Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 14, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Reversal of Input tax credit - inputs consumed in expired Cakes & Pastries - The Non-obstante clause of Section 17(5)( h) of CGST Act, 2017 overrides the operation of section 16 and section 18 of CGST Act provisions contrary to this subsection and thereby blocks ITC admissibility contrary to the said sub section. Subject goods being destroyed are covered under this non obstante clause (h) of section 17(5) CGST Act. - ITC on inputs used in manufacturing expired cakes & pastries is not admissible and required to be reversed. - AAR
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Purchase Scrap/Used vehicles from Unregistered Dealers by Composition dealer - Reverse Charge Mechanism - Composition Dealer purchasing Scrap/Used vehicles from the following Suppliers, namely: Central Government, State Government, Union territory or a local authority are liable to pay tax on RCM basis. - There is no RCM tax liability for purchase of subject goods from unregistered dealers. - AAR
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Classification of services - composite supply of works contract service - construction of fish market for the Panchayat(Road and Building) Division, Valsad District Panchayat - this activity is undertaken by the Valsad Panchayat engaged as public authority and the activity squarely falls under the entry no 22- ‘Markets and Fairs’ of the Eleventh Schedule of our Constitution - Liable to GST @12% - AAR
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Classification of goods - Paratha - various varieties of Paratha produced - the subject products are not only different from the said khakhra, plain chapatti or roti, but are also not ‘like products’ in common parlance. - The composition of paratha (wheat flour 36% to 62%) is different from composition of khakhra/ plain chapatti/roti. Moreover, ‘paratha’ also requires further processing for human consumption as admitted by the applicant themselves. - ‘Paratha’ merits classification at HSN 21069099 - Liable to GST @18% - AAR
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Provisional attachment of property - no proceedings are pending against the petitioner under sections 62 or 63 or 64 or 67 or 73 or 74 thereof - Vires of section 83 of CGST Act - The order of provisional attachment under challenge is clearly in the teeth of the decision in Radha Krishan Industries - The order of provisional attachment stands set aside with further direction to the Assistant Commissioner to defreeze the bank account of the petitioner immediately. - HC
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Fraudulent Input Tax Credit (ITC) - Seeking quashing of entire criminal proceedings of the complaint - sanction order has been issued by a competent authority or not - passing of fraudulent input tax credit - retraction of statements after long time - There is no substance in the present application, calling for interference in either the complaint case or the order of cognizance or the order of the summoning - application dismissed. - HC
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Principles of natural justice - Admittedly summons were issued to the petitioner under Section 70 of the G.S.T Act, 2017 on 12.02.2021 and enquiry was conducted and after that at 18:10. hours on the same day he was arrested by issuing a arrest memo and he was remanded to Judicial custody on 13.02.2021. Now, the investigation is pending. - There is no violation of law or civil procedure code - This Court is not inclined to grant bail to the petitioner - HC
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Grant of anticipatory bail - availment and utilization of inadmissible Input Tax Credit - availment of fraudulent export benefits - Fake firm - dummy proprietor - The firms and the companies of the applicant which are conducted by him along with his father and brother had according to respondent evaded tax. - No case for grant of anticipatory bail is made out - HC
Income Tax
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Disallowance u/s 14A - Exempted income - proportionate disallowance of interest paid by the banks for investments made in tax free bonds/ securities which yield tax free dividend and interest to assessee Banks - the proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds/ securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments. - SC
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Validity of Reopening of assessment u/s 147 - while recording the reasons, the AO has considered the relevant facts like issue of stock in trade, the way in which the stock of proprietary concern came to be gifted to the family members by proprietor - It could be said that there was proper application of mind on the part of the AO while recording the reasons for reopening. When the return of income of both the assessees was processed under Section 143(1) of the Act and not under Section 143 (3) of the Act, the AO is justified in arriving at the conclusion that the income has escaped assessment. - HC
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Proceeding of Criminal Case u/s 276CC of the Income Tax Act - Proof of willful default in filing the return - As the applicant has filed the income tax return in time as per Section 139(4) of the Act, 1961 and the same was accepted by the opposite party in toto and the opposite party has also not imposed any penalty of late filing of income tax return as alleged by them in complaint in view of Section 271(1)(a) of the Act, 1961, therefore, prima facie it appears that the complaint filed before Magistrate concerned under Section 276CC of the Act, 1961 appears to be an abuse of process of law. - HC
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Interest levied u/s 234D - Interest levied in the regular assessment or re-assessment - the assessment framed under Section 143(3) read with Section 147 dated 26.12.2008, being not the assessment made for the first time, the same cannot be regarded as a 'regular assessment' for the purposes of Section 234D and therefore, no interest can be levied on the respondent-assessee. - HC
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Correct head of Income - income towards Mall Operating Revenue - taxable under the head Income from House Property or Income from Business and Profession - principle of rule of consistency - AO directed to treat the impugned income earned by the assessee under “profit and gains from business or profession”. - AT
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Best judgement assessment u/s. 144 r.w.s.147 - additions towards unaccounted professional charges received from Hospitals in cash - Assessing Officer has erred in making additions towards unaccounted professional charges received in cash from Apollo Hospitals on the basis of statement of a third party, without providing opportunity of cross-examination to the assessee - AT
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Amount outstanding from the trade debtors - non-charging of interest on the debtors - Assessee had not received any interest then we fail to understand as to how the Income tax authorities can fix a notional interest as due, or collected by the assessee. Our attention has not been invited to any of the provisions of the Act empowering the Income tax authorities to include in the income, interest which has not been due or collected/received at any stage by the assessee. - AT
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Undisclosed turnover - Estimation of income - The presumptions u/s. 292C are rebuttable presumptions and they do not lead to conclusive evidence. The assessee has right to rebut the presumption. In the present case, since the assessee has not rebutted the presumption, CIT(A) has given a direction to estimate the income on the turnover @ 5% as income of the assessee. - AT
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Addition u/s 68 - bogus share application money and premium received by the assessee-company - sham transactions - Onus to prove - Here in this case, the investee companies are based outside Delhi and if he was not satisfied with the authorized representative sent by them, then at least he could not have issued a commission u/s.133(1)(d) to be examined by the local Income tax authority. Further, these authorized representative have adduced the document but nowhere Assessing Officer has pointed out what was lacking in such documents which was already submitted by these companies in reply to the notice u/s.133(6) and what extra he wanted to examine, has not been mentioned. - No additions - AT
Customs
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Clearance of goods as stock transfers for self-consumption - transfer from a unit located in Free Trade Warehousing Zone to Domestic tariff Area unit - The writ petitioner has chosen to file the present Writ Petition merely on the ground that the authorities are attempting to pass an assessment in contravention with the advance ruling in the mentioned case. - The relief cannot be granted in anticipation in such circumstances. - HC
Indian Laws
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Dishonor of Cheque - legally enforceable debt or not - threat and coercion - Though it is the case of the petitioner that the said memo of compromise has been obtained from her by way of threat and coercion and the cheque had been misutilised by the respondent, however, those are points that have to be canvassed by the petitioner at the time of trial and this Court, sitting under Section 482 Cr.P.C., cannot go into the merits of the case - this Court is not inclined to interfere with the proceedings pending before the Court below. - HC
Service Tax
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Service tax liability - Franchise service - The offering of M/s Shri Sai Transport and Courier Pvt Ltd to its customers are the services associated with Maharashtra State Road Transport Corporation to which they obtain rights by their agreement with the appellant who are delegates of the Corporation. The transport is effected by Maharashtra State Road Transport Corporation and it is that service which the appellant has enabled M/s Shri Sai Transport and Courier Pvt Ltd to offer to users. This ‘representational right’ is intended to be taxed by the ‘taxable service’ and the consideration thereof is liable to tax. - AT
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CENVAT Credit - input services - The denial of credit merely for want of description of service or classification thereof, which are primarily intended for statistical reference, should not be allowed to impede availment of credit as substantive eligibility, prescribed in CENVAT Credit Rules, 2004 is not assailed by Revenue. - AT
Case Laws:
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GST
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2021 (9) TMI 571
Reversal of Input tax credit - inputs consumed in expired Cakes Pastries - goods used as raw material in manufacturing of expired cakes pastries that were kept in display for use in course or furtherance of business - HELD THAT:- Cakes and pastry have limited shelf life and after expiry these bakery items are prohibited from sale. Attention drawn to Section 7 of Prevention of Food and Alteration Act, 1954 prohibiting the sale of expired goods as such are not fit for consumption. Further section 273 Indian Penal Code criminalizes the act of sale of harmful perishable food products - Thus, the act of throwing away expired cakes and pastries is akin to destroying the expired food products, for the applicant destroys by throwing them away. The Non-obstante clause of Section 17(5)( h) of CGST Act, 2017 overrides the operation of section 16 and section 18 of CGST Act provisions contrary to this subsection and thereby blocks ITC admissibility contrary to the said sub section. Subject goods being destroyed are covered under this non obstante clause (h) of section 17(5) CGST Act. The subject matter is covered under section 17(5) (h) of CGST Act and thereby ITC on inputs used in manufacturing expired cakes pastries is not admissible and required to be reversed.
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2021 (9) TMI 570
Classification of goods - rate of tax - HSN Code - Sprocket, which is a part in chains- conveyor or roller chains- for industrial use - classified at HSN 73151100 or otherwise? - HELD THAT:- The HSN 848390 covers tooth wheel, Chain Sprocket and other transmission element presented separately; parts. This description is sufficient to classify the subject goods at HSN 848390 and Rule 1 of General Rules of Interpertation of Harmonised System (GIR), i.e, Classification to be based on the Heading, being satisfied, there is no further need to apply GIR sequentially. There are no merit to examine other HSN in this regard. Reliance is placed in an order of CESTAT in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS NU-TECH ENGG. CO [ 2000 (6) TMI 342 - CEGAT, NEW DELHI ] wherein Sprockets were classified under Heading 84.83 of Central Excise Tariff Act (CETH), 1985. We note that CETH and Customs Tariff Heading (CTH) in 8483 have the same description. The statutory entry under sub heading 848390 of the CETA, 1985 corresponds to entry under sub-heading 8483.90 of the HSN. The Custom Tariff Act is based on HSN. Thus, Sprocket is classified under HSN 848390 tariff subheading.
