 - whether the hostel activity of the trust which is imparting dental education in the institution established by it is a business activity incidental to the attainment of its objectives? - Having held that the activity of running the hostel is not a separate business activity and surplus income from the hostel fee cannot be treated as profit and gains of a separate business or commercial activity of the trust, it is held that the exemption under Section 11(1) of the Act cannot be disallowed to the assessee - HC
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• Validity of the Order of assessment passed after the death of the assessee - In the instant case, admittedly, after conclusion of the submissions, before an order was passed by the Assessing Officer, the assessee expired. Therefore, by virtue of Section 159(2) of the Act, the proceeding could not have held to have been abated and could have been continued against the legal representatives. Section 159(2)(a) of the Act creates a legal fiction therefore, full effect has to be given to the same. It is not a case where the proceedings were initiated against the assessee who had already expired. - HC
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• Validity of reopening of assessment u/s 147 - The only contention of the writ applicant is that during the course of the assessment proceedings, the Assessing Officer could not have called for further information by issuing the impugned show cause notice - This contention is thoroughly fallacious and not tenable in view of the scheme of the Act. - The case on hand is not one in which it can be said that the jurisdictional fact did not exist. We should not interfere with the impugned show cause notices - HC
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• TDS on accommodation provided by the petitioner to its employees - computation of rent for the purpose of computing perquisites - The respondents had not demanded any quantified amount so that we can direct the department to correct the error, if any. If the petitioner had made an error in computation, it is either by the petitioner to approach the authority for rectification if time is available or for the concerned employees to seek refund of excess deduction of taxes from the salaries. - HC
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• Addition u/s. 56(2)(vii)(b) - difference in the value of shares transferred by the assessee company to its holding company, pursuant to a scheme approved by the Hon’ble Jurisdicational High Court - the appointed date is 01/04/2013 and hence, the value considered by the assessee, which is nearer to the date is appropriate. The valuation date taken by the AO is not in accordance with the appointed date approved by Hon’ble High Court and in this view of the matter appointed date taken and the valuation done by the AO is incorrect. - AT
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• Revision u/s 263 - scope of limited scrutiny - the issue of valuation of closing work-in-progress as well as matter relating to agriculture income, which are held by the ld PCIT as matters not been examined by the AO, are matters which are not part of the reasons for which the case was selected for limited scrutiny and are not even remotely connected, therefore, no fault lie on the part of the AO resulting in order being held as erroneous and prejudicial to the interest of revenue. - AT
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• Expenditure incurred in respect of ESOP (Employees Stock Option Programme) - the employees have been given shares of the holding company at a discounted price and the assessee has borne the discount amount on behalf of its employees. - Hence, in effect, it is a staff welfare programme of the assessee and hence the same is allowable as deduction u/s 37(1) - AT
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• Treatment of interest earned on fixed deposits made out of funds of the assessee in the period prior to commencement of business - 'revenue or capital' receipt - the interest received to the extent of ADB loan parked in investments in FDRs is not revenue in nature and not liable to be taxed under the head "income from other sources" - AT
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Customs

• Refund of additional duty - rejection of refund claim on the ground of failure to fulfill the Condition D of N/N.102/2007-C - mere cutting of the imported goods into small pieces will not amount to manufacture and refund of additional duty under N/N.102/2007 cannot be denied. - AT
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Indian Laws

• Dishonor of Cheque - prosecution against the person who signed the cheque or the person who has authorized the signatory - The law on the point is made very clear. When accused No. 1 alone signed the Cheque in question, even though it is stated that accused No. 2 had authorized accused No. 1 to sign the Cheque, will not make her liable for the offence punishable under Section 138 of the N.I. Act. It is only accused No. 1 who signed the Cheque and issued in favour of the complainant and therefore, he can be prosecuted before the trial Court. - HC
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Service Tax

• Refund of unutilized cenvat credit - validity of SCN - As per the Notification No.27/2012, there is no requirement to debit in the service return, the only requirement under Condition 2(h) of Notification No.27/2012 dt. 18/06/2012 is that the amount i.e. claimed as refund under Rule 5 of the said Rules shall be debited by claimant from his cenvat credit account at the time of making the claim and this condition has been followed by the appellant before filing the claim of refund but the impugned order has misconstrued and misinterpreted the requirement of Notification No.27/2012 - AT
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• Refund of unutilized cenvat credit - validity of SCN - transitional credit under GST - The transition of refund amount into GST regime was merely inadvertent error and the same was made good by the appellant by reversing the credit into GSTR-3B filed in May 2018 - the appellant has not violated conditions of the N/N. 27/2012 dt. 18/06/2012 - AT
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• Delayed payment of service tax - completion certificate valid or not - construction of residential complex - Mere evasion of tax does not invite penalties unless and until there is the evidence of some positive act on part of the appellant to show his intend to not to pay the tax. The said evidence is miserably missing in the present case. The proviso to Section 73 of Finance Act could not have been invoked by the Department in the present case - In present case, Show Cause Notice of the year 2017 raising the demand from the year 2012 onwards is, therefore held barred by time. - AT
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Central Excise

• Clandestine manufacture and clearance - Cigarettes - Raw material which was found lying in the factory of the appellant was admittedly not manufactured by the appellant and as such the same is not dutiable in the hands of the appellant. Thus, there is no requirement of confiscation of raw material in the facts and circumstances - AT
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Case Laws:

• GST

• 2021 (7) TMI 128
  Detention of goods alongwith vehicle - detention of goods on the ground that out of the two e-way bills generated by the petitioner validity of one of them had expired - intent to evade was present or not? - Case of petitioner is that detention of such goods at the border check post under unprotected conditions would damage the goods as the product is perishable - HELD THAT:- The consignee has paid the full tax of ₹ 1,78,283/- on the value of the goods. Considering the submissions made by the counsel for the petitioner it is held that further continued detention of the vehicle and the goods would serve no purpose. Let the vehicle with the goods be released on certain terms and conditions. While permitting the GST authorities to carry on assessment if the competent authority is of the opinion that there has been any infraction of any rules, regulations or statutory requirement. However, pending such adjudication the goods and the vehicle may be released. The petitioner shall either deposit or give Bank guarantee to the tune of 25% of possible duty with penalty. For such purpose, respondent No.3 shall convey to the petitioner within 2(two) days from today the possible amount of duty with penalty that may ultimately be imposed even if the petitioner s explanations are not accepted - petition allowed.

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• 2021 (7) TMI 127
  Continuous Blocking of the electronic credit ledger beyond one year - Input tax credit - fake invoices issued by non-existing firms - Rule 86(A)(1) of C.G.S.T. Rules, 2017 - HELD THAT:- The continuance of blockage of petitioner s electronic credit ledger cannot continue beyond one year, the writ petition stands allowed.

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• 2021 (7) TMI 120
  Validity of demand notice - HELD THAT:- The e-mails issued by the respondent calling for payment of interest, one of which the petitioner has replied to. It would be appropriate for this conversation to continue and the respondents to hear the party to arrive at a proper reconciliation of the amount to be paid, if any - In fact, in the counter filed in February 20201, the respondent has quantified the interest demand from 10.11.2010 to 22.02.2018 at a figure of ₹ 24,40,546/- and the petitioner may file its reply to the respondent in regard to the quantification made. Petition disposed off.

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• Income Tax

• 2021 (7) TMI 124
  Exemption u/s 11 - whether the hostel activity of the trust which is imparting dental education in the institution established by it is a business activity incidental to the attainment of its objectives or it is an activity which is an integral and inseparable part of the main activity(education) carried on by the assessee? - HELD THAT:- In the facts of the present case it can be safely concluded that the surplus, if any, generated out of the activity of maintaining halls and residents for the students being an integral part of the main object of education, was liable to be treated as income from the property held by the trust wholly for charitable purposes and was, therefore, deductible from the total income of the trust (person in receipt of the income) by granting exemption under Section 11. Any interpretation or meaning given to the word business in the literal parlance cannot be read into the Income Tax Act as the word business has been defined in the Act itself. The Court has to read the statute namely the Income Tax Act to find out as to whether the activity of the assessee in maintaining the hostel would be exempted under Section 11(1) of the Act and whether the provisions of Section 11(4A) would be attracted in the facts and circumstances of the case. Having held that the activity of running the hostel is not a separate business activity and surplus income from the hostel fee cannot be treated as profit and gains of a separate business or commercial activity of the trust, it is held that the exemption under Section 11(1) of the Act cannot be disallowed to the assessee. - Decided in favour of the assessee.

