Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 11, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of GST registration of petitioner - while giving the reason for cancellation of the registration, it is mentioned that no reply has been received from the petitioner whereas in the same order in the very beginning there is a specific reference that the said order has taken into the reference the reply dated 25.02.2020 of the petitioner which is in response to the notice to show cause dated 14.02.2020, which is contrary in itself - order set aside - HC
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Input Tax Credit - GST charged by service provider on hiring of bus/motor vehicle for transportation of employees to & from workplace - ITC is not admissible to Applicant on part of cost borne by employee and thus ITC will be restricted to the extent of cost borne by the Applicant. - AAR
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Levy of GST - Since the applicant is not supplying any services to its employees, in view of Schedule III mentioned above, we are of the opinion that GST is not applicable on the nominal amounts recovered by Applicants from their employees in the subject case. - AAR
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Maintainability of application for advance ruling - investigation by the Directorate of GST Intelligence against the applicant, with regard to mis-classification of “flavoured milk” was initiated before the date of application - The application is rejected as “inadmissible”, in terms of first proviso to Section 98(2) of the CGST Act 2017. - AAR
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Levy of GST - Lease Service - The question of charging or not charging GST for the transaction between the applicant and the Company does not arise as the applicant himself is not effecting any supply of service to the Company directly - AAAR
Income Tax
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Validity of initiation of proceedings u/s 148 - what cannot be done directly cannot be done indirectly - If any material was found relating to the assessee during the course of search on third parties then the correct course of action would have been to proceed against the assessee under section 153C of the Act and there was no justification for the A.O. to initiate the proceedings under section 147 r.w.s 148 of the Act. - AT
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Transfer Pricing Adjustment - adjustment against AMP expenditure - Bright Line Test (BLT) - BLT method as adopted by Ld. TPO was not a valid method to benchmark the transactions. The technical collaboration agreement as referred to by Ld. TPO did not envisage any such express arrangement / agreement between the assessee and its AE and therefore, the same could not support the case of the revenue. - AT
Customs
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DFIA Scheme - Legality of import of ‘sweet whey powder’ - Actual User Condition - The ‘duty-free import authorizations’ procured by the appellant-importer had been made transferable in accordance with the provisions of the Foreign Trade Policy and there is no whiff of allegation that the said endorsements had been procured unlawfully. The prescription of ‘actual user’ condition in the Foreign Trade Policy, and reflected in the corresponding notification issued under section 25 of Customs Act, 1962, cannot be said to be extended to transferees of such licences, except where specified otherwise, either in the policy prescriptions or in the notification, for that would be tantamount to imposing a condition that was not intended by the Central Government. - AT
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Validity of Compounding Order passed by the Compounding Authority - there is no demand of redemption fine against the appellants. In this view, there is no case of demand of redemption fine,Therefore, the rejection of application for non-payment or redemption fine if not correct and legal. - HC
Corporate Law
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Restoration of name of respondent in the Registrar of Companies - The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would be neither just nor equitable - Tri
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Restoration of name of Company - Aggrieved person is Income Tax Department - The instant application would not lie under section 252(3) of the Companies Act, 2013; rather, it would lie under section 252(1) of the Companies Act, 2013 - name of the Company was struck off for continuous non-filing of Statutory Returns. Hence, considering the public interest, and to protect the legitimate interest of revenue, the name of the Respondent Company requires to be restored in the Register of Companies maintained by the ROC, Ahmedabad so as to enable the Appellant (Income Tax Department) to proceed further as per rules and in accordance with law. - Tri
IBC
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Jurisdiction - power of liquidator to sell the immovable properties and actionable claims of the Corporate Debtor - Distribution of Sale Proceeds - In view of the provisions of Section 53 of the I&B Code, 2016 the liquidator have to act as provided under Section 53 of the Code for which the specific direction is not required from this Adjudicating Authority - Tri
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Initiation of insolvency resolution of a personal guarantor of the Corporate debtors - The law doesn't envisage that the insolvency resolution of the personal guarantor should follow only when the process of corporate insolvency resolution of the corporate debtor has come to an end. Therefore, the submission that this Authority should wait till the resolution of RCOM or RITL is successfully accomplished and the debts of the corporate debtors have been satisfied, would be eristic. - Tri
Service Tax
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Non-payment of Service Tax - Man Power Recruitment and Supply Agency Services - Petitioner failed to account the amount of service provided to various customers during the financial year 2010-2011 to 2014-2015 for his service tax liability resulting into evasion of service tax. - The writ petition is not maintainable, at any point of time, is not entitled to claim any relief - HC
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CENVAT Credit - input services - Merely for the reason that the break-up of premium amount is shown in the policy, the fact that remains is that the policy is one and single with the feature of both risk coverage and investment opportunity simultaneously. It cannot be said that the ‘insured’ i.e. the subscriber to the policy has availed two separate policies. Neither there can be a question of extending the facility for subscribing to ULIP policy with only the investment portion, excluding the risk coverage and vice versa. - Since there is no exempt service, credit of service tax paid on the services of insurance agents allowed - AT
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Refund of Advance Service tax paid - refund claimed on the ground that there was absolutely no service provided - service to self due to amalgamation - When the amount loses the character of Service Tax, it could only be treated as a deposit, as held in innumerable precedents, which becomes an item for adjustment in terms of Rule 6 (3) ibid., since no service could ever be provided. Thus, the provisions of Rule 6 (3) would only apply and not the provisions of Section 11B ibid. - AT
Case Laws:
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GST
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2020 (9) TMI 373
Detention of goods - detention on the ground that there was no valid e-way bill covering the transportation of goods in terms of Section 138 of the GST Rules - HELD THAT:- Taking note of the fact that the transportation of the goods was not covered by a valid e-way bill, it is found that the detention cannot be seen as unjustified. Taking note of the submission of the learned counsel for the petitioner that he is prepared to furnish a bank guarantee for the amounts demanded, the writ petition is disposed by directing the 3rd respondent to release the goods and the vehicle to the petitioner on the petitioner furnishing a bank guarantee for the amount demanded in Ext.P11. The learned Government Pleader shall communicate the gist of this order to the 3 rd respondent for enabling an immediate clearance of the goods on the petitioner complying with the condition aforementioned.
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2020 (9) TMI 372
Vires of Rule 117 of the Central Goods and Service Tax Rules - time limitation - input tax credit - purchase of goods from the manufacturer - submission of the petitioner is that Rule 117 of the Central Goods and Service Tax Rules provides the procedure of transaction of credit pertaining to pre-GST period under Section 140 of CGST Act, 2017. HELD THAT:- The respondents No.4 and 5 states that the GST portal is being managed by the Goods and Services Tax Network (GSTN), an agency hired by the department. However, the respondent No.5-Additional Commissioner, Central Goods and Services Tax (CGST), Nodal Officer IT Grievance Redressal Mechanism is the appropriate authority to redress the grievances of the petitioner. Without entering into the merits of the claim of the petitioner, we direct that the petitioner may approach the respondent No.5- Additional Commissioner, Central Goods and Services Tax (CGST), Nodal Officer IT Grievance Redressal Mechanism by moving a fresh application along with a copy of this order within a period of three weeks from today. The respondent No.5-Additional Commissioner, Central Goods and Services Tax (CGST), Nodal Officer IT Grievance Redressal Mechanism is directed to look into all the grievances of the petitioner, and take necessary steps to redress the same within a period of four weeks thereafter. Petition disposed off.
