TMI Tax Updates - e-Newsletter
July 9, 2021

Case Laws in this Newsletter:

GST Income Tax Insolvency & Bankruptcy Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. DEALING WITH BLOCKING OF ITC ON A/C OF 2A & 3B MISMATCH

   By: Vivek Jalan

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. Higher TDS for Income Tax Return Defaulters w.e.f. 01.07.2021-Decoding section 206AB

   By: Manish Gupta

News

1. Shri Shaktikanta Das, Governor, RBI interview with Business Standard on July 8, 2021

2. Smt. Anupriya Patel takes charge as Minister of State of Ministry of Commerce and Industry

3. GI certified Madurai Malli and other flowers exported to USA & Dubai from Tamil Nadu

4. Dr Bhagwat Kishanrao Karad takes charge as Minister of State in the Ministry of Finance

5. Response from Ministry of Finance on reports relating to freezing of Indian assets in France

6. Revenue Deficit Grant of ₹ 9,871 crore released to 17 States

Notifications

GST - States

1. 84/2020– State Tax - dated 7-7-2021 - Delhi SGST

Class of persons under proviso to section 39(1) - Option to furnish a return for every quarter

2. 72/2020– State Tax - dated 7-7-2021 - Delhi SGST

Delhi Goods and Services Tax (Eleventh Amendment) Rules, 2020

3. 62/2020– State Tax - dated 7-7-2021 - Delhi SGST

Delhi Goods and Services Tax (Tenth Amendment) Rules, 2020.

4. 58/2020– State Tax - dated 7-7-2021 - Delhi SGST

Delhi Goods and Services Tax (Eighth Amendment) Rules, 2020

5. 50/2020– State Tax - dated 7-7-2021 - Delhi SGST

Delhi Goods and Services Tax (Seventh Amendment) Rules, 2020

6. 16415-FIN-CTI-TAX-0002/2020 - dated 21-6-2021 - Orissa SGST

Amendment in Notification No. 8899-FIN-CT 1 -TAX-0002-2020, dated the 17th March, 2021

7. G.O. Ms. No. 99 - dated 2-7-2021 - Tamil Nadu SGST

Supersession Notification No. II(2)/CTR/793(a)/2020, dated 2nd December, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CDMRD_DOP/P/CIR/2021/592 - dated 8-7-2021

Review of Advance Intimation timelines for modifications in the contract specifications of commodity derivatives contracts

GST - States

2. CIRCULAR No. 10/2021(STATE) - dated 2-7-2021

Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System

3. CIRCULAR No. 09/2021(STATE) - dated 2-7-2021

GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them

4. CIRCULAR No. 06/2021(STATE) - dated 2-7-2021

Clarifcation regarding GST on supply of various services by Central and State Board (such as National Board of Examination)

5. CIRCULAR No. 08/2021(STATE) - dated 1-7-2021

GST on milling of wheat into flour or paddy into rice for distribution by State Governments under PDS

6. CIRCULAR No. 07/2021(STATE) - dated 1-7-2021

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

7. CIRCULAR No.11/2021(STATE) - dated 30-6-2021

Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification issued in the G O Ms No.142, Revenue (CT-II) Department, dated 15-5-2020.

8. TRADE CIRCULAR No. 05/2021 - dated 6-5-2021

Further clarification in respect of certain challenges faced by the registered persons in implementation of provisions of GST Laws.

9. TRADE CIRCULAR No. 06/2021 - dated 6-5-2021

Further clarification in respect of various measures announced by the Government for providing relief to the taxpayers in view of spread of Novel Corona Virus (COVID-19).

Customs

10. 14/2021 - dated 7-7-2021

Improvements in Faceless Assessment - Measures for expediting Customs clearances

Highlights / Catch Notes

Income Tax

• Court Rules Unexplained Investments Invalid; No Property in Individual's Name, Assessment Officer's Addition Deleted.

  Case-Laws - AT : Unexplained investment in the property, credit card payment and cash deposited in the bank - since the assessee has not purchased any property in his own name we do not find any merit in the addition made by the AO the same is accordingly directed to be deleted. - AT
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• Tax Authorities' Forfeiture Claim Lacks Evidence; Section 51 of Income Tax Act Reduces Property Cost Due to Forfeiture.

  Case-Laws - AT : Addition u/s. 28(iv) - advance money against sale of property forfeited by the assessee - Merely for the reason that the amount received as loan in an earlier year was converted into advance payment for purchase of property, there is no reason to disbelieve the property transaction as a colourable device. No material has been brought to substantiate the above said view of the tax authorities, meaning thereby, they have entertained this view only on surmises and conjectures. - the provisions of section 51 of the Act shall be applicable and the above said amount would go to reduce the cost of property. - AT
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• Court Reviews Disallowance of Professional Fees for Retained Family Members in Business Management and Operations.

  Case-Laws - AT : Disallowance of Professional Fees - The claim of the appellant rest on the ground that both the employees worked on retainer-ship basis and were qualified professional. The appointment of both the employees was purely a commercial decision keeping in mind the benefit of the business as a whole as it would be very important that the family persons should be employed in the own family business to control the management, operations, staff etc. so that there should not be any difficulty in running the business. The lower authorities, without questioning the appointment letter of both the persons, questioned the genuineness of the transaction. - AT
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Indian Laws

• High Court Affirms Liability for Issuing Signed Blank Cheques; Presumption of Debt Discharge Upheld.

  Case-Laws - HC : Dishonor of Cheque - issuance of signed blank cheque - contention is that the cheques were issued in blank and the cheques were not filled, but signature on the cheque was not denied - the statutory presumptions that the cheques were issued by her in discharge of her liability arises against her which she could not rebut by adducing evidence - HC
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Service Tax

• Appellant Must Comply with Summons to Benefit from Master Circular on Service Tax, Says Court.

  Case-Laws - HC : Failure to remit the service tax - issuance of a pre-show cause notice - If the appellant desired to seek the benefit of the Master Circular dated 10.03.2017, he is expected to comply with the summons issued by the respondent seeking explanation/documents that were summoned by the respondent. The benefit of the Master Circular cannot be a one-way traffic and the appellant cannot milch the Master Circular to his advantage. - HC
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• Refund Granted for Incorrect Service Tax Category; Chartered Accountant's Certificate Upheld; Unjust Enrichment Principles Applied.

  Case-Laws - AT : Refund of Service Tax paid - principles of unjust enrichment - Service tax was paid under wrong head - Rejection of certificate of the Chartered Accountant - certificate issued by the Chartered Accountant has an evidentiary value and should not be rejected lightly because the said certificate has been issued after the verification of the accounts of the assessee. - Refund allowed - AT
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Central Excise

• CENVAT Credit Allowed for Plastic Buckets and Containers as Integrated Business Inputs, Not Separately Billed to Customers.

  Case-Laws - AT : CENVAT Credit - inputs - plastic household buckets - kitchen containers - to be considered as inputs or not - , the value of the buckets are buried into the business income alone. It is an admitted fact that the appellant have not collected any consideration separately for bucket and hence the cost of the buckets was not charged on the customers separately - Credit allowed - AT
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• CENVAT Credit Eligibility for Capital Goods: Pipeline Connection to Refinery Examined Under Evolving Cenvat Credit Rules 2000-2004.

  Case-Laws - AT : CENVAT Credit - capital goods - pipeline used to connect the SBM with the refinery - difference between Cenvat Credit Rules and the Modvat scheme - The Cenvat Credit Rules have evolved over the period 2000 to 2004 and the ratio of the decision made with reference to ‘Cenvat’ introduced vide Notification No 27/2000(NT) cannot be straight away applied to the subsequent rules without due examination - AT
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VAT

• Court Rules Bona Fide Purchaser Not Liable for Selling Dealer's KVAT Act Non-Compliance; ITC Reassessment Scrutinized.

  Case-Laws - HC : Validity of reassessment order - Input tax credit on purchases from three dealers - a bonafide purchaser cannot be put at jeopardy, when he has done all that the law expects him to comply. The purchasing dealer has no means to ascertain and secure compliance provisions of the KVAT Act by the selling dealer - it cannot be said that the assessee has conspired with the selling dealers to avail the ITC fraudulently. If the revenue is able to demonstrate that the assessee and the selling dealers have conspired, then it is still open for the Revenue to initiate necessary steps against the assessee as well. - HC
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Case Laws:

• GST

• 2021 (7) TMI 315
  Constitutional validity of Rule 86A CGST Rules/WBGST and for reading down Section 16(2)(c) of the CGST Act/WBGST Act - HELD THAT:- The issues raised in this writ petition cannot be adjudicated without calling for affidavits. Since the Constitutional validity of both Central and State Act has been challenged, the petitioners have to serve notice upon the Attorney General of India as well as Advocate General of the State of West Bengal. The interim orders as prayed for by the petitioners is same as final relief, which according to this court cannot be granted at the motion stage and furthermore, quashing of the proceedings also cannot be done at the motion stage. It is also settled position of law that every piece of legislation is presumed to be legal and valid so long it is not declared invalid by any court of law. No interim order at this stage is passed and any action taken against the petitioners during the pendency of the writ petition will abide by the result of the writ petition - Matter to appear in the list for final hearing after eight weeks.

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• 2021 (7) TMI 303
  Principles of natural justice - credit blocked - Petitioner has not been served with any notice or the reasons for blocking the credit - HELD THAT:- If the powers are exercised under Rule 86(A) of the Goods Services Tax Rules, 2017, then also, the concerned authority is required to give reasons for blocking the credits in the credit ledger of the Petitioner. Let Notice be issued, making it returnable on 30.6.2021.

