TMI Tax Updates - e-Newsletter
August 29, 2022

Case Laws in this Newsletter:

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

Articles

1. Crypto Currency and Money-Laundering

   By: Commissioner CESTATHyderabad

2. JOB WORKS OF ALCOHOLIC BEVERAGES NOT LIABLE TO SERVICE TAX

   By: Dr. Sanjiv Agarwal

3. Provisionally attachment cannot extend after One Year: Delhi HC

   By: Bimal jain

4. SEIS benefit can’t be denied for not having IEC when services rendered No IEC required for availing benefit of SEIS

   By: Bimal jain

News

1. Shri Goyal addresses students at cultural function, ‘India@75: Dholavira to Narendra Modi’

2. Department for Promotion of Industry and Internal Trade (DPIIT) reviews 40 critical Infrastructure Projects across India

Notifications

GST - States

1. 1396-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to Amend notification No. 1127-F.T. dated 28.06.2017 regarding rates of goods required in connection with petroleum operations

2. 1393-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to Amend notification No. 1135-F.T. dated 28.06.2017 regarding rates of taxable services

3. 1392-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to Amend notification No. 380-F.T. dated 07.03.2019 regarding composition scheme

4. 1391-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to Amend notification No. 378-F.T. dated 07.03.2019 regarding threshold limit of forty lakh rupees for exclusive suppliers of goods

5. 1389-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to extend dates of specified compliances in exercise of powers under section 168A of the WBGST Act.

6. 1388-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22.

7. 1387-F.T. - dated 23-8-2022 - West Bengal SGST

Seeks to extend due date of furnishing FORM GST CMP-08 for the quarter ending June till 31.07.2022.

Highlights / Catch Notes

GST

• GST Credit Regularization Nullifies Show Cause Notices; Authorities Halt Adjudication on ISD Credit Transition Issues.

  Case-Laws - HC : Once, the credit taken by the respective units is regularized by filing revised electronic or manual declaration (as the case maybe) in Form GST TRAN – 1, the credit balance shown in Electronic Credit Ledger of the ISD unit of Petitioner shall be deemed to have lapsed/ deleted - Respondents and the authorities concerned shall not proceed to adjudicate the above and other Show Cause Notices issued to Petitioner and their units for transition of credit in the Petitioner’s ISD registration and its subsequent distribution. - HC
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• Court Orders Review of Service Tax Refund Application Under CGST Act, Section 142(3), After Delayed Payment Issues.

  Case-Laws - HC : Refund of service tax paid - reverse charge mechanism (RCM) - had paid the service tax for the period from April 2016 to June 2017 only on 02.05.2018 and hence, they were unable to avail credit of the service tax already paid by them. - This court is of the view that what was impugned herein is only the order of remand passed by the learned Judge and hence, there is no requirement to set aside the same in entirety - the order of the learned Judge is modified by directing the appellant to consider the application of the assessee under section 142(3) of the CGST Act, 2017, based on the available materials and dispose the same, on merits and after affording an opportunity of hearing to the assessee, within a period of six weeks from the date of receipt of a copy of this judgment. - HC
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• Court Questions GST Officer's Authority to Debit Account Without Notice; Affidavit Required Detailing Legal Basis and Justification.

  Case-Laws - HC : Misuse of the power - Jurisdiction of GST officer for attaching and withdrawing amount from bank account of the assessee - The concerned officer who instructed the bank to debit the amount of petitioner shall file his personal affidavit explaining therein under what authority of law that he got removed the money from petitioner’s bank account or directed the bank to debit the bank account and why did he do it without even informing petitioner even after giving instructions to the bank. The officer is put to notice that this Court may even consider taking action against the officer if it is not satisfied with the explanation. - HC
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Income Tax

• Court Rules Bad Debt Deduction for Property Advance Not Allowable u/s 36(1)(vii), Overturns ITAT and High Court Decisions.

  Case-Laws - SC : Deduction of bad and doubtful debt u/s 36(1)(vii) - Advance against the purchase of property - This court is of the opinion that as a proposition of law, that enunciation is unexceptional, since the heads of expenditure that can be claimed as deduction are not exhaustive – which is the precise reason for the existence of Section 37. Therefore, in a given case, if the expenditure relates to business, and the claim for its treatment under other provisions are unsuccessful, application of Section 37 is per se not excluded. - the assessee’s claim for deduction as a bad and doubtful debt could not have been allowed. The findings of the ITAT and the High Court, to the contrary, are therefore, insubstantial and have to be set aside. - SC
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• Assessment Reopening u/s 147 Invalidated Due to Procedural Flaws in Notices Issued u/s 148A(b.

  Case-Laws - HC : Reopening of assessment u/s 147 - the notices dated 21.03.2022 and 30.03.2022 though purported to have been issued under Clause (b) of Section 148A, on a reading of the annexure, it is clearly seen that the annexure does not contain information but it is a questionnaire. If that is so, then it goes without saying that what was intended by the assessing officer is to conduct an enquiry after receiving information from the assessee and the notice is deemed to be a notice under Section 148A (a) of the Act. - there is gross procedural error from the very inception of the proceedings rendering the same as bad in law. - HC
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• High Court Upholds ITAT's Reversal of CIT's Order, Stresses Need for Reasoned Decisions u/s 263.

  Case-Laws - HC : Revision u/s 263 - ITAT reversed the order of CIT/PCIT - It is no longer res integra that reasons provide a live link between conclusion and evidence. This vital link is the safeguard against arbitrariness and prejudice to the interests, is a manifestation of the mind of a quasi-judicial authorities, Tribunal or a Court and it is a tool for judging validity of an order and, therefore giving reasons is an essential element of administration of justice. Thus, in the absence of any reasons given by the Assessing Officer by recording satisfaction as mandated under Section 56 (2)(viib) of the Act, the order passed by the Tribunal calls for interference. - Revision order sustained - HC
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• High Court Rules Rental Income from Business Assets as Business Income u/s 263, Not House Property Income.

  Case-Laws - HC : Revision u/s 263 by CIT - rental income which had been shown as “Income from Business & Profession” rather than showing the same as “Income from House Property” - once the property in question is used as business asset and the exclusive business of the assessescompany or firm is to earn income by way of rental or lease money, then such rental income can be treated only as “business income of the assessee” and not as income from “house property”. - HC
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• Interest Cost Deductible u/s 24(b) Can Be Included in Capital Gains Calculation per Section 48.

  Case-Laws - AT : Computation of capital Gain - Cost of acquisition - inclusion of Interest cost - Interest cost was claimed as deduction u/s 24(b) from Income from House Property (self occupied) - We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains u/s 48 - CIT(A) rightly allowed the claim of assessee - AT
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• TPO's Adjustment on Bank Guarantee Lacks FAR Analysis; Case Sent Back for Rule 10B(1)(a) Review.

  Case-Laws - AT : TP adjustment on account of back-to-back counter bank guarantee - TPO, by considering the rate charged by Bank of Baroda for issuance of guarantee against 100% counter guarantee by reputed international banks, has made the transfer pricing adjustment by considering it to be an appropriate CUP. However, there is no further analysis as to how the said transaction is an appropriate CUP to the transaction undertaken by the assessee’s Indian branch considering the FAR in both the transactions and whether any adjustment for differences as per Rule 10B(1)(a) of the Income Tax Rules is possible. - Matter restored back to TPO for de novo benchmarking - AT
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• Court Nullifies Order Due to AO's Failure to Record Satisfaction u/s 153C; Procedural Lapse Cited.

  Case-Laws - AT : Assessment u/s 153C - recording of satisfaction - From the plain reading of the the Circular it is noticed in para 4 that even if the AO of the searched person and the other person is one and the same, then also AO is required to record the satisfaction, as held by the various Courts. In the instant case, no such material has been brought before us by the ld. DR - Since the satisfaction was not recorded by the Assessing Officer before issue of notice U/s. 153C we are of the considered view that the order passed by the Ld. CIT(A) U/s. 153C of the Act deserves to be set aside for all the impugned assessment years - AT
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• PCIT's Jurisdiction u/s 263 Invalid; Share Capital and Premium Not Part of Reassessment.

  Case-Laws - AT : Revision u/s 263 by CIT - Jurisdiction exercised by ld PCIT under section 263 of the Act is not in accordance with law. PCIT has selected the item (share capital and share premium) which is not subject matter of reassessment proceedings therefore, order passed by the assessing officer under section 147 r.w.s. 143(3) is neither erroneous nor prejudicial to the interest of revenue. Therefore, jurisdiction exercised by the ld PCIT under section 263 of the Act to tax the share capital and share premium is not valid in the eye of law. - AT
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• Company's Write-Offs Exempt from Clause (i) of Explanation to Section 115JB; Additions Deleted in Book Profit Computation.

  Case-Laws - AT : MAT Computation - book profit of the assessee-company u/s 115JB - doubtful debts - the provision made for doubtful debts as well as for diminution in the value of investment was reduced by the assessee from the corresponding amount of trade receivables and investments as reflected in the balance-sheet at the end of the year - it is not merely a case of provision but an actual write off which would not be hit by clause (i) of Explanation to Section 115 JB of the Act. We accordingly delete both the additions - AT
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• AO Ordered to Disallow Outstanding Sales Tax/Works Contracts Tax u/s 43B, As Per Clause 12(b) of Form 3CD.

  Case-Laws - AT : Disallowance u/s 43B - Sales Tax/Works Contracts tax which was outstanding on the date of filing of return - AO directed to disallow under Section 43B of the Act the quantum of the outstanding Sales Tax/Works Contract Tax liability to the extent the same is included in the statement showing details of deviations from the method of valuation prescribed under section 145A of the Act by the tax auditor as per Clause 12(b) of tax audit report in Form 3CD. - AT
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Customs

• Revenue Must Refund Petitioner Due to Inappropriate Bank Guarantee Encashment; Demand Stay and Unused Goods Release.

  Case-Laws - HC : Refund claim - monies obtained by the revenue, against the encashment of three bank guarantees - Given the fact that there is a stay on the demand raised by the respondents/revenue, as also the undisputed fact which has emerged, that the provisional release of goods was not, ultimately, taken recourse to by the petitioner, to our minds, the aforementioned bank guarantees could not have been encashed - having regard to the state of affairs, it is clear that the respondents/revenue will have to remit the amount to the petitioner, as reflected in the aforementioned bank guarantees. - HC
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FEMA

• Banks Not Required to Keep Transaction Records Over 8 Years; Notices for Older Transactions Unfair, Unreasonable.

  Case-Laws - SC : How long should a Bank keep records - Violation of the provisions of the FERA - Undisputedly, no such order has been placed on record which required the respondents-Banks to preserve records concerning the transactions in question for a period longer than eight years.It could thus be seen that even under the said Rules, the Banks are required to preserve the record for five years and eight years respectively. On this ground also, permitting the show cause notices and the proceedings continued thereunder of the transactions which have taken place much prior to eight years would be unfair and unreasonable.- SC
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Corporate Law

• Company Secretary Can Initiate Legal Proceedings as Key Managerial Person per Companies Act, 2013, Section 2(51) & Rule 10(4).

  Case-Laws - Tri : Power to Company secretary to initiate suit or any other legal proceedings in the absence of specific authorization - locus standi of the Company Secretary in the main application - it is fairly clear that the company can be represented by the company secretary since he is a key managerial person under section 2(51) of the Companies Act, 2013, officer in default as per section 2(60) as per Companies Act, 2013 and as per the power given under section 205(1)(c) read with rule 10 clause 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 it is abundantly clear that the company secretary can represent before various regulators and other authorities under the Act in connection with discharge of various duties under the Act. - Tri
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IBC

• NCLT Rejects Insolvency Application as Time-Barred; Creditor Missed 3-Year Limit After Default Date.

