Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 7, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of services - restaurant services or not - The applicant has only prepared birthday cakes, as per order for take out service and they do not prepare birthday cakes immediately from the customers order. Those who wants to take within the premises, they merely supply the readily available cakes. They do not serve food to the Customer table & in most cases sold the items from the counter. Therefore, the applicant should not be considered as Restaurant Services. - The items sold by the applicant M/s. Pioneer Bakers will attract the GST tariff rate as individual items - AAAR
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Exemption from GST - Repair and maintenance fund - sinking fund - applicability of exemption Limit of ₹ 7500/- on the components of maintenance bill by the housing co-operative Society to members of society - GST is applicable on Repair and Maintenance Fund and Sinking Fund - if the gross amounts collected by the applicant in their bills/invoices, exceed ₹ 7500/- then exemption limit of 7500/-is not applicable on two components of maintenance bills. - AAR
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Validity of summons issued - The validity of the proceedings initiated by the competent authority by invoking Section 70 of the Act, 2017 can only be challenged therein - It is, thus, incumbent upon the petitioner to appear before the competent officer and raise all points of objection - HC
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Rate of GST - supply of electrically operated vehicles without fitting of battery - An Electric Vehicle with battery pack uses electric motors and motor controllers instead of internal combustion engines (ICEs) for propulsion. It derives all power from battery packs and thus has no internal combustion engine etc. - thus, fitting of battery in the vehicle, at or before the time of supply, is not a precondition for the same to be classified as electrically operated vehicle. - A two or three-wheeled “battery powered electric vehicle” when supplied with or without battery pack is classifiable under HSN 8703 as an ‘electrically operated vehicle’ and is taxable @ 5% GST. - AAR
Income Tax
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Stay of demand - pre-deposit of only 20% of the disputed demand - adjustments of refunds against demand - respondent is entitled to seek pre-deposit of only 20% of the disputed demand during the pendency of the appeal - the respondent no.1 is directed to refund the amount adjusted in excess of 20% of the disputed demand, within four weeks. - HC
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Validity of reopening of assessment u/s 147 - This Court cannot go into the factual details now furnished by the petitioner at the time of original assessment nor made a comparison with reference to the original explanations or submissions along with inferences drawn by the Assessing Officer for reopening of assessment. - the petitioner has to participate in the process of re-assessment and establish their case in the manner known to law and by availing the opportunities to be provided by the respondent. - HC
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Brand Image Expenses - The assessee has provided details of all the dealers who have been given tickets to cruise trips which were not inquired by the revenue to prove any deformation in the information provided. Instead of doing so, the revenue held that the expenses of ₹ 8. 73 crores are unreasonable and excessive which is beyond the purview of the revenue. Since, the fact of incurring of expenses and its genuineness has not been in dispute, we hereby decline to accept the reasoning of the ld. CIT(A) - AT
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Expenses under the head research and development - deduction of such expenses under the provisions of section 37(1) OR u/s 35 - the genuineness of the expenses cannot be a criteria for allowing the deduction u/s 37(1) - R & D facility was not exclusively used by the assessee for its own activities. - CIT (A) has rightly allowed the relief to the assessee to the tune of 50% of the total expenses incurred under the head research and development activities. - AT
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Penalty u/s 271C - whether the respondent-assessee had made an incorrect claim for deduction in its E-Return - an erroneous claim simpliciter does not automatically attract a penalty. It is only when an erroneous claim is based on a deliberate misrepresentation of facts or deliberate suppression of relevant material facts, that, a penalty is imposed after the deduction is denied. - HC
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Disallowance towards interest u/s.36(1)(iii) in the hands of partner - interest paid on borrowed funds - amount invested in partnership firm by the assessee partner is certainly for business purpose and hence, there cannot be any disallowance of interest u/s.36(1)(iii) of the Act. - AT
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Addition u/s.69 or 68 - assessee has paid on-money towards purchase of property to the seller - The assessee is only owner of 1/3rd share in the property purchased. - Any addition that could be made in the hands of the assessee on account of unexplained investment made on purchase of property could only be to the extent of 1/3rd share and not 1/2 share as made by the Revenue in the instant case - AT
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Reopening of assessment u/s 147 - time to initiate Revision u/s 263 was not left - Reopening is made at the direction of the ld. CIT. The ld. CIT when he did not find time to invoke provision of section 263 of the act, he directed ld. AO to initiate action u/s. 147 of the Act. Therefore, we do not find any reason to uphold the reopening of the assessment. - AT
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Addition u/s. 68 - apart from identity other ingredients like creditworthiness and genuineness of transaction required to be proved in support of claim u/s. 68 - CIT(A) observed that the AO failed to examine the said lenders u/s. 131 of the Act but however in our opinion the CIT(A) also failed to exercise said jurisdiction by remanding the matter to the file of AO - we deem it proper to remand the issue to the file of CIT(A) for its fresh adjudication. - AT
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Levy of penalty u/s. 272A(2)(k) - belated filing of TDS returns u/s. 200(3) r.w.r. 31A - there is reasonable cause in not filing its TDS returns within prescribed time - There is only a mere procedural delay of electronically filing its TDS returns. In our considered opinion, no penalty could be levied for a mere technical venial breach on the part of the assessee. - AT
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Exemption u/s 54F - LTCG - completion of construction or just investment - Nowhere does the provision lay down a stipulation of completion of construction as a condition precedent for claiming the exemption. Once the construction has been started and the requisite amount has been invested in the same, the requirement of section 54F gets fulfilled notwithstanding the fact that the construction does not get completed within the given period of three years. - AT
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Rectification u/s 154 - Exemption/deduction u/s 10B denied - returns was filed beyond the period of limitation - Even if the intimation dated 28.03.2008 was despatched on the said date after it was signed in all likelihood, it could not have been received by the petitioner on 31.03.2008 to file a revised returns in time. Therefore, the petitioner was entitled for rectification under Section 154 of the IT Act, 1961. - HC
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Revision u/s 263 - Validity of order of ITAT, cancelling the order of assessment u/s 115 WE(3) and directing the assessing officer to make an order de novo only for the reason that there is no discussion in the order or in the record of the assessment proceedings - Tribunal confirming the order passed by the Commissioner of Income Tax u/s 263 - it is evident that the Tribunal has not considered the claim of the assessee with regard to fringe benefits under Section 115WE of the Act on merits - Matter restored back to ITAT - HC
Customs
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Refund of amount paid as demurrage charges for the clearance of Ammonium Sulphate in Bulk - The petitioner was not at fault, in view of the fact that the detention made by the Customs Authorities was found to be wrong, which was subsequently clarified by the Ministry of Agriculture - this Court is of the opinion that the petitioner need not be penalised - The respondents 1 and 2 are directed to refund a sum paid by the petitioner on 05.08.2014 as demurrage charges - HC
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Levy of penalty - Smuggling - imitation jewellery raw material glass beads (Chatons) in the guise of clearing glass show piece/scrubbers/foot wear - In any case, it is not the case of the Department that those two persons had gained unauthorized access and that the appellant had helped in any way, in accommodating the unauthorized access or exit from the scene. - There is otherwise no allegation by the Revenue as to security and access control and therefore, the penalty cannot be sustained. - AT
Indian Laws
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Dishonor of Cheque - acquittal of the accused - the accused by way of cross examining the complainant has exposed him and that itself establishes that presumption is rebutted - The complainant though running a finance company, but, he has advanced a huge loan to accused in his individual capacity. Secondly, there is no evidence to prove that he was possessing such a huge amount in his house and further it is hard to accept that he has advanced such a huge amount as a hand loan to accused without charging any interest that too when the accused was a defaulter in respect of loan obtained by him from other company - HC
Service Tax
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Refund of Service Tax paid under RCM - repeal of Finance Act and introduction of GST Act - rejection of refund on the ground that input tax credit can only be claimed under the GST/CGST Act, 2017 and not otherwise - the refund claims filed by the appellants should merit consideration under the provisions of sub-section (3) of section 142 ibid, and as such, it should be entitled for the benefit of refund of service tax paid by it. - AT
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Re-credit of Cenvat Credit alrady reversed (suo motu) - When the reversal/adjustment is made under Rule 6(3A), the time-limit as prescribed in the Cenvat Credit Rules, 2004 would apply. In the present case, the re-credit is an adjustment/correction of the excess reversal which was not required to be made by them. - the allegation of the department that the credit ought to have been take before 30th of June of the succeeding year is without any basis - Demand set aside - AT
Central Excise
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CENVAT Credit - input - PVC Filler Hollow - credit denied to the assessee on the ground that the supplier of raw material was not liable to pay the duty on the goods supplied - Credit cannot be denied - Also it is observed that the finding of Commissioner (Appeals) about M/s. Shiv Industries that the product supplied by them was exempted from payment of duty is based merely on the letter from the Jurisdictional Incharge - There is no discussion in the impugned order about any mention in the letter of Jurisdictional officer about manufacturing process - AT
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CENVAT Credit - input services - The appellant did not submit the documentary evidences either before the original or first appellate authority to demonstrate that it is entitled to avail the Cenvat credit on some of the disputed services. - Since, the onus lies with the appellant for proper substantiation of the fact regarding availment of Cenvat credit on the disputed services viz., Rent-a-Cab and Travel expenses (Foreign) has not been fulfilled, the denial of Cenvat benefit on such services in the impugned order cannot be faulted. - AT
Case Laws:
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GST
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2021 (8) TMI 267
Maintainability of appeal - time limitation - classification of services - restaurant services or not - supply of Cakes, bakery items, ice creams, chocolates, drinks and other eatable products prepared at the premises of the applicant and supplied to the customers from the counter with the facility to consume the same in the air-conditioned premises itself - supply of items such as birthday stickers, candles, birthday caps, snow sprays etc related items which are essentially used in birthday celebration - composite supply or not - principal supply of goods consists of bakery items, chocolates while the supply of services include the supply of air conditioned place to sit and to celebrate birthday - Section 2 (30) of the CGST Act, 2017 and Section 2 (30) of the OGST Act, 2017 - sale of handmade chocolates which are manufactured in the workshop of the Applicant and are utilised for the purpose of providing other services such as shakes, brownies - nature and tax applicable on Items such as Birthday caps, knife, decorative items which are bundled along with the cakes and are utilised by the Customers in the premises of the outlets - rates applicable as per Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 on items such as chocolate, cookies which are prepared in the nearby workshop of the applicant and then processed / customized in the outlets of the applicant before selling to the customers - tax liability charged on goods which are tax free without opting for composite scheme such as bread etc. - whether the products which are prepared in the workshop but are sold only after certain customizations in the outlets will also be covered under the composite scheme or not? Time Limitation - Whether the appeal is time barred as claimed by the applicant during the personal hearing? - HELD THAT:- The time limitation period is prescribed under sub section 2 of the Section 100 of CGST Act, 2017/SGST Act, 2017 that the appeal shall be filed within 30 days from the date of the communication of the order. On verification of records, we observed that, the order of the Authority for Advance Ruling was communicated to Jurisdictional Officer on dt.30.03.2021 they have filed the appeal on dt.28.04.2021. The appeal is filed well within 30 days of the communication of the order. The time period of 30 days shall be considered from the date of communication of the order - the appeal is not time barred it was filed well within the prescribed time limit. Restaurant Service or not - HELD THAT:- The establishments/outlets/premises of the applicant cannot be treated as restaurant. Consequently, the activities carried out by the applicant from their premises/outlets cannot be considered as restaurant Service. Ruling of AAR set aside - appeal of the revenue allowed.
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2021 (8) TMI 266
Exemption from GST - Repair and maintenance fund - sinking fund - applicability of exemption Limit of ₹ 7500/- on the components of maintenance bill by the housing co-operative Society to members of society - HELD THAT:- A plain reading of the Circular No. 109/28/2019-GST dated 22/07/2019 (F No 332/04/2017-TRU Govt Of India, Ministry of Finance, Department of Revenue (Tax research Unit) makes it clear that, it is the intention of the Government, to tax Housing Societies under GST Laws subject to the condition that the reimbursement of charges or share of contribution of the members exceed an amount of ₹ 7500/- per month per member for Supply of service rendered by Resident Welfare Association (unincorporated body or a non- profit entity registered under any law) to its own members. In addition, it is also clarified that if the Gross turnover exceeds the 20 lakhs, but maintenance charges collected are up to or less than ₹ 7500/-per member per month, then no is GST applicable - the Government has clarified the eventualities of transactions and has removed the doubts of the taxpayers regarding the applicability of GST. It is a fact that, the applicant has collected charges separately on above said heads in maintenance bills and invoices which were issued to its members. Considering the N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, and clarification circular issued by TRU, it is held that, if the applicant has collected the charges from its members on the above said supplies up to ₹ 7500/-per member per month basis, then the said supplies would not attract the GST and if the charges collected exceed the ₹ 7,500/- per month, in that case, the GST would be applicable on the total amount recovered (by whatever name called) from its members on their supply of services. Thus, GST is applicable on Repair and Maintenance Fund and Sinking Fund - if the gross amounts collected by the applicant in their bills/invoices, exceed ₹ 7500/- then exemption limit of 7500/-is not applicable on two components of maintenance bills.