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• 2021 (7) TMI 121
  Revision u/s 263 - inadequate enquiry on depreciation claimed on assets leased under finance lease transactions - HELD THAT:- There was some controversy regarding the invoices issued by the manufacturer whether they were issued in the name of the lessee or the lessor. For the view we have taken above, we deem it unnecessary to go into the said question as it is of no consequence to our final opinion on the main issue. From a perusal of the lease agreement and other related factors, as discussed above, we are satisfied of the assessee s ownership of the trucks in question. In the facts of the present case, we hold that the lessor i.e. the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out. Claim of the assessee for a higher rate of depreciation, the import of the same term purposes of business , used in the second proviso to Section 32(1) of the Act gains significance - the interpretation of these words would not be any different from that which we ascribed to them earlier, under Section 32 (1) of the Act. Therefore, the assessee fulfills even the requirements for a claim of a higher rate of depreciation, and hence is entitled to the same. In the present case, with regard to the ownership, inspection, repossession of the equipment on default, delivery of equipment on expiry of lease and ownership at the end of the lease period, are similar and therefore, it is the assessee alone who can claim depreciation, as rightly held by the assessing officer. The clauses relating to lease have already been interpreted by the Supreme Court in the case of M/s ICDS Ltd., [ 2013 (1) TMI 344 - SUPREME COURT] and it has been held that the assessee is entitled to the benefit of depreciation on leased assets under Section 32 of the Act of 1961 and therefore, the substantial question of law involved in the present appeal is no longer res integra and is squarely covered by the decision above as well as the judgment delivered by the Division of this Court in Hewlett Packard India Sales Pvt. Ltd. [ 2020 (12) TMI 306 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2021 (7) TMI 119
  Validity of the Order of assessment passed after the death of the assessee - scope of section 159 - Responsibility of legal representatives of the deceased assessee - HELD THAT:- From perusal of Section 159(2) of the Act, it is evident that the aforesaid provision expressly provides that death of the party is of no consequence and proceeding under the Act can proceed against legal representatives of the assessee and proceedings initiated against the deceased assessee shall be deemed to be the proceeding initiated against legal representatives of the assessee from the inception which could be continued from the stage of his death. The concept of abatement of the proceeding is not contemplated under the provisions of the Act. Section 159(2)(a)(b) and Section 159(3) of the Act create a legal fiction. It is well settled rule of statutory interpretation that in interpreting a provision creating a legal fiction, the court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. A division bench of this court in Smt.V.Rukmini [ 2010 (8) TMI 505 - KARNATAKA HIGH COURT] while dealing with the question whether an appeal under Section 260A of the Act abates on account of death of the assessee during the pendency of the appeal, while dealing with scope and ambit of Section 159 of the Act has held that the concept of abatement is excluded, from the provisions of the Act which is evident from Section 159(2) of the Act. In the instant case, admittedly, after conclusion of the submissions, before an order was passed by the Assessing Officer, the assessee expired. Therefore, by virtue of Section 159(2) of the Act, the proceeding could not have held to have been abated and could have been continued against the legal representatives. Section 159(2)(a) of the Act creates a legal fiction therefore, full effect has to be given to the same. It is not a case where the proceedings were initiated against the assessee who had already expired. Therefore, the proceeding could have been held to be ab initio void. Order passed by the tribunal is quashed and the matter is remitted to the Assessing Officer to issue notice to the legal representatives of the deceased assessee.

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• 2021 (7) TMI 118
  Validity of Reopening of assessment u/s 147 - Notice issued as assessee had received accommodation entries by entry provider Mr. Vipul Vidur Bhatt by using bogus paper company - assessee argued for non disposing of the objections properly - HELD THAT:- We are of the considered view that, the preliminary objections filed by the writ applicants against the reasons recorded for reopening of assessment, have not been properly dealt with by the AO. We take the note of the fact that, while submitting the objections, the assessee had specifically taken a stand that, for A.Y. 2011-12, the transactions of purchase being entered with SCL company and in the next year, the outstanding amount had been cleared by the assessee. In support of such claim, the ledger account of the SCL maintained in the books of accounts of the assessee had been submitted for perusal and adjudication. However, the objections having not been properly dealt with the assessing officer. The preliminary objections raised by the writ applicant in both the cases having not been properly dealt with the by AO. The lapses is in clear violation - AO has passed the order disposing of the objections mechanically and without application of mind. The orders disposing of the objections are hereby set aside and the matters are remitted to the Assessing Officer. The Assessing officer shall take into consideration the objections raised by the writ applicants and pass a fresh speaking order in accordance with law

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• 2021 (7) TMI 114
  MAT applicability u/s 115JB - nature of company activities - Whether the Tribunal was correct in holding that Section 115JB was not applicable to the assesee in view of Explanation-3 to section 115JB without appreciating that the amendment is applicable only with effect from 1.4.2013 relevant Assessment Year 2013-14? - HELD THAT:- As decided in M/s. Karnataka Power Corporation Ltd [ 2020 (5) TMI 657 - KARNATAKA HIGH COURT ] Companies Act, 1956 has excluded insurance, banking companies or the companies engaged in the generation or supply of electricity from the purview of Section 211(1) of the Companies Act, 1956 and resultantly from the purview of Section 115JB of the Act.

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• 2021 (7) TMI 113
  Disallowance of interest on capital as attributable to capital work-in-progress relying on the proviso to Section 36(1)(iii) - as argued when the said proviso was inapplicable to the case of the appellant and no part of the borrowed capital was utilized for investment in work in progress in any event? - HELD THAT:- As decided in assessee's own case [ 2021 (3) TMI 1030 - KARNATAKA HIGH COURT]. The word expansion and extension connote different meaning and legislature in its wisdom has used the terms differently under various provisions of the Act itself and therefore, the words cannot be used synonymously. In this connection reference may be made to Section 80- IC(2)(b) and Section 80-IE(2)(ii) where the expression expansion is used and substantial expansion is defined as increase in investment in plant and machinery by a specified percentage of book value of plant and machinery. In Section 35D(1)(ii) and proviso to Section 36(1)(iii) (prior to its amendment in the year 2015), the legislature has employed the expression extension . Therefore, prior to its amendment the extension of business was covered under Section 36(1)(iii) of the Act and not the expansion of business. In the instant case, the assesee has set up new coffee shops, which amounts to expansion of business and therefore, the bar under the proviso Section 36(1)(iii) is not applicable. It is only after the amendment of Section 36(1)(iii) with effect from 01.04.2016 the proviso can be attracted to the case of expansion of business which is not applicable to the facts of the case as the case of the assessee pertains to Assessment Year 2010-11. Decided in favour of the assessee

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• 2021 (7) TMI 112
  Deduction u/s 80IB(10) - Whether Tribunal was right in holding that assessee who is only a owner of the land and had out sourced the work of constructing the building and had realised the sale proceeds in the form of constructed area is entitled for deduction u/s 80IB? - HELD THAT:- As following the ratio laid down by the Hon'ble Division Bench of this Court in the judgment reported in Bashyam Constructions (P) Ltd [ 2019 (2) TMI 906 - MADRAS HIGH COURT] the questions of law raised in the appeals are decided against the revenue and in favour of the assessee.

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• 2021 (7) TMI 111
  Validity of reopening of assessment u/s 147 - Assessee argued that as during assessment proceedings AO could not have called for further information by issuing the impugned show cause - jurisdictional fact existed for the purpose of assuming jurisdiction to issue the impugned show cause notices - HELD THAT:- When the assessment is at large by issuing the first notice under Section 143(2), within the time prescribed and in the course of the ongoing assessment proceedings, if further information is received, the same has to form a part of the assessment proceedings. It is not the case of the writ applicant that the notice dated 28th July 2017 issued under Section 143(2) of the Act is time barred. The only contention of the writ applicant is that during the course of the assessment proceedings, the Assessing Officer could not have called for further information by issuing the impugned show cause notice dated 18th December 2018 and 21st December 2018 respectively. This contention is thoroughly fallacious and not tenable in view of the scheme of the Act. The contention with regard to the documents not provided is also fallacious and not borne out from the record. The evidence upon which the department seeks to rely upon, is already within the knowledge of the writ applicant, as enumerated in the affidavit-in-reply referred to above. In any view of the matter, the assessment in the case of the writ applicant has been transferred from the Exemption to Central Charge. Thus, the contention of adequate opportunity not being given is also factually incorrect. There is one another good reason why we should entertain this writ application. If the impugned show cause notice, ultimately, culminates in an order of assessment, then such order would be an appealable order. A show cause notice can be questioned before a Writ Court provided the writ applicant is able to establish that the show cause notice has been issued without any jurisdictional fact in existence. In other words, a jurisdictional fact is a fact which must exist before a Court, Tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or nonexistence of which depends the jurisdiction of a Court, a Tribunal or an authority. The underlying principle is that by erroneously assuming the existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. The case on hand is not one in which it can be said that the jurisdictional fact did not exist. We should not interfere with the impugned show cause notices.

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• 2021 (7) TMI 110
  TDS on accommodation provided by the petitioner to its employees - computation of rent for the purpose of computing perquisites at the time of deducting of tax at source - petitioner is an educational institution constituted under the National Institutes of Technology, Science, Education and Research Act, 2007 and is engaged in imparting higher education in engineering, technology, management, science, arts etc. and also encourages research in such fields - petitioner receives 100% assistance from the central government and has been declared as an institution of national importance - HELD THAT:- The employee bears full license fees fixed by the employer government, there would be no question of any perquisite. Whereas in cases falling under sl.No.2 of the table, there are detailed provisions how such accommodation should be valued and any amount charged from the employee which falls short of such valuation, would be treated as perquisite on which tax would be deducted at source by the employer and deposited with the Income Tax Authority. The Income Tax Officer in the impugned order had observed that the petitioner NIT is not the state within the meaning of Article 12 of the Constitution, which does not appear to be quite correct - even if the NIT would be treated as state within the meaning of Article 12, it cannot escape the liability to deduct tax at source on the differential valuation of the rent as assessed under sub-rule(1) of Rule 3 and that collected from the employee concerned by way of license fee. Writ petitioner, however, submitted that under mistaken belief the petitioner had taken into account full value of the computation of rent for the purpose of computing perquisites at the time of deducting of tax at source, ignoring that component which the employee was anyway paying by way of license fees under the Rules. This is a factual aspect into which we cannot go into in the present writ petition. The respondents had not demanded any quantified amount so that we can direct the department to correct the error, if any. If the petitioner had made an error in computation, it is either by the petitioner to approach the authority for rectification if time is available or for the concerned employees to seek refund of excess deduction of taxes from the salaries.

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• 2021 (7) TMI 108
  Validity of reopening of assessment - assessee is admittedly a company engaged in the real estate business - un-explained investment in purchase of land and profit on sale of land - CIT(A) has affirmed the same - HELD THAT:- As noticed from a perusal of the case file that the Forest Department of the Government of Andhra Pradesh through the DFO, Hyderabad had cancelled the assessee s sale deed itself on 20-11-2008 for the reason that the land in question was government/reserve forest land. This in our considered opinion, sufficiently takes care of the AO s sole re-opening reason alleging escapement of income with the assessee s taxable income derived from sale of properties during FY.2008-09. No other sale deed other than that cancelled has been executed at the assessee s behest. The Assessing Officer s corresponding sole re-opening reason does not survive anymore therefore. In view of all the preceding facts that the assessee could not have been held to have derived any taxable income once the sale deed itself stood annulled by the state Government. Hon'ble apex court s landmark decision in Chainrup Sampatram [ 1953 (10) TMI 2 - SUPREME COURT] held long back that while anticipated loss is thus taken into account, anticipated profit is not brought into the account, as no prudent trader would care to show increased profits before its realisation as per the conservative spectrum of accounting. We therefore hold that the Assessing Officer s re-opening reasoning itself does not hold ground in light of all these facts and circumstances. We find no substance in the Revenue s stand as per tribunal s co-ordinate bench s decision in Joginder Sing [ 2015 (6) TMI 1217 - ITAT AMRITSAR] - We adopt the foregoing detailed reasoning mutatismutandis to accept assessee s former substantive grievance challenging validity of the impugned re-opening. The same stands quashed.

