TMI Tax Updates - e-Newsletter
September 11, 2021

Case Laws in this Newsletter:

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

Articles

1. CROSS CHARGE UNDER GST

   By: VISHAKA GOYAL

2. COACHING SERVICES: ISSUES CLARIFIED BY AAR

   By: Dr. Sanjiv Agarwal

News

1. Income Tax Department conducts searches in Punjab and Haryana

2. Income Tax Department conducts searches in Ahmedabad

3. Know all about Account Aggregator Network- a financial data-sharing system

4. CBDT extends due dates for filing of Income Tax Returns and various reports of audit for Assessment Year 2021-22

Notifications

DGFT

1. 24/2015-2020 - dated 9-9-2021 - FTP

Amendment in Import Policy of Mercury under ITC HS Code 28054000 and insertion of Policy Condition No. 03 in Chapter 28 of ITC(HS), Schedule I(Import Policy)

2. 17/2/2021-EP (Agri.IV). - dated 9-9-2021 - FTP

Central Government introduce 'Revised Transport and Marketing Assistance (TMA) for Specified Agriculture Products Scheme'

GST - States

3. S. R. O. No. 663/2021 - dated 7-9-2021 - Kerala SGST

Amendment in Notification No. 19/2019/TAXES. dated 28th January, 2019

4. S. R. O. No. 662/2021 - dated 7-9-2021 - Kerala SGST

Amendment in Notification No. 61/2017/TAXES. dated 30th June, 2017

Income Tax

5. 103/2021 - dated 10-9-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘District Mineral Foundation Trust’ in respect of the specified income arising to that Authority

Circulars / Instructions / Orders

Income Tax

1. 17/2021 - dated 9-9-2021

Extension of time lines for filing of Income-tax returns and various reports of audit for the Assessment Year 2021-22

Highlights / Catch Notes

GST

• Assistant Commissioner to Decide on GST Refund for Inverted Duty Structure: Higher Input vs. Output Tax Rates.

  Case-Laws - HC : Refund claim - inverted duty (GST) structure - If the Assistant Commissioner arrives at his satisfaction that the actual rate of tax on the input supplies made by the petitioner assessee is higher than the actual rate of tax on the output supplies appropriate order for refund may be passed and on the other hand, if the Assistant Commissioner upon factual deliberation arrives at his satisfaction that the actual rate of tax on the input supplies was not higher than the actual rate of tax on the output supplies, again an appropriate order may be passed by giving reasons. - HC
  Visit to Get Source

  ---

• Supreme Court advises pursuing statutory remedy u/s 107; High Court's writ petition decision deemed inappropriate.

  Case-Laws - SC : Maintainability of petition - no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority - the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent.- SC
  Visit to Get Source

  ---

• Services for Government Hospitals Exempt from GST per Advance Authority Ruling.

  Case-Laws - AAR : Classification of services - The proposed supply as per the Tender for housekeeping, Security Services and Assistance in Electrical, Plumbing, laundering, Cooking, Catering, Gardening & Carpentry Services in 93 Government Hospitals under the Control of Directorate of Medical & Rural Health Services, -86 Institutions, Directorate Medical & Rural Health Services (ESI)-7 Institutions is exempt - AAR
  Visit to Get Source

  ---

• Coaching services including materials and uniforms classified as "Supply of service" under GST; tax invoice required.

  Case-Laws - AAR : Supply of goods or services - services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students - transaction of supply of coaching service for a consideration falls under the ambit of "Supply of service". - the consolidated value for which tax invoice is issued shall be the taxable value - AAR
  Visit to Get Source

  ---

Income Tax

• Taxpayer Challenges PCIT's Revisional Powers u/s 263 in Limited Scrutiny Case on Deduction and Depreciation Claims.

  Case-Laws - AT : Revision u/s 263 - deduction claim u/s 80IA and excess claim of depreciation - Case of assessee as selected for limited scrutiny - - revisional jurisdiction u/s 263 cannot be exercised by the ld PCIT as the same would tantamount to broadening the scope of jurisdiction that was originally vested with the A.O while framing the assessment u/s 143(3) of the Act in case of limited scrutiny case.. - AT
  Visit to Get Source

  ---

• Assessment Invalid Due to Non-Existent Entity; Participation Doesn't Estop Law; Section 292B Can't Rectify Error.

  Case-Laws - AT : Assessment against non-existing entity - Amalagamation - Regarding the participation in the proceedings as contended by the ld. DR, in our opinion, participation in the proceedings by the assessee in such circumstances cannot operate as an estoppels against law, thus, the final assessment as framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which would be cured by invoking the provisions of Section 292B - AT
  Visit to Get Source

  ---

• Supreme Court Rules Software License Sales Not 'Royalty' u/s 9(1)(vi) and Article 12 of DTAA.

  Case-Laws - AT : Reopening of assessment u/s 147 - There is no gainsaying that the Courts declare the law and do not legislate. With the advent of Engineering Analysis (SC) (supra), the law since inception has to be presumed as not treating the sale of software licenses as ‘Royalty’ in terms of section 9(1)(vi) read with Article 12 of the DTAA insofar as the year under consideration is concerned. Thus, the re-assessment pursuant to such reasons is hereby set-aside. - AT
  Visit to Get Source

  ---

• Gifts Explained u/s 56(2)(vii)(a) Accepted; No Grounds to Invoke Section 69A for Unexplained Income.

  Case-Laws - AT : Addition u/s 69A r.w.s.115BBE - Since, the assessee has already explained the source as gifts and offered the same to tax u/s 56(2)(vii)(a), which was not being disproved by the AO, the credits made in the books of accounts stands explained and there is no case for invocation of section 69A - AT
  Visit to Get Source

  ---

• Court Rules Against Retrospective Depreciation Disallowance on Road Infrastructure Facilities by Assessing Officer Under Concessionaire Agreement.

  Case-Laws - AT : Excess depreciation - cost of development of infrastructure facility of roads/highways - Action of the Ld. AO in applying the circular retrospectively is not in order. Accordingly, the disallowance made by the Ld. AO on account of difference between the depreciation claimed and the depreciation allowed on the basis of amortization for the remaining part of the concessionaire agreement is directed to be deleted - AT
  Visit to Get Source

  ---

• High Court Reverses ITT, Confirms Additions Due to Unexplained Share Application Money u/s 68.

  Case-Laws - HC : Addition u/s 68 - Unexplained share application money - onus to prove - In the case on hand, the assessee miserably failed to discharge the primary onus cast upon them - AO conducted a detailed enquiry, issued summons, recorded statements, permitted the authorized representative of the assessee to peruse the seized records and in fact, came to a provisional conclusion as to how he intends to proceed and gave further opportunity to the authorized representative of the assessee - Additions confirmed - Order of ITT reversed - HC
  Visit to Get Source

  ---

• Court Upholds ITSC Order on Deemed Dividends u/s 2(22)(e); Revenue's Concerns Addressed in Settlement.

  Case-Laws - HC : Validity of order of Income Tax Settlement Commission [ITSC] - deemed dividend under Section 2(22)(e) - The Revenue need not have any apprehension over the income, which was initially disclosed at the time of filing the application under Section 245C of the Act because the said income, which was offered at the first instance was not accepted by the Revenue and a report under Rule 9 of the said Rules was filed and based on that, the Revenue suggested four additions and thereafter, the case was proceeded and the matter was settled. - HC
  Visit to Get Source

  ---

• Arrears Salary Claim Validity Depends on Crystallization; AO Reviews Evidence for Current Year Liability.

  Case-Laws - AT : Alllowability of claim of arrears of salary - Ascertained or crystallized liability of the current year or not - AO is well within his jurisdiction to examine all such claims and the assessee is required to justify such claims and demonstrate with reasonable verifiable evidence that such liability has crystallized during the year under consideration. - AT
  Visit to Get Source

  ---

• Rectification Order Issued After 4-Year Limit u/s 154 Deemed Time-Barred and Annulled in Favor of Taxpayer.

  Case-Laws - AT : Rectification u/s 154 - Period of limitation as per section 154(7) - In the present case, the order u/s. 143(3) was passed on 26/12/2011 and the financial year is FY 2010-11. The impugned order passed dated 30/11/2018 is certainly beyond four years thereof. Hence, in our considered opinion, the assessee succeeds on the additional ground. The rectification order passed u/s. 154 in this case is accordingly time barred and hence, the same is squashed as such - AT
  Visit to Get Source

  ---

Service Tax

• Service Tax on Corporate Guarantee Commission: Inconsistency in Classification by Tax Authorities Raises Concerns.

  Case-Laws - AT : Levy of service tax - commission earned by providing ‘corporate guarantee’ is taxable, as ‘business auxiliary service’ - It can be gauged from the narrative of the impugned order that, initially, the tax authorities had the same inclination but, for unfathomable reasons, a different ‘taxable service’ was invoked for initiating recovery proceedings. Consequently, there was patent lack of certainty of tax in the mind of the show cause notice issuing authority. - AT
  Visit to Get Source

  ---

• Telecom Company Challenges Service Tax on Roaming Charges, Citing Lack of Authority to Operate Abroad u/s 66A.

  Case-Laws - AT : Demand of service tax on roaming charges - The appellant, as a licencee of the domestic telecommunication regulatory regime, is not conferred with empowerment to operate in a foreign territory and can neither, conceivably, offer such service independent of the overseas entity nor avail of the equipment of overseas operator for rendering ‘telecommunication service’ to its subscribers. The activity, therefore, lies outside the ambit of ‘support service of business or commerce’ which is the ‘taxable service’ sought to be fastened on the appellant as ‘deemed provider’ under section 66A - AT
  Visit to Get Source

  ---

Central Excise

• Adding Sheds to Manufacturing Unit is Capacity Expansion, Not New Units Post-28.02.2001, Tribunal Confirms.