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2021 (8) TMI 265
Validity of summons issued - petitioner had submitted an online application on 25.9.2020 for cancellation of the registration which was successfully submitted and acknowledged - HELD THAT:- After filing of the cancellation application, no communication had been received by the petitioner. The summons under Section 70 of the Central Goods Services Tax Act 2017 could not have been issued thereafter. The validity of the proceedings initiated by the competent authority by invoking Section 70 of the Act, 2017 can only be challenged therein - It is, thus, incumbent upon the petitioner to appear before the competent officer and raise all points of objection - petition dismissed.
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2021 (8) TMI 263
Grant of Bail - fake Input Tax Credit - offence under Section 132 of the Central Goods And Services Tax Act, 2017 read with Sub-Section 5 of Section 132 of the Act of 2017 - HELD THAT:- As is apparent from the contents of complaint filed by the DGGI against the petitioners, the entire exercise of investigation which led to arrest of the petitioners, started from the investigation against Mr. Mohit Vijay Kapil Vijay against whom the allegation was of the tax evasion to the tune of ₹139.05 crores. The petitioners are stated to be part of same racket. It has been admitted by the learned counsels for the Revenue that the order dated 02.06.2020 has attained finality as it was not assailed further. Taking into consideration that the petitioners are in custody since 26.03.2021 27.03.2021 respectively, the complaint has already been filed against them; indisputably, they are not warranted for further investigation, the maximum punishment awardable in such case is of five years, the offence is compoundable though, none has initiated any proceedings in this regard and the factum of release of accused persons namely Mohit Vijay Kapil Vijay on bail by this Court; but, without expressing any opinion on the merits of the case, this court deems it just and proper to enlarge the petitioners on bail. Bail application allowed.
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2021 (8) TMI 262
Seeking exemption from filing the certified copy of the annexures and duly affirmed affidavits - HELD THAT:- Insofar as the filing of the certified copy of the annexures is concerned, the same is allowed subject to just exceptions. Filing of duly affirmed affidavits - HELD THAT:- The same is also allowed, subject to the applicant filing the same within a period of two weeks from resumption of physical Courts. Application disposed off.
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2021 (8) TMI 259
Cancellation of registration of petitioner - petitioner is that at the time of purchase of goods/stocks, the registration of the selling dealer was valid - non-constitution of CoC - HELD THAT:- Matter requires consideration. Learned Additional Chief Standing Counsel has accepted notice on behalf of State-respondents. He prays for and is granted four weeks' time to file counter affidavit. Petitioner shall have two weeks thereafter to file rejoinder affidavit.
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2021 (8) TMI 257
Refund of unutilized input tax credit - zero rated supplies - Section 16 of the Integrated Goods and Services Tax Act, 2017 - October 2017 to July 2018 - HELD THAT:- The Petitioner s refund applications being GST RFD-01A have not been disposed of till date. Consequently it is directed that the original Adjudicating Authority to decide the said refund applications within a period of six weeks in accordance with law in particular the judgment passed by this Court in MEDICAL BUREAU VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX DELHI NORTH ORS. [ 2020 (11) TMI 783 - DELHI HIGH COURT] . Petition disposed off.
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2021 (8) TMI 255
Seeking permission for withdrawal of petition - demand of tax, interest and penalty - recovery of the disputed demand of tax raised only upon disallowance of input tax credit - April 2019 to September 2019 - October 2018 to March 2019 - HELD THAT:- The petition is dismissed as withdrawn.
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2021 (8) TMI 250
Rate of GST - supply of electrically operated vehicles without fitting of battery - Requirement of fitting of battery in two three-wheeled battery powered electric vehicles while selling the same to the dealers - applicability of benefit of 5% GST rate applicable for electrically operated vehicles - HELD THAT:- The applicant stated that the difference between the goods that are supplied with batteries and the ones without batteries is that, battery is not there in the latter case. Otherwise, the goods without batteries are complete in itself to act as an agent of transportation which is propelled by a motor. Once battery is fitted, the vehicles will start functioning. Thus, such goods fits within the definition of Electrically operated vehicles mentioned in entry 242A of Notification No. 1/2017 ibid. The definition of electrically operated vehicle . Explanation to Entry No.242 A of schedule-1 to notification no.01/2017-central tax (rate), dated 28.06.2017, as amended from time to time defines the term electrically operated vehicle to mean vehicles which run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicles and shall include e-bicycles . That means it is a type of electric vehicle (EV) that exclusively uses chemical energy stored in rechargeable battery packs, with no secondary source of propulsion (e.g. hydrogen fuel cell, internal combustion engine, etc.). An Electric Vehicle with battery pack uses electric motors and motor controllers instead of internal combustion engines (ICEs) for propulsion. It derives all power from battery packs and thus has no internal combustion engine etc. - thus, fitting of battery in the vehicle, at or before the time of supply, is not a precondition for the same to be classified as electrically operated vehicle. A two or three-wheeled battery powered electric vehicle when supplied with or without battery pack is classifiable under HSN 8703 as an electrically operated vehicle and is taxable @ 5% GST.
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2021 (8) TMI 230
Refund of erroneous tax paid - tax paid inadvertently to the government exchequer - Section 54 of CGST Act, 2017 - Exemption from GST - leasing and renting services with or without operator as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 - License Fee (LF) for issuance of license and Spectrum Usage Charges (SUC) for use of spectrum - issuance of license and allotment of spectrum as a Regulatory fee - LF and SUC charges are consideration for supply or not - License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification or not - non-speaking order. Whether payment, in the form of License Fee (LF) for issuance of license and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the Adjusted Gross Revenue (AGR) to Department of Telecommunications (DoT) is a Supply under GST law or not? - HELD THAT:- It is implied that the rendering of service from the Government (DoT) to business entities, (in the instant case the appellant ) established from the aforesaid statutory provision. Therefore, the levy of GST is appropriately applicable on the appellant as per sub-section (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 - Further, if there was any doubt regarding 'taxability of service then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. Whether issuance of license and allotment of spectrum as a Regulatory fee attract any levy of tax as per GST law? - HELD THAT:- If no GST is leviable on grant of license then why a service category at HSN Head 9973 38 as Licensing services for right to use other natural resources including telecommunication spectrum has been specified in the GST Act. Thus, it can be concluded that such type of services License Services for right to use other natural resources including Teleservices Spectrum are not regulatory fee and are taxable as per GST law under the specific Head 9973 38 meant for such services. Whether LF and SUC charges are consideration for supply as per GST law or not? - HELD THAT:- On consideration in the form of LF and SUC paid by the appellant to the Government is consideration as per clause (31) of Section 2 of CGST Act, 2017 which cover all the elements specified under ibid section of the Act. There are service provider as well as service recipient and the element of consideration is also involved in the instant case. Hence, the taxability is fasten on these payments as per GST Act. Whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax or not? - HELD THAT:- The fact to be appreciated is that the rate amendments carried out vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is nothing but to clarify the legislative intent as well as to resolve the unintended interpretations. Hence, the rate of tax specified vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 is very much applicable to the disputed period and as such the prevalent rate, at which appellant has paid, found in order. Whether impugned order is non-speaking order? - HELD THAT:- Licensing services for right to use other natural resources including telecommunication spectrum is specified in HSN sub-heading 9973 38, whereby taxability of said service has been fastened as per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. Since, taxability of service in question has been specified in the Act, then it cannot be interpreted that it will not be taxed and refund will be issued for the GST, payment in this regard. There are no infirmity in rejection of the refund - appeal dismissed.
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Income Tax
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2021 (8) TMI 261
Stay of demand - pre-deposit of only 20% of the disputed demand - adjustments of refunds against demand - HELD THAT:- The order under Section 245 of the Act for adjustments of refunds as well as the order on stay of demand under Section 220(6) of the Act do not give any special/particular reason as to why any amount in excess of 20% of the outstanding demand should be recovered from the petitioner-assessee at this stage in accordance with paragraph 4(B) of the office memorandum dated 29th February, 2016. Consequently, this Court is of the view that the respondent is entitled to seek pre-deposit of only 20% of the disputed demand during the pendency of the appeal in accordance with paragraph 4(A) of the office memorandum dated 29th February, 2016, as amended by the office memorandum dated 25th August, 2017. Accordingly, the respondent no.1 is directed to refund the amount adjusted in excess of 20% of the disputed demand for the Assessment Year 2017-18, within four weeks. This Court clarifies that it is not granting any relief with regard to prayer (c), as the Principal Commissioner, Income Tax vide order dated 02nd July, 2021, as reproduced hereinabove, has already granted the said prayer.
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2021 (8) TMI 260
Reopening of assessment u/s 147 - Deduction u/s 10A - HELD THAT:- The scope of provisions would unambiguously portrays that the case of the petitioner is falling u/s 10A of sub-section (2) to sub-clause (i)(c) of the Income Tax Act, and therefore, if the petitioner is manufacturing or producing articles or things of computer software, it must be in any Special Economic Zone. The Form 56-F submitted by the petitioner would reveal that they are not mentioned about their location of functioning - they have furnished their address and the respondents have filed counter stating that the Unit is not located in Special Economic Zone. This being the factum established, the petitioner-Company is not entitled to avail the benefit of Section 10A and if at all any contra materials are available with the petitioner, it is for them to place it before the Assessing Authority for the purpose of availing the benefit for which they are entitled under the provisions of the Income Tax Act - adjudication in this writ petition is done with reference to the interpretations to be considered for the purpose of availing the benefit of Section 10A and regarding all other factual disputes, it is for the Assessee to pursue the same before the Assessing Authority for the purpose of completion of reassessment proceedings. If at all the writ petitioner-Company has already claimed the benefit and in order to establish the said claim, the writ petitioner is at liberty to submit the documents and materials at the time of participating in the reassessment proceedings. WP dismissed.
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2021 (8) TMI 256
Assessment u/s 144C - non-consideration of the objections by the DRP - violation of natural justice - HELD THAT:- This Court is of the considered opinion that principles of natural justice and its violation with regard to certain disputed issues need not be gone into by the High Court in the writ proceedings, so also the jurisdictional issues, if relatable to the disputed facts, then also the aggrieved person may be granted liberty to prefer an appeal for effective adjudication of such disputes - if the principles of violation of natural justice or the jurisdiction directly hitting the provisions of the Statute is established, then the High Court has to look into the seriousness of such violations for the purpose of restoring the right of the aggrieved persons and issue suitable orders to provide such opportunities as contemplated. Pertinent point that the Assessee would get an opportunity to raise all the points raised in the objections before the Assessing Officer as well as before the Appellate Authority. However, such a submission has no force as the valuable right conferred under the Act to the Assessee can never be taken away. In the event of glaring violation of the provisions of the Act, the High Court has to provide an appropriate relief to the aggrieved persons.In the event of failure, the High Court would be failing in its constitutional duty to restore the valuable right of an Assessee conferred under the Income Tax Act. The principles of natural justice being an integral part of Article 14 of the Constitution of India, the direct violation of the provisions in this regard is a ground for entertaining a writ petition. Where the violation of principles of natural justice is raised and interpretation of the provisions of the Income Tax Act is imminent, then it is necessary to entertain the writ petition to ascertain the nature of rights conferred to an Assessee or the Assessing Officer under the provisions of the Act. While doing so, if the rights violated are patent and caused infringement of right to either of the parties, then the aggrieved person is entitled for an appropriate relief.Thus, the objections raised by the learned Senior Standing Counsel appearing on behalf of respondents, stand rejected. Petitioner, fairly made a submission that all such disputes are to be adjudicated before the Competent Authority as the point of jurisdiction as well as the manner in which an order must be passed by the Dispute Resolution Panel, which is under challenge in the present writ petition. This Court is of the considered opinion that the DRP had failed to act in the manner as contemplated, more specifically, under sub-sections (5) and (6) of Section 144-C of the Income Tax Act and therefore, the order passed, rejecting the objections submitted by the Assessee, merely on the ground that the Assessee has not appeared on the hearing date, is infirm and liable to be quashed and accordingly, the same is quashed.
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2021 (8) TMI 243
Validity of reopening of assessment u/s 147 - assessee contended that absolutely there is no reason for the purpose of reopening nor the reasons furnished are in compliance with the requirements contemplated u/s 147 - reasons for reopening was furnished to the petitioner after a lapse of more than one year - disallowance of expenditure incurred during the year in foreign currency - HELD THAT:- The High Court is not expected to conduct a rowing enquiry in respect of facts and circumstances as narrated by the respective parties to the lis on hand. It is improper on the part of the Courts to form an opinion with reference to the disputed facts at this point of time as several alternate and efficacious remedies are available to the assessee under the provisions of the Income Tax Act and only after exhausting all those remedies the High Court can rely on those findings of the appellate authorities for the purpose of forming an opinion with reference to the facts.' This Court is of the considered opinion that the assessee is bound to furnish further details or the documents or materials so as to establish the expenditure, which are all now considered as the reason for the purpose of reopening of assessment. This Court cannot go into the factual details now furnished by the petitioner at the time of original assessment nor made a comparison with reference to the original explanations or submissions along with inferences drawn by the Assessing Officer for reopening of assessment. Reasoning furnished for reopening of assessment would reveal that there is no indication either in the return of income or the accompanying statement or the details filed that the assessee had deducted tax on the above payments. If at all the Assessing Officer's finding in this regard is not in consonance with the facts and circumstances, it is for the assessee to place all materials and at any stage, there is a possibility of dropping of further proceedings by the Assessing Officer if he is satisfied. Therefore, the petitioner need not shy away from participation and to explain before the Assessing Officer that the reasons to believe is incorrect as the petitioner is having materials to establish the contrary. Reasons for reopening as stated has got sum and substance and the said differences or inferences are to be answered and explained by the assessee by participating in the process of re-assessment. Contrarily the High Court cannot form an opinion with reference to the doubt raised by the Assessing Officer in the impugned orders and made a finding with reference to the documents relied on by the petitioner. This being the scope of the provisions of Sections 147/148 of the Act, this Court has no hesitation in forming an opinion that the petitioner has to participate in the process of re-assessment and establish their case in the manner known to law and by availing the opportunities to be provided by the respondent.