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• Income Tax

• 2021 (7) TMI 314
  Offence punishable under Section 276C(2) read with Section 278E of Income Tax Act - wilful attempt to evade payment of tax -Non-payment of remaining admitted tax liability - petitioners state that they have resigned way back in the month of November, 2018 and the Certificate of the Chartered Accountant dated 19.11.2019 along with necessary documents shows that the entire tax liability had been paid by the accused Company - assessee deposits/ paid self- assessment tax dues belatedly, after steps taken by the department - HELD THAT:- From the facts of the case it appears that Company had voluntarily declared its intention to pay tax and 80% of the tax was paid prior to the complaint. The Income Tax Department was instructed regarding the dues from the GST Department and there is no denial to the fact that the Income Tax Department had issued Notice to GST Department for remitting the refund directly to their Department. Certain tough circumstances were also pleaded by the Company regarding demonetisation and implementation of GST, the Textile Industry facing huge financial crisis, which had affected the recovery of tax liability determined by the accused Company was not controverted by the Income Tax Department and to that payable tax, as per the self-assessed Return of income, the Company had already paid and further amount was to be directly paid by the GST Department and as such amount was to be adjusted against GST refund which constitute the 80% of the total tax liability. The accused Company has stated the reasons for the delay and expressed readiness to pay the balance of Rs. . Delayed payment under the provisions of the Act may call for penalty or interest but by no stretch of imagination in the circumstances as pleaded by the petitioners, could be construed as an attempt to evade the tax so as to entail prosecution of the petitioner for the alleged offence of Section 276C(2) of the Act. Thus, in the considered opinion of this Court, the prosecution initiated against the petitioners is illegal and tantamount to abuse of process of law and required to be quashed. Petition is allowed. The complaint made by the Office of the Assistant Commissioner of Income Tax, Surat which has culminated into Criminal Case pending before the Court of learned Chief Judicial Magistrate, Surat against the petitioners for the offence punishable under Section 276C(2) read with Section 278E of Income Tax Act, as well as the order issuing summons dated 13.6.2019 are quashed and set-aside

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• 2021 (7) TMI 313
  Assessment of trust - Depreciation on asset of Charitable trust - HELD THAT:- As decided in M/S. NATIONAL COLLEGE COUNCIL, TEPPAKULAM, TIRUCHIRAPALLI. [ 2021 (4) TMI 469 - MADRAS HIGH COURT] substantial questions of law, which have been framed in these appeals, have been answered against the Revenue as relying on RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] . - Decided against revenue.

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• 2021 (7) TMI 312
  Reopening of assessment u/s 147 - respondent had received the information from the office of DDIT (Inv.) Unit-1(3), Ahmedabad that the petitioner - company was identified as one of the beneficiaries of the accommodation entries unearthed during the course of search proceedings - seizure of unaccounted cash along with the incriminating digital as well as documentary evidences - HELD THAT:- AO had received specific information from the said investigating wings outlining the systemic evasion of taxes by the petitioner and others, and had therefore reason to believe that the petitioner had sold scrips to Veronica Production Limited / Dhvanil Chemicals Ltd., which were penny stock during financial year 2011-12. Such satisfaction arrived at by the AO being subjective in nature and based on the fresh material for coming to the prima facie conclusion that the petitioner had failed to disclose fully and truly all material facts necessary for his assessment for the A.Y. 2012-13, it could not be said that the respondent had initiated the proceedings under section 147 of the Act on the basis of incorrect facts or on the basis of borrowed belief of the Investigation Wings at Ahmedabad and Mumbai, as sought to be submitted by the learned advocate Mr. R.K. Patel for the petitioner. The Court also does not agree with the submission made by the learned advocate Mr. Patel that the respondent could not have reopened the assessment of the petitioner under section 147/148 of the said Act after the scrutiny assessment having been undertaken by the Assessing Officer under section 143(3) of the said Act for the A.Y. 2012-13. AO having arrived at his subjective satisfaction based on additional fresh material placed before him that the petitioner had not fully and truly disclosed all the material facts necessary for his assessment for the relevant assessment year and prima facie his income chargeable to tax had escaped assessment, he was fully justified in initiating the proceedings under section 147/148 In this case, the Assessing Officer has recorded the reasons in detail and the objections raised by the petitioner have also been dealt with by him in detail vide the impugned order. It may further be noted that no such contention that the Principal Commissioner had granted sanction without application of mind or without assigning any reason, was taken up by the petitioner before the respondent authority in the objections filed by him, nonetheless the respondent has mentioned in the impugned order that his satisfaction was duly approved by the CIT-4, Ahmedabad vide his letter / approval dated 30.03.2019. Again in response to the said contention raised in the petition, the respondent has contended in his affidavit-in- reply that the case of the petitioner was reopened after obtaining the sanction from the Pr. CIT-4, Ahmedabad as required by section 151 of the said Act and that the Pr. CIT had approved the notice after appreciating the facts and after duly applying his mind. The petitioner has chosen not to controvert the said submission in the affidavit-in-rejoinder filed by him. There is also no merit in the submission of Mr. Patel that the petitioner was assessed under section 115JB and that the assessee was already paying more tax under section 115JB than the income tax liability arising under the normal provisions of the Act. As rightly observed by the respondent in the impugned order disposing of the objections, whether the income chargeable to tax has escaped assessment or not, could not be considered at this stage and no conclusive opinion could be rendered at this point of time when the assessment / reassessment has not even started. - Decided against assessee.

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• 2021 (7) TMI 311
  Deduction u/s.10A - Tribunal directing the AO to recompute the income in the case of Sak Soft by excluding the freight and insurance expenses both from the export turnover and also from the total turnover while computing deduction under Section 10-A - HELD THAT:- As fairly submitted that the questions of law 1 and 2 were already decided against the Revenue by judgment reported in Commissioner of Income Tax v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] Allowing set off of benefit of brought forward losses from the total income after allowing deduction under Section 10A when as per the amended provisions of the Act in Section 10A(1) deduction has to be allowed only after arriving at the total income after giving effect to brought forward depreciation and losses - HELD THAT:- 3rd question of law was decided against the Revenue by the Division Bench of this Court in M/s.Allsec Technologies Ltd., Chennai [ 2020 (9) TMI 1192 - MADRAS HIGH COURT] - Decided in favour of the assessee.

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• 2021 (7) TMI 308
  Disallowance of 50% of credit card expenses - AO held that the assessee has not adduced any evidence that drawings made by the Directors through their personal credit card are in fact, incurred for the purpose of business of the company - of Income Tax (Appeals) as well as tribunal held that no evidence has been adduced by the assessee to show that expenses are incurred for purposes of business by assessee - HELD THAT:- As pertinent to note that before the tribunal the assessee had filed the documents with regard to the claims made by the assessee - tribunal has rejected the aforesaid application on the ground that the documents annexed with the application are neither certified nor have been filed before the tribunal and the Assessing Officer. It has further been held that no application for admission of additional evidence along with documents was filed. As held by the tribunal that no cognizance can be taken of the document along with the documents filed by the assessee. Thus, in the absence of any document on record, all the authorities have rightly disallowed the credit card expenses. Similarly, in the absence of any evidence on record, the disallowance of business development expenses and disallowance of foreign travel expenses has been upheld. Whether the assessee has added a sum as provision for wealth tax in income is a question which has to be ascertained after remand and after giving an opportunity of being heard to the assessee. The findings of fact have been recorded by the Assessing Officer, Commissioner of Income Tax (Appeals) and the tribunal do not suffer from any infirmity. The aforesaid findings are also not demonstrated to be perverse. Substantial question of law are answered against the assessee and in favour of the revenue.

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• 2021 (7) TMI 306
  Marked to market loss - FCNR loss - foreign currency transactions entered into by the assessee - whether it is speculative and notional in nature and is therefore liable to be disallowed? - HELD THAT:- As liability was crystalised and ascertained. The assessee had entered into a binding obligation when it entered into a foreign currency contract and the contract was entered into to protect the assessee from foreign exchange fluctuation. The working capital loan was used for the purpose of business and therefore, the same could not have been considered either as notional or speculative transaction. It is pertinent to note that if the assessee has to repay the loan and square off the contract on 31.03.2008, the assessee in addition to prepayment charges, has to make a payment - Therefore, the finding recorded by the Tribunal that the decision of WOODWARD GOVERNOR INDIA P. LTD. [ 2009 (4) TMI 4 - SUPREME COURT ] do not apply to the fact situation of the case, cannot be sustained in the eye of law. The working capital loan was used by the assessee for the purpose of business and therefore, the assessee had incurred the loss in the course of business and is entitled to claim deduction under Section 37(1) - Decided in favour of assessee.

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• 2021 (7) TMI 302
  Correct head of income - Income derived from letting out of property to the tenants for the purpose of running a software technology park - business income or house property - HELD THAT:- M/S. TIDEL PARK LIMITED [ 2020 (7) TMI 339 - MADRAS HIGH COURT ] income derived from letting out of the property with all amenities and facilities would be income from business and cannot be assessed either as income from house property or as income from other sources.

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• 2021 (7) TMI 301
  Reopening of assessment u/s 147 - Addition u/s 68 - notice issued after end of 4 years - HELD THAT:- Since the revenue has failed to show the non-disclosure of facts, the notice having been issued after period of 4 years is required to be quashed - assessee had disclosed all material facts at the time of previous assessment proceedings and all the relevant facts with regard to transaction alleged in the reasons recorded were duly within the knowledge of the Assessing Officer. After disclosure of primary facts with regard to purchase and sales of scrip of M/s. Aarya Global, the Assessing Officer, could have made further inquriy with regard to truthfulness of the transaction and reliability of the company. AO being an expert in the subject, could have inferred from the price of purchase and sales of the scrip that the transaction is bogus. It is pertinent to note that the Assessing Officer was investigating the transaction of penny stock Company i.e. KGN Industries. The record indicates that the report of SEBI imposing penalty was pronounced on 30.11.2017. Therefore, it cannot be said that the revenue was unaware with regard to alleged bogus trading undertaken by M/s. Aarya Global and connected persons and their beneficiaries. Under such circumstances, contention raised by the revenue is not acceptable. - Decided in favour of assessee.