  Case-Laws - HC : Area based exemption - Expansion / enhancement of manufacturing capacity - The Tribunal committed no error in coming to the conclusion that the addition of two sheds to the existing manufacturing unit was only in the nature of expansion of manufacturing capacity and cannot be seen as establishment of new industrial units coming into existence after 28.02.2001 - It is not the case of the department that even if there is any expansion in the existing industrial unit after 28.02.2001, the production achieved through such augmented manufacturing capacity would not qualify for exemption under the said notification - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (9) TMI 482
  Classification of supply - supply of goods or supply of services - composite services or not - principal supply - supply of services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students - coaching service under a business model through Network Partners as per sample agreement attached, containing obligations of Applicant and Network partners - supplier of service and recipient of service? - valuation of service provided by Applicant to students and by network partner to Applicant. Supply of goods or services - services of coaching to students which also includes along with coaching, supply of goods/printed material/test papers, uniform, bags and other goods to students - HELD THAT:- Since the applicant supplied the goods i.e. printed material, text paper, uniform, bags to the students etc. and as well as supply of services i.e. coaching/Training to the student. As such supplies are not charged separately but a consolidated amount is charged by the applicant - In the instant case, the applicant is providing coaching service to its enrolled students for as consideration which will be a lump sum amount for both goods and services. Therefore, transaction of supply of coaching service for a consideration falls under the ambit of Supply of service . Whether such supply shall be considered as composite supply? - If yes, what shall be the principal supply? - HELD THAT:- From the definition of principal supply it is clear that in the present case there is a principal supply of goods or services which constitutes the predominant element of a composite supply. The predominant element of the composite supply is to be determined on the basis of facts and circumstances of the present case - In the instant case, the applicant along with coaching services provides goods in the form of uniforms, bags, study material etc. Supply of goods is a part of supply of service shall qualify as composite supply . The principal supply being the supply of coaching service to the students, tax on such supply shall be levied accordingly. Coaching service under a business model through Network Partners as per sample agreement attached, containing obligations of Applicant and Network partners - who shall be considered as supplier of service and recipient of service under the agreement? - HELD THAT:- Where services are provided by the applicant to the students. students shall be regarded as recipient as consideration is payable for the supply of goods or services or both by the students to the applicant. Similarly. Network partner will be regarded as provider of service to the applicant. What shall be the value of service provided by Applicant to students and by network partner to Applicant? - HELD THAT:- The applicant has been incurring the cost of goods supply to the students i.e. Begs, study material etc.). therefore, in light of the provisions of Sections 15(2) (b of the Act, the values of goods are part of the value of services provided by the applicant and charged a consolidate amount to the students. Therefore, the consolidated value for which tax invoice is issued shall be the taxable value. Whether both, Applicant and network partner can avail eligible ITC for their respective supplies? - HELD THAT:- As per Section 16(1) of the CGST Act, Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person - in this case the applicant is a registered person and can avail eligible ITC as per provisions of GST Act, 2017.

  ---

• 2021 (9) TMI 481
  Classification of services - services provided by Padmavathi Hospitality Facilities Management Services (PHFMS) to DME - function entrusted to a Panchayat or a Municipality under the constitution - exemption under SI.No.3 of Notification 12/2017 Central Tax dated 28.06.2017 read along with amendment dated 25.01.2018 or not - levy of GST - pure services or Composite Supplies? - HELD THAT:- t is seen that Tamil Nadu Medical Service Corporation Ltd., (TNMSC) has called for a tender vide Bid Reference 697/Outsourcing/DMS/TNMSC/ENGG/2021 dt 05.07.2021, Tender for outsourcing of housekeeping, Security Services and Assistance in Electrical, Plumbing, laundering, Cooking, Catering, Gardening Carpentry Services in 93 Government Hospitals under the Control of Directorate of Medical Rural Health Services (DM RHS), -86 Institutions, Directorate Medical Rural Health Services (ESI) (DM RHS ESI) - 7 institutions. It has been proposed to identify an agency /agencies for one or any or all of the four zones through a transparent bidding process to accomplish the task. It can be stated that the works involved in the tender is offering Comprehensive Facility Management Solutions to the Hospitals under DM RHS in the area of Housekeeping, Cleaning, Security, maintenance, etc by providing effective manpower including supervisory persons and the required equipment, consumables, etc. The tender considers the entire works as Services which by the clauses of the tender includes goods and services - the person bidding for the tender has to provide the man-hour cost and the cost of resources such as equipment(amortized), consumables, etc to be used by the bidder for effective provision of the comprehensive management solution related to cleaning, housekeeping, security and maintenance of the Hospitals under the DM RHS. Applicability of entry No. 3 of the Notification No. 12/2017-C.T.(Rate) - scope of work to be undertaken in the 86 Government Hospitals under the control of Directorate of Medical Rural Health Services and 7 Hospitals - HELD THAT:- The entry applies to Pure Services provided to the defined class of service recipients and the services are to be of any activity in relation to any function entrusted to a Panchayat/Municipality under Article 243 G/243W of the Constitution - in the case at hand, the scope of work is the supply of Comprehensive facility management service for the upkeep/running of the hospitals, i.e., the successful bidder uses the materials required for provision of such services and the various services are supplied to the recipient by such successful bidder. Hence, the recipient is supplied with Pure services of Housekeeping/cleaning including Pest Control services; Security services; manpower for various maintenance services. The first limb of the said notification specifies Pure Services (excluding works contract service or other composite supplies involving supply of any goods) , in the instant case, the services provided are Pure Services and the said entry covers all the Pure services , therefore, this limb is fulfilled. It is clearly evident that Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) are Directorates under Health Family welfare Department, Government of Tamil Nadu. In the case at hand, the tender issuing and accepting authority, alone is the TNMSC. The role of the Tamil Nadu Medical Service Corporation Ltd., (TNMSC), a Government of Tamil Nadu Undertaking is to be understood in the backdrop of the tender offer document of Tamil Nadu Medical Services Corporation Bid Reference 697/Outsourcing/DMS/TNMSC/ENGG/2021 dt 05.07.2021 - upon perusing the tender document Clause 2.1.2 of the Interpretation of Terminologies in Part II - Conditions of Contract role of Tamil Nadu Medical services Corporation is specified as The Tender inviting authority and Tender Accepting Authority and they act as facilitator and the actual contract is between the Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) and the successful bidder only and the services are to be provided to Directorate of Medical Rural Health Services, and Directorate Medical Rural Health Services (ESI) - thus, DMS MS(ESI) are State Government Department and the successful bidder makes the supply to the State Government, the identified class under the said entry and second limb of the said Notification is fulfilled. Whether the activities are in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - Entry No.3 Chapter 99 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017 - HELD THAT:- The scope of work in the tender document as furnished to us is Comprehensive facility management services which are Pure Services of Housekeeping, cleaning including pest control services, Security services, assistance in the form of Electrician, Plumber, etc for effective maintenance of the hospital facility; the supply is proposed for the hospitals under DM RHS, which is a Directorate under Ministry of Health Family Welfare, State of Tamil Nadu, i.e., State Government; the activities being in relation to the up-keeping/running of the Hospital facility, is in relation to the activities entrusted to a Panchayat or a Municipality under Article 243G/W of the Constitution and therefore, the exemption at Entry No. 3 of Notification no. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is applicable in respect of the scope of work tendered by TNMSC for the supply to be made to hospitals under DMS. The Tender is for Providing Sanitation Services for the Hospitals and Medical/nursing colleges in DME Institutions in Chittoor, Kadapa, Anantapur, Kurnool Districts in the State of Andhra Pradesh. It is evident that in this case the supply is made not only to the Hospitals but also to the educational institutions and the facts in this count are not similar to that in the case at hand, wherein the supply tendered is towards Comprehensive facility management of the Hospital facility only, which is to be maintained by the State Government as per the dictum of the Constitution under Article 243G/243W.

  ---

• 2021 (9) TMI 480
  Maintainability of petition - availability of alternative remedy of appeal - Refund of the amount collected towards tax and penalty together with interest - inter-State sale - sale of goods in the local market by evading SGST and CGST - violation of principles of natural justice - HELD THAT:- The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. A writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority - the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent. The writ petition filed by the respondent shall stand dismissed.

  ---

• 2021 (9) TMI 479
  Maintainability of petition - availability of alternative remedy of appeal - Seizure order - levy of penalty - the petitioners prays that the petitioners may be permitted to institute and/or pursue the statutory remedy of appeal against the order impugned in the present petition - HELD THAT:- The Revenue would have no objection to the same, if that remedy has been or is availed in accordance with law. The present proceedings are found to have been terminated by the Supreme Court - Petition dismissed.

  ---

• 2021 (9) TMI 472
  Refund claim - inverted duty (GST) structure - misdeclaration of amount of total turnover - period October to December 2018 - scope of SCN - rejection of claim of refund on the ground that as the input and output supplies made by the assessee were of the same material and goods, therefore, although the rate of tax on the input supply may be higher than the rate of tax in the output supply, but by referring to the provisions of paragraph 3.2 of the clarificatory circular No.135/05/2020-GST dated 31.03.2020 it was held that the assessee in not entitled to the refund - Section 54(3)(ii) of the CGST Act of 2017 - principles of natural justice - HELD THAT:- The provisions of paragraph 3.2 of the circular No.135/05/2020-GST dated 31.03.2020 vis a vis, the provisions of Section 54(3) (ii) of the CGST Act of 2017, indicates that there is a conflict between the provisions of paragraph 3.2 of the circular No.135/05/2020- GST dated 31.03.2020 with the provisions of Section 54(3)(ii) of the CGST Act of 2017. The law in this respect is settled to the extent that whenever there is a conflict between the provisions of a statutory Act and that of a notification or circular issued by an administrative authority, the provisions of the statutory Act would prevail over such conflicting provisions of a notification or a circular of an administrative authority. The said principle of law is so well entrenched that we are not required to refer to any specific judgment on the said point of law and it is a well accepted principle of law - in view of the clear unambiguous provisions of Section 54(3) (ii) providing that a refund of the unutilized input tax credit would be available in the event the rate of tax on the input supplies is higher than the rate of tax on output supplies, the provisions of paragraph 3.2 of the circular No.135/05/2020-GST dated 31.03.2020 providing that even though different tax rate may be attracted at different point of time, but the refund of the accumulated unutilized tax credit will not be available under Section 54(3)(ii) of the CGST Act of 2017 in cases where the input and output supplies are same, would have to be ignored. The rejection of the claim for refund by the petitioner assessee in the order dated 22.05.2020 of the Assistant Commissioner by referring to the provisions of paragraph 3.2 of the circular No.135/05/2020-GST dated 31.03.2020 would be unsustainable in law. Principles of natural justice - HELD THAT:- The reasoning given by the Joint Commissioner (Appeals) in the appellate order dated 29.10.2020 for reversing the order of rejection by the Assistant Commissioner would also be not sustainable. The only reasoning given by the Joint Commissioner (Appeals) is that the issue decided by the Assistant Commissioner was not included in the show cause notice dated 10.04.2020 and, therefore, there was a violation of the principles of natural justice - without making any further enquiry as to whether the tax rate on the input supplies was higher than the tax rate on the output supplies, the Joint Commissioner (Appeals) would direct a refund of the unutilized input tax credit under Section 54(3)(ii) of the CGST Act of 2017 - the order of the Joint Commissioner (Appeals) dated 29.10.2020 would be unsustainable in law. The matter stands remanded back to the Assistant Commissioner, GST, Guwahati to consider the matter afresh and arrive at his own factual satisfaction as to whether the actual rate of tax on the input supplies made by the petitioner assessee is higher than the actual rate of tax on the output supplies made by them and depending upon the satisfaction that may be arrived to pass a reasoned order on the claim of the petitioner assessee for refund under Section 54(3)(ii) of the CGST Act of 2017 - Petition allowed by way of remand.