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2020 (9) TMI 371
Cancellation of registration of petitioner - case of petitioner is that since the impugned order on the face of it is per-se illegal and also the reading of the same would go to show that the same has been passed without application of mind - Principles of natural justice - HELD THAT:- It is apparent that while giving the reason for cancellation of the registration, it is mentioned that no reply has been received from the petitioner whereas in the same order in the very beginning there is a specific reference that the said order has taken into the reference the reply dated 25.02.2020 of the petitioner which is in response to the notice to show cause dated 14.02.2020, which is contrary in itself. The order dated 14.04.2020 passed by the Superintendent, Kanpur Sector 12, Central Goods and Services Tax (Annexure 5 to the writ petition), is set aside with liberty to respondent no. 2 to pass a fresh order in accordance with law - Petition allowed.
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2020 (9) TMI 354
Levy of GST - Lease Service - Benefit of exemption N/N. 9/2017-integrated tax (rate) dated. 28th June, 2017 - whether the lessors (here Ambrish Vasudeva and 4 others) need not charge GST while issuing the invoice for the lease service to M/s. DTwelve Spaces Pvt ltd.? - whether falls under the Exemption prescribed and can be described as Services by way of renting of residential swelling for use as residence as listed in the aforesaid Notification? - challenge to AAR decision. HELD THAT:- The impugned property was constructed as Hostel building. The project description in the sanctioned plan submitted to us indicates that the plan is for the construction of a hostel building. Can a hostel building be called as a residential dwelling? A common understanding of a hostel is that of an establishment which provides inexpensive accommodation to specific categories of persons such as students, workers, travellers. On the other hand, a common understanding of the term residential dwelling is one where people reside treating it as a home. We find that the Appellant has constructed the building with the intention of providing hostel accommodation which is more akin to sociable accommodation rather than what is commonly understood as residential accommodation. It is concluded that the impugned property cannot be termed as residential dwelling . Once the impugned property is not a residential dwelling, the exemption under Sl.No 13 of Notification No 09/2017-IT (Rate) dt 28.06.2017 will not apply to the renting/leasing of such property. Time Limitation - HELD THAT:- In this case, the application was filed manually on 6th December 2019 and the ruling should have been pronounced on or before 5th March 2020. No doubt the ruling given by the Authority has been passed after the time period stipulated under the statute. However, that does not render the ruling null and void or unsustainable. An order which is passed without jurisdiction can be held to be null and void and unsustainable. However, an order suffering from illegality or irregularity of procedure cannot be termed in executable - In this case, the Authority was well within its jurisdiction to pass a ruling on the subject matter. Not adhering to the time limit in passing an order can be termed as an irregularity in procedure which can be set right in appeal proceedings. The question of charging or not charging GST for the transaction between the applicant and the Company does not arise as the applicant himself is not effecting any supply of service to the Company directly - AAR decision upheld.
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2020 (9) TMI 353
Maintainability of application for advance ruling - first proviso to Section 98(2) of the CGST Act 2017 - initiation of investigation was done prior to filing of the instant application - Classification of goods - rate of tax - flavoured Milk - taxable at the rate of 5% under Schedule-IV of GST Act or not - HELD THAT:- The first proviso to Section 98(2) of the CGST Act 2017 does not specify as to with whom the issue pertaining to the question raised has to be pending, but merely specifies that it has to be pending or decided under the provisions of this Act. Hence the argument of the applicant that the issue must be pending before the jurisdictional officer is not tenable under the law. In the instant case, the Deputy Commissioner, Office of the Principal Commissioner of Central Tax, Bangalore East Commissionerate, Bangalore have reported vide their letter dated 18.08.2020 that the Directorate of GST Intelligence, Bangalore Zonal Unit have initiated the investigation against the applicant, with regard to mis-classification of flavoured milk , under Incident Report No.35/2019-20, which is under progress. DGSTI has recorded the statements of the authorised representatives of the applicant and the applicant has also paid ₹ 2.97 Lacs towards pre-deposit. Further it is an admitted fact that the initiation of investigation was done prior to filing of the instant application, by issuing summons dated 18.02.2019, 15.03.2019 14.08.2019 - Thus all the required three conditions have been satisfied in the instant case and hence the application is liable to be treated as inadmissible. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.
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2020 (9) TMI 352
Input Tax Credit - GST charged by service provider on hiring of bus/motor vehicle having seating capacity of more than thirteen person for transportation of employees to from workplace - levy of GST - nominal amount recovered by Applicants from employees for usage of employee bus transportation facility in non-air conditioned bus - restriction to the extent of cost borne by the Applicant (employer). HELD THAT:- In the subject case, the supply of services received by the applicant is used in the course or furtherance of their business and therefore prima facie. they are eligible to take credit of GST charged by their suppliers - while we find that the applicant is eligible to take ITC under the provisions of the CGST Act, it is to be seen whether Section 17 (5) of the said Act debars the applicant from taking credit. As rightly pointed out by the jurisdictional officer, Section 17 (5) has been amended by CGST (Amendment) Act. 2018 (No. 31 of 2018) dated 29.08.2018 made effective from 01.02.2019 vide Notification No. 02/2019 - C.T.- 2019 dated 29.01.2019. It is clear and apparent that Section 17 (5) had clearly debarred Input Tax Credit on motor vehicles or conveyances used in transport of passengers till the date of the amendment i.e. 01.12.2019. However with effect from 01.12.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons (including the driver) - in the subject case, since the applicant has specifically submitted and as agreed by the jurisdictional officer, that they are using motor vehicles having approved seating capacity of more than thirteen persons (including the driver), the applicant shall be eligible for Input Tax Credit in this case. Whether GST is applicable on nominal amount recovered by Applicants from their employees for usage of employee bus transportation facility in non-air conditioned bus? - HELD THAT:- Schedule III to the CGST Act which lists activities which shall be treated neither as a supply of goods nor a supply of services As per clause 1 of the said Schedule-III, Services by an employee to the employer in the course of or in relation to his employment shall he treated neither as a supply of goods nor a supply of services - Since the applicant is not supplying any services to its employees, in view of Schedule III mentioned above, we are of the opinion that GST is not applicable on the nominal amounts recovered by Applicants from their employees in the subject case. If ITC is available to them, whether it will be restricted to the extent of cost borne by the Applicant? - HELD THAT:- Reliance placed in Hon ble High court of Bombay in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD. [ 2010 (10) TMI 13 - BOMBAY HIGH COURT ] has submitted that ITC is not admissible to Applicant on part of cost borne by employee and thus ITC will be restricted to the extent of cost borne by the Applicant.