  Case-Laws - AT : Initiation of CIRP - NCLT dismissed the application - even though the operational creditor sent an e-mail dated 1.6.2016 mentioning the outstanding amount for payment, and debit note was also included in the ledger account dated 31.3.2016, no acknowledgement of the liability has been made in writing by the corporate debtor. In such a situation, the date of default has to be computed from the date of last payment i.e. 4.9.2015 - the three years’ period shall be over on 3.9.2018 and since the application under section 9 was filed on 4.12.2018, it is clearly beyond the period of limitation and hence is barred as being out of limitation. - AT
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• Resolution Plan Approved with 89.80% Homebuyer Support; Procedural Compliance Deemed Sufficient u/s 25-A(3-A) of IBC.

  Case-Laws - AT : Approval of Resolution Plan - out of 26 Homebuyers, only 19 Homebuyers voted in the matter and that in terms of Section 25-A(3-A) of the IBC, the Authorized Representative taking cognizance of the fact that 89.80% of Homebuyers voted in favour of the amended Resolution Plan, he cast his vote in favour of the amended Resolution Plan on behalf of the Creditors in class - the procedural compliance by the Resolution Professional and Authorized Representative appears to be reasonably substantial and there are no reason to hold that there was any wilful casualty or miscarriage of justice. - Remanding the matter back to CoC on the grounds of the procedural deviations raised by a dissenting minority in class of creditors would render the CIRP a never ending process. - AT
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• NCLT Admits CIRP Application: Defaults on Additional and Further Loans Lead to Section 7 Filing Despite Principal Loan Compliance.

  Case-Laws - AT : Initiation of CIRP - NCLT admitted the application - The event of default had not occurred with Principal Loan, the event of default did occur for Additional Loan and Further Loan on 27.11.2021 giving right to the Financial Creditor to file Section 7 application in January, 2022. - The submission of the Appellant that no event of default took place in loan cannot be accepted. - AT
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Service Tax

• Unit No. II's centralized registration ensures service tax credit eligibility for all units under the same entity.

  Case-Laws - AT : Disallowance of credit - With regard to the payment of service tax made by Unit No. II, since the said unit is centralized registered, Unit No. II is under obligation to pay the service tax on behalf of all the units. Merely because, the Unit No. II has paid the service tax, the eligibility of cenvat credit of the present appellant’s unit will not adversely be affected because irrespective of any unit paying the service tax, all the units are under one single entity - AT
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Central Excise

• Court Corrects Error: Refund Ordered to Consumer Welfare Fund Due to Misinterpretation of Unjust Enrichment in Excise Case.

  Case-Laws - AT : Unjust-enrichment - Refund allowed but directed to be deposited in the Consumer Welfare Fund of India - o the amount deposited during investigation, basing - The findings of the Commissioner (Appeals) that unless the deposited amount is shown in the Profit & Loss Account of the Appellant as amount receivable, doctrine of unjust enrichment would be established, is erroneous. - AT
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• Investment in New Machines Post-2010 Cut-Off Doesn't Deny Area-Based Exemption for Existing Unit's New Products.

  Case-Laws - AT : Area Based Exemption - new products which were manufactured/added by the appellant after the cut-off date i.e. 31.03.2010 - The appellant had not set up a new Unit and there was only a diversification of production capacity by adding new machines. The old products were continued to be manufactured, in addition to the new products. The fact that the investment for the new products was very large and the percentage of production of the new product was also very large cannot be made a ground to deny the benefit of the Exemption - AT
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Case Laws:

• GST

• 2022 (8) TMI 1146
  Transition and distribution of CENVAT Credit by Input Service Distributor (ISD) of the balance of Service Tax/ Excise Duty as on 30.06.2017 - transition of credit under Section 140 of the CGST Act within the prescribed time - HELD THAT:- Petitioner s recipient units can file revised declaration in Form GST TRAN 1, either electronically or manually (where electronically is not possible), for taking the credit already distributed to them by the ISD unit of Petitioner by issuing invoices - Once, such a revised declaration is filed by the concerned recipient units of Petitioner, the credit already taken by the said units shall be treated to have been taken validly on the date on which it was originally taken. However, no further credit based on revised declaration in Form TRAN-1 shall be claimed by Petitioner, as the said filing is purely for regularizing the earlier action of transition and distribution of Cenvat credit by the ISD registration of Petitioner. Once, the credit taken by the respective units is regularized by filing revised electronic or manual declaration (as the case maybe) in Form GST TRAN 1, the credit balance shown in Electronic Credit Ledger of the ISD unit of Petitioner shall be deemed to have lapsed/ deleted - Respondents and the authorities concerned shall not proceed to adjudicate the above and other Show Cause Notices issued to Petitioner and their units for transition of credit in the Petitioner s ISD registration and its subsequent distribution. Petition disposed off.

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• 2022 (8) TMI 1145
  Distribution and/or utilisation and/or eligibility of Input Service Distributor (ISD) credit of Service Tax/excise duty - Section 140 of the CGST Act 2017 - HELD THAT:- The Hon ble Apex Court, to aid the assessees to overcome the procedural / technical hurdles, in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER ] directed the GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months, i.e., with effect from 1st September, 2022 to 31st October, 2022 to enable the different private parties to avail Transitional Credit. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022 - petition disposed off.

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• 2022 (8) TMI 1144
  Fraudulently availment of ineligible input tax credit - Circular No.CBEC-20/16/05/2021-GST dated 02/11/2021 - HELD THAT:- Even the CBITC has understood the possibility of this power under Section 86 A being abused and hence has even advised that it should not be exercised in a mechanical manner but only on careful examination of all the facts of the case because it is an extra ordinary power by its very nature. CBITC has also advised that this extraordinary power has to be resorted to with utmost circumspection and with maximum care and caution. Neither, petitioner has been made available copy of this reasons to believe nor has Respondent Nos.4 and 5 annexed copy of its reasons to believe in its reply. It is not even clear whether any such reasons to believe has been recorded in writing - the concerned officer is bound to furnish these reasons to the assessee. On receipt of such reasons, the assessee is entitled to file objections to taking of any such action and the concerned officer is bound to dispose the same by passing a speaking order. Respondent No.5 is therefore, directed to make available to petitioner by 26th August, 2022 copy of the reasons to believe . Should petitioner wish to file a further affidavit in support to deal with the reasons to believe, petitioner may do so. If petitioner wish to amend the petition, petitioner may tender draft amendment on the next date - Stand over to 30th August, 2022.

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• 2022 (8) TMI 1143
  Refund of service tax paid - reverse charge mechanism (RCM) - had paid the service tax for the period from April 2016 to June 2017 only on 02.05.2018 and hence, they were unable to avail credit of the service tax already paid by them.- received technical know-how / intellectual property right from foreign persons and paid royalty to them - H ELD THAT:- It is an admitted fact that the assessee is eligible to claim cenvat credit under the erstwhile Central Excise Act, prior to 30.06.2017, but they were unable to claim, due to transitional provision has come into effect from 01.07.2017. It is also not in dispute that they had paid the service tax for the period from April 2017 to June 2017 belatedly i.e., on 02.05.2018, after pointing out the same through departmental audit. Thereafter, the assessee filed an application for refund. The appellant rejected the claim of refund made by the assessee on the premise that there is no provision in the new regime to allow such refund as input tax credit in GST/credit in Electronic cash ledger/ payment in cash. The assessee is entitled to avail cenvat credit of the service tax already paid, which fact was also admitted by the Revenue, but they were unable to claim, due to transitional provision has come into effect from 01.07.2017, ordered the writ petition by setting aside the rejection order of the appellant and remanding back the matter to the appellant for fresh consideration, with certain directions, which are aggrieved by the appellant / Revenue. This court is of the view that what was impugned herein is only the order of remand passed by the learned Judge and hence, there is no requirement to set aside the same in entirety - the order of the learned Judge is modified by directing the appellant to consider the application of the assessee under section 142(3) of the CGST Act, 2017, based on the available materials and dispose the same, on merits and after affording an opportunity of hearing to the assessee, within a period of six weeks from the date of receipt of a copy of this judgment. The appeal is disposed off.

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• 2022 (8) TMI 1142
  Jurisdiction of GST officer for attaching and withdrawing amount from bank account of the assessee - Seeking defreezing of account maintained by petitioner - HELD THAT:- It is not reasonable to understand, prima facie, as to how the authorities get this power to take away amount from anybody s account without account holder s permission or even after taking away the money, they would not even consider it necessary to inform the account-holder that money from their account has been debited. This is nothing but high handedness and gross abuse of power. The concerned officer who instructed the bank to debit the amount of petitioner shall file his personal affidavit explaining therein under what authority of law that he got removed the money from petitioner s bank account or directed the bank to debit the bank account and why did he do it without even informing petitioner even after giving instructions to the bank. The officer is put to notice that this Court may even consider taking action against the officer if it is not satisfied with the explanation. The affidavit shall be filed and copies served on or before 25.07.2022. Rejoinder, if any, to be filed and copies served by 3.00 p.m. on 29.07.2022 - Stand over to 1st August, 2022.

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• Income Tax

• 2022 (8) TMI 1141
  Deduction of bad and doubtful debt u/s 36(1)(vii) or u/s 37 - Advance against the purchase of property - It was contended that the project did not appear to make any progress, and consequently, the assessee sought return of the amounts from the builder. However, the latter did not respond. As a result, the assessee s Board of Directors resolved to write off the amount as a bad debt - HELD THAT:- As noted by the CIT(A), there was no material to substantiate this submission, in respect of payment of the amount, the time by which the constructed unit was to be given to it, the area agreed to be purchased, etc. Equally, in support of its other argument that the amount was given as a loan, the assessee nowhere established the duration of the advance, the terms and conditions applicable to it, interest payable, etc. The assessee conceded that it had received interest income for the relevant assessment year. However, it could not establish that any interest was paid (or shown to be payable in its accounts) for the sum of Rs. 10 crores. Furthermore, there is nothing on record to suggest that the requirement of the law that the bad debt was written-off as irrecoverable in the assessee s accounts for the previous year had been satisfied. Another reason why the amount could not have been written-off, is that the assessee s claim was that it was given to M/s Bhansali Developers Pvt. Ltd. for acquiring immovable property it therefore, was in the nature of a capital expenditure. It could not have been treated as a business expenditure. In view of the above discussion, it is held that the assessee s claim for deduction as a bad and doubtful debt could not have been allowed. The findings of the ITAT and the High Court, to the contrary, are therefore, insubstantial and have to be set aside. Admissibility of an expenditure as a deduction, which does not fall within the provisions of Sections 28 to 43, and is not capital in nature, but is laid out or spent exclusively for the purpose of business, under Section 37 - This court was satisfied that the disallowance of the amount, on account of bad and doubtful debt, did not preclude a claim for deduction, on the ground that the expenditure was exclusively laid out for the purpose of business. The court applied the test of whether the expense was incurred for business, or whether it fell into the capital stream. In the facts of the case, the tests were satisfied the expenditure was for the purpose of business, and did not fall in the capital stream. This court is of the opinion that as a proposition of law, that enunciation is unexceptional, since the heads of expenditure that can be claimed as deduction are not exhaustive which is the precise reason for the existence of Section 37. Therefore, in a given case, if the expenditure relates to business, and the claim for its treatment under other provisions are unsuccessful, application of Section 37 is per se not excluded. This court is of the opinion however, that in the facts of this case, the judgment in Southern Technologies [ 2010 (1) TMI 5 - SUPREME COURT ] on this issue (where the claim of bad and doubtful debt was disallowed) is appropriate, and applicable. Thus the Revenue s appeal has to succeed. The impugned judgment of the High Court and the order of ITAT are hereby set aside.