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2021 (8) TMI 237
Reassessment proceedings initiated u/s 147/148 - validity of reasons to believe - Addition u/s 68 - unexplained deposits in cash - HELD THAT:- Reasons would indicate that the Assessing Officer has reopened the assessment on the ground that the assessee had made deposits in cash. This cash deposit, in the opinion of the AO, was escaped income from the assessment. We have perused the assessment order also, but we do not find any such addition made by the Assessing Officer. Entries in the bank account were made through account payee cheques. Assessing Officer has not made the addition which was allegedly deposited in cash; rather the Assessing Officer has made some other additions. See MOHMED JUNED DADANI [ 2013 (2) TMI 292 - GUJARAT HIGH COURT, JET AIRWAYS (I) LTD. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and RANBAXY LABORATORIES LIMITED [ 2011 (6) TMI 4 - DELHI HIGH COURT] Since no addition was made on an issue for which the assessment was reopened, therefore, any other addition is not sustainable. We allow this ground of appeal of assessee.
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2021 (8) TMI 236
Addition of Brand Image expenses - HELD THAT:- CIT (A) found that the bill dated 17.09.2011 for an amount of ₹ 20, 48,705/- pertain to the assessment year 2012- 13, hence, disallowed the expenditure to that extent and allowed the remaining expenditure being the amount spent during the year. The disallowance of ₹ 20,48, 705/- has not been contested by the assessee. The ld. CIT ( A) has also verified the list of dealers and their persons who were taken for the foreign junkets in support of the claim of the expenditure while deleting the addition.e hereby decline to interfere with the order of the ld. CIT ( A). Disallowance u/s 14A - During the year, as per the records, the assessee has not earned any dividend income - HELD THAT:- Since, no disallowance is called for in the absence of any exempt income earned and claimed by the assessee, we hereby decline to interfere with the order of the ld. CIT (A). Commission payment - AO disallowed the amount holding that it was the provision towards commission and therefore not an ascertained liability - CIT ( A) found that the commission payment was not a provision but paid on the basis of bills dated 02.04.2013 - HELD THAT:- Since, the commission amount was an ascertained liability and paid for the services rendered. TDS was also deducted on the commission payment and hence the ld. CIT ( A) taking into consideration, the entire facts allowed the deduction. Since, no contrary material has been brought before us, we decline to interfere with order of the ld. CIT ( A). Disallowance u/s 14A under Rule 8D( ii) and 8D( iii) - Suo moto disallowance made by assessee - A.Y. 2014- 15 - HELD THAT:- The Hon ble Supreme Court in the case of Maxopp Investments Ltd.[ 2018 (3) TMI 805 - SUPREME COURT] has obliterated the distinction between investment in the subsidiaries or otherwise. Hence, the matter is referred back to the Assessing Officer for re- computation of the disallowance u/s 14 A, keeping in view the judgment of Hon ble Apex Court and the amended provisions of the Act existing at the time of completion of assessment. Brand Image Expenses - CIT (A) confirmed the addition holding that the assessee company claimed expenses is unreasonable and excessive and has been claimed in order to reduce its taxable income for the assessment year 2014-15 and held that the APL gold khazana scheme do not relate to the current assessment year 2014-15 - HELD THAT:- From the facts on record, we find that gold of 5000 gm worth ₹ 1,34,85,900/- has been purchased on 01.04.2013, 22.04.2013, 21. 12.2013 pertaining to the assessment year 2014-15. The gold has been purchased from GR Tangamaligai Jewellers Pvt. Ltd. which has not been disputed by the revenue. The list of gold distribution has been given at page no. 15 of the order of the ld. CIT ( A) mentioning the sales volume in metric tonnes and the quantity of gold in grams given as incentive. The revenue ought to have enquired whether the incentive of gold varying from 1073 to 1500 gms has indeed been bestowed as incentive, if so, what is the treatment given in the hands of recipient s books of accounts. The assessee has provided details of all the dealers who have been given tickets to cruise trips which were not inquired by the revenue to prove any deformation in the information provided. Instead of doing so, the revenue held that the expenses of ₹ 8. 73 crores are unreasonable and excessive which is beyond the purview of the revenue. Since, the fact of incurring of expenses and its genuineness has not been in dispute, we hereby decline to accept the reasoning of the ld. CIT (A)
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2021 (8) TMI 235
Assessment u/s 153A - absence of incriminating material found during the course of search - time limit for issuance of notice under section 143(2) - HELD THAT:- The additions made by Assessing Officer in assessment for AY 2011-12 are not based on any evidence, belonging to the assessee found during the search. All the additions are based on the copy of drafts of Statakhat (agreement) of different lands which were impounded during the course of survey under section 133A from the premises of A Sai Leela Associate, 302, SNS House-3 Athwalines, Surat. - no addition made on the basis of document which were believed to belonging to the assessee while recording satisfaction. There is no dispute that the assessee filed his return of income for AY 2011-12 on 27.03.2013 under section 139(4). The time limit for issuing notice under section 142(3) was expired on 30.092013. The assessing officer after recording satisfaction, issued notice under 153C dated 16.09.2014. Admittedly, no assessment for AY 2011-12 was pending when notice under section 153C was served on the assessee. Additions made by Assessing Officer in assessment for AY 2011-12 are not based on any evidence, belonging to the assessee found during the search. It is settled law that no addition can be made in the unabated assessment in absence of evidence found during the search. During the hearing before us, no evidence or material was brought to our notice that any of the addition either on substantive or on protective is based on evidence found during the search. We further find that the order of ld CIT(A) is in consonance with the decisions of Jurisdictional High Court in Saumya construction (P) Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] , Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Continental Warehousing (Nhava Sheva) Ltd [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] which we affirm. Thus, in view of the aforesaid discussions, we do not find any merits in the grounds of appeal raised by the revenue. LTCG - year of assessment - capital gain in the hand of other coowners - Transfer of asset u/s 2(47) - AO while passing the assessment order for AY 2011-12 withdrew the LTCG and directed to tax it in AY 2013-14 - revenue vehemently submitted that no performance of transfer of land in AY 2011-12 as held by CIT-A and that the sale deed of the impugned land was executed during the period falls in AY 2013-13 - HELD THAT:- DRB Ravani builder stared project on the land introduced by the assessee and his co-owners and Ravani family. During the search the partner of the DRB Ravani Developer undisclosed income and paid due tax on the said discloser. The revenue accepted the discloser and accepted the tax in assessment order dated 22.03.2013. DRB Ravani Builder also had shown the land in their books of account, which is neither doubted nor disturbed by the revenue. Further all the co-owner of the assessee also offered similar Capital gain in AY 2011-12, which was accepted by the revenue. The revenue has not made re-opening of any of those co-owners, which has attained finality. Thus, in view of the aforesaid discussions, we accept the submission of the ld CIT(A), in addition to affirm the order of ld CIT(A) on this issue. Year of assessment/ taxability - sale deed of the impugned land was executed during the period falls in AY 2013-13 and that the assessee cannot choose the year of taxability as per his choice - Considering the facts that the revenue has accepted the capital gain in the hand of other coowners in AY 2011-12, the possession of the land was handed over on 01.11.2010, the land was introduced as capital contribution in the Firm. The Firm started its development activities and offered income for taxation. The assessee received part consideration in AY 2011-12. Further, the assessee and his co-owners were prevented from executing the sale deed in favour of the purchaser, due to injunction of Civil Court. Thus, the land was substantially transferred to the purchasers in AY 2011-12.
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2021 (8) TMI 231
Expenses under the head research and development - deduction of such expenses under the provisions of section 37(1) OR u/s 35 - whether the assessee has incurred the impugned expenses wholly and exclusively for the purpose of the business as mandated under the provisions of section 37? - HELD THAT:- In the case on hand the assessee is harping upon that the expenses in question are genuine as admitted by the Revenue and therefore the same should be allowed as deduction. CIT (A) has given very clear-cut finding that the expenses in dispute have been incurred by the assessee but its outcome has been used by the group as a whole. Thus, the assessee has not availed the benefit of the impugned expenses in entirety and therefore the entire expenses cannot be allowed as deduction while computing the income of the assessee. Accordingly, the learned CIT (A) has allowed the relief to the assessee to the tune of 50% of the total expenses incurred under the head research and development activities. The provisions of section 37(1) of the Act mandates that the assessee can claim the deduction if the expenses have been incurred wholly and exclusively for the purpose of the business. In the event the conditions stipulated under the provisions of section 37(1) of the Act are not complied with, then the assessee cannot claim the deduction under the section. The finding of the learned CIT (A) has not been controverted by the learned AR at the time of hearing and therefore the genuineness of the expenses cannot be a criteria for allowing the deduction under section 37(1) of the Act in the given facts and circumstances. R D facility was not exclusively used by the assessee for its own activities. Thus, we do not find any merit in the argument advanced by the learned AR for the assessee. Hence we concur with the finding of the authorities below. Thus the ground of appeal of the assessee is dismissed.
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2021 (8) TMI 229
Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT:- In the instant case also both the CIT(A) as well as the ITAT have held that the addition is not based on any incriminating material found during the course of search and the assessment was not pending on the date of search. In the proceedings before the CIT(A) as well as the ITAT, the Revenue has not made any attempt as to disclose the incriminating material. The view taken by the tax authorities based on the decision of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] cannot be held to be perverse. The questions of law proposed by the Revenue are squarely covered by the aforesaid judgment.
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2021 (8) TMI 228
Faceless assessment u/s 144B - opportunity of hearing was not granted to the petitioner - violation of principle of natural justice - HELD THAT:- As decided in Sanjay Aggarwal vs. National Faceless Assessment Centre Delhi [ 2021 (6) TMI 336 - DELHI HIGH COURT] while interpreting the aforesaid Section has held that it was incumbent upon the respondent/Revenue to accord a personal hearing to the petitioner. Since in the present case, the Assessing Officer has proceeded to pass the impugned Assessment Order without dealing with the request of the petitioner for adjournment, this Court is of the view that there has been a violation of principles of natural justice. Keeping in view the aforesaid, the impugned Assessment Order dated 13th May, 2021, the notice of demand and penalty notices for the Assessment Year 1995-96 are set aside and the matter is remanded back to the Assessing Officer, who shall grant an opportunity of personal hearing to the petitioner by way of Video Conferencing.
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2021 (8) TMI 227
Penalty u/s 271C - whether the respondent-assessee had made an incorrect claim for deduction in its E-Return filed on 29/9/2009? - HELD THAT:- This Court has dismissed the Revenue's appeal against the order dated 8/3/2013 [ 2013 (9) TMI 233 - ITAT PANAJI] it is quite clear that there was no error on the part of the respondent-assessee in claiming the deduction in its E-Return. Since there was no error, there was obviously, no question of imposing any penalty upon the respondent-assessee. Even, otherwise, an erroneous claim simpliciter does not automatically attract a penalty. It is only when an erroneous claim is based on a deliberate misrepresentation of facts or deliberate suppression of relevant material facts, that, a penalty is imposed after the deduction is denied. In this case, the deduction was ultimately allowed and, therefore, there was no question of levy of any penalty.
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2021 (8) TMI 226
Revision u/s 263 - Validity of order of ITAT, cancelling the order of assessment u/s 115 WE(3) and directing the assessing officer to make an order de novo only for the reason that there is no discussion in the order or in the record of the assessment proceedings - Tribunal confirming the order passed by the Commissioner of Income Tax u/s 263 - HELD THAT:- From perusal of the order passed by the Tribunal, it is evident that the Tribunal has not considered the claim of the assessee with regard to fringe benefits under Section 115WE of the Act on merits. It is evident from the aforesaid extract of the impugned order that the Tribunal has not dealt with the claim of the assessee on merits. The impugned order is therefore quashed and the matter is remitted to the Tribunal for decision afresh with regard to the claim of the assessee with reference to fringe benefits, on merits.