  ---

• 2021 (9) TMI 468
  Seeking a direction to the respondent no.3 to decide the representation filed by the petitioner by passing a speaking order - on the same issue and transaction two different authorities have initiated the proceedings - HELD THAT:- It is deemed proper to dispose of the present petition by directing the respondent no.3 to consider and decide the representation of the petitioner in accordance with law by passing a speaking order before proceeding further in the matter - petition disposed off.

  ---

• Income Tax

• 2021 (9) TMI 476
  Validity of order of Income Tax Settlement Commission [ITSC] - deemed dividend under Section 2(22)(e) - Revenue contended that the ITSC erred in accepting the contention of the assessee for not including the advance amount received as liable to be taxed as deemed dividend - Levy of interest under Section 234A - HELD THAT:- It will be too late for the Revenue to now contend that the ITSC could not have settled the cases in respect of the assessment year 2012-13 and especially when this was never the ground raised by the Revenue either in the report filed under Rule 9 of the said Rules or in the subsequent report filed to the reply given by the assessees. Though the word disclosed gives a slightly distorted meaning, a clear picture emerges if we see paragraph 11.2 of the order passed by the ITSC, which deals with settlement of income. The total income arrived at by the ITSC which alone shall be considered as the income disclosed for the purposes of an application under Section 245C of the Act. The Revenue need not have any apprehension over the income, which was initially disclosed at the time of filing the application under Section 245C of the Act because the said income, which was offered at the first instance was not accepted by the Revenue and a report under Rule 9 of the said Rules was filed and based on that, the Revenue suggested four additions and thereafter, the case was proceeded and the matter was settled. Therefore, in our considered view, there may not be any necessity to remand the matter for a fresh consideration and the interest under Section 234B of the Act has to be charged on the income settled by the ITSC and in terms of the decision of the Hon ble Supreme Court in the case of Brij Lal [ 2010 (10) TMI 8 - SUPREME COURT] , the interest would be chargeable upto the date of order under Section 245D(1) of the Act and not upto the date of the order of the ITSC under Section 245D(4).

  ---

• 2021 (9) TMI 473
  Reopening of assessment u/s 147 - deductions claimed by the assessee u/s 10B on approval from the Software Technology Parks of India (STPI) based on the delegation granted to the directors of STPI by IMSC - order of ratification by the Board had not been furnished - HELD THAT:- Non obtaining of ratification certificate from the Board has not been attributed to the assessee as a default committed by the assessee. There may be various reasons, for which, the Board might not have granted a ratification. Nevertheless, the approval granted by the Authority, to whom the power had been delegated was valid and hence, as long as the said approval was not withdrawn, the assessee would be entitled to rely upon the approval and claim deduction under Section 10B of the Act, which is a special provision for earning of foreign exchange. In such circumstances, the reopening of assessment is without jurisdiction and bad in law. - Decided in favour of assessee.

  ---

• 2021 (9) TMI 469
  Addition u/s 68 - Unexplained share application money - onus to prove - ITAT allowed the relief - HELD THAT:- Onus is on the assessee to establish the creditworthiness of various persons and as to how the share application money was brought in - furnishing the list of names or stating that the monies were paid by cheques will not, by itself, establish the creditworthiness and genuineness of the transaction. The initial onus is on the assessee to discharge the burden cast upon them to prove the creditworthiness and genuineness of the transaction. In the case on hand, the assessee miserably failed to discharge the primary onus cast upon them - AO conducted a detailed enquiry, issued summons, recorded statements, permitted the authorized representative of the assessee to peruse the seized records and in fact, came to a provisional conclusion as to how he intends to proceed and gave further opportunity to the authorized representative of the assessee, who had filed a written submission on 03.12.2007 raising certain factual issues and relying upon certain decisions. Those factual issues were considered and held to be not sustainable and the decisions, which were relied upon by the assessee, were also distinguished and in our considered view, are rightly so. - Decided against assessee.

  ---

• 2021 (9) TMI 466
  Excess depreciation - cost of development of infrastructure facility of roads/highways - depreciation as allowable on the toll road/bridges under Build-Operate-Transfer (BOT) arrangement - whether deduction shall be allowed on the basis of amortization over the concessionaire period? - HELD THAT:- Board s Circular which is dated 23.04.2014 following the Circular, the appellant company has amortized WDV on 01.04.2014 over the remaining life of the asset. A close reading of the Circular also shows that deduction claimed out of initial cost of development of infrastructure, facility of road /highway under BOT projects in earlier year may be deducted from the initial cost of infrastructure facility of roads/bridge and the cost so reduced shall be amortized equally over remaining period of toll concessionaire agreement (refer para 7 of the CBDT circular no. 09/2014 dated 23.04.2014). This effectively means that the reduced cost is to be amortized equally over the remaining period. There is nothing in the circular to suggest and the same shall be applicable on retrospective basis. Action of the Ld. AO in applying the circular retrospectively is not in order. Accordingly, the disallowance made by the Ld. AO on account of difference between the depreciation claimed and the depreciation allowed on the basis of amortization for the remaining part of the concessionaire agreement is directed to be deleted - assessee has rightly claimed the depreciation. The appeal of the Revenue is dismissed.

  ---

• 2021 (9) TMI 465
  Assessment u/s 153A - unexplained credits in the books of account u/s. 68 - whether any incriminating material that was unearthed during the search and seizure operations? - HELD THAT:- As the returns of income for the assessment years 2008-09 and 2010-11 were filed on 27.09.2008 and 25.09.2010 respectively whereas search operation took place on 07.03.2014. Admittedly, the returns of income for both the assessment years were processed u/s.143(1) of the Act. Long prior to the search, the time period permissible for issuance of notice u/s. 143(2) by proviso thereunder expires. It leaves no doubt that as on the date of search, there were no assessments pending or were abated due to search. In CIT vs. Kabul Chawla, [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that the assessment cannot be arbitrary or made without any relevance or nexus with the seized material and an assessment has to be made under this section only on the basis of seized material - completed assessments can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search or the documents requisitioned or undisclosed income/property discovered in the course of search. - Decided in favour of assessee.

  ---

• 2021 (9) TMI 464
  Disallowance u/s 14A r.w.r. 8D -submission of no exempt income earned - HELD THAT:- As relying on assessee s own case [ 2021 (2) TMI 848 - ITAT MUMBAI] there is no exempt income there cannot be any disallowance - we direct the Assessing Officer to delete the disallowance made u/s. 14A - Decided in favour of assessee. TP Adjustment - assessee had remitted funds to its A.E by way of share application money and loan - TPO treated the aforesaid amount as interest free loan, on the ground that in a third party scenario, the assessee would not have invested in the shares of an unrelated party at such a huge premium and also no shares were allotted - HELD THAT:- As decided in own case [ 2019 (10) TMI 987 - ITAT MUMBAI] wherein for the reasons stated therein the issue has been decided in favour of the assessee and against the Revenue.

  ---

• 2021 (9) TMI 463
  Deduction u/s 80IB(11A) - proof of manufacturing activity - as per assessee has outsourced its entire manufacturing therefore not entitled for benefit of deduction - assessee entered into an agreement with Mother Dairy for processing, preservation and packaging of milk, under which Mother Dairy supplied pasteurized/raw chilled milk and commodities for processing and packaging of liquid milk in poly packs of different categories of milk and as the assessee company was not having its own facility, it entered into back-to-back agreement with one of its related party i.e. Umang Dairy Ltd. (Umang) which was under BIFR process - HELD THAT:- Depreciation on such plant and machinery, however, CIT(A) deleted such disallowance and the Revenue has not challenged said finding of the CIT(A). This means, the Revenue has accepted the plant and machinery on which depreciation has been claimed, was put to use for manufacturing process by the assessee. Once the claim of the depreciation on machinery engaged for manufacturing has been accepted by the revenue, contesting that no manufacturing has been carried out by the assessee is self-contradictory and not justified - assessee that assessee was engaged in colourable device of evasion of taxes has not been found to be correct. The allegation of the AO that there were large amount of carryforward losses in the case of Umang and therefore deduction has been claimed in the case of assessee. This claim of the Assessing Officer has been not found to be correct as Ld. CIT(A) has pointed out that there was profit in the case of the Umang during the year under consideration. AO in the scrutiny assessment assessment year 2018-19 has accepted the claim of the assessee for deduction under section 80IB of the Act. In our opinion, when the same claim has been accepted by the Assessing Officer in assessment year 2008-19, the Assessing Officer is not justified in contesting the same issue for earlier year - Decided against revenue.

  ---

• 2021 (9) TMI 462
  Reopening of assessment u/s 147 - amount of consideration received by the assessee from sale of software licenses and support, maintenance services rendered in relation to such software licenses, as chargeable to tax as Royalty - reasons deciphers that the assessee sold software to Wipro Ltd., an Indian company as AO opined that the consideration received from sale of software license is in the nature of Royalty - HELD THAT:- AO opined that the consideration received from sale of software license is in the nature of Royalty . For reaching this opinion, he relied solely on the judgment of Hon ble Karnataka High Court in Samsung Electronics Co. Ltd [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT ] in which it has been held that the consideration received on sale of software license amounts to Royalty . This judgment of the Hon ble Karnataka High Court, along with a batch of others, came up for consideration before the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT [ 2021 (3) TMI 138 - SUPREME COURT ] After carrying out a detailed analysis, the view taken by the Hon ble Karnataka High Court has been overturned by the Hon ble Supreme Court. Thus, it becomes overt that the sole reason taken by the AO at the time of initiation of reassessment for holding the amount as chargeable to tax, based on Samsung Electronics Co. Ltd. [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT ], now ceases to exist. The reversal of Samsung (supra) by the Hon ble Supreme Court has rendered the reasons for re-assessment as unfounded and invalid. There is no gainsaying that the Courts declare the law and do not legislate. With the advent of Engineering Analysis (SC) (supra), the law since inception has to be presumed as not treating the sale of software licenses as Royalty in terms of section 9(1)(vi) read with Article 12 of the DTAA insofar as the year under consideration is concerned. Thus, the re-assessment pursuant to such reasons is hereby set-aside. Appeal of assessee is allowed.