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• 2021 (7) TMI 299
  Revision u/s 263 - AO is not correct in not initiating penalty proceedings u/s 271(1)(c) - case of the assessee was selected for scrutiny as there was a mis-match found in the receipts of the profit and loss account with Form No. 26AS - HELD THAT:- CIT issued show cause notice for assuming jurisdiction u/s 263 of the act on 23/3/2021. Therefore, at the time of examination of the record by the learned principal CIT, issue is squarely covered in favour of the assessee by the decision in her own case in previous year, therefore, she was not justified in passing an order on the identical facts by directing the learned assessing officer to initiate the penalty proceedings for concealment of income. Thus on this count also the order of the learned principal CIT is not sustainable. More on going through the order passed by the learned principal Commissioner of income tax u/s 263 of the income tax act it is clear-cut that she relied on the president is dated 14 December 2016 issued by the government of India, central board of direct taxes with respect to the filing of income tax return by the taxpayers post de monetization of currency. Those she relied on the paragraph number two of that pretzel in stating that if there is no omission or wrong statement made in the original return of income the assessee cannot revise the return filed originally. However, in the present case, we find that there is an omission and a wrong statement, which is bona fide, and therefore the assessee was entitled to revise a return of income. It is also a fact that it is not a case of demonetization of currency. Therefore, the assessee is validly entitled to revise a return of income. If the argument of the learned principal CIT is accepted then the sanctity of revising the return of income then in assessee finds an error or omission in the originally filed return, automatically in all such cases initiation of the penalty proceedings would be mandatory. Such is not the mandate of law and therefore on this count also the order passed by the learned principal Commissioner of income tax is not sustainable. We hold that the order passed by the principal Commissioner of income tax u/s 263 is not sustainable in law - Appeal filed by the assessee is allowed.

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• 2021 (7) TMI 298
  Addition u/s 68 - Director did not attend the assessment proceedings, ignoring all the direct evidences furnished by the assessee in support of its claim that the initial burden has been discharged by it - HELD THAT:- Merely because the Director of the lender company could not attend the assessment proceedings cannot be the basis for brushing aside the clinching direct evidences brought on record by the assessee. We find that the transactions have been made through banking channel. The entries are duly reflected in the bank accounts of both the parties i.e. the lender and the borrower. We also find that the lender company i.e. M/s Arti Securities and Services Ltd has furnished its complete Income tax details alongwith documents furnished by it to the Registrar of Companies. It is not the case of the AO that the assessee has purchased cheque by paying cash nor it is the case of any accommodation entry, nor there is any allegation or suspicion on the documentary evidences furnished by the assessee which are part of the record. The only reason we find is the non-appearance of the Director before the AO In a case where a sum is credited in the books of account of the assessee, the assessee could discharge its onus by proving three things, namely - The identity of the creditor, The credit-worthiness of the creditor, and The genuineness of the transaction in question. Once the assessee proves all the above three things, its onus is discharged. We have no hesitation to say that the assessee has successfully discharged its onus u/s 68 - Decided in favour of assessee.

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• 2021 (7) TMI 295
  Deduction u/s 80IB(10) - proportionate deduction on the profits of the eligible units - HELD THAT:- As decided in own case [ 2019 (7) TMI 1529 - ITAT PUNE] the assessee is not entitled to claim any deduction under section 80IB(10) of the Act in respect of four flats against which there is violation of clauses (e) and (f) of Section 80IB(10) of the Act. However, the assessee is entitled to claim proportionate deduction in respect of balance flats sold by the assessee in the aforesaid housing project. Upholding the order of the CIT(A), we dismiss the ground of appeal raised by the Revenue

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• 2021 (7) TMI 293
  Addition u/s 68 - unexplained cash credits - assessee had received unsecured loans - onus to prove - HELD THAT:- From the material filed before ld.CIT(A), it is clear that the appellant had filed the details of each and every receipt of loan received. CIT(A) without adverting to the evidence filed before him, without discussing the evidence in respect of each credit and assigning reasons, confirmed the addition by holding that the appellant had failed to prove the creditworthiness of creditors. Thus, the order of the ld.CIT(A) is devoid of any reasons. Needless to say that the ld.CIT(A) is a quasi-judicial authority. An order passed by the quasi-judicial authority should be in conformity with the principles of natural justice. Recording of reasons for the conclusions reached by an authority is a part and parcel of the principles of natural justice. CIT(A) had given bald findings without giving any cogent and convincing reasons based on evidence on record. Therefore, the order of ld.CIT(A) cannot be sustained in the eyes of the law. In order to meet the ends of justice, we remand the matter back to the file of ld.CIT(A) for denovo adjudication of the matter in accordance with the law. Appeal of the assessee is partly allowed for statistical purposes.

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• 2021 (7) TMI 292
  Reopening of assessment u/s 147 - HELD THAT:- No doubt, in assessment year 2009-10, assessments in case of both the assessee were initially completed under section 143(3) - as observed, after receiving the notices issued u/s 148 the assessee had raised objection against reopening of assessment. It is evident, the assessing officer has dealt with the objections of the assessee in separate orders. Thus, the assessing officer has acted in conformity with the legal principles before proceeding to re-assess the income of the assessee. As noticed from the material on record that the assessing officer has only made routine enquiry in course of original assessment proceedings. He has not made specific enquiry in respect of the purchases. It is also a fact on record, after completion of original assessments for assessment year 2009-10, AO received information from the Investigation Wing of the department indicating that certain purchases claimed to have been made by the assessee are non genuine as the concerned selling dealers have indulged in providing accommodation bills - AO had tangible material available with him to form a belief that income chargeable to tax has escaped assessment - contention of the assessee that the assessing officer has reopened the assessment on a mere change of opinion without proper application of mind is contrary to facts on record; hence, unacceptable. Insofar as assessment year 2010-11 it is an admitted factual position that the returns of income filed by both the assessees were only processed under section 143(1) - there was no occasion for examining the purchases made by the assessees - unable to accept assessee s contention that the assessments were not reopened validly - there is no need for deliberating on them at length - grounds raised by the assessees challenging the validity of reopening of assessment under section 147 of the Act do not have merit. Estimation of income on bogus purchases - Considering the nature of business of both the assessee s and keeping in view the decision of coordinate bench in case of M/s Sterling Steel Industries [ 2020 (4) TMI 889 - ITAT MUMBAI] disallowance @2% on the alleged non genuine purchases would be fair and reasonable.

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• 2021 (7) TMI 291
  Revision u/s 263 by CIT - AO did not carry out enquiries or examination in respect of five issues - trade payable, advances receivable short term borrowings, Inventory, salary to directors increased and bad debts written off - HELD THAT:- All the five points raised by the ld. CIT for revising the assessment order were duly enquired into by the AO and the assessee also furnished its reply to each one of them. Onus lies on the CIT to demonstrably indicate as to in which manner either the AO did not make proper enquiry on relevant aspects of the assessment or that the reply furnished by the assessee was fallacious, thereby rendering the assessment order erroneous causing prejudice to the interest of revenue. If the CIT simply declares an assessment order falling within the ken of section 263 just on his whims without any specific foundation for such a belief, the revision will not pass the test of judicial scrutiny. Simply put, in no situation - where the AO conducts proper enquiry; reply is filed by the assessee; and the claim of assessee is accepted can the CIT invoke section 263 without indicating lacunas in the AO s enquiry or fallacy either in the assessee s reply or in the action of the AO in accepting such reply leading to under assessment of income, thereby causing prejudice to the interest of revenue. Adverting to the facts of extant case, we find that it falls in the afore discussed second way of the second outcome of the third category, namely, where the AO conducted enquiry; the assessee furnished his reply thereto; and the assessment was made accepting the point of view of the assessee without making any separate discussion in the assessment order. In such a panorama, the onus was upon the ld. CIT to show as to how the acceptance of the assessee s claims by the AO led to the passing of an erroneous order thereby causing prejudice to the interest of revenue. The only raison d`etre given by him for the revision is that: In the present case the AO has not verified all the relevant issues to deduce the correct taxable income and therefore the order passed by the Assessing Officer is prima-facie found to be erroneous in so far as it is prejudicial to the interest of revenue . It is manifest on a bare perusal of the impugned order that, apart from relying on certain decisions justifying the revisionary exercise, the ld. CIT has not refuted the assessee s contention that all the five points were raised by the AO during the course of the assessment proceedings and the assessee did satisfactorily furnish reply to each one of them backed by necessary details and further that there was nothing amiss in that. If the revision is held valid in such circumstances as are instantly obtaining, then each and every case of assessment would give a license to the CIT for making revision u/s 263 without first fulfilling the jurisdictional conditions of the assessment order being erroneous and prejudicial to the interest of revenue. As such, we are satisfied that the ld. CIT was not justified in setting aside the assessment order. - Decided in favour of assessee.

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• 2021 (7) TMI 287
  Correct head of income - profits arisen from the sale of land constitutes Capital Gains or Business Income - HELD THAT:- In the instant case, undisputedly, the intention of the parties apart from the treatment given in the books of accounts i.e., as investments, there is no material brought on record by the assessing authority to indicate that the land was purchased by the assessee with an intention to resale for profit. On the other hand, the intention of the parties clearly demonstrated in the form of treatment given in the books of accounts. There is nothing on record to infer the contrary and the facts of the present case are identical to the case of Baguio Investments Pvt Ltd [ 2013 (1) TMI 812 - BOMBAY HIGH COURT] wherein has confirmed the findings of the Tribunal that the land forms part of the investment and the land was held for a period of 10 years - decision of the order of Ld.CIT(A) is based on the proper appreciation of the facts and in consonance with the settled position of law. Therefore, we do not find any reason to interfere with the findings of Ld.CIT(A) that the profits arising on sale of land should be assessed as Capital Gains. Undisclosed consideration should be assessed as part of the sale consideration of land and the findings of CIT(A) is based on the consideration of material evidence like there is an established link between the transaction of sale of land to the MCA and grant of Corporate Boxes in the Cricket Stadium - Findings of Ld.CIT(A) is also based on the material on record and we do not find any material on record contrary to the findings of the Ld.CIT(A). Thus, this ground of appeal also stands disallowed.