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2021 (8) TMI 225
Deduction u/s 36(1)(viii) - profits derived from eligible business - as argued interest pertaining to Non-Performing Assets (NPA) cannot be recognized as income till it is actually received - HELD THAT:- The assessee is a specified entity as provided in sub clause (iv) of clause (a) to Explanation to Section 36(1)(viii) of the Act and development of housing in India is an eligible business by virtue of sub clause c of clause (b) to Explanation to Section 36(1)(viii) - in case of an assessee the assessee is required to fulfill the condition of having engaged in the business of providing long term finance for construction or purchase of houses in India for residential purpose. The aforesaid aspect of the matter has not been examined by the tribunal while dealing with the claim of the assessee for deduction under Section 36(1)(viii) of the Act. The assessee had classified certain advances as Non Performing Asset in accordance with the directives issued by the Reserve Bank of India. The income by way of interest in respect of the said account is not recognized as income till it is actually accrued to the assessee. The tribunal while deciding the aforesaid issue failed to take into account the law laid down by this court in Canfin Homes Ltd supra, which is binding on it. The tribunal has also not dealt with the grounds raised by the assessee in memo of appeal in ground Nos.16 to 20. Order passed by the tribunal cannot be sustained in the eye of law, the same is quashed. It is made clear that the tribunal shall decide the claim of the assessee with regard to deduction under Section 36(1)(viii) of the Act afresh
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2021 (8) TMI 224
Stay of recovery of tax - Extension for further period of 120 days or until the pronouncement of the order - HELD THAT:- Having regard to the submission made by the learned Senior Standing Counsel counsel appearing for the appellant-Revenue, since the Tribunal had already disposed of the main appeal [ 2016 (5) TMI 1249 - ITAT CHENNAI] the appeal filed as against the interim order passed in the said appeal has become redundant. Accordingly, the Tax Case Appeal is dismissed as infructuous.
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2021 (8) TMI 223
Rectification of mistake - Deduction u/s 80 IA denied - petitioner contended that the deduction u/s 80 IA was not granted to the writ petitioner and thus the Assessment Order is perverse - HELD THAT:- Petitioner brought to the notice of this Court that during the pendency of the writ petition, the petitioner filed an appeal before the Appellate Authority namely Commissioner of Income Tax (Appeals) and in view of the fact that the writ petition is pending for long years, the petitioner has not pursued the appeal and the said appeal was dismissed for non-prosecution. This Court is of the considered opinion that all the disputed facts raised by the petitioners regarding the application of Section 80 IA of the Act as well as the errors in computation of income are to be adjudicated before the ITA. The petitioner is at liberty to raise all the disputed facts and objections before the Tribunal and the Tribunal shall look into those aspects, considering the case on merits and in accordance with law.
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2021 (8) TMI 222
Sale of Certified Emission Reduction Credit - revenue or capital receipt - whether Tribunal was right in holding that the proceeds realized by the assessee on sale of Certified Emission Reduction Credit, which the assessee had earned on the Clean Development Mechanism in its wind energy operations, is a capital receipt and not taxable? - HELD THAT:- Following the judgment made in S.P.Spinning Mills Pvt. Ltd., [ 2021 (1) TMI 1081 - MADRAS HIGH COURT] and the judgment reported in Ambika Cotton Mills Ltd. [ 2014 (3) TMI 428 - ITAT CHENNAI] the questions of law are decided against the Revenue and in favour of the assessee.
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2021 (8) TMI 221
Rectification u/s 154 - Exemption/deduction u/s 10B denied - returns was filed beyond the period of limitation - petitioner had failed to claim the benefit of exemption/deduction under Section 10B as per Section 80(5) of the IT, 1961 in Income Tax Returns - petitioner was acquired to make a claim in the said Returns filed under Section 139, thus no such deductions are claimed when the Returns filed under Section 139 no deduction can be allowed - HELD THAT:- Assessment Order passed by the Assessing Officer under Section 143 (1) (a) cannot be said to be an erroneous order passed by the Assessing Officer as it is based on the Returns filed by the petitioner. Assessments under IT Act, 1961 are driven based on the Returns that are filed under Section 139 of the IT Act, 1961. In Annamallais Agencies [ 2002 (9) TMI 62 - MADRAS HIGH COURT] has accepted the proposition that for the purpose of rectification of error apparent on the face of record can be corrected. The expression record is not merely confined to error/mistake in the Assessment Order. It would include the mistake in Return and documents which accompanied the Returns as a part of the record. If there has been omission on the part of the Assessing Officer therein to take note of the contents of that record, while making his order, the mistake in the assessment can be rectified. Though the said order is dated 28.03.2008, it is the case of the petitioner that the intimation was received by the petitioner only on 18.05.2008 by which time, the time to file revised returns under Section 139(5) had already expired on 31.03.2008. Therefore, the only option available to the petitioner was to file rectification petitioner before the Assessing Officer under Section 154 of the IT Act, 1961, which the petitioner did by filing of rectification petition on 18.08.2009. Assessing Officer by an order dated 06.10.2009 rejected the same while recording that the petitioner had enclosed the revised returns by stating that the assessee had filed the return on 30.11.2006 and if there was any mistake found in the returns, the petitioner could have to filed a revised return on or before 31.03.2008. The intimation issued under Section 1431A of the IT Act, 1961 is dated 28.03.2008. It is about 3 days prior to the expiry of limitation for filing revised return on 31.03.2008. Even if the intimation dated 28.03.2008 was despatched on the said date after it was signed in all likelihood, it could not have been received by the petitioner on 31.03.2008 to file a revised returns in time. Therefore, the petitioner was entitled for rectification under Section 154 of the IT Act, 1961. Rejection of the application for rectification by the Assessing Officer under Section 154 of the IT Act, 1961 was unjustified, considering the fact that the petitioner is entitled to substantive the benefit and delay, if any, wholly attributed on account of the system. Rejection of the revision application filed by the petitioner vide order dated 08.03.2011 and vide order dated 25.02.2013 impugned herein, it is also not justified as the officers acting under the IT Department are duty bound to extend substantive benefits that are legitimately available to an assessee. Dealing with a somewhat similar case, this Court in M/s.Craftsman Automation P Ltd., Coimbatore [ 2020 (2) TMI 1538 - MADRAS HIGH COURT] has allowed the benefit where returns was filed beyond the period of limitation prescribed under Section 139(5) of the IT Act, 1961. WP Allowed
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2021 (8) TMI 220
Exemption u/s 54F - completion of construction or just investment - claim denied as assessee did not complete the construction of house within a period of three years albeit the construction work was going on - whether it is completion of construction or just investment of net consideration in construction which is sine qua non for granting exemption u/s 54F? - HELD THAT:- The requirement of section 54F is, inter-alia, to construct the residential house within a period of three years by investing the net consideration. The proviso to this section also states that the exemption shall not be allowed if the assessee constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset. So the emphasis in the provision is on constructing. Nowhere does the provision lay down a stipulation of completion of construction as a condition precedent for claiming the exemption. Once the construction has been started and the requisite amount has been invested in the same, the requirement of section 54F gets fulfilled notwithstanding the fact that the construction does not get completed within the given period of three years. On the facts of extant case, it is amply clear that the assessee invested ₹ 2.24 crores and odd in the construction of house within a period of three years, which construction was incomplete at the end of the stipulated period, but got actually completed at a later stage as has been recorded by the ld. CIT(A) on the last page of his order. It is further not disputed that the assessee invested a sum of ₹ 1 crore in the Capital Gains Scheme Account. We concur with the ld. CIT(A) in granting exemption u/s 54F - Decided in favour of assessee.
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2021 (8) TMI 219
TDS u/s 194C - lease rent payment - HELD THAT:- By placing reliance on the decision of Hon ble jurisdictional High Court in the case of Rajesh Projects (India) Ltd. [ 2017 (2) TMI 1109 - DELHI HIGH COURT] CIT(A) rightly held that the assessee is not liable to be treated as an assessee in default, as the assessee was prevented from deducting TDS by Noida Authority by issue of letter and if the amount of lease rent is accounted for by the Noida Authority in view of first proviso to section 201(1), the said fact was to be verified and the demand to the tune has to be deleted. Revenue does not dispute the correctness of this finding. As decided in case of Rajesh Projects (supra) to the effect that GNoida was ensured that the reimbursement is made to compensate the petitioner s excess payments; the income tax authorities shall not pursue any coercive methods for recovery of the amounts, penalty, once the basic liability (with interest to be paid by GNoida) is satisfied and decided the issue in favour of the assessee. In Prateek Buildtech [ 2020 (3) TMI 224 - ITAT DELHI] a coordinate Bench of this Tribunal held that when once the basic liability of reimbursement by Gnoida is made, the authority shall not pursue any coercive method. We restore the issue to the learned Assessing Officer with the direction to verify whether the NOIDA has payments of the basic TDS liability along with the interest; that the assessee shall cooperate and provide relevant information required by the Assessing Officer and if after verification, it is found that the basic TDS liability and interest thereon has already been paid by the NOIDA, then no such liability shall be raised on the assessee. With these observations, we allow ground No. 3 for statistical purposes. TDS u/s 194C OR 194J - payments in respect of advertisement expenses - HELD THAT:- It could be seen that the word advertising has been clarified by CBDT in Circular No. 714 dated 03/08/1995 while stating that according to the amended provisions, tax has to be deducted @ 1% in case of advertising and at 2% in other cases.Further Circular No. 4 clarifies the distinction between the payments by a person to the advertising agency and the payments made by advertising agency to the television channel or newspaper company etc. A reading of Circular No. 714 and 4 makes it amply clear that when a person makes a payment to advertising agency, such payments are covered by section 194C whereas if the advertising agency makes any payment to a film artist such as an actor, a cameraman, a director etc., it would be covered by section 194J. This distinction is based on the fact that when the advertising agency makes such payments to a film artist, the intellectual property in the contents will be acquired by the advertising agency and the services secured are only broadcast and telecast and nothing more. A contract need not always be in writing and could be implied also. In the circumstances, we find that the payment made by the assessee for advertisement in connection with their business falls within the ambit of section 194C and not section 194J
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2021 (8) TMI 218
Levy of penalty u/s. 272A(2)(k) - belated filing of TDS returns u/s. 200(3) r.w.r. 31A of the IT Rules, 1962 for the various quarters of A.Y. 2008-09 - HELD THAT:- There is a delay in filing of quarterly returns by the assessee, the same in the peculiar facts and circumstances of the instant case, would only amount to technical venial breach committed by the assessee. The very purpose of filing of quarterly TDS returns within time is only to ensure that the deductees are given due credit of TDS in their respective returns of income. In the instant case, the assessee had also submitted before the CIT(A) that deductees had indeed claimed credit for TDS in their returns of income. We hold that assessee was prevented from reasonable cause in not filing its TDS returns within prescribed time and in any case had not created any loss to the exchequer by way of delayed remittance of TDS. There is only a mere procedural delay of electronically filing its TDS returns. In our considered opinion, no penalty could be levied for a mere technical venial breach on the part of the assessee. Reliance in this regard is also placed on the decision of the Hon'ble Madras High Court in the case of CIT vs. Arunachalam [ 1994 (1) TMI 65 - MADRAS HIGH COURT ] We hereby direct the ld. AO to delete the penalty levied u/s. 272A(2)(k) of the Act in the peculiar facts and circumstances of the case. Accordingly, the grounds raised by the assessee are allowed.
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2021 (8) TMI 217
Disallowance u/s. 40(a)(ia) - no TDS was deducted on interest payment - as explained by the assessee that the Reliance Capital is a Banking Company and no TDS is deductible - HELD THAT:- We note that no evidences filed before the AO as rightly pointed out by the ld. DR showing the Reliance Capital the payee taking into account the interest paid by the assessee has its income and a certificate filed to that effect. CIT(A) also did not discuss about such evidences in the impugned order. Without having such evidences on record the CIT(A) proceeded to hold the second proviso to section 40(a)(ia) read with first proviso to section 201 is applicable - having no evidences on record the applicability of the ratio laid down any decision is not justified. Admittedly, there was no evidences even before this Tribunal showing that resident payee the Reliance Capital furnished return of income taking into the interest as its income by computing in the return of income and no certificate as required under law was filed to that effect. Therefore, considering the facts and circumstances of the case, we deem it proper to remand the issue to the file of CIT(A) for its fresh adjudication as indicated above. Thus, ground No. 1 raised by the Revenue is allowed for statistical purpose. Addition u/s. 36(1)(iii) - Admission of evidence HELD THAT:- AR submits that all the details regarding the evidences filed before the CIT(A) and admitted no such evidences for filed before the AO. We note that the fact is not disputed that no evidences were filed before the AO and all the evidences stated to have been concerning the said disallowances were filed before the CIT(A). On examination of the impugned order we note that no opportunity was given by the CIT(A) for AO as required under Rule 46A. The evidences filed before us were admittedly not before the AO, therefore, the CIT(A) did not follow the procedure as laid down in Rule 46A whenever the new evidences which were not before the AO comes to its knowledge. Therefore, we deem it proper to remand the issue to the file of CIT(A) for its fresh adjudication and to decide the issue by following the due procedure established under law. Addition u/s. 68 - HELD THAT:- In the assessment proceedings, the AO asked the assessee to furnish Return of Income, Balance sheet and Bank Statement but no such details relevant to the addition to prove the creditworthiness and genuineness of the transaction filed before the AO nor before the CIT(A), even before us. Mere giving Names and Addresses of the lenders are not sufficient to prove all the ingredients of section 68 of the Act, in our opinion apart from identity other ingredients like creditworthiness and genuineness of transaction required to be proved in support of claim u/s. 68 - CIT(A) observed that the AO failed to examine the said lenders u/s. 131 of the Act but however in our opinion the CIT(A) also failed to exercise said jurisdiction by remanding the matter to the file of AO - we deem it proper to remand the issue to the file of CIT(A) for its fresh adjudication. The assessee is liberty to file evidences, if any, in support of its clam. Thus, ground No. 3 raised by the Revenue is allowed for statistical purpose.