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• 2021 (7) TMI 107
  Disallowance of loss claimed on the reasoning that the assessee has not set up its business - assessee has not started commercial production, i.e., extraction of minerals during the years under consideration - HELD THAT:- It is well settled proposition of law that setting up of business and commencement of production are two different activities. Once the business is set up, the assessee would be entitled for deduction of revenue expenses. In case of business relating to exploration and extraction of minerals, the activity of exploration of minerals itself is a long process. Once a person identifies the area, where minerals are available, then only the activity of extraction of minerals would start, that too, if it is viable to undertake those activities. Hence generation of revenue, as observed by the tax authorities, should not be the criteria for determining the date of setting up of business. The fact that the generation of revenue would take several years is well recognized in sec.35E of the Act, which provides for amortization of expenses incurred in previous four years preceding the year of commercial production. We notice from the financial statements that the assessee has employed personnel and has started exploration activities. The reconnaissance license has been obtained by one of the shareholders of the assessee company. Hence, there appears to be merit in the contention of the assessee that it has set up its business. As observed the provisions of section 35E of the Act is applicable to facts of the present case, as per which the expenditure incurred within four years prior to the year of commencement of production have to be accumulated and should be amortised in succeeding ten years. Thus, the special provisions of section 35E contemplates accumulation of expenses, i.e., they are not treated as business loss as per normal provisions of the Act. Hence the question of setting up of business is not relevant for the provisions of sec.35E of the Act. Admittedly, the A.O. has not examined the case of the assessee in terms of section 35E of the Act. However, the Ld A.R submitted that the assessee has not commenced extraction activities and accordingly contended that normal provisions of the Act should apply for the years preceding the four years period mentioned in sec.35E of the Act. As per the provisions of the Act, the business loss is allowed to be carried forward only for a period of eight years. For both the years under consideration, the prescribed period of eight years has already elapsed. Hence the claim of the assessee becomes academic. In any case, the question whether the provisions of sec.35E should apply for the years beyond the prescribed period of four years or normal provisions of the Act should apply appears to be a debatable one. At the time of hearing of cases, the bench proposed to restore the matter to the file of the AO for examining entire issue afresh in terms of sec.35E of the Act. Both the parties agreed to the same.

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• 2021 (7) TMI 106
  Disallowance u/s 14A - assessee is contending that it is having own funds and interest free funds exceeding the value of investments and hence the decision rendered in the case of Micro Labs Ltd.[ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] and Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] is applicable - HELD THAT:- The above said contentions urged before us require verification of facts prevailing in this case. Accordingly, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh by following the decision rendered in the case of Micro Labs Ltd. (supra) and Vireet Investments Pvt. Ltd. (supra). Disallowance made u/s 40(a)(ia) - payments for purchase of software without deducting tax at source - HELD THAT:- Since the transactions of purchase of software has been completed prior to rendering of decision SAMSUNG ELECTRONICS CO. LTD. [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] which have held that TDS is not required to be made out of payment made for software purchasesby Hon ble Karnatak, following the above said decision we hold that the TDS liability cannot be fastened upon the assessee retrospectively and accordingly disallowance u/s 40(a)(i) is not called for even if the software purchases is treated as revenue expenditure. Accordingly, we are of the view that there is no reason to treat the cost of software capitalized by the assessee as revenue expenditure. Accordingly we set aside the order passed by Ld. CIT(A) and direct the AO to treat the cost of software as capital expenditure and delete the disallowance made on this issue. Addition of rental income due to the difference found out in form no.26-AS - difference in the income reported by the assessee under form No.26AS - DR submitted that the claim of the assessee requires examination at the end of the A.O - HELD THAT:- We find merit in the submission made by Ld. D.R. Accordingly, we restore this issue to the file of the AO for examining the explanations furnished by the assessee. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law.

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• 2021 (7) TMI 105
  Disallowance u/s 37(1) towards the Interest payment - amalgamation scheme conceived - HELD THAT:- As in support of the impugned interest disallowance and find no merit in Revenue s stand in principle. This is for the reason that the hon'ble jurisdictional high court s order approving amalgamation scheme with effect from the appointed date i.e., 01-04-2012 (falling in the relevant previous year) makes it clear that the assessee had undertaken all the liabilities and duties of transferer company, M/s.Everbig Properties Finvest Private Ltd., who infact had borrowed the principle amount of ₹ 54.75 Lakhs in FY.2004-05 and 2006-07 i.e. well before merger. We further notice that the assessee has also filed a petition dt.26-12-2020 inte alia placing on record audited financial statements of M/s.Gajmukh Investments Pvt. Ltd., (FY.2012-13) Form-26AS of M/s.Gajmukh Investments Pvt. Ltd., for the AY.2013-14 and detailed copy of the amalgamation scheme; respectively. Faced with this situation, we deem it appropriate to express our agreement with the Revenue s stand qua the foregoing additional expenditure that all these documents require the Assessing Officer s necessary factual verification. We therefore restore the instant former issue of interest disallowance back to the Assessing Officer for his verification as per law within three effective opportunities of hearing. This former substantive issue is accepted for statistical purposes. CIT-A Restoring the issue of TDS and advance tax claim(s) - Since the power to set aside is no more available to him in light of Section 251(1)(a) containing the omission to this effect vide Finance Act, 2001 w.e.f.01-06-2001. We find merit in the assessee s grievance in principle and deem it appropriate to restore the instant latter issue back to the Assessing Officer at the same time to verify the corresponding facts pertaining to the impugned twin heads.

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• 2021 (7) TMI 104
  Denial of deduction u/s 80IB(10) on certain on-money received by the assessee which was also declared as income - HELD THAT:- The assessee received a sum as `on-money which was not declared in the books of account but offered as additional income during the course of survey in respect of its otherwise eligible housing project. The said money was duly accounted for in the total income at the time of filing of the return - when the issue of allowing the deduction cropped up, the AO came to hold that the said amount could not be considered as `business income as the buyers denied having given such on-money. We are at loss to comprehend as to how the sum admittedly received as on-money on the booking of flats, can be construed as not arising from the same source when the question of granting deduction u/s 80IB(10) thereon surfaced. The doctrine of approbate and reprobate does not allow the Department to blow hot and cold in the same breath, thereby accepting one consequence arising from the statement of the assessee while rejecting the other one. When the assessee made a surrender with the clear backdrop of having received 'on money and the Revenue accepted the same while including it in the total income, it cannot later on claim that no deduction u/s 80IB(10) can be granted on the same as the assessee failed to prove that the flat bookers gave such on-money. If we accept the view point of the Revenue that source of the income is unexplained and does not pertain to the housing project, then, in the given facts, when there is no positive material other than the assessee s statement of receiving such an amount as 'on money , then there is no income in the first instance calling for its inclusion in the total income. Once it is agreed to be 'on-money from the flats-bookings at the time of its inclusion in the total income, a fortiori, such an income, being from sale of flats albeit received as on-money, qualifies for the deduction as well. We, therefore, overturn the impugned order on this score and order to allow deduction u/s 80IB(10) on such amount. - Decided in favour of assessee.

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• 2021 (7) TMI 103
  TDS u/s 195 - Disallowance u/s 40(a)(i) - deduction of tax in respect of Global Account Coordination cost - scope of amendment - HELD THAT:- As decided in ASHAPURA MINICHEM LTD. VERSUS ADIT (INT L TAXATION) [ 2010 (5) TMI 523 - ITAT, MUMBAI] prevailing legal position was that unless the technical services were rendered in India, the fees for such services could not be brought to tax under section 9(1)(vii). The law amended was undoubtedly retrospective in nature but so far as tax withholding liability is concerned, it depends on the law as it existed at the point of time when payments, from which taxes ought to have been withheld, were made. The taxdeductor cannot be expected to have clairvoyance of knowing how the law will change in future. A retrospective amendment in law does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability, with retrospective effect. The tax withholding obligations from payments to non-residents, as set out in Section 195, require that the person making the payment at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income -tax thereon at the rates in force . When these obligations are to be discharged at the point of time when payment is made or credited, whichever is earlier, such obligations can only be discharged in the light of the law as it stands that point of time. We are in agreement with the view expressed by the Co-ordinate Bench. Therefore, we hold that the Assessing Officer was not justified in fastening the liability of tax deduction by relying on the amendment which was inserted in the year 2010 with retrospective effect from 01.04.1976. The Assessment Year in question is 2008-09, therefore, provision of section 40(a)(i) of the Act ought not to have been invoked in the case of the assessee. Therefore, we direct the Assessing Officer to delete the addition. Thus, grounds raised by the assessee in this appeal are allowed.

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• 2021 (7) TMI 96
  Addition u/s. 56(2)(vii)(b) - difference in the value of shares transferred by the assessee company to its holding company, pursuant to a scheme approved by the Hon ble Jurisdicational High Court - Shares issued at premium - wholly owned subsidiary company issued shares to its Holding Company in consideration of transfer of assets and liabilities of a division to it by the holding company at a value determined under the Scheme of Arrangement duly approved by the learned High Court of Bombay - CIT-A rejected assessee s contention that transfer in pursuant to Hon ble High Court order effective from a appointed ate, which is the basis of valuation and contention of 5% tolerance - HELD THAT:- it is noted that the scheme was approved by the Hon ble High Curt on 01/08/2014 without any variance in the appointed date. The appointed date as per the scheme approved by the Hon ble High Court was 01/04/2013 or such other date as the Hon ble High Court may direct or approve. The Hon ble High Court order while approving the scheme did not direct otherwise regarding the appointed date. Hence, the appointed date of the scheme approved by the High Court is 01/04/2013. As scheme approved by the Hon ble High Court provided an appointed date to be 01/04/2013 or any other date directed by Hon ble High Court while accepting the scheme Hon ble High Court has not directed any change in appointed date, we are of the considered opinion, the appointed date is 01/04/2013 and hence, the value considered by the assessee, which is nearer to the date is appropriate. The valuation date taken by the AO is not in accordance with the appointed date approved by Hon ble High Court and in this view of the matter appointed date taken and the valuation done by the AO is incorrect. Hence, we do not find any infirmity in value taken by the assessee as per the scheme approved by the Hon ble High Court and appointed date therein. Hence, the addition made is directed to be deleted. Appeal by the assessee stands allowed.

