Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 1, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exemption from GST or not - activity of providing the hostel on the rent to various students by applicant - hostel fees charged per student per day is much less than ₹ 1000/- - The services provided by such hostel, for residential and lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore, the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose only. - Benefit of exemption available - AAR
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Classification of services - composite supply or not - services by way of construction of residential property is supplied along with the supply of 'other services' - “Other Charges” received will not be treated as consideration for construction services of the Company and is not classified under SAC 9954 along with the main residential construction services. - The 'other charges' will be treated as consideration received against supply of independent service(s) of the respective heads. - Liable to GST @18% - AAR
Income Tax
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Whether income of VCF shall be exempt only to the extent it is from the investment in venture capital undertaking ? - Exemption under section 10(23FB) and exemption under section 10(25) of the Act operates in different fields. CIT(A) is correct in holding that operations of these sections are independent. Assessee’s income in VCU is exempt under section 10(23FB) of the Act and the dividend income is exempt under section 10(35) of the Act. - AT
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Condonation of delay - proof of reasonable cause for not filing the appeal in time before the CIT (Appeals) - Since the order was send at wrong address, the assessee was prevented from filing the appeal before the CIT (Appeals) within the time granted by the statute - Delay condoned - AT
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Revision u/s 263 - Assessee company is a private limited company and it is closely held and has raised share subscription from its own directors and their wives who are all income tax assessee's and all the money has come through banking channel and their creditworthiness has also been proved by the documents produced - PCIT erred in finding that the source of share subscribers has not been properly enquired by the AO - Revision order quashed - AT
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TP Adjustment - corporate guarantee forms an international transaction or not? - Explanation to Section 92B inserted vide the Finance Act, 2012 with retrospective effect from 01-04-2002 also includes a corporate guarantee. We thus hold that the tribunal’s all foregoing orders must make way for higher wisdom and decline the assessee’s first and foremost legal plea. - AT
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Unexplained u/s.68 - un-explained cash credit addition - Huge amount withdrawn from bank - self made vouchers for expenses - AO observed that expenses were not supported by bills/vouchers and no TDS was made on such amounts - loose sheets found during survey proceedings - It appears that assessee’s failure in filing its cogent explanation only led the Assessing Officer to add the impugned sums in all these assessment years. - Additions confirmed - AT
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Assessment u/s 153A - belated return in response to notice u/s 153A - denying carry-forward of loss - it is undisputed that no assessment was pending as on the date of the search and, therefore, the AO is not permitted to make changes in the whatever determined in regular assessment proceeding on the basis of the return of income filed, in absence of any incriminating material. Since in the regular proceeding, the assessee is entitled to carry forward the losses in terms of the provision of the Act, the action of the Assessing Officer in denying the carry forward of the loss on account of the late filing of the return under section 153A of the Act, is not justified - AT
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Revenue expenditure - interest expenses towards delayed payment of EDC external Development Charges to HUDA - - Not to be held as penal in nature u/s 37(1) - the interest expenditure on delayed payment for EDC charges paid to HUDA in the year under consideration is allowable to the assessee - AT
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Rejection of Settlement application u/s 245C - allegation of Suppression of facts - Legislative intention is to ensure that the manner in which the income has been derived must be disclosed by the Assessee while submitting an application under Section 245C of the Income Tax Act and in the absence of furnishing all such details, settlement cannot be arrived and the authorities are bound to continue their investigation and proceed for assessment or for reassessment under the relevant provisions of the Income Tax Act. - HC
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Application under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act). - Seeking Adjust/give credit to the amount paid by petitioner under the Income Declaration Scheme, 2016 (“the IDS”) - The Scheme does not provide for Revenue to retain the tax so paid in respect of a declaration which is void and non-est. Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. - Petitioner is entitled to an adjustment by giving credit to the amount paid under IDS. - HC
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Claiming Depreciation u/s 32 while claiming exemption u/s 11 - whether while computing income under section 11(1)(a) of the Income Tax Act, 1961, depreciation is not to be allowed? - HELD Yes - normal depreciation could be considered as legitimate deduction in computing real income of assessee on general principles or under Section 11(1)(a). - HC
Customs
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Mis-classification of imported goods - printed thermal paper rolls - Country of Origin Certificate - benefit of exemption as per N/N. 26/2000-Cus. - It is seen that the Department has accepted the decision passed by the Commissioner of Customs, Nhava Sheva holding that the subject goods are to be classified under CTH 4911 9990. When this classification has been accepted, the Department cannot allege mis-classification for imports of the same goods made during the subsequent period. - AT
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Revocation of Customs Brokers license - smuggling of Red Sanders - CESTAT set aside the proceedings on the ground of delay in inquiry - The Tribunal completely erred in ignoring the true import and misread the binding decision of this court. We observe that the Tribunal has failed to consider the detailed submissions as sought to be made out on behalf of the parties and without even dealing with the detailed explanation as well as the necessary facts, allowed the appeal of Respondent. The Tribunal ought to have discussed each of the submissions before coming to any conclusion. - HC
Service Tax
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Renting of immovable property service - The appellant entered into agreements with the film distributors under which the film distributors granted copyright license in the form of theatrical exhibition rights to the Appellant. As against the transfer of such rights, the Appellant agreed to pay certain amount to the distributors, generally fixed as a percentage of the NBOC. - the demand of service tax under ‘renting of immovable property’ service was not justified for the reason that the Appellant had not provided any service to the distributor, nor the distributor had made any payment to the Appellant as a consideration for the alleged service. - AT
Central Excise
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CENVAT Credit - capital goods - input services - capital goods installed in the Research & Development wing - Admittedly the Research and Development building is not the office of the appellant factory - As it is held, the Research and Development Building to be the part of the factory/ registered premises of the Appellant, CENVAT Credit on the input services for use in the said Research and Development building/ activities could not have been denied - AT
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Clandestine removal - cigarettes - In this case, the appellant has admitted the excess stock found during the course of investigation has been procured through illicit manner, in that circumstances, revenue need not to prove that the raw material and finished goods recovered during the course of investigation were procured through licit manner. - Demand confirmed - AT
Case Laws:
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GST
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2021 (8) TMI 1231
Classification of services - composite supply or not - services by way of construction of residential property is supplied along with the supply of 'other services' - Other Charges received by the company - to be treated as consideration for construction services of the Company - whether classified under HSN 9954 along with the main residential construction services of the Company or whether the same will be treated as consideration for independent service(s) of the respective head? - applicable effective rate of GST on services underlying the Other Charges. HELD THAT:- There are more than two supplies which are independent supplies and so taxable separately, the supply of construction services of residential unit and the other supply of 'other services', viz. 'Electric meter installation and security deposit for the meter, Water connection charges and security deposit, municipal taxes, Advance maintenance, Clubhouse maintenance, Development charges, share money, entrance fee of organization, legal charges, legal fees, and, Infrastructure charges'. Services supplied in respect of the 'other charges' are different from the service of construction of residential flats. Therefore, it is observed that the 'other services' provided cannot be said to be naturally bundled and supplied in conjunction with each other in the ordinary course of business with main supply of residential flat in the subject case. Other Charges received will not be treated as consideration for construction services of the Company and is not classified under SAC 9954 along with the main residential construction services - The 'other charges' will be treated as consideration received against supply of independent service(s) of the respective heads. The amount or consideration is charged separately for different services. And even the stamp duty is also not paid on full amount collected from the customer along with the said other charges. Therefore, the other charges for the other services provided is not covered under the scope of 'Composite supply of services'. Therefore, the contention of the applicant is found not acceptable - the 'other charges' mentioned as above are held taxable as per their SAC under the GST Act, at 18% in terms of the respective and appropriate entries in Notification No.11/2017 CT (R) dated 28.6.2017 as they are covered under services, other than construction services.