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• 2022 (8) TMI 1140
  Reopening of assessment u/s 147 - purpose of conducting an enquiry under Clause (a) of Section 148 (A) of the Act or is it the information based on which the notice under Clause (b) of Section 148 of the Act was issued - Violation of principles of natural justice - whether the allegation contained in the annexure and the questions posed therein is for the purpose of conducting an enquiry under Clause (a) of Section 148 (A) of the Act or is it the information based on which the notice under Clause (b) of Section 148 of the Act was issued? - HELD THAT:- We are fully satisfied that there has been gross violation of the principles of natural justice and the assessee did not have adequate opportunity to put forth their objection in an effective manner as the information sought for by the assessee was not furnished. Further we have held that the notices dated 21.03.2022 and 30.03.2022 though purported to have been issued under Clause (b) of Section 148A, on a reading of the annexure, it is clearly seen that the annexure does not contain information but it is a questionnaire. If that is so, then it goes without saying that what was intended by the assessing officer is to conduct an enquiry after receiving information from the assessee and the notice is deemed to be a notice under Section 148A (a) of the Act. Thus, there is gross procedural error from the very inception of the proceedings rendering the same as bad in law. In the result, the appeal is allowed, the order passed in the writ petition is set aside. Consequently, the writ petition is allowed to the extent indicated:- (i) The order under Clause (d) of Section 148A of the Act dated 12.04.2022 is set aside and the matter is remanded to the assessing officer. (ii) For the reasons mentioned above, the notices dated 21.03.2022 and 31.03.2022 though stated to have been issued under Clause (b) of Section 148A of the Act, they are in fact, notices under Clause (a) of Section 148A of the Act and be treated as such, and accordingly direction is issued to the assessing officer to conduct an enquiry after receipt of the explanation from the assessee. (iii) The assessing officer, before conducting enquiry as directed in Clause (ii) above, is directed to furnish full information as sought for by the assessee by their representation dated 30/31.03.2022 within 15 days from the date of the receipt of the server copy of this order. (iv) On receipt of the such information, the assessee is granted 10 days time to submit their written response/reply after which the assessing officer shall proceed to conduct an enquiry as provided for under Clause (a) under Section 148 A of the Act and thereafter proceed in accordance with law. (v) In the light of the above directions, the notice issued under Section 148 of the Act dated 12.04.2022 cannot be enforced.

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• 2022 (8) TMI 1139
  Revision u/s 263 - as per CIT AO has not examined the applicability of Section 56(2)(viib) read with Rule 11(U) and Rule 11UA - Commissioner held that with respect to fair market value of unquoted equity shares, the valuation provided under Rule 11UA (c)(b) has to be adopted and the valuation to be accordingly worked out and also opined that the assessing officer has not verified the computation of fair market value of the shares since relevant and tangible material was not placed before the assessing officer by the assessee during the course of assessment proceedings under Section 143(3) - HELD THAT:- What weighed in the mind of the AO appears to be as to whether the case of the assessee was a case of artificially rising of the capital by circular transactional. There was no such allegation when the Assessing Officer issued the questionnaire. If such is the case, we find that the note is of no consequence with regard to the fact in issue and therefore, the note requires to be ignored. The note also cannot be construed to be a rectification of the assessment order as the Assessing Officer does not state that he has invoked his power under Section 154 of the Act. Therefore, we are of the view that the learned Tribunal committed a serious error in reversing the order passed by the Principle Commissioner of Income Tax, II Kolkata in exercise of his powers under Section 263 of the Act. It was submitted on behalf of the respondent assessee that the Income Tax Department cannot sit in the arm chair of a businessman and commercial expediency has to be seen from the view point of the businessman. Such issue does not arise for consideration in this appeal nor it was the case of the assessee before the Commissioner that the Commissioner is purporting to take business decisions on behalf of the assessee. It is no longer res integra that reasons provide a live link between conclusion and evidence. This vital link is the safeguard against arbitrariness and prejudice to the interests, is a manifestation of the mind of a quasi-judicial authorities, Tribunal or a Court and it is a tool for judging validity of an order and, therefore giving reasons is an essential element of administration of justice. Thus, in the absence of any reasons given by the Assessing Officer by recording satisfaction as mandated under Section 56 (2)(viib) of the Act, the order passed by the Tribunal calls for interference. Accordingly, the appeal filed by the revenue is allowed and the order passed by the Tribunal is set aside and the order passed by the Principal Commissioner of Income Tax-II Kolkata is restored and the Assessing Officer is directed to comply with the directions contained in paragraph 6 of the said order by passing a reasoned and speaking order after offering an opportunity of hearing to the assessee or their authorized representative either through virtual hearing or physical hearing as expeditiously as possible but not later than sixty days from the date of receipt of the server copy of this judgment

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• 2022 (8) TMI 1138
  Disallowance u/s 14A r.w.r. 8D - Whether nexus between loan taken and investment made is found? - HELD THAT:- As pointed out by the Hon ble Division Bench in M/S BINANI INDUSTRIES LTD. [ 2016 (9) TMI 1635 - ITAT KOLKATA] there is a specific finding recorded by the Tribunal that the Assessing Officer had failed to establish that party funds were utilized for the purpose of acquiring shares and in view of availability of own funds with the assessee the expenditure ought not to have been disallowed. This being the finding of fact the Hon ble Division Bench held that the order of the Tribunal does not suffer from any perversity. The said finding and observation will squarely cover the case on hand. Therefore, we find no grounds to admit this appeal.

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• 2022 (8) TMI 1137
  Recovery proceedings - attachment orders for the rents from the property - deceased assessee appears to have divorced his wife - HELD THAT:- The action taken by the Income Tax Department in this case is to secure its interest by attachment of rent. Prima facie, there is nothing untoward in this regard as admittedly, the petitioners are beneficiaries under the Will of the deceased assessee dated 07.06.2007, to the exclusion of R2 and R3. As per the provisions of Section 159 of the Income tax Act read with Section 2(11) of the CPC, the petitioners are LRs of the assessee as a legal representative connotes any person intermeddles with the estate of the deceased . Rule 86 of the Second Schedule provides that An appeal from any original order passed by the Tax Recovery Officer under this Schedule, not being an order which is conclusive, shall lie to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. (2) Every appeal under this rule must be presented within thirty days from the date of the order appealed against. (3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate authority so directs, but not otherwise. A query was put to Standing counsel as to whether an order of attachment would tantamount to an original order passed by the TRO under the schedule , and the stand of the revenue is that the impugned order in these Writ Petitions dated 22.11.2019 is very much amenable to appeal under Rule 86 of the Second Schedule. This is recorded. Thus, if at all the petitioners are aggrieved by the impugned attachment, they may well file an appeal before the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner /Commissioner in terms of Rule 86 of the second schedule. Sub-rule (3) also provides for interim relief pending appeal. Hence, seeing as the submissions of the petitioners turn on appreciation of several facts including the extent of the property and rental income attributable to the deceased assessee, it would be appropriate that such submissions are made before the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner /Commissioner by way of appeals under Rule 86 of the second schedule. The petitioners are thus relegated to statutory remedy and are permitted to file appeals and stay petitions if they desire, in terms of Rule 86(1) (3) of the Second Schedule. If filed as aforesaid, the appellate authority shall entertain the same and dispose the stay petitions within a period of two (2) weeks from date of receipt, after hearing the petitioners. The timelines as aforesaid shall be strictly implemented. The interim order that the petitioners have been enjoying in these Writ Petitions shall continue for a period of four (4) weeks from today or till disposal of the stay petitions, whichever is earlier.

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• 2022 (8) TMI 1136
  Revision u/s 263 by CIT - whether the letting was doing of a business or the exploitation of the property by the owner? - assessee had earned rental income which had been shown as Income from Business Profession rather than showing the same as Income from House Property - whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular business is letting or not? - HELD THAT:- The Hon ble Supreme Court in Chennai Properties and Investments Limited, Chennai vs. Commissioner of Income Tax Central III, Tamilnadu [ 2015 (5) TMI 46 - SUPREME COURT] held that where the assessee is a company whose main object of business is to acquire properties and to let out properties, the rental income received therefrom was taxable as income from business and not income from house property . This view was taken after following the ratio of the judgment of the Hon ble Supreme Court in Sultan Brothers (P) Ltd. 1963 (12) TMI 4 - SUPREME COURT] wherein it was held that each case has to be looked at from businessman s point of view to find out whether the letting was doing of a business or the exploitation of the property by the owner. In view of the settled legal position with which we are duty bound to respectfully agree, more particularly, when we do not find any later and recent contrary view to the aforesaid legal position, no fault can be found with the order of the ITAT. Thus, we are clearly of the opinion that once the property in question is used as business asset and the exclusive business of the assessescompany or firm is to earn income by way of rental or lease money, then such rental income can be treated only as business income of the assessee and not as income from house property . Apart from the above, we notice that no doubt this is a case which falls under the exception laid down in Para 10 (c) of the CBDT Circular dated 20.08.2018. The tax effect otherwise involved in the instant case is barely Rs.8,04,740/- which again dissociates us from interfering with the order passed by the ITAT, more especially, for the reasons as already stated above.

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• 2022 (8) TMI 1135
  Delayed employees contribution to ESI/Provident Fund - adjustment and intimation u/s 143(1) - payments were deposited by the respective assessees well before the date of filing of return of Income Tax prescribed under section 139(1) - whether, the aforesaid additions by way of adjustments and intimation u/s 143(1) of Income Tax Act in respect of payments of Employee s contribution to ESI/Provident Fund, made by the assessee [payments made after stipulated dates prescribed under relevant laws governing provident fund and ESI, but before due date of filing of return prescribed u/s 139(1) are to be sustained or deleted? - HELD THAT:- We are aware about amendments to section 36(1)(va) and 43B of Income Tax Act, brought into effect by Finance Act, 2021. As regards whether these amendments are prospective in nature and applicable with effect from 01.04.2021 or retrospective in nature having applicability even before 01.04.2021; we are aware of some reported orders of ITAT, passed after the aforesaid amendments were brought in by Finance Act, 2021; in which the issue in dispute for Assessment Years prior to Assessment Year 2021-22 (i.e. for periods before 01.04.2021) has been decided in favour of the assessee and against Revenue. See DIGIQAL SOLUTION SERVICES PVT. LTD. [ 2022 (1) TMI 27 - ITAT CHANDIGARH] , M/S MAHADEV COLD STORAGE,[ 2021 (6) TMI 506 - ITAT AGRA] . Revenue should have given due consideration to the fact that the issue was highly debatable and controversial. As already discussed earlier, adjustments u/s 143(1) of Income Tax Act by way of intimation u/s 143(1) of Income Tax Act, on debatable and controversial issues, is beyond the scope of section 143(1) of Income Tax Act. Revenue was clearly in error, in making the aforesaid adjustments u/s 143(1) of Income Tax Act on a debatable and controversial issue. We would also like to make respectful mention of order of Jabalpur Bench of ITAT in the case of Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] in which similar view has been taken. Thus direct the Assessing Officer to delete the additions made by way of adjustments/intimation u/s 143(1).