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• 2021 (7) TMI 286
  Excess cane price paid to sugarcane supplier - HELD THAT:- In the present appeal are identical, the issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT [ 2019 (3) TMI 906 - ITAT PUNE]. The Assessing Officer shall decide the issue after affording reasonable opportunity of hearing to the respective assessee, in accordance with law. Ground No.1 raised in appeal by the assessee is allowed for statistical purposes. Sale of sugar at Concessional Rate - HELD THAT:- We find that the issue of sale of sugar at concessional rates has also been considered by the Co-ordinate Bench in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT [ 2019 (3) TMI 906 - ITAT PUNE] and in the case of ACIT Vs. Shri Shankar SSK Ltd. 88[ 2019 (6) TMI 1399 - ITAT PUNE] . In view of the above order by Co-ordinate Bench of the Tribunal this issue is restored back to the file of Assessing Officer for de-novo adjudication in similar terms. Provision for Vasantdada Sugar Institute (VSI) Contribution - HELD THAT:- As provision for VSI contribution has been decided by the Tribunal while adjudicating bunch of SSK appeals in Majalgaon SSK Ltd. Vs. ACIT [ 2019 (3) TMI 906 - ITAT PUNE]. We observe that the Co-ordinate Bench has decided this issue in favour of assessee. Disallowance on account of Chief Minister Relief Fund - CIT(Appeals) on this issue held that this amount was not incurred for the purpose of business and hence, not allowable u/s.37 of the Act and the same is allowable u/s.80G - HELD THAT:- As the amount has not been paid in the previous year as donation to the Chief Minister Relief Fund, the same was not allowable, as the requirement of law is that it should be paid. The action of the AO was upheld - once it is decided that the amount is allowable u/s.80G of the Act as donation to the Chief Minister Relief Fund, therefore, deduction allowed has to be calculated according to the provisions of the Act and also it has to be verified whether the said donation was made in the previous year or not, relevant to the assessment year. This exercise has to be done by the Assessing Officer. DR conceded to this observation of the Bench. In view thereof, we set aside the order of the Ld. CIT(Appeals) on this issue and remand the matter back to the file of the Assessing Officer for adjudication as per law while complying with the principles of natural justice. Ground raised in appeal by the assessee is allowed for statistical purposes.

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• 2021 (7) TMI 285
  Estimation of income - Bogus purchases - HELD THAT:- Since, in the instant case, the sale of the assessee has not been disturbed by the AO, treating the same as bogus, therefore, the entire bogus purchase could not have been added to the total income of the assessee. Since the assessee has already declared profit on account of sales against such bogus purchases which is more than the GP rate declared by the assessee at 1%, therefore, on this count also no addition is called for in the instant case. If the AO treats the purchase as bogus, then, the sales also is bogus and since such bogus purchase has been sold at a price higher than cost of such bogus purchase and the assessee has already offered income out of such bogus purchases, therefore, in our opinion, no separate addition on account of such bogus purchase is called for especially in absence of any incriminating material found during the course of search for the impugned assessment year. In this view of the matter, we set aside the order of the CIT(A) and direct the AO to delete the addition. Disallowance u/s 14A - HELD THAT:- As in the case of Cheminvest [ 2015 (9) TMI 238 - DELHI HIGH COURT] has held that no disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee. Similar view has been taken in the case of PCIT vs. Oil Industries Development Board, [ 2018 (2) TMI 1861 - DELHI HIGH COURT] and in various other decisions relied on by the assessee. Since, admittedly, the assessee in the instant case has not received any dividend income during the year, a fact stated before the lower authorities and not controverted by them, we are of the considered opinion that no disallowance u/s 14A is called for. The order of the CIT(A) on this issue is accordingly set aside and the grounds raised by the assessee are allowed.

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• 2021 (7) TMI 284
  Revision u/s 263 - SPV contribution by monitoring committee out of the sale proceeds - AO has not done any enquiry in respect of the assessment of 20% of sale proceeds retained by monitoring committee and that assessment order was passed without making proper enquiries and based on incorrect assumption of facts or on incorrect application of law or non application of mind or based on no or insufficient materials - HELD THAT:- As assessee has considered the 20%/10% as the case may be in assessment year 2014-15 which is not in accordance with the matching principle is to be followed in Mercantile system of accounting. Admittedly, assessee follows mercantile system of accounting and therefore the entire sale proceeds needs to be accounted for the year under consideration out of which the expenditure has to be claimed in respect of the amount retained by monitoring committee. We place reliance on decision by coordinate bench of this Tribunal in case of Veerbhadrappa Sangappa [ 2020 (12) TMI 1145 - ITAT BANGALORE] . This Tribunal in respect of this issue has observed as under - AR has mentioned that Hon ble Supreme Court has subsequently reduced the SPV contribution to 10% as assessee holds A Category mining lease by virtue of order dated 28/03/2011. Any reimbursements made to assessee in view of the same shall be considered in the relevant year in which such payment have been received in accordance with law. Assessee is directed to place on record relevant details and payment schedules issued by the monitoring committee in support. 20% contribution of sale proceeds retained by monitoring committee towards SPV charges claimed as expenditure - As the facts for these issues are identical with that considered by us for assessment year 2012-13, the observation hereinabove are applied mutatis mutandis. We thus hold that the 20%/10% contribution to SPV as the case may be, out of the sale proceeds is an allowable expenditure for year under consideration.

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• 2021 (7) TMI 283
  Revision u/s 263 - applicability of provision of section 92BA(i) - assessee has challenged the legality of the said order by submitting that when the Assessing Officer ceased with the matter, the provision of Section 92BA(i) of the Act stood omitted and hence, did not warrant reference to the Transfer Pricing Officer placing reliance - HELD THAT:- In this case, Section 92BA(i) of the Act was omitted w.e.f.01.04.2017 and after its omission, the Ld. Pr. Commissioner of Income Tax passed order u/s.263 dated 28.02.2020. Since Section 92BA(i) of the Act was unconditionally omitted without a saving clause in favour of pending proceedings, therefore, the Ld. Pr. Commissioner of Income Tax ought not to have proceeded u/s.263. Since such omission in Section 92BA(i) of the Act is unconditional i.e. it does not say that pending proceedings under clause (i) of Section 92BA would continue in future even after its omission on 01.04.2017. Therefore, the Ld. Pr. Commissioner of Income Tax erred in exercising jurisdiction u/s.263 of the Act, in so far as clause (i) of Section 92BA is concerned, the reason being in the eyes of law after omission of clause (i) of Section 92BA of the Act, it would be treated as if it never existed in the statute book. Thus we hold that the exercise of jurisdiction u/s.263 of the Act by the Ld. Pr. .Commissioner of Income Tax was void and not legally valid - Decided in favour of assessee.

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• 2021 (7) TMI 282
  Undisclosed purchase of car and the investment so made in purchase of car - assessee is engaged in agricultural and diary activities - HELD THAT:- Considering the fact that the agricultural and diary activities are predominantly rural activities where the transactions continues to be undertaken predominantly in cash rather than through formal banking channels, what is relevant is availability of overall cash in hands of the assessee at the time of purchase of the car towards the end of the financial year i.e, on 13.02.2013. On perusal of the return of income alongwith accompanying cash flow statement, we find that the assessee has generated net cash receipts of Rs. 191,240/- from agricultural operations, net cash receipts (before depreciation) of Rs. 315,589/- from diary business during the year under consideration which reasonably explains the source of purchase of car for which part payment was made in cash of Rs. 369,850/-. As far as withdrawals for household expenses are concerned, we find that the same is again demonstrated partly from agricultural and diary activities during the year as well as availability of cash at the beginning of the financial year. We therefore find that the assessee has duly explained the source of payment for purchase of car and the investment so made in purchase of car cannot be treated as made out of undisclosed sources - Decided in favour of assessee.

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• 2021 (7) TMI 281
  Disallowance of ROC expenses u/s 35D - AO disallowed by holding that payment to ROC for increase in capital is a capital expenditure and added to the total income of the assessee - HELD THAT:- This issue has rightly been decided by the CIT(A) on relying on the judgment of Hon ble Supreme Court in the case of Brookbond India Limited [ 1997 (2) TMI 11 - SUPREME COURT] and Punjab State Industrial Development Corporation [ 1996 (12) TMI 6 - SUPREME COURT] wherein it was held that the ROC expenses as fees for enhancement of capital was not a revenue expenditure. Therefore this ground cannot be allowed. Ground No.2 is dismissed. Disallowance u/s. 14A r.w.r. 8D - No suo moto any expenditure in this regard disallowed by the assessee - HELD THAT:- The assessee is unable to demonstrate that on the date of investments he had sufficient own funds available. While calculating the disallowance u/s. 14A, only those investments should be considered which has yielded exempt income. We are sending back to the file of Assessing Officer for recalculation of the disallowance u/s. 14A of the Act. Needless to say that reasonable opportunity of being given to the assessee and the assessee is also directed not to seek unnecessary adjournments. Accordingly this ground is allowed for statistical purposes. Disallowance of differed employee compensation - CIT(A) has dismissed by holding that for want of details were not provided by the assessee - HELD THAT:- The assessee has filed a paper book and has submitted that benefit received by the employee has been added in their income as a prerequisite and properly TDS has been made and in support he has submitted Form No.16 issued to the employees and computation of income. CIT(A) observed that the assessee did not file any details of perquisites paid to the employees to which the CIT(A) has narrated in para No.9.2 in his order - we remit this issue to the file of Assessing Officer for further verification and the assessee is directed to produce all the documents in support of his claim of the expenditure and the Assessing Officer is directed to provide reasonable opportunity of hearing to the assessee. The assessee is directed not to seek unnecessary adjustments. Therefore this ground of the assessee is allowed for statistical purposes.