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• 2021 (7) TMI 94
  Penalty u/s 271(1)(c) - AO has verified during the assessment that the assessee did not furnish any documents on record to prove that the assets were put to use - CIT (A) deleting the penalty u/s 271(1)(c) on the grounds that appellant should not penalized merely for showing the receipt of consultancy as other income - HELD THAT:- Assessment order passed in this case shows that the AO has failed to record a valid satisfaction to initiate the penalty proceedings u/s 271(1)(c) because he has merely recorded that, penalty proceedings u/s 271(1)(c), u/s 271B and 271F of the Income Tax Act, 1961, have been initiated separately , without specifying if the assessee has furnished concealment of particulars of income or has furnished inaccurate particulars of income. Even at the time of passing of penalty order, AO was not clear enough as to whether he is going to levy the penalty for concealment of particulars of income or has furnished inaccurate particulars of income. AO was required to satisfy himself as to under which limb of section 271(1)(c) of the Act he is initiating the penalty proceedings and only thereafter penalty can be levied. In the instant case, AO was neither satisfied/aware at the time of recording a satisfaction in the assessment order nor he was clear enough at the time of penalty proceedings as to under which of the limb of section 271(1)(c) he is going to levy the penalty. - Decided in favour of assessee.

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• 2021 (7) TMI 93
  Deduction u/s 80IA(4)(iv)(c) - subsidy received by the Assessee had to be regarded as profits and gains derived from eligible business - as per CIT-A subsidy subsidy as well as the additional subsidy received by the assessee from the Karnataka Government was in lieu of electricity supply to farmers and others at subsidized rates - HELD THAT:- Entitlement for DEPB or Duty Drawback Scheme arose, when the undertaking decided to export after manufacturing or production and this incentive was restricted only to the export of goods of a specified class. Consequently, if there was no export, there was no incentive from DEPB or Duty Drawback. This apart, DEPB or Duty Drawback Scheme did not provide refund of exemption from Central Excise Duty actually paid. Thus, the relationship under the DEPB or Duty Drawback Scheme, on the one hand, and the manufacturing or production, on the other, was not proximate and direct. The entitlement was based on the artifice of average amount of duty paid . The scrutiny of the scheme under which the assessee received additional subsidy is required to be seen. It is only after perusal of the scheme under which subsidy was given to the assessee, the principles laid down in the case of Meghalaya Steels [ 2016 (3) TMI 375 - SUPREME COURT] can be applied to the facts of the case of the assessee. Since this exercise has not been carried out in the proceedings before the lower authorities, we are of the view that it would be just and appropriate to set aside the order of the CIT(A) and remand the issue to the AO for fresh consideration in the light of the decision cited by the learned DR before the Tribunal, after scrutiny of the scheme under which the assessee received the subsidy. Despite specific directions copies of the subsidy scheme has not been provided by the parties. In these circumstances, we have no other alternative but to remand the issue to the AO for consideration afresh in the light of the directions give above - Appeal of the Revenue is allowed for statistical purposes.

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• 2021 (7) TMI 92
  Profit on Sale/Redemption of Investments - whether profit derived by the assessee from sale/ redemption of investments is exempt from tax? - HELD THAT:- In earlier years too similar additions were made by the lower authorities and the matter now stands settled by the decision of the Hon ble Jurisdictional High Court in case of assessee for AY 2005-06 [ 2017 (9) TMI 172 - DELHI HIGH COURT] .The question framed is accordingly answered in the negative in favour of the assessee and against the revenue, by holding that the itat erred in holding that the income earned on sale/redemption of investment was chargeable to tax. Disallowance of depreciation - assessee has not given the basic details, therefore, the question of allowing any depreciation on such assets cannot be accepted - HELD THAT:- As relying on assessee's own case [ 2018 (1) TMI 802 - ITAT DELHI] in the year under consideration also, the relevant details for addition made to fixed assets in Financial Year 2009-10 have been placed on record by the assessee. The AO has, however, failed to take the same into consideration. We are, therefore, inclined to set aside this issue to the records of the AO for a de novo verification of the relevant facts. In the result, Grounds 3 and 3.1 are partly allowed for statistical purposes. Disallowance on account of Provision made for Standard Assets - whether Rule 5 prescribes for an adjustment by adding back the provision made for standard assets? - HELD THAT:- There is no enabling mechanism in Rule 5(a) mandating an adjustment to disclosed profits by making an addition on account of provision made for Standard Assets. CIT (DR) has relied upon decision of the coordinate bench of this Tribunal in case of Chaitanya Godavari Grameena Bank [ 2018 (5) TMI 511 - ITAT VISAKHAPATNAM] . However, in that case the assessee was a bank and had claimed deduction on account of Provision for Standard Assets u/s 36(1)(viia). This was not a case of an Insurance Company to which provisions of Rule 5 was applicable. As already held above, under Rule 5 the Statute makes profit disclosed in Profit and Loss account sacrosanct subject only to adjustments prescribed in Rules 5(a) to 5(c). The case law relied is, therefore, distinguishable. CIT (A), in AY 2011-12, has also not properly addressed the issue. Relevant statutory provisions have been inadvertently misread and hence not properly understood.We therefore delete the disallowance Determination and carry forward of business loss and unabsorbed depreciation - assessee is aggrieved by the fact that the Ld. CIT (A) has erred in not adjudicating on ground numbers 7 and 8 raised by the assessee - HELD THAT:- A perusal of the impugned order passed by the Ld. CIT (A) depicts that inadvertently there is no adjudication by the Ld. first appellate authority on the above issues. Since the issues raised pertain to determination and carry forward of business loss and unabsorbed depreciation, we direct the AO to consider these issues on merits in accordance with law while giving effect to our order.

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• 2021 (7) TMI 91
  Attribution of profit - attribution rate of 35% has been applied - AR submitted that the activities relatable to India and rate of attribution to be applied in relation to such activities undertaken has been adjudicated - HELD THAT:- Considering that there is no material change in facts and the legal issue on attribution of profit is already sub-judice in Assessee's appeal before High Court, whilst respectfully following the decision of co-ordinate Bench in earlier years we dispose off the grounds raised in Assessee's appeal for AY 2016-17 and AY 2017-18. As been brought to our attention that in AY 2017-18, the Assessing Officer has taken the operating profitability instead of the net-operating profitability as per published accounts. In view of the decision as rendered in the preceding years, we direct the Assessing Officer to take the net-operating profitability as per published accounts whilst calculating the attribution. Taxability of income from supply of software as Royalty - HELD THAT:- Respectfully following the decision of the co-ordinate Bench as approved by the jurisdictional High Court [ 2017 (8) TMI 1638 - DELHI HIGH COURT] we rule in favour of the Assessee. We also agree with the alternate argument of the Assessee that since the sale of software is inextricably linked with sale of software than the provision of Article 12(5) of the India-China DTAA would be applicable and such income from supply of software could be taxed only as business profits in terms of Article 7 of the India-China DTAA.

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• 2021 (7) TMI 90
  Revision u/s 263 - scope of limited scrutiny - case of the assessee was selected for limited scrutiny through CASS on account of mismatch of AIR and CIB data, and mismatch in sale turnover reported in audit report and ITR - notice u/s 263 of the Act for taking the cost of complete project while calculating profit for the year under consideration instead of cost debited till the date of Balance sheet AND taking the agriculture income in the capital Account and not in the computation of income - HELD THAT:- AO is duty bound to follow the instructions in case limited scrutiny assessment proceeding are proposed to be converted into complete scrutiny and without following said procedure and necessary approval of the competent authority conducting an enquiry on the issue which is outside the limited scrutiny would be beyond the jurisdiction of the AO. As a necessary corollary, the Pr. CIT u/s 263 cannot be permitted to traverse beyond the jurisdiction that was vested with the A.O while framing the assessment as what cannot be done directly cannot be done indirectly - where the matter was selected for limited scrutiny, revisional jurisdiction cannot be exercised for broadening the scope of jurisdiction that was originally vested with the A.O while framing the assessment as also held consistently by various Benches of the Tribunal. The transactions reflected in the financial statements are sum total of various independent transactions undertaken during the year, and the balance sheet represent a consolidated picture of the financial position of the assessee at the end of the year and similarly, the profit/loss account represent the consolidated position of revenues and costs and net profit during the financial year. It is likely that some of the transactions are directed connected and some are indirectly connected, however, they all have a common thread in terms of impacting the financial position of the assessee and for tax purposes, in determination of net taxable income. The reasoning adopted by the PCIT that transactions of cost of construction will have an effect on closing work in progress and taking sales turnover and closing WIP into account, all these transactions taken together will effect the determination of net taxable income is no doubt correct but as far as determination of correct sales turnover is concerned for which the matter was selected for limited scrutiny, the same can be determined on a standalone basis on examination of sale deeds and related documents for sale of flats and is not connected with determination and examination of cost of construction and work in progress. As discussed in case of limited scrutiny, the AO is duty bound to restrict himself to examine the matters for which matter was selected for limited scrutiny and where the AO takes a view and forms a reasonable belief that some other matters are required to be examined, the same will in effect be traversing beyond the scope of limited scrutiny which is not permissible unless the matter is converted into complete scrutiny and which has not happened during the course of present assessment proceedings. Therefore, the issue of valuation of closing work-in-progress as well as matter relating to agriculture income, which are held by the ld PCIT as matters not been examined by the AO, are matters which are not part of the reasons for which the case was selected for limited scrutiny and are not even remotely connected, therefore, no fault lie on the part of the AO resulting in order being held as erroneous and prejudicial to the interest of revenue. As far as matters for which case was selected for limited scrutiny in terms of mis-match of sales turnover, the same has been duly examined by the AO and even the ld PCIT has not recorded any adverse findings in terms of lack of enquiry or inadequate enquiry on part of the AO - we hereby set-aside the order passed by the ld PCIT u/s 263 and the order of the AO is sustained. -Decided in favour of assessee.