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2021 (8) TMI 216
Unexplained investment on purchase of lands - HELD THAT:- On reading of the assessment order, it would suggest that the Assessing Officer made addition based on the statement given by the sellers before the Investigation Wing of the Department. No doubt, the AO had given opportunity to the appellant to rebut the said evidence which was not availed of by the appellant for whatsoever reasons. But, during the course of proceedings before CIT(A), the appellant had contested the addition on the ground that no reasonable opportunity was granted and no addition can be made merely based on the statement of third parties. CIT(A) confirmed the addition relying upon the evidence gathered by the AO i.e., in the form of statement given by the sellers before the Investigation Department. In our considered opinion, the approach of the ld. CIT(A) does not stand the judicial scrutiny as it is settled position of law that no addition can be made merely based on the statement of third parties and the CIT(A) without giving an opportunity to cross-examine the sellers, whose statements formed the basis of making addition, ought not have confirmed the addition - in order to meet the ends of justice, we remand the matter back to the file of Assessing Officer to re do the assessment afresh in accordance with the law.
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2021 (8) TMI 215
Reopening of assessment u/s 147 - time to initiate Revision u/s 263 was not left - proposal based on audit objection to invoke provision of section 263 - as no time left for invoking the provision of section 263 of the Act and therefore, the ld. CIT directed the ld. AO to take action u/s. 147 - HELD THAT:- CIT as well as the ld. AO both were proceedings to proceed against the Assessee by invoking the provision of section 263 of the Act on the basis of audit objections. They also got certain enquiries conducted but when the enquiry is concluded, no time was left with them for carrying out proceedings u/s. 263 of the Act. It required issuance of show cause notice, opportunity of hearing to the assessee and then passing of the orders. Time for passing order u/s. 263 of the Act i.e. 31.03.1999 was not available. This fact is also mentioned in one of the correspondence of CIT with ld. AO when he requested ld. AO to expedite the inquiries. Therefore, the ld. CIT directed the ld. AO to initiate action u/s. 147 AO recorded the reasons on 30.03.1999 stating that specifically that the ld. CIT has directed him to invoke provisions of section 147 of the Act and therefore, the reopening was made - it is not the 'reason to believe' of the AO about escapement of income which is basic mandatory requirement of law for reopening u/s. 147 - Opinion of ld. AO is clearly manifest that he thought it is case of erroneous order, which is prejudicial to interest of revenue. Reopening is made at the direction of the ld. CIT. The ld. CIT when he did not find time to invoke provision of section 263 of the act, he directed ld. AO to initiate action u/s. 147 of the Act. Therefore, we do not find any reason to uphold the reopening of the assessment. - Decided in favour of assessee.
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2021 (8) TMI 214
Disallowance u/s 14A - AO not recorded satisfaction as required u/s.14A(2) - HELD THAT:- As disallowance of interest expenses under Rule 8D(2)(ii) of Income Tax Rules, 1962, is concerned, by following the decision of co-ordinate bench in assessee s own case [ 2019 (5) TMI 1888 - ITAT CHENNAI] we direct the Assessing Officer to verify claim of assessee that it has sufficient own funds. In case, assessee is able to prove availability of own funds, then delete interest disallowance Rule 8D(2)(ii) of Income Tax Rules, 1962. Disallowance of other expenses under Rule 8D(2)(iii), it was the claim of learned AR for the assessee that disallowance computed by the Assessing Officer may be restricted to the extent of exempt income earned for the year under consideration. We find that issue of disallowances of expenditure u/s.14A in excess of exempt income earned for the year is no longer res integra . In the case Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] has considered an identical issue and held that disallowances contemplated u/s.14A cannot exceed exempt income earned for the year under consideration. A similar view has been taken by the Hon ble High Court of Delhi in the case of Joint Investments Pvt .Ltd vs. CIT [ 2015 (3) TMI 155 - DELHI HIGH COURT] where it was held that disallowances contemplated u/s.14A cannot swallow entire exempt income for the year under consideration. In this case, the assessee has earned dividend income of ₹ 6,99,349/-, whereas the Assessing Officer has computed disallowance of ₹ 6,99,349/- . Therefore, we are of the considered view that disallowance computed by the Assessing Officer is disproportionate and contrary to the settled principle of law by various High Courts including the Hon ble Delhi High Court. Hence, we direct the Assessing Officer to restrict disallowances contemplated u/s.14A read with Rule 8D(2)(iii) of the Income Tax Rules, 1962, to the extent of exempt income earned for the year. Disallowance of commission paid to Managing Director u/s.36(1)(ii) - AO disallowed commission paid to Managing Director u/s.36(1)(ii) of the Act, on the ground that the assessee has paid commission to Managing Director in lieu of profits or dividend - HELD THAT:- As decided in assessee s own case [ 2019 (5) TMI 1888 - ITAT CHENNAI] we are of the considered view that Assessing Officer has erred in disallowing commission paid to Managing Director u/s.36(1)(ii) of the Act and hence, we are inclined to uphold the findings of the learned CIT(A) and reject ground taken by the Revenue.
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2021 (8) TMI 213
Revision u/s 263 - business profit on sale of land at Nallur - HELD THAT:- On perusal of the deed in document No.14320/2013 dated 02.12.2013, it is seen that the property valued at ₹ 6,81,69,559/- as per the SRO value. Hence, the value of consideration received on transfer of business asset is less than the value adopted by the SRO for the purpose of stamp duty, which is not in accordance with the provisions of s.43CA of the Act is at ₹ 2,50,05,694/- which failed to bring to tax. Failure to assess this has rendered the assessment is erroneous and prejudicial to the interests of revenue. Before the A.O, it was submitted by the assessee that the sale price is ₹ 6,81,69,559/- less cost price is at ₹ 1,12,83,619/- and profit on sale of land is at ₹ 5,68,85,940/- and the same is offered for taxation and therefore, the provisions of s.43CA of the Act will not apply. Exemption u/s. 54F - In this case, the A.O has completed assessment u/s. 143(3) of the Act dated 30.12.2019. The same was taken up by the Ld. PCIT for examination u/s. 263 of the Act and found that the A.O has not examined in respect of business profits on sale of land at Nallur, which is erroneous and prejudicial to the interests of revenue. He has also pointed out that the claim of assessee u/s. 54F of the Act is fully allowed, where only 50% has to be allowed. We have gone through the order of the Ld. PCIT, we found that there are two issues as pointed out by the Ld. PCIT. In our opinion, the A.O has not made any enquiry/investigation to complete the assessment u/s. 143(3) of the Act. PCIT rightly set aside the order passed by the A.O and directed the A.O to pass fresh assessment order in accordance with law. Hence, we find that no interference is called for in this case. - Decided in favour of assessee.
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2021 (8) TMI 210
Correct head on income - Income from revenue operation from common area maintenance charges received from the tenants - income from house property or income from business - HELD THAT:- Assessee claimed that receipts on account of rent as well as maintenance charges were liable to be taxed under the head Income from house property . AO rejected the claim of the assessee to treat the receipts on account of maintenance agreement as rental income and taxed the same under the head Income from other sources . In the case in hand the assessee is showing receipt as Business income . In the case of Runwal Developers Pvt Ltd [ 2011 (10) TMI 35 - BOMBAY HIGH COURT] has held that maintenance charges received were towards maintenance and promotion of common area and the amounts received towards maintenance charges were business receipts liable to be assessed under the head Income from business . In the case of Karnani Properties [ 1971 (8) TMI 18 - SUPREME COURT] has held that services rendered by the assessee to its tenants were result of its activities carried on continuously in an organized manner with a set purpose and with a view to earn profit and hence those activities were business activities and income arising therefrom was assessable as business income . We do not find any error or infirmity in the findings of the ld. CIT(A). Both the grounds taken by the Revenue are accordingly dismissed.
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2021 (8) TMI 209
Exemption u/s 11 - registration u/s. 12AA denied - objects of religious-cum-charitable trust - voluntarily contributions/donations received and credited to the corpus accounts during the financial years 2017-18 and 2018-19 were not offered to tax and paid the taxes thereon - HELD THAT:- Grant of registration and assessment are two separate and distinct procedures prescribed under the Income Tax Act. The issues of assessment cannot be considered at the time of grant of registration. CIT (Exemption) had denied the grant of registration by taking into consideration that the corpus donations collected during the financial years 2017-18 and 2018-19 had escaped assessment to tax which clearly falls under the realm of the assessment . In view of the settled position of law discussed above, we are of the considered opinion that the grounds on which the ld. CIT (Exemption) had rejected the grant of registration are untenable in law. Accordingly, we direct the ld. CIT (Exemption) to grant the registration u/s. 12AA of the Act. - Decided in favour of assessee.
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2021 (8) TMI 205
Addition u/s.69 or 68 - assessee has paid on-money towards purchase of property to the seller - HELD THAT:- As per the statement given by the assessee before the ld. AO during the course of assessment proceedings, Shri Jignesh Jayantilal Doshi is running his business in the premises which is opposite to the shop of the assessee. Hence, there may be a reasonable belief that assessee or his relatives could have influenced Shri Jignesh Jayantilal Doshi (seller) for not responding to the summons issued by the ld. AO. Preponderance of Probability Theory would come into play in the instant case. Though this observation is made only as a passing remark, we would like to address the entire issue in dispute on merits of the addition in the peculiar facts and circumstances of the instant case instead of addressing on the legal arguments advanced by the ld. AR before us. We would like to make it clear that the decision rendered in this case shall not be considered as a binding precedent for other cases as the same is peculiar to the facts of the instant case alone - DR pointed before us that the seller has conceded the cash portion of ₹ 23,00,000/- as part of sale consideration of property and had paid capital gains tax in his returns. Hence, it could be reasonably inferred that the said cash of ₹ 23,00,000/- represents on money payments made by the assessee to the seller for purchase of property. Addition towards unexplained cash payments should be made in the hands of the assessee. Admittedly, the assessee Shri Navin C Punjani is only owner of 1/3rd share in the property purchased. This fact is not disputed at all. Hence, any addition that could be made in the hands of the assessee on account of unexplained investment made on purchase of property could only be to the extent of 1/3rd share and not 1/2 share as made by the Revenue in the instant case. We direct the ld. AO accordingly. Accordingly, the grounds raised by the assessee in the case of Shri Navin C Punjani are partly allowed. Reopening of assessment u/s 147 - Unexplained investment u/s.69 - Recorded by the ld. AO in the case of Ms. Nisha N Punjani nowhere mentions that the ld. AO while recording reasons had a reasonable belief that her income had escaped assessment. Hence no addition per se could be made in the hands of Ms. Nisha N Punjani - we hold that the reasons recorded by the ld. AO for reopening the assessment itself does not contemplate any formation of belief to conclude that income of Ms. Nisha N Punjani had escaped assessment. Accordingly, re-assessment made herein in the hands of Ms. Nisha N Punjani is hereby quashed. In the result, appeal of the assessee is allowed.
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2021 (8) TMI 204
Exemption u/s. 10(34) - exemption u/s. 11 is denied to the assessee due to the violation of section 13(1 )(d) - CIT(A) granting exemption u/s. 10(34) when this income forms a part of the income from property held under trust and therefore can only be claimed to be exempt u/s. 11, if applied for charity and not u/s. 10 - HELD THAT:- We find ourself agreement with the submission of assessee and the view taken by the Ld.CIT(A) that the issue stands covered in favour of the assessee by the decision of Jasubhai Foundation [ 2015 (4) TMI 305 - BOMBAY HIGH COURT] . ITAT decision in the case of Jamsetji Tata Trust [ 2014 (5) TMI 890 - ITAT MUMBAI] and associate trust of the assessee trust, Shekhar bajaj charitable trust also supports this view. Departments plea in grounds of appeal that Hon ble jurisdictional High Court in decision in Jasubhai Foundation(supra) has not been appealed before Hon ble Supreme Court due to low tax effect is not a reason for us to take a contrary view.
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2021 (8) TMI 202
Disallowance towards interest u/s.36(1)(iii) in the hands of partner - interest paid on borrowed funds - as per revenue since assessee was not receiving any interest income from the capital contribution made in the partnership firm, the only income that would be received by the assessee would be share of profit from the partnership firm which would be exempt from tax and hence, interest paid on borrowed funds is not eligible for deduction u/s.36(i)(iii) - HELD THAT:- We are unable to persuade ourselves to accept to this proposition there is absolutely no nexus of borrowed funds being used for investment in capital contribution of partnership firm which is brought on record by the lower authorities. We hold that there cannot be any assumption / presumption that only borrowed funds were used for making investment in capital contribution of partnership firm, unless there is mixed funds (i.e borrowed funds and own funds inextricably mixed in the same bank account). In any case, there is no dispute that assessee is a partner in Ambhe Properties (firm) - it is a duty of the assessee in the capacity of a partner to pump in sufficient capital contribution for the smooth running of the business of the partnership firm. This investment is to be considered as an investment made as a measure of commercial expediency. Obviously, the amount contributed by the partner would be certainly a business investment and would be for business purposes. Even if the funds required for the said contribution were received out of borrowed funds, still the business purpose of making the investment and business purpose of utilisation of borrowed funds thereon is proved beyond doubt and cannot be doubted at all. For the purpose of allowability of interest on borrowed funds u/s.36(1)(iii) of the Act, what is required is only whether the borrowed funds have been used by the assessee for the purpose of business. It is totally irrelevant and immaterial whether any return on investment has been received in the form of taxable income or exempt income by the assessee out of utilisation of such borrowed funds. As already held hereinabove that amount invested in partnership firm by the assessee partner is certainly for business purpose and hence, there cannot be any disallowance of interest u/s.36(1)(iii) of the Act. In view of the aforesaid observations, the grounds raised by the assessee are allowed.