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2020 (9) TMI 348
Maintainability of petition - availability of alternative remedy of appeal - refund of unutilized ITC - inverted duty structure - Circular No.59/33/2018-GST dated 04.09.2018 - HELD THAT:- Since an efficacious statutory remedy is available to the petitioner to assail the legality and validity of the order passed under Annexure-5, this Court should be slow in entertaining the writ petition at this stage. The petitioner has also not made out any ground for interference with the order under Annexure-5 in a writ petition which he cannot raise before the Appellate Authority. The grounds raised by the petitioner can be considered by the Appellate Authority in exercise of power under Section 107 of the Act. This Court without interfering with the impugned order under Annexure-5, disposes of this writ petition granting liberty to the petitioner-Company to assail the legality and validity of Annexure-5 under Section 107 of the Act - Petition disposed off.
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Income Tax
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2020 (9) TMI 370
Assessment u/s 153A - disallowance of freight charges u/s 37(1) - HELD THAT:- In the present case though search was conducted in the case of assessee as well as SRS Group, but, the A.O. made disallowance of freight charges because the assessee could not produce the bills and requisite vouchers in respect of the claim of the freight charges. It is, therefore, clearly apparent that the disallowance of freight charges are made in the absence of any incriminating material found during the course of search. A.O. has framed assessments u/s 153A r.w.s. 143(3). Thus, the above Judgments MEETA GUTGUTIA PROP. M/S. FERNS N PETALS [ 2017 (5) TMI 1224 - DELHI HIGH COURT] and KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] are clearly apply in the case of assessee. Further, on identical facts in the case of assessee for the A.Y. 2009-2010 deleted the similar addition. Therefore, following the above decisions and discussion above, we are of the view that both the additions are liable to be set aside. - Decided against revenue.
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2020 (9) TMI 369
Allowability interest expenditure - Advances to subsidiary companies/sister concern - HELD THAT:- Availability of interest-free funds has to be decided after verification of facts of the each year and cannot be allowed merely by following the decisions of the Tribunal in the case of the assessee in earlier years. This issue of availability of interest free funds has not been raised by the assessee before the Assessing Officer during assessment proceedings. As before AO the assessee argued only utilisation of loan funds by the subsidiary companies/sister concern for business purposes and for that too also no documentary evidences were submitted before the Assessing Officer. Before the Ld. CIT(A), the assessee did not appear and not filed any submissions. The argument of availability of interest free funds and giving of loans to subsidiary companies/sister concern out of such interest-free funds, has been raised for the first time before us, therefore in the interest of natural justice, we feel it appropriate to restore this issue back to the file of AO for deciding afresh in accordance with law after providing adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2020 (9) TMI 368
TDS u/s 194C and 194A - TDS on reimbursement of expenses - Addition u/s 40(a)(ia) - HELD THAT:- This appeal was decided without being personally heard the assessee. Further the Ld.AR submitted that on identical issue in the case of M/s Annavarapu Enterprises (198 [ 2017 (8) TMI 1613 - ITAT VISAKHAPATNAM] this Tribunal has decided the issue in favour of the assessee. Similarly, the Ld.CIT(A) for the A.Y.2006-07 and 2008-09 in the case of M/s Annavarapu Enterprises (1989) decided the appeal in favour of the assessee and deleted the addition. Therefore, in the interest of justice, we are of the considered view that the assessee required to be given an opportunity to present it s case before the CIT(A). Hence, we remit the matter back to the file of the Ld.CIT(A) with a direction to examine whether the expenditure in question i.e., reimbursement of expenses attracts TDS or not and whether the case is covered by the decision of this Tribunal as argued by the Ld.AR and decide the appeal on merits - Appeal of the assessee is allowed for statistical purpose.
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2020 (9) TMI 367
Capital gain computation - market value of the property sold u/s. 50C - HELD THAT:- We have no reason to disbelieve the genuineness of the contents of the agreement.The issue of registration was resolved by an order of the Hon'ble High Court of Andhra Pradesh dated 13-2-2007. From the agreement, we observe that the payment was received by the assessee by cheque for transfer of land, therefore, the case is squarely covered by the proviso to section 50C of the Act. On identical facts, this Tribunal in the case of Smt. Chalasani Naga Ratna Kumari, Visakhapatnam [ 2016 (12) TMI 1406 - ITAT VISAKHAPATNAM ] directed the AO to adopt the value of the property as on the date of execution of the agreement for capital gains We direct the AO to adopt the value of the property for the purpose of section 50C of the Act for computing capital gains as on the date of execution of agreement to sale, but not as on the date of sale deed. Accordingly, we set aside the order of the Ld. CIT (A) and remit the matter back to the file of the AO for limited purpose of verification of SRO value as on the date of sale agreement for determination of the capital gains. The AO is required to give opportunity to the assessee before passing the order. Appeal of the assessee is allowed for statistical purpose.
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2020 (9) TMI 345
TP Adjustment - protective adjustment on account of business restructuring - HELD THAT:- We find that TPO/DRP have made adjustment on substantive basis in assessment year 2010-11. However, since the proceedings in assessment year 2010-11 were subjudice, protective adjustment was made in the impugned assessment order making an addition which is in line with similar addition for assessment year 2011-12, 2012-13 and 2014-15. We find the MAP resolution was passed on 29th January, 2018 which is much after the order passed by the AO/TPO/DRP. Under these circumstances we deem it appropriate to restore the issue to the file of the AO/TPO for deciding the issue afresh in the light of the MAP resolution dated 29th January, 2018 and the order passed by the DRP in assessee s own case for assessment year 2014-15 AO/TPO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Grounds raised by the assessee are accordingly allowed for statistical purposes.
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2020 (9) TMI 342
Reopening of assessment u/s 147 - incorrect treatment of the income received from the house property - HELD THAT:- It is not in dispute that the AO made the addition only on the basis of the grounds which formed the part of the reasons recorded. It is only on merits the CIT(A) held that the income of the assessee is chargeable to tax under the head business income. It is, therefore, clear that at threshold the AO is justified in reopening the assessment and subsequently on merits the CIT(A) reached a different conclusion that the income falls under the head income from business . Now it falls for our consideration as to whether the CIT(A) is justified in refusing to take cognizance of the bifurcations of the lease and services by way of a supplementary agreement. We therefore, hold that the reopening of the assessment under section 147 is beyond challenge. Rent received on property - Whether the assessee is free to arrange their business and to enter into an agreement separately one for letting out the demised premises and another for the services and hiring of the equipment. Equipment may be inseparable from the building, but the Revenue cannot force the assessee to provide any services or to hire the equipment along with letting out the property. It is always open for the assessee not to provide the services or not to hire the equipment, while letting out the demised premises. Whether or not such services could be provided or the equipment could be hired independently, is the prerogative of the assessee and the lessee. When it is possible for the assessee to provide or not the services and to hire or not the equipment, then it is equally the prerogative of the assessee to provide them at a separate cost. Revenue cannot force the assessee to enter into any agreement in any particular form, but at the best, the Revenue can probe into the genuineness of the transaction or the correctness of the quantum of expenditure. Revenue cannot prevent the assessee from entering into separate agreements. At best Revenue can verify the quantum of expenditure claimed by the assessee in respect of the services provided or the expenditure related to the hired equipment. When the assessee had chosen to bifurcate the transaction and to charge separately towards the rent of the demised premises and for the services provided and hire charges, in our considered opinion the Revenue cannot prevent the same on the ground that such process would result in loss to the Revenue. Action of the authorities below not to permit the assessee to arrange their business in the way which is beneficial to them, within the permissible limits of law, is impermissible. Then it goes without saying that the assessee is entitled to claim the business expenses in respect of the income from the services provided and hiring of equipment, and statutory deductions under section 24 (a) of the Act insofar as the income from the house property is concerned. We direct the learned Assessing Officer to allow the statutory deduction u/s 24 (a) of the Act also and the interest incurred in respect of the house property. - Decided in favour of assessee.