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• 2021 (7) TMI 280
  Disallowance u/s 80(IA)(10) r.w.s 10AA(9) - not claiming interest and remuneration on partners capital - CIT-A deleted the disallowance - assessee had taken undue benefits of Section 10AA by not claiming Interest ton Capital and Remuneration to partners which resulted increase in exempted profit of the assessee - whether the CIT(A) is justified in not appreciating the fact that by not providing interest and remuneration to the partners, the firm has claimed higher profits leading to higher claim of deduction u/s 10AA of the Act and thus, devoiding the revenue from due amount of tax? - HELD THAT:- We find that similar disallowances under section 80(IA) rws 10AA(9) on account of not claiming interest and remuneration on partners capital, was made by assessing officer in the assessment for A.Y. 2012-13.[ 2019 (5) TMI 1880 - ITAT SURAT] however, on appeal the disallowances were deleted by Ld. CIT(A) by following the order of jurisdictional high Court in Alidhara Taxpro Engineering (P) Ltd [ 2009 (3) TMI 74 - GUJARAT HIGH COURT] and decision of Tribunal in ACIT Vs Mukta Enterprises [ 2018 (12) TMI 597 - ITAT SURAT] as held CIT(A) was right in observing that the disallowance made by the AO on account of non provision of interest and remuneration of s. 10AA of the Act deduction is erroneous and incorrect and law and facts as in the peculiar facts of the present case the partnership deed clearly lays down that no interest and remuneration is payable and hence, the first appellate authority right in deleting the disallowance made by the AO on account of non provision of interest and remuneration from amount of deduction u/s. 10AA of the Act. We are unable to see any valid reason to interfere with the same - Decided against revenue.

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• 2021 (7) TMI 279
  Unexplained investment in the property, credit card payment and cash deposited in the bank - HELD THAT:- Since the property was purchased in the name of a legal person/director, the PAN number of natural person has been mentioned. It can be seen from the purchased deed that it has been specifically mentioned that the property has been purchased by M/s. Nagarka Property and Finance Private Limited through director/Brigadier Krishna Nandan - since the assessee has not purchased any property in his own name we do not find any merit in the addition made by the AO the same is accordingly directed to be deleted. In this finding we find support from the Bank Statements, Nagarka Property and Finance Private Limited from where we have verified the payments made to the seller Prabha Sinha addition is directed to be deleted. Cash deposit in the Kotak Mahindra Bank as perused the bank statement which is part of our record on every entry of cash deposit the Nomenclature is cash deposit @ Dwarka. The assessment order and also the order of the first appellate authority is completely silent on such entries made by the person mentioned in the bank statements. Neither of the lower authorities has verified the cash withdrawal in the bank statement. Thus where neither the AO has given any specific finding for making the additions nor the assessee has given any explanation. Further we do not find any substantial balance in the said bank account and considering the fact that the assessee is a ex Army Men retired as Brigadier we direct the AO to restrict the addition to Rs. 3.5 lacs. The assessee gets a part relief. Credit card payment added as payment for which no explanation of the sources has been given, since we have confirmed the addition of Rs. 3.50 lacs this should become the source of credit card payment accordingly we direct the AO to delete the addition of Rs. 3,38,210/-. Appeal filled by assessee is partly allowed.

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• 2021 (7) TMI 278
  Maintainability of appeal on low tax effect - Reopening of assessment u/s 147 - information received from the DGIT(Inv.), Mumbai - bogus purchases - Whether this appeal is filed because it is covered by exception mentioned in para 10 of the CBDT Circular No. 3/2018 dated 11.07.2018? - HELD THAT:- On a perusal of the assessment order, we find, that the A.O. had specifically stated that he had received information from the DGIT(Inv.), Mumbai. In the backdrop of the aforesaid facts, we are of the considered view that as the very genesis for reopening the case of the assessee and the making of impugned addition/disallowance was based on the information received from the DGIT(Inv.), Mumbai, and not on the basis of any information received from an external source in the nature of law enforcement agencies, viz. CBI/ED/DRI/SFIP/Directorate General GST Intelligence (DGGI), therefore, as stated by the ld. A.R., and rightly so, the exception carved out in Para 10(e) of the CBDT Circular No. 3/2018 (as amended on 20.08.2018) would not come into play. Accordingly, we are of the considered view that as the tax effect involved in the present appeal filed by the revenue is lower than that contemplated in the CBDT circular No. 17/2019, therefore, the appeal of the revenue is not maintainable.

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• 2021 (7) TMI 277
  Disallowance on account of late payment of employee s contribution towards EPF and ESI - HELD THAT:- As considering the judgment of the Hon ble Delhi High Court in the case of the CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] has decided the issue in favour of the assessee. As decided in Pro Interactive Service (India) Pvt. Ltd [ 2018 (9) TMI 2009 - DELHI HIGH COURT] in view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income Tax v. AIMIL Limited, [ 2009 (12) TMI 38 - DELHI HIGH COURT] the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act.- Decided in favour of assessee.

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• 2021 (7) TMI 276
  Addition in respect of Service Tax paid wherein CENVAT credit could not be availed - addition in respect of various expenses incurred under the head Other Minor Miscellaneous Advances Written Off - CIT(A) deleted the addition made on account of discount written off and confirmed the service tax which could not be claimed as CENVAT - CIT(A) also confirmed the addition in respect of Other Minor Miscellaneous Advances Written Off - HELD THAT:- We deem it proper in the interest of justice to restore the issue related to impugned additions in respect of service tax paid and other minor miscellaneous advances written off to the file of the Assessing Officer to decide it in accordance with law after verifying the claim of the assessee as stated in the written submissions. Thus, grounds raised by the assessee in this appeal are allowed for statistical purposes.

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• 2021 (7) TMI 275
  Addition on account of amortization of investment - CIT(A) deleted the addition - HELD THAT:- As decided in own case for AYs 2012-13 and 2013-14 and 2006-07 to 2011-12 wherein it has been held that the provisions of sections 28 to 43 of the Act are not Applicable to the case of the appellant where the accounts are to be prepared in accordance with provisions of section 44 read with First Schedule of Income Tax Act, 1961 and I.R.D.A. guidelines (Preparation of financial statements and auditor s report of insurance companies Regulations 2002). Following these decisions all the above additions made are deleted. Interest on TDS u/s. 40(a) - Addition of sum debited under the head Miscellaneous expenses being interest on TDS - CIT(A) deleted the same by following the orders of his predecessors for preceding assessment years - HELD THAT:- In our opinion, interest on TDS is not an allowable expenditure in the light of the decisions of Hon ble Supreme Court in the case of Bharat Commerce Industries [ 1998 (3) TMI 2 - SUPREME COURT] and case of Martin Harries (P) Ltd. vs. CIT[ 1989 (7) TMI 342 - CALCUTTA HIGH COURT] - The ground raised by the Revenue on this issue is accordingly allowed. Addition on account of bonus unpaid by invoking the provisions of section 43B - CIT(A) deleted the addition on the ground that identical issue was decided by his predecessors in the preceding so many assessment years - HELD THAT:- As per provisions of section 43B(c) any sum referred to in clause (ii) of sub-section (1) of section 36, payment of bonus shall be allowed as an expenditure on actual payment. Since the assessee admittedly had not paid such bonus before the specified date for which the auditors even have qualified the same, the ld. CIT(A) in our opinion was not justified in deleting the addition. The ground raised by the Revenue is accordingly allowed. Addition on account of leave encashment unpaid u/s. 43B - CIT(A), following the orders of his predecessor for preceding so many assessment years, deleted the addition - HELD THAT:- The order of CIT(A) in our opinion, is not in accordance with law. With effect from 01.04.2002, clause (f) has been inserted in provisions of section 43B according to which any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee shall not be allowed as a deduction in computing the income of the assessee unless such sum is paid. Since the assessee in the instant case has admittedly not paid this sum towards leave encashment, therefore, the Ld. CIT(A) is not justified in allowing the same. Merely because some wrong practice has been followed by the Ld. CIT(A) in the past such wrong cannot be perpetuated. Since the order of the Ld. CIT(A) is not in accordance with law, therefore, the order of Ld. CIT(A) on this issue is set aside.

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• 2021 (7) TMI 274
  Addition u/s. 28(iv) - advance money against sale of property forfeited by the assessee - loan amount forfeited by the assessee represents income of the assessee and the same has not been declared in the return of income - HELD THAT:- In the present case amount represented advance money forfeited by the assessee and the same also represents cash received on forfeiture of advance money. In this view of the matter, the provisions of section 28(iv) of the Act is not applicable to the facts of the present case. In the present case, there is no dispute with regard to the fact that the assessee has received money from Naveen P. Patil initially in the financial year 2006-07. As per the recital in the Agreement for sale, the above said amount was given as investment in the projects taken up by the assessee - CIT(A) has given much importance to the recital so made in the Agreement for sale by observing that neither the assessee nor Naveen P Patil has given the details of project. In fact, the parties have only stated the purpose of given money by Shri Naveen P Patil to the assessee in FY 2006-07. The said facts are not relevant to the issue on hand. The issue on hand is related to the property transaction subsequently entered by the parties, i.e., subsequently, the above said loan amount was converted into advance money in the property transaction, whereby a property belonging to the assessee was agreed to be purchased by Shri Naveen P. Patil for a sum - Thus the issue is related to the property transaction and not the earlier loan transaction. Merely for the reason that the amount received as loan in an earlier year was converted into advance payment for purchase of property, there is no reason to disbelieve the property transaction as a colourable device. No material has been brought to substantiate the above said view of the tax authorities, meaning thereby, they have entertained this view only on surmises and conjectures. Since the amount forfeited by the assessee is on account of sale of property, we agree with the submissions of the assessee that the provisions of section 51 of the Act shall be applicable and the above said amount would go to reduce the cost of property. The impugned amount is not taxable in the hands of the assessee u/s. 28(iv) - Decided in favour of assessee.