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• 2022 (8) TMI 1134
  Penalty u/s 271(1)(c) - Addition on account of personal expenses of the Directors - HELD THAT:- There was no material dispute regarding facts of the case between the representatives of two sides, i.e., for the assessee and for Revenue. It is not in dispute that the assessee filed revised computation of income/loss, offering the aforesaid amount for addition, in the course of assessment proceedings before the AO. It is also not in dispute that the assessee company had disallowed a part of the expenses as personal expenses of the Directors, in its computation of income, except the aforesaid amount. Addition of the aforesaid amount is based on ad hoc estimation of personal use of car by the Directors of the company. The personal use of the car was estimated in ad hoc manner at the rate of 1/6 of the claim. In the computation of income filed with return of income (loss); the assessee suo motu disallowed 1/6th out of claim of depreciation on car. Thus, Rs.3,07,651/- out of total depreciation claim of Rs.18,45,904/- was suo motu disallowed by the assessee. Further, 1/6th out of interest on car loan, and 1/3 out of telephone expenses were also suo motu disallowed by the assessee in computation of income filed with return of income (loss). The total amount of suo motu disallowance made by the assessee in computation of income filed with return of income, on account of personal use of the Directors of the assessee company is, Rs.4,40,942/- (including the aforesaid amount of Rs.3,07,651/-). However, the assessee made a computational error in not disallowing 1/6th out of expenses on car amounting to aforesaid Rs.1,63,263/- being 1/6th out of motor car expenses. We accept the assessee s claim in the facts and circumstances of the specific case before us, that this computational error was due to oversight and inadvertent mistake, and that the error was a bonafide one. We are of the view that the present case before us is squarely covered in favour of the assessee and against Revenue by order of Hon ble Supreme Court in the case to Price Waterhouse Coopers (P.) Ltd. vs. CIT[ 2012 (9) TMI 775 - SUPREME COURT] Thus inadvertent and bonafide mistake made due to oversight did not amount to furnishing inaccurate particulars of income, or concealment of income. Thus this is not a fit case for levy of penalty u/s 271(1)(c) - Decided in favour of assessee.

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• 2022 (8) TMI 1133
  Computation of capital Gain - Cost of acquisition - inclusion of Interest cost - Interest cost was claimed as deduction u/s 24(b) from Income from House Property (self occupied) - CIT-A deleted the addition - HELD THAT:- This issue is squarely covered by the decision of Delhi SMC Bench of the Tribunal in Ashok Kumar Shahi [ 2019 (11) TMI 85 - ITAT DELHI] in which decision of Chennai Bench of the Tribunal in ACIT vs. Shri C. Ramabrahmam [ 2012 (11) TMI 430 - ITAT CHENNAI] and held deduction under section 24(b) and computation of capital gains under section 48 of the Act are altogether covered by different heads of income i.e., income from house property and capital gains . Further, a perusal of both the provisions makes it unambiguous that none of them excludes operative of the other. In other words, a deduction under section 24(b) is claimed when concerned assessee declares income from house property , whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48. We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 - CIT(A) has rightly accepted the assessee s contention and deleted the addition made by the Assessing officer - Decided against revenue. Deduction u/s 54 on account of acquisition of new residential unit - HELD THAT:- It is not in dispute that the assessee has purchased agricultural land and constructed in the said land residential house, guest house, staff quarters, swimming pool shed for parking etc. The Ld. CIT(A) has observed and rightly so that the assessee has made investment in the residential house and land appurtenant thereto and that the Act does not limit the size of appurtenant land. As decided in Shri Narendra Mohan Uniyali [ 2009 (8) TMI 825 - ITAT, DELHI] . It is crystal clear from the plain reading of Section 54 54F that exemption is allowable in respect of amount invested in the construction of a residential house. There is no any rider u/s 54F that no deduction would be allowed in respect of investment of capital gains made on acquisition of land appurtenant the building or on the investment on land on which building is being constructed. When the land is purchased and building is constructed thereon, it is not necessary that such construction should be on the entire plot of land, meaning thereby a part of the land which is appurtenant to the building and on which no construction is made, there is no denial of exemption on such investment. The impugned disallowances of exemption under section 54 is not based on any solid foundation and the Ld. CIT(A) was perfectly justified in deleting the disallowance. - Decided against revenue.

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• 2022 (8) TMI 1132
  Revision u/s 263 by CIT - CIT(A) noticed that the assessee-society had made cash deposits with specified bank notes (SBNs) during the demonetisation period in its bank account - According to the PCIT AO did not make necessary enquiries about the source / genuineness of the cash deposits. Secondly assessee had credited in the profit and loss account an amount towards interest and dividends on investments from bank - PCIT was of the view that the said amount should be taxed as income under the head other sources u/s 56 of the I.T.Act, and therefore, deduction u/s 80P(2)(a)(i) and 80P((2)(d) of the I.T.Act is not allowable HELD THAT:- AO had allowed the deduction u/s 80P(2)a)(i) in respect of interest income received on account of investments made by the assessee with certain Co-operative Banks. This action of the A.O. is contrary to the dictum laid down in the case of Pr.CIT Anr. v. Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] . Further, as regards the cash deposits is concerned, there is no discussion with reference to the genuineness of the source of cash deposits in the assessment order completed u/s 143(3) of the I.T.Act. Therefore, for the aforesaid reasons, we uphold the order passed by the PCIT u/s 263 of the I.T.Act. Limited submission of the learned AR as regards the claim of deduction u/s 80P(2)(a)(i) is that investments are made out of statutory compulsions under the Karnataka Co-operative Societies Act and Rules. Hence, the receipt of interest income has nexus with business of the assessee. In this context, the learned AR had relied on the order of the Bangalore Bench of the Tribunal in the case of M/s.Vasavamba Co-operative Society Ltd.. [ 2021 (8) TMI 706 - ITAT BANGALORE] and Uppinangady Co-operative Agricultural Society Limited [ 2021 (12) TMI 563 - ITAT BANGALORE] We find merit in the alternative submission of the learned AR that if interest income is earned out of investments made with Central Co-operative Banks and is in statutory compliance with the Karnataka Co-operative Societies Act and Rules, such investments have business nexus and should be considered as income derived from business of providing credit facilities to the members. This alternate contention of the assessee need to be examined by the A.O. while giving effect to the order of the PCIT passed u/s 263 of the I.T.Act. PCIT in impugned order had made certain observations that the assessee had failed to furnish satisfactory explanation regarding the source of cash deposits in the banks and the SBNs received. This observation of the PCIT will not result in a fair opportunity of hearing to the assessee while giving effect to the order of the PCIT. Hence, we delete the said observation. The A.O. shall examine the creditworthiness of the creditors and the genuineness of the transactions in respect of the cash deposits made during the demonetisation period. Accordingly, we uphold the order of the PCIT passed u/s 263 of the I.T.Act with aforesaid modification - Appeal of assessee dismissed.

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• 2022 (8) TMI 1131
  Unexplained bank deposits - addition made as assessee failed to discharge his onus in establishing the genuineness of the land transaction and deposit in his bank account - onus to prove - Assessee s replied that he had sold the agriculture land during the Financial Year 2008-09 relevant to the Assessment Year 2009-10 - HELD THAT:- CIT(A) has not adverted to the submissions of the assessee that the amount was deposited out of the sale consideration of the agricultural land. The factum of execution of Sale Deed is well established from the Sale Deeds filed by the assessee. Thus find that neither the AO nor the Ld.CIT(A) conducted any inquiry regarding the verification of the claim of the assessee that the sale consideration was the source of cash deposited in the assessee s bank account and also advance from one of the relatives. No material is placed on record to rebut the findings of assessee - therefore, direct the AO to delete the impugned addition. Thus, grounds raised by the assessee are allowed.

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• 2022 (8) TMI 1130
  Income deemed to accrue or arise in India - taxability of interest payable to head office of the assessee - AO taxed the interest income @ 10% of gross amount under Art 11(2)(a) of the India Japan DTAA - HELD THAT:- We find that coordinate bench of the Tribunal in ADIT (International Taxation) vs M/s Mizuho Corporation Bank Ltd. [ 2014 (4) TMI 733 - ITAT MUMBAI] for assessment year 2005 06, while deciding similar issue in favour of assessee held that interest paid by the Indian Branch of the assessee bank to its overseas head office is not chargeable to tax in India - provisions of sec.195 consequently would not be attracted in case of such payment of interest by the Indian Branch to overseas Head office and the question of disallowance of the said interest by invoking the provisions of sec.40(a)(i) does not arise. - Decided in favour of assessee. Disallowance of depreciation - HELD THAT:- In the present case, depreciation was claimed, inter-alia, in respect of addition to the assets made during the assessment years 2007 08 and 2008 09. We find that in the aforesaid assessment years, AO has passed orders giving effect to the directions of CIT(A) and accordingly, granted depreciation under the Act. Since, in respect of assets added in preceding years, depreciation is year to year deduction available to the taxpayer and therefore is dependent on the order(s) passed in previous years. Thus, we find no infirmity in order passed by the learned CIT(A) on this issue. Accordingly, grounds no. 3 and 4, raised in Revenue s appeal, are dismissed. TP adjustment on account of back-to-back counter bank guarantee - HELD THAT:- No details have been furnished to support the claim that no risk was borne by the Indian branch. Further, though in Form No. 3 CEB assessee has claimed to determine the arm s length price of international transaction of issuing bank guarantee against the counter guarantee issued by the associated enterprise by applying CUP method, however, there are no details available on record as to how such benchmarking has been carried out by the assessee. We find that the TPO, by considering the rate charged by Bank of Baroda for issuance of guarantee against 100% counter guarantee by reputed international banks, has made the transfer pricing adjustment by considering it to be an appropriate CUP. However, there is no further analysis as to how the said transaction is an appropriate CUP to the transaction undertaken by the assessee s Indian branch considering the FAR in both the transactions and whether any adjustment for differences as per Rule 10B(1)(a) of the Income Tax Rules is possible. CIT(A) vide impugned order on an ad hoc basis directed computation of commission for guarantee by making addition of 10% increase in the rate of commission charged by the assessee to arrive at the arm s length rate - we deem it appropriate to remand this issue to the file of TPO for de novo benchmarking of impugned international transaction of issuing bank guarantee against counter guarantee issued by the associated enterprise.The assessee is directed to produce all the documents before the TPO in support of its claim. Further, the TPO shall be at liberty to call for any details or documents for proper benchmarking of the impugned international transaction. TP adjustment on account of interest received/paid on inter-bank placements amongst the assessee and the foreign branches - HELD THAT:- From the perusal of the record it is evident that the TPO has not correctly appreciated the benchmarking undertaken by the assessee. Further, there are no adverse findings against USD depo rates used by the assessee for the purpose of granting/receiving of loans/advances from the associated enterprise. Accordingly, we deem it appropriate to remand this issue to the file of TPO for de novo benchmarking of international transaction pertaining to borrowing/lending by applying the USD depo rates, after necessary verification/examination of the details. We further direct that if upon examination it is found that the interest rate paid or received by the assessee is within the high and low of US depo rates, during the day of payment/receipt, then the international transaction of borrowing/lending be considered to be at arm s length. As a result, grounds no. 1 and 2 raised in assessee s appeal are allowed for statistical purpose.

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• 2022 (8) TMI 1129
  Assessment u/s 153C - satisfaction recorded before the issue of notice or not? - HELD THAT:- In the instant case, inspite of repeated requests from the AR, the Revenue has not produced any satisfaction note either to the assessee or before us. Further, it is also noted from the letter of the DCIT, Circle-3(1), Visakhapatnam that the satisfaction recorded before the issue of notice U/s. 153C was not found as per the order sheet notings. From the Circular No. 24/2015, dated 31/12/2015 it is noticed in para 4 that even if the AO of the searched person and the other person is one and the same, then also AO is required to record the satisfaction, as held by the various Courts. In the instant case, no such material has been brought before us by the ld. DR - Since the satisfaction was not recorded by the Assessing Officer before issue of notice U/s. 153C we are of the considered view that the order passed by the Ld. CIT(A) U/s. 153C of the Act deserves to be set aside for all the impugned assessment years - Assessee appeal allowed.