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2020 (9) TMI 341
Transfer Pricing Adjustment - adjustment against AMP expenditure - Bright Line Test (BLT) - HELD THAT:- Assessee was not merely a distributor of the products manufactured by its AE but the assessee itself was manufacturing its own products in India under license from the AE. With a view to market and promote its own manufactured products, the assessee incurred AMP expenditure by making payments to third parties in India. There was no express arrangement / agreement between the assessee and the AE for incurring such expenditure to promote the brand of the AE and therefore, the said transactions would not constitute international transaction relating to AMP expenditure. As also observed that BLT method as adopted by Ld. TPO was not a valid method to benchmark the transactions. The technical collaboration agreement as referred to by Ld. TPO did not envisage any such express arrangement / agreement between the assessee and its AE and therefore, the same could not support the case of the revenue. Disallowance of cost of infrastructure development - HELD THAT:- There could be no doubt that the construction of roads facilitated the business operations of the assessee and enabled the management and conduct of the assessee's business to be carried on more efficiently and profitably. There could be no doubt that the advantage secured for the business of the assessee was of a long duration inasmuch as it would last so long as the roads continued to be in motorable condition, but it was not an advantage in the capital field, because no tangible or intangible asset was acquired by the assessee, nor was there any addition to or expansion of the profit-making apparatus of the assessee. The expenditure would be for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and therefore, clearly an expenditure on revenue account. Another aspect is that The Income Tax Act, unless specifically provided in the provisions, do not recognise the concept of deferred revenue expenditure. If the expenditure qualifies for deduction u/s 37(1), the same would be an allowable expenditure in its entirety in the year in which it has been incurred, if the assessee chooses to claim the same at one go. The said proposition stem from another decision in Taparia Tools Limited V/s JCIT [ 2015 (3) TMI 853 - SUPREME COURT]. We are of the considered opinion that the aforesaid expenditure, being revenue in nature would be an allowable expenditure in its entirety during this year. Accordingly, the ground raised stand allowed. Treatment of interest income - HELD THAT:- No details of bank deposits could be provided by AR despite specific request being made by the bench due to which we are unable to ascertain the fact that whether these deposits have direct nexus with the business of the assessee AR has attributed the parking of funds to general credit float enjoyed by the assessee without bringing anything on record to substantiate the same. Hence, we deem it fit to restore the matter back to the file of AO to examine the nature of Bank FDR particularly the tenure of the deposit and also verify the fact of 'credit float' enjoyed by the assessee and decide the issue afresh in accordance with law. The assessee is directed to cooperate with the lower authorities forthwith to substantiate his submissions. The ground of revenue's appeal is allowed for statistical purposes. Set-off of brought forward unabsorbed depreciation - HELD THAT:- As decided in own case [ 2020 (6) TMI 42 - ITAT MUMBAI] allowed the assessee to set off unabsorbed depreciation in accordance with the amended provisions of section 32(2) of the Act. As per amended provision of section 32(2), the unabsorbed depreciation can be carry forward and set off without any time limit. Thus, in the light of the settled position we find merit in the contentions of the assessee and direct the Assessing Officer to allow set off of brought forward unabsorbed depreciation pertaining to assessment year 2007-08 against the profits of the current year s assessment. We direct Ld. AO to allow the set-off of the same. This ground stand allowed.
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2020 (9) TMI 338
Validity of initiation of proceedings u/s 148 - dropping of proceedings under section 153A in the assessee s case but the A.O. proceeded to issue notice under section 147 r.w.s 148 - As submitted reopening is based on borrowed satisfaction by entirely relying on unverified 3rd party information /material/statements which had already lost the evidentiary value on want of being material under section 142(3) of the Act and having no presumptive evidentiary value under section 292 C - HELD THAT:- Reopening in the assessee s case by the A.O. was merely based on the borrowed satisfaction drawn from the cases of Shri Sanjay Singal, Smt. Aarti Singal, Shri Aniket Singal which was not sufficient for the purposes of sustaining any addition made u/s 147 r.w.s 148 . In the instant case the A.O. in the reasons recorded has mentioned that the search conducted on numerous entry operators and their beneficiaries revealed that the assessee had received huge amount of accommodation entries in the garb of exempt LTCG - if any action was required to be done on the basis of certain documents found from other persons during the course of search then the assessment could have been framed under section 153C of the Act but no such action was taken in assessee s case rather the action was taken indirectly under section 147 r.w.s 148 of the Act. As decided in in the case of CIT Vs. Kelvinator of India Ltd. [ 2002 (4) TMI 37 - DELHI HIGH COURT] it is well settled principle of law that what cannot be done directly cannot be done indirectly If any material was found relating to the assessee during the course of search on third parties then the correct course of action would have been to proceed against the assessee under section 153C of the Act and there was no justification for the A.O. to initiate the proceedings under section 147 r.w.s 148 of the Act. So respectfully following the case SHRI ADARSH AGRAWAL VERSUS THE INCOME TAX OFFICER, WARD-61 (1) , NEW DELHI [ 2020 (1) TMI 620 - ITAT DELHI] we are of the view that there was no justification on the part of the A.O. to initiate the reassessment proceedings under section 147 r.w.s 148 of the Act against the assessee. Accordingly the said order of the A.O. is set aside and quashed. - Decided in favour of assessee.