  ---

• 2021 (9) TMI 461
  Revision u/s 263 - deduction claim u/s 80IA and excess claim of depreciation on construction of road (As per BOT agreement) - Case of assessee as selected for limited scrutiny - HELD THAT:- Case of the assessee was selected for limited scrutiny for examining claim of depreciation at higher rate/higher additional depreciation, mismatch in sales turnover reported in audit report ITR and mismatch in amount paid to related person u/s 40A(2)(b) reported in audit report ITR - claim of the deduction u/s 80IA was clearly not the subject matter of limited scrutiny and where the AO has failed to examine and verify the said claim of the assessee, the order so passed by the AO cannot be held as erroneous as the same was not within the scope of limited scrutiny at first place and the AO is duty bound to restrict himself to the reasons recorded for which the case was selected for limited scrutiny. We, therefore, agree with the contentions advanced by the ld AR that on this matter, revisional jurisdiction u/s 263 cannot be exercised by the ld PCIT as the same would tantamount to broadening the scope of jurisdiction that was originally vested with the A.O while framing the assessment u/s 143(3) of the Act in case of limited scrutiny case.. Claim of depreciation/amortization relating to two roads/highway stretches constructed by the assessee company under BOT agreement - As per claim of amortization as guided by CBDT circular no. 9/2014 dated 23.04.2014 where there is no dispute that two roads/highway stretches have been constructed/developed by the assessee under the BOT agreements, the assessee shall be eligible to claim amortization of the whole of the cost incurred in creation of infrastructural facility of road/highway evenly over the period of concessionaire agreement after excluding the time take for creation of such facility rather than the rate of depreciation as prescribed under section 32(1)(ii) of the Act. During the course of assessment proceedings, as noted that on enquiry by the Assessing officer, the assessee has submitted that this is the second year of claim of amortization wherein it has claimed amortization of Rs. 4,01,84,929 for a period of 365 days as against amortization of Rs. 3,22,32,261 for a period of 293 days claimed in the previous assessment year 2014-15 and detail statement as part of the audit report was also submitted in respect of both the road/highway stretches disclosing respective cost of construction/development, the period of concessionaire agreement and the amount of amortization determined for the year under consideration. The same was duly examined by the Assessing officer and no adverse finding has been recorded by him. Thus where the assessee is eligible for claim of amortization as per CBDT circular no. 9/2014 dated 23.04.2014 and the same has accordingly been claimed and allowed by the Assessing officer after due verification and examination, the order so passed by the Assessing officer cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. - Decided in favour of assessee.

  ---

• 2021 (9) TMI 459
  Unexplained money u/s 69A - No source of cash deposit in bank given - whether the sum was duly recorded in the books of accounts or not ? - HELD THAT:- In the instant case, the assessee explained that the entire sum representing the deposits was duly accounted in the books of accounts and the books of accounts were produced before the AO, but no defect was found by the AO - source of the deposit of Rs. 74,90,000/- duly explained by the assessee as sales and accounted in the books of accounts. AO made the addition u/s 69A. As per section 69A, it is deemed to be income of the assessee as unexplained money when the AO found money, bullion, jewellery or other valuable article and the assessee offers no explanation to the satisfaction of the AO. In the instant case, the source of cash deposited by the assessee in the bank account was duly explained by the assessee and the same was duly accounted in the books of accounts. Thus, there is no case for making addition u/s 69A In the instant case there is no doubt that the assessee has recorded the sales in the books of accounts and the deposits were made out of the cash balances available in the cash book. The assessee produced the books of accounts and no defects were found by the AO. Therefore the case of Karthik constructions [ 2018 (3) TMI 39 - ITAT MUMBAI] squarely applies to the case of the assessee and hence appeal of the revenue is dismissed.

  ---

• 2021 (9) TMI 458
  Addition u/s 69A r.w.s.115BBE - assessee purchased land and paid on-money in cash over and above the sale consideration mentioned in the registered sale deed and agreed to disclose the same as additional income - assessee has admitted the same as income in the return of income u/s 56(2)(viia) - CIT(A) deleted the addition holding that there is no case for making the addition u/s 69A since the assessee has recorded the source in the books of accounts and admitted the income in the returns filed by him - HELD THAT:- In the instant case, the assessee has purchased a piece of land for which the source was explained as gifts, partly and partly the amount was paid through cheques. Thus, the gifts were recorded in the books of accounts and also offered to tax u/s 56(2)(vii)(a) - assessee also furnished the details to the DDIT/ AO, with names and addresses of the persons from whom the gifts were received vide letter dated 30.03.2018. Assessee furnished the details before the AO also vide letter dated 11.12.2019. Neither the DDIT nor the AO found any deficiency in the information submitted by the assessee and has not caused any enquiries. Since, the assessee has already explained the source as gifts and offered the same to tax u/s 56(2)(vii)(a), which was not being disproved by the AO, the credits made in the books of accounts stands explained and there is no case for invocation of section 69A - No reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.

  ---

• 2021 (9) TMI 457
  Revision u/s 263 by CIT - TP Adjustment - Non reference to the TPO - HELD THAT:- PCIT has failed to specify as to how and on what ground the assessment order is erroneous and/ or which part of the CBDT instructions were not adhered to by the AO. Merely not recording the satisfaction, the AO on the records does not make the assessment order erroneous and prejudicial to the interest of revenue, as is decided in the various judicial pronouncement by various courts - as perused Instruction no 3/2016 and are of the opinion that it was not mandatory for the AO to make a reference to the TPO. Even as per the order and the show cause notice u/s 263 which has been issued it is evident that the selection of the case was for complete scrutiny and the issues was not on transfer pricing parameters risk factors. The clause (a) states where there are international transactions or specified transactions or both and the taxpayer has not filed any report required to be submitted under section 92E. This is not a situation in the case of the assessee, and report was submitted and also during the assessment the same was submitted. The second situation where in previous assessments if any addition on account of transfer pricing adjustment of more than ten crores and addition being upheld in appellate proceedings is also not applicable in the case of the assessee, and this is not a case where search or seizure or survey operations had been carried out. In such a situation it cannot be said that the assessment is erroneous as reference to TPO was not made. Claim u/s 80IA(4)(iv) - As the said deduction had already been disallowed by the AO in the assessment order, and therefore the order on such issue cannot be said to be prejudicial to the interest of revenue. Claim u/s 35(2AB) - Deduction u/s 35 (2AB) of the IT Act 1961, was allowed on the basis of the expenditure based on the report submitted to DSIR. Thereafter, the Government of India Ministry of Science Technology, Department of Scientific and industrial Research, Technology Bhawan New Delhi vide its letter No. TU/IV-15(493)/2017 dated 3.11.2017 had restricted the eligible expenditure for Research, and accordingly the deduction was allowed in the assessment order, and the issue was again duly examined at the time of assessment, and no error in such claim has been pointed out to us. As regards claim u/s 10AA the claim was allowed on the basis of report in form 56F and after examining the facts of the case, and this was not the first year of claim and was also allowed in the earlier years also.In light of above discussion we hold that the order u/s 263 cannot be sustained as we find that the assessment order passed by the AO cannot be said to be erroneous or prejudicial to the interest of revenue, and accordingly the order made u/s 263 of the is quashed.- Decided in favour of assessee.

  ---

• 2021 (9) TMI 455
  Disallowance u/s 43B - Addition on account of bank interest - interest on CC limit - as submitted that the amount of pre-structured term loan was paid out of Cash credit limit (CC account) and therefore interest on pre-structured term loan should be treated as being actually paid - HELD THAT:- As submission of the Ld AR that bank has charged interest on term loan on month to month basis and the same has been recovered by debiting it to the cash credit (CC) account of the assessee. AR has also contended that the amounts of credits (deposits) in the cash credit account are much more than the amount of interest debited by bank. The aforesaid contentions of the AR have not been controverted by Revenue nor has it been found to be untrue. In the case of CIT vs. Shreekant Phumbhra [ 2016 (11) TMI 796 - CALCUTTA HIGH COURT ] CIT(A) had decided the issue in favour of the assessee by holding that the interest accrued on month to month basis had been paid on month to month basis as the deposit of each month was much more than the corresponding interest debited in respective month and as such no part of such interest remained which could be said to have been converted into any loan or advance as on the close of the previous year so as to be deemed not actually paid. The order of CIT(A) was held by Tribunal and upheld by Hon ble Calcutta High Court.AO was not justified in disallowing the expenses u/s 43B - Decided in favour of assessee.

  ---

• 2021 (9) TMI 454
  Assessment against non-existing entity - Amalagamation - notice in the name of amalgamating company - procedural irregularity or jurisdictional defect - curable defect u/s 292B or not - HELD THAT:- Despite the fact that the DCIT/AO was informed of the amalgamating company having ceased to exist in consequence of the approved scheme of amalgamation by the Hon be High Court of Bombay, the final assessment order and demand notice was issued in its name is against the legal principle that the amalgamating company (Honeywell Turbo (India) Private Limited) ceased to exist upon the approved scheme by the Hon ble High Court of Bombay. Regarding the participation in the proceedings as contended by the ld. DR, in our opinion, participation in the proceedings by the assessee in such circumstances cannot operate as an estoppels against law, thus, the final assessment as framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which would be cured by invoking the provisions of Section 292B - framing of final assessment against a non-existent company goes to the root of the matter which is not a procedural irregularity, but a jurisdictional defect. - Decided in favour of assessee.

  ---

• 2021 (9) TMI 453
  Rectification of mistake u/s 254 - period of limitation - period of limitation for filing of Miscellaneous Petition u/s. 254(2) - non granting deduction of interest earned from co-operative bank claimed u/s. 80P(2)(d) - HELD THAT:- In the present case, the order was passed on 30th January, 2020, therefore, the limitation for filing of Miscellaneous Petition u/s. 254(2) starts from 1st Feb, 2020 to 31st July, 2020. However, the Miscellaneous Application has been filed by the assessee on 1st Sep, 2020 in spite of the fact that as per record the order of the ITAT dated 30th Jan, 2020 was received by the assessee on 19th Feb, 2020. Miscellaneous Petition of the assessee is beyond the period of limitation as provided u/s. 254(2) is not maintainable. Accordingly, the same is dismissed being barred by limitation.

  ---

• 2021 (9) TMI 449
  Addition u/s 56(2)(vii)(b) - sale of agricultural land - Status of the land - difference in the stamp duty valuation and transaction value - Assessee contended that addition under section 56(2)(vii)(b)(ii) of the Act cannot be made against the assessee as the assessee has purchased agricultural land, which is situated beyond 8 km from local municipal limit and that, the agricultural land, is not a capital asset - HELD THAT:- We find that the lower authorities has not disputed the fact that the land purchased by the assessee are beyond the 8 km from the mentioned unit of SMC - CIT(A) further admitted that the assessee purchased the agricultural land. We have seen the sale /purchase deed dated 25.102013, which is placed on record on the direction of the bench, wherein the nature of land is described as agricultural land . We find that grounds of appeal raised by the assessee is covered by the decision of Pune Bench of Tribunal in Mubharak Gafur Korabu [ 2019 (4) TMI 1877 - ITAT PUNE ] and in Yogesh Maheshwari [ 2021 (1) TMI 832 - ITAT JAIPUR ] Therefore, we find merit in the submission of the ld.AR of the assessee that provision of section 56(2)(vii)(b) of the Act are of the Act not applicable in the present case. - Decided in favour of assessee.