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• 2022 (8) TMI 1128
  Revision u/s 263 by CIT - Scope of the Reassessment order - AO made no inquiry/addition in respect of bogus share capital received from Kolkata-based shell /paper companies - Reopening of assessment initiated against assessee - HELD THAT:- From the reasons recorded, it is vivid that there is nothing mentioned about share capital and share premium. Thus, assessment was not reopened to examine the issue relating to share capital and share premium. The reassessment proceedings were initiated to tax the unaccounted payment, loans and advances and various unaccounted transactions. There is no whisper about the share capital and share premium in the reasons so recorded by the assessing officer under section 147. AO has not discovered any other income which is chargeable to tax and has escaped assessment during the reassessment proceedings as per third proviso to section 147 of the Act, hence it is quite clear that the share capital and share premium, was not the subject matter before assessing officer, during the reassessment proceedings under section 147. We note that ld PCIT has exercised his jurisdiction under section 263 of the Act, to the effect that assessing officer has not examined share capital and share premium. However, as we have noted that this issue was not there before the assessing officer in the reasons recorded by him under section 147 of the Act. Therefore, the issue relating to share capital and share premium, cannot be examined by the assessing officer in reassessment proceedings, as it was not the part of reasons recorded by the assessing officer. Jurisdiction exercised by ld PCIT under section 263 of the Act is not in accordance with law. PCIT has selected the item (share capital and share premium) which is not subject matter of reassessment proceedings therefore, order passed by the assessing officer under section 147 r.w.s. 143(3) is neither erroneous nor prejudicial to the interest of revenue. Therefore, jurisdiction exercised by the ld PCIT under section 263 of the Act to tax the share capital and share premium is not valid in the eye of law. The issues on which the revisional jurisdiction is being exercised were admittedly issues which arose in the proceeding/assessment done prior to reopening of the assessment. In view of passage of time the jurisdiction to exercise powers under section 263 of the Act with regard to assessment done under section 143(1) of the Act had lapsed. Thus, the jurisdiction under section 263 of the Act cannot be exercised on issues ( share capital and share premium) which were not subject matter of consideration while passing the order of reassessment under section 143(3)/147 of the Act but a part of an assessment done earlier under the Act. Thus, the jurisdiction exercised by ld PCIT is not in tune with the provisions of section 263 of the Act. AO has passed the reassessment order under section 143(3) r.w.s 147 after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry in respect of issue of share capital and share premium, has to fail. Based on these facts and circumstances, we quash the orderpassed by the ld PCIT under section 263 - Appeal of assessee allowed.

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• 2022 (8) TMI 1127
  Enhanced claim of the assessee on R D expenses u/s.35(2AB) - HELD THAT:- We observe that assessee is in R D work for its business purposes as well as undertaking contract research. The income earned by the assessee may include income earned by the assessee for the mere services on contract research as well as certain products which is considered by the DSIR and excluded the same while approving the project and R D expenditure for the purpose of claiming deduction u/s. 35(2AB) of the Act. This may needs detailed verification on the income earned by the assessee and it has to be segregated based on the products made by the assessee and the products emanating out of R D services like Dossier etc., and accordingly, Assessing Officer is directed to exclude only those incomes which are in the category of dossier etc., not the product/assets and contract income. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purpose. Nature of expenditure - amount paid to Asean Patent Bureau - revenue or capital expenditure - HELD THAT:- We observe from the record that the ITAT in assessee s own case in particular A.Y. 2011-12 [ 2018 (2) TMI 2081 - ITAT MUMBAI] has decided in favour of the assessee and against the revenue. Disallowance of Consultancy charges - Consultancy charges paid to the consultants for the purpose of business only, we direct the Assessing Officer to verify the genuineness of the claim and if it is within the category of other consultancy charges which this bench as allowed in Ground we direct him to allow the same

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• 2022 (8) TMI 1126
  Penalty u/s 271(1)(c) - addition made on account of loss on sale of assets by treating the assessee guilty of having furnished inaccurate particulars of its income - HELD THAT:- Submission made by the assessee in writing during the course of assessment proceedings itself as well as the further details already furnished by the assessee along with its return of income giving full and true details of the loss as well as its capital nature, we find merit in the contention for the assessee that the mistake in not adding back the loss on sale of fixed assets in computation of income was a bona fide mistake inadvertently committed by the assessee. In the case of Price Waterhouse Coopers Pvt Ltd [ 2012 (9) TMI 775 - SUPREME COURT] relied upon by the learned Counsel for the assessee, the Hon ble Supreme Court held that even if the assessee was a reputed firm and had great expertise available with it, it was possible that it could make a silly mistake. In this regard, the Hon ble Supreme Court took note of the fact that the Tax Audit Report filed by the assessee along with return of income unequivocally stated that the provision for payment was not allowable under Section 40A(7) of the Act and held that the contents of the Tax Audit Report suggested that there was no question of the assessee concealing its income or furnishing any inaccurate particulars of its income. Hon ble Apex Court held that it was through a bona fide and inadvertent mistake, the assessee while submitting its return, failed to add the provision for gratuity to its total income. It was held that the imposition of penalty on the assessee, therefore, was not justifiable. The decision of the Hon ble Supreme Court in the case of Price Waterhouse Coopers Pvt Ltd (supra) is squarely applicable in the facts of the present case as discussed above and respectfully following the same, we cancel the penalty imposed by the Assessing Officer under Section 271(1)(c) - Decided in favour of assessee allowed.

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• 2022 (8) TMI 1125
  MAT Computation - book profit of the assessee-company u/s 115JB on account of provision for doubtful debts and provision for diminution in the value of investment - HELD THAT:- VODAFONE ESSAR GUJARAT LTD. [ 2017 (8) TMI 451 - GUJARAT HIGH COURT] held a mere provision is made by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debts; but if such provision is simultaneously obliterated by the assessee from its account by reducing the corresponding amount from the loans and advances on the asset side of the balance-sheet thereby showing the loans and advances on the asset side of the balance-sheet as net of the provision at the end of the year, it would amount to a write off and such actual write off could not be hit by clause (i) of the Explanation to Section 115JB of the Act. As demonstrated by assessee from the annual account of the assessee-company, the provision made for doubtful debts as well as for diminution in the value of investment was reduced by the assessee from the corresponding amount of trade receivables and investments as reflected in the balance-sheet at the end of the year and this being so, we hold, respectfully following the decision of the Hon ble Gujarat High Court in the case of Vodafone Essar Gujarat Ltd that it is not merely a case of provision but an actual write off which would not be hit by clause (i) of Explanation to Section 115 JB of the Act. We accordingly delete both the additions made by the Assessing Officer and confirmed by the learned CIT(A) to the book profit of the assessee-company under Section 115JB of the Act on account of provision for doubtful debts and provision for diminution in the value of investment and allow ground Nos. 2 3 of the assessee s appeal.

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• 2022 (8) TMI 1124
  Exemption u/s 11 - rejecting the grant of registration u/s 12A on the grounds that the activities of trust are not for public charity - whether registration u/s 12A be granted to the trust as all the activities of the trust are charitable in nature and relief be given to the assessee? - HELD THAT:- We have gone through the Trust Deed given in paper book. We have also carefully perused the Grant of Probate order by the Addl. District Judge submitted in the paper book. We agree with the assessee s submission that ld. CIT has passed a hasty order without appreciating the true purport of the documents submitted before him. It is settled law that even administrative order should be consistent with natural justice. It includes fair hearing, fair appreciation of documents and a speaking order. In this view of the matter, we remit the issue to the file of ld. CIT (A). CIT (A) shall consider the issue afresh after giving the assessee proper opportunity of being heard. Appeal filed by the assessee is allowed for statistical purposes.

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• 2022 (8) TMI 1123
  Disallowance u/s 43B - Sales Tax/Works Contracts tax which was outstanding on the date of filing of return - C IT(A) deleted the disallowance accepting the contention of the Assessee that provision of Section 43B of the Act are not applicable as the aforesaid Sales Tax/Work Contract Tax liability was not routed through Profit Loss account and therefore no deduction was claimed by the Assessee - HELD THAT:- The contention advanced on behalf of the Assessee is that since there was huge input tax credit available as on the date of filing return of income, the outstanding Sales Tax/Works Contract Tax liability can be deemed to have been set off against such available input tax credit and therefore, the question of making disallowance under Section 43B of the Act does not arise. We do not find any merit in the aforesaid contention and are of the view that the authorities below were justified in rejecting the contention of the Assessee. In paragraph 5.2.4 of the order, the CIT(A) has rightly observed that the judgments relied upon by the Assessee do not support the contention that mere availability of unutilized tax credit would be deemed to be payment even in absence of actual set off of the outstanding liability with the available tax credit. In our considered view, the provisions of section 43B would not be attracted in case there is actual payment or actual set off (which would be deemed to be payment). Mere availability of unutilized tax credit cannot be deemed to be payment and/or lead to a conclusion that there existed no outstanding Sales Tax/Works Contract tax liability as on the date of filing return of income. Calculation of quantum of outstanding Sales Tax/Works Contract Tax liability for deduction u/s 43B - Increase in profits on account of inclusion of taxes/duties in closing stock and sales has been set off against the decrease in profits arising on account of increase of cost of opening stock, work-in progress and purchase material. Thus, in effect, deduction has been claimed by the Assessee in respect of the tax liability incurred during the relevant previous year even though the same has not been routed through the Profit Loss Account. We note that as per the statement showing details of variation from the method of valuation prescribed under Section 145A of the Act and the effect thereof on the profits of the Assessee prepared by the tax auditor, there is no effect on the profits from business A co-joint reading of Sections 145A and Section 43B of the Act would show that as per Section 145A of the Act the business profits are firstly required to be mandatorily computed by following the Inclusive method , by loading the amount of tax or duty etc. on purchase, sale and inventories and thereafter, if some part of tax or duty is unpaid, that should be added back in the computation of income as per Section 43B of the Act to arrive at income chargeable under the head profits and gains of business . Accordingly, we hold that the provisions of Section 43B of the Act would be attracted in the facts of the present case even though the Assessee has not routed the Sales Tax/Works Contract Tax liability through Profit Loss Account. In view of the aforesaid, we set aside the order passed by the CIT(A) on this issue, and direct the Assessing Officer to disallow under Section 43B of the Act the quantum of the outstanding Sales Tax/Works Contract Tax liability of INR 3,78,15,218/- to the extent the same is included in the statement showing details of deviations from the method of valuation prescribed under section 145A of the Act by the tax auditor as per Clause 12(b) of tax audit report in Form 3CD. Accordingly, Ground No. 1 and 2 raised by the Revenue in appeal are allowed whereas Cross Objection No.1 of the Assessee is dismissed.

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• Customs

• 2022 (8) TMI 1122
  Refund claim - monies obtained by the respondents/revenue, against the encashment of three bank guarantees furnished by the petitioner - HELD THAT:- Admittedly, the bank guarantees were invoked on 04.12.2020. The amount against the said bank guarantees was received by the respondents/revenue via a demand draft dated 29.12.2020. Given the fact that there is a stay on the demand raised by the respondents/revenue, as also the undisputed fact which has emerged, that the provisional release of goods was not, ultimately, taken recourse to by the petitioner, to our minds, the aforementioned bank guarantees could not have been encashed - having regard to the state of affairs, it is clear that the respondents/revenue will have to remit the amount to the petitioner, as reflected in the aforementioned bank guarantees. The respondents/revenue, concededly, can recover the demand raised, only if the petitioner were to ultimately fail in the appeal or in any other proceedings taken out thereafter, before a superior forum - the instant writ petition is disposed of, with the direction that the impugned order dated 16.07.2021 shall stand quashed.

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• 2022 (8) TMI 1121
  Classification of imported goods - Thiourea 99% min - want of import permit issued by Respondent No.4 - principles of natural justice - HELD THAT:- Petitioner states that he will make all these submissions to the proper officer who can finalize the Bills of Entry by considering the submissions made by Petitioner. The proper officer shall finalize Bills of Entry Nos.4114491, 4116732 and 4116397 all dated 18.07.2019 by passing a speaking order, after taking into consideration the submission of Petitioner and after complying with the principles of natural justice within a period of six weeks from today. Before passing the order, Petitioner shall be given a personal hearing with at least 7 working days advance notice. The Writ Petition is disposed off.