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• 2021 (7) TMI 89
  Addition on account of interest on PDCs Paid out Side the books of account - CIT(A) has upheld the addition of cash payment of interest on PDC, however, he directed to charge interest for six month after the sale deed - HELD THAT:- Identical issue was before the Tribunal in the case of M/s. Impower Infrastructure Private Limited [ 2018 (5) TMI 2071 - ITAT DELHI] as held assessee was used to pay part payments of the sale consideration in respect of the land purchased at the time of execution of the sale-deed and the payments of balance sale consideration were invariably made through post dated cheques (PDCs) and for the intervening period) i.e. period between the date of sale deed and the date of encashment of PDCs), interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. on the amount of PDCs and this cash payment of interest by the vendee company, was not accounted for by it, in its books of account. - Thus we uphold the finding of the Learned CIT(A) on the issue-in-dispute. The ground of the appeal of the Revenue is accordingly dismissed. Additional payment in violation of the Stamp Duty Act, 1899 - disallowance under section 37 of the Act on account of additional payments for purchase of land - HELD THAT:- As decided in own case [ 2018 (6) TMI 63 - ITAT DELHI] CIT(A) has given categorical finding that the payment for acquiring land cannot be said disbursement of expense or not claimed as expense. In case of owner i.e. assessee effectively the owner of the land is purchasing the same and selling all the rights in said land at a cost of land plus ₹ 35,000 per acre. Therefore, the cost of land plus ₹ 35,000 per acre is the sale cost which effectively claimed but due to accounting entries, such transaction gets squared up to the extent of cost of land, as such owner including the assessee is directly crediting ₹ 35,000 per acre in its P L account. - Decided in favour of assessee.

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• 2021 (7) TMI 87
  Expenditure incurred in respect of ESOP (Employees Stock Option Programme) - Disallowance of expenditure incurred in respect of Shares of holding company (ESOP) to its employees - HELD THAT:- In the instant case, we are of the view that the assessee stands in a better footing. The assessee has not issued its own shares at the discounted price. In fact, the employees have been given shares of the holding company at a discounted price and the assessee has borne the discount amount on behalf of its employees. Hence, in effect, it is a staff welfare programme of the assessee and hence the same is allowable as deduction u/s 37(1) of the Act - we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and direct the A.O. to delete the disallowance. Deduction of Education Cess and higher education Cess - HELD THAT:- We notice that the claim of the assessee for deduction of payment of education Cess is held to be allowable by Hon ble Bombay High Court in the case of Sesagoa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] . The said decision has been followed by the coordinate bench in the case of Wipro Ltd.[ 2020 (10) TMI 605 - ITAT BANGALORE] - Thus we direct the A.O. to allow education Cess as deduction in both the years.

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• 2021 (7) TMI 86
  Condonation of delay - appeal of the Assessee was dismissed in limine as not admitted on the ground of non-filing of the necessary application with supporting affidavit - Assessee deceased had expired on 14/03/2016 and as per the legal heir of the Assessee the legal formalities for getting the relevant certificates have been delayed which resulted into delay of 151 days in filing the appeal - HELD THAT:- Though, the application for condonation of delay is supposed to be filed along with the appeal itself, however as has been held in the case of State of M.P. And Anr vs Pradeep Kumar and Anr.,. [ 2000 (9) TMI 1042 - SUPREME COURT] the same can be entertained at a later stage. It seems that may be due to lack of knowledge or guidance or inadvertence, the appellant failed to file the appropriate application and supporting affidavit/evidence in support of reasons for delay. The Assessee died and the appeal before the ld. Commissioner was filed by the legal heir, therefore, considering the peculiar facts and circumstances as discussed above, we deem it appropriate to remand back this case to the file of the ld. Commissioner for decision afresh while affording reasonable opportunity(s) to the Assessee for filing an appropriate application along with affidavit/evidence in support of reasons for delay -Appeal filed by the Assessee stands allowed for statistical purpose.

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• 2021 (7) TMI 85
  Treatment of interest earned on fixed deposits made out of funds of the assessee in the period prior to commencement of business - 'revenue or capital' receipt - addition taxing the interest as the income of the appellant under the head income from other sources and that too without allowing the set off of the interest paid on borrowed funds from the same - HELD THAT:- We agree with the Ld. Counsel for the assessee that the issue stands squarely covered by the decision of the ITAT in the case of HP Power Corporation [ 2015 (5) TMI 1226 - ITAT CHANDIGARH] where identically the facts were found to be different from the preceding year on account of identical ADB loan taken for specific project parked temporary in FDRs on account of delay in the project and the ITAT holding the case to be distinguishable from the preceding year had ruled in favour of the assessee following the decision of the ITAT in the case of M/s. Beas Valley Power Corporation Ltd. [ 2014 (12) TMI 1378 - ITAT CHANDIGARH] We hold that the interest received to the extent of ADB loan parked in investments in FDRs is not revenue in nature and not liable to be taxed under the head income from other sources - Decided in favour of assessee.

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• 2021 (7) TMI 84
  Reopening of assessment u/s 147 - notice after 4 years from the end of relevant assessment year - excess claim of 10A deduction - assessee credit in the P L account an amount as excess provision of earlier years written back which was not reduced in the computation of income resulting in excess claim of 10A deduction on the enhanced profit - HELD THAT:- In the present case, there was regular original assessment that was completed u/s. 143(3) r.w.s. 144C on 24.1.2012. During the course of original assessment proceedings, deduction u/s. 10A was considered by the AO and granted accordingly. In the reasons recorded, there was no allegation by the AO that there was any failure on the part of assessee to disclose truly and correctly all material facts necessary for assessment. Without any such allegation, the AO in the present case recorded the reason for reopening the assessment. Thus, we are of the opinion that assessment was reopened merely on a change of opinion without any fresh material or any allegation by the AO that assessee failed to disclose truly and correctly all material facts for the purpose of assessment. Thus we hold that the reassessment is bad in law and quash the same. - Decided in favour of assessee.

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• 2021 (7) TMI 83
  Exemption u/s 11 - Registration u/s 12A - Charitable activity u/s 2(15) - HELD THAT:- We find that assessee is a chamber of commerce registered under 12A of the Act having main objects to promote and extend the commercial and industrial relations between Italy and India and the development of commercial exchanges between their respective industries, trades and businesses and to further the economic interest of Italy and India. The assessee is in existence with further objects to assist and facilitate new contracts between the trade, economic and industrial interest of both the countries. From the perusal of the aforesaid grounds of the Revenue, it could be seen that the issue in dispute is squarely covered by the Co-ordinate Bench of this Tribunal in the case of Indian Merchant Chambers [ 2016 (7) TMI 107 - ITAT MUMBAI] for A.Y.2009-10 which has been followed by the ld. CIT(A) while granting relief to the assessee by way of granting exemption u/s.11 of the Act, apart from placing reliance on other various decisions. CIT(A) had also relied on the assessment orders in assessee s own case for A.Yrs. 2010-11, 2012-13, 2014-15 and 2016-17 where the claim of exemption u/s.11 of the Act has been accepted and granted under similar facts and circumstances by the ld. AO u/s.143(3). We find that the ld. CIT(A) has only followed Co-ordinate Bench decision of this Tribunal in the case of Indian Merchant Chambers in [ 2016 (7) TMI 107 - ITAT MUMBAI] for A.Y.2009-10 which is after the amendment brought in Section 2(15) of the Act and that the Revenue s grievance is only that since the decision has been agitated by them before the Hon ble Bombay High Court, they had not accepted the Tribunal decision and that the same had not attained finality. We find that the decision of this Tribunal is binding on us on the same set of facts and circumstances and hence, we deem it fit not to deviate from the said decision. We find that the ld. CIT(A) had rightly granted relief to the assessee in the instance case by following the decision of the Tribunal. Accordingly, the grounds raised by the Revenue are dismissed.

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• 2021 (7) TMI 82
  Addition u/s 68 - unsecured loan - CIT- A deleted the addition - HELD THAT:- We find that the assessee has taken unsecured loans which were found to be receipt from bogus entry operators. Findings in the case of search and seizure amply proved that the receipt was from a company which was benami concern of the bogus entry operator. AO has rejected the documents submitted by the assessee in support of the claim of the genuineness of the loan in view of the extensive findings in the case of search and seizure operation. Finding of the AO inter alia was that what is apparent is not correct and in substance the transaction is bogus. In the present case as we have noted above there is no elaborate exercised by CIT(A) to examine as noted above, rather learned CIT(A) has simply accepted papers submitted by assessee without any comment about the examination thereof. It is settled law that powers of learned CIT(A) are co-terminus with that of the AO. If Assessing Officer had not done some further examination required it is incumbent upon learned CIT(A) to consider that himself. As in the case Shri Kapurchand Shrimal vs.CIT [ 1981 (8) TMI 2 - SUPREME COURT ] where with reference to first appellate authority s order it was observed that it is the duty of the appellate authority to correct the errors in the orders of the authority below. In this view of the matter, in our considered opinion order of learned CIT(A) is not at all sustainable. - Revenue s appeal is allowed for statistical purposes.

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• 2021 (7) TMI 81
  Deemed dividend u/s 22(22)(e) - HELD THAT:- We are of the considered view that the case of the assessee is squarely covered as the assessee and its subsidiary were in the same business. The money had been taken to purchase a land, which was common purpose and a current account was being maintained between the assessee and its subsidiary. Accordingly, we direct to delete the addition made u/s Section 2(22)(e) of the Act qua the issues. Disallowance u/s 40A(3) - assessee had to make payment in cash as the seller was not ready to accept payment through cheques - HELD THAT:- We are of the considered view that we find merit in the contention of the assessee and we direct to delete the addition made u/s Section 40(A)(3) of the Act qua this issue.