  ---

• 2021 (9) TMI 448
  Rectification of mistake u/s 154 - seeking rectification of the order [ 2019 (11) TMI 1674 - ITAT PUNE] of this Tribunal on the ground that the finding of the Tribunal that initiation of proceedings u/s 154 by the AO is valid and the finding of the Tribunal in upholding the power of Assessing Officer to levy of interest u/s 234A of the Act in the proceedings u/s 154 of the Act cannot co-exist - HELD THAT:- We find that the averment of the Revenue before us is correct. On mere reading of para 4 of the impugned order (supra), it would suggest that the tenor of order of Tribunal is not to uphold the validity of initiation of proceedings u/s 154 of the Act, the light of discoveries made by the Tribunal in the preceding para. Therefore, the word valid appearing in para 5 of the impugned order (supra) is substituted by word invalid . Present Miscellaneous Petition filed by the Revenue is allowed.

  ---

• 2021 (9) TMI 447
  Revision u/s 263 by CIT - case of assessee was selected for limited scrutiny - Additional depreciation on cost of windmill allowed by AO - as per the PCIT, the amount of liquidated damages was directly relatable to the procurement of windmill and was required to be reduced from the actual cost of windmill as per provisions of section 43(1) and on the balance amount, the depreciation should have been claimed and allowed, however AO in a routine and perfunctory manner without proper examination and verification of the facts of the case has allowed excess claim of depreciation - HELD THAT:- We find that the decision of the Hon ble Supreme Court in case of Saurashtra Cement [ 2010 (7) TMI 11 - SUPREME COURT] as well as the decision of Shree Digvijay Cement Co Ltd [ 1981 (8) TMI 32 - GUJARAT HIGH COURT] supports the case of the assessee in treating the liquidated damages as capital receipts and not reducing the same from the cost of the windmill in terms of section 43(1) for the purposes of claim of depreciation and where such a claim is allowed by the Assessing officer, it cannot be held that there is erroneous application of provisions of law and legal position so emerging from reading of the aforesaid two decisions. During the course of assessment proceedings, we find that the matter was duly examined by the AO as evident from the notice issued u/s 143(2) wherein one of the reasons for selection of case has been stated to be claim of depreciation which was followed by specific queries raised on 11.10.2017, 7.11.2017, 10.11.2017 and 30.11.2017 and replies dated 10.11.2017 and 7.11.2017 submitted by the assessee providing the necessary information and documentation as well as the legal decisions referred supra in support of his claim. It is therefore not a case where the queries were raised and submissions were accepted on face value, rather the Assessing officer on receipt of initial submissions has examined the same and has thereafter raised further queries and sought submissions and once he was satisfied with the claim of the assessee, he has allowed the said claim - where the Assessing Officer has taken into consideration the factual and legal position and examined the matter at length and allowed the claim of the assessee, the opinion so formed by the Assessing Officer cannot be held as erroneous in nature - Decided in favour of assessee.

  ---

• 2021 (9) TMI 446
  Revision u/s 263 by CIT - understatement of commission receipts - as per CIT No proper enquiries and verifications have not been carried out by the AO and the order so passed has been held as erroneous in so far as prejudicial to the interest of Revenue - HELD THAT:- methodology to be adopted for examining a particular transaction or set of transactions is something which is best left to the discretion of the Assessing officer who is the best judge to device an appropriate methodology given the facts and circumstances of a particular case. At the same time, we are conscious of the fact that there are standard operating procedures devised by the CBDT and the Assessing officers are expected to follow the same while discharging their functions. However, in the instant case, we find that there are no standard operating procedures devised by the CBDT and the ld PCIT has basically suggested a different methodology than the one followed by the Assessing officer and merely by virtue of the same, the order so passed by the Assessing officer cannot be held as erroneous in nature. Explanation so offered by the assessee regarding the nature of various credit entries have not been disputed by the ld PCIT, therefore, there is no justifiable basis to hold that there is a failure on part of the Assessing officer by virtue of inadequate enquiries and verifications and the directions so issued to verify bank credits and recalculate commission receipts is hereby set-aside. Non-verification of remuneration and interest paid to two - Requisite documents have been called for by the AO and duly examined in terms of payment of remuneration and interest to the partners and no adverse finding has been recorded by the AO. It is thus not a case where the AO has failed to examine and verify the subject matter - As during the course of revision proceedings, the assessee has again submitted copy of the partnership deed and partner s capital account and there is no finding recorded by the ld PCIT as to whether the allowance of remuneration and interest is not in accordance with the facts and relevant provisions of the Act - where the matter has been duly examined by the AO, the findings of the ld PCIT for fresh examination cannot be upheld and is hereby set-aside. Difference in bank balance as per books and as per bank statement - Where the difference is on account of cheque issued and not presented before the close of the financial year and the details of cheque payment and its subsequent clearance after the close of the financial year is duly available on record and examined by the AO, the order so passed by the AO cannot be held as erroneous on account of non-verification and in any case, the accrural/payment to KUMS has not been disputed, therefore, the allowance thereof cannot be held as prejudicial to the interest of Revenue. Addition u/s 40A(3) - cash payment to farmer against agriculture crop - As the factum of payment being made to Shri Ranjeet Singh Lambra, a farmer towards supply of potato is not under dispute and the assessee has reasonably explained the business exigency of making such payment in cash which is also covered in the exception so provided in Rule 6DD. Therefore, where the matter has been verified and examined during the course of assessment proceedings and the claim has been allowed as per provisions of law, the order so passed by the AO cannot be held as erroneous due to nonapplication of relevant law and related provisions. As necessary enquiries and examination as reasonably expected have been carried out by the Assessing officer and he has taken a prudent, judicious and reasonable view after considering the entire material available on record and the order so passed u/s 143(3) cannot be held as erroneous in so far as prejudicial to the interest of Revenue - Decided in favour of assessee.

  ---

• 2021 (9) TMI 445
  Ownership - Amount seized from the assessee at the Delhi Air Port - real owner of the cash amount seized from the assessee belongs to whom - HELD THAT:- The assessee has successfully discharged the burden by disclosing source of cash amount by filing respective evidences which are available on the record in the paper book. Even otherwise, the tax authorities are also required to tax the real owner and not the representative thereof and in this case, the real owner of the cash amount seized from the assessee belongs to M/s Lux Industries Ltd. and not to the assessee. Although, the assessee had also filed an affidavit in support of his contention but he was never cross examined by the A.O. Therefore, the averments contained in duly sworn affidavit are to be accepted as a correct unless the same are rebutted by the evidence. we are of the view that the amount seized from the assessee at the Delhi Air Port belonged to the Lux Industries Limited and not the assessee. The A.O. as well as the ld. CIT(A) wrongly made and confirmed the assessment and added the same in the income of the assessee, therefore, we direct to delete the addition qua this issue. Appeal of the assessee is allowed.

  ---

• 2021 (9) TMI 444
  Rectification u/s 154 - Period of limitation as per section 154(7) - whether order passed four years after the end of the financial year is time barred? - HELD THAT:- As the order dated 30/11/2018 passed u/s. 154 of the Act in which the impugned additions had been made are with reference to the original order of assessment, dated 26/12/2011. The time limit specified in the Act of four years is certainly crossed in the order dated 30/11/2018 passed in the present case. Hence, this order u/s. 154 is certainly time barred inasmuch as it has been passed four years after the end of the financial year in which order sought to be amended was passed. In the present case, the order u/s. 143(3) was passed on 26/12/2011 and the financial year is FY 2010-11. The impugned order passed dated 30/11/2018 is certainly beyond four years thereof. Hence, in our considered opinion, the assessee succeeds on the additional ground. The rectification order passed u/s. 154 in this case is accordingly time barred and hence, the same is squashed as such - Decided in favour of assessee.

  ---

• 2021 (9) TMI 440
  TP Adjustment - rate determined under MAP resolution for USA based transactions to other non-USA based transactions transfer pricing assessment made in respect of Software development services ( Information Technology Services ) - rate determined under MAP resolution for USA based transactions to other non-USA based transactions - HELD THAT:- AO/TPO to adopt the net margin rate of 16.99% for non-USA based transactions also and compute the Transfer pricing adjustment for SWD segment (IT services segment) accordingly. Non-granting of proper credit for TDS and advance tax - HELD THAT:- AO has given credit for the amounts wherein the PAN number of the present assessee is shown. It is the case of the assessee that the payments made under the name and PAN number of merged entities also should be given credit, when the corresponding income is assessed in the hands of the present assessee. We find merit in the said contentions. However, this issue requires factual verification. Accordingly we restore this issue to the file of the AO for examining the claim of the assessee in accordance with law. Rejection of set off of brought forward business loss claimed in the return - HELD THAT:- We notice that the AO has not assigned any reason for not allowing set off of brought forward business loss. Accordingly, we restore this issue to the file of the AO for examining the claim of the assessee in accordance with law. Transfer pricing adjustment made in respect of ITES segment - HELD THAT:- Major source of income for this company is from Engineering Design Services which is an activity falling under the category of Knowledge Process Outsourcing (KPO) while the activities carried on by the assessee falls under the category of Business process outsourcing (BPO) - DRP has followed the decision rendered by the coordinate bench in the case of Symphony Marketing Solutions India Pvt. Ltd. [ 2014 (2) TMI 83 - ITAT BANGALORE] - Hence, we do not find any reason to interfere with the decision of Ld. DRP on this comparable company. Computation of deduction u/s. 10A - HELD THAT:- A.O. to exclude certain expenditure both from export turnover and total turnover while computing deduction u/s. 10A of the Act. This issue is now settled by Hon ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT ]and this decision support the view taken by the Ld. DRP. Accordingly, we uphold the decision of DRP on this issue.

  ---

• 2021 (9) TMI 439
  Alllowability of claim of arrears of salary - Ascertained or crystallized liability of the current year or not - coperative bank Allowability of remaining provision of payments towards surrender leave, bonus and ex-gratia etctowards arrears of salary - pay commission recommendation against the assessee co-operative bank - what is the relevant point of time the liability of the assessee towards arrears of salary has actually crystallized and not the year to which such arrears of salary pertains? - HELD THAT:- In agreement as been executed between the assessee co-operative bank and its employees and staff members on 16.04.2012 towards implementation of the 14th pay commission recommendations and finally, major payments towards arrears of salary have happened during November 2012 - liability of the assessee cooperative bank to implement 14th pay commission recommendation arose on adoption of resolution at its meeting of the Board of Directors read along with execution of agreement with its employees and staff members. Prior to these two significant events which happened during the financial year 2012-13, it cannot be said that the assessee cooperative bank has decided to implement and enforce 14th pay commission recommendation in respect of its employees and on same analogy, prior to these two significant events, even the employees were not having any legally enforceable claim to implement 14th pay commission recommendation against the assessee co-operative bank. Crystallization of liability to pay arrears of salary and other payments towards surrender leave, bonus and ex-gratia etc. as per 14th pay commission recommendation arose during the financial year 2012-13 relevant to subsequent assessment year 2013-14 and not during the current financial year 2011-12 relevant to impugned assessment year 2012-13. The assessee co-operative bank therefore shall be eligible to claim the same in the subsequent assessment year 2013-14 and not in the impugned assessment year. AO is well within his jurisdiction to examine all such claims and the assessee is required to justify such claims and demonstrate with reasonable verifiable evidence that such liability has crystallized during the year under consideration. Grounds so taken by the assessee co- operative bank for allowability of claim of arrears of salary is hereby dismissed.