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2021 (8) TMI 201
Rectification u/s 254 - HELD THAT:- It is the basic principle of jurisprudence that if any mistake is committed by the tribunal, it needs to be rectified as no one should suffer on account of the mistake committed by the court. Even the rules of procedures and technicalities should not come in the way in rendering justice to the parties by correcting the mistake committed by the tribunal. In the instant case the ITAT has wrongly assumed that the reference to the TPO by the AO for deciding the arm length price with respect to the international transactions was not valid as the quantum involved was less than ₹15 crores. This assumption of the ITAT was based on the statement made by the assessee. The mistake committed by the learned counsel for the assessee was also admitted at the time of hearing. As important to note that the learned DR also at the time of hearing has not controverted the proposition canvassed by the learned AR for the assessee. Rather the learned DR was agreed to the proposition suggested by the AR at the time of hearing. It is not material how the mistake was committed by the tribunal. What is material is the mistake committed by the tribunal in deciding the issue on hand, though on the wrong statement of the learned counsel for the assessee. Tribunal has wrongly assumed the fact that the AO has accidentally referred the matter to the TPO for the determination of arm length price whereas there was no such reference made by the AO. The wrong assumption of facts which are crucial to decide the issue, will constitute mistake apparent from record. We recall the ground No. 1 raised by the Revenue for fresh adjudication as per the provisions of law. The appeal may be listed for hearing on 26 July 2021. As the date of hearing has been pronounced in the open court, there is no need to send separate notice of hearing to either party.
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2021 (8) TMI 200
Assessment u/s 153A - incriminating material found during the course of search or not? - HELD THAT:- In the instant case also both the CIT(A) as well as the ITAT have held that the addition is not based on any incriminating material found during the course of search and the assessment was not pending on the date of search. In the proceedings before the CIT(A) as well as the ITAT, the Revenue has not made any attempt as to disclose the incriminating material. The view taken by the tax authorities based on the decision of CIT Vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] cannot be held to be perverse. The questions of law proposed by the Revenue are squarely covered by the aforesaid judgment.
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2021 (8) TMI 199
Validity of assessment - adjournment and extension of time to submit to reply - citing the reason for delay that the Resolution Professional of the Petitioner was unable to access the records of the Petitioner-Company due to various lockdown restrictions imposed by the State of Uttar Pradesh - Petitioner had stated that the Petitioner on 31st May 2021 at around 02:00 p.m. had asked for an adjournment and extension of time to submit his reply and on the same day at around 04:00 p.m., the Respondent had granted an adjournment by way of an email - respodent opposed the petition by contending that the petitioner had approached this Court with unclean hands and the alleged email dated 31st May, 2021 which was the basis for filing the writ petition had not originated from the office of the respondent and therefore, had prayed that the writ petition be dismissed - HELD THAT:- This matter is serious in nature as one of the parties has either forged the document in question and/or is not telling a complete truth. The respondent s (DCIT, CC-06) offer to now ascertain source of the email from the Directorate of Systems, who is having control over all income tax systems is too late in the day. Any reasonable official would have conducted the said enquiry before filing his counter affidavit and before making a serious allegation of perjury and forgery, even if prima facie, against the deponent of the writ petition. Consequently, in the opinion of this Court, the said offer of DCIT, CC-06 lacks bonafides. As the allegation pertains to a sensitive server belonging to the Ministry of Finance/Department of Income Tax and involves a senior official of the Income Tax Department holding a sensitive post, this Court directs the Central agency, namely Central Bureau of Investigation (CBI) to enquire as to whether the email dated 31st May, 2021 (Annexure P-4) had been issued to the petitioner or not, and if so, by whom. The CBI shall file its enquiry report with this Court within four weeks. The Deponent of the writ petition and the counter affidavit are also directed to cooperate with the officials of the CBI. Registry is also directed to forward a copy of this order along with the entire paper book to the Director, CBI, on or before 20th July, 2021, who in turn, is directed to nominate an officer to conduct the enquiry. This Court clarifies that in the event it is found that the email dated 31st May, 2021 (Annexure P-4) had been forged and fabricated by the petitioner it would initiate action under Sections 191/192/196 of the IPC. However, if it is found that the email dated 31st May, 2021 (Annexure P-4) had been issued by the Income Tax of India s e-filing portal, then it would not hesitate to take action against the Deponent of the counter affidavit for stating half-truths , namely, that the email dated 31st May, 2021 (Annexure P-4) had not been generated by the respondent, as from the order dated 11th June, 2021 and the averment made in the counter affidavit, this Court has no doubt that the inarticulate submission of the respondent is that the email dated 31st May, 2021 (Annexure P-4) has been forged and fabricated by the petitioner. This Court may mention that it is constitutionally bound to ensure that citizens of this country who invoke the extra ordinary jurisdiction of this Court are not intimidated by allegations of forgery and prosecution and that too by officials who do not exercise the duty of care by enquiring as to whether the email had been issued by another wing or Department of Revenue. List on 06th September, 2021.
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Benami Property
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2021 (8) TMI 245
Benami Transaction - Prohibition of the right to recover property held benami - disputed joint family property - acquisitions by and in the name of a coparcener in a Hindu undivided family or the benefit of such coparceners in the family - HELD THAT:- The pleading of the plaintif Yakub Mohammad is that disputed property is a joint family property and appellants/defendants are his real brother but the disputed property is on his name and this dispute cannot be decided only by advancing argument while deciding the application under Order 7 Rule 11 of CPC. It is clear from order sheets that appellants/defendants did not file written statement and they had only filed an application under Order 7 Rule 11 of CPC. Hon'ble the Supreme Court has already held in Pawan Kumar [ 2019 (4) TMI 232 - SUPREME COURT ] that the disputed questions cannot be decided at the time of considering an application filed under Order 7 Rule 11 CPC. Clause (d) of Rule 11 of Order 7 applies in those cases only where the statement made by the plaintif in the plaint, without any doubt or dispute shows that the suit is barred by any law in force. Lower appellate Court has rightly observed that the order of learned trail Court being not sustainable in the eye of law set-aside and remitted back the case to the trial Court for deciding afresh. The order of the learned appellate Court is based on proper appreciation of law laid down by Hon'ble Supreme Court in Pawan Kumar Vs. Babulal since Deceased Through Legal Representatives and Others which does not calls for interference by this Court.
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Customs
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2021 (8) TMI 254
Seeking waiver of the costs imposed by this Court - HELD THAT:- Issue notice. Notice is accepted by Mr.J.K. Mittal, Advocate on behalf of the petitioner. He states that without admitting to any of the averments made in the present application, the same may be allowed. Accordingly, without admitting any of the averments made in the present application, the costs imposed by this Court vide order dated 24th May, 2021 is waived - Application disposed off.
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2021 (8) TMI 253
Refund of amount paid as demurrage charges for the clearance of Ammonium Sulphate in Bulk - period 26.07.2014 to 05.08.2014 - HELD THAT:- The initial action of the Customs Authorities demanding the certificate from RFCL was incorrect and based on the subsequent clarifications issued by the Ministry of Agriculture, the Customs Authorities released the goods. Therefore, the petitioner cannot be faulted and the detention of the goods was made by the Customs Authorities on account of certain misconception, for which the petitioner cannot be penalised. This Court is of the considered opinion that because of certain procedural delays, the petitioner was penalised. The petitioner was not at fault, in view of the fact that the detention made by the Customs Authorities was found to be wrong, which was subsequently clarified by the Ministry of Agriculture - this Court is of the opinion that the petitioner need not be penalised and they have not committed any fault or irregularity at any point of time and the procedural delays should not affect the rights of an importer and therefore, this Court is inclined to consider this writ petition. The respondents 1 and 2 are directed to refund a sum of ₹ 25,85,403/- paid by the petitioner on 05.08.2014 as demurrage charges for clearance of Ammonium Sulphate in bulk covered under the vessel M.V. Kenanga for the period of 26.07.2014 to 05.08.2014 - Petition allowed.
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2021 (8) TMI 251
Maintainability of appeal - rejection on the ground of non-fulfilment with mandatory requirement of pre-deposit - customs duty already paid not adjusted by the petitioners towards pre-deposit to be made - Section 129E of Customs Act - HELD THAT:- When the appellate authority made a finding that the records were carefully gone through and the facts were considered and the petitioners have not established that they are entitled for any adjustment of paid customs duty towards pre-deposit for entertaining an appeal, there is no reason to entertain a writ petition and if at all there is any records available with the petitioners, they are at liberty to approach the CESTAT under Section 129A(1) of the Act. The CESTAT is empowered to call for the entire files, verify the records and form an opinion whether the petitioners are entitled for any such adjustment or not, or there is any error in respect of the findings made by the authority or not. However, such an elaborate adjudication cannot be done by the High Court in writ proceedings at this stage. The petitioners on one hand claim that they have paid ₹ 11.36 Lakhs towards duty. The Orders-in-Appeal, which are impugned, state that there is no clarity in respect of the said payment made by the petitioners. The adjudication of facts is required with reference to the documents in original, which are to be scrutinised. Thus, the petitioners are at liberty to prefer an appeal under Section 129A(1) before the CESTAT for the purpose of redressal of their grievances - petition disposed off.
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2021 (8) TMI 248
Non-fulfilment of export obligation - export of Rice - petitioner made a submission that the petitioner sent a representation to the respondents in the year 2013 itself, which was not considered - HELD THAT:- This Court is of the considered opinion that the export obligations declared were agreed by the petitioner. When the export license was granted pursuant to the declaration and agreement, the petitioner is bound to fulfill the same and in the event of any difficulty or other grievances, he has to approach the competent authorities and the High Court cannot dilute or grant any relief with reference to the agreed export obligations. In view of the facts and on account of efflux of time, if any other grievances exist, the petitioner has to approach the competent authorities and this Court cannot consider the claim of the petitioner, as the petitioner has not established any acceptable ground for the purpose of interference. Petition dismissed.