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2021 (8) TMI 1230
Exemption from GST or not - activity of providing the hostel on the rent to various students by applicant - hostel fees charged per student per day is much less than ₹ 1000/- - exemption under Serial Number 12 or Serial Number 14 of Notification No. 12/2017- Central Tax (Rate) (as amended time to time) dated 28/06/2017? - HELD THAT:- The word hostel not being specifically mentioned implies that the same would be covered under the term Whatever name called . The services provided by such hostel, for residential and lodging purposes would be covered by the scope of notification entry where the declared tariff of a unit of an accommodation is below one thousand rupees per day. Therefore, the scope of the entry is restricted to use of the accommodation unit for residential and lodging purpose only. The applicant is providing hostel on the rent to various students where fees charged per student per day per room is much less than ₹ 1000/- per day per person. Therefore, considering the provisions of notification Entry No. 14, and clarification given by CBIC in circular No. 32106/2018-GST dated 12th February 2018, it is held that, the applicant s activity is satisfying the conditions of Entry Sr.no. 14 of said Notification and hence would be exempt from taxes.
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Income Tax
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2021 (8) TMI 1228
Claiming Depreciation u/s 32 while claiming exemption u/s 11 - whether while computing income under section 11(1)(a) of the Income Tax Act, 1961, depreciation is not to be allowed? - HELD THAT:- The substantial questions of law framed for consideration have been answered in favour of the assessee in the case of CIT vs. Rajasthan and Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] held that normal depreciation could be considered as legitimate deduction in computing real income of assessee on general principles or under Section 11(1)(a).
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2021 (8) TMI 1227
Application under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act). - Seeking Adjust/give credit to the amount paid by petitioner under the Income Declaration Scheme, 2016 ( the IDS ) - Tax in respect of voluntarily disclosed income is refundable or not - application made under the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- Sub-Section (3) of Section 187 of IDS categorically provides if the declarant fails to pay the tax, surcharge and penalty in respect of the declaration made under Section 183 on or before the dates specified in sub-Section 1, the declaration filed by him shall be deemed never to have been made under the Scheme - declaration will be non-est. Revenue cannot retain any amounts paid under a declaration which contemplated under the Scheme is deemed never to have been made. The Scheme does not provide for Revenue to retain the tax so paid in respect of a declaration which is void and non-est. Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. This would mean there must be a law, the law must authorise the tax and the tax must be levied and collected according to the law. In the absence of any such authority of law, a retention of tax contrary to the very Scheme cannot be permitted. Therefore, the provision of Section 191 cannot have any application to a situation where the tax is paid but the entire amount of tax is not paid and accordingly the retention of the tax by respondent no.1 is illegal. Petitioner is entitled to an adjustment by giving credit to the amount paid under IDS. Respondent no. 3 is directed to rectify Form No. 3 issued under the DTVSV Act read with DTVSV Rules, to give credit to this amount and issue fresh Form No. 3, within two weeks from the day, an authenticated copy of this order is served upon respondent No. 3 by petitioner. Petitioner to make payment of disputed tax in accordance with revised / rectified Form-3 within a period of two weeks from the issuance of revised Form-3.
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2021 (8) TMI 1226
Rejection of Settlement application u/s 245C - allegation of Suppression of facts - non disclosure of earning the additional income - whether the petitioners have disclosed fully and truly all the informations and the materials relating to their foreign bank accounts and certain information not produced by the Assessee may be construed as not within their knowledge? - HELD THAT:- All along the petitioners have not submitted the source and figures and the manner in which the income has been derived. If the Assessee has not furnished the details regarding the income as well as the manner in which such income has been derived, it may not be possible for the Competent Authorities to complete the process of assessment/ reassessment as only if the manner in which the income has been derived is traced out. In the absence of producing such details, it is the requirements contemplated under Section 245C of the Income Tax Act, the authorities may not be in a position to settle the issues. The repeated findings of the Settlement Commission that the petitioners have failed to state the source from which the income has been derived and the said non-furnishing of information resulted in rejection of application on the ground that the petitioners have suppressed the vital informations. Petitioners have not complied with the conditions stipulated under Section 245C of the Income Tax Act and when the petitioners were not complied with the conditions stipulated under Section 245C of the Act, the judgments relied on by the petitioners- Assessees have no avail to them for the purpose of considering the present writ petitions. Legislative intention is to ensure that the manner in which the income has been derived must be disclosed by the Assessee while submitting an application under Section 245C of the Income Tax Act and in the absence of furnishing all such details, settlement cannot be arrived and the authorities are bound to continue their investigation and proceed for assessment or for reassessment under the relevant provisions of the Income Tax Act. - Writ petition dismissed.
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2021 (8) TMI 1221
Revenue expenditure - interest expenses towards delayed payment of EDC external Development Charges to HUDA - allowable expenditure u/s 37 or penal in nature as interest has been charged by concerned authority for delay - HELD THAT:- As decided in TRIVENI FERROUS INFRASTRUCTURE LTD [ 2019 (11) TMI 1670 - ITAT DELHI] the interest payment as revenue expenditure and not penal in nature, therefore respectfully following the same, the interest expenditure on delayed payment for EDC charges paid to HUDA in the year under consideration is allowable to the assessee. We do not find any error in the order of the Ld. CIT(A) and accordingly, we uphold the same. The grounds of the appeal of the Revenue are accordingly dismissed.
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2021 (8) TMI 1220
Estimation of income - Rate of commission on accommodation entries - income for commission earned at the rate of 2% on sale transaction - HELD THAT:- The assessee being a company of the Tarun Goyal Group of the companies, respectfully following the finding of the Tribunal [ 2019 (1) TMI 1266 - ITAT DELHI] , we restrict the rate of the commission assessed by the Assessing Officer to 0.50 % of the transactions carried out by the assessee in the year under consideration. The ground of the appeal of the assessee is accordingly partly allowed.
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2021 (8) TMI 1219
Addition u/s 36 (1)(va) - delay in depositing the ESI and EPF - employees' contribution to specified fund - amount has been paid beyond the due date as prescribed in the ESI PF Act - HELD THAT:- As relying on M/S. EAGLE TRANS SHIPPING AND LOGISTICS (INDIA) PRIVATE LTD. [ 2019 (10) TMI 704 - ITAT DELHI] and M/S. BHARAT HOTELS LTD. [ 2018 (9) TMI 798 - DELHI HIGH COURT] Assessee company is not entitled for deduction u/ s 36(1)(va) of the Act claimed on account of depositing the employees contribution towards ESI PF as per provisions contained u/s 2(24)(x) read with section 36(1)(va) after due date - Decided against assessee.
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2021 (8) TMI 1218
Exemption u/s 11 - registration u/s 12A denied - proof of charitable activity u/s 2(15) - Commissioner satisfaction to charitable nature of object of assessee society - HELD THAT:- As decided in the case of Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] has elaborated that the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust and has further held that the term 'activities' in the provision includes proposed activities also - Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the trust CIT (Exemptions) had no objection to the objects of the assessee which necessarily are charitable in nature and regarding the transactions in the bank account, the same are explainable and these documents were available with her - we are satisfied that the activities of the assessee are genuine and therefore, we direct the CIT (Exemptions) to grant registration u/s 12A of the Act forthwith. - Decided in favour of assessee.