  ---

• 2021 (9) TMI 438
  Revision u/s 263 - profit and loss account on account of PAC Development Fund under the head Other expenses which is not an actual expenditure towards business activities - HELD THAT:- Where two views are possible and where the AO has followed the later decision while allowing the claim of the assessee, the view so taken by the AO cannot be held to be erroneous in nature. Also interesting to note that just prior to issuance of show-cause u/s. 263 by the ld. PCIT, the ld. CIT(A) in assessee s own case for A.Y 2013-14 and A.Y 2016-17 has allowed the claim of the assessee towards such contribution towards PAC development fund following the decision of the Hon ble Rajasthan High Court [ 2017 (11) TMI 453 - RAJASTHAN HIGH COURT ] These orders so passed by the ld. CIT(A) thus form part of the records and therefore, where the matter is consistently decided in favour of the assessee earlier by the Hon ble Rajasthan High Court which is subsequently followed by the ld. CIT(A) and where the AO decide to follow the same binding decisions and follow the rule of consistency and the settled position in the earlier years, the order passed by the AO cannot be held as erroneous in nature - the order so passed by the ld. Pr. CIT is hereby set-aside and the order of the AO is sustained. - Decided in favour of assessee. .

  ---

• Customs

• 2021 (9) TMI 456
  Smuggling of export goods - Red Sanders - prohibited goods or not - breach of the Foreign Trade Policy 2009-2014 - penalty on customs broker and agent of customs broker - HELD THAT:- The appellant M/s CSB Logistic (Custom Broker) was duty bound as a Custom Broker under the Regulation of 2014 to verify antecedents and genuineness of the importer exporter code, IEC number, identity of their client and functioning of their client at the declared address by using reliable, independent and authentic documents/ data/ information. As per the facts on record, the Custom Broker did not meet the exporter or the owner of the said Fashion World or the master mind Reyaz Ahmed alias Rajbir alias Dharmendra, the person who originated the goods for exporter, which were prohibited. Thus, their negligence have facilitated the mischievous exporter in attempting to export prohibited goods. Further, they have similarly facilitated the export of about eight consignments in the recent past and there is reasonable belief that such consignments also had prohibited goods. Other three appellants (other than custom broker/agent of customs broker) - HELD THAT:- The other three appellants are freight forwarder, evidently they have acted as the facilitator of export of prohibited goods. They have acted as an agent of the Custom Broker M/s CSB Logistics, directly or indirectly. Thus, these three appellants were also duty bound to observe the KYC norms and to assist the Custom Broker in complying with his obligation under Customs Broker Licensing Regulation, 2013. Penalty - HELD THAT:- As per the evidence on record, these appellants have not made any profit and/or participated in any profit in the export of prohibited goods. Rather these persons have acted on normal remuneration basis as a freight forwarder - appeal allowed in part by reducing the quantum of penalty. Appeal allowed in part.

  ---

• Corporate Laws

• 2021 (9) TMI 443
  Seeking restoration of name of company on the register of members - Section 252 (3) of Companies Act - malafide intent present or not - HELD THAT:- It is admitted that from the year 2000 onwards the Respondent No. 2 Company not in business or in operation. The Respondent No. 2 has not placed on record any document in support that the Company was carrying on business or in operation when it was struck off on 30.04.2008. Whether the Tribunal has rightly rejected the Appeal on the ground of malafide intention? - HELD THAT:- Admittedly, the directors have not filed any appeal against the order of Registrar of the Companies. As the Company has not filed the Appeal within a period of three years from the date of order of the Registrar of the Companies which was lapsed in April, 2011 - it can be safely presumed that at the instance of the Respondent No. 2 Company the Appellant has filed the Appeal before Tribunal for taking advantage of 20 years limitation from the publication in official gazette as per section 252(3) of the Act - Ld. Tribunal has also rejected the Appeal on the ground of malafide intention. Appeal dismissed.

  ---

• 2021 (9) TMI 436
  Seeking restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- During the course of hearing, appellant was directed to produce the audited balance sheet to show that appellant had revenue from operation during the last two preceding financial years from the date of striking off the name of the company but it is seen that the appellant has failed to produce any such document. The prayer of the appellant is considered and it is observed that the specific averments have been made by the RoC in its reply stating the dates, when the notices were sent upon the appellant company and its directors but appellant company and its directors failed to submit any reply - there are no force in the contention raised by the Ld. Counsel for appellant that no notice was sent/served upon the appellant company before the date, when the name of company was struck off by the RoC. The appellant has failed to produce the audited balance sheet to show the company had revenue from operation for the immediate two preceding financial years when the name of the company was struck off by the RoC. Therefore, the appellant company has failed to produce any document to show that the appellant company had revenue from operation or carrying on business at the time when the name of the company was struck off by the Registrar of Companies. The action taken by the RoC under Section 248(5) of the Companies Act, 2016 need not be interfered - appeal dismissed.

  ---

• Insolvency & Bankruptcy

• 2021 (9) TMI 467
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Financial Debt - Non-performing asset - existence of debt and dispute or not - time limitation - HELD THAT:- A plea of limitation is a mixed question of law and fact. It cannot be decided as an abstract principle of law devoid from facts as in every case, the starting point of limitation is entirely a question of fact. Time Limitation - HELD THAT:- In the instant case, the term loan was serviced till June 2017. The Application was filed on 21.12.2019. Further, an OTS Agreement was entered into by the parties and the promise to pay the amount within the time frame can safely be construed as the existence of a jural relationship between the parties constituting an acknowledgement of debt . Hence, Section 7 Application was not barred by Limitation as the facts substantiate that the period of limitation of three years as provided under Article 137 of the Limitation Act, 1963 is satisfied. In the interest of justice and taking into consideration the fact that in this pandemic, the travel dependent sector, which is the core business of the Corporate Debtor , has more than suffered the negative impact of the crisis, this opportunity is being given to settle which could help mitigate the blow - the Corporate Debtor has settled the matter with Dhanlaxmi Bank, the Applicant of Section 7 Application which was disposed of as withdrawn based on the settlement terms on 06.01.2020, during which period of pendency, this Section 7 Application was filed on 27.12.2019 against the same Corporate Debtor . The Admission of Section 7 Application is set aside - this Appeal is disposed off with a direction that if the Corporate Debtor fails to settle in 6 months time from the date of this Order, the Respondent Bank is at liberty to take appropriate steps.

  ---

• 2021 (9) TMI 441
  Dissolution of the Corporate Person through voluntary liquidation - Section 59 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On the Petition filed by the Liquidator under sub-section 7 of Section 59 of the Code for dissolution of this Corporate Person, it is noticed that the affairs of the Corporate Person have been completely wound up and its assets are liquidated. This Corporate Person, through its Liquidator, voluntarily liquidated itself so as to get dissolved - this Corporate Person is dissolved directing the Liquidator to file this order with concerned Registrar of Companies and IBBI within 14 days thereof - petition allowed.

  ---

• 2021 (9) TMI 437
  Distribution of the dues in the Resolution Plan including dues of statutory authorities - Resolution plan already approved - dues of appellant approved by CoC in its commercial wisdom - case of appellant is that its quite surprising that the Appellant - Operational Creditor has been given a 99% haircut and the Learned Counsel is expressing doubts in the manner in which CIRP was conducted - HELD THAT:- Hon ble Supreme Court in the matter of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ] has held that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. As it is found that Committee of Creditors in the present matter has taken a discussion with regard to distribution of the dues in the Resolution Plan including dues of statutory authorities, it is found that this is a matter where interference in the impugned order accepting a Resolution Plan is called for. The dues of the Appellant are admittedly operational dues and the Resolution Plan has dealt with the dues. The appeal cannot be entertained.

  ---

• 2021 (9) TMI 435
  Order for Replacement of the Liquidator - depreciated value of the Plant Machinery as per the latest MSME classification - Section 34(4)(a) of IBC, 2016 - HELD THAT:- The proviso of Section 34(4)(a) of IBC, 2016, does not provide for any application to be made by any aggrieved person with regard to the invocation of Section 34(4)(a) of IBC, 2016 and the language with which the provision made is very clear and enables this Adjudicating Authority to set-aside the appointment of Mr. Sisirkumar Appikatla as the Liquidator of the Corporate Debtor. This order shall not come in the way on interferes with the of appeal pending before the Hon ble National Company Law Appellate Tribunal for the reason that this Adjudicating Authority not venturing into or transgressing his powers in any manner and this order is confined only to the extent of replacement of Mr. Sisirkumar Appikatla as the Liquidator of the Corporate Debtor. The appointment of Mr. Sisirkumar Appikatla as the Liquidator of the Corporate Debtor Company is non-est/illegal and ab initio void - Application disposed off.

  ---

• 2021 (9) TMI 434
  Seeking extension of period of liquidation of the Corporate Debtor by a period of one year beyond 11.04.2021 - Section 35(1)(N) of the I B Code, 2016 R/w Regulation 44(2) of the IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- This Adjudicating Authority has also been taking a view that the hardship caused by the COVID-19 pandemic, the lockdown enforced by the Central and State Governments, and the resulting disruption to movement of men and material during the last few months constitute exceptional circumstances as contemplated in Section 60(5) of the Code wherein this Adjudicating Authority is empowered to pass orders as it deems fit. In view of the circumstances narrated in the Petition, the extension of time period prayed for deserves to be acceded to - the period is extended for four months from 11.04.2021 in the Liquidation - petition disposed off.

  ---

• 2021 (9) TMI 433
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existing dispute or not - quantum of default - pendency of arbitration proceeding - HELD THAT:- An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. What is material is that the default is at least Rs. 100 lakhs. In view of Section 4 of the Code, the moment default is of Rupees one hundred lakhs or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. In the present matter the applicant has produced loan agreement executed between the parties, according to which the respondent has failed to repay the loan within stipulated time. The respondent has not denied the same. The objections raised by respondent regarding sufficient security is not sustainable as proceeding under this Code is not money recovery proceeding. The other objection raised about removal of loan amount from Balance Sheet will also not help respondent - Fact still remains that the respondent has enjoyed the loan amount and failed to clear the dues on time. It is clear that the family member of applicant put forth their money in the company against the loan of the respondent company, however no assignment is made and admittedly the applicant is still a financial creditor of the respondent. The same fact has not been denied by the respondent itself. If a debt become due and payable and not paid by-Corporate Debtor, it will be said that the Corporate Debtor has committed default. When we apply the aforesaid judgment in the present matter it is seen that the debt become due and payable on 31.03.2019 as per the loan agreement and the respondent itself has admitted that the payment has not been made to the applicant. Therefore, existence of debt and default cannot be ruled out in the present matter. The respondent also placed reliance of Arbitration Clause, i.e., Clause 25 of the loan agreement. However, it is a settled preposition that the pendency of arbitration proceeding is not a defense in case of Section 7 application. In fact, no evidence is placed to show that any arbitration proceeding is pending in the present matter. The respondent has not raised any dispute over quantum of default or existence of loan amount. Therefore, this objection is also not sustainable. The present application is complete in all respects and the applicant is entitled to claim outstanding financial debts from the respondent and that there has been default in payment of the financial debt - Application admitted - moratorium declared.