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2021 (9) TMI 569
Purchase Scrap/Used vehicles from Unregistered Dealers by Composition dealer - applicability of Reverse Charge Mechanism on these purchases - RCM exemption limit amount for purchase of Scrap and Used vehicles from unregistered dealers - HELD THAT:- Vide Section 9(3) of CGST Act, Government may specify the categories of supply of goods or service or both on which the tax shall be paid on reverse charge mechanism by the recipient. In exercise of powers of section 9(3) of CGST Act, The Central Government specifies at The Sr no 6 to Notification No.4/2017-Central Tax(Rate) dated 28-6-17,central tax shall be paid on reverse charge basis by the recipient - Vide Section 9(4) of the CGST Act, Government may specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both. Notification No.7/2019-Central Tax(Rate) dated 29-3-19 notifies that the specified registered persons shall, in respect of supply of goods or services or both, received from an unregistered supplier shall pay tax on reverse charge basis as recipient of such goods or services or both. However, subject goods are not notified vide said Notification 7/2019-CT(R). Composition Dealer purchasing Scrap/Used vehicles from the following Suppliers, namely Central Government, State Government, Union territory or a local authority are liable to pay tax on RCM basis - there is no RCM tax liability for purchase of subject goods from unregistered dealers.
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2021 (9) TMI 568
Classification of services - composite supply of works contract service - construction of fish market for the Panchayat(Road and Building) Division, Valsad District Panchayat - service recipient is Panchayat - Local Authority or not - merits classification at Serial Number 3(vi)(a) of Notification No.11/2017-Central Tax(Rate) dated 28-6-17 or otherwise? - HELD THAT:- The subject contract is for the construction of immovable property wherein transfer of property in goods is involved in the execution of subject contract. The subject supply is a composite supply of works contract service. The service recipient is Panchayat Vibhag-Road and Building, Valsad District. Panchayat is a Local Authority as defined vide Section 2(69)(a) of CGST Act, 2017. Fish Market being a market is covered under said entry 22 of Markets and Fairs . Further it is stated that Markets and Fairs can also be read as Markets or Fairs . There are merit to classify the subject supply of Fish Market(a composite works contract) to the Valsad Panchayat( a local authority) and this activity is undertaken by the Valsad Panchayat engaged as public authority and the activity squarely falls under the entry no 22- Markets and Fairs of the Eleventh Schedule of our Constitution - the subject matter falls within the ambit of predominantly meant for use other than for commerce, industry, or any other business or profession . The subject Supply is eligible for 12% GST vide Serial Number 3(vi) (a) of said NT (as amended from time to time).
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2021 (9) TMI 567
Classification of goods - Paratha - various varieties of Paratha produced by the applicant merit classification under HSN Code 19059090 or not - chargeable to 5% GST under Sl.No.99A of Schedule-I of Notification No.1/2017CT(Rate) and Notification No.1/2017-IT(Rate) dated 28-6-17 - HELD THAT:- The varieties of the product Paratha supplied by the applicant falls under Heading 2106 and specifically under Tariff item 21069099. GST rate of 5% is applicable subject to (i) products shall be classified at HSN 1905 or 2106 and (ii) description shall be khakhra, plain chapatti or roti. In the issue in hand, it is found that the first condition of classification is fulfilled as the product paratha has been classified under heading 2106. The description of Paratha is not mentioned in the said entry and also as discussed in aforementioned paragraphs, khakhra, plain chapatti or roti are cooked preparations, do not require any processing for human consumption and hence are ready to eat food preparations whereas the subject products are not only different from the said khakhra, plain chapatti or roti, but are also not like products in common parlance. The composition of paratha (wheat flour 36% to 62%) is different from composition of khakhra/ plain chapatti/roti. Moreover, paratha also requires further processing for human consumption as admitted by the applicant themselves. The impugned product paratha is not Khakhra, plain chapatti or roti. The said Entry No.99A of Schedule I to the Notification No.01/2017-Central Tax(Rate) dated 28-6-17(as amended vide Notification No.34/2017-Central Tax(Rate) dated 13-10-17) is not applicable for Paratha . The product Paratha of the applicant will be covered under: (i) Entry No.453 of Schedule-III of Notification No.01/2017-Central Tax(Rate) dated 28-6-17 for the period from 1-7-17 to 14-11-17 and (ii) Entry No.23 of Schedule-III of Notification No.01/2017-Central Tax(Rate) dated 28-6-17(as amended by Notification No.41/2017-Central Tax(Rate) dated 14-11-17) with effect from 15-11-17 and will be liable to GST at the rate of 18%.
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2021 (9) TMI 564
Provisional attachment of property - no proceedings are pending against the petitioner under sections 62 or 63 or 64 or 67 or 73 or 74 thereof - Vires of section 83 of CGST Act - HELD THAT:- Mr. Mishra has not disputed that no proceedings under sections 62 or 63 or 64 or 67 or 73 or 74 have yet been initiated against the petitioner - the issue is squarely covered by the decision in M/S. S.S. OFFSHORE PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2021 (8) TMI 344 - BOMBAY HIGH COURT] . Whilst so deciding, the Division Bench had relied on the decision of the M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] where it was held that the order passed by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings. The order of provisional attachment under challenge is clearly in the teeth of the decision in Radha Krishan Industries - The order of provisional attachment dated 09/11/2020 stands set aside with further direction to the Assistant Commissioner to defreeze the bank account of the petitioner immediately. Petition allowed.
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2021 (9) TMI 552
Fraudulent Input Tax Credit (ITC) - Seeking quashing of entire criminal proceedings of the complaint - sanction order has been issued by a competent authority or not - passing of fraudulent input tax credit - retraction of statements after long time - HELD THAT:- It is evident and as admitted by Sri Mathur that the authority concerned had issued summons to the applicants on 26.02.2021. In terms of the summons, applicants had appeared before the summoning authority and had answered various questions, put-forth to him, and had signed the statement on 27.02.2021. Though, learned counsel for applicants submits that subsequently, by filing an affidavit, applicants had retracted his statement and copy of this affidavit dated 02.06.2021 is available on record. It is evident that applicant was given an opportunity to appear and explain the circumstances appearing to the appropriate officer under the Act to give evidence and produce documents. Retraction of this statement, after about more than three months, is not the subject matter of the adjudication in an Application U/S 482 Cr.P.C. - also, there is already an assessment, as is evident from the complaint filed by the department before the learned Special Chief Judicial Magistrate, Meerut, showing amount of input tax credit passed on to M/s M.F.P.L., as per the G.S.T.R.-2A of M/s M.F.P.L., to the extent of ₹ 31.64 crores, which has been fraudulently availed and utilized by the applicant-Sanjay Garg, even this argument that there has been no assessment and prosecution has been launched without any assessment, is not made out. There is no substance in the present application, calling for interference in either the complaint case or the order of cognizance or the order of the summoning - application dismissed.
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2021 (9) TMI 550
Principles of natural justice - summons was issued under Section 70 of the GST Act, 2017 and without giving an opportunity an enquiry was conducted on the same date - HELD THAT:- Admittedly summons were issued to the petitioner under Section 70 of the G.S.T Act, 2017 on 12.02.2021 and enquiry was conducted and after that at 18:10. hours on the same day he was arrested by issuing a arrest memo and he was remanded to Judicial custody on 13.02.2021. Now, the investigation is pending. Admittedly summons were issued to the petitioner under Section 70 of the G.S.T Act, 2017 on 12.02.2021 and enquiry was conducted and after that at 18:10. hours on the same day he was arrested by issuing a arrest memo and he was remanded to Judicial custody on 13.02.2021. Now, the investigation is pending. There is no violation of law or civil procedure code and further regarding the authorization of arrest and enquiry is concerned, the learned special public prosecutor would submit that the copy of the authorization letter is submitted and the respondent police have also followed the mandatory procedures. Therefore, the contention raised by the learned counsel for the petitioner is not accepted and the learned counsel himself admitted that the case has been registered only based on the confession statement. Therefore, when he admits that the summons were issued and enquiry was conducted there is incriminating materials to register the case and the admissibility and validity of the statement and whether the petitioner has involved in the case or not will be decided only after the investigation. This Court is not inclined to grant bail to the petitioner - Petition dismissed.
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2021 (9) TMI 549
Grant of anticipatory bail - availment and utilization of inadmissible Input Tax Credit - availment of fraudulent export benefits - Fake firm - dummy proprietor - evidence of legal commercial contract - Section 132(1)(b), 132(1(c) and Section 132 (e)(e) of CGST Act - HELD THAT:- The complicity of the applicant is established during the course of investigation. It is pertinent to note that the case of the respondent is that all accused had acted in connivance with each other. The applicant had admitted that the applicant is partner in four firms. Statement of Sachin Gaikwad shows that, he does not own any firm by name M/s. Neha Impex. Jaghish Chauhan had approached him and requested him to meet his friend Mourya, who in turn introduced him to Sameer Sayeed Patel for the purpose of opening bank account with ICICI Bank. He provided blank cheque of Kotak Mahindra Bank. According to Sachin Gaikwad he did not obtain any GST registration number. Blank cheques were provided according to Sameer Patel. He had not obtained any registration number. Prima facie there is sufficient evidence against the applicant/accused. It is apparent that the goods worth ₹ 2.47 Crores were allegedly purchased from M/s. Neha Impex and M/s. Rohini Impex. They had in turn purchased the goods from M/s. Mahalaxmi Traders. As per the investigation, M/s. Mahalaxmi Traders is not in existence. The firms and the companies of the applicant which are conducted by him along with his father and brother had according to respondent evaded tax. Sachin Gaikwad has stated that he is not owner or proprietor of M/s. Neha Impex. Statement of Jagdish Chauhan also transpired that he is dummy proprietor of M/s. Rohini Impax. Owners of M/s. Neha Impex and M/s. Rohini Impex have stated that they have not provided any goods to applicant. Payment to Neha Impex M/s. Rohini Impex - evidence of legal commercial contract or not - HELD THAT:- The submission about payment to M/s. Neha Impex M/s. Rohini Impex cannot be considered to be evidence of legal commercial contract since they have never conducted any business. They have not sold goods. There is no infirmity or illegality in summons issued by respondents. No case for grant of anticipatory bail is made out - Bail application dismissed.