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2021 (8) TMI 1217
Assessment u/s 153A - filing of belated return in response to notice u/s 153A - denying carry-forward of loss claimed in the return filed under section 153A on the ground that return was not filed within the stipulated period of 16 days - Whether provision of the Act which would be otherwise applicable in the case of return filed under section 139(1)? - HELD THAT:- AO has not correctly interpreted the provision - If assessment proceedings in particular assessment year are pending as on the date of the search, same get abated and in consequence to notice under section 153A, assessment of such year would be subject to assessment by the revenue for the first time and the earlier return filed for the purpose of assessment would be treated as non est in law - return filed under section 153A(1)(a) is return furnished under section 139 - provision of the Act which would be otherwise applicable in the case of return filed under section 139(1) of the Act would also apply in case of return filed under section 153A of the Act. Where the assessments are not abated or no assessments are pending as on the date of the search, the return of income filed under section 139 cannot be treated as non est. In such completed assessments, addition if any can be made on the basis of the income relating incriminating material otherwise the position accepted in completed assessment has to reiterate. In the year under consideration, it is undisputed that no assessment was pending as on the date of the search and, therefore, the AO is not permitted to make changes in the whatever determined in regular assessment proceeding on the basis of the return of income filed, in absence of any incriminating material. Since in the regular proceeding, the assessee is entitled to carry forward the losses in terms of the provision of the Act, the action of the Assessing Officer in denying the carry forward of the loss on account of the late filing of the return under section 153A of the Act, is not justified. - Decided in favour of assessee.
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2021 (8) TMI 1216
Disallowance u/s 14A r.w.r.8D - computation of expenses incurred for earning the tax free income - mandation of recording of satisfaction - HELD THAT:- Disallowance made by the AO and confirmed by the CIT (A) on the basis of invalid satisfaction as to the correctness of the claim of the assessee is not sustainable, hence ordered to be deleted. Credit of the entire amount of TDS - HELD THAT:- Following the decision rendered by the coordinate Bench of the Tribunal in assessee s own case AY 2011-12 [ 2020 (1) TMI 403 - ITAT DELHI] we are of the considered view that assessee is entitled for credit of tax deducted at source on proportionate basis for the income declared during the year under consideration as per Rule 37BA(3)(ii) of the Rules. Licence fee paid to the Department of Telecommunication (DOT) for grant of licence to operate and provide services - disallowance by the AO on the ground that the said licence fee paid by the assessee during the years is to be amortized in accordance with section 35ABB - HELD THAT:- Following the decision rendered by coordinate Bench of the Tribunal in assessee s own case for AYs 2006-07 to 2011-12 and decision rendered by Hon ble Delhi High Court in assessee s own case for AYs 2009-10 2010-11, we are of the considered view that ld. CIT (A) has rightly deleted the addition, hence finding no infirmity or illegality in the impugned findings. Depreciation @ 15% on the principal portion of the lease rental - HELD THAT:- In the registration certificate, assessee company is referred as the lessee and Orix Auto is referred as the lessor. Merely mentioning the name of the assessee company as the lessee does not construe ownership in favour of the assessee as has been held in case of ICDS Ltd. [ 2013 (1) TMI 344 - SUPREME COURT] . It is a basic principle of law that only lessor is the owner of the leased property in case of finances and depreciation is allowable to the lessor only and not the lessee. Lease agreement entered into between the assessee company and lessor of the vehicles itself provides that ownership of the vehicles will not be transferred to the lessee during the subsistence of the lease as is evident from Lease Agreement.We are of the considered view that ld. CIT (A) has rightly decided the issue in favour of the assessee.
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2021 (8) TMI 1215
Unexplained u/s.68 - un-explained cash credit addition - Huge amount withdrawn from bank - self made vouchers for expenses - AO observed that expenses were not supported by bills/vouchers and no TDS was made on such amounts - loose sheets found during survey proceedings - HELD THAT:- This assessee is admittedly a company engaged in construction and building of infrastructure projects/facilities. The department had carried out the survey in question dt.03-10-2012 at its premises. It came across the alleged impounded document forming part of case records before us - This crucial document found at assessee s premises during survey makes it clear that it is in the nature of assessee s INVESTMENT STATEMENT FROM 10-09-2007 TO 10-08-2012 wherein it had duly recorded payment, fund transfers, site payments involving group companies, other payments and administrative expenses along with working capital limits, term loans from banks other loans funds, other group companies funds received from sites and other receipts indicating varying sums - the impounded document is assessee s INVESTMENT STATEMENT FROM 10-09-2007 TO 10-08-2012 wherein its Managing Director had duly pointed out the same in the nature of investments and loans which ought to be treated as un-explained u/s.68 of the Act only. The assessee s further argument that the impugned sum is merely an estimate also fails to inspire confidence since there is no material before us which could suggest the factual position to be different than that found during the course of survey . It appears that assessee s failure in filing its cogent explanation only led the AO to add the impugned sums in all these assessment years. We thus restore this un-explained cash credit addition in these facts and circumstances in AY.2010-11. The CIT(A) s findings under challenge stand reversed therefore. Revenue succeeds in its instant identical latter substantive ground.
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2021 (8) TMI 1213
Revision u/s 263 by CIT - Addition u/s 40(a)(ia) - assessee had claimed expenditure of Corporate Management Services paid to its AE - claim so made included 'year-end' provision made for an outstanding and assessee voluntarily disallowed above said amount u/s. 40(a)(i) - TPO determined ALP of Corporate Management services at NIL. and while computing TP adjustment, he reduced the amount voluntarily disallowed u/s. 40(a) - HELD THAT:- There should not be any dispute that the claim of the assessee is as per the provisions of sec. 40(a) of the Act - under Explanation to section 92(1) of the Act, the allowance for any expense shall also be determined having regard to arms length price - TPO has determined the arms length price at NIL in AY 2009-10, the entire claim made in the profit and loss account should have been considered as transfer pricing adjustment - TPO has reduced the amount disallowed u/s. 40(a) and made transfer pricing adjustment for the balance amount only in AY 2009-10 The question of making disallowance u/s. 40(a) shall apply, only if the relevant expenditure was found to be allowable, but for the provisions of sec. 40(a). Hence the action of TPO in reducing the T.P adjustment amount by the disallowance made u/s. 40(a) may not be right and in that case, the error lies in AY 2009-10. Having not done so, the Ld. CIT should not find fault with the claim of the assessee made u/s. 40(a) of the Act on the reasoning that the TDS has been made in this year, i.e., in AY 2010-11. the order passed by Ld. CIT(A) on this issue cannot be sustained. Foreign services Employees expenses - TPO had determined ALP of intra group services at NIL - AR also took us through the query posed by the TPO during the course of TP proceedings. TPO has specifically asked whether the assessee is claiming any reimbursements as expenses without routing though the Profit and Loss account? - The assessee has also furnished reply to the same stating that reimbursement claims have been routed through the Profit and Loss account, meaning thereby, the TPO has specifically applied his mind on this issue. Hence the TPO has examined this issue and has taken a possible view, in which case, the revision order passed by Ld. CIT on this issue is also liable to be quashed. In the case of Malabar Industrial Co Ltd. as [ 2000 (2) TMI 10 - SUPREME COURT] as expressed the view that the assessment order cannot be considered to be prejudicial to the interests of revenue, if the AO has taken a plausible view - impugned revision order is not sustainable in law. - Decided in favour of assessee.