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• 2022 (8) TMI 1120
  Levy of penalty u/s 112(a) and 114AA of the Customs Act, 1962 - allegation of illegal removal of container from CFS - HELD THAT:- The Preventive Officer Mr. G. Raghava is said to have stated that he came to know only in November 2017 that the said container was removed illegally from the CFS when such illegal removal had happened on 16.09.2017, is a matter of serious concern since the consignment was admittedly in the custody of the CFS and for nearly two months (from 16.09.2017 to November 2017), the Preventive Officer was not even aware of the alleged illegal removal. The Revenue has failed to bring on record any material evidence to justify the imposition of penalty, more so when they did not even allege that the act or omission on the part of these appellants has led to confiscation of the goods. The penalty imposed, as confirmed in the impugned order, cannot be sustained - Appeal allowed.

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• 2022 (8) TMI 1119
  Maintainability of appeal - non-prosecution of the case - HELD THAT:- The appeal before the Commissioner (Appeals) was not disposed of and even before the actual disposal of the appeal, appellant has preferred this appeal before the Tribunal. In view of the fact that the appeal has not been finally disposed of by the Commissioner (Appeals), this appeal is premature and can be dismissed on merits itself. This appeal is dismissed not only for non-prosecution under Rule 20 of CESTAT (Procedure) Rules, 1982 but also on merits

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• 2022 (8) TMI 1118
  Interest on refund of pre-deposit - rate of Interest - period of Interest - Section 129EE of the Customs Act - HELD THAT:- In view of the precedent decisions, the appellant is entitled to grant of interest under Section 129EE of the Customs Act, for the period from the date of deposit till the date of refund. Reliance can be placed in the case of Reeba Textiles Ltd. [ 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT] - the appellant is entitled to interest from 23.09.2015 till the date of grant of refund i.e. 11.03.2021. Rate of Interest - HELD THAT:- The interest is payable @12% P.A. following the ruling of Hon ble Supreme Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] wherein refund under the Income Tax Provisions was allowed @12% p.a. Appeal allowed.

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• Corporate Laws

• 2022 (8) TMI 1117
  Power to Company secretary to initiate suit or any other legal proceedings in the absence of specific authorization - locus standi of the Company Secretary in the main application - fulfilment of requiremnt of section 90 - that every individual who holds beneficial interest over the company shall make a declaration specifying the nature of the interest in form No. BEN-1 within a period of 90 days - officer in default - section 2(60) of the Companies Act, 2013 - HELD THAT:- There is no idealistic overstatement in holding that company secretary is required to act not only with adequate diligence but with proper and necessary diligence while discharging his duties by sounding the knell in order to alert all concerned including the board of directors on occasions where he apprehends deviations from sound corporate principles and prudent governance practice in the best interest of the company and its stakeholders. The clause (f) of sub-section (5) of section 134 read with sub-section (5) makes it a mandatory prescription to devise and put in place proper system to ensure the compliance with all applicable laws and that such systems are adequate and operating effectively, the violation of which will drag the company and every officer in default to penal consequences including penalty up to Rs. 24 lakhs for the company and imprisonment to the officer in default for a term up to three years or with a fine up to Rs. 5 lakhs or with both - The company secretary in the instant situation has acted diligently and promptly to ensure compliance with the mandatory provisions by moving this Tribunal. To answer the question put forward whether the company secretary has the locus standi to file such application, the same is answered in affirmative by virtue of the above position of law, it is fairly clear that the company can be represented by the company secretary since he is a key managerial person under section 2(51) of the Companies Act, 2013, officer in default as per section 2(60) as per Companies Act, 2013 and as per the power given under section 205(1)(c) read with rule 10 clause 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 it is abundantly clear that the company secretary can represent before various regulators and other authorities under the Act in connection with discharge of various duties under the Act. Application dismissed.

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• Insolvency & Bankruptcy

• 2022 (8) TMI 1116
  Seeking a direction to the Insolvency Resolution Professional (IRP) to treat the Applicant s Claim as Assets in Trust - Section 18(1)(f) of the Insolvency and Bankruptcy Code, 2016 - whether the amount collected by the Corporate Debtor on behalf of the Carrier is essentially goods held in trust which can be recovered by the Appellant herein who stood subrogated? - HELD THAT:- Clause 7.4 is invoked when the Agent becomes the subject of Bankruptcy Proceedings, or becomes subject to a similar legal process. Resultantly, any amount due and payable under Clause 7.2 becomes payable from the CIRP date. In the present case, the CIRP commenced on 22.10.2019 and Clause 7.4 of the Agreement becomes operable from the said date due to which all amounts collected by the Corporate Debtor on behalf of the Carrier is crystallised as a debt, due and payable to IATA as on 22.10.2019 - The phrase notwithstanding the normal remittance procedure under this Agreement indicates that Clause 7.4 of the Agreement overrides Clause 7.2 and therefore, the contention of the Learned Counsel for the Appellant that Clause 7.4 of the Agreement is unworkable as on the date of passing of the Impugned Order i.e.,16.12.2021, is unsustainable. Clause 7.2 of the Agreement does not declare any trust property with any certainty as the subject matter of the trust is defined as all monies collected by the Agent from Transportation and Ancillary Services sold under this Agreement - It is relevant to note that there was no prior demarcation as to which of the amounts were received under the terms of the Agreement and which amount was received on account of other transactions of the Corporate Debtor. In the absence of any separate trust account and specifically in the absence of any specific segregation/demarcation of the amount collected by the Corporate Debtor under the terms of the Agreement, no trust can be said to have come into the existence in favour of the Carrier in the present case as the goods that are said to be held in trust is the Money/amounts collected by the Corporate Debtor. There is no documentary evidence on record to establish that any steps were taken for creation of any separate trust account by the parties to the Agreement - it cannot be construed that a trust could have been created by IATA itself under Clause 7.2 of the Agreement as it cannot be presumed that all individual IATA Members have intended to create this trust under this Clause. At the cost of repetition, the contention of the Appellant Counsel that Clause 7.4 of the Agreement was unworkable , is untenable. Merely because Clause 7.2 of the Agreement states that the property of the Carrier must be held by the Agent in trust over the Carrier does not lead to an understanding that the money in fact is to be held by the Company in trust for the Carrier/IATA. If this is to be strictly interpreted, and if that was the truest intention of the parties, a separate trust account would have been opened to earmark the amounts received by the Corporate Debtor in terms of Clause 7.2 of the Agreement, which in the instant case is admittedly not done - There should be harmonious interpretation of both the Clauses and it is held that the Adjudicating Authority has rightly relied on Clause 7.4 of the Agreement which states that from the moment the Corporate Debtor goes into Insolvency, the money held by it on behalf of the Carrier would be crystallized as a debt which is due and payable by the Corporate Debtor and classified the Claim of the Appellant to be an Operational Debt under Section 5(21) of the Code. It is also relevant to mention that Moratorium under Section 14(1)(b) was imposed on 22.10.2019 and recovery of any such money which is in possession of the Corporate Debtor is prohibited. This Appeal fails and is accordingly dismissed.

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• 2022 (8) TMI 1115
  Rejection of Auction Bids - pre-bidding qualifications - HELD THAT:- The documentary evidence on record establishes that the Appellant herein contended before the Learned Adjudicating Authority that pre-bidding qualification will not bind the bidders and sought for relief to be granted under the eligibility criteria at Clause 1.15 of the tender document. Having sought for participating in the bidding process, the contention that pre-bid qualification will not bind the bidders is erroneous as such a situation would only negatively affect the efforts of the Liquidator to maximize the value of the asset and would moreover delay the proceedings as all and sundry would participate in the bidding process. Secondly, the record evidences that the email was resent on 09.12.2021 and even otherwise on 11.12.2021 at 7:25 PM, the Liquidator confirmed the eligibility of the Appellant in respect of one property based on his turnover and his net worth. Having participated in the bidding process, the conduct of the Appellant in turning around and stating that the eligibility criteria is erroneous, without challenging the said condition in any appropriate forum, is truly misconceived. This Appeal is partly allowed only modifying the amount of cost imposed from Rs.9Lakhs/- to Rs.2Lakhs/- to be paid within one week from the date of this Order.

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• 2022 (8) TMI 1114
  Initiation of CIRP - NCLT dismissed the application - Corporate Debtor failed to make repayment of its dues - Operational Creditrs - existence of debt and dispute or not - time limitation - date of default - HELD THAT:- The limitation period of an operational debt under IBC will be extended if before the expiration of the 3 years period, an acknowledgment has been made in writing signed by the party against whom such property or right is claimed - In the present case, it is noted that even though the operational creditor sent an e-mail dated 1.6.2016 mentioning the outstanding amount for payment, and debit note was also included in the ledger account dated 31.3.2016, no acknowledgement of the liability has been made in writing by the corporate debtor. In such a situation, the date of default has to be computed from the date of last payment i.e. 4.9.2015 - the three years period shall be over on 3.9.2018 and since the application under section 9 was filed on 4.12.2018, it is clearly beyond the period of limitation and hence is barred as being out of limitation. The Adjudicating Authority has correctly dismissed the section 9 application filed by the Appellant - Appeal dismissed.

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• 2022 (8) TMI 1113
  Seeking a direction to the Liquidator for release of money realized on the sale of vehicles which were stated to be hypothecated to the Appellant Bank - Section 61 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The documentary evidence on record establishes that the Appellant had entered into a Deed of Hypothecation with the Corporate Debtor on 28.01.2019, pursuant to which the charge was registered with the RoC, which describes the charge to be on all vehicle inventory and receivables thereof. There are force in the contention of the Learned Counsel for the Liquidator that in the Books of Account of the Corporate Debtor there is no clarity regarding the particulars of each vehicles and the details of its financing and at any given point of time, there would be finance facilities being utilized from different Financial Institutions and the same was being repaid when the receipts came from the actual buyer of the vehicles and hence the Secured Financial Creditors is construed to have a joint charge over the Sale Proceeds as they have collectively relinquished the Security Interest as there is no discernible way to determine the specific inventory financed by them individually. It is seen from the record that the proof of Claim in Form- D is dated 24.07.2020, whereas the Order of Liquidation was passed, much prior to that on 26.06.2020 and there were no vehicles in existence as on 26.06.2020. Having regard to the fact that, the Corporate Debtor had given its unequivocal assent in the CoC Meetings with respect to sale of vehicles during the CIRP Process without any objection, and has not chosen to realize the Security Interest in accordance with Section 52 of the Code, either through the records of Information Utility or RoC and specifically keeping in view that the subject vehicles are already sold and the proceeds from the sale of the vehicles have already been distributed between the Secured Financial Creditors in proportion to their debt , and the Appellant has already received its share of the proceeds on 01.03.2021 after providing an Affidavit of undertaking dated 23.02.2021, the Appellant is estopped from claiming any part over the asset which has already been sold and therefore we are of the considered view that the Adjudicating Authority has rightly observed the Sale Proceeds ought to be distributed as provided for under Section 53 of the Code. Appeal dismissed.