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Income Tax
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2021 (9) TMI 566
Disallowance u/s 14A - Exempted Income - proportionate disallowance of interest paid by the banks for investments made in tax free bonds/ securities which yield tax free dividend and interest to assessee Banks - whether assessee had sufficient interest free own funds which were more than the investments made? - whether Section 14A, enables the Department to make disallowance on expenditure incurred for earning tax free income in cases where assessee like the present appellant, do not maintain separate accounts for the investments and other expenditures incurred for earning the tax-free income? - HELD THAT:- Revenue does not contend that the Assessee Banks had held the securities for maintaining the Statutory Liquidity Ratio (SLR), as mentioned in the circular - when there is no finding that the investments of the Assessee are of the related category, tax implication would not arise against the appellants, from the said circular. The aforesaid discussion and the cited judgments advise this Court to conclude that the proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds/ securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments. With this conclusion, we unhesitatingly agree with the view taken by the learned ITAT favouring the assessees. The above conclusion is reached because nexus has not been established between expenditure disallowed and earning of exempt income. The respondents as earlier noted, have failed to substantiate their argument that assessee was required to maintain separate accounts. Their reliance on Honda Siel [ 2011 (7) TMI 275 - SC ORDER] to project such an obligation on the assessee, is already negated. The learned counsel for the revenue has failed to refer to any statutory provision which obligate the assessee to maintain separate accounts which might justify proportionate disallowance - Decided in favour of the assessee.
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2021 (9) TMI 565
Validity of Reopening of assessment u/s 147 - Eligibility of reason to believe - Capital gain u/s 45 on partners transfer of capital asset - whether the revenue is justified in reopening the assessment for the year under consideration ? - writ applicants being partners of the partnership firm transferred their capital assets received by them in the form of gift to the partnership firm by way of capital contribution at a market rate and therefore, they are liable for capital gain u/s 45 (3) - whether the writ applicants were engaged in trading business of gold and gold ornaments before the partnership firm came into existence ? - HELD THAT:- The reasons for reopening are merely based on the observations made by the AO while framing the assessment of the partnership firm vide order dated 31.12.2017. It is pertinent to note that, against the assessment order dated 31.12.2017, the firm is in appeal before the appellate authority and the appeal is still pending. Thus, while recording the reasons, the AO has considered the relevant facts like issue of stock in trade, the way in which the stock of proprietary concern came to be gifted to the family members by proprietor Mr. Ashok Zinzuvadia. It could be said that there was proper application of mind on the part of the AO while recording the reasons for reopening. When the return of income of both the assessees was processed under Section 143(1) of the Act and not under Section 143 (3) of the Act, the AO is justified in arriving at the conclusion that the income has escaped assessment. As held by the Apex court in the case of Central Provinces Manganese Ore Company Ltd.[ 1991 (8) TMI 4 - SUPREME COURT ] and Rajesh Jhaveri [ 2007 (5) TMI 197 - SUPREME COURT] that the word reason in the phrase reason to believe in Section 147 would mean cause or justification. If the AO has cause or justification to know or suppose that income has escaped assessment, he can be said to have reason to believe that income has escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. We are convinced that there was tangible material before the AO to initiate the proceedings U/s. 147 of the Act. In our view, the AO is justified in reopening the assessment of both the assessees and it cannot be said that the impugned Notice is without jurisdiction or contrary to Section 147 - Decided against assessee.
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2021 (9) TMI 563
Transfer of case u/s 127 - petitioner has challenged the impugned action of transfer of his income tax file from Principal Commissioner of Income Tax-II Kolkata to Deputy Commissioner of Income Tax, Central Circle 19, New Delhi - Petitioner submits that without considering and disposing the aforesaid letters/representations and without communication of the formal order of disposal and/or rejection of the petitioner s prayer made in the aforesaid letters such decision of transfer was taken and even such order of transfer has not been communicated to the petitioner and after about eighteen months from his second letter dated 3rd October, 2019, petitioner came to know from the official portal of income tax on 17th July, 2021 that his case has been transferred from Kolkata to Delhi - HELD THAT:- Considering the submission of the parties, respondents are directed to produce the record particularly with regard to the receipt of the letter dated 18th September, 2019 and fate or decision of the respondents income tax authority on the petitioner s letter dated 18th September, 2019 and 3rd October, 2019 as to whether the same was considered and disposed of or rejected and whether such decision was communicated to the petitioner before taking any final decision of the transfer of the case of the petitioner and whether formal order of transfer was communicated to the petitioner. The respondents shall produce the relevant record in the aforesaid regard on 20th September, 2021 and petitioner will also come up with sufficient document to show as to how the letter dated 18th September, 2019 was sent or served on the respondents concerned. List this matter on 20th September, 2021
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2021 (9) TMI 562
Proceeding of Criminal Case u/s 276CC of the Income Tax Act - Proof of willful default in filing the return - penalty imposed for late filing of return under Section 271(1)(a) - instant application under Section 482 Cr.P.C. filed for staying the further proceeding of Criminal Case under Section 276CC of the Income Tax Act, 1961, pending before the Court of learned Special Chief Judicial Magistrate, Varanasi - HELD THAT:- As the applicant has filed the income tax return in time as per Section 139(4) of the Act, 1961 and the same was accepted by the opposite party in toto and the opposite party has also not imposed any penalty of late filing of income tax return as alleged by them in complaint in view of Section 271(1)(a) of the Act, 1961, therefore, prima facie it appears that the complaint filed before Magistrate concerned under Section 276CC of the Act, 1961 appears to be an abuse of process of law. The applicant has made out a case for interim relief.
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2021 (9) TMI 556
Interest levied u/s 234D - Interest levied in the regular assessment or re-assessment - assessment framed under Section 143(3) read with Section 147 against assessee - scope of regular assessment - whether no interest can be charged even for the period subsequent to the introduction of Section 234D merely on the ground that said section was introduced by Finance Act, 2003 with effect from 01.06.2003? - whether Tribunal was right in holding that interest levied under Section 234D of the Income Tax Act cannot be charged for the assessment year 2001-02 especially when the assessment order was made? - HELD THAT:- In the instant case, admittedly, the assessment order dated 26.12.2008 under Section 143(3) read with Section 147 was not the first assessment, as the assessment was under Section 143(3) dated 31.03.2004, which fact is not disputed. The decision in the case of CIT vs. Fertilizers Chemicals Travancore Ltd. [ 2018 (3) TMI 962 - KERALA HIGH COURT] would also help us in answering the substantial questions of law, though it was a case arising under Section 234B(3) of the Act wherein, it was held that interest payable under sub-section (1) of Section 234B was levied in the regular assessment and on re-assessment, the liability for advance tax was also stood increased and in such circumstances, the differential tax of reassessment has to be levied interest at the rate provided under sub-section (3) of Section 234B of the Act. There is no such provision in Section 234B of the Act and conspicuously, no provision in pari materia with Section 234B(3) is found in Section 234B of the Act. Thus, in the light of the above discussion, we are of the clear view that the assessment framed under Section 143(3) read with Section 147 dated 26.12.2008, being not the assessment made for the first time, the same cannot be regarded as a 'regular assessment' for the purposes of Section 234D and therefore, no interest can be levied on the respondent-assessee. - Decided against revenue.
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2021 (9) TMI 555
Accrual of income - Addition on interest on securities - HELD THAT:- As decided in assessee's own case [ 2021 (9) TMI 484 - MADRAS HIGH COURT] as relying on CITY UNION BANK LIMITED. [ 2007 (2) TMI 187 - MADRAS HIGH COURT] held that the assessee is taxable for interest on securities only on specified dates when it becomes due for payment, in view of third proviso to s.145(1) of the Act, which was in force during the relevant assessment years.
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2021 (9) TMI 554
Contribution made towards superannuation fund - Whether allowable business expenditure u/s 37? - Is not the finding of the Tribunal bad by directing the AO to allow expenditure under Section 37 when the assessee failed to obtain necessary approval from the competent authority viz., Principal Commissioner of Income Tax for the year under consideration and the deduction falls squarely within the ambit of Section 36(1)(iv) r/w. Section 40A(9)? - HELD THAT:- As decided in own case [ 2020 (10) TMI 798 - MADRAS HIGH COURT] similar question has been decided by the Division Bench of this Court on identical facts in the case of Commissioner of Income Tax v. Kattabomman Transport Corporation Limited [ 1998 (9) TMI 2 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2021 (9) TMI 547
Addition u/s 68 - bogus share capital - onus to prove - whether assessee has discharged his onus to prove, prima facie, the identity, creditworthiness and genuineness of the share capital and share premium received by it from share subscribers companies? - HELD THAT:- All the share applicants are (i) income tax assessee s, (ii) they are filing their return of income, (iii) the share application form and allotment letter is available on record, (iv) the share application money was made by account payee cheques, (v) the details of the bank accounts belonging to the share applicants and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee company, (vii) the applicants are having substantial creditworthiness which is represented by a capital and reserve as noted above. Thus the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee cannot be brushed aside by the AO to draw adverse view cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the AO, we hold that an addition cannot be sustained merely based on inferences drawn by circumstances - we delete the addition - Decided in favour of assessee.
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2021 (9) TMI 545
Denial of natural justice - non admission of additional evidence - CIT-A Power to admit additional evidences - CIT(A) rejecting the application moved by the assessee under Rule 46A of the Income Tax Rules, 1962 for leading the additional evidence - HELD THAT:- Section 254 of the Act read with Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 states about power to admit additional evidences, whether mere fact that evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at appellate stage, especially when evidence was available to party at initial state and had not been produced at that time. Rule 46A of the Rules speaks about production of additional evidence before the [Deputy Commissioner (Appeals)] [and Commissioner (Appeals)]. The additional evidences submitted by the assessee at this stage are the first time and are necessary for deciding the appeal. Even otherwise, all the documents so placed on record by the assessee by way of additional evidences before the ld. CIT(A) are necessary to adjudicate the controversy between the parties - in case, the additional evidence so placed on record by the assessee is allowed then in that eventuality, no prejudice shall be caused to the rights of the Revenue. Whereas on the contrary, in case, the said additional evidences placed on record by the assessee is not considered then in that eventuality the rights of the assessee shall be prejudiced. Therefore, we direct the ld. CIT(A) to admit additional evidences so placed on record by the assessee. - Decided in favour of assessee.