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• 2021 (7) TMI 273
  Unexplained cash payment without any evidence - assessee could not explain satisfactorily that the amount was not received by him - HELD THAT:- Claim of the assessee was that the said amount was never received by him as there was no provision at all in the contract that any amount would be received in cash, rather the amount was to be received through cheque. The assessee also filed an affidavit dt. 24/06/2021 first time before this Bench of Tribunal with an application to admit the same as an additional evidence - contents of the said affidavit go to the root of the matter and the assessee had averted in the said affidavit that the signature on the photocopy of the receipt used against him for making addition were not his, the person who had made the complaint had not been allowed to be cross examined and that the signature on the receipt needs to be got verified by hand writing expert. We admit the additional evidence in the form of the affidavit of the assessee but since the said affidavit was not before the A.O. or the Ld. CIT(A), we deem it appropriate to remand this issue back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Assessee appeals are allowed for statistical purposes.

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• 2021 (7) TMI 272
  Addition u/s 68 towards unexplained cash credit - assessee has willfully not filed his return of income and, therefore, the source of investment and taxability remains unexplained - assessee is a doctor serving in Defense of Indian Government at different naval bases and has not filed his return of income although TDSs were deducted from his employer - HELD THAT:- In this case, the assessee has not produced any evidence either before the AO or before the ld CIT(A). It is the contention of ld A.R. of the assessee that in the name of the assessee, one person has done fraudulent activities and the assessee is unnecessary suffering from that action, although he is a respectable person working in Indian Navy. The written submission filed by the assessee is self-explanatory, which is reproduced in the body of this order. In view of above, I deem it fit and proper to set aside the case, the assessee has not produced any evidence either before the AO or before the ld CIT(A). It is the contention of ld A.R. of the assessee that in the name of the assessee, one person has done fraudulent activities and the assessee is unnecessary suffering from that action, although he is a respectable person working in Indian Navy. The written submission filed by the assessee is self-explanatory, which is reproduced in the body of this order. We set aside the matter and restore the same to the file of the AO for denovo assessment. The Assessing Officer is directed to verify the documents/evidence furnished by the assessee in paper book and the contention of the assessee thoroughly and pass the assessment denovo. Appeal of the assessee is allowed for statistical purposes

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• 2021 (7) TMI 271
  Addition of income - Difference in receipts as business turnover - HELD THAT:- Prima facie it appears that there is a difference of service tax returns which was not properly verified by the Assessing Officer. Therefore, we are remanding back the issue to the file of the Assessing Officer for proper adjudication after taking cognizance of the evidence produced by the assessee. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.

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• 2021 (7) TMI 270
  Assessment ex parte - addition of the amount deposited by the assessee in his saving bank account - HELD THAT:- Since the assessment order was passed by the A.O. ex parte, the assessee furnished the additional evidences before the Ld. CIT(A) who admitted the same. CIT(A) sustained the addition by observing that the assessee had not brought any evidence on record to authenticate his claim that the cash deposited in his bank account was out of the withdrawal/adjustment of cash from his father s bank account. On the contrary the claim of the assessee was that the cash was deposited in his bank account out of cash withdrawn by his father from his bank account. In the present case, it is not brought on record as to what were the contents of the bank statement furnished by the assessee and it is not clear as to whether there were sufficient withdrawals to justify the deposit in the bank account of the assessee. We therefore deem it appropriate to set aside this case back to the file of the A.O. to be adjudicated afresh - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (7) TMI 269
  Disallowance of Rent - Payment of Rent to OPC Assets Solutions Private Limited - disallowance made on the ground that the payment needs to be equally distributed over the entire duration of the agreement - whether the arrangement entered into by the Appellant was to achieve commercial expediency? - HELD THAT:- We find that the assessee has taken on lease office equipment, furniture fixtures for a period of 5 years pursuant to certain agreements between the assessee and M/s. OPC Asset Solutions Private Ltd. As per the terms of agreements, the assessee is required to pay yearly lease rent for a period of first three years.Undisputedly, the assessee has paid the said amount to the lessor pursuant to the terms of agreement after due compliances and claimed the deduction of the same during the year. The lessor is unrelated party to the assessee. The agreements between the two parties have not been held to be non-genuine and it is also not the case that the expenditure was not incurred wholly and exclusively for the purpose of assessee s business. This being so, in our considered opinion, it is not open for revenue authority to sit on the armchair of a businessman so as to ascertain the quantum of deduction allowable to the assessee, Another pertinent fact is that while framing assessment for AY 2013-14 (which is the first year of payment of rent), the lease rent paid the assessee as per the agreements has not been disturbed by Ld. AO. Therefore, on the facts circumstances of the case, the revenue authorities were not justified in tinkering with the claim made by the assessee. Therefore, we delete the disallowance as made by Ld. CIT(A) in the impugned order and allow this ground of appeal. Disallowance of Professional Fees - allowable business expenditure or not? - HELD THAT:- Since the assessee failed to establish that the expenditure was laid out wholly and exclusively for the purpose of the business, the disallowance was confirmed. As against this, in this year, the assessee has furnished the copy of the Appointment Letter of both the employees which elaborate the nature of work assigned to them. The copies of the qualification certificates along with copies of TDS certificates have also been furnished. The claim of the appellant rest on the ground that both the employees worked on retainer-ship basis and were qualified professional. The appointment of both the employees was purely a commercial decision keeping in mind the benefit of the business as a whole as it would be very important that the family persons should be employed in the own family business to control the management, operations, staff etc. so that there should not be any difficulty in running the business. The lower authorities, without questioning the appointment letter of both the persons, questioned the genuineness of the transaction. We deem it fit to provide another opportunity to the assessee to substantiate its claim before lower authorities. Therefore, the matter of this disallowance stand remitted back to the file of Ld. AO for fresh adjudication.

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• 2021 (7) TMI 266
  Characterization of income - subsidy received considering of new industrial sales from State Governments - revenue or capital receipt - HELD THAT:- On perusal of the respective schemes of the subsidy, it is clear that the subsidy is only granted in order to accelerate the industrial development and promote the employment opportunities. It is settled position of law that to determine the true nature of the subsidy, a purpose test has to be applied as held by the Hon ble Supreme Court in the case of CIT Vs. Ponni Sugars and Chemicals Ltd [ 2008 (9) TMI 14 - SUPREME COURT] The Co-ordinate Bench of the Tribunal has rightly applied the purpose test and had come to conclusion that the nature of subsidy is only in capital nature and we do not see any reason to differ with the reasoning of the Co-ordinate Bench of the Tribunal in assessee s own case[ 2020 (11) TMI 418 - ITAT PUNE] - Decided against revenue. Directions of ld.CIT(A) to reduce the amount of the subsidy received from the respective block of assessment years in terms of the Explanation 10 to Sec.43(1) - HELD THAT:- As decided in own case [ 2020 (11) TMI 418 - ITAT PUNE] on perusal of the respective schemes of the subsidy, it is clear that the subsidy is not granted to meet the cost of any fixed asset and therefore the Explanation 10 to Sec.43(1) have no application to the facts of the present case had rightly applied the decision of M/s. Welspun Steel Ltd., [ 2019 (3) TMI 397 - BOMBAY HIGH COURT] and we do not see any reason to differ with the reasoning of the decision of the Co-ordinate Bench. Accordingly, we reverse the directions of the ld.CIT(A) directing the Assessing Officer to reduce the amount of the subsidy from the cost of the respective block of assets.

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• Law of Competition

• 2021 (7) TMI 267
  Approval of scheme of Arrangement - seeking directions regarding meetings of shareholders and creditors in connection with the Scheme of Arrangement between Demerged Company and Resulting Company - section 230-232 of Companies Act - HELD THAT:- Various directions regarding holding and convening as well as dispensing of various meetings is issued - directions regarding issuance of various notices issued. The application is allowed.

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• Insolvency & Bankruptcy

• 2021 (7) TMI 290
  Seeking direction to Liquidator to consider the proposals of the Applicant under Section 230 of the Companies Act - OTS cum Compromise proposals placed before the CoC, were both cancelled - HELD THAT:- The Appellant has not pointed out any irregularity in exercise of the powers committed by Ld. Adjudicating Authority. The CoC has taken commercial decision of rejecting the OTS proposals. It is settled law that the statute has not invested jurisdiction and authority either with NCLT or NCLAT to review the commercial decision exercised by the CoC of approving the resolution plan or rejecting the same. It is also to be noted that in this Appeal the Appellant has raised the ground that the CoC has rejected the OTS cum Compromise proposals without assigning any valid reason and without any suitable opportunity to the Appellant to discuss with the Respondent No. 1 on OTS Proposals. Such objection was never raised before the Adjudicating Authority. There is no allegation against the liquidator and no prayer for replacement of liquidator was made. The Appellant in the Appeal first time prayed for replacement of the liquidator. Such prayer cannot be considered at this stage, particularly when there is no allegation in the Application. Appeal dismissed.