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• 2021 (7) TMI 80
  Addition towards lease premium received - assessee is stated to be a tenant ownership (Plot ownership) housing society under clause 10(5)(a) of the Maharashtra Cooperative Housing Society Rule, 1961 - whether the lease premium received by the assessee from M/s Shreyans Finvest Pvt. Ltd. would be covered under the principle of mutuality? - HELD THAT:- When membership was granted to the original lessees and shares were issued in 2008 they had already transferred/assigned their right and interest in the property to Shri Suni Purushottamdas Bagari. That being the case, it is not understood how they can be admitted as the member of the society after having transferred their right, title and interest over the leased property. It also emerges that Shri Suni Purushottamdas Bagari to whom the original lessees have transferred the leased property was never admitted as a member of the society. Whereas, Shreyans Finvest Pvt Ltd., admittedly, had purchased the property from Shri Suni Purushottamdas Bagari in the year 2009. Thus, the chain of events indicate that Shreyans Finvest Pvt. Ltd. has acquired the right, title and interest over plot no. 1 along with the building from a person, who was never a member of the society. In the aforesaid factual scenario, the onus is entirely on the assessee to explain as to how the principle of mutuality would apply to the lease premium received from Shreyans Finvest Pvt. Ltd. Tests laid down to ascertain whether principle of mutuality would apply or not, are germane to the issue at hand. The first thing, which needs to be ascertained is, whether at the time of receipt of share premium M/s Shreyans Finvest Pvt. Ltd. was a member of the society. The next issue is, while admitting Shreyans Finvest Pvt. Ltd. as a member of the society all conditions of membership, as noted earlier in the order, were fulfilled. It is also necessary to verify the applicability of notification dated 09.08.2001 issued by the Ministry of Co-operation and Textiles, Government of Maharashtra. Of course, ultimately, whether the share premium received by the assessee is covered under the principle of mutuality has to be tested in the touchstone of various tests laid down by the Hon ble jurisdictional High Court in case of Sind Co-operative Housing Society [ 2009 (7) TMI 15 - BOMBAY HIGH COURT]. Since, the aforesaid aspects have not been examined by the departmental authorities in the light of the ratio laid down in case of Sind Cooperative Housing Society (supra), we are inclined to restore the issue to the Assessing Officer for de-novo adjudication. Disallowance of expenses - AO has made part disallowance out of the expenditure claimed by the assessee relying upon certain remark of the auditor - HELD THAT:- As we are restoring the issue relating to applicability of principle of mutuality in respect of share premium, it deemed appropriate to restore this issue also to the Assessing Officer for deciding afresh after due opportunity of being heard to the assessee. This ground is allowed for statistical purposes.

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• 2021 (7) TMI 79
  Ex-parte order - Denial of natural justice - HELD THAT:- The appeal of the assessee was fixed for hearing by the CIT(Appeals) only on one occasion and without giving any further opportunity of being heard to the assessee, the appeal of the assessee was dismissed by him ex-parte vide his impugned order - no proper and sufficient opportunity of being heard was given by the CIT(Appeals) to the assessee before dismissing the appeal of the assessee vide his impugned order passed ex-parte and there is a clear violation of principles of natural justice. Even the ld. D.R. has not been able to dispute this position, which is clearly evident from the impugned order of the ld. CIT(Appeals). therefore, consider it fair and proper and in the interest of justice to set aside the impugned order passed by the ld. CIT(Appeals) ex-parte and remit the matter back to him for disposing of the appeal of the assessee afresh on merit in accordance with law - Aappeal of the assessee is treated as allowed for statistical purposes.

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• 2021 (7) TMI 78
  Addition u/s 68 - unexplained loan transactions - onus to prove - HELD THAT:- On being called upon to substantiate the genuineness and veracity of the aforesaid loan transactions, the assessee, in the course of the assessment proceedings filed supporting documentary evidence, viz. confirmation letters from the creditors; PAN of the creditors; bank statements of the creditors and the assessee; form nos. 16 qua TDS on interest; profit and loss account, balance sheet and returns of income of the creditors; and ledger accounts of the creditors. As the assessee had discharged the 'onus' that was cast upon it under Sec. 68 of the Act, therefore, the A.O without rebutting the genuineness of the said loan transactions in question on the basis of supporting documents was in no way justified in treating the loans received by the assessee from the aforementioned parties as unexplained cash credits under Sec. 68 of the Act. Accordingly, not finding favour with the view taken by the lower authorities, we herein set aside the order of the CIT(A) and vacate the addition. Disallowance of the interest expenditure - Claim of expense of the assessee was disallowed by the A.O, for the reason, that the loan transactions in question had been held by him to be bogus - HELD THAT:- Now, as we have concluded that the assessee had raised genuine loans from the aforementioned parties, therefore, the consequential disallowance by the A.O of the interest paid to the said lenders by treating the loan transactions as bogus shall stand vacated

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• 2021 (7) TMI 77
  Disallowance u/s 14A r.w.r. 8D - HELD THAT:- It is settled principle that when the share capital, reserves and surplus funds are more than the investments made, shall be presumed that the investments made from own funds. Therefore, the disallowance under interest expenditure involving Rule 8D(2)(ii) is not required in view of decision of Hon ble High Court of Bombay in the case of CIT Vs. HDFC Bank Ltd. reported in [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] Recording of satisfaction of the AO in respect of computation of expenditure relating to exempt income - It is settled principle that the adoption of methodology contemplated in Rule 8D(2) is not mechanical proceeding which requires the satisfaction of the Assessing Officer. In this case as discussed above already, there was no satisfaction of the Assessing Officer regarding the expenditure disallowed by the assessee on its own. Therefore, the disallowance made by the Assessing Officer without recording satisfaction is liable to be deleted. Regarding the order of this Tribunal in earlier years involving the assessment years 2009-10 and 2010-11 in assessee s own case rendered a finding the disallowance made by the assessee on account of expenditure relating to exempt income is fair and reasonable. Though the said order is not applicable to the year under consideration but however no contrary finding brought on record by the ld. AR in this regard. Therefore, the disallowance made by the AO as upheld by the CIT(A) is deleted and we hold that the disallowance made by the assessee on its own is justified. Thus, grounds raised by the assessee are allowed Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income under normal provisions of the I.T. Act. The Hon ble High Court of Bombay in the case of Sesa Goa Limited [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act. Thus we direct the AO to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground raised by the assessee is allowed.

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• 2021 (7) TMI 76
  LTCG - Estimation of cost of construction - assessee had disputed with the Ld. AO towards adopting the cost of the land sold as on 1/4/1981 and cost of construction for the purpose of computing his Long Term Capital Gain - HELD THAT:- Since the assessee is unable to produce any evidence with respect to his cost of land as on 1/4/1981 and cost of construction, we do not have any other option but to confirm the order of the Ld. Revenue Authorities who had relied on the SRO valuation and fairly estimated the cost of construction. Therefore, the grounds raised by the assessee on these regards are devoid of merit. Deduction u/s. 54F - assessee has utilised only ₹ 10 lakhs for the construction of his new residential house within the due date of filing of the return of income i.e. on 31/7/2009 and had failed to remit the balance amount in the capital gain account scheme in a National Bank as provided under the Act - HELD THAT:- As decided in JUSTICE T.S. ARUNACHALAM [ 2018 (1) TMI 1572 - ITAT CHENNAI] that if the sale proceeds are deposited in Nationalised Bank it would suffice to claim the benefit of deduction U/s. 54F of the Act. Now, Since the assessee has claimed before me that the entire amount was deposited in Nationalised Bank and thereafter fully utilised the same for the purpose of acquiring the New asset within the period specified under the Act, in the interest of justice, I hereby remit back the matter to the file of the ld. AO in order to verify the claim of the assessee and decide the matter in accordance with law and merit and in the light of the Tribunal decision cited herein above. Appeal of the assessee is partly allowed for statistical purposes.

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• 2021 (7) TMI 75
  Validity of reopening of assessment u/s 147 - AO non disposing objection against reopening orders - HELD THAT:- We find that in these cases the assessing officer has in his assessment order noted that assessee did not file the objection to the reopening. However learned CIT(A) in his order has noted this aspect. He has also reproduced one of the letters by the assessee to the assessing officer wherein objections to reopening were duly raised. CIT(A) is of the opinion that honourable Supreme Court decision in GKN Driveshaft [ 2002 (11) TMI 7 - SUPREME COURT] does not hold that the reassessment will be bad if objection are not disposed of. In this regard, on this premise he has rejected the assessee s contention that assessment is bad in as much as objections to reopening have not been disposed off - View of the learned CIT appeals is not in accordance with honourable Bombay High Court decision in the case of Fomento Resorts Hotels Ltd. [ 2019 (9) TMI 1284 - BOMBAY HIGH COURT ] dealt with in the above said order of the ITAT. It is settled law the order of honourable jurisdictional High Court is binding upon the subordinate courts and tribunals. We find that learned CIT appeals has erred not following the binding order of honourable jurisdictional High Court and instead of referring to a Delhi High Court decision in this regard. Assessing Officer is wrong in observing that assessee has not filed objection to reopening. The objection to reopening was intimated to Assessing Officer and the objections have not been disposed off. This, as per the ratio of Hon'ble Jurisdictional High Court decision as referred above is fatal to the assessment. Hence, we set aside the orders of authorities below and decide the issue in favour of assessee.