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2021 (9) TMI 544
Capital gain assessed in the hands of the HUF or individual member/in the hands of the assessee in his individual capacity - property in question was a joint family property - Long term capital gain (LTCG) addition on a protective basis in the hands of the assessee - deemed sale consideration received or receivable by the assessee - transaction involved results in capital gain in the hands of the assessee as one of the co-owner or his father Sri. P.S. Vishwanathappa as the kartha of HUF - assessee submitted that the Assessing Officer erred in adopting market value of constructed area, to be received by the landlord in view of Joint Development Agreement, instead of fair market value of the said asset on the dated of transfer - HELD THAT:- We are of the view that the issue of computation of capital gain has to be remanded to the AO for consideration de novo, in the light of the conclusion that the AO might arrive at in the case of assessment of the HUF on substantive basis. Without a substantive assessment, protective assessment will have no meaning. We make it clear that all the issues with regard to computation of capital gain viz., computation of full value of consideration received on transfer and deduction under section 54F of the Act will also be considered de novo by the AO depending on the outcome of proceedings in the case of the HUF. With these observations, we set aside the order of the AO and direct the issue to be examined afresh by the AO - Appeal by the assessee is treated as allowed for statistical purpose.
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2021 (9) TMI 543
Correct head of Income - income towards Mall Operating Revenue - taxable under the head Income from House Property or Income from Business and Profession - principle of rule of consistency - assessee is engaged in development and maintenance of immovable properties and Mall management - HELD THAT:- DR has not pointed out any fundamental changes in the facts of this year with that of earlier years, prompting us to take a different view. Rather, both the Revenue authorities gone to record a finding that there is no change in the facts and in order to maintain consistency with the earlier years, income of the assessee is to be treated as income from house property. Since identical issue was dealt with by the Tribunal in earlier year [ 2019 (11) TMI 1078 - ITAT AHMEDABAD ] in the assessee s own cases, following the principle of consistency, we direct the AO to treat the impugned income earned by the assessee under profit and gains from business or profession . Disallowing deduction of business expenditure and depreciation on fixed assets against income from business operation - HELD THAT:- As we have held that income earned by the assessee is to be treated under the head profits and gains from business or profession , as a consequence thereof, this expenditure is also to be considered from that angle. Accordingly, this ground is allowed.
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2021 (9) TMI 542
Disallowance of sales promotion expenses and reworking of deduction u/s.80IC - HELD THAT:- An identical issue had been considered by Tribunal in assessee s own case for assessment year 2012-13 [ 2019 (6) TMI 661 - ITAT CHENNAI] where the Tribunal by following various decisions including decision of Macleods Pharmaceuticals Ltd. [ 2016 (11) TMI 363 - ITAT MUMBAI] and also circular issued by CBDT vide Circular No.5 of 2012, held that sales promotion expenditure incurred by an assessee in the business of manufacture and selling of pharmaceutical products cannot be disallowed by enlarging the scope of circular issued under different regulation Computation of deduction claim u/s.80IC of the Act, by excluding disallowance made towards sales promotion and publicity expenses including free samples given to medical practitioners, the Tribunal by following the decision of Hon ble Bombay High Court in the case of CIT vs. Gem Plus Jewellery India [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] as held that enhanced profit on account of disallowance of expenses is eligible for deduction u/s.80IC AO as well as the ld.CIT(A) were erred in disallowing sales promotion expenses u/s.37(1) of the Act, by considering guideline issued by the Medical Council of India under different legislation. Hence, we direct the AO to delete addition made towards disallowance of sales promotion and publicity expenses and further, allow deduction claim u/s.80IC of the Act, without reducing disallowance made towards sales promotion and publicity expenses. Disallowance u/s 14A - Mandation of satisfaction as required u/s.14A(2) - HELD THAT:- In this case, the assessee has not made any suo-motto disallowance of expenses and hence, the question of recording satisfaction as required u/s.14A(2) of the Act does not arise. As regards, disallowance of direct expenses, the AO has given categorical finding towards expenses directly relatable to earning exempt income which does not form part of total income. According to the AO, the assessee has incurred ₹ 2,00,673/- which is directly relatable to exempt income. Once there is a categorical finding from the authorities on direct nexus between expenditure incurred for earning exempt income, said expenditure needs to be disallowed under Rule 8D(2)(i) of IT Rules. Therefore, there is no error in the orders of the lower authorities in disallowing direct expenses relatable to exempt income. Disallowance of interest expenditure - In the case of CIT vs. HDFC Bank Ltd.[ 2014 (8) TMI 119 - BOMBAY HIGH COURT] where it was clearly held that if assessee had mixed funds including borrowed funds then, general presumption comes in favor of the assessee that investment in shares and securities is out of interest free funds. In this case, the ld.CIT(A) has accepted the plea of the assessee and has directed the AO to examine availability of interest free funds. Therefore, we are of the considered view that there is no error in the findings recorded by the ld.CIT(A) to restore the issue to the file of the AO and to determine disallowance of interest expenses under Rule 8D(2)(ii), on the basis of availability of interest free funds. Disallowance of other expenses u/s 8D(2)(iii) at the rate of 0.5% of average value of investments, when the assessee has not made any suo-motto disallowance towards expenses relatable to exempt income, then the AO left with no option but to apply prescribed procedure provided under Rule 8D(2)(iii) of the IT Rules. Hence, there is no error in disallowance made by the AO towards other expenses. Accordingly, we reject the ground taken by the assessee. Excluding investments which does not yield exempt income, we find that it is a well settled principle of law by the decision of ITAT, Special Bench in the case of ACIT vs. Vireet Investment Pvt. Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] where it was clearly held that only those investments which yielded exempt income for the relevant assessment year needs to be considered for the purpose of disallowance of other expenses under Rule 8D(2)(iii) of IT Rules. Therefore, we direct the AO to consider only those investments which yielded exempt income for the purpose of computing average value of investments and further to disallow other expenses at the rate of 0.5% of average value of investments.
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2021 (9) TMI 540
Reopening of assessment u/s 147 - Bogus LTCG - unexplained cash credit u/s.68 - income chargeable to tax had been escaped assessment on account of exemption claimed u/s.10(38) of the Income Tax Act, 1961, in respect of long term capital gain derived from sale of shares of certain companies - HELD THAT:- As assessee has filed relevant documents including contract note issued by stock broker, as per which purchase and sale of shares were through online. The assessee has paid consideration for purchase of shares by cheque and had received consideration for sale of shares by cheque. AO has not made any adverse comments on the evidences filed by the assessee, but he has disbelieved documents filed by the assessee for simple reason that broker was kept under watch list by the SEBI for fraudulent and unfair trade practices relating to Securities Market Regulations, 1995. Basis on which the AO has concluded his finding to hold the assessee is a beneficiary of bogus long term capital gain is not supported by any corroborative evidences - AO has predominantly went on the basis of theory of human behavior and preponderance of probabilities for the reason that the assessee was never involved in purchase and sale of shares, but has done isolated transaction of purchase and sale of a particular company . The said finding of the AO is contrary to facts, because, the assessee was a regular investor in shares which is evident from Demat account furnished before us, as per which along with this script, the assessee had purchased and sold number of other scripts. AO as well as CIT(A) were erred in treating consideration received for sale of shares as unexplained cash credit u/s.68 of the Act. Hence, we direct the Assessing Officer to delete additions made u/s.68 - Decided in favour of assessee.
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2021 (9) TMI 539
Deemed divided u/s 2(22)(e) - advances as made by a company to a sister concern and adjusted the dues for job work done by the sister concern - HELD THAT:- Assessee has paid certain expenses on behalf of M/s. Indo Shell Mould Ltd. and the same has been adjusted against receivables from them. If at all, transaction between assessee and M/s. Indo Shell Mould Ltd. is in the nature of loans or advances, then same needs to be considered in the hands of M/s. Indo Shell Mould Ltd. as deemed dividend u/s.2(22)(e) of the Act. In this case, the Assessing Officer has invoked provisions of section 2(22)(e) of the Act, in the hands of company, but not in the hands of shareholder. Therefore, on this count, additions made by the Assessing Officer cannot be sustained. assessee is having exclusive contract manufacturing agreement with M/s. Indo Shell Mould Ltd. As per agreement between the parties dated 25.07.2011 M/s. Indo Shell Mould Ltd. has paid a sum of ₹ 20 crores as interest free advance for utilizing entire capacity to fulfill its needs. Since there is a commercial understanding between the assessee and M/s. Indo Shell Mould Ltd., the assessee has paid certain expenses of M/s. Indo Shell Mould Ltd. on their behalf and debited same to the account of M/s. Indo Shell Mould Ltd. Further, said amount has been adjusted against receivables from them. From the above, it is very clear that transaction between the assessee and M/s. Indo Shell Mould Ltd. is a clear commercial transaction in the normal course of business of the assessee. Therefore, in our view, same is outside scope of provisions of section 2(22)(e) - Decided in favour of assessee. Additions towards belated payment of employees contribution of PF ESI u/s.36(1)(va) r.w.s 43B(b) - HELD THAT:- Hon'ble Supreme Court in the case of CIT vs. Rajasthan State Beverages Corporation Ltd.[ 2017 (7) TMI 1087 - SC ORDER] has considered an identical issue while dismissing SLP filed by the Revenue and held that amount claimed on payment of PF ESI having been deposited on or before due date of filing of returns, same could not be disallowed u/s.43B or u/s.36(1)(va) - Insofar as circular No.22/2015 dated 17.12.2015 issued by the CBDT, we find that it has clarified allowabiity of employer s contribution to funds for welfare of the employees in terms of section 43B(b) of the Act and therefore, not relevant for considering employees contribution to the funds. AO has erred in disallowing belated payment of employees contribution to PF ESI u/s.36(1)(va) - Decided against revenue.