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2021 (8) TMI 1212
TP Adjustment - appropriate PLI for benchmarking the international transaction of rendering of business support services in respect of the overseas projects of the AE - not considering return on value added cost (ROVAC) - TPO opined the transaction in the present case is being compared is sales to AE and held the ROVAC cannot be used for the purposes of computing the PLI, as if would directly influence the PLI being in the denomination for computation of the rates - HELD THAT:- The contention of the ld. AR is that the contract charges incurred by the assessee for the services taken from third parties and prayed to treat the assessee as trader. Therefore, in our opinion, the berry ratio becomes academic We deem it proper to remand the matter to the file of TPO for its fresh verification to decide whether the assessee is in the activities of business support service provider or in the trading activities or in the mix of both i.e. business support service provider and trading activities. The assessee is liberty to file all evidences, if any, in support of its claim and the TPO shall decide as indicated above. Appeal of assessee is allowed for statistical purpose.
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2021 (8) TMI 1211
Disallowance u/s 40(a)(ia) - Assessee in default under the first proviso to 201(1) - Assessee did not file Form 26A which is the certificate of auditor certifying that the payee has included the amount received from the assessee in his return of income filed for the relevant assessment year and paid taxes thereon - HELD THAT:- Assessee filed before us certificate of a Chartered Accountant under the 1st proviso to sub-section 1 of section 201 of the Act certifying that M/s. Cholamandalam Investment and Finance Company Ltd., has filed the return of income for Assessment Year 2014-15 and has included the income received form the assessee in such return of income - in the light of the certificate of the Chartered Accountant filed by the assessee, the issue with regard to the disallowance under section 40(a)(ia) of the Act should be remanded to the AO for fresh consideration - Appeal of the assessee is treated as allowed for statistical purposes.
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2021 (8) TMI 1210
TP Adjustment - corporate guarantee forms an international transaction or not? - Retrospective amendment to Section 92B - HELD THAT:- All the legal arguments fail to convince us as per Hon'ble Madras high court s recent decision in Pr.CIT Vs. M/s.Redignton (India) Limited, [ 2020 (12) TMI 516 - MADRAS HIGH COURT] holds that Explanation to Section 92B inserted vide the Finance Act, 2012 with retrospective effect from 01-04-2002 also includes a corporate guarantee. We thus hold that the tribunal s all foregoing orders must make way for higher wisdom and decline the assessee s first and foremost legal plea. Quantification of the impugned corporate guarantee adjustment - As relying on own case [ 2016 (1) TMI 936 - ITAT HYDERABAD] adopt judicial consistency and direct the TPO to adopt 0.53% rate in both these assessees cases in all these respective assessment years. Quantification of the corporate guarantee adjustment itself in all these three assessment years - There is no dispute between the parties that the TPO herein had himself made it clear that in case of guarantees covering more than one financial year the fee is charged by the banks at the beginning of the financial year on the outstanding amount . As against this, the Revenue fails to dispute that case law BS LTD. [ 2018 (4) TMI 1742 - ITAT HYDERABAD] , MANUGRAPH INDIA LTD. [ 2015 (3) TMI 1103 - ITAT MUMBAI] and M/S ACG ASSOCIATED CAPSULES PVT. LTD[ 2012 (2) TMI 101 - SUPREME COURT] hold that such a corporate guarantee adjustment could only be made to the extent of actually utilized amount during the year than that of the full value of the guarantee itself. We adopt the very reasoning herein as well and directing the TPO to re-compute the impugned adjustment after taking into consideration only the actually utilised amount of the corresponding corporate guarantees in these three cases. The assessees identical first and foremost ground in all these three appeals is partly accepted in foregoing terms. Disallowance u/s 14A r.w.r. 8D - proof of sufficient non-interest bearing funds - HELD THAT:- Section 14A read with Rule 8D applies only in relation to an assessee s exempt income than having any independent exigibility. It is an admitted fact that the assessee has not derived any exempt income in the relevant previous year. We therefore direct the Assessing Officer to delete the impugned disallowance for this precise reason alone.
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2021 (8) TMI 1209
Revision u/s 263 - as per CIT AO's action in respect of receipt of share capital by the assessee is erroneous as well as prejudicial to the revenue - HELD THAT:- AO had issued notice u/s.142(1) and called for all the details of the share subscribers/share premium and pursuant to the notice of AO, the assessee had filed all the documents to substantiate the identity, creditworthiness and genuineness of the share subscription. The source of source of the share subscription was also brought to the notice of the AO, Assessee company is a private limited company and it is closely held and has raised share subscription from its own directors and their wives who are all income tax assessee's and all the money has come through banking channel and their creditworthiness has also been proved by the documents produced - PCIT erred in finding that the source of share subscribers has not been properly enquired by the AO - since the condition precedent for invoking the revisional jurisdiction has not been satisfied the Ld. PCIT lacks of jurisdiction. - Decided in favour of assessee.
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2021 (8) TMI 1207
Condonation of delay - proof of reasonable cause for not filing the appeal in time before the CIT (Appeals) - HELD THAT:- Assessing Officer had sent the demand notice at incorrect address which is clear from the demand notice and the envelope placed on record - demand notice was served by affixation on 30th March, 2013, at wrong address. In fact, in the assessment order, the Assessing Officer himself has recorded that the correct address where the assessee resides, alongwith her husband. However, despite the above said the assessment order along with the demand notice were sent at the wrong address - the assessee was prevented from filing the appeal before the CIT (Appeals) within the time granted by the statute. Unexplained investment - Registered sale deed was made in the name of the assessee and her husband - AO had made the addition of 50% of assessee's share - HELD THAT:- Though the assessee sought to explain the source disclosed by Assessee's husband in his assessment order, however, the same do not come for rescue for the assessee, as it is for the assessee to disclose the source of investment made by her in the property. Nothing has been disclosed and merely because the same was disclosed by the husband of the assessee, in our view, is no explanation in the eye of law as it is required to be independently tested and examined by the revenue authorities- in the assessment proceedings, the assessee has not submitted that the investment made by her was made after borrowing it from the husband. In fact, it was the case of the husband that the consideration was paid in cash to the seller. The assessing Officer of the husband had made the addition in the hands of the assessee (on account of undisclosed cash deposit in the bank account). As the assessee failed to disclose the source of investment either before the Assessing Officer or before CIT or before us, therefore, we have no other option but to confirm the addition - Decided against assessee.
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2021 (8) TMI 1206
TDS u/s 194A - disallowance of interest paid to non-banking finance companies - Non deduction of TDS - AR submitted that the recipient of the payment has already been paid the tax and as such the same cannot be disallowed in the hands of the assessee - HELD THAT:- In view of the above order of the Tribunal [ 2019 (12) TMI 1537 - ITAT BANGALORE] we inclined to remit the issue to the files of the A.O. to allow the claim to the extent that the recipient of the payment paid the tax to the department. Accordingly, this issue is remitted to the files of the A.O. for verification of the issue and deciding the same in accordance with law. Disallowance u/s. 14A - AR submitted that the assessee earned dividend income which is exempt from Income-tax and the amount used for investments yielding exempt income, was made from assessee's own funds - HELD THAT:- It is the claim of the assessee that the assessee has earned dividend income which is exempt from income tax and the funds used for investment is from its own funds. However, the assessee could not demonstrate the availability of its own funds for investment in exempt income. We, therefore, remit this issue to the files of the A.O. to examine the issue afresh and also direct the assessee to prove the availability of own funds for making investment in such exempted income yielding assets. Disallowance of interest on advances made to Naveen Hotels towards purchase of land - Contention of the learned AR is that the assessee is having own funds to make investments to its sister concern - HELD THAT:- As the assessee has to prove that it is having sufficient interest free own funds to make investment to its sister concern - Case of Reliance Industries Limited [ 2019 (1) TMI 757 - SUPREME COURT] correctly relied - assessee has also to prove that it has not used any borrowed funds. With these observations, we remit the matter to the files of the A.O. to examine whether the assessee is having availability of interest free funds to make investment in sister concern. This ground is partly allowed.