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Customs
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2020 (9) TMI 366
DFIA Scheme - Legality of import of sweet whey powder - Actual User Condition - exemption under notification no. 40/2006-Cus dated 1st May 2006 or no. 98/2009-Cus dated 11th September 2009 - HELD THAT:- It would appear that, despite availability of cheaper alternatives, it is not unknown for whey powder to be deployed as leavening agent in the baking industry. The adjudicating authority appears to have taken a contrary position on the basis of statements recorded from employees of the original holder of the license as well as those of the importer. This, as pointed out supra, is without good authority - Furthermore, the disinclination on the part of customs authorities to accept the clarifications issued by the licensing authority is mystifying. It is not the case of the adjudicating authority that there has been misdeclaration of the classification, or value, of the goods implying that the essentials for assessment have, thus, been complied with. Consequently, there is no finding of differential duty attributable to re-assessment. The impugned order fastens recovery, and other detriment, for non-compliance, in terms of eligibility and fulfilment of conditions, with exemption notifications issued for the purposes of implementing the duty-free import authorization (DFIA) scheme in the Foreign Trade Policy notified by the Directorate General of Foreign Trade under Foreign Trade (Development Regulation) Act, 1992. The eligibility for import of sweet whey powder , as leavening agent for manufacture of biscuits, should not, therefore, have given cause for doubt after receipt of clarifications from the license issuing authority. With the threshold eligibility thus settled, the allegation pertaining to ineligibility arising from import by an entity other than actual user and of ineligibility arising from utilization of a different leavening agent in the exports effected by the original license holder remain to be evaluated. The duty-free import authorizations procured by the appellant-importer had been made transferable in accordance with the provisions of the Foreign Trade Policy and there is no whiff of allegation that the said endorsements had been procured unlawfully. The prescription of actual user condition in the Foreign Trade Policy, and reflected in the corresponding notification issued under section 25 of Customs Act, 1962, cannot be said to be extended to transferees of such licences, except where specified otherwise, either in the policy prescriptions or in the notification, for that would be tantamount to imposing a condition that was not intended by the Central Government. We are also constrained to note that the original holder of license had not indicated such details in the relevant shipping bills. The statement of the employee of the exporter is the sole evidence relied upon by the adjudicating authority to conclude that an entirely different input had been utilized. There is no evidence on record that the appellants were aware of the composition of the exported goods. Hence, the appellant cannot be expected to conform to such imports as they are not cognizant of. From the available records and submissions made, we are unable to conclude if any of the inputs permitted for import to enable manufacture of biscuits are enumerated among the goods specified for conformity in the Handbook of Procedures. On the inadequacy of credible evidence, nature of the impugned goods and apparent conformity with the conditions of the Foreign Trade Policy, the impugned order cannot be sustained - Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 351
Maintainability of appeal - appeal has been dismissed on account of non-compliance of mandatory Pre-deposit - Section 129(E) of the Customs Act, 1962 - HELD THAT:- This Court after hearing learned counsel for the parties at length is of the considered opinion that the appellate authority was justified in dismissing the appeal on account of non-deposit of mandatory pre-deposit. This Court does not find any reason to interfere with the order passed by the appellate authority, however, it is made clear that in case, the mandatory pre-deposit is made within 30 days from today, the appellate authority shall decide the appeal on merits in accordance with law.
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2020 (9) TMI 350
Maintainability of appeal - Section 129A(3) of CA - validity of Compounding Order passed by the Compounding Authority - demand of redemption fine - compounding of offences under Section 137(3) of the Customs Act, 1962 in view of his previous antecedents under the Act - HELD THAT:- A common order was passed by the Tribunal in two appeals being the SHRI NOPAJI LAKHMAJI CHARITABLE TRUST MUMBAI, SHANTILAL JAVERCHAND JAIN VERSUS C.C., AHMEDABAD [ 2019 (6) TMI 1461 - CESTAT AHMEDABAD] and from which the present appeal arises before us. Against the order passed by the Tribunal in SHRI NOPAJI LAKHMAJI CHARITABLE TRUST MUMBAI, the Revenue had come before this Court by way of THE PRINCIPAL COMMISSIONER OF CUSTOMS VERSUS M/S. NOPAJI LAKHMAJI CHARITABLE TRUST, MUMBAI [ 2020 (4) TMI 10 - GUJARAT HIGH COURT] . A coordinate Bench of this Court vide order dated 27.02.2020 dismissed the Tax Appeal No.106 of 2020. The order states that since there is no clear proposal in the SCN on imposition of redemption fine and also in the OIO, there is no crystallized demand of redemption fine against each noticee. It was held that the department could not recover fine from the noticee. In this position, there is no demand of redemption fine against the appellants. In this view, there is no case of demand of redemption fine,Therefore, the rejection of application for non-payment or redemption fine if not correct and legal. The present appeal arising from the self same order passed by the Tribunal should also fail - Appeal dismissed.
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2020 (9) TMI 343
Review Order - Time Limitation - According to the Learned First Appellate Authority, the Review Order which was passed on 10.06.2019 was not within the above prescribed three months under Section 129D (3) of the Customs Act, 1962 and hence, rejected the Revenue s appeal - HELD THAT:- It is found after going through the impugned order, that the Learned First Appellate Authority, though has observed the date of passing of the Order-in-Original as 23.01.2019, has not considered the date affixed by the signatory of the order. Moreover, the Learned First Appellate Authority has considered the date of dispatch as 12.02.2019 whereas as per Section 129D (3) ibid., what is relevant is the date of communication i.e., Review Order to be passed within a period of three months from the date of communication. Hence, if the date of communication is 11th March 2019, then the Review Order passed on 10.06.2019 is very much within the time-frame fixed by the statute. The Revenue is also one of the litigants before this court and that being so, it cannot sit in the driver s seat. First of all, the crucial aspect which is creating suspicion in the minds of all of us, is as to the date of communication (11.03.2019) when the order was signed on 04.02.2019, has not at all been explained nor is the Revenue disputing the contentions of the Learned Advocate for the appellant that the office of the Adjudicating Authority as also that of the Reviewing Authority are located in the same premises. There is also no further explanation as to the date of dispatch/communication that has taken about a month when undisputedly, both the authorities are in the same building premises. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2020 (9) TMI 365
Restoration of name of the company in the Register of Companies maintained by the Registrar of Companies, Mumbai - HELD THAT:- On perusal of the Report of Registrar of Companies, Mumbai,Audited Accounts submitted by the Petitioner Company and the documents placed on record, the Bench has observed that company has Revenues from operation,Tangible Fixed Assets Current Assets its Books of Accounts.Therefore, it would be just, equitable and in the interest of justice to provide an opportunity to the company to rectify its defaults and continue the business. Petition allowed.
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2020 (9) TMI 364
Restoration of name of respondent in the Registrar of Companies - section 248 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the ROC to restore the name in its Register. The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would be neither just nor equitable - As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off to 'Active' (for e-filing), restoration of status of DIN etc. - Appeal disposed off.