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• 2021 (7) TMI 289
  Compnay under liquidation / CIRP - Tripartite Agreement - Pledge agreement - MSTC Limited had supplied goods to the Corporate Debtor - secured (Operational) creditor or not - goods procured by MSTC for consumption of Corporate Debtor, stored at the premises of Corporate Debtor, under custody of FSNL for MSTC, which were to be issued to Corporate Debtor on cash and carry basis was in practical execution modified accepting Memorandum of Pledge treating Corporate Debtor as Pledger delivering goods by way of arrival of shipment at its factory premises for payment of amounts mentioned in the Memorandum which was to be treated as advance by MSTC to Corporate Debtor. MSTC thus claims existence of pledge and goods at site to be of MSTC and to be secured. HELD THAT:- The Interim Resolution Professional took note of the records and on said basis calculated the stocks. However, there is no material shown that before the second Inspection dated 12th May, 2018 was done, at any time the Interim Resolution Professional and the Resolution Professional did actually go and take or cause to be taken physical verification of the stocks. When the provisions require taking control and custody of the assets, it would be necessary for the Interim Resolution Professional/ Resolution Professional to show steps taken on such count. Without doing this, when MSTC was constantly mentioning in its letters that it was Secured Creditor with goods pledged to it lying on the premises of the Corporate Debtor, nothing was done and when the assessment was carried out on 29th March, 2018, fault is being found with the official of the Corporate Debtor signing the Joint Statement of Inspection. We discard such effort on the part of the Appellant. The Appeal shows that the Appellant (Resolution Professional-now Liquidator) is conscious that Geo Chem is an agency empanelled with MSTC which is an International Inspection and Testing Company. The Resolution Professional did not have any reason to question the action of Geo Chem in the first Inspection Report. Grievance was not about the taking place of Inspection. It was only with regard to Authority of official of Corporate Debtor to sign the document. Although the records of the Corporate Debtor of which the Interim Resolution Professional took note showed lower stocks (even lower that the Second Inspection Report) and were unreliable, the First Inspection Report dated 29th March, 2018 showed that there were much higher quantities of Steam Coal and MT Steel Billets. By the time the Second Inspection could happen on 3rd May, 2018, MT Steel Billets was almost not there and MT Steam Coal had drastically reduced - Fact remains that even the Resolution Professional did move the Adjudicating Authority so as to secure direction through SFIO which direction appears to have been later on modified to get investigation done through local police. Charge sheet now is pending. The matter zeros down to the position that MSTC had in view of the agreements and arrangements with the Corporate Debtor to store the goods which appear to have been imported, on the premises of the Corporate Debtor but FSNL was to be the custodian. The access of FSNL and MSTC appears to have got lost when CIRP started and Interim Resolution Professional/ Resolution Professional came into management. First Inspection Report read with Second Inspection Report show Substantial goods have been lost/missing/ consumed (or whatever) for which MSTC cannot be blamed - if the Appellant claims that the goods were of the Corporate Debtor the taking over of control and custody would have to be shown. If the Appellant claims that the goods were not of the ownership of the Corporate Debtor (and inspection Report shows presence of the goods), there is no material to show that the same were returned to the owner. The Appellant wants to claim that pledge should not be recognised. In the facts of the matter where goods of MSTC have disappeared drastically from custody of Corporate Debtor under management of IRP/ RP, if the Agreements (as on record) between parties are seen, the goods- (Steam Coal and Steel Billets which reduced between the First Inspection Report and Second Inspection Report) was of the ownership of MSTC. Same must be deemed to have been consumed at the Bankura Unit which was functional during CIRP. The value of the same should in that case have to step up the ladder under Section 53 of IBC as CIRP costs. However, this not having been claimed by MSTC, the impugned order is upheld, which placed MSTC on a lower rung, considering the facts. There is no substance in the Appeal - appeal dismissed.

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• 2021 (7) TMI 288
  Auction - appellant had vested right for sale or not - sale certificate issued in terms of the e-auction or not - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Object of the Code is Resolution . If this concept fails, then the objective shifts to maximization of the value of assets of the Corporate Debtor . It is well settled principle that an auction should be transparent and visible to other bidder. As per IBBI (Liquidation Process) Regulations, 2016 vide Chapter VI, the process of realisation of assets has elaborately been explained. Regulation 31 of IBBI (Liquidation Process) Regulation 2016 provides how the list of stakeholders be made by the Liquidator and Regulation 31 A - the stakeholders consultations committee to advice the Liquidators on the matters relating to sale under Regulation 32 - The Appellant has no vested right and has no sale certificate issued to him in terms of the e-auction. There appears has to be some technical glitches but the same is not support by the certificate of the administrator of the E-auction service provider of the agency involved. This is a case where the Liquidator has gone for e-auction based on the advice of the stakeholders consultation committee and this action is yet to be approved or disapproved by the Adjudicating Authority. This case is not right for review by the Appellate Tribunal as no order has been passed by the Adjudicating Authority. The Appellant has appealed under Section 61 of the Code where the appeal can be filed only against the order of the Adjudicating Authority vide 61(1) of the Code. The Appellant has come in this appeal against the decision taken by the stakeholders consultation committee and Liquidator going ahead with the e-auction. The Adjudicating Authority is to appropriately consider the observations while disposing of the petition. The Appellant is to approach first to the Adjudicating Authority for redressal of their grievance for any irregularity and only thereafter can approach before this Appellate Tribunal under Section 61(1) of the Code - there are no merits in the appeal - appeal dismissed.

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• 2021 (7) TMI 268
  Seeking stay on admitted CIRP proceedings - proceedings against both principal borrower and Appellant initiated under SARFAESI Act - overriding effect of IBC - Respondent No. 1/Bank vehemently opposed grant of any interim relief including stay of formation of CoC as it will hamper the CIRP - HELD THAT:- The CIRP proceedings cannot be stayed at this stage - Let the matter be fixed For Admission (After Notice) on 15th July, 2021.

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• PMLA

• 2021 (7) TMI 305
  Money Laundering - seeking release of provisionally attached of movable properties - waterfall mechanism - overriding provisions of IBC - NCLT had already passed an order appointing an Official Liquidator for the sale of the assets of the Company In Liquidation - Adjudicating Authority under the PMLA ought not to have passed the Provisional Attachment Order - HELD THAT:- On a plain reading of the provisions of the IB Code, it is clear that statutory dues, which come within the meaning of operational debt , could be claimed against the Corporate Debtor only under the provisions of the IB Code and not under any other law. All such claims have to be lodged with the Official Liquidator and are payable under the waterfall mechanism provided in Section 53 of IB Code - the dues relatable to the vehicles belonging to the Corporate Debtor can only be recovered under the provisions of the IB Code, i.e. the waterfall mechanism under Section 53 of the IB Code and not from the petitioners, being the auction purchasers. The petitioners could be held liable to pay statutory dues in respect of the subject vehicles, which have been claimed by the respondent Regional Transport Offices after their purchase by the petitioners in April 2019, only from the date when they had purchased the subject vehicles after having exercised their right to raise objections to such claim. It would be appropriate to direct the petitioners to make payment of the statutory dues from the date of purchase of the subject vehicles by the petitioners, which would be made subject to other proceedings in relation to the said vehicles since the petitioners, being the auction purchasers, could not be asked to make payment of the statutory dues claimed against the Corporate Debtor in liquidation in respect of vehicles prior to their date of purchase by the petitioners. The respondents Regional Transport Offices, Gujarat and Maharashtra are directed to complete the transfer proceedings of the subject vehicles purchased by the petitioners from the Court appointed Official Liquidator of M/s. Siddhi Vinayak Logistic Ltd., which shall be subject to the outcome of the proceedings that may be pending under the provisions of the PMLA or under any other corresponding law - the petition is partly allowed.

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• Service Tax

• 2021 (7) TMI 309
  Failure to remit the service tax - issuance of a pre-show cause notice - violation of the Master Circular dated 10.03.2017 and the Circular dated 19.11.2020 - HELD THAT:- In the present case, it is seen that every attempt made by the respondent to secure information/document from the appeal were stonewalled by the appellant. Though the show cause notice issued by the respondent which was impugned before the learned Single Judge was not preventive in nature but yet an offence report was registered against the appellant - If the appellant desired to seek the benefit of the Master Circular dated 10.03.2017, he is expected to comply with the summons issued by the respondent seeking explanation/documents that were summoned by the respondent. The benefit of the Master Circular cannot be a one-way traffic and the appellant cannot milch the Master Circular to his advantage. The appellant was not entitled to pre-show cause notice as contemplated under Master Circular dated 10.03.2017 - Appeal dismissed.

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• 2021 (7) TMI 297
  Refund of Service Tax paid - principles of unjust enrichment - Service tax was paid under wrong head - rejection of claim solely on the ground that certificate of the Chartered Accountant alone is not sufficient to establish that portion of taxes have not been passed on to the buyer - period from 01.04.2008 to 31.03.2009 - HELD THAT:- In the present case, the stand of the appellant from the very beginning was that they are not liable to pay service tax but a SCN was issued to the sister concern demanding the service tax and thereafter the appellant paid the service tax but later on found that they were not liable to pay the service tax and filed the refund claim - it has been consistently held by various Courts that free services rendered by authorized service stations on behalf of the manufacturer are not covered under the definition of taxable service. The only ground on which the impugned order has rejected the refund claim is that Chartered Accountant certificate alone is not sufficient whereas in the present case the appellant filed the Chartered Accountant certificate and also filed the audited statements of accounts where the service tax paid was written off and the appellant has also produced a certificate from manufacturer which has also certified that the appellant had not made any claim of service tax on free service charges - besides the Chartered Accountant certificate, the appellant has also produced audited statements of accounts as well as the certificate from the manufacturer which should be sufficient to hold that the appellant has not passed the incidence of tax to any other person and hence entitled to claim refund. Tribunal in the case of CC, Guntur Vs MP Sugar and Chemicals [ 2006 (12) TMI 349 - CESTAT, BANGALORE] held that certificate issued by the Chartered Accountant has an evidentiary value and should not be rejected lightly because the said certificate has been issued after the verification of the accounts of the assessee. The impugned order denying the refund is not sustainable in law - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (7) TMI 300
  CENVAT Credit - inputs - plastic household buckets - kitchen containers - to be considered as inputs or not, as they were neither used in the factory for the manufacture of final products nor were they accessories to their final products? - inclusion of value of buckets and other plastic containers in the value of soap (final product) - HELD THAT:- In clause (ii) of Rule 2(k) of CCR, the expression any goods is emphasized and this expression has a wide scope and coverage and there are no restriction that the goods covered under the expression need to be part of final product which are subjected to manufacture or they need to be accessories etc. The sole criteria for the goods coming under the said expression any goods should be the one that the value of these goods should be included in the value of the final product. Whether the value of buckets and other plastic containers were included in the value of the final products i.e. soap? - HELD THAT:- It was clearly brought on record by the appellants that the expenses towards purchase of the buckets are charged against the sales value of the company and therefore under the financial accounting angle, the value of the buckets are buried into the business income alone. It is an admitted fact that the appellant have not collected any consideration separately for bucket and hence the cost of the buckets was not charged on the customers separately. In the case of M/S. CADBURY INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (4) TMI 1215 - CESTAT MUMBAI] , the Tribunal has reiterated the decision of M/S. MANIK MACHINERY MANUFACTURERS P. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-IV [ 2016 (9) TMI 623 - CESTAT MUMBAI] case, and has held that the assesse is entitled to cenvat credit on free goods given along with other goods. Appeal allowed - decided in favor of appellant.