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• Customs

• 2021 (7) TMI 100
  Refund of additional duty - rejection of refund claim on the ground of failure to fulfill the Condition D of N/N.102/2007-C dated 14.09.2007 - HELD THAT:- The appellant has imported the Sappan Billets (Caesalpinea sappan) and has cut them into small pieces for the purpose of marketing locally but the said cutting into smaller pieces does not change the identity of the goods and further no new product has come into existence. The identical issue has been considered by the Division Bench of the Tribunal in the case of Agarwalla Timbers Pvt.Ltd. [ 2010 (9) TMI 950 - CESTAT AHMEDABAD] wherein it has been held that mere cutting of large pieces into small pieces for the purpose of trade will not amount to manufacture or processing in order to deny the benefit of 4% additional duty. The Division Bench of the Tribunal has considered the conditions of the Notification as well as the Circular issued by the Board and has also considered other decisions of the Tribunal wherein it has been held that mere cutting of the imported goods into small pieces will not amount to manufacture and refund of additional duty under N/N.102/2007 cannot be denied. The impugned order holding that the appellant has violated the Condition D of the N/N. 102/2007 dated 14.09.2007 is not sustainable - Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (7) TMI 109
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- Corporate Debtor has not shown anywhere that if the project was not completed or abandoned, any notice was sent to the Operational Creditor, before Operational Creditor sent Demand Notice u/s 8 of IBC. The Document Annexure R-1 filed by Respondent No.1 (Dy. No.25468) shows that even till August, 2016 bills were being paid. Thus, time was not essence of the contract. No dispute can be presumed merely by non-completion of the project in the fixed time or for the reason that the it was the contractor s fault, when the contract shows responsibilities on both the sides. If Operational Creditor had to continue construction, Corporate Debtor also had to continue paying RA Bills. Thus it cannot be agreed with the argument to make a presumption that there was pre-existing dispute or that the responsibility of non-completion fell on the Operational Creditor. It is concluded that there was no pre-existing dispute regarding the construction works that were undertaken by the Operational Creditor for the Corporate Debtor. Since there was no pre-existing dispute, all the other issues/disputes that relate to the various clauses of the contract agreement such as joint measurements, lack of completion certificate and inadequate and inappropriate certification of the bills become irrelevant insofar as adjudication of Respondent No. 1 s application under Section 9 is concerned. The appeal is dismissed.

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• 2021 (7) TMI 99
  Permission of withdrawal of application of CIRP of the Operational Creditor - Section 12A of the Insolvency and Bankruptcy Code, read with Section 60(5) of the Code read with Regulation 30(a) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons Regulations, 2016) - HELD THAT:- It is pertinently pointed out that the Applicant/Interim Resolution Professional had preferred an application IA/232(CHE)/2021 in IBA/81/2020 as a result of settlement arrived at between the Operational Creditor and the Corporate Debtor . In reality, the Operational Creditor had filed Form FA under Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. It is brought to the fore that the Applicant/Interim Resolution Professional received the aforesaid Form FA from the Operational Creditor on 10.03.2021 for withdrawal of the main Company Petition, pursuant to Regulation 30A(2) sub section (a). The Applicant was in receipt of a cheque for ₹ 13,36,590/- in respect of the estimated expenses, etc. To put it precisely, IA/232(CHE)/2021 in IBA/81/2020 was filed pursuant to the ingredients of Regulation 30A(3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons). Application filed by the Applicants/Proposed Respondents No.3 and 4 seeking permission of this Tribunal to get themselves impleaded in the instant Company Appeal as Respondents No.3 and 4, to avoid plurality/multiplicity of litigation is not entertained - appeal dismissed.

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• Service Tax

• 2021 (7) TMI 125
  Settlement under SVLDR scheme was opted - date of payment has been extended - HELD THAT:- The petitioner had tendered payment on 30/06/2020 and the amount accordingly had been debited from the account of the petitioner, however, the same came to be recredited in its account. The efforts of the petitioner to pay and have its acknowledgment have been in vain and thus, the petitioner is before this court. It appears that there is no dispute on aforesaid facts and particularly on the tender of payment being made on 30/06/2020. For no fault of the petitioner, the amount was not being accepted. Petition disposed off.

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• 2021 (7) TMI 102
  Refund of unutilized cenvat credit - validity of SCN - SCN was challenged on the ground of Order-in-Original has traversed beyond the show-cause notice inasmuch as the ground for rejection did not form part of the show-cause notice and other grounds were also taken - refund claim was rejected for the reason that the appellant had transitioned the credit for the said period into GST regime and consequently the appellant has not complied with the conditions of N/N. 27/2012-CE dt. 18.06.2012 - HELD THAT:- It is not in dispute that the appellant is an exporter and does not have any domestic services at all. Appellant availed input services for the purpose of rendering output service exporting to his foreign company for which he pays service tax and take cenvat credit. Since the appellant was unable to utilize the cenvat credit for payment of its output liability, the appellant filed a refund claim for the period April 2016 to June 2016 which was rejected by the original authority on the ground that appellant has not debited the refund amount in cenvat credit and service tax return and consequently the refund was rejected on the ground that the appellant has transitioned the input tax credit into TRAN-1 and as per Section 142(4), the refund is liable to be rejected once the cenvat credit is transferred to TRAN-1. The appellant has proved that he has actually reversed the amount of refund claimed in its cenvat credit account maintained in the books of accounts as prescribed in the Notification before filing the refund claim and Exhibit B clearly shows the reversal of cenvat credit but Commissioner(Appeals) has not appreciated that aspect and has wrongly observed in para 9.1 of the impugned order that the assessee has failed to debit the refund amount in cenvat account. As per the Notification No.27/2012, there is no requirement to debit in the service return, the only requirement under Condition 2(h) of Notification No.27/2012 dt. 18/06/2012 is that the amount i.e. claimed as refund under Rule 5 of the said Rules shall be debited by claimant from his cenvat credit account at the time of making the claim and this condition has been followed by the appellant before filing the claim of refund but the impugned order has misconstrued and misinterpreted the requirement of Notification No.27/2012 - Further it is found that appellant by sheer inadvertent mistake has transitioned the cenvat credit into TRAN-1 during the GST regime. As soon as, he realized his bona fide and unintentional mistake and the reversal was done in GSTR-3B returns in May 2018 itself. Scope of SCN - HELD THAT:- The impugned order has also travelled beyond the show-cause notice because all the submissions made by the appellant during the adjudication proceedings were not considered by both the authorities below. It is also found that the act of inadvertent transition of refund amount to GST regime and voluntarily reversal of such amount made by the appellant has been submitted before the adjudicating authority by the appellant vide his letter dt. 13.05.2018 which is much before the issuance of the adjudication order in October 2018 but the same was not considered by the adjudicating authority. The transition of refund amount into GST regime was merely inadvertent error and the same was made good by the appellant by reversing the credit into GSTR-3B filed in May 2018 - the appellant has not violated conditions of the N/N. 27/2012 dt. 18/06/2012 - Appeal allowed - decided in favor of appellant.

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• 2021 (7) TMI 95
  Delayed payment of service tax - completion certificate valid or not - residential complex constructed by the appellant from Gram Panchayat, Chota Bangarda - levy of interest - time limitation. Completion certificate dated 5.2.2013 received in favour of the residential complex constructed by the appellant from Gram Panchayat, Chota Bangarda is valid certificate or not? - HELD THAT:- Though on the date when completion certificate was issued in favour of the appellant by the Gram Panchayat, Chotta Bangarda, the impugned area, the jurisdiction thereof got vested with IMC, Indore. But once the said notification got quashed in February, 2014 the jurisdiction stands revested in Gram Panchayat itself. Thus the Show Cause Notice of October, 2017 should not have been issued. Except for 17 days i.e. with effect from 5.2.2013 to 22.2.2013 Gram Panchayat, Chota Bangarda was not the competent authority in terms of Section 66E (b) of the Finance Act. Rather the said Gram Panchayat was the, competent authority when it issued the permission to construct the said residential complex. The competence of said Gram Panchyat got retained from the order of High Court of February, 2014 - the completion certificate dated 22.2.2017 as was issued by Gram Panchayat was absolutely valid, at the time the Show Cause Notice was issued to the appellant - SCN is void. Levy of interest on account of late payment of service tax - HELD THAT:- It is observed that the appellant herein has issued the receipt of installment as and when the installment was received no invoice was ever issued by the appellant. The sale deed is a legal documents of the title of property hence cannot be termed as invoice. Also the date of completion of service will be the date when possession of the property is given to the purchaser which shall only be after receipt of sale consideration and the date of receiving final installment, therefore, later will be the relevant date for determination of point of taxation. The calculation placed on record reveals that the service tax liability has been discharged as and when the payment of requisite installment has been received by the appellant. Above all, there is no evidence produced by the Department to the contrary - there is no late payment of service tax by the appellant as is alleged by the Department. Imposition of interest on the ground of late payment is not sustainable. SCN is barred by time - HELD THAT:- It is on record that the appellant was discharging the service tax liability as and when the installment toward the sale consideration of the property used to be received by the appellant. No mala fide intent can be attributed to such an assessee who otherwise has been regularly discharging the tax liability. Mere evasion of tax does not invite penalties unless and until there is the evidence of some positive act on part of the appellant to show his intend to not to pay the tax. The said evidence is miserably missing in the present case. The proviso to Section 73 of Finance Act could not have been invoked by the Department in the present case - In present case, Show Cause Notice of the year 2017 raising the demand from the year 2012 onwards is, therefore held barred by time. The findings of the Commissioner (Appeals) are hereby set aside - Appeal allowed.

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• 2021 (7) TMI 88
  Refund claim of service tax paid - rejection on the ground of time limitation - specified services in the course of export under the provisions of N/N. 41/2012-ST dated 29.06.2012 - HELD THAT:- The provisions have to be read harmoniously. When the provisions require that only one claim has to be filed for each quarter, definitely, an assessee has to file one claim only at the end of the quarter. Thus, the limitation cannot be counted from the day of LEO or the last LEO in a quarter, as the assessee cannot file more than one refund claim for each quarter - on harmonious reading of the provisions and also the earlier Notification no.5/2006-CE (NT) read with notification no.41/2007-ST and read with notification no.41/2012-ST, the limitation has to be counted from the first day and after the end of the quarter, and accordingly, it is found that refund claim filed on 27.12.2016 is within limitation. The refund claim is rejected only on the ground of limitation, which is evident from the show cause notice dated 11.05.2017 as well as from the orders of the Court below - the Adjudicating Authority is directed to disburse the refund within a period of 45 days upon the receipt of the copy of the order with interest as per Rules for the period from 27.03.2017 (3 months ending the date of claim), till the grant of refund. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (7) TMI 122
  Validity of proceedings - during the pendency of the Writ Petition, several developments occurred with reference to the issues raised in this Writ Petition - petitioner made submission that the petitioner may be granted opportunity to adjudicate all the issues before the adjudicating authority for the purpose of redressing his grievances - HELD THAT:- The respondents made a submission that with reference to such disputed facts and circumstances, the adjudicating authority has to go into the documents and take a decision. In this view of the matter, the petitioner is at liberty to approach the adjudicating authority by filing an appropriate reply in the prescribed format, complying with the requirements within a period of four weeks from the date of receipt of a copy of this order and in the event of filing any such reply to the adjudicating authority and on receipt of any such reply, the adjudicating authority shall consider the same on merits, in accordance with law, take a decision and pass orders as expeditiously as possible. Petition disposed off.