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• 2022 (8) TMI 1112
  Rejection of application for initiation of CIRP, filed u/s 9 of IBC - Operational Creditors - dispute prior to delivery of demand notice - HELD THAT:- From the record of the EGM dated 20.5.2019, it is noted that the Appellant continued to function as a WTD and was entitled to a remuneration as stipulated in the clauses 48 and 49 of the Articles of Association, and the figure of remuneration of the Appellant as WTD can be seen from the Form MR-1 filed by the corporate debtor wherein a remuneration of Rs.86,49,600 p.a. is shown as Appellant s remuneration (attached at pp.75-77 of appeal paperbook, vol. I). Further an increment was given to the Appellant as CFO and WTD vide letter dated 2.7.2018. The Adjudicating Authority has erroneously inferred the existence of a dispute merely because a Writ Petition bearing WP (C) 4407/2019 was filed by the appellant, even though there is no such reference or mention is made in the order dismissing the writ petition and no inference of dispute can be drawn from what is stated in the said order - the Appellant was appointed as a WTD of the corporate debtor on 29.9.2015 while he was already working as CFO, and continued as WTD till 20.5.2019. Since he was paid his total emoluments and termination benefits till 31.3.2019 for his work as CFO, he is entitled to receive payment for the period 1.4.2019 till 20.5.2019 for his work as WTD, which is an operational debt in default and payable by the corporate debtor. The Adjudicating Authority has erroneously dismissed Appellant s application under section 9 - The case is sent to the Adjudicating Authority for passing necessary order after the admission of section 9 application - Appeal disposed off.

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• 2022 (8) TMI 1111
  Approval of Resolution Plan - CIRP period had already expired and time exclusion order not granted prior to expiry of CIRP period - HELD THAT:- If procedural rules are bypassed or circumvented by them in a manner which stifles the basic canons of fairness and justice and prejudicially affects the legal rights and entitlements of party, the said action on grounds of having vitiated the process deserves to be set aside. Be that as it may, while it is important to maintain the sanctity and credibility of CIRP proceedings, it is equally important to ensure that hyper-technicality is not allowed to occupy centre-stage and besiege the proceedings as it would end up frustrating and defeating the very object and purpose of IBC. From the series of communications, it is abundantly clear that Authorized Representative did not falter in keeping the Homebuyers informed about the CoC meeting and its agenda. It is also noted that Authorized Representative had intended to hold a meeting to elicit preliminary views of the Homebuyers on 12.01.2022 but eventually did not convene it and instead sought the views of Homebuyers on the amended Resolution Plan by e-mail on whether they approved or rejected it. It is pertinent to note that CIRP Regulations 16-A(9) does not appear to make it obligatory to hold the meeting with Homebuyers to seek their preliminary views as the word used in the said Regulation is may , thereby rendering the decision to seek preliminary views optional. This is not to deny the fact that with a view to enable the Authorised Representative to participate effectively in the CoC meeting and properly represent the interests of the homebuyers, holding such a meeting of Homebuyers is eminently desirable. It is also an admitted fact that out of 26 Homebuyers, only 19 Homebuyers voted in the matter and that in terms of Section 25-A(3-A) of the IBC, the Authorized Representative taking cognizance of the fact that 89.80% of Homebuyers voted in favour of the amended Resolution Plan, he cast his vote in favour of the amended Resolution Plan on behalf of the Creditors in class - the procedural compliance by the Resolution Professional and Authorized Representative appears to be reasonably substantial and there are no reason to hold that there was any wilful casualty or miscarriage of justice. Whether the CoC decision on the amended Resolution Plan could have been materially any different, had the procedural deviations not taken place? - HELD THAT:- The answer seems to be in the negative for the following reasons. The Adjudicating Authority in the impugned order has clearly held that the amended Resolution Plan has been approved by 98.58% voting share of the CoC members which is much above the statutory requirement of 66% vote share and this has not been challenged by the Appellants - It may be safely inferred that even if the alleged procedural omissions had not taken place, the Appellants would still have remained minority Homebuyers in the class of Creditors. Remanding the matter back to CoC on the grounds of the procedural deviations raised by a dissenting minority in class of creditors would render the CIRP a never ending process. This would militate against the core objective of the IBC to ensure insolvency resolution in a time bound manner. Thus, there are no convincing reasons to interfere with the order of Adjudicating Authority approving the revised Resolution Plan of the Corporate Debtor under Section 31(1) of the IBC - appeal dismissed.

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• 2022 (8) TMI 1110
  Initiation of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - event of default (for principal loan) has occurred in January, 2022 when the Financial Creditor filed Section 7 application, or not - HELD THAT:- The Adjudicating Authority in the impugned order has after considering the submissions of the parties has returned finding that default was committed. The event of default had not occurred with Principal Loan, the event of default did occur for Additional Loan and Further Loan on 27.11.2021 giving right to the Financial Creditor to file Section 7 application in January, 2022. The Adjudicating Authority has rightly after finding debt and default admitted Section 7 application. We may further notice one more aspect of the present Appeal. On the very first day when this Appeal came for consideration before this Appellate Tribunal, learned counsel for the Appellant submitted that Appellant intends to settle the entire amount of Principal and interest within a period of three months. Further on 02.06.2022, Appellant undertook to make payment of entire amount of Rs.22,23,45,748/-. The submission of the Appellant that no event of default took place in loan cannot be accepted. Nor, Appellant can be permitted to submit that no default took place in the payment of loan - the Adjudicating Authority did not commit any error in admitting Section 7 application. Appeal dismissed.

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• 2022 (8) TMI 1109
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- On perusal of the records, it is seen that no Agreement or prior approval for such loan has been annexed to the Petition, to reflect that the Corporate Debtor had taken a commercial debt. This Adjudicating Authority is a summary court and hence, we cannot venture into a detailed proceeding, the main points in a section 7 petition is to check whether there is a debt and default with the aid of the documents annexed with the pleadings. In the present case, the debt has been converted into equity shares, hence there is no debt at the present. Application filed under section 7 of Insolvency and Bankruptcy Code, 2016 is dismissed.

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• 2022 (8) TMI 1108
  Dissolution of the company - Voluntary Liquidation of Corporate persons - Section 59 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A bare perusal of the material available on record shows that the Board of Directors of the Company has taken a conscious decision for closing down the company, because the company has not commenced any business since incorporation. Thus, the Board of Directors of the company have unanimously proposed to liquidate the company by invoking the provisions of voluntary liquidation under Section 59 of the Code. From the perusal of the record of the case, it is seen that the Liquidator, after his appointment has duly performed his duties and completed necessary formalities to complete the liquidation process of the applicant company, which has been averred in the present petition and, thus, the liquidator has prayed for an order from this Tribunal to dissolve the applicant company - Apart, as per record of the present case, it is seen that the company is not found involved in such kind of business activities, which are detrimental to the interest of public at large. Further, it is not the case that the proposed liquidation may affect adversely to its shareholders/members or is contrary to the provisions of law. Liquidation/Dissolution of the Corporate Person is ordered - petition allowed.

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• FEMA

• 2022 (8) TMI 1107
  Violation of the provisions of the FERA - proceedings to be initiated within a particular period provided under the Statute - As submitted authorized dealer, before permitting the deposits of foreign currency, was required to satisfy himself that the foreign currency is deposited by the NRI Account Holder himself; that the account holder is on a temporary visit to India; and that the account holder is still normally resident abroad - whether High Court has grossly erred in holding that it was for the first time that the stipulation regarding the deposits of foreign currency by the account holder himself, was expressly provided for by Circular dated 31st July 1995 and therefore the Circular dated 31st July 1995 could not have had a retrospective operation? - HELD THAT:- We are of the view that the show causes notices issued in the year 2002, i.e., after a period of almost one decade from the date of the alleged transactions of 1992-1993, were not tenable in law. It is a settled proposition of law that when the proceedings are required to be initiated within a particular period provided under the Statute, the same are required to be initiated within the said period. However, where no such period has been provided in the Statute, the authorities are required to initiate the said proceeding within a reasonable period. No doubt that what would be a reasonable period would depend upon the facts and circumstances of each case. Admittedly, in the present cases, the alleged transactions had taken place during the financial years 1992 and 1993. Show cause notices for the said transactions were issued in the year 2002 and that too just before the sunset period of FERA was to expire, i.e., on 1st June 2002. We are therefore of the considered view that show cause notices and the proceedings continued thereunder are liable to be set aside on this short ground. As per provisions of Rules 2, 3 and 4 of the said Rules every Banking Company to preserve records stated in Rule 2 for five years and eight years for records mentioned in Rule 3 respectively. No doubt that under Rule 4 of the said Rules, the RBI, having regard to the factors specified in subsection (1) of Section 35A, by an order in writing, is empowered to direct any banking company to preserve any of the books, accounts or other documents, etc. for a period longer than the period specified under the said Rules. Undisputedly, no such order has been placed on record which required the respondents-Banks to preserve records concerning the transactions in question for a period longer than eight years.It could thus be seen that even under the said Rules, the Banks are required to preserve the record for five years and eight years respectively. On this ground also, permitting the show cause notices and the proceedings continued thereunder of the transactions which have taken place much prior to eight years would be unfair and unreasonable. We find no error in the impugned judgments of the learned Single Judge as well as the Division Bench of the High Court of Delhi. The Civil Appeals as also the Criminal Appeals are therefore dismissed.

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• Service Tax

• 2022 (8) TMI 1147
  Sabka Vikas Legacy Dispute Resolution Scheme, 2019 - application rejected only an erroneous ground that audit had been initiated and hence, the petitioner was not entitled to the benefit of the SVLDR Scheme - HELD THAT:- Shri Saraswat is not in a position to dispute the fact that the last date stipulated for initiating the investigation or audit making the applicant ineligible to apply under the Disclosure Scheme was 30.06.2019. It is not disputed that the notice for providing documents to conduct audit was issued to the petitioner well after 30.06.2019 to be specific on 26.12.2019. Hon ble Bombay High Court in the case of UCC Infrastructure Pvt. Ltd. vs. Union of India Ors. [ 2022 (2) TMI 94 - BOMBAY HIGH COURT ] where it was held that In the facts of this case also the respondents had issued a summons only on 30th August, 2019 i.e. after 30th June, 2019 and thus summons issued after the cut-off date of 30th June, 2019 could not be the ground for declaring the application filed by the petitioner under SVLRDS-1 ineligible. The Declaration Forms filed by the petitioners are restored to file and are remanded to the respondent no.3 for taking a fresh decision on these two declaration forms filed by the petitioner by treating the same as valid declarations under the voluntary disclosure category and thereafter grant the admissible relief to the petitioner - It is made clear that the respondents are empowered to take action under Section 129(2)(c) of the said Scheme, if within a period of one year of issuance of the discharge certificate against the petitioner, the respondent no.3 finds that the material particulars furnished in the declaration filed by the petitioner are found to be false. The writ petition is allowed.