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2021 (8) TMI 242
Smuggling - imitation jewellery raw material glass beads (Chatons) in the guise of clearing glass show piece/scrubbers/foot wear - penalty - HELD THAT:- The very Show Cause Notice contains serious allegations of attempted smuggling against various persons. Admittedly, there is no allegation against the appellant herein as to whether he had any role or was involved in abetting the commission of the alleged smuggling activity. Sole allegation in the Show Cause Notice as well as the Order-in-Original is that the two persons who appeared on a particular day, had absconded, whose identity was not established by the appellant herein. The discussion in the Show Cause Notice as well as the impugned order points out that during examination, the persons were present, who later on absconded, which per se would not tantamount to breach of Regulation 5(1)(i)(n) because, there is nothing on record to suggest that they had gained unauthorized access into the premises. It is admitted that they had presented themselves on being called for examination, were also within the reach of the officers, who only later on absconded and this would not amount to unauthorized access into the premises. In any case, it is not the case of the Department that those two persons had gained unauthorized access and that the appellant had helped in any way, in accommodating the unauthorized access or exit from the scene. Penalty - HELD THAT:- There is otherwise no allegation by the Revenue as to security and access control and therefore, the penalty cannot be sustained. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 241
Revocation of Customs Broker Licence - forfeiture of security deposit - levy of penalty - import of consignment of old and used parts by misdeclaring the same as Hard Disk Drive Seagate 500 GB - restricted goods or not - violation under 10(a), 10(n) and 10(o) of the CBLR, 2018. Actual owner of goods - allegation is that the appellant did not collect the KYC directly from the IEC holder but had collected it only from Shri Dhurv Bhavsar and that if appellant had collected it directly from the IEC holder, appellant would have come to know that M/s. U.V. Infotech is not the actual owner of the goods - HELD THAT:- The old and used Hard Disk Drives after import are refurbished and sold in the market. Import of such such used goods fall under restricted category and requires license/permission for import. From the statement of Shri Dhurv Bhavsar, it is seen that he had not disclosed to the appellant that the actual owner of the goods is Shri Tanzeem Tanvir Shaikh. From the statement of Shri R. Kannan Pillai, it is seen that they were not aware that goods were used goods and filed the documents based on the declaration made under invoices - M/s. U.V. Infotech is a Partnership Firm, which is run by brothers [cousins], namely, Shri Mohammad Anas and Shri Mohammad Shahnawaj. Shri Tanzeem Tanvir Shaikh, who is the actual owner of the goods, is their cousin. It cannot be said that the IEC was used by a total stranger or a fake importer. Violation of Regulations 10(a) and 10(n) of CBLR, 2018 - HELD THAT:- In the present case, appellant has done verification of the previous imports of the importer and also obtained necessary KYC documents. Then the allegation that they did not exercise due diligence for complying with Regulations 10(a) and 10(n) cannot sustain. Violation of Regulations 10(o) of CBLR, 2018 - HELD THAT:- From the documents, it is seen that Nerul address is the address of Power of Attorney holder of the appellant Shri R. Kannan Pillai. The Ghatkopar address belongs to Shri Dinesh Pratap Rai Mehta, Manager of the appellant-Company. The Nerul address is not false or fake address - there is no violation of Regulations 10(o) of CBLR, 2018. After inquiry report, the adjudicating authority has held that there is no requirement to revoke/suspend the findings or to order for forfeiture of security deposit - penalty also cannot sustain unless the department establishes the violations committed by the appellant. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (8) TMI 234
Sanction of scheme of arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions regarding holding and convening of various meetings issued - directions regarding issuance of SCN also issued. Application allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 212
IA No. 249/2020 Seeking a direction to admit its claim (by operational creditor) - rejection of claim on the ground that it is outstanding for more than three years and is a time barred debt, barred by limitation - period of 27.05.2015 to 11.06.2015 - HELD THAT:- Since the claim form submitted by the applicant clearly mentioned about the said judgment in favour of the applicant and since the time for execution of the said decree and judgment had not yet expired, rejecting the claim of the applicant on the ground that the same was time barred is untenable and unsustainable - It is also to be seen that even as per the respondent even in the event of allowing the IA directing admission of the claim of the applicant, the resolution plan is in no way to be affected, since the resolution plan which was already approved by the Committee of Creditors (COC) of the corporate debtor, provided a lump-sum of ₹ 50 lakhs for all the operational creditors - Application allowed. IA No. 659/2020 Seeking a direction to the RP to admit claim of Operational Creditor with regard to interest amount also - HELD THAT:- A bare perusal of the provisions of the MSME Act clearly shows that in the event of any dispute, the same requires to be referred to the MSME Facilitation Council and the lis is to be decided by the said Council. Therefore, unless the applicant obtains an appropriate order from the MSME Facilitation Council for payment of any amount towards interest the same cannot be admissible by the RP - Application dismissed. IA No. 667/2020 Seeking a direction to the RP to admit claim of Operational Creditor - HELD THAT:- In so far as the stand taken by the RP with regard to the submission of the claim belatedly i.e. submission of the claim after 90 days of CIRP, the same is unsustainable. In view of the settled principles of law, fixation of time limit for submission of claims is not mandatory and it is only directory, the RP cannot reject the claim of the applicant, unless the same is abnormally delayed and made after the approval of the resolution plan. But in the instant case the submission of claim was prior to the approval of the plan by the COC and hence, the action of the RP in rejecting the claim on the ground of belated submission i.e. beyond 90 days of the initiation of CIRP is unsustainable. In so far as the other reason given by the RP for rejection of the claim of the applicant i.e. the claim was outstanding for more than three years and is a time barred debt and barred by limitation, the applicant failed to state how his claim is still enforceable against the corporate debtor as on the date of initiation of the CIRP. Once the claim, prima facie, cannot be treated as an enforceable debt, it is not admissible. Hence, in this regard, the action of the RP cannot be found fault with. IA No. 707/2020 Appointment of RP - it is the case of the applicant that the respondent-Shri Nipan Bansal is ineligible to be appointed as the RP of the corporate debtor - HELD THAT:- It is to be seen that now the process of CIRP against the corporate debtor has reached its finality since a resolution plan was already approved by the COC and that an application under Section 30(6) read with Section 31 of IBC 2016 had already been filed and is pending before this Adjudicating Authority. The role of the RP, almost came to an end and that no further action is required to be taken by the RP, unless in the event of rejection of the resolution plan by this Adjudicating Authority - Since, admittedly the applicant made complaint against the respondent-RP to the IBBI, at this stage, we are not inclined to adjudicate and give any finding on these IAs. IA No. 817/2020 Seeking ad-interim, direction or injunction/relief restraining the Respondents, agents or representatives from approving the Resolution Plan - HELD THAT:- The instant IA is not maintainable before this Adjudicating Authority, as no provision under the IBC 2016 was shown to us which dealt with the One Time Settlement proposals of any corporate debtor with its lenders. Further, it is for the lenders of any corporate debtor to consider or not to consider an One Time Settlement proposal of any borrower/corporate debtor. The merits or demerits of an One Time Settlement proposal vis-a-vis. the merits and demerits of a resolution plan approved by the COC cannot be compared, as the scope and ambit of the both are different and distinct. Application dismissed.
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2021 (8) TMI 211
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:- In view of specific admission of the debt and the liability to pay, as evidenced by the settlement deed executed by the respondent-corporate debtor and filed before this Adjudicating Authority, the petition is admitted for initiation of the CIR Process in the case of the Corporate Debtor, M/s. K.C. Land Finance Ltd. and it is also directed that the moratorium to take effect and Interim Resolution Professional to be appointed. Application admitted - moratorium declared.
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2021 (8) TMI 208
Liquidation of Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - time limitation - HELD THAT:- In the present case, the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted on 03.09.2019 and the present application is filed by the Resolution Professional on 11.12.2020. The period of 180 days would be completed on 01.03.2020. As per order dated 25.02.2020 (Annexure-12), this Hon'ble Adjudicating Authority has allowed the CIRP to be extended by a period of 90 days w.e.f. 01.03.2020, but as per Notification No. IBBI/2020-21/GN/REG059 dated 20.04.2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after excluding the lockdown period w.e.f. 23.03.2020 to 31.07.2020, the CIRP was expired on 07.10.2020 and the present application is filed on 11.12.2020. Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT:- The CoC has not made any recommendation regarding sale of the corporate debtor as a going concern. Therefore, the Liquidator is directed to refer to Regulation 32A of the IBBI (Liquidation Process) Regulation, 2016 and take necessary action. In view of the satisfaction of the conditions provided under Section 33(1) of the Code, the corporate debtor Lakshmi Energy Foods Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code - Application admitted - moratorium declared.
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2021 (8) TMI 207
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute between the parties or not - time barred claim or not - HELD THAT:- This Bench is of the opinion that the invoices for the month of Oct-Nov 2015 were outstanding and there were exchange of emails between he parties regarding the pending invoices, however, the Corporate Debtor in his reply have claimed that they have not been able to reconcile or open the logs sent by the Petitioner. There has been a dispute raised by the Corporate Debtor with reference to the SMS count as per the email dated 04.02.2016. Though there was no dispute regarding payment terms as raised by the Corporate Debtor but evidently there has been dispute with regard to the SMS count as claimed by the Petitioner in the said invoice and SMS count as recorded by the Corporate Debtor, this amounts to be a pre-existing dispute between the parties and in view of judgment of Mobilox Innovations Private Limited vs. Kirusa Software (P) Limited [ 2017 (9) TMI 1270 - SUPREME COURT ] , the contents of the email dated 04.02.2016 amounts to be plausible dispute between the parties. Time Limitation - HELD THAT:- The said claim is also time barred in view of the fact that the invoices pertaining to the year 2015-2016 and the petition was filed on 07.05.2019, the last payment made by the Corporate Debtor was on 01.12.2015. The email of the Corporate Debtor raising a dispute dated 04.02.2016 which may have extended the limitation also ends by February, 2019 and in view of the fact that the petition was filed on 07.02.2019, this Petition is barred by limitation. Petition dismissed.
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2021 (8) TMI 206
Inclusion of Respondent No. 2 in the Stakeholders' Consultation Committee as the representative of the shareholders of the Corporate Debtor - Whether the nomination of Respondent No. 2 as representative of Shareholders in class made by the Respondent No. 1/Liquidator is in order and is in terms of the provision of Regulation 31A (3) read with Regulation 31A (4) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016? - HELD THAT:- Whereas on the one hand, the Respondent No. 1/Liquidator has assumed that the 'shareholders' (have) failed to nominate their representative, on the other hand he has duly noted that the Applicant has the nomination support of 03 out of total 05 shareholders. The plea taken by the Liquidator that no nomination was made as the other 2 shareholders having 75% shareholding had not nominated the applicant as their representative does not merit consideration since the Applicant has been the nominee of 03 out of total 05 shareholders (and which was duly communicated by the Applicant vide his email dated 10.02.2021 to the Liquidator) and the other 02 shareholders did not participate in the nomination process directly or indirectly. Further, the Regulation 31A(3) does not prescribe any criteria for nomination in terms of value of shareholding. That from perusal of the Regulation 31A(3), which reads as The liquidator may facilitate the stakeholders of each class to nominate their representatives for inclusion in the consultation committee , we observe that the said Regulation is silent on both the criteria as well as process of nomination of a Representative. However, the Regulation 31A(3) has bestowed a duty on the Liquidator to facilitate the stakeholders of each class to nominate their representatives for inclusion in the SCC. Since the Applicant has been nominated by the majority i.e., 3 out of 5 Shareholders as the Representative of the Shareholders-in-class, which was duly communicated by the Applicant to the Respondent No. 1, the question of applicability of the provision under Regulation 31A(4) did not arise. Therefore, we hold that the nomination of the Respondent No. 2 as to represent Shareholders-in-class in the Stakeholders Consultation Committee of the Corporate Debtor made by the Respondent No. 1/Liquidator is not valid in terms of the provision of Regulation 31A (3) read with Regulation 31A (4) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The nomination of Respondent No. 2 to the Stakeholders Consultation Committee of the Corporate Debtor, made by the Respondent No. 1/Liquidator in terms of Regulation 31A(4) of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, is set aside and the Liquidator is directed to accept the nomination of the Applicant as the Representative of Shareholders-in-class for the purpose of constitution of the Stakeholders Consultation Committee (SCC) of the Corporate Debtor. Application allowed.
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2021 (8) TMI 203
Prayer to receive the documents on record which clearly shows the existence of pre-existing dispute - Section 60(5) of Insolvency and Bankruptcy Code, 2016 Read with Section 8, 11 32 of NCLT Rules, 2016 - HELD THAT:- The applicant/corporate debtor should be allowed to place on record the documents for establishing his claim before us. Copies of these documents are already served to the respondent/operational creditor herein. Therefore, the documents submitted by the corporate debtor are taken on record. Application disposed off.
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PMLA
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2021 (8) TMI 264
Seeking grant of Bail - criminal conspiracy - cheating and fraud - fraudulent import of fertilizers and other materials for fertilizer production at inflated prices and claimed higher subsidy from Government of India causing loss of several crores of rupees - siphoning off the commission received from the suppliers through a complex web of fake commercial transactions through multiple companies - Flight risk - HELD THAT:- Even if the allegation was one of grave economic offence, it was not a rule that bail should be denied in every case. Flight risk - HELD THAT:- It is the admitted case of the department that over the period of last 10 years the petitioner has gone abroad atleast 90 times for various purposes - The petitioner was even allowed to travel abroad by this Court twice subject to conditions despite the opening of LOC against him and the registration of the FIR by the CBI. Therefore, when such is the conduct of the petitioner, he cannot be said to be a flight risk. Moreover, nothing has been placed on record that the petitioner/accused is a flight risk nor much emphasis was laid on this during the argument. Medical condition of petitioner - HELD THAT:- Petitioner is suffering from cancer since 2002 which is not denied by the department. The petitioner is under the treatment of one doctor namely Morton Coleman of U.S. and he visits the doctor for his follow up from time to time. It is on record that the petitioner was granted special permission to travel to America by the American Embassy aided by the Ministry of External Affairs and his sister was also allowed to travel with him due to his medical condition. Looking into the medical condition of the petitioner, this Court permitted the petitioner to travel to USA for his medical treatment subject to conditions, despite the registration of the FIR - No doubt, as argued by the Ld. ASG, the condition of the petitioner is not serious and do not require immediate attention and his present condition is manageable, but one also cannot lose sight of the fact that the petitioner is a known case of cancer and is suffering from various diseases for which he is taking medicines as submitted by Ld. Sr. counsel for the petitioner. The petitioner is entitled to be released on bail on merits as well as on medical grounds - petitioner shall be released on bail on the terms and conditions imposed. Application allowed.