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• 2021 (7) TMI 101
  CENVAT Credit - capital goods - intent to evade - suppression of facts - contravention of Rule 3 (5) of the CENVAT Credit Rules, 2004 - Rule 8 (1) of the Central Excise Rules, 2002 - extended period of limitation - Penalty - HELD THAT:- The period involved in the case on hand is 2013-14 and 2014-15 and the Department audit took place between February 2017 and April 2017. Till that time, the appellant should have filed its monthly/ER-1 returns regularly/periodically/quarterly/monthly, as is applicable, possibly with the help of its auditors. If the bona fides were to be believed, then the grave irregularity, as pointed out by the Revenue, should have been attempted to be set right on its own before being pointed out since the monthly/regular ER-1 returns were not filed blindly. Obviously, therefore, upon being pointed out, the appellant felt exposed, made payments without even questioning the delay, if any, in the Revenue s audit nor did it even raise the issue of invoking the larger period when the Show Cause Notice was issued, but accepted the appropriation of its payment towards duty and interest. Penalty - HELD THAT:- Admittedly, there is no challenge by the assessee-appellant to the invoking of larger period which has the same ingredients as that of Section 11AC (1) (a) ibid. It is therefore difficult to accept that the ingredients would apply for one and not when it comes to the issue of penalty - there is no provision similar to Section 73 (3) of the Finance Act, 1994 under the Central Excise Act, but rather a specific provision for penalty is there under Section 11AC. In most of the cases, facts are different, like there is quantification of duty, the payment of Service Tax was made before the issuance of Show Cause Notice which again stands on a different footing; in some cases, the penalty apparently was directed to be deleted for no suppression, but here the same is clearly for suppression of facts coupled with contravention of various provisions. Appeal dismissed.

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• 2021 (7) TMI 98
  100% EOU - Refund claim - rejection on the ground that goods were exported after claiming drawback, doubt was also expressed if the appellant have exported the goods lying in stock on the date of debonding - HELD THAT:- Admittedly the appellant have exported 448 units of handicraft on 30.07.2015, within a week after the date of debonding being 27.07.2015 when only 153 units were lying in stock. Thus, the refund claim have been rejected on presumptions and assumptions that such 153 units may not have been included in the exported units as there has been further production of 448 units on 28-29.07.2015. Such presumption is drawn without any adverse finding or any adverse material on record. In this view of the matter, it is held that the appellant have exported 153 units lying in stock on the date of debonding. Accordingly, the impugned order is set aside. It is held that the appellant is entitled to refund of the duty of ₹ 7,22,290/-. The Adjudicating Authority is directed to refund this amount alongwith interest from 18.08.2016 till the date of refund @ 12% p.a. - appeal allowed - decided in favor of appellant.

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• 2021 (7) TMI 97
  Clandestine manufacture and clearance - Cigarettes - non accountal of goods in RG-I register - physical control as per the Central Excise law or not - HELD THAT:- It is found that only for not finding the statutory register being RG-I and Form-4 at the time of inspection by the Officers of DGCEI, adverse inference have been drawn without reference to the records of the appellant available with the Department, being the various returns filed from time to time and the inspection reports available on record. Admittedly, the audit has taken place in the factory premises of the appellant on 20.05.2013, which is four days before the date of search or inspection by the DGCEI. There is no adverse report on record by the Officers of the Audit team nor there is any whisper of any discrepancy in the stock of finished goods and raw material with respect to the quantity entered in the statutory register. There are no instance of clandestine clearance or attempt to clear clandestinely have been brought on record. Thus, there is absence of mens rea or any attempt by appellant to clandestinely clear the finished goods lying in the factory as on the date of inspection or at any point of time. This Tribunal have repeatedly held that any finished goods found not entered in the RG-I register on the date of inspection, are not liable for confiscation in absence of any finding of attempted clandestine removal of the excisable goods. Further, raw material which was found lying in the factory of the appellant was admittedly not manufactured by the appellant and as such the same is not dutiable in the hands of the appellant. Thus, there is no requirement of confiscation of raw material in the facts and circumstances - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE LUCKNOW VERSUS M/S. SHUBH METALS AND M/S. SHUBH METALS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUCKNOW [ 2015 (1) TMI 1039 - CESTAT NEW DELHI] . A bare reading of Rule 25 read with Section 11AC of the Act, the order of confiscation and penalty can be made only in case of fraud, collusion, wilful mis-statement, suppression of facts or any contravention of the provisions of the law with intent to evade duty. There is no such allegation in the facts of the present case save and except non finding or non production of the statutory register RG-I and Form-IV for the reasons that the same were missing and could not be located. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (7) TMI 126
  Validity of assessment order - Reversal of Input tax credit - difference in purchase turnover to tax - TNVAT Act - HELD THAT:- Reliance placed in the case of M/S. CHAKARAVARTHY READYMADES VERSUS THE STATE TAX OFFICER, VANDAVASI, TIRUVANNAMALAI DISTRICT. [ 2019 (2) TMI 1447 - MADRAS HIGH COURT] where it was held that In the present case, the Department, does not dispute the position that the purchasers have duly produced the original invoices from the seller. In such a circumstance, no reversal is liable to be made, in the absence of any further condition imposed upon the dealer in this regard. The assessment will be re-done - petition allowed by way of remand.

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• 2021 (7) TMI 116
  Jurisdiction - power of respondent No.1 to entertain a proceeding under Section 64(1) of Karnataka Value Added Tax Act, 2003 - claim for deduction of tax - appellant had failed to disclose the quantum of tax collected in the invoices and that therefore, he is not entitled to the deduction - HELD THAT:- A perusal of the impugned order passed by the respondent No.1 discloses that the respondent No.1 took note of the written objections submitted by the appellant herein to the proposed revision notice. The objections raised are extracted in page Nos.3, 4, 5, 6, 7 and 8 of the impugned order passed by the respondent No.1. However, the respondent No.1 has again relied upon the judgment of this Court in the case of M/s.Indian Rayon [ 2013 (9) TMI 1021 - KARNATAKA HIGH COURT ] and submitted that the judgment of this Court squarely applies to the facts and circumstances of the case. The respondent No.1 has not considered any of the objections raised by the appellant. Without expressing any opinion on the merits of the case and without expressing anything on the objections raised by the appellant, it is deemed appropriate to remit the case back to the respondent No.1 to reconsider the case - appeal allowed by way of remand.

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• Indian Laws

• 2021 (7) TMI 123
  Dishonor of Cheque - illegality in the order of issuance of process or not - the contention in the memo of revision is that the learned Magistrate committed a jurisdictional error in taking cognizance of the offence - HELD THAT:- The cheque is issued by a firm, which is not arraigned as accused. Indeed, since the statutory notice was not served, the firm could not be arraigned as accused. The private limited company, which has no nexus whatsoever with the dishonoured cheques, was arraigned as accused 1. The fact that Ramanarao Bolla is a Director of the private limited company as well as a partner of the firm, is of scant significance considering that the company is a distinct legal entity and the mere fact that one of the Director is also a partner of a firm which issued the dishonoured cheque cannot be the basis of the implication of the company in the alleged offence. The petition is dismissed.

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• 2021 (7) TMI 117
  Dishonor of Cheque - insufficiency of funds - Amicable settlement - Section 138 read with Section 141 of the Negotiable Instruments Act - HELD THAT:- The prosecution under Section 138 of the Negotiable Instruments Act is against persons who have issued the cheque, which is later dishonored. Mere assurance of payment or selection of jewellery cannot be the basis to rope in the petitioners. It is vaguely stated in the complaint that the petitioners are directors and responsible for the day-to-day affairs of the A1 company. But in the given facts and circumstances of the case and particularly the uncontroverted claim of the petitioners that they are household ladies, this Court is of the opinion that vague and omnibus against the petitioners/directors as being responsible for the day-to-day affairs of A1 company is not sufficient. Mere verbatim reproduction of the words contained in Section 141 of the Negotiable Instruments Act without any specific role attributed to each of the petitioners in the A1 company, cannot be the basis to prosecute the petitioners, as the same would unjust and result in abuse of process of law. In POOJA RAVINDER DEVIDASANI's case [ 2014 (12) TMI 1070 - SUPREME COURT] , the Supreme Court allowed the quash petition not only on the ground that there is no specific role attributed to the appellant but also on the ground that the appellant has resigned as Director much prior to issuance of the cheque. The criminal petition is allowed.

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• 2021 (7) TMI 115
  Dishonor of Cheque - prosecution against the person who signed the cheque or the person who has authorized the signatory - - Insufficiency of funds - criminal proceedings initiated against these petitioners No. 1 and 2 or not - HELD THAT:- The complaint filed by the complainant before the trial Court makes it clear that it was the accused No. 1 who issued the Cheque in question towards legally recoverable debt due by accused Nos. 1 and 2. Similar contention is taken in the legal notice that was issued immediately after dishonor of the Cheque. Complainant in his sworn statement before the trial Court stated similar facts that it was accused No. 1 only who signed the Cheque. Of course, it is stated that accused No. 1 was authorized to maintain and sign the joint account on which the Cheque in question was drawn. Therefore, it is clear that even though the Cheque in question pertains to a joint account of accused Nos. 1 and 2 it was signed only by accused No. 1 and not by accused No. 2. The law on the point is made very clear. When accused No. 1 alone signed the Cheque in question, even though it is stated that accused No. 2 had authorized accused No. 1 to sign the Cheque, will not make her liable for the offence punishable under Section 138 of the N.I. Act. It is only accused No. 1 who signed the Cheque and issued in favour of the complainant and therefore, he can be prosecuted before the trial Court. Petition allowed in part.

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