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2020 (9) TMI 362
Dispensation of meetings of the Secured Creditors of the Applicant Nos. 1 and 2 and Unsecured Creditors in the Applicant Companies Merger of Companies - scheme of arrangement - transfer of shares - HELD THAT:- Considering the fact that there are a large number of Creditors, it would be appropriate to issue notices to them. It is ordered as follows: a. The Applicant Company shall serve the notice upon (i) Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) Income Tax Authority within whose jurisdiction the Applicant Companies' assessments are made, complete with PAN of the Company concerned i.e. for Applicant No. 1 (PAN No: AAACI7165B) and for Applicant No. 2, (PAN No: AACCE6013C) Circle 14(1)(2), Mumbai; for Applicant No. 3 (PAN No: AABCK6887D) Circle 12(3)(1), Mumbai; and for Applicant No. 4 (PAN No.: AACCE2954N) Ward 14 (1)(4), Mumbai; pursuant to section 230(5) of the Act and as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. If no response is received by the Tribunal within 30 days of the date of receipt of the notice it will be presumed that the Authorities have no objection to the Scheme. b. The Applicant No. 1, Applicant No. 2 and Applicant No. 3 shall serve notice of Application along with a copy of the Scheme upon the Official Liquidator, High Court, Bombay pursuant to Section 230(5) of the Act. The Tribunal hereby appoints M/s. K. K. Naulakha Co., Chartered Accountants having address at 101, Yusuf Building, 43, M. G. Road, Flora Fountain, Fort, Mumbai-400001, [Contact: 022-22852300/10/20, Email: [email protected]] with remuneration of ₹ 2,00,000/- (Rupees Two lakh only) to assist the Official Liquidator in scrutinizing the books of Accounts of the Applicant No. 1, Applicant No. 2 and Applicant No. 3. The Official Liquidator shall submit its report/ representation to this Tribunal. If no response is received by the Tribunal from the Official Liquidator within a period of thirty (30) days, it would be presumed that the Official Liquidator has no objection to proposed Scheme as per Rule 8 of the Rules. c. The Applicant Companies shall issue notice to all the Secured Creditors of Applicant Nos. 1 and 2 and Unsecured Creditors of the Applicant Companies by Courier/Registered Post/Speed Post/Hand Delivery at their last known address or through their registered Email Such Creditors may submit their representations to the Tribunal, if any, within a period of thirty (30) days from the date of receipt of such notice. It shall be the responsibility of the Applicant Companies to ensure that all the Creditors as indicated above are put on notice regarding the Scheme, so that they may take informed decision thereon. d. The Applicant Companies shall file compliance report with the Registry on the directions given in this Order in lieu of customary affidavit of service, due to the prevailing lockdown, for proving service of notice on the regulatory authorities and the Creditors as stated above.
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2020 (9) TMI 361
Sanction of Amalgamation Scheme - Sections 230 to 232 of Companies Act - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, Petition filed by the Petitioner Company has been made absolute in terms of prayer made in the petition. Petition allowed subject to conditions imposed.
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2020 (9) TMI 360
Removal of the applicant as a director - main issue put across by way of the present application is that the applicant has not received his remuneration @ ₹ 1,10,000/- per month as a director of the company since October 2016, although the other directors of the company have continuously received their salary from the company unlike the applicant - HELD THAT:- There is no urgency to pass any interim directions/orders as regards entitlement of the applicant to any remuneration/salary, or any payment thereof to the applicant by the company. What weighed in our mind in refusing to pass any interim order was the Resolution passed in the EoGM by the majority shareholders/directors, converting the status of the applicant from the Executive director to a Non Executive Director, which meeting was attended by the applicant and the Resolution is stated to have been challenged by the applicant. There is no use keeping this application on board particularly when an application on the same and similar facts is already filed and pending. Prima facie, we are convinced that the applicant has not been able to prove even that he ever worked for the company as a director or as an employee for which he deserved some remuneration or salary as an interim measure. This is not a fit case for passing any interim orders or keep this petition for further consideration - application dismissed.
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2020 (9) TMI 359
Restoration of name of respondent in the Register of Companies maintained by the office of ROC - Aggrieved person is Income Tax Department - Circular No. 225/423/2017-ITA.II dated 29.12.2017 - HELD THAT:- It is found that the appeal is filed under section 252(3) of the Companies Act, 2013. While, going through the section 252(3) of the Companies Act, it is found that the instant provision is made when the company is struck of voluntarily on the behest of the Promoter(s)/Director(s), whereas, section 252(1) of the Companies Act, provides that, when the company is struck of by the Registrar of Companies on the failure in filing of statutory returns by the Company. The instant application would not lie under section 252(3) of the Companies Act, 2013; rather, it would lie under section 252(1) of the Companies Act, 2013 - name of the Company was struck off for continuous non-filing of Statutory Returns. Hence, considering the public interest, and to protect the legitimate interest of revenue, the name of the Respondent Company requires to be restored in the Register of Companies maintained by the ROC, Ahmedabad so as to enable the Appellant (Income Tax Department) to proceed further as per rules and in accordance with law. Appeal allowed - it would be just and equitable to restore the name of the Company M/s. Crucial Consulting Pvt. Ltd. in the register maintained by ROC, Ahmedabad, Gujarat as the same is not barred by any law.
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2020 (9) TMI 339
Urgent hearing and disposal of petition - It is submitted by the applicant that delay in hearing and disposal of the main petition led to significant losses for the creditors and therefore, the petition may be taken up for urgent hearing through videoconference at the earliest - HELD THAT:- The Tribunal should not be swayed by the communication dated 24.04.2020 issued by the Ministry of Corporate Affairs in deciding the IA as this Tribunal is a statutory authority. We agree with the contention. However, the said communication dated 24.04.2020 cannot be seen in isolation. It has to be viewed in view of the fact that huge financial defaults will cause adverse impact on the economy of the country. Further, Government of India has announced unlocking of the lockdown effective from 08.06.2020. Almost all Governmental organizations are functioning, albeit with some restrictions. Even though the pandemic situation does prevail, near normalcy is restored with lot of safeguards and precautions. As such we are not in a position to agree with the contention of the learned counsel for the respondent/Corporate Debtor in this regard. After the restrictions of lockdown getting relaxed, this Tribunal is also hearing matters on regular basis, wherever urgency is felt. The main Company Petition is posted for regular hearing on 01.07.2020 - application disposed off.
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Insolvency & Bankruptcy
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2020 (9) TMI 363
Jurisdiction - power of liquidator to sell the immovable properties and actionable claims of the Corporate Debtor in liquidation through public auction or private contract - Regulation 33 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 and Section 53 of the Insolvency and Bankruptcy Code, 2016 - Distribution of Sale Proceeds - HELD THAT:- The Adjudicating Authority has the power to permit the private sale subject to certain conditions. In the case in hand since the secured creditors have already given their consent for private sale, this Adjudicating Authority is of the opinion that the request of the Liquidator be considered. Accordingly, the sale of the property of the Corporate Debtor by private treaty is allowed and liquidator is permitted to sell the property i.e. factory structure and sheds for ₹15,00,00,000/- excluding applicable indirect taxes, stamp duty, cess, if any. In view of the provisions of Section 53 of the I B Code, 2016 the liquidator have to act as provided under Section 53 of the Code for which the specific direction is not required from this Adjudicating Authority - In view of the above provisions of Section 35 and Section 53 of the I B Code, 2016 the liquidator is also seeking permission of this Bench to distribute the proceeds of the sale. The liquidator has to arrive at the amount available for distribution after deducting the costs, if any, as required under section 53(1)(a). Further there are no details as to amount payable to labourers in terms of section 53(1)(b)(i). Hence no directions can be given in respect of this prayer at this stage and he has to file application providing all the details preferably by serving a copy to the security interest holders over this asset - Application partially allowed.