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2021 (8) TMI 1205
Exemption u/s 10(23FB) - Assessee has made investment in VCUs (Venture Capital Undertakings) - as per AO said VCU is not engaged in carrying out any real estate business during the financial year 2015-16 as there was no financials maintained by the company and as the directors of the said entity were in custody for making defaults -Amrapali Smart City Developers Pvt. Ltd. (ASCD) - HELD THAT:- CIT(A) has accepted the claim which has also been reiterated by the assessee that interest income accruing from the said concern had been allocated to various investors who would have included the same in their return for income tax and paid the due tax in terms of section 115U and taxing the said income in the hands of the assessee would result in double taxation. In this regard we note that learned Counsel of the assessee has made further submissions before us that in the subsequent financial year the assessee has reversed the interest entries from this concern on the ground that receipt was extremely doubtful - As pointed out that the assessee has not claimed deduction of the said reversion in financial accounts. In this view of the matter, in our considered opinion order of CIT(A) on this issue is cogent and does not need any interference in our part. Disallowance made with respect to CSN Estates Pvt. Ltd - CIT(A) is correct in holding that CSN is engaged in the development of the project. That it has purchased and provided land for the project, obtained necessary approvals and sanctions and has entered into development agreement with Lemon Tree for development and construction. Hence, in our considered opinion disallowance made by the Assessing Officer has been rightly deleted by learned CIT(A) Whether income of VCF shall be exempt only to the extent it is from the investment in venture capital undertaking ? - CIT- A deleted the addition - HELD THAT:- Observation of the AO that, VCF was eligible for deduction under a specific section 10(23FB) and therefore it cannot claim deduction under another section 10(35) of the Act is totally inapplicable in the facts and circumstances of the case. Exemption under section 10(23FB) and exemption under section 10(25) of the Act operates in different fields. CIT(A) is correct in holding that operations of these sections are independent. Assessee s income in VCU is exempt under section 10(23FB) of the Act and the dividend income is exempt under section 10(35) of the Act. Hence, there is no infirmity in the assessee s claim of exemption on dividend income under section 10(35) - Decided against revenue.
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2021 (8) TMI 1204
Suppressed profit on sale of project - undisclosed income - Estimation of Net profit of suppressed sales - HELD THAT:- This addition was duly and properly made on the basis of material discovered during the search. In our considered opinion learned CIT(A) has taken a correct view of the matter and has addressed all the issues. Accordingly, we uphold the order of learned CIT(A). Addition u/s.40(a)(ia) - Non deduction of TDS - expenses on account of construction expenses and on account of labour charges - HELD THAT:- As the case of the appellant is covered by the decision in case of Bharati Shipyard [ 2011 (9) TMI 258 - ITAT MUMBAI] and in case of DCIT vs. Ashika Stock Broking Ltd [ 2010 (11) TMI 555 - ITAT, KOLKATA] . Therefore, it is held that the case of the assessee is covered u/s. 40(a)(ia) and the addition made by the AO on this account is upheld. Unexplained cash credit u/s. 68 - HELD THAT:- We find that the assessee has duly submitted additional evidences before learned CIT(A). It was duly submitted that the amount received was booking advance and name of the party, his confirmation and photocopy of the PAN was also submitted. CIT(A) simply rejected the additional evidence on the ground that it was not submitted earlier - issue may be remitted to the Assessing Officer - Appeal by the assessee is allowed for statistical purposes. Rectification of mistake u/s 154 - Addition had been made on the order but the same remained to be added in the computation of total income - HELD THAT:- We find ourselves duly in agreement with the order of learned CIT(A). The Assessing Officer having made addition by discussing in the assessment order and making the addition in the body thereof and has mistakenly omitted it from the computational part. Hence, in our considered opinion there is no infirmity in the order under section 154 correcting the same. As rightly pointed out by learned CIT(A) the merits in this regard could not have been gone into by the Assessing Officer in the proceedings under section 154 of the Act. Hence, we uphold the order of learned CIT(A). Addition u/s 68 - sundry creditors and advances for booking as the parties have not responded to the notice u/s 133(6) - HELD THAT:- In the order of the Assessing Officer, only balances as at the closing of the year has been mentioned. It is not mentioned whether they arose during the year or they are coming from earlier year. In case they are coming from earlier year, addition under section 68 of the Act is not at all permissible. Hence, in our considered opinion this issue needs to be remitted to the file of the AO. AO shall examine the issue afresh in the light of our observation as above and thereafter he will pass an order in accordance with law.
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2021 (8) TMI 1201
Long tern capital gain - Valuation of property - determination of fair market value of the property - adoption of the deemed sales consideration according to the provisions of Section 50 C - HELD THAT:- As the difference between stamp duty valuation u/s 50C is just 8.98 % higher than the actual sale consideration. Only actual sale consideration should be taken for working out capital gain. Accordingly, additional ground raised by the assessee is allowed. Deduction u/s 54 - whether it is to be restricted to only one residential unit against the total investment made by the assessee in two adjoining residential unit - HELD THAT:- Assessee has purchased two adjacent units of house property and claimed deduction u/s 54 of the Act. For the impugned assessment year section 54 provided exemption in investment in a‟ residential house and which is amended by Finance Act, 2014 wherein, word a‟ has been replaced by word one ‟. This amendment is prospective in nature cannot be given a retrospective effect. In view of this, in the facts and circumstances of the case whether the assessee has purchased two adjacent residential houses, according to us the assessee is entitled to deduction u/s 54 of the Act on the amount invested in both the houses. Addition u/s 69 - Unexplained investment in purchases of property - HELD THAT:- Source of the fund is available with the assessee for payment to the builder and further the medical exigencies are meet by the Govt is not denied, We found that in absence of any other evidences contrary , benefit of cash available on hand should be granted four source of investment of ₹ 1 lakh with the builder. Accordingly, we direct the ld AO to delete the addition - Decided in favour of assessee. Adopting indexed cost of acquisition shown by the assessee - HELD THAT:- AO has considered the indexed cost of acquisition without giving any reason that why he is not agreeing with the indexed cost of acquisition shown by the assessee of ₹ 6,991,206 as shown in the computation of income. Therefore we agree with the argument of the learned authorised representative. We direct the ld AO to consider the cost of acquisition of the property sold/transferred for computation of capital gain. Thus, Ground is allowed.
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2021 (8) TMI 1193
Bogus Purchases - as per AO accommodation entries provided by various dealers and assessee was also one of the beneficiary - CIT-A deleted the addition - HELD THAT:- Purchases are supported by proper invoices duly reflected in the books of accounts, the payments have been made by account payee cheque which are duly reflected in the bank statement of the appellant. There is no evidence to show that the appellant has received cash back from the suppliers - AO has not disputed the sales of the concluded that there is no basis to disbelieve the purchases made by the appellant from the alleged parties which could, have caused any leakage to the revenue necessitating estimated disallowance claim of the appellant, cannot be denied. The AO is directed to delete the disallowance - Decided in favour of assessee.