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• 2022 (8) TMI 1106
  Disallowance of credit - credit was denied on the ground that the Unit No. II being centralized registered unit has not issued ISD invoice - HELD THAT:- It is established from the records that the appellant have taken credit of Rs. 1,24,129/- only. This position was made very clearly before the original authority as well as Commissioner (Appeals). It is found that surprisingly both the authorities have discarded this defence stating that it is an afterthought. It is clearly a fact on record which both the authorities should have verified which they utterly failed to do so. Moreover, right from show cause notice stage till Commissioner (Appeals) stage there is no evidence on record that the appellant have taken the cenvat credit of Rs. 20,72,909/- - the adjudicating authority and Commissioner (Appeals) denied this credit on the ground that the Unit No. II which has a centralized registration should have issued ISD invoice and in absence of ISD invoice, credit is not admissible. As regard the payment of service tax made by Unit No. II, since the said unit is centralized registered, Unit No. II is under obligation to pay the service tax on behalf of all the units. Merely because, the Unit No. II has paid the service tax, the eligibility of cenvat credit of the present appellant s unit will not adversely be affected because irrespective of any unit paying the service tax, all the units are under one single entity i.e. M/s IDMC Ltd. The appellant are entitled for the cenvat credit of Rs. 1,24,129/- and remaining amount for which appellant have otherwise not taken the credit, the demand of the same will not sustain - Appeal allowed - decided in favor of appellant

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• 2022 (8) TMI 1105
  100% EOU under the Software Technology Park (STP) Scheme - refund of unutilized CENVAT Credit - input services or not - rejection of credit on the ground that credit availed subsequent to the last date of export - rejection also on the ground that unbilled revenue was not taken into consideration for computing the total turnover of the appellant - export turnover has been restricted by the authorities below to the documents proving the realisation of export proceeds - Service Tax Registration has not been mentioned in the invoice and that the appellant has not produced any Chartered Accountant certificate to this effect. HELD THAT:- Prior to 01.04.2011, the definition of input service had a wide ambit as it included the words activities relating to business . Almost all the services availed by the appellant under this category, were used by the appellant-company for its business activities. In the decisions of various fora, it has been held that almost all the said services would fall within the definition of input service when they are used for providing output service, for the period prior to 01.04.2011 - the rejection of refund claims for all the services availed by the appellant prior to 01.04.2011, on the allegation that they do not qualify as input service , cannot be justified. After 01.04.2011, a major amendment was brought forth in the definition of input service whereby certain services have been excluded. Services in the nature of Outdoor Catering Service, Rent-a-Cab Service, Health Insurance, Leave and Home Travel Concession, etc., which are availed primarily for the personal use of an employee, are excluded from the purview of input service - The appellant is required to furnish details in respect of the purpose and places of travel along with evidence regarding the order given by the appellant-company to undertake the travel, etc. As the appellant has failed to produce such evidence, we cannot conclude that the Travel Agent Services were availed for providing output services. The appellant has not furnished any break-up with regard to the various services that are bundled under the category of Business Support Services. The credit under this head, for the categories of service explained by the Learned Consultant for the appellant, are not eligible for credit after 01.04.2011. Rejection on the ground that the appellant has availed the credit subsequent to the last date of export - HELD THAT:- There is no requirement under Rule 5 of the CENVAT Credit Rules, 2004 or under Notification No. 05/2006-C.E. (N.T.) dated 14.03.2006 that there has to be one-to-one correlation between input and output services for claiming refund - It is also submitted by the Learned Consultant for the appellant that the computation of eligible refund is not correct for the reason that the credit taken after the last date of export has not been considered for the subsequent period also. These facts are required to be verified once again - Matter allowed by way of remand. Refund has been rejected in the ground that unbilled revenue was not taken into consideration for computing the total turnover of the appellant - HELD THAT:- It is the case of the appellant that the unbilled revenue as on 31.12.2010 ought to have been recognised as revenue for computing the eligible refund. The matter is required to be re-looked by the Adjudicating Authority. Computation of eligible refund - export turnover has been restricted by the authorities below to the documents proving the realisation of export proceeds - HELD THAT:- The refund is eligible only in respect of the Foreign Inward Remittance Certificates (FIRCs) (realization of export proceeds) produced by the appellant. However, taking note of the argument put forward by the appellant with regard to wrong computation of eligible refund, the matter has to be once again verified and considered by the Adjudicating Authority. Refund has also been rejected on the ground that Service Tax Registration has not been mentioned in the invoice and that the appellant has not produced any Chartered Accountant certificate to this effect - HELD THAT:- If the appellant is able to furnish sufficient evidence to prove the payment of Service Tax, the amount of Rs.9,280/- rejected on this ground, should be considered. Refund has been rejected to the tune of Rs.50,730/- on the ground that Service Tax was not charged by the service provider in the invoices. If the appellant has not paid Service Tax, there is no question of granting any refund. The rejection of refund on this ground, in our view, is required to be upheld - the periods of dispute for the various grounds for rejection of the refund claim overlap with the period for which the dispute is settled by the appellant under the Sabka Vishwas Scheme, 2019. The matter requires to be remanded to the Original Authority for re-considering/re-processing the refund claims. In such remand proceedings, the Original Authority shall look into the discussions made hereinabove in this order with regard to the various grounds of rejection - Appeal allowed by way of remand.

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• 2022 (8) TMI 1104
  Business auxiliary service - activity of conducting market research and market survey in India for and on behalf of the foreign principle - Export of service - HELD THAT:- The Commissioner (Appeals) was justified in deciding the appeal in pursuance to the order passed by the Tribunal in the earlier round of proceedings on November 16, 2016 on the basis of the five decisions of the Tribunal. The appeal filed by the Department is dismissed.

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• 2022 (8) TMI 1103
  Maintainability of appeal - time limitation - whether the show cause notice has been rightly issued invoking the extended period of limitation? - HELD THAT:- The show cause notice has been issued in a mechanical way without referring to the records by the Department. When the show cause notice was issued in the year 2019, the ST returns, which were filed in November 14 and July 15, were available on the record of the Revenue. But it is alleged in the show cause notice that appellant have failed to file the returns - the appellant had filed reply to show cause notice along with copy of the ST- 3 returns. There is total failure on the part of the assessing officer to consider the reply filed as well as the documents annexed therewith, being the copy of ST 3 returns - in spite of the assessee being a registered assessee, the Assessing Officer has failed to look into the records and refer to the copy of returns already filed. The extended period of limitation is not invokable, as there is no failure on the part of the appellant to discloses taxable turnover and depositing the admitted taxes - it is observed that there is likely to be some difference in the turnover as per the ST 3 returns, as the same is on accrual basis as compared to the turnover reflected in the Form-26 AS. (as per income tax records) because this is as per receipt basis. The appellant are directed to file reconciliation statement before the Adjudicating Authority reconciling the turnover as per the ST 3 return and as per Form 26 A.S., for the purpose of appraisal. If any tax is found payable by the appellant, they shall deposit the same as per Rules - appeal allowed.

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• 2022 (8) TMI 1102
  Levy of Service Tax - Commercial and Industrial Construction service or not - construction of Market Yard for agriculture produce for APMC - HELD THAT:- There is no dispute in the fact that the construction activity carried out for construction of market yard for APMC. This identical issue has been considered by this Tribunal in the case of AB Projects [ 2017 (8) TMI 518 - CESTAT MUMBAI ] and held that the construction of Market Yard for APCM is not covered under the Commercial and Industrial Construction service. The appeal is allowed - decided in favor of assessee.

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• Central Excise

• 2022 (8) TMI 1101
  Valuation - physician samples were given free of cost by the distributors and not by the manufacturer - Determination of transaction value - HELD THAT:- These appeals are disposed off in terms of the judgment rendered by this Court in COMMR. OF CENTRAL EXCISE CUSTOMS, SURAT VERSUS M/S SUN PHARMACEUTICALS INDS. LTD. v ORS. [ 2015 (12) TMI 670 - SUPREME COURT] where it was held that The transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the Show Cause Notice is clearly founded on a wrong reason. Application disposed off.

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• 2022 (8) TMI 1100
  Lack of jurisdiction of Shri C.M. Mehra, to pass the original order of adjudication in his capacity as the Commissioner of Central Excise Service Tax, Siliguri - Admission of additional grounds before the Tribunal - HELD THAT:- The learned Tribunal has not considered the issue which was specifically raised by the respondent, M/s Perfect Technologies, in its application seeking inclusion of additional grounds in the appeal regarding the lack of jurisdiction of Shri C.M. Mehra - who at the material point of time was the Commissioner of Central Excise and Service Tax, Siliguri - to pass the original order of adjudication. This issue is required to be answered by the learned Customs, Excise and Service Tax Appellate Tribunal, East Regional Bench, Kolkata, specifically, since it is relevant for the purpose of deciding the appeal which is pending before this Court - The cross-objection filed by the respondent, M/s Perfect Technologies is disposed off with a direction upon the learned Customs, Excise and Service Tax Appellate Tribunal, East Regional Bench, Kolkata, to decide on this issue after giving adequate opportunity of hearing to both parties. Application disposed off - List the Tax Appeal No. 01 of 2019, under an appropriate heading immediately after the expiry of the period mentioned.

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• 2022 (8) TMI 1099
  Refund allowed but directed to be deposited in the Consumer Welfare Fund of India - failure to cross the bar of unjust-enrichment - HELD THAT:- It is noticed that the ground of rejection of payment to the Appellant s account, as noted by the Commissioner (Appeals), is that Appellant had not produced any evidence, to show that the amount was shown in its Balance Sheet as receivable from government or anything similar to it despite the fact that he himself had reproduced paragraph 10 of the order passed by this Tribunal in the case of COMMR. OF CUS., BANGALORE VERSUS MOTOROLA INDIA PVT. LTD. [ 2006 (4) TMI 390 - CESTAT, BANGALORE] wherein it was held that bar of unjust enrichment would not be applicable to the amount deposited during investigation, basing on which he had set aside the order of Adjudicating Authority that the limitation period prescribed for seeking of refund of tax will not be made applicable to the Appellant s case as it was an amount deposited and not discharged against tax liability. The findings of the Commissioner (Appeals) that unless the deposited amount is shown in the Profit Loss Account of the Appellant as amount receivable, doctrine of unjust enrichment would be established, is erroneous. The order passed by the Commissioner of Central Tax (Appeals-I), Pune is hereby modified to the extent that the refund amount sanctioned and directed to be deposited in the Consumer Welfare fund of India is to be refunded to the Appellant and not to the Welfare Fund - Appeal allowed.

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• 2022 (8) TMI 1098
  Area Based Exemption - new products which were manufactured/added by the appellant after the cut-off date i.e. 31.03.2010 - benefit of N/N. 50/2003-CE dated 10.06.2003 - fulfilment of conditions of the Exemption Notification or not - HELD THAT:- It would be seen from the Circular dated 22.12.2010 regarding the scope of Notification dated 10.06.2003 that the provisions of the Notification dated 10.06.2003 do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible Unit after the cut-off date and during the exemption period of ten years. In all such cases, the benefit of the excise duty exemption under the Exemption Notification would continue to be available to an eligible industrial Unit, though, the period of exemption would remain to be ten years. In the present case, the appellant had set up new plant and machinery for manufacture of new products and, therefore, the appellant was eligible to avail the exemption for the residual period on the new products also. The appellant had not set up a new Unit and there was only a diversification of production capacity by adding new machines. The old products were continued to be manufactured, in addition to the new products. The fact that the investment for the new products was very large and the percentage of production of the new product was also very large cannot be made a ground to deny the benefit of the Exemption Notification dated 10.06.2003 to the appellant - In the present case, neither there was a charge in the show cause notice nor there is a finding in the impugned order that the old products and the new products had separate manpower or finances. It has, therefore, to be considered as a single Unit. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (8) TMI 1097
  Adjustment of excess credit towards outstanding balances under the APVAT and CST Acts - validity of refund audit proceedings - release of cash refund - violation of principles of natural justice - HELD THAT:- It is clear that the respondents are due a sum of Rs.44,66,069/- [excess credit]. But, technicalities are coming in the way of returning the excess credit. In fact, it would be appropriate to refer to the Endorsement dated on 05.02.2019 issued by the Commercial Taxes Department, Office of the Assistant Commissioner (ST), Bapatla. The Learned Government Pleader for Commercial Taxes also placed on record the Endorsement dated 30.06.2022 wherein it is stated that though the dealer is entitled for refund of Rs.44,66,069/-, but he did not furnish any purchase invoices and unless the tax invoices in original are placed, it is not possible to process to claim for refund. To this, learned counsel for the petitioner submits that all the invoices were infact furnished to the Department and in spite of the same, there is no response. Having regard to the fact that the issue of refund is pending for a considerable period of time, the present writ petition is disposed of, with a direction to the petitioner to submit either original purchase invoices if not submitted earlier or copies of the purchase invoices if the originals are already submitted within a period of ten (10) days from today - application disposed off.

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• 2022 (8) TMI 1096
  Condonation of delay in filing appeal - sufficient cause was not furnished to condone the delay - HELD THAT:- Mr Bhardwaj says that, in any event, his instructions are that the respondent/revenue would have no objection, if the matter is remanded to the Tribunal for hearing on merits of the appeal. The impugned order passed by the Tribunal are set aside - the Tribunal is directed to hear and dispose of the appeal on merits.

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