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Service Tax
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2021 (8) TMI 239
Refund of Service Tax paid under RCM - repeal of Finance Act and introduction of GST Act - rejection of refund on the ground that input tax credit can only be claimed under the GST/CGST Act, 2017 and not otherwise - applicability of sub-section 8(a) of Section 142 of the CGST Act, 2017 - HELD THAT:- Insofar as the statutory provisions are concerned, it has been mandated that the assessed/adjudged amount of tax/interest/fine/penalty shall be recovered from the assessee as an arrear of tax under the CGST Act, 2017 - In the case in hand, the appellant is not falling under the scope and ambit of sub-section 8(a) of Section 142 of CGST Act, inasmuch as no assessment/adjudication orders were passed by the competent authorities in determining the tax liability, which the appellant was required to pay under the erstwhile statute. Rather, the case of the appellant is governed under the provisions of sub-section (3) of Section 144 ibid. An assessee can file the application, claiming refund of the amount of CENVAT credit after the appointed day and that the said application shall be disposed of by the authorities in accordance with the erstwhile statute. The authorities below have not questioned the issue regarding the entitlement of the appellant to the CENVAT credit under the erstwhile CENVAT statute - the refund claims filed by the appellants should merit consideration under the provisions of sub-section (3) of section 142 ibid, and as such, it should be entitled for the benefit of refund of service tax paid by it. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 233
Re-credit of Cenvat Credit alrady reversed (suo motu) - Storage and Warehousing services - storage of rice - rice is agricultural produce or not - agricultural produce after introduction of Negative List or not - Clause (d) of section 66D of Finance Act - HELD THAT:- When Notification No.4/2014 made the Storage and Warehousing Services of rice to be exempted services, the said service became taxable for the period 01.07.2012 to 16.02.2014. The appellants had been reversing the proportionate credit on the common input services availed by them. When the reversal/adjustment is made under Rule 6(3A), the time-limit as prescribed in the Cenvat Credit Rules, 2004 would apply. In the present case, the re-credit is an adjustment/correction of the excess reversal which was not required to be made by them. The appellants are not eligible to take suo motu re-credit of an amount of ₹ 20,83,773/-. So also, the allegation of the department that the credit ought to have been take before 30th of June of the succeeding year is without any basis in the facts of this case as it is not reversal of proportionate credit but only re-credit of the credit which was not required to be reversed. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (8) TMI 240
Process amounting to manufacture or not - compression of carbondioxide received through pipelines and the subsequent filling into cylinders - Chapter Note 9 of Chapter 28 of the Central Excise Tariff Act 1985 - HELD THAT:- It would now be necessary to examine the main contention raised by the learned counsel for the Appellant that since the order dated 21.07.2016 passed by the Principal Commissioner for the subsequent period attained finality, as no appeal was filed by the Department to assail the said order, the Department cannot now agitate that the activity undertaken by the appellant would amount to manufacture. A Division Bench of the Tribunal in ROSMERTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CE ST, LTU DELHI [ 2019 (11) TMI 1573 - CESTAT CHANDIGARH] , had an occasion to examine this contention. It was held that when for a subsequent period in the own case of the appellant it was held that service tax cannot be levied, which order had attained finality, the Department cannot be permitted to take a stand that service tax is leviable. The decision of the Supreme Court in COMMR. OF C. EX., MUMBAI VERSUS BOC (I) LTD. [ 2008 (4) TMI 46 - SUPREME COURT] , where it was held that mere labeling or relabeling in the absence of any activity of repacking from bulk packs to retail packs would not render the product marketable directly to the consumer , would not be applicable in view of the subsequent decision of the Supreme Court in AIR LIQUIDE NORTH INDIA (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2011 (8) TMI 93 - SUPREME COURT] and that the process undertaken by the appellant would amount to manufacture in view of the third requirement contained in Chapter Note 9 of Chapter 28 of the Tariff Act. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 238
CENVAT Credit - input - PVC Filler Hollow - credit denied to the assessee on the ground that the supplier of raw material was not liable to pay the duty on the goods supplied - HELD THAT:- The duty being paid by M/s. Shiv Industries and that there is no cogent evidence that PVC of M/s. Shiv Industries is covered under Notification No. 12/2012, the relief in respect of the said duty paid including the availment of CENVAT Credit by the recipient of the goods on which the duty was paid, cannot be denied. This has been the settled law that once the raw material has suffered the excise duty, then the relief should be granted in respect of duty payable on final products. The perusal of the provisions of CCR makes it abundantly clear that the terminology used in the relevant provisions in Rule 3 erstwhile Section 57A (1) is paid and not payable . Hon ble High Court at Madras in COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I VERSUS CEGAT, CHENNAI [ 2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] has held that the said terminology is sufficient to consider the factual state of affairs that as to whether the duty has actually been paid on the raw material and not whether duty was payable or not. Classification of the goods cannot be changed at the recipient s end, the issue is again settled and is no more res integra as is apparent from the decision of Hon ble Apex Court in the case of SARVESH REFRACTORIES (P) LTD. VERSUS COMMISSIONER OF C. EX. CUSTOMS [ 2007 (11) TMI 23 - SUPREME COURT] wherein it has been held that the classification by the manufacturer only has to prevail, the same cannot be altered at the buyers end. Once M/s. Shiv Industries has classified its PVC under Chapter Heading 3904 and admittedly Chapter heading 3904 is not merely for such PVC which is manufactured by scrap and is exempted from duty. The said classification cannot be denied by the appellant specially when the invoices received by him shows the payment of duty by his supplier. The question of adjudication is answered in negative holding that CENVAT Credit cannot be denied on the ground that the supplier was not liable to pay the duty on the goods supplied. Also it is observed that the finding of Commissioner (Appeals) about M/s. Shiv Industries that the product supplied by them was exempted from payment of duty is based merely on the letter from the Jurisdictional Incharge - There is no discussion in the impugned order about any mention in the letter of Jurisdictional officer about manufacturing process of M/s. Shiv Industries and about using the scrap for manufacture of their PVC Filler Hollow . Nor there is any iota of evidence about the manufacturing process of six other supplier. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 232
CENVAT Credit - input services - Rent-a-Cab services - Insurance services - Membership Fees - Travel Expenses (Foreign) - period of dispute involved in this case is prior to April 2011 - levy of equal penalty - HELD THAT:- The un-amended definition of input service among other taxable services, has included the phrase activities relating to business , for consideration as input service , for the purpose of availment of Cenvat benefit on the service tax component paid by the assessee. The said phrase finding place in the inclusive part of definition is very broad and takes within its ambit and purview the services used or utilised by the assessee for accomplishing its business purpose/activities - the disputed services in this case should merit consideration as input service for the purpose of entitling an assessee to avail the Cenvat benefit. The appellant did not submit the documentary evidences either before the original or first appellate authority to demonstrate that it is entitled to avail the Cenvat credit on some of the disputed services. In this context, the learned AR appearing for Revenue also stated that the appellant did not submit the invoices or other documents before the authorities below to show that the disputed services namely, Rent-a- Cab and Travel expenses (Foreign) were actually used for carrying out the business purpose - Since, the onus lies with the appellant for proper substantiation of the fact regarding availment of Cenvat credit on the disputed services viz., Rent-a-Cab and Travel expenses (Foreign) has not been fulfilled, the denial of Cenvat benefit on such services in the impugned order cannot be faulted. Levy of equal penalty - Section 11AC of the erstwhile Central Excise Act, 1944 read with the erstwhile Rule 15 of the Cenvat Credit Rules, 2004 - HELD THAT:- In this case, it is an undisputed fact on record that the appellant had maintained the statutory records, reflecting therein the particulars of availment of Cenvat credit on the entire disputed services and that the above irregularities were observed by the audit wing of department during the course of scrutiny of the records. Under such circumstances, it cannot be said that there is element of suppression in defrauding the Government revenue by the appellant - invocation of the penal provisions for imposition of penalty on the appellant, without proper corroboration of facts, will not meet the ends of justice. Appeal allowed in part.
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CST, VAT & Sales Tax
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2021 (8) TMI 258
Seeking to rectify the Delhi Value Added Tax (DVAT) return for column 11 - seeking issuance of correct Form F to the Petitioner - HELD THAT:- This Court is of the view that the issue raised in the present writ petition is no longer res integra as a Coordinate Bench of this Court in H.M. SALES CORPORATION VERSUS B COMMISSIONER OF TRADE TAXES [ 2017 (7) TMI 1358 - DELHI HIGH COURT] had in similar facts permitted the petitioner to rectify its return. The petitioner is permitted to rectify its return even at this stage and its clarifications are directed to be accepted. Consequently, the return filed by the petitioner for the fourth quarter 2015-16 shall stand rectified accordingly - Petition disposed off.
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2021 (8) TMI 252
Seeking restraint from raising demands or from taking coercive action for enforcing such demands against the petitioner - HELD THAT:- Learned Additional Chief Standing Counsel prays for and is granted four weeks' time to file counter affidavit. Petitioner may file rejoinder affidavit, if any, within one week thereafter - List this case along with Writ Petition No. 29277 (MB) of 2016 in the 1st week of September, 2021.
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2021 (8) TMI 247
Validity of assessment order - demand of tax - case of petitioner is that the assessment order suffered from errors apparent on the face of record - HELD THAT:- Since the mistake pointed out by the petitioner is an error apparent on the face of record, the representation submitted by the petitioner seeking to rectify the said error, may be directed to be disposed of by the respondent. This Court, without going into the merits of the case, directs the respondent to consider the representation dated 30.12.2019, if not considered earlier, and pass appropriate orders, on merits and in accordance with law, after affording an opportunity of hearing to the petitioner, within a period of six weeks, from the date of receipt of a copy of this order. Petition disposed off.
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Indian Laws
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2021 (8) TMI 249
Dishonor of Cheque - drawer of the cheque - liability to pay interim compensation - Section 143A of the N.I. Act - HELD THAT:- It is pertinent to note that the petitioners have not taken the contention before the trial Court at the time of hearing of the application Exh.13 filed by respondent No. 2 complainant that the petitioners are not the drawer of the cheques in question and, therefore, they are not liable to pay interim compensation under Section 143A of the N.I. Act. On the contrary, the petitioners have requested before the trial Court that as per the provisions contained in Section 143A of the N.I. Act, the interim compensation shall not exceed 20% of the cheque amount and, therefore, minimum amount may be ordered to be deposited. Thus, it appears that the petitioners have accepted their liability of making payment of interim compensation. It is therefore clear from the record that the contention taken by the petitioners that the petitioners are not the drawer of the cheques in question is nothing but an afterthought and the said contention is taken for the first time before this Court. The petitioner No. 1 has signed the cheques in question as an authorised signatory of accused No. 1 Company. The petitioners are Directors of accused No. 1 Company. The contention taken before this Court was not taken before the trial Court by the petitioners. On the contrary, it was requested before the trial Court that minimum amount may be ordered to be deposited and not 20% of the cheque amount. Further, though the trial Court directed the accused to pay 20% of the cheque amount by way of interim compensation within 60 days from the date of order i.e. from 19.09.2019, till date, the said direction has not been complied with. This Court is not inclined to exercise powers under Article 226 of the Constitution of India in favour of the present petitioners - Petition dismissed.
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2021 (8) TMI 246
Dishonor of Cheque - acquittal of the accused - it is alleged that the accused has cheated the complainant by issuing a cheque having knowledge that he had no sufficient funds - Section 138 of N.I. Act - Whether the complainant has proved beyond all reasonable doubt that accused has committed an offence punishable under Section 138 of Negotiable Instrument Act? - HELD THAT:- It is an undisputed fact that the cheque belongs to the accused and there is no dispute regarding signature on the cheque. Hence, the presumption under Section 139 of N.I. Act is available to the accused - It is also evident that the accused for rebutting the presumption, need not enter into witness box, but, can rebut the presumption on the basis of the available materials placed on record. Apart from that, it is also important to note here that the complainant is required to prove his case beyond all reasonable doubts. But, for rebuttal, the same standard is not applicable and the accused is required to rebut the presumption on the basis of preponderance of probability. The presumption under Section 139 of N.I. Act is a statutory rebuttal presumption. Since Ex. P3 is admitted, the presumption is in favour of the complainant. Admittedly, the initial presumption is in favour of the complainant and reverse onus clauses become operative and obligations shifts upon the accused to rebut the said presumption. In the instant case also, the accused by way of cross examining the complainant has exposed him and that itself establishes that presumption is rebutted - The complainant though running a finance company, but, he has advanced a huge loan to accused in his individual capacity. Secondly, there is no evidence to prove that he was possessing such a huge amount in his house and further it is hard to accept that he has advanced such a huge amount of ₹ 4,25,000/- as a hand loan to accused without charging any interest that too when the accused was a defaulter in respect of loan obtained by him in Saptagiri Finance Company. Under these circumstances, looking to the facts and circumstances of the case, it is evident that the complainant has failed to establish that the cheque was issued towards discharge of legally enforceable debt so as to attract the ingredients of Section 138 of N.I. Act. The learned Magistrate has analyzed the oral and documentary evidence in proper perspective and also dealt with the citations in detail. He has properly appreciated the oral and documentary evidence including the principle of reverse onus and come to a just conclusion that presumption under Section 139 of N.I. Act was rebutted by the accused. Hence, he has justified in acquitting the accused. Appeal dismissed.
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2021 (8) TMI 244
Dishonor of cheque - amicable settlement of the matter - seeking permission for compounding the matter - Section 147 of the N.I. Act - HELD THAT:- The Court is convinced that both parties have settled the matter amicably out of their own volition and free consent and without there being any coercion, fraud or misrepresentation and also keeping their best interest in consideration, as such, there is no reason for denying the permission for settling the matter. Section 147 of the N.I. Act has made every offence punishable under the N.I. Act as compoundable. As such, there is no bar for the parties in proceeding to compound the offence - The enquiry made with the parties who are physically present convinces the Court that both the parties out of their free consent and volition and in their best interest have settled the matter which is further corroborated by the submissions made by their learned counsels. On the terms of the said joint application, the parties be permitted to compound the offence punishable under Section 138 of the N.I. Act, however, subject to the payment of the graded cost by the petitioner/accused - Joint application filed by both side under Section 147 of the Negotiable Instruments Act, 1881, is allowed and the parties to the present petition are permitted to compound the offence, however, subject to the petitioner herein (accused) paying a sum of ₹ 11,250/- towards graded cost. Petition disposed off.
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