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2021 (8) TMI 1192
Commission charged towards accommodation entries provided - CIT(A) restricting the quantum of commission at the rate of 0.6% based on the average of the past four years profits - HELD THAT:- Estimation as made by CIT(A) was in accordance with average profits shown in earlier 4 years. Even if the transactions were sham transactions, the estimation, in our considered opinion, was to be on some rational basis. The basis as adopted by Ld. CIT(A) was more rational and plausible one. Therefore, no fault could be found in the said estimation. Estimation of income on contract receipts and commission income - CIT(A) has merely gone by the fact that the aforesaid receipts would be business income of the assessee keeping in view assessee s main objects - he has overlooked the fact that no estimation of income was made by Ld. AO against these transactions and the estimation was only with respect to sale purchase transactions. These items, as noted by Ld. AO, were separately credited to Profit Loss Account and hence, constitute separate stream of income for the assessee - a separate estimated income against these two items would certainly be required. We make the estimation @8% for both these streams of income.
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2021 (8) TMI 1191
Penalty u/s.271(1)(c) - computation of income added back the provision for substandard asset for the purpose of sec 115JB - HELD THAT:- There is no case that the profit and loss account prepared is not as per law - provision for standard asset is duly reflected in the profit and loss account. It cannot be said that it was not a mistake of the assessee not to add back the same under section 115JB. Once having disclosed the provision for substandard asset which is a normal feature in the preparation of profit and loss account, it will certainly be a mistake not to add the same under the 115JB computation of income. CIT(A) has completely erred in observing that the provision for substandard asset was not disclosed in any of the enclosures of computation of income. CIT(A) has misled himself. Assessee s claim that it was a genuine mistake and the assessee has suo moto revised the same during the assessment proceedings is cogent. The authorities below have not been able to cogently rebut the submission of the assessee - set aside the orders of the authorities below and delete the penalty - Appeal by the assessee stands allowed.
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2021 (8) TMI 1190
Disallowance u/s.14A r.w.r. 8D - whether only activity of the assessee which is exempt from tax is the agriculture activity and that during the year assessee had incurred loss from agricultural activity which was duly disallowed by the assessee in the return of income - HELD THAT:- Entire expenses attributable to the agricultural division had already been subject matter of voluntary disallowance by the assessee - Other expenses incurred are only expenses attributable to the regular business of the assessee and it could be safely concluded that the same cannot be construed to have incurred for the purpose of earning any exempt income - assessee had vehemently pleaded before the lower authorities that interest paid on loans are used only for the purpose of non-agri division activities of the assessee which does not require any apportionment towards the agri- division. This fact has not been controverted by cogent evidences by the lower authorities - there cannot be any disallowance of interest under second limb of Rule 8D(2) of the Rules - disallowance made under first and third limb of rules, the same gets subsumed in the disallowance of loss incurred from agricultural division which had already been made by the assessee in the return of income. Accordingly, there cannot be any disallowance of expenses separately u/s.14A of the Act in the peculiar facts of the instant case. Ground No.1 raised by the assessee is allowed.
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Customs
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2021 (8) TMI 1229
Revocation of Customs Brokers license - smuggling of Red Sanders - CESTAT set aside the proceedings on the ground of delay in inquiry - link between the smuggling of red sanders - activities for which the Respondent herein was licensed or not - HELD THAT:- The CESTAT has referred to the decision in the case of M/S UNISON CLEARING PVT LTD VERSUS COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI [ 2015 (7) TMI 881 - CESTAT MUMBAI] to give a finding that the delay in commencement of the proceedings for revocation of licence does not command itself as indicative of proper undertaking of responsibility and that the delay in commencement of the proceedings for revocation of licence was not justifiable. It has also observed that there is an implicit responsibility on the part of the competent authority to adhere to the timelines with acceptable justification for delays, if any. The Tribunal has referred to that although the suspension was withdrawn on 11th January, 2017, another 15 days had elapsed for inquiry proceedings to commence and, thereafter there was a lapse of more than six months in completion of inquiry and a further lapse of more than two months in revocation of the licence, whereas the incident had its origin in November, 2015. The Tribunal completely erred in ignoring the true import and misread the binding decision of this court. We observe that the Tribunal has failed to consider the detailed submissions as sought to be made out on behalf of the parties and without even dealing with the detailed explanation as well as the necessary facts, allowed the appeal of Respondent. The Tribunal ought to have discussed each of the submissions before coming to any conclusion. Whether, on the facts and in the circumstances of the case, the CESTAT was right in holding that there is no link between the smuggling of red sanders by Shri Vijay Poojary with the activities for which the Respondent herein was licensed? - HELD THAT:- The Tribunal has nowhere discussed any of the factual aspects raised on behalf of the Revenue either as contained in the Show Cause Notice or in the Order-in-Original. There is no discussion on the alleged smuggling of red sanders nor any discussion in the various statements recorded under Section 108 of the Customs Act or the admission of Vijay Poojary or the modus operandi or as to Respondent s involvement, investigations on various firms alleged to be used for the alleged smuggling activities, the fact of detention of Shri Vijay Poojary under COFEPOSA Act, the investigation with respect to the DEPB Scheme, the involvement of various customs firms/companies and the statement of various persons recorded under Section 108 of the Customs Act 1962 regarding destruction of post shipment documents, the factum of unrecorded exports, the alleged forgery and fabrication of documents, the admission of Shri Vijay Poojary that he was involved in smuggling of red sanders. It is incomprehensible as to how in the light of the factual submissions discussed above and without any discussion on the same, a factual finding is recorded stating that there is no link between the smuggling of Red Sanders by Shri Vijay Poojary with the activities for which Respondent was licenced - It is also surprising that without any detailed discussion, absence of link is being given as the reason for the delay in completion of the proceedings. The matter is remanded back to the CESTAT for fresh adjudication - Appeal allowed by way of remand.
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2021 (8) TMI 1214
Mis-classification of imported goods - printed thermal paper rolls - to be classified under CTH 4911 9990 or not? - Country of Origin Certificate - benefit of exemption as per N/N. 26/2000-Cus. - Show Cause Notice in this case has been issued by the Additional Director General (ADG) of the Directorate of Revenue Intelligence (DRI) - Proper officer or not - HELD THAT:- The issue on merits has been decided in the appellant's own case in M/S. HI-TEC CORPORATION VERSUS COMMISSIONER OF CUSTOMS, CHENNAI-II [ 2017 (11) TMI 1437 - CESTAT CHENNAI] passed by the Commissioner of Customs, Nhava Sheva. The classification adopted by the appellant under CTH 4911 9990 has been accepted by the Department and the proceedings initiated vide the Show Cause Notice have been dropped. The appellant filed an RTI application seeking information as to whether any appeal has been filed by the Department against such Order-in-Original or whether the same has been accepted by the Department. It is seen that the Department has accepted the decision passed by the Commissioner of Customs, Nhava Sheva holding that the subject goods are to be classified under CTH 4911 9990. When this classification has been accepted, the Department cannot allege mis-classification for imports of the same goods made during the subsequent period. In POPULAR CARBONIC PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I COMMISSIONERATE [ 2021 (8) TMI 240 - CESTAT CHENNAI] , the Tribunal held that when the issue has been decided and has attained finality, the Department cannot be permitted to take a different stand for subsequent periods. A similar view was taken in ROSMERTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CE ST, LTU DELHI [ 2019 (11) TMI 1573 - CESTAT CHANDIGARH] . The correct classification of the impugned goods would be under CTH 4911 9990, as contended by the appellant - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2021 (8) TMI 1203
Seeking restoration of name of the Company in the Register of Companies maintained by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- After hearing the Counsel for Applicant and after perusal of material documents on record, the report of the RoC, Hyderabad and after going through the provisions of Section 252(3) of the Companies Act, 2013, and in view of the special circumstances of the case, the name of the Company to be restored in the Register of Companies as maintained by RoC, in the larger public interest. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Company as if the name of the company has not been struck off from the Register of Companies - application allowed.