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2021 (9) TMI 538
Exemption u/s 54F - purchase of new residential house - excess consideration paid over and above consideration shown in registered sale deed - HELD THAT:- Entire consideration has been paid by cheque / demand draft. It is also an admitted fact that the AO has collected information from the seller u/s.133(6) of the Act, for which the seller Shri G. Murugesan has responded and confirmed that the property has been sold for a consideration of ₹ 58 lakhs. The assessee has also placed bank statements of the seller which clearly indicate payment of consideration by cheque. Further, both agreement to sale and registered sale deeds are entered into on 06.02.2012. Under these facts and circumstances, denying the benefit of deduction u/s.54F for excess consideration paid over and above consideration shown in registered sale deed is not correct because, merely for the property was registered for a lesser consideration, the genuine transaction between the parties cannot be doubted when it comes to allowing benefit under exemption / deduction provisions. AO as well as the ld.CIT(A) has erred in sustaining addition towards disallowance of exemption claimed u/s.54F towards consideration paid for purchase of property. Restriction of cost of improvement - HELD THAT:- AO has not given any valid reasons for rejecting cost of improvement to the extent of ₹ 50,000/- incurred by the assessee, when he has not doubted genuineness of expenditure incurred for improvement of the property. Further, it is a known fact how banks would finance purchase / construction of property. The assessee being an employee of Canara Bank had availed loan from the bank to the tune of ₹ 3 lakhs and balance ₹ 50,000/- was sourced out of her salary savings - when the assessee has explained source for cost of improvement, out of her savings and bank finance then the AO is erred in not accepting the source out of past savings, when he has accepted the genuineness of expenditure incurred for cost of improvement. CIT(A) without appreciating the facts simply confirmed addition made by the AO.
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2021 (9) TMI 537
Best judgement assessment u/s. 144 r.w.s.147 - additions towards unaccounted professional charges received from Apollo Hospitals in cash - denial of natural justice - assessee argued for non providing opportunity of cross-examination to the assessee - additions towards unaccounted professional charges on statement recorded from an employee during the course of search - assessee has denied having received professional charges in cash from Apollo Hospitals other than what was received in cheque/RTGS - HELD THAT:- AO made additions towards unaccounted professional charges received in cash for simple reason that except statement of an employee recorded during the course of search, the AO has never brought on record any other evidence to support his finding that the assessee has received professional charges in cash from Apollo Hospitals. Additions towards unaccounted professional charges received in cash for simple reason that except statement of an employee recorded during the course of search, the Assessing Officer has never brought on record any other evidence to support his finding that the assessee has received professional charges in cash from Apollo Hospitals. Hon'ble Supreme Court in the case of M/s.Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] as categorically held that not allowing assessee to cross examine witnesses by the adjudicating authority, though statements of those witnesses were made on the basis of impugned order is a serious flaw, which makes the order nullity, inasmuch as it amounted to violation of principles of natural justice, because of which the assessee was adversely affected. Assessing Officer has erred in making additions towards unaccounted professional charges received in cash from Apollo Hospitals on the basis of statement of a third party, without providing opportunity of cross-examination to the assessee. - Decided in favour of assessee.
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2021 (9) TMI 535
Denial of exemption u/s.80IB(10) - single residential project OR multiple units - HELD THAT:- We are of the opinion that neither party s submissions regarding the impugned issue of sec 80IB(10) deduction claim(s) therein, as the case may be, deserve to be accepted in entirety. So far as the Revenue s objection(s) are concerned that none of the assessee s residential projects is eligible for the impugned deduction, there is hardly any dispute that the learned coordinate bench has already declined the same regarding blocks G, H, I, K, F, L in the foregoing detailed discussion in preceding paragraphs. Meaning thereby that all these Revenue s objections are presumed to have been raised and declined regarding the corresponding conditions enshrined in section 80IB(10) of the Act. We therefore, adopt the foregoing detailed discussion mutatis mutandis so far as the assessee s residential projects, except A , D and E projects are concerned. The Revenue s arguments to this effect are rejected accordingly. The assessee s corresponding ground in the above housing projects stand accepted. Remaining three housing projects i.e. A, D and E - The assessee has not placed on record any corresponding clinching document to this effect as to whether it had filed the completion certificate in the prescribed format or not. We must also emphasize herein that the said prescribed proforma makes it mandatory for an applicant to submit Building Completion Notice which was submitted on 4.7.2014 only (supra). We thus adopt a different approach herein regarding the assessee s impugned sec 80IB(10) Explanation (i), (ii) deduction claim(s) pertaining to its A , D and E housing projects. Learned lower authorities action rejecting the same stands upheld. Proportionate section 80IB(10) deduction claim - We therefore direct the assessing authority to frame its consequential computation as per law i.e. he shall reiterate his impugned sec 80IB (10) disallowance qua blocks A , D and E and delete the same pertaining to G, H, I, K, F, K and L in foregoing terms. It clear before the parties that both the learned representatives had placed record a catena of case law before us regarding the basic principles of interpretation and multi-dimensional facets of the impugned sec 80IB(10) deduction claim. The same are not dealt with specifically in view of the fact that the assessee herein has not completed its corresponding housing block(s)/project s within the stipulated deadline falling 31.3.2013.
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2021 (9) TMI 533
Addition on account of difference of stock found from the survey conducted u/s 133A - assessee failed to explain the quantity 2kg 0.679gm out of books sales of silver items - addition is based on the discrepancy of the stock found during the survey of 8 kg 0.495 gm. in compression to the stock recorded in the daybook - HELD THAT:- Addition on account of out books sales can be made to the extent of the profit element in the sails and not the entire sale proceeds. In the case in hand the assessee has explained that the gross-profit on the sales during the year is 35% and the average sale price of the assessee during the year was ₹ 35 per gm. of Silver items. Addition on account of out of books sale can be made only by taking the gross-profit as declared by the assessee the accounted sales, as well as the average sale-price of the Silver items as recorded in the books of accounts - AO has made the entire sale proceeds as addition to the income of the assessee which is not justified - sale price adopted by the AO is also not based on the actual prevailing price which ought to have been taken as an average sale price of the recorded sales of the assessee - Assessing Officer is directed to restrict the addition on account of out of books sales only to the extent of profit element i.e. Gross Profit that to by considering the average sale price as assertable from the sales recorded by the assessee - Appeal of the assessee is partly allowed.
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2021 (9) TMI 532
Accrual of interest income - Amount outstanding from the trade debtors - non-charging of interest on the debtors - Whether amount provided by the assessee to the said parties comes under the ambit of commercial expediency - CIT(A) confirming the addition made on account of disallowance of interest and added the same in the income of the assessee - as per assessee none of the parties to whom amount was advanced was covered u/s. 40(A)(b) of the Act and all the parties were transacted within the normal course of business - HELD THAT:- As no amount has been advanced to the sister concern or others without any business purposes. The A.O. has not demonstrated that the amount paid by the assessee to the parties was without any 'business expediency' moreover, no independent enquiry has ever been conducted by the A.O. from the said parties. We found support from the decision of Highways Construction Co. P. Ltd. [ 1992 (11) TMI 86 - GAUHATI HIGH COURT] wherein it was categorically held that the A.O. has to bring on record any interest actually been collected or received and the collection of the interest was reflected in the accounts. In the present case, there is no such finding on record and even otherwise the findings of the Income tax officer are only to the extent that the assessee ought to have collected interest. Assessee had not received any interest then we fail to understand as to how the Income tax authorities can fix a notional interest as due, or collected by the assessee. Our attention has not been invited to any of the provisions of the Act empowering the Income tax authorities to include in the income, interest which has not been due or collected/received at any stage by the assessee. Amount outstanding from the trade debtors cannot be held as amount given on loan. No material has been placed on record by the A.O. to impute that the delay in receiving the outstanding balance amounts from the debtor parties was on account of deliberate act of the assessee - no addition could have been made by the A.O. on account of non-charging of interest by the assessee, hence, we direct to delete the addition. - Decided in favour of assessee.
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2021 (9) TMI 531
Revision u/s 263 by CIT - eligibility of deduction u/s 54F - CIT concluded that the assessee is eligible for deduction under s. 54F of the Act in respect of only one residential unit and two adjoining flats cannot be regarded as one residential house - AO has failed to initiate penalty u/s 271(c) - HELD THAT:- It is the case of the assessee that while two adjoining flats can be regarded as two residential units constructed by the developer, but in effect, constitutes only one residential 'house' of the assessee. The view has been consistently taken in large number of judicial precedents and hence, the action of the AO is consistent with the plausible view as held by the Courts and Tribunals. Where the AO has taken a view which is possible and plausible, the action of the AO cannot be regarded as erroneous per se. Consequently, the twin conditions of order being (i) erroneous as well as (ii) prejudicial to the interest of the Revenue, does not co-exist. Hence, the jurisdiction usurped by the PCIT is not sustainable in law. The reliance placed on the amendment carried out by Finance (No. 2) Act, 2014 is grossly misplaced. The interpretation rendered by the co-ordinate benches and the Hon'ble High Courts is on the point as to what constitutes a residential house. A residential house may comprise of several residential units if used and consummated collectively as residential house. The decisions quoted on behalf of the assessee squarely apply to the fact situation. The amendment in Section 54F of the Act has merely curtailed the holding of residential house at the sale of original asset. The interpretation of what constitutes 'residential house' has not been displaced by the amendment per se - no error in the action of the AO - Decided in favour of assessee.
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2021 (9) TMI 530
Undisclosed turnover - Estimation of income @ 5% being sales turnover of the assessee - presumption u/s. 292C - according to the ld. DR, the entire turnover has to be considered as unexplained investment u/s. 69B - HELD THAT:- As the entire turnover mentioned in the pocket diaries in its entirety cannot be considered as undisclosed income of the assessee and turnover includes purchase cost, labour cost, other costs and gross profit and he estimated only the net profit of that turnover @ 5% and directed the AO accordingly - even after applying the presumptions u/s. 292C of the Act to the facts of the present case, there was no adequate material to conclude that the transaction recorded in the seized documents are total undisclosed income of assessee which remained unexplained. The other aspect of the matter is that presumptions u/s. 292C are rebuttable presumptions and they do not lead to conclusive evidence. The assessee has right to rebut the presumption. In the present case, since the assessee has not rebutted the presumption, CIT(A) has given a direction to estimate the income on the turnover @ 5% as income of the assessee. In view of the inadequate material to suggest that the entire turnover is income of the assessee, to be reasonable and fair, the CIT(A) estimated income @ 5% of the turnover. We do not find any infirmity in the findings of the CIT(A) on this issue. As the entire transaction recorded in the seized material cannot be considered as income of assessee u/s 69B. Therefore, we are inclined to confirm the order of CIT(Appeals) on estimation of income @ 5% of the turnover. In view of the above discussion, we dismiss the grounds of the revenue.