  ---

• 2021 (9) TMI 432
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - HELD THAT:- Learned Counsel for the Respondent has fairly conceded that the observations in Paras 29 and 34 of the Impugned Order do touch upon the merits of the case and that he has no objection to the same being expunged. Keeping in view the facts and circumstances of the case and the observation made in these two Paras, we are of the considered view that the aforenoted Paras 29 and 34 of the Impugned Order be expunged and the same is ordered. We observe that we have not gone into merits of the matter with respect to any Pre-Existing Dispute or otherwise. This Appeal is disposed of expunging Paras 29 and 34 from the Impugned Order dated 04.01.2021.

  ---

• PMLA

• 2021 (9) TMI 478
  Applicability of application u/s 439(2) of the Cr.P.C. - accused is released from the custody or not - decision in Nikesh Tarachand Shah [ 2017 (11) TMI 1336 - SUPREME COURT] has lost its significance because of amendment in Section 45(1) of the PMLA Act or not - irrelevant material acted upon or not - relevant material ignored or not? Whether Section 439(2) of the Cr.P.C. can have no application unless accused is released from the custody ? - HELD THAT:- The instant application filed by the prosecution under Section 439(2) is maintainable, although the accused actually has not been released. Primary objection as to the maintainability is overruled. Whether decision in Nikesh Tarachand Shah [ 2017 (11) TMI 1336 - SUPREME COURT] has lost its significance because of amendment in Section 45(1) of the PMLA Act? - HELD THAT:- In Nikesh T. Shah, the Hon ble Apex Court has struck down Section 45 of the PMLA Act, as a whole having found it arbitrary and violative of Article 14 21 of the Constitution of India and not just applicability of twin conditions to scheduled offences - Once, it is held that twin conditions enumerated under Section 45 of the PMLA Act have no application while granting bail to accused of money laundering, it is to be ascertained, whether the trial Court granted bail on irrelevant considerations. Whether Trial Court while granting bail, acted upon the irrelevant material and ignored the relevant material? - HELD THAT:- The prosecution case rests and founded on documentary evidence and, therefore, even if applicant is released on bail, chances of tampering the prosecution evidence are weak and faint. Apart from that, it is worthwhile recording here that NSEL Management, Persons, Defaulters of NSEL and persons associated with Aastha Group (Mohit Aggarwal and Sham Kejriwal) have been granted bail either by Special Court or by the High Court, having a greater role than the present applicant. Mr. Chavan, the learned Senior Counsel for the respondent, has placed for my perusal, orders granting bail to twenty co-accused, who may have similar or greater role than the present accused. Even otherwise offence under Sections 3 and 4 of the PMLA Act is offence punishable upto seven years - the trial Court while granting bail to respondent-accused has not acted upon the irrelevant material and ignored the relevant material. Application dismissed.

  ---

• Service Tax

• 2021 (9) TMI 460
  Short payment of Service Tax - manpower recruitment or supply agency service - tax paid only on 75% of gross service value under reverse charge mechanism as per the provisions of N/N. 30/2012-ST dated 20th June, 2012, whereas liability was of 100% - suppression of facts or not - Extended period of limitation - HELD THAT:- The non-payment by the appellant for the said period is merely due to his bonafide belief of his liability to the extent of paying the service tax at 75% of the service value. Once there is no apparent malafide on part of the appellant and in view of the aforesaid bonafide belief of the appellant, fastening the allegations as that of concealment fraud and suppression are held to be highly unjustified. The alleged non-payment cannot be called as willful or intentional act of the appellant to evade the payment of duty. Otherwise also, there is no denial on part of the Department that the balance service tax on 25% value of the service has already been paid by the service provider. The Department, thus, has received 100% tax amount on the impugned transaction. Confirming such liability again under the pretext of the amendment of the applicable Notification will be nothing but will amount to receiving tax twice for the same transaction. Extended period of limitation - HELD THAT:- Without going into the other merits of the status of appellant as to whether it is a business entity or a body Corporate or a charitable trust, it is made clear that the appellants liabilities stands already discharged. The demand should not have been confirmed - the Department was not entitled to invoke the extended period of limitation for no willful suppression on part of appellant that too with intent to not to pay duty (full duty already stands paid). Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 452
  Levy of penalty u/s 78 of FA - Demand of service tax on roaming charges - Failure to discharge tax dues - appellant herein was not even placed on notice for non discharge of tax - Period between 18th April 2006 and 16th May 2008 - HELD THAT:- The licence enables entities like the appellant to offer services to its subscribers; the charges due from subscribers are also itemised in the bills raised for payment at pre-arranged intervals. No other operator is contractually competent to collect charges from the subscriber. At the same time, the constraints of territorial licencing whether within the country or outside it, though, in this dispute, the former does not concern us impede provision of service to subscribers who are physically, albeit temporarily, outside the licence territory and in facilitating communication of calling party subscriber in India with called party in another territory. Doubtlessly, the equipment of licencee outside the country is utilised but, nonetheless, are not placed at the disposal of the appellant; the subscriber is provided in entirety, or for continuity of service, directly by the overseas operator. The premise of the adjudicating authority that infrastructural facilities of the overseas operator are made use of by the appellant has no basis in facts. The billings for each such use are transmitted through the appellant to the subscriber as separately itemised charges which, though paid on demand to the overseas operator by the appellant, is to be recovered from the subscriber - It is not the case of the service tax authorities that the amount paid by the subscriber in relation to roaming charges or for international calls are subsumed in the revenues of the appellant. The separate and distinct itemisation in the billing forecloses such supposition. The appellant, as a licencee of the domestic telecommunication regulatory regime, is not conferred with empowerment to operate in a foreign territory and can neither, conceivably, offer such service independent of the overseas entity nor avail of the equipment of overseas operator for rendering telecommunication service to its subscribers. The activity, therefore, lies outside the ambit of support service of business or commerce which is the taxable service sought to be fastened on the appellant as deemed provider under section 66A of Finance Act, 1944. Consequently, the demand of tax on roaming charges and call termination charges in the impugned order fails. Tax liability of Rs. 12,74,60,204, Rs. 35,10,51,305 and Rs. 3,02,65,333 under section 73 of Finance Act, 1994, along with interest thereon under section 75 of Finance Act, 1994, penalties under section 76 and penalty under section 78 of Finance Act, 1994 are set aside - Appeal allowed.

  ---

• 2021 (9) TMI 451
  Refund claim - rejection on the ground of time limitation - power of Commissioner (Appeals) to remand the case - HELD THAT:- From the impugned order it is quite evident that the adjudicating authority has rejected the refund claim on ground of limitation, without consideration of the same on merits. Since Commissioner (Appeals) has in the impugned order arrived at the finding that the refund claim could not have been rejected on the ground of limitation, he had no option but to allow the opportunity to the original authority for consideration of the refund claim on merits. This finding of the Commissioner (Appeal) on the issue of limitation has not been challenged by the revenue in the appeal filed. Even if it is held that Commissioner (Appeal) could not have remanded the matter back following the decisions of Hon ble Apex Court in MIL INDIA LTD. VERSUS COMMISSIONER OF C. EX., NOIDA [ 2007 (3) TMI 8 - SUPREME COURT ] and Hon ble Punjab Haryana High Court in Commissioner of Customs Amritsar v/s Enkay (India) Rubber Co Pvt Ltd. [ 2007 (3) TMI 276 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH ], referred to by revenue in the appeal filed, then also we remand the matter for decision by the adjudicating authority on merits as have been done by the Commissioner (Appeals). It is nobody s case that, there are no power to do so. The end of justice will be met if the appeal filed by Revenue is allowed to the extent that the Commissioner (Appeals) could not have remanded the matter back - appeal allowed by way of remand.

  ---

• 2021 (9) TMI 450
  Levy of service tax - Banking and other financial services - commission charged for providing corporate guarantee to their customers - HELD THAT:- The decision in OLAM AGRO INDIA LTD. VERSUS C.C. E-DELHI-II [ 2018 (8) TMI 102 - CESTAT NEW DELHI] has established that commission earned by providing corporate guarantee is taxable, as business auxiliary service , under section 65(105)(zzb) of Finance Act, 1994. The decisions of the Tribunal, in M/S BANK OF BARODA VERSUS CCE, JAIPUR-I [ 2014 (3) TMI 653 - CESTAT NEW DELHI] and in RADIOWANI VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2018 (6) TMI 928 - CESTAT MUMBAI] , reinforce the imperative of certainty of tax, as reflected in the classification of service proposed by tax authorities in the show cause notice, and as the pivot for the fulcrum of adjudicatory competence. It can be gauged from the narrative of the impugned order that, initially, the tax authorities had the same inclination but, for unfathomable reasons, a different taxable service was invoked for initiating recovery proceedings. Consequently, there was patent lack of certainty of tax in the mind of the show cause notice issuing authority. The impugned order has failed to set about determining the congruity of that facilitation within the definition of taxable service in section 65(105)(zm) of Finance Act, 1994 - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (9) TMI 442
  Recovery of CENVAT Credit - general insurance services pertaining to motor insurance, health insurance, property insurance, engineering insurance, liability insurance etc. - Department was of the view that the description in the invoice issued by the dealers did not reflect the true description of services rendered to the appellant by the dealers - HELD THAT:- The issue in this appeal has been analyzed and decided in the appellant s own case for the previous period in M/S. CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI [ 2021 (3) TMI 24 - CESTAT CHENNAI ] where it was held that CENVAT credit cannot be denied. The demand cannot sustain - Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2021 (9) TMI 474
  Area based exemption - Expansion / enhancement of manufacturing capacity - Part of manufacturing unit or not - Sheds No.15 and 36D of the respondent assessee were part of the existing manufacturing unit or not - exemption under N/N. 69/2003-CE dated 25.08.2003 - HELD THAT:- In the present case, the department is not in a position to dispute the factual assertions of the assessee that there was inter linking of a manufacturing process between all sheds, the raw material was procured commonly, that the labour and work force were also commonly maintained. All sheds were under the controlled of the same management and the sheds were under common registration of the factory. It is also pointed out that the sheds No.15 and 36D were adjacent to and inter connected with the existing manufacturing unit located at shed No.14. The Tribunal committed no error in coming to the conclusion that the addition of two sheds to the existing manufacturing unit was only in the nature of expansion of manufacturing capacity and cannot be seen as establishment of new industrial units coming into existence after 28.02.2001 - It is not the case of the department that even if there is any expansion in the existing industrial unit after 28.02.2001, the production achieved through such augmented manufacturing capacity would not qualify for exemption under the said notification dated 25.08.2003. The question is answered in favour of the assessee against the Department - Appeal is dismissed.