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2020 (9) TMI 358
Maintainability of application - Liquidation of Corporate Debtor - initiation of proceedings under SARFAESI Act, 2002 - sale of assets of the Applicant companies which are subsidiaries (while three are 100% subsidiaries and one being 66%) of the Corporate Debtor as a going concern - diminishing of value of the Corporate Debtor or not? - section 60(5)(c) of the IB Code, 2016. HELD THAT:- In the present case, during the CIRP, as there was no viable resolution plan, this Adjudicating Authority passed an order for liquidation. Against the said order of liquidation, an appeal came to be preferred before Hon'ble NCLAT. The fact on record is that one M/s. Gabs Megacorp, is the successful auction bidder, who is acquiring the Corporate Debtor as a going concern for a bid of ₹ 1654.77 Crores. It is also a fact that the assets of the Corporate Debtor includes investments in the subsidiary companies. The value of the said investments would depend, inter-alia, on the value of the assets owned by the subsidiary companies, apparently, the successful bidder has bid the acquisition amount based on the value of the assets of the Corporate Debtor which include the investment in the shares of the Applicant companies i.e., the subsidiary companies herein - In case, the Respondent No. 1 bank is allowed to proceed with the sale of the Applicants, there is every chance that it would diminish the value of the Applicants, which would result in diminishing the value of the Corporate Debtor, since the value of the Corporate Debtor includes the value of its shareholding in the Applicant companies. Though it is a settled position of Law that the liabilities of a surety is coextensive with that of principal debtor and further in view of the Law settled by the Hon'ble NCLAT and Hon'ble Supreme Court that a Financial Creditor can proceed to enforce the guarantees against the guarantors. Thus the settled position of Law, that there should not be any restraints on a Financial Creditor to proceed against the Guarantor even after the initiation of CIRP, approval of Resolution Plan or liquidation proceedings being commenced or closed. However, in the instant case, it is not the question of the right of the Financial Creditor to enforce the guarantee against the guarantor, but the point for consideration is whether the Respondent No. 1 Bank can proceed with the enforcement of security interest and sell the properties owned by guarantor companies within Applicant No. 1 to 4, which also would certainly result in diminishing the value of the Corporate Debtor, which would impact the sale of the Corporate Debtor as a going concern. This Adjudicating Authority feels it proper to direct Respondent No. 1 bank not to take any coercive steps such as sale of the properties mortgaged by the Applicant companies in favor of Respondent No. 1 bank till the completion of Liquidation proceedings of the Corporate Debtor - Application disposed off.
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2020 (9) TMI 357
Approval of Resolution - Section 30(6) of the IB Code, 2016 - HELD THAT:- List these applications also on 16.06.2020. The learned counsel for the Resolution Professional shall communicate this order to all the remaining counsels in these applications as well as the parties in the proposed IA.
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2020 (9) TMI 340
Initiation of insolvency resolution of a personal guarantor of the Corporate debtors - Financial Creditor - Contest against a Personal Guarantor of the Corporate Debtors - section 97(3) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- While an Application for corporate insolvency resolution process or liquidation proceedings of corporate debtors are pending before this Authority i.e. to say during the pendency of a process of corporate insolvency resolution of the Corporate Debtors, an Application against the Personal Guarantor shall have to be filed. This itself indicates that the process of corporate insolvency resolution of the Corporate Debtors in an Application relating to insolvency resolution etc. of a personal guarantor needs to be filed and can be prosecuted. The law doesn't envisage that the insolvency resolution of the personal guarantor should follow only when the process of corporate insolvency resolution of the corporate debtor has come to an end. Therefore, the submission that this Authority should wait till the resolution of RCOM or RITL is successfully accomplished and the debts of the corporate debtors have been satisfied, would be eristic. It is to be remembered that the present forum is not a recovery forum and has nothing to do with the satisfaction or otherwise of the debts of the corporate debtors. The submissions accordingly don't hold much water. Section 97(3) of the Code doesn't provide for any alternative or any option to the Adjudicating Authority to be tardy in making the direction to the Board. The use of the word 'shall' itself indicates the urgency with which the Application needs to be dealt with. The Authority accordingly has no other option than to issue the direction. The submissions made by the Respondents that this Authority could wait till the resolution of the Corporate debtors are completed accordingly cannot be accepted. Therefore, in our considered opinion we feel it appropriate to issue the direction in terms of Section 97(3) of the Code. Rule 8 of the I B (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors) Rules, 2019 provides that for the purposes inter alia of sub section (2) of section 97 the IBBI may share the database of Insolvency Professionals and share a panel of Insolvency Professionals for the purpose inter alia of subsection (4) of section 97 of the Code. The IBBI has since shared the panel (valid till 25th November 2020) under its letter dated 25th June 2020 - Therefore, there is no need to direct the IBBI to nominate the name of a Resolution Professional. This Authority can appoint one from the panel. Since on filing of the Petition interim moratorium under section 96 of the Code had set in, no other order in terms of prayer (b) of the Application can be passed. Application disposed off.
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Service Tax
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2020 (9) TMI 356
Non-payment of Service Tax - Man Power Recruitment and Supply Agency Services - It is the case of the petitioner that the impugned order dated 27th September, 2016 came to be passed by the respondent no.1 in absence of any reply or any evidence being produced by the petitioner - HELD THAT:- The petitioner was registered under section 69 pursuant to the Act-1994 for providing Man Power Recruitment and Supply Agency Services . However the petitioner did not file the return in Form ST3 and did not deposit the service tax collected by him from his clients. It was also found by the adjudicating authority on scrutiny of the documents submitted and verified during investigation that the petitioner did not correctly declare his total service amount and purposefully concealed the income from service provided by him. The petitioner also did not furnish service invoice party wise ledge or balance sheet during the investigation and therefore, the adjudicating authority was required to rely upon only tax statement under section 203AA of the Income Tax Act, 1961 i.e. Form 26AS for the period under investigation to find out the actual taxable amount out of the total service income of the petitioner. The petitioner has admitted in the statement recorded under section 14 of the Act-1944 as applicable to service tax law that he did not account the amount of service provided to various customers during the financial year 2010-2011 to 2014-2015 for his service tax liability resulting into evasion of service tax. The writ petition is not maintainable in view of stipulations made by Full Bench and even on merits, the petitioner having not complied with the provisions of the Service Tax Act at any point of time, is not entitled to claim any relief - In facts of the case, as the petitioner has failed to file return of income and failed to deposit the service tax collected by it there was clear intention to evade the tax on behalf of the petitioner. Petition dismissed.