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2021 (9) TMI 529
TP Adjustment - Adjustment as income in the hands of assessee company on account of deemed interest income - whether as per Article 11(1) interest paid includes interest payable or not? - Indo-Cyprus DTAA - HELD THAT:- Since, the matter stands adjudicated by various orders of the Tribunal and Hon'ble Courts that the word paid cannot be extended to payable in respect of interest under Article 11 of Indo-Cyprus treaty, we hereby allow the appeal of the assessee.
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2021 (9) TMI 528
Addition u/s 40(a)(ia) - Disallowance of interest paid on account of non deduction of TDS - Scope of second proviso to Section 40(a)(ia) of the Act inserted by the Finance Act 2012 w.e.f. 01/04/2013 - assessee could not place on record any documentary evidence in order to demonstrate that the interest paid by the assessee has been shown by the NBFCs as income in the return of income, therefore, the claim was of the assessee was rejected - application of assessee admitting the documents as additional evidences - HELD THAT:- Keeping in view the settled legal proposition, we are also of the view that second proviso to Section 40(a)(ia) of the Act has retrospective effect. In the present case, the disallowance u/s 40(a)(ia) of the Act was made on account of the fact that the assessee could not place on record any documentary evidence in order to demonstrate that the interest paid by the assessee has been shown by the NBFCs as income in the return of income, therefore, the claim was of the assessee was rejected. During the pendency of present appeal, in order to support his contention, the assessee has moved an application under Rule 29 of the ITAT Rules, 1963 for placing on record the documents by way of additional evidences vide application dated 01/4/2021. The additional evidences submitted by the assessee at this stage are the first time and are necessary for deciding the appeal, therefore, considering the totality of facts and circumstances of the case as well as law prevailing in this regard, we admit the additional evidences filed by the assessee. Though we have restored the matter back to the file of the A.O. for reconsideration - we further direct the assessee to submit required documents in respect of both the NBFCs i.e. Barclays Investment Loan (India) Ltd. and Future Capital relating to the year under consideration and further the A.O. is also directed that being the adjudicator as well as investigator, the A.O. should invoke necessary provisions of the Income Tax Act for calling the records from the concerned NBFCs i.e. i.e. Barclays Investment Loan (India) Ltd. and Future Capital to ascertain that the amount paid by the assessee has been included as income in their total taxable income and if from the documents, the A.O. is satisfied regarding inclusion of the said amount paid by the assessee as income in the records of respected payees then in that eventuality, the A.O. is directed to delete the additions - Appeal of the assessee is allowed for statistical purposes only.
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2021 (9) TMI 527
Condonation of delay - Appeal filled to wrong jurisdictional CIT(A) - sufficient cause of delay - HELD THAT:- There was no delay on the part of the assessee in filing the appeal against the order passed by the A.O. on 17/03/2016 as the assessee had filed the appeal on 21/3/2016 i.e. well within the stipulated period, although, inadvertently, the assessee had filed the appeal before the ld. CIT(A)-3, Jaipur instead of CIT(A)-1, Jaipur but later on the said mistake was also rectified by moving an application by the assessee which was allowed by the concerned CIT(A)-3, Jaipur and necessary order in this respect by transferring the appeal to the jurisdictional CIT(A)-1, Jaipur was also passed. As per AR that he has opted for VSVS Scheme-19 and filed Form No. 1 and 2 and the department has also issued Form No. 3. However, the benefit of VSVS-19 cannot be taken by the assessee as there is a condition precedent that the appeal filed by the assessee should be pending at the time of obtaining the scheme. Since the appeal filed by the assessee has been wrongly dismissed by the NFAC, therefore, considering the totality of facts and circumstances as narrated above and also considering the principles laid down in the case of Collector, Land Acquisition, Anantnag Anr. Vs Mst. Katiji and others [ 1987 (2) TMI 61 - SUPREME COURT] wherein the Hon'ble Supreme Court has held that the expression 'Sufficient Cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. We condone the delay if any in filing the appeal - we restore the matter back to the ld. CIT(A), NFAC for deciding the appeal on merits after giving due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee.
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2021 (9) TMI 526
Income from house property - Addition being notional annual lettable value u/s. 22 after allowing 30% standard deduction u/s. 24(a) - whether property in habitable condition? - computation of fair market value of the assessee's property - Assessee before the CIT(A) objected to the comparison between the property of the assessee situated in Sector 18 with a property in Sector-9 and argued that the two were not comparable - HELD THAT:- In the facts of the present case in terms of the statutory remit, the ld. CIT(A) while arriving at the conclusion should necessarily have invited a remand report from the Assessing Officer in view of the fact that the power of remand no longer vested with the said authority. To this extent we find that the submissions of the Revenue relying upon Ground No. 2 raised in the present appeal is supported by the statutory provisions, hence, it has to be allowed and the order has to be set aside. As in the facts of the present case, this is a disputed fact and the specific property is not in a remote village and in a dilapidated condition but in Sector 18 in the midst of the City - the said case on the facts as they stand has no application. While so holding, we clarify that facts are in flux as the issue is being remanded back. We specifically required the ld. AR to address whether he is aggrieved by any specific observation in the impugned order which he would want us to address while remanding the issue back to the ld. CIT(A). The ld. AR was unable to address the query. As the relevant provisions of the Act and the evidences on record, we find that in the facts of the present case, it would be appropriate to set aside the issue back to the file of the CIT(A) with the direction to pass a speaking order in accordance with law after taking into consideration the relevant facts - assessee in his own interests is directed to place full facts and submissions before the said authority in order to facilitate a proper conclusion on facts. Said order was pronounced at the time of virtual hearing itself in the presence of the parties via Webex.
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2021 (9) TMI 525
Addition u/s 68 - bogus share application money and premium received by the assessee-company - sham transactions - Onus to prove - notices sent u/s.133(6) were not received on the given date - HELD THAT:- There is no dispute that the assessee has received share application money from six companies, out of which, from three companies assessee has received premium and accepted - AO has only disputed the other three companies as discussed above, merely because the assessee company has received huge premium from such parties. In so far as the initial onus cast upon the assessee for proving the nature and source of the share capital, the assessee had filed various documents. One of the main allegation of AO that the notices sent u/s.133(6) were not received on the given date for which it has been clarified before us that within a short span, Assessing Officer has sought lot of information during the period of one week from the parties situated outside Delhi. In fact, all the notices were ultimately duly complied with by these parties who have sent all the requisite details as required by the Assessing Officer in his notices u/s.133(6). Thus, there cannot be reason of compliance of the notices have been made beyond the dates specified by him and as his observation lose its relevance. Reason assigned by the Assessing Officer does not have much credence to dislodge the evidences filed by these parties to corroborate the assessee s explanation and the documents submitted by the assessee to prove the nature and source of credit. From bare perusal of the explanation duly supported by the documents, we find that whatever so called inquiry which was conducted by him has not lead to any iota of adverse material so as to hold that the transaction is not genuine. AO required the Directors/the representatives of the three companies which were produced before him, the same were duly complied with and not only they were produced but have also confirmed the transaction and given the required documents on the subsequent dates. Once these parties have directly confirmed the transaction with all the documents and the authorized representatives have duly appeared before the Assessing Officer, then without any substantial ground he has disbelieved on a very technical and whimsical reasons. Here in this case, the investee companies are based outside Delhi and if he was not satisfied with the authorized representative sent by them, then at least he could not have issued a commission u/s.133(1)(d) to be examined by the local Income tax authority. Further, these authorized representative have adduced the document but nowhere Assessing Officer has pointed out what was lacking in such documents which was already submitted by these companies in reply to the notice u/s.133(6) and what extra he wanted to examine, has not been mentioned. Regarding one of the companies, i.e., M/s. Bridge and Building Construction Pvt. Ltd. who has made the payment on behalf of M/s. Topgrain Mercantile Pvt. Ltd., Ld. counsel explanation as incorporated above is testimony to itself that M/s. Topgrain Mercantile has furnished a certified copy of the ledger account of the said party which shows that investee company has sold its share against which M/s. Bridge and Building construction company had transferred the sale consideration thereof amounting to ₹ 57.30 crore through RTGS at the direction of M/s. Topgrain Mercantile Pvt. Ltd. Evidences to this effect of RTGS transfer and copy of bank statement of the said company was also filed before the Assessing Officer. The said bank statement reveals that there was an OD limit and there was also mention of correct address. Thus, without any cogent material to rebut such evidence, adverse inference cannot be drawn that transaction through this company is sham. Another allegation by the AO was that these companies have received funds from other companies before issuance of cheques through the assessee company and also tried to analyze fund trail to assume that assessee-company had ploughed back its own money in the books of account in the garb of share application money itself is based on erroneous assumption of facts which has been demonstrated by the ld. counsel, from the details of funds chart as reproduced above, specifically in the case of payment made by M/s. Godsons Pvt. Ltd. to the assessee - Nowhere in the so called alleged cash trail there is an element of cash or anything has been brought on record that any of the trails, assessee s undisclosed cash or income has been routed. In fact, none of these bank account requisitioning by the Assessing Officer u/s. 133(6), there was any cash deposits. Source of the fund and the creditworthiness of the parties , it is seen from the chart reproduced hereinabove that these parties had sufficient own funds to invest and the share of assessee-company duly reflected in their balance sheet as on 31.03.2011. Thus it cannot be held that the onus cast upon the assessee to prove the identity, creditworthiness of the investee parties or genuineness of the transaction has not been explained properly nor there is any adverse finding or material gathered from any inquiry that it is a bogus transaction or kind of accommodation entry. Thus, we do not find any reason to tinker and deviate from the finding of the ld. CIT (A) while deleting the addition. Accordingly, the order of the ld. CIT (A) is confirmed and the appeal filed by the Revenue is dismissed.