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2021 (8) TMI 1196
Sanction of Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 - HELD THAT:- There is no impediment in the approval of the 'Scheme'. The Scheme (Annexure P-1) is hereby approved. While approving the Scheme, it is clarified that this Order should not be construed as an Order in any way granting exemption from payment of any stamp duty, taxes or any other charges, if any, and payment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law. With the sanction of the 'Scheme', the Transferor Companies shall stand dissolved without undergoing the process of winding up resulting in increase in the share capital of the Transferee Company. The scheme is approved - application allowed.
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2021 (8) TMI 1195
Sanction of scheme of Arrangement - seeking to dispense with the meetings of the Equity Shareholders, Secured and Unsecured Creditors of the Applicant Companies - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- The Companies have followed extant provisions of Companies Act in framing the Scheme in question, which are duly approved by the Board of Directors of the Companies involved. The Statutory Auditors/Chartered Accountants of the Companies have also issued respective Certificates by inter-alia certifying the details of shareholders, creditors, and compliance of accounting treatment as prescribed U/s 133 of the Companies Act, 2013 with reference to the Scheme in question. The Applicant Companies have disclosed all the material facts relating to the Scheme in question and filed necessary documents along with the Application. Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of various notices issued - the scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (8) TMI 1202
Admission of claims of the workers - Rule 11 of the National Company Law Tribunal Rules, 2016 read with Section 42 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The claims of workmen who have toiled to serve the company and helped in production and running of the same through hard labour, must be given due importance. The Companies Act as well as the IBC 2016, contain specific provisions for workmen for this reason. Hence the Legislative intent also is to protect the interest of the workmen - In the instant case when CIRP was ordered, then also their claims were made before the RP, and all the records and documents available with the RP would have been handed over to the Liquidator at the time of his appointment as Liquidator. Further as per Regulation 19(4) of the IBBI (Liquidation Process) Regulations 2016, the Liquidator may admit the claims of the workmen on the basis of the books of accounts of the Corporate Debtor if a claim has not been made by the Workmen. Once the workmen have made a claim, through their Union, the same has to be made in the prescribed manner and within the prescribed time. As per Regulation 16, a stakeholder has to prove his claim for the debt or dues to him as on the liquidation commencement date. As per Reg. 19, in the case of workmen, the proof of claim has to be submitted to the liquidator in person, or by post or electronic means in prescribed forms. The proof has to be provided in the manner laid down in Reg. 19(3) - the claim can also be accepted as per the books of accounts of the corporate Debtor. The claim of the workmen needs to be considered by the Liquidator. This denial of claims would be against all norms of justice and equity. Hence, without any comment on or interfering with the disputes that are sub-judice before various courts, thus, the legitimate and verifiable dues of the workmen must be considered by the Liquidator. The order rejecting the claims of the Applicants is set aside - petition disposed off.
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2021 (8) TMI 1200
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The counsel for the Operational Creditor successfully demonstrated and proved the existence of debt and default. The debt is within limitation. Thus, the Company Petition satisfies all the requirements for admission. Since the Corporate Debtor remained ex-parte even without filing any reply, the claim of the applicant remained unchallenged. The scheme is approved - application allowed.
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2021 (8) TMI 1198
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not prior to the issuance of the Demand Notice - HELD THAT:- The Corporate Debtor, throughout the averments made in the counter, seems to have only alleged that there exists a dispute between the parties. However, in order to substantiate the said averments made in the counter, no documentary evidence or proof has been filed by the Corporate Debtor to show that there exists a real dispute between the parties. As per the contention of the Corporate Debtor, if the materials supplied by the Operational Creditor is found to be defective, no correspondence whatsoever was exchanged between the parties in relation to the supply of the defective materials to the Corporate Debtor has been placed on record by the Corporate Debtor and all these allegations seem to be only a moonshine defence raised by the Corporate Debtor in order to defeat the claim of the Operational Creditor. There is no dispute in relation to the supply of goods by the Operational Creditor to the Corporate Debtor and also those defences raised by the Corporate Debtor are afterthought and also all these defences have been raised by the Corporate Debtor very much after the issuance of the Demand Notice which cannot be termed as a dispute as envisaged under Section 9 of IBC, 2016. Whether the Operational Creditor has proved the 'Operational Debt' and the 'default' committed on the part of the Corporate Debtor? - HELD THAT:- It is seen that all the invoices raised by the Operational Creditor squarely falls for the period from 2017 to 2018 and the present application was filed before this Tribunal on 21.02.2020 and also the services provided by the Operational Creditor and the failure to make payment by the Corporate Debtor will fall within the meaning of Operational Debt , as stated under Section 5(20) of the IBC, 2016. The application is admitted - moratorium declared.
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2021 (8) TMI 1197
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - financial contract or not - existence of debt and dispute or not - HELD THAT:- It becomes clear that it is incumbent upon the Financial Creditor while filing this petition to place on record before this Authority, the 'Financial Contract' and demonstrate without any ambiguity from the financial contract, the amount disbursed as per the loan/debt, the tenure of the loan/debt, the interest payable and the conditions of repayment. In the present case, it is evident that the Financial Creditor has not placed on record any Financial Contract or any Financial Agreement, in pursuance of which the loan was disbursed to the Corporate Debtor. The Part V of the Petition also discloses the fact that the Financial Creditor has only attached the copy of the ledger of the Financial Creditor maintained in the books of accounts of the Corporate Debtor. Even the Financial Creditor has not placed on record any Promissory Note, in the present case, which can be construed as a 'Financial Contract' in order to prove the debt qualifies to be a 'financial debt' - In the present case, there is no financial contract which is seen on record in order to establish that the relationship between the Financial Creditor and the Corporate Debtor herein in order for the Applicant to qualify as a 'Financial Creditor' and in the absence of the same, the default as alleged by the Financial Creditor cannot be determined. In the absence of any 'Financial Contract' between the parties - Petition dismissed.
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Service Tax
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2021 (8) TMI 1224
Levy of service tax - Work Contract Services - HELD THAT:- Undisputedly, the services provided by the appellant were contract services as the invoices are supply of material alongwith services. The issue is squarely covered by the decision of the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] where it was held that Works contract were not chargeable to service tax prior to 1.6.2007. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 1223
Refund of Service Tax - input services invoices is not allowed as the appellants failed to co-relate payment made to vendors through bank statements - service of Information Technology Software Service not in the approved list of service - period from April, 2014 to June, 2015 - HELD THAT:- From the case records it is apparent that the supporting documents were produced, although belatedly, by the appellants before the learned Commissioner but they were not considered by him at the time of passing the impugned order of rejecting the appeal on the ground of non-production of supporting documents. The verification of the documents which was produced by the Appellant before the learned Commissioner alongwith letter dated 13.06.2017 need to be looked into and verified by the lower authorities. The verification of them by the Commissioner (Appeals) may not be proper and these documents can very well be appreciated by the Original Authority. The matter should be remanded to the original authority for proper verification of these documents and also for de novo adjudication - Appeal allowed by way of remand.