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2020 (9) TMI 355
CENVAT Credit - input services - services of insurance agents when portion of premium amount (consideration towards output service) - reverse charge mechanism - service not liable to tax - credit has been denied solely on the premise that the insurance service (for sale of ULIP policies) is exempted service, since no service tax is paid on the premium pertaining to the investment component - HELD THAT:- The Ld. Commissioner committed a fundamental error in assuming that the sale of ULIP policy by the appellant results into provision of exempted service. We are of the considered view that the appellant is only engaged in rendering the insurance services and merely for the reason that portion of the premium amount charged in respect of ULIP policies is not liable to tax, it cannot be said that the said service is exempted output service when tax is duly paid on the portion of premium collected on risk coverage. Merely for the reason that the break-up of premium amount is shown in the policy, the fact that remains is that the policy is one and single with the feature of both risk coverage and investment opportunity simultaneously. It cannot be said that the insured i.e. the subscriber to the policy has availed two separate policies. Neither there can be a question of extending the facility for subscribing to ULIP policy with only the investment portion, excluding the risk coverage and vice versa. Since no exempt service has been provided by the appellant, there is no application of Rule 6 of the Credit Rules in the instant case to deny the credit. Moreover, since there is no dispute that the services of insurance agents have been used in providing output service, the said service constitute eligible input service under Rule 2(l) and therefore, service tax paid thereon is clearly eligible for credit in the hands of the appellant. The impugned demand of service tax along with interest and penalty cannot be sustained and hence, set aside in entirety - Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 344
Refund of Advance Service tax paid - refund claimed on the ground that there was absolutely no service provided - Rule 6 (3) of the Service Tax Rules, 1994 - Time Limitation. When advance amount is paid for a service and such service could not be provided due to amalgamation, whether Section 11B ibid. applies when refund of the above amount is claimed? - HELD THAT:- There is no dispute as to the eligibility or otherwise for refund except the claim being rejected as barred by limitation. There is also no dispute that both the service provider and the service recipient having merged into a single entity, there was no service provider or service receiver. Hence, the service for which the agreement was signed could not be provided also since the same would have amounted to providing a service to the self. Further, even Rule 3 of the Point of Taxation Rules, 2011 will have no role since the same would not apply to the case of service to the self. Section 66B of the Finance Act, 1994, which is the charging Section, requires the levy of Service Tax on the value of services other than the services specified in the Negative List, provided or agreed to be provided, by one person to another. Subsequent to the amalgamation in this case, there remained only one person for having provided service to himself/itself. Where an agreed service could not be provided either wholly or partially; that the Rule 6 (3) of the Service Tax Rules, in such a situation, permits the assessee to take credit of such excess Service Tax paid which falls under a separate category by itself, as a deposit and hence, loses the characteristics of tax , for which reason provisions of Section 11B ibid. are not attracted. There is also no dispute that even the ST-3 return itself recognizes this aspect by providing a separate column for taking credit without any time-limit and without even any reference to cash or credit, thereby enabling the taxpayer to set off the credit so taken against any tax liability. Unjust Enrichment - HELD THAT:- The Revenue has not alleged unjust enrichment. When the amount loses the character of Service Tax, it could only be treated as a deposit, as held in innumerable precedents, which becomes an item for adjustment in terms of Rule 6 (3) ibid., since no service could ever be provided. Thus, the provisions of Rule 6 (3) would only apply and not the provisions of Section 11B ibid. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (9) TMI 347
Maintainability of petition - Validity of assessment order - writ petition after 3 years - Condonation of delay - HELD THAT:- As on date, there is no justification whatsoever to interfere with the order of R1 confirming the assessment and levy of tax. In fact there is no acceptable explanation for the delay of three years in filing this writ petition - The only trigger for filing of this Writ Petition was that the cancellation of penalty had been challenged by the revenue and this can hardly be a ground for interference with the impugned order. Petition dismissed.
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2020 (9) TMI 346
Penalty Order - Stay, on condition that the petitioner furnished a simple bond to cover the disputed amount - limited prayer of the petitioner at this stage is for a direction to the respondents to accept the bond offered by him and to direct the Tribunal to dispose the appeal expeditiously - HELD THAT:- It is not in dispute that by Ext.P6 order, the petitioner was granted a stay against recovery proceedings pending disposal of the appeal. The only lapse on the part of the petitioner appears to have been the non-furnishing of the bond within the time stipulated by the Tribunal. It is not in dispute however that Ext.P7 bond was subsequently offered before the respondent authority, but the said authority refused to accept the bond since it was preferred beyond the time stipulated by the Tribunal. Inasmuch as there is no prejudice caused to the revenue by accepting the bond at this distance of time, the Writ Petition is disposed off with a direction to the respondents to accept Ext.P7 bond offered by the petitioner and to treat the same as in compliance with Ext.P6 order of the Tribunal - on furnishing the bond, the stay granted by the Tribunal shall continue to operate in favour of the petitioner, pending disposal of the appeal.
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Indian Laws
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2020 (9) TMI 349
Bail Application - Smuggling - contraband drugs(heroin) - Whether a person accused of committing an offence under the penal provisions of the NDPS Act is entitled to the benefits of bail due to procedural defects or irregularities? - Whether the accused person can be released on bail if the offence which he/she allegedly commits as is found in the charge-sheet does not suffer the rigour of Section 37 of NDPS Act? HELD THAT:- The procedural defects or irregularities in course of investigation shall not be considered as fatal entitling the benefit of bail to the person accused of committing offence under the penal provisions of NDPS Act. In the instant case, the learned counsels appearing for the parties have tried to persuade this Court that charge- sheet has been filed, charges have been framed and four witnesses have already been examined wherefrom it transpires that there is total non-compliance of the mandatory provisions of Section 42 of the NDPS Act. I am not unmindful to the submission of learned counsel appearing for the State- respondent that vital witnesses, like SDPO of NCC P.S., the Duty Officer[HWC(UB)] Bipin Debbarma of NCC P.S., I.O. and the reporting officer were yet to be examined. Whether a person who has not been charged for committing offence punishable under Section 19 or Section 24 or Section 27A and also for offence involving commercial quantity, should suffer a rigour of Section 37 of NDPS Act and be considered for bail after submission of charge-sheet and particularly, when charge has been framed against him? - HELD THAT:- In the case in hand, the accused person has been charged under Sections 22(b)/25 of the NDPS Act - The charge framed by the learned Special Judge after considering the materials as revealed from the charge-sheet clearly manifests that the present accused-person has not committed any offence punishable for offence under Section 19 or Section 24 or Section 27A and also for offence involving commercial quantity. A plain reading of Section 37 of the NDPS Act and the language employed therein clearly manifest that the Legislature while introducing the provision of Section 37 of the NDPS Act had taken into notice the extent and gravity of the offences punishable under Section 19 or Section 24 or Section 27A and also for offences involving commercial quantity. It was not the fact that the makers of law were unaware of other penal provisions prescribed in the statute but had intended not to bring those penal provisions under the umbrella of Section 37 of the NDPS Act and restricted themselves within the provisions and circumstances as specifically mentioned therein. In my opinion, the language used in a statute and literal meaning thereof, is the determinative factor of legislative intention. The intention of the Legislature is found in the words used by the Legislature itself. The question is not what may be supposed to have been intended, but, what has been stated expressly. The accused has been in custody for one year and six months and also a private tutor. The earlier bail application was filed by the accused-person after framing of charge, and the bail application in hand has been filed after the trial is commenced when four witnesses have been examined. As such, there is change in circumstance. Further, at this stage, there is no chance of tempering the evidence - the accused-person, namely Shri Jitendra Bhowmik shall be released on bail by furnishing a bail bond of ₹ 2,00,000/-(Rupees two lakhs) with two sureties of the like amount to the satisfaction of the learned Special Judge, West Tripura, Agartala. Bail application allowed.
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