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2021 (9) TMI 524
Depreciation on Plant Machinery leased to various parties - AR has pointed out that for the AY 2010-11 this Tribunal has decided the issue in favour of the assessee and allowed the claim of depreciation - HELD THAT:- As to maintain the rule of consistency, we follow the earlier order of this Tribunal [ 2020 (10) TMI 606 - ITAT DELHI] and allow the claim of depreciation. The addition made by the AO on this account is deleted. Addition u/s 14A r.w.r. 8D - Onus to prove - assessee has not claimed that the suo moto disallowance - HELD THAT:- We find that the AO has clearly pointed out while issuing the show cause notice to the assessee that the assessee has not given any basis for the suo moto disallowance of ₹ 10 lacs which amounts to recording the satisfaction by the AO. When the facts for the two assessment years are entirely different then the reasoning recorded by the AO for the year under consideration cannot be compared for the AY 2010-11. Hence, we do not find any substance in the contention of the ld. AR of the assessee that addition made by the AO is liable to be deleted. Since, the AO has computed the disallowance by applying the formula under Rule 8D which is 0.5% of the average investment then we do not find any fault in the computation of disallowance made by the AO. As we have already discussed that there is a regular transaction of purchase and sale of shares and securities by the assessee, therefore, the administrative expenses which is incurred both for the taxable income and exempt income has to be apportioned as per the formula provided in Rule 8D. Hence, this issue is decided against the assessee and in favour of the Revenue.
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Customs
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2021 (9) TMI 560
The writ petition is listed under the caption 'For Being Mentioned' at the instance of the learned counsel for the petitioner, in view of the fact that the learned counsel for the petitioner raised a point that he could not able to appear on 19.08.2021, when the matter was taken up for final hearing and this Court passed orders on merits on that day. The orders passed by this Court on 19.08.2021 in W.P.No.4155 of 2014 stands recalled.
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2021 (9) TMI 558
Provisional release of imported goods - Criteria to be adopted either by the State or an authority of the State whenever it is granted any discretionary power either to increase or decrease any amount which is required to be deposited as security under any statutory provision, especially in revenue related matters - HELD THAT:- Whenever such discretionary power is given either to the State or an authority of the State such discretionary power is required to be exercised following the well established principle as enshrined in the doctrine of fairness coupled with the grand old principles of equity. There cannot be any adhocism in the approach by the State or an authority of the State while using such discretionary power. That apart and in any event, cogent and justifiable reasons are required to be recorded in writing whenever such discretionary power is exercised which tantamounts to either increase or decrease of any amount that is required to be deposited as security, especially in revenue related matters of the State. While passing the above directions, whether the learned Tribunal followed the principles of law enunciated in SHRI RAJIB GHOSH VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , NER, SHILLONG [ 2020 (2) TMI 1560 - CESTAT KOLKATA] of the applicable guidelines dated 16th August, 2017, for grant of provisional release of imported goods which are seized under section 110 of the Customs Act, 1962, is required to be looked into. The learned Advocate-on-Record of the appellant is directed to serve notice along with a copy of the appeal papers which before us to the respondent and file an affidavit of service on the next date indicating service as directed herein - List this matter three weeks hence for further consideration.
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2021 (9) TMI 553
Clearance of goods as stock transfers for self-consumption - transfer from a unit located in Free Trade Warehousing Zone to Domestic tariff Area unit - injunction restraining the respondents from carrying out any assessment in contravention with the advance ruling in M/S GE INDIA INDUSTRIAL PVT LTD VERSUS COMMISSIONER OF CUSTOMS (EXPORT) [ 2013 (6) TMI 10 - AUTHORITY FOR ADVANCE RULINGS] - HELD THAT:- No writ needs to be entertained in a routine manner. The application of advance ruling in the abovementioned case or otherwise may arise only if an assessment order is passed even before taking a decision by the Competent Authority. The writ petitioner has chosen to file the present Writ Petition merely on the ground that the authorities are attempting to pass an assessment in contravention with the advance ruling in the mentioned case. The relief cannot be granted in anticipation in such circumstances. The authorities are in the process of consideration. The petitioner would be getting an opportunity to defend their case. The application of advance ruling or otherwise is to be ascertained with reference to the facts and circumstances placed before the Competent Authority - the petitioner is at liberty to place all their objections or apprehensions or advance ruling or otherwise before the Competent Authority at the time of passing of the final assessment orders. Petition dismissed.
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2021 (9) TMI 551
Bail application - misappropriation of huge amount fraudulently - adiversion of huge funds for own benefits - pplicant had acted in connivance with the main accused Vinit Gupta or not - deposit of huge cash which was further transferred, diverted in the name of relatives and companies - whether applicant is entitled to bail on the ground that his son Vinit Gupta is released on bail or not? - two FIRs filed relating to different causes of action - validity of second FIR - HELD THAT:- Voluminous documents are recovered during the investigation. Charge sheet has been filed against applicant. Search was conducted at the residential premises of Vinit Gupta on 26th December 2019. Nothing incriminating was recovered. Search was conducted at residence of applicant on 19th March 2020. Nothing was recovered. Statement of Suresh Bhojan was recorded on 25th February 2020. He is working with ICICI Bank. He handed over cheques issued by Vimlesh Dwivedi. Production panchanama was recorded on 29th February 2020 - Statement of Devendra Ghai was recorded on 28th December 2019. He is working with Jaipur Golden Transport as Deputy General Manager. M/s.EXL India Pvt Ltd is sister company of Jaipur Transport. He referred to contract executed with M/s.Rashi Peripherals Pvt.Ltd in 2012. Subsequently contracts were renewed. Vinit Gupta used to follow up with him regarding transportation. M/s.Rashi Peripherals Pvt Ltd had filed Civil Suit at Thane. The accused had deposited cash during the period of offence and transferred funds in the name of his relatives and companies. Thus, the facts are already investigated and further custody of the applicant is not necessary. The offences are triable by Magistrate. The applicant is directed to be released on bail investigated by Economic offences Wing on executing P.R.Bond in the sum of ₹ 50,000/- with one or more sureties in the like amount - bail application allowed.
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Insolvency & Bankruptcy
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2021 (9) TMI 523
Maintainability of appeal - appeals are filed by Directors of this company - continuation of proceedings of suits against the company when insolvency resolution is in process - HELD THAT:- The movement an order is passed referring the assessee for resolution u/s seven of the IBC 2016, the administration of the company rest with the insurance resolution professional. In this case, these appeals are filed by the directors of the company therefore, they are not maintainable. Therefore, these appeals should have been preferred by the insolvency resolution professional under the instruction of committee of the creditors and the directors do not have any locus standi. The adjournment application of the assessee is rejected - appeals are dismissed as not maintainable with a liberty to the IRP that if he wants to prefer these appeals, he may file the fresh appeals or makes an application for restoration of these appeals with the approval of committee of creditors. The third appeal is filed by the learned assessing officer, according to the provisions of Section 14 of IBC 2016, no proceedings of suits against the company can continue until the insolvency resolution process is complete. Therefore, the appeal filed by the learned AO is also deserves to be dismissed with a liberty to the AO that he may file an application for recall of this order after the moratorium period is over. Appeal dismissed.
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Service Tax
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2021 (9) TMI 546
Demand of tax liability - Levy of penalty and interest - non-payment of service tax - Franchise service - grant of representational rights , inherent in the contract so awarded, to the de facto operator - period between October 2006 and March 2010 - extended period of limitation - HELD THAT:- Franchise is a business model that affords access to market by riding on the back of a product or offering that is well-entrenched in the minds of consumers and for which the franchisor is entitled to recompense from the franchisee. Many national jurisdictions have special laws for governing such commercial engagement but we do not and remedies are enforceable only within the generality of Indian Contract Act, 1872. The expression is evocative of congruity of intent between two parties with stipulations that obligate, along with indebtment of, the beneficiary in exchange for specific offering from the benefactor. The range of contract is, thus, too vast for encapsulation within the confines of a statutory definition. It is the contents of the agreement that unveil the franchisor-franchisee engagement by the congruity of intent to assign representational rights of product, service or process by one to the other. The relationship intended by the agreement between the appellant and M/s Shri Sai Transport and Courier Pvt Ltd must find fitment within the framework of the definition for establishing that franchise was intended - brief overview of bus services in India would not be out of place as, unlike goods transport, stage carriage of passengers was of sufficient import to public policy even before representational governance was made fully operational and, in the infancy of the Republic, a national enactment, viz,. The Road Transport Corporations Act, 1950, enabled the federating states to participate in servicing of the travelling public. Chapter IV-A, comprising section 68-A to section 68-J was engrafted in 1956 in the Motor Vehicles Act, 1939 to further empower state governments to nationalize bus routes. The offering of M/s Shri Sai Transport and Courier Pvt Ltd to its customers are the services associated with Maharashtra State Road Transport Corporation to which they obtain rights by their agreement with the appellant who are delegates of the Corporation. The transport is effected by Maharashtra State Road Transport Corporation and it is that service which the appellant has enabled M/s Shri Sai Transport and Courier Pvt Ltd to offer to users. This representational right is intended to be taxed by the taxable service and the consideration thereof is liable to tax. The decision in COMMISSIONER OF SERVICE TAX, AHMEDABAD. VERSUS M/S. GUJARAT STATE ROAD TRANSPORT CORPORATION. [ 2012 (12) TMI 673 - CESTAT, AHMEDABAD] that was based upon the clarification issued by Central Board of Excise Customs is of no relevance to the present dispute which does not pertain to tax leviable on the State Road Transport Corporation. Extended period of limitation - HELD THAT:- Neither does the claim for discard of extended period; as the taxable service , incorporating essential elements of the service, did not offer an alternative even if subsequent introspection may have suggested otherwise. Mere correspondence does not evince absence of suppression or misrepresentation. Consequently, the plea for limiting the demand to the normal period lacks support. Appeal dismissed.