  ---

• CST, VAT & Sales Tax

• 2021 (9) TMI 477
  Refund claim - availability of Sales tax exemption or not - whether the petitioner namely M/s. Akbari Continental Pvt. Ltd. is a Hotel or comes under Guest House and Restaurants under Clause-27 of the ineligibility list - Entry 30-FFFF vide Finance Department Notification dated 16.08.1990 - disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of Orissa Sales Tax Act. Whether by selling IMFL, cold drinks in its hotel it was part of the list of units excluded from exemption under Sl. No. 27 of IPR 1989? - HELD THAT:- The Tribunal has for the three AYs 1993- 94, 1994-95 and 1996-1997 rejected the plea of the Department that the Petitioner s unit is to be categorized as a restaurant and denied the exemption in terms of Entry 30-FFFF. This Court finds no reason why only for AY 1995-96 the Department s case ought to be accepted by the Tribunal particularly since the eligibility certificate issued by the DIC is the same for all these AYs - question is answered in favour of the Petitioner and against the Department by holding that the Petitioner is a hotel and does not fall under Clause 27 of the ineligibility list of IPR-1989 and is entitled to sales tax exemption under Entry 30-FFFF in terms of the Finance Department Notification dated 16th August, 1990. Whether in the facts and circumstances of the case, disallowance of the case, disallowance of claim of first point sale of cold-drinks and IMFL U/s. 5(2) (A) (a) read with Section 8 of the Act is sustainable in law? - HELD THAT:- It is not in dispute that the Petitioner is not the first seller in respect of cold drinks. It has produced the invoices to show from whom it has purchased the soft drinks. The Tribunal appears to have rejected these invoices only because the seller was not a registered dealer. But the Tribunal has for the AYs 1993-94 and 1996-97accepted that the cold drinks have suffered tax at the first point of sale and that irrespective of the sellers of such cold drinks not being registered dealers themselves, the cold drinks cannot be made exigible again to sales tax. This appears position also flows from a reading of Section 8 read with Explanation (1) to Section 5 (2) (A) (a) of the OST Act. Reliance placed in the case of GOVINDAN CO. VERSUS THE STATE OF TAMIL NADU [ 1974 (2) TMI 69 - MADRAS HIGH COURT] , where the Madras High Court held that to claim benefit of tax on the ground that the sales effected by the Assessees were second sales, they need not show that their sellers had in fact paid the tax at the first point. It was enough for them to show that the earlier sales were taxable sales and the tax was really payable by their sellers. The issue is thus answered partly in favour of the Petitioner by holding that the disallowance of claim of first point sale of cold drinks under Section 5(2) (A) (a) read with Section 8 thereof was not sustainable in law. However, the observation of the Tribunal in regard to the issue of sale of IMFL requiring further enquiry is upheld and the issue of sale of IMFL by the Petitioner for the AY 1995-96 is therefore remanded to the Assessing Authority for a fresh determination. Petition disposed off.

  ---

• 2021 (9) TMI 475
  Process amounting to manufacture or not - Works contract - manufacturing and selling the recorded cassettes to the petitioner - First sale or second sale - recording the blank cassettes by utilizing the master copy - cassettes not sold in the open market - Validity of Circular dated 16.05.2003 - Central Excise Act and TNGST Act for levying of Tax for sale, are same or not - HELD THAT:- In the present case, the right was not given to use goods for any purpose and it is given for a particular purpose that recording the songs in blank cassettes and after recording, such recorded cassettes are to be supplied only to the petitioner. Therefore, the cassette manufacturer s services are utilized to process the recording system and after processing the recording system, the recorded cassettes are handed over or sold to the petitioner and the materials utilized for such recording of cassettes cannot be construed as a sale and even in case, an invoice is raised in this regard i.e., part and parcel of the works contract and cannot be construed as a sale. In the present case, the master copy was allowed to be utilized only for the purpose of recording of blank cassettes by the cassette manufacturers and after recording, he is not permitted to sell the product in the open market, but to handover the recorded cassettes only to the petitioner company, who in turn, reserve their rights to sell the product in the open market. Thus, such sale by the petitioner in the open market cannot be construed as a second sale, but to be taken as the first sale for the purpose of levying tax under the provisions of the TNGST Act. In the present case, there was a works contract between the petitioner and the cassette manufacturers to use the master copy for the purpose of recording the blank cassettes in large scale. Secondly, there is an execution of works contract and such execution is done on certain terms and conditions of the agreement. Thirdly, in the present case, the goods were transferred to the petitioner, who has supplied the master copy and not sold in the open market admittedly. It would have been supplied in the sale form or in any other form. In the present case, it was supplied in the other form by recording the blank cassettes by utilizing the master copy and therefore, all the three conditions stipulated by the Hon ble Supreme Court of India in the above case has been complied with in respect of the facts and circumstances of the present case. This Court is of the considered opinion that for the purpose of levying tax with reference to the provisions of the tax law, the nature of transactions are of paramount importance for forming an opinion, whether such transaction amounts to sale or works contract or otherwise. In the present case, there is no dispute with reference to the transaction between the petitioner and the cassette manufacturers for recording of blank audio cassettes and supply of the recorded cassettes to the petitioner - this Court has no hesitation in forming an opinion that the first sale as claimed by the petitioner cannot be considered as a first sale, but to be construed as works contract and the sale by the petitioner in the open market is to be taken as the first sale for the purpose of levy of tax under the provisions of the TNGST Act. The impugned Circular passed by the respondents in Circular No.Acts Cell-I/76234/2002 dated 16.05.2003 is confirmed - Petition dismissed.

  ---

• 2021 (9) TMI 471
  Levy of Sales Tax - Rubber Polisher, V-Belt and Hose pipe - covered under first point levy of Tax prior to Finance Department Notification No.14691-CTA-37/2001 dated 31.7.2001 or not - disallowance of declaration Form No.XXXIV, proper or not - HELD THAT:- It is evident that inclusion of spare parts in terms of the notification dated 31st March, 2001 for the purposes of first point tax was intended to be prospective. In other words, there is nothing in the said notification to indicate that applies to a prior period. In the present case, since the assessment pertains to the year 1999-2000, the question of applying the aforementioned notification dated 31 st March, 2001 did not arise. The Court answers the question framed in the negative in favour of the assessee against the Department. Accordingly, it is held that the Tribunal was not justified in holding that the items in question were exigible to first point tax for the year in question i.e. 1999-2000. It is held that disallowance of declaration form-XXXIV filed by the Petitioner was not proper. Revision petition disposed off.

  ---

• 2021 (9) TMI 470
  Works Contract - intra-State sales - three separate contracts for supply, design and erection of 100 TPD Rotary Kiln - turn over has been assessed under the CST Act - levy of penalty u/s12(5) of the Orissa Sales Tax Act, 1947 - whether the Tribunal erred in treating the transactions as an intra-State sale despite the Petitioner having paid CST on the same transaction? - HELD THAT:- In BHARAT HEAVY ELECTRICALS LIMITED VERSUS UNION OF INDIA AND OTHERS [ 1996 (4) TMI 419 - SUPREME COURT ], the Supreme Court was considering a similar question which arose in the background of Bharat Heavy Electrical Limited (BHEL) being awarded a Letter of Intent (LOI) by the National Aluminium Company Limited (NALCO), Bhubaneswar for setting up of five captive power plants (120 MW each) at its Aluminium smelter complex at Angul, Orissa. Pursuant to the LOI, BHEL instructed its several units in Haridwar, Jhansi, Bhopal, Bangalore, Ramachandrapuram (Andhra Pradesh- near Hyderabad), Ranipet and Tiruchi (Tamil Nadu) and so on to manufacture the requisite machinery and equipment. There was a separate supply and service contract executed between the parties. Merely because the component parts were brought from different places outside Orissa and assembled in Orissa, it cannot be said that it was an intra-State sale and that a colourable device was deployed to avoid paying sales tax under the OST Act. This is contrary to the facts. The documents placed on record clearly show that components either manufactured in the Petitioner s own facilities outside Orissa or brought from outside Orissa were transported to Orissa for erection, testing and commissioning of the 100 TPD Rotary Kiln - there was no occasion for the Tribunal to have gone into a lengthy discussion whether it amounted to a works contract when the focus ought to have been on whether it was an intra-State sale as contended by the State. The goods were indeed supplied in course of inter-State rate, and received by TRL in Orissa. The movement of the goods originated from outside the State. This was not an intra-Sate sale by any stretch of imagination. The Court is unable to agree with the conclusion reached by the authorities at all levels, i.e., STO, ACST - application disposed off.

  ---

• Indian Laws

• 2021 (9) TMI 483
  Regularization of Ad hoc appointments - claim for regularization was mainly rejected on the ground that since her initial appointment was on leave vacancy for which there was no provision under the 2001 Rules, as such she cannot be held to be entitled to the benefit conferred by Regularization Rules, 2001 - HELD THAT:- In the case of the appellant, it is undisputed that she was appointed by the Regional Inspectress of Girls Schools, who is the prescribed appointing authority under the Uttar Pradesh Subordinate Educational (Trained Graduates Grade) Service Rules, 1983. Equally undisputed is the fact that she was appointed on a sanctioned post and possessed all the necessary prescribed qualifications under 1983, Rules. Whether her continuation on the post on the strength of the interim order passed by the High Court would disentitle her from regularization in view of the dictum in the case of SECRETARY, STATE OF KARNATAKA AND OTHERS VERSUS UMADEVI AND OTHERS [ 2006 (4) TMI 456 - SUPREME COURT] wherein it was held that since the initial appointment of the petitioner (appellant herein) was dehors the Rules and thus was illegal and her appointment was litigious appointment and she continued on the strength of an interim order passed by the High Court on 20.05.1986, she was not entitled for regularization? - HELD THAT:- It is very well settled that it is not permissible for the parties to re-open the concluded judgments of the Court as the same may not only tantamount to an abuse of the process of the Court but would have far reaching adverse effect on the administration of justice. A feeble attempt was made by the learned counsel for the Staterespondent to persuade us not to interfere in the matter on the ground that the services of the appellant were terminated vide letter dated 19.05.1986 which was never challenged as such her services stood terminated - We are not ready to accept the proposition canvased by learned counsel for the respondent at this stage for the simple reason that it was open for the State to have advanced this contention before the learned Single Judge in the two Writ Petitions decided vide judgment and order dated 23.01.2006. Once this argument was never made before the learned Single Judge in the proceedings which has attained finality, the respondent cannot be permitted to raise this argument in this appeal. The impugned judgment passed by the Division Bench of High Court is not liable to be sustained and is hereby set aside - appellant is held entitled to be regularized with all consequential benefits which may be extended to her within a period of three months from today - Appeal allowed - decided in favor of appellant.

  ---