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2021 (8) TMI 1222
Levy of service tax - renting of immovable property service - appellant is providing service to the film distributors by way of renting its theatre for screening films - convenience charges - pouring fees - other income - lease rent income - parking fees - service charges - VPF charges - advertisement income - sale of space or time for advertisement income - foreign exchange expenses - architect services - reverse charge mechanism. Renting of immovable property service - HELD THAT:- This issue also came up for consideration before a Division Bench of the Tribunal in M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [ 2020 (6) TMI 87 - CESTAT NEW DELHI] . It was held that the demand of service tax under renting of immovable property service was not justified for the reason that the Appellant had not provided any service to the distributor, nor the distributor had made any payment to the Appellant as a consideration for the alleged service. Income under convenience charges, pouring fees, other income, lease rent income, parking fees, VPF charges and service charges - HELD THAT:- In regard to convenience fees, pouring fees, parking fees and service charges, it was submitted that though the demand of service tax proposed in the show cause notice dated 21.04.2014 was under the category of renting of immovable property services, the impugned order has confirmed the demand under the category of support services of business . It was, therefore, submitted that the impugned order has gone beyond the show cause notice. In this connection, reliance was placed on a Division Bench decision of the Tribunal in M/S DELHI DUTY FREE SERVICES PVT. LTD. VERSUS COMMISSIONER CGST DIVISION, DELHI SOUTH COMMISSIONERATE [ 2019 (8) TMI 1489 - CESTAT NEW DELHI] . A perusal of the reply to the show cause notice filed by the appellant as also the additional written submissions clearly show that the appellant had made detailed submissions an each of these heads - the impugned order, to the extent it has confirmed the demand of service tax under these four heads is, therefore, liable to be set aside. Advertisement Income - HELD THAT:- The Principal Commissioner committed an error in confirming the demand under this head. Reverse Charge mechanism - foreign expenditure incurred - HELD THAT:- Not only has the Principal Commissioner ignored the submission made on behalf of the appellant, but has also failed to take into consideration the fact that service tax had been paid by the appellant. The confirmation of demand under this head, therefore, cannot be sustained - the confirmation of demands under the impugned order cannot be sustained. Extended period of limitation - Penalty - HELD THAT:- It would not be necessary to examine the remaining issues raised by learned counsel for the appellant relating to invocation of the extended period of limitation or imposition of penalty. The appeal is allowed.
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Central Excise
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2021 (8) TMI 1225
Clandestine removal - cigarettes - corroborative evidence has been produced by the Revenue to allege that clandestine removal of goods or not - statements taken under coercion or not - HELD THAT:- The facts of the case which are in dispute are that during the course of investigation, excess tobacco of 210 kg alongwith other material for manufacturers Hitler Black‟ Brand Cigarettes were found at the premises of M/s Karsh Enterprises and production was going on. Further, 4,08,000 cigarettes packets of Hitler Brand of 69mm and unaccounted cash was found at the premises of M/s Shardha Traders, Raipur proprietor of Shri Ajay Adwani. These facts were never disputed by the appellants. Moreover, they have made a inculpatory statements. On the basis of that the statements they have been implicated in the matter by alleging the appellants are involved in clandestine removal manufacture and removal of goods - the Hon‟ble Apex Court in the case of COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS COMPONENTS PVT. LTD. [ 2004 (2) TMI 65 - SUPREME COURT] has held that what is admitted need not to be proved. In this case, the appellant has admitted the excess stock found during the course of investigation has been procured through illicit manner, in that circumstances, revenue need not to prove that the raw material and finished goods recovered during the course of investigation were procured through licit manner. As the appellants have been failed to brought on record any documents in their favour, the appeal is dismissed.
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2021 (8) TMI 1208
Refund of excess excise duty paid - amount paid in cases where copper prices was less than provisional prices - rejection of refund on the ground of time limitation - HELD THAT:- Since the Hon ble High Court has set aside the order passed by the CESTAT, the Order-in-Original and Order-in-Appeal passed by way of impugned orders are not sustainable in law. Appeal allowed.
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2021 (8) TMI 1199
CENVAT Credit - capital goods - input services - capital goods installed in the Research Development wing - scope of remand proceedings - Section 2(e) of the Central excise Act, 1944 - extended period of limitation - HELD THAT:- In the registered premises, appellant should undertake the activities relating to manufacture of the finished goods, it is not necessary that each and every part of the premises should be dedicated to manufacturing of the finished goods, there can be number of parts which undertake the activities such as storage of the raw material and finished goods, administrative activities, development of the product manufactured etc. all such activities are integral to manufacture of the finished products. Admittedly the Research and Development building is not the office of the appellant factory. The only question which needs to be examined whether these Capital Goods are used in the factory of manufacturer. The phrase used in the definition of Capital Goods, is not the same as that in the definition of inputs where it is stated that to qualify as inputs the goods should have been used in or in relation to the manufacture of finished goods. In case of the Capital Goods, the use of Capital Good within the factory of manufacturer whether in or in relation to manufacture of the finished products or otherwise shall make them eligible as Capital Goods in terms of the definition. The observations made by the Commissioner that these capital goods should have been used by the manufacturer in his factory whether directly or indirectly, in or in relation to the manufacture of final products do not find support from the definition of Capital Goods. Since the Capital Goods after the demolition of manufacturing sheds, were shifted within the registered premises from the from the manufacturing shed to the Research and Development Building, the same cannot be said to have been removed from the factory. Undisputedly the CENVAT Credit taken against these Capital Goods when they were received was not disputed by the revenue - In the decision of DELHI CLOTH GENERAL MILLS CO. LTD. VERSUS JOINT SECRETARY, GOVERNMENT OF INDIA [ 1978 (2) TMI 205 - DELHI HIGH COURT] , taking of the goods from one place in the registered premises/ factory to the other place in the same registered premises/ factory do not amount to removal or clearance of the goods. As it is held, the Research and Development Building to be the part of the factory/ registered premises of the Appellant, CENVAT Credit on the input services for use in the said Research and Development building/ activities could not have been denied - It is settled law that CENVAT Credit on the inputs or the input services received by the appellant cannot be denied to the appellant till the time the same are used in the factory of the manufacturer. Extended period of limitation - HELD THAT:- All the activities were well within the knowledge of the department as is seen from the various correspondences highlighted by the tribunal in the order remanding the matter back to the original authority. In view of the specific correspondences and declarations referred earlier, there are no justification in invoking the extended period of limitation for making these demands. Appeal allowed - decided in favor of appellant.
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2021 (8) TMI 1194
Levy of penalty u/r 26 of the erstwhile Central Excise Rules, 2002 - Status of the entity - appellants are the partnership firms - HELD THAT:- The penal provisions are applicable only in case of natural person and not for the artificial person namely the incorporated company or a partnership firm. Admittedly, in this case the appellants are the partnership firms. Since, they are not the natural persons, the provisions of Rule 26 cannot be invoked for imposition of penalty on them. This Tribunal in the case of WOODMEN INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA [ 2003 (9) TMI 228 - CESTAT, KOLKATA] has dealt with the identical set of facts in context with imposition of penalty under Rule 26 ibid on the partnership firm and has held that penalty cannot be imposed on the firm and only the individual person is exposed to the penal consequences provided therein. The imposition of penalty under Rule 26 ibid on the appellants is upheld - appeal allowed - decided in favor of appellant.
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