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2021 (9) TMI 541
Maintainability of appeal - appeal dismissed for non-prosecution in terms of Rule 20 of the CESTAT (Procedure) Rules, 1982 - HELD THAT:- From provisions of Rule 20 of the CESTAT Procedure Rules, 1982, it is quite evident that CESTAT can grant adjournment to either side in appeal for a maximum number of three times. In this case whenever the matter has been posted for hearing, the appellant has chosen to abstain from hearing. He has not even cared to file any request seeking adjournment at any time. The conduct of the appellant clearly shows that he is not interested in pursuing this appeal. The appeal is dismissed for non-prosecution in terms of Rule 20 of the CESTAT (Procedure) Rules, 1982.
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2021 (9) TMI 536
CENVAT Credit - input services - brokerage - custodial charge - event management and consortium charges - invoices in rule 4A of Service Tax Rules, 1994 and in rule 9 of CENVAT Credit Rules, 2004 - denial of credit for incomplete documentation - HELD THAT:- It is settled law that procedural infirmities cannot stand in the way of availment of substantive benefit. It is not the case of the tax authorities that the services of State Bank of India had not been deployed in the consortium led by them or that tax liability had not been included in the consideration made over to the provider of service. It is also not the case of the service tax authorities that the provider of service is not in the business of banking and other financial service; nor is it the contention that the output service afforded by the consortium, which included the appellant, is not taxable - The denial of credit merely for want of description of service or classification thereof, which are primarily intended for statistical reference, should not be allowed to impede availment of credit as substantive eligibility, prescribed in CENVAT Credit Rules, 2004 is not assailed by Revenue. Event management service - connection with output service of organisations - HELD THAT:- The issue has been settled by the decision of the Tribunal in ENDURANCE TECHNOLOGIES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [ 2013 (8) TMI 601 - CESTAT MUMBAI] where it was held that credit cannot be denied in similar issue - thus, the denial of this credit is not in accordance with established law. The reliance placed upon the decision of the Hon ble High Court of Rajasthan in BANSAL CLASSES VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX [ 2015 (4) TMI 288 - RAJASTHAN HIGH COURT] would not apply to the facts of the present dispute inasmuch as the activities therein, concerned with programmes after the culmination of taxable service against which credit was claimed, were not attributable to the rendering of the output service thereby emphasizing that each situation should be evaluated on its own facts. CENVAT Credit - credit of taxes included in the consideration for availing brokerage charges and custodial charges upon buying and selling of securities for compliance with the ratios prescribed for banks in the monetary policy of Reserve Bank of India - HELD THAT:- The denial of credit of these taxes in the impugned order stems from the finding that, unlike the purchase and sale of securities for, and on behalf of, their customers, the beneficiary of the impugned activity being themselves takes it out of the purview of taxable service in which a provider and a recipient are pre-requisites. In effect, the premise is that the appellant, even if a registered provider of taxable service, is, nonetheless, a final consumer of the service. The exempted service is defined in CENVAT Credit Rules, 2004 and neither of the legs the principal meaning and the inclusive meaning in the absence of a service rendered by the appellant that is not subject to tax appear to fit the circumstances of procurement of brokerage and custodial services in the dispute before us. The existence of such service is but speculation without the presence of an identifiable recipient and flow of consideration; else, every consumed service could meet the same fate in the mind of the tax collector - the appellant, as a bank is required, under the regulatory aegis of the Reserve Bank of India, to comply with the cash reserve ratio (CRR) and statutory liquid ration (SLR) for participation in restricting money supply or expanding money supply according to the monetary policy of the country and has thus, undertaken activity which cannot be disaggregated from rendering banking and financial service to its customers - denial of credit to banks in such circumstances is, therefore, not sanctioned by CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
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2021 (9) TMI 534
Levy of service tax - Business Auxiliary services or not - discount allowed by the supplier of goods for sale to corporate customers - commission from banks and financial companies and on payments received for insurance referral - penalty - extended period of limitation - HELD THAT:- The dispute pertaining to discount offered to corporate customers has attained finality. In this connection, the decision of the Tribunal in TOYOTA LAKOZY AUTO PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX/CENTRAL EXCISE MUMBAI -II / MUMBAI - V [ 2016 (12) TMI 541 - CESTAT MUMBAI] which has referred to the other two decisions, observing that discounts offered by car manufacturers to their dealers for onward transmission to corporate customers is not liable to tax as promotion or marketing or sale of goods produced or belonging to clients within the enumeration of business auxiliary service in section 65(19) of Finance Act, 1994. - the demand of ₹ 3,70,994/-, along with interest, and penalty under section 78 of Finance Act, 1994 fails to survive. Commission from banks and financial companies and on payments received for insurance referral - penalty - HELD THAT:- Appellant has admitted and discharged liability arising on receipt of commission from financial institutions and insurance companies - reliance placed in the decision of the Tribunal in re Addis Marketing, the exposition of the Tribunal in GEMINI MOBILES PVT LTD, SUNNY MOTORS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LUCKNOW [ 2015 (8) TMI 1137 - CESTAT ALLAHABAD] which examined several aspects for arriving at the conclusion of circumstances not being conducive to invoking of section 78 of Finance Act, 1994 is relevant. Penalty - Extended period of limitation - HELD THAT:- In view of the circumstances and the stand taken by the Tribunal in these several decisions, invoking of the extended period for the purpose of imposition of penalty is not sustainable. Accordingly, the penalty imposed under section 78 of Finance Act, 1994 is also set aside. Appeal disposed off.
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CST, VAT & Sales Tax
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2021 (9) TMI 548
Best Judgement Assessment - cancellation of compounding tax permitted for the year 2014-15 - HELD THAT:- On a perusal of the judgment in THAKKARAM RESTAURANT VERSUS STATE OF KERALA [ 2020 (11) TMI 1014 - KERALA HIGH COURT] it is seen that the cancellation of payment of compounded tax under section 8(c)(i) has been upheld by this court ; holding that pursuant to such a cancellation, regular assessment can be resorted to by the assessing officer. The learned counsel for the assessee after perusing the abovesaid judgment fairly conceded that the matter is already covered by the said judgment. Revision dismissed.
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Indian Laws
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2021 (9) TMI 561
Power to legislate in the field of Cooperative Societies - scope/ jurisdiction falls exclusively with the State and does not lie within the domain of the Union, much less the Reserved Bank of India? - HELD THAT:- The Parliament by Constitution (97th Amendment) 2011 while inserting Article 243ZL(1) provided that in case of cooperative society carrying on the business of banking, the provisions of the Banking Regulation Act 1949 shall also apply. This provision was struck down by the Gujarat High Court in RAJENDRA N SHAH VERSUS UNION OF INDIA ANR. [ 2013 (4) TMI 972 - GUJARAT HIGH COURT] , whereby Part IXB introduced by way of aforesaid amendment was declared ultra vires the constitution for want of rectification by the State Legislation under proviso (2) to Article 368 (2). The aforesaid judgment has been upheld by the Supreme Court recently in UNION OF INDIA VERSUS RAJENDRA N SHAH ANR. [ 2021 (9) TMI 315 - SUPREME COURT] . The petitioner has therefore challenged the constitutional validity of amended Section 4 of the Banking Regulation Amendment Act, 1965. The argument therefore is that the impugned order dated 25.06.2021 issued by the Reserve Bank of India is absolutely incompetent and lacks in authority. Issue notice to the respondents on payment of PF within seven days, returnable within eight weeks - List after eight weeks.
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2021 (9) TMI 559
Dishonor of Cheque - Calling for the entire records relating to complaint - rebuttal of presumption - ulterior motive to cheat the respondent/complainant or not - Section 482 of Cr.P.C. - HELD THAT:- The issuance of the disputed cheque by the petitioner is admitted and established. Primarily, once the issuance of cheque is admitted/established, the presumption would arise under Section 139 of the N.I. Act in favour of the holder of cheque and the burden lies upon the accused to rebut the presumption by adducing evidence. As held by the Hon'ble Supreme Court in the case of Rajeshbhai Muljibhai Patel [ 2020 (2) TMI 412 - SUPREME COURT] , until the accused discharges his burden, the presumption under Section 139 of N.I. Act will continue to remain and it is for the accused to adduce evidence to rebut the statutory presumption. The Hon'ble Supreme Court has further held that the case therein involves various disputed questions of facts which need to be adjudicated after the parties adduce evidence, and the complaint under Section 138 of the N.I. Act ought not to have been quashed by the High Court by taking recourse to Section 482 Cr.P.C. Though the Court has power to quash the criminal complaint filed under Section 138 of the N.I. Act on the legal issues like limitation, etc., criminal complaint filed under Section 138 of the N.I. Act ought not to have been quashed and further held that, under Section 482 Cr.P.C., it is for the Court to decide there is prima facie case made out by the petitioner to quash the same - Petition dismissed.
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2021 (9) TMI 557
Dishonor of Cheque - legally enforceable debt or not - threat and coercion - mis-utilisation of funds - jurisdiction under Section 482 of Criminal Procedure Code - HELD THAT:- The fact in the present case is not in dispute that there was a Memo of Compromise between the parties dated 24.07.2014. It is the claim of the petitioner that by force and intimidation, the said Memo of Compromise was entered into between the parties. Further it is admitted by the petitioner that she had issued two cheques bearing No. 578187 and 578186, as security towards the vehicle loan obtained by the husband of the petitioner. However as per the Memo of Compromise, the petitioner is liable to the respondent for a sum of ₹ 10,00,000/- - On the other hand, it is the claim of the respondent that there is a legally enforceable debt against the petitioner as clearly mentioned in the Memo of Compromise to pay the balance amount of ₹ 12,17,680/-. Though it is the case of the petitioner that she has discharged her legal liability towards the loan obtained by her husband, however, the memo of compromise entered into between the parties stares at the petitioner. Though it is the case of the petitioner that the said memo of compromise has been obtained from her by way of threat and coercion and the cheque had been misutilised by the respondent, however, those are points that have to be canvassed by the petitioner at the time of trial and this Court, sitting under Section 482 Cr.P.C., cannot go into the merits of the case - this Court is not inclined to interfere with the proceedings pending before the Court below. This petition is disposed of directing the trial court to dispose of as expeditiously as possible as per seniority of the case.
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