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• 2021 (7) TMI 296
  Distribution of credits on input services - distribution on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle Biscuits and its contract manufacturing units - correctness of issuance of Input Service Distributors invoice by Parle to its contract manufacturing unit - contract manufacturing carried out in terms of N/N. 36/2001-CE (NT) - HELD THAT:- The Division Bench, while hearing Excise Appeals, expressed reservations about the proposition of law laid down by the Division Bench in Sunbell Alloys Co. Of India Ltd. vs. Commissioner of Central Excise Customs, Belapur [ 2014 (2) TMI 297 - CESTAT MUMBAI ] and also noticed that a Division Bench of the Tribunal in Colgate Palmolive (I) Ltd. vs. Commissioner of Central Excise, Mumbai-I [ 2011 (2) TMI 57 - CESTAT MUMBAI ] had taken a contrary view. The Division Bench, therefore, referred the questions for consideration by a Larger Bench of the Tribunal. The Larger Bench of the Tribunal in M/S. KRISHNA FOOD PRODUCTS, M/S. MARIAMMA R. IYER, M/S. PARLE BISCUITS PVT LTD. VERSUS THE ADDITIONAL COMMISSIONER OF CGST C. EX [ 2021 (5) TMI 906 - CESTAT NEW DELHI ] has held that Parle was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle and its contract manufacturing units, including the appellant, under rule 7(d) of the CENVAT Rules. In view of the aforesaid answer given by the Larger Bench of the Tribunal, the order passed by the Commissioner (Appeals) cannot be sustained and is set aside - appeal allowed - decided in favor of appellant.

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• 2021 (7) TMI 294
  CENVAT Credit - capital goods - pipeline used to connect the SBM with the refinery - difference between Cenvat Credit Rules and the Modvat scheme - denial of Cenvat credit on the ground that the pipeline is located outside the factory premises and the Cenvat Credit Rules do not permit Cenvat Credit of such capital goods as are used outside the factory premises - HELD THAT:- Hon ble Apex Court in the case of Vikram Cement [ 2006 (1) TMI 130 - SUPREME COURT ] has held that the Cenvat Credit Rules and the Modvat scheme are not different and therefore the decision made in the context of Modvat would be equally applicable to Cenvat Credit Rules. It is seen that the decision in the case of Vikram Cement was given by comparing the Modvat rules with the provision of Cenvat credit introduced vide Notification No 27/2000- CE(NT) dated 31.03.2000 by introducing rule 57AA to rule 57AK in Central Excise Rules 1944. It is seen that Hon ble Apex Court in the case of Vikram Cement did not have any occasion to examine the provisions of Modvat Scheme with the Cenvat Credit Rules, 2001, or Cenvat Credit Rules, 2002, or Cenvat Credit Rules, 2004. Therefore the argument of the Learned Counsel that the decision made with reference to earlier rules will also be applicable to the disputes involving of subsequent Cenvat Credit Rules, is misplaced. The Cenvat Credit Rules have evolved over the period 2000 to 2004 and the ratio of the decision made with reference to Cenvat introduced vide Notification No 27/2000(NT) cannot be straight away applied to the subsequent rules without due examination - Hon ble Apex Court never had the occasioned to compare the Modvat Rules with Cenvat Credit Rules, 2004 under which the present dispute lies. This fundamental issue if the area under pipeline and SBM lies in the factory premises or otherwise is also pending before original adjudicating authority. Thus, the impugned order is set aside and matter is remanded to original adjudicating authority to decide afresh, after a decision is taken on the issue of registration which has been remanded by tribunal to the original Adjudicating Authority. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (7) TMI 307
  Validity of reassessment order - Input tax credit on purchases from three dealers - bogus transaction - denial on the ground that the said three dealers were non-existent but bogus dealers and that they had not sold any goods to the respondent but had only issued tax invoice in order to enable the respondent to claim ITC - HELD THAT:- The provisions of the Act provide for registration of dealers and provides for detection of fraudulent acts to claim ITC and also provide a detailed mechanism for conducting audit of the registered dealers and also launch prosecution against dealers who indulge in generating bogus invoices to avail the ITC etc. It is seen from the case on hand that the selling dealers from whom the assessee had purchased the goods were all registered dealers. It is not the case of the revenue that these selling dealers were not traceable and or that they were not registered. Consequently, the revenue cannot contend that merely because the selling dealers have failed to deposit the VAT collected from the assessee, the transaction itself is bogus and is designed to claim ITC - This question is no longer res-intigra in view of the judgment of the Hon ble Apex Court in the case of CORPORATION BANK VERSUS SARASWATI ABHARANSALA AND ANOTHER [ 2008 (11) TMI 387 - SUPREME COURT ] where it was held that the bona fide buyer cannot be put in jeopardy when he was done all the law requires him to do so. The purchasing dealer has no means to ascertain and secure compliance by the selling dealer. In CENTRAL WINES VERSUS SPECIAL COMMERCIAL TAX OFFICER (AND OTHER APPEALS) [ 1987 (1) TMI 442 - SUPREME COURT ], the Supreme Court inter-alia observed that the seller acts an agent of the buyer while collecting the tax. Therefore, a bonafide purchaser cannot be put at jeopardy, when he has done all that the law expects him to comply. The purchasing dealer has no means to ascertain and secure compliance provisions of the KVAT Act by the selling dealer - it cannot be said that the assessee has conspired with the selling dealers to avail the ITC fraudulently. If the revenue is able to demonstrate that the assessee and the selling dealers have conspired, then it is still open for the Revenue to initiate necessary steps against the assessee as well. This revision petition lacks merit and the same is dismissed.

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• 2021 (7) TMI 304
  Reopening of assessment - Assessment of escaped turnover - tax assessed at lower rate - enhancement of tax liability by invoking Section 12A of the Karnataka Sales Tax Act, 1957 - Misclassification of taxable turnover - HELD THAT:- Admittedly, in the instant case, the Assessing Authority had formed an opinion that the tax has been assessed at a rate lower than the rate at which it is assessable. From the perusal of the order of the Assessing Officer, it is evident that the Assessing Officer was of the opinion that tax has been levied at the rate of 4% and 5% on certain items i.e., telephone instrument and at the rate of 14% on networking instruments, whereas, the networking equipments are taxable under Entry 4 of Part E of 2nd Schedule to the Act at the rate of 12% for the month of April and May and for a period of 13% from June to March. Thus, the condition precedent for invocation of power under Section 12A of the Act has been fulfilled. The Assessing Authority while passing an order of re-assessment has granted concession to the petitioner in the rate of tax. It is evident that on initiation of the re assessment, the assessment proceedings are re-opened and initial order of assessment does not survive and the effect of re-opening of the assessment is to vacate or set aside initial order of assessment and to substitute in its place the order made on re-assessment and the result of re-opening of the assessment is that a fresh order of assessment has to be made. Thus, the Assessing Authority has passed a fresh order of assessment after completion of the re-assessment proceeding, however, the aforesaid aspect of the matter has not been appreciated by Joint Commissioner of Commercial Taxes and the tribunal and it has been held that in recourse to Section 12A of the Act can only be taken for enhancement of the tax liability. The orders passed by the Joint Commissioner of Commercial Taxes and the tribunal have decided the question of law mainly with regard to scope and ambit of Section 12A of the Act erroneously, the same therefore, cannot be sustained in the eye of law - Petition allowed.

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• Indian Laws

• 2021 (7) TMI 310
  Dishonor of Cheque - issuance of signed blank cheque - contention is that the cheques were issued in blank and the cheques were not filled, but signature on the cheque was not denied - award of sentence - HELD THAT:- The Apex Court in BIR SINGH VERSUS MUKESH KUMAR [ 2019 (2) TMI 547 - SUPREME COURT ] succinctly held that once a person signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It had also been held by the Apex Court by the said judgment that even if a blank cheque is voluntarily presented to the payee, towards some payment, the payee may fill up the amount and other particulars which itself would not invalidate the cheque. In the present context there is no allegation from side of the accused petitioner that she signed the impugned cheques involuntarily. The accused petitioner denied her debt or liability. Her case is that she repaid full amount of advance to the respondent - Law is well settled that mere denial would not absolve the accused from the liability unless the statutory presumptions under the N.I Act is rebutted by the accused and the contrary is proved by adducing cogent evidence, direct or circumstantial - In Laxmi Dyechem Vrs. State of Gujarat and others [2012 (12) TMI 106 - SUPREME COURT] the Apex Court held that under Section 139 of N.I Act it has to be presumed that the cheque was issued in discharge of a debt or other liability but such presumption should be rebutted by adducing evidence. It is no case of the accused petitioner that she signed the impugned cheques or parted with those cheques under any threat or coercion - the statutory presumptions that the cheques were issued by her in discharge of her liability arises against her which she could not rebut by adducing evidence. Therefore, in so far as her conviction is concerned, there are no error in the concurrent findings of the Courts below. Award of sentence - HELD THAT:- The trial Court sentenced her to a fine of Rs. 15,00,000/- and in default to S.I for six months and in case No. N.I. 113/2008 the trial Court sentenced the accused respondent to fine of Rs. 20,00,000/- and in default S.I for six months. It was directed in both the cases that fine on realisation be paid to the complainant respondent as compensation - it is deemed appropriate to reduce the fine imposed on the accused by way of sentence to Rs. 24,00,000/-. Appeal allowed in part.

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