TMI Tax Updates - e-Newsletter
September 15, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

• Priority Action Items for Fiscal Years 2021
• Paradox over Constitutionality of Arrest provision in GST
• LTCG EXEMPTION ALLOWED – appeals pending need to be pursued. If VSV declaration has been filed , possibilities can be explored for restoration of appeal if addition was made just on allegation of penny stock, bogus LTCG etc. by department.
• GST Refund-inverted tax structure – where input and output supplies are same

News

• India’s overall exports (Merchandise and Services combined) in August 2021* are estimated to be USD 52.20 Billion

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• India assures ASEAN partners of India’s support in its recovery efforts in the post pandemic period -Smt. Anupriya Patel

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• India &UK aim for launching the negotiations on FTA by 1st November 2021

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• 11 States meet the target for capital expenditure in Q-1 of 2021-22

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Notifications

Customs

• 50/2021 - dated 14-9-2021 - ADD
  Amendment in Notification No. 54/2017-Customs (ADD), dated the 17th November, 2017

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• 72/2021 - dated 13-9-2021 - Cus (NT)
  Seeks to amendment in Notification No. 61/94-CUSTOMS (N.T.), dated the 21st November, 1994

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DGFT

• S.O. 3707(E) - dated 13-9-2021 - FTP
  Extension of Import Policy Provision

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• 25/2015-2020 - dated 13-9-2021 - FTP
  Clarification on last date of import in continuation of Notification No. 20/2015-20 dated 24.08.2021

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GST - States

• 34/2021-State Tax - dated 31-8-2021 - Gujarat SGST
  Extension in time limit for filing of application for revocation of cancellation of registration to 30.09.2021

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• 33/2021-State Tax - dated 31-8-2021 - Gujarat SGST
  Amendment in Notification No. (GHN-134) GST-2018/S.128(13)-TH dated the 31st December, 2018

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• 32/2021-State Tax - dated 31-8-2021 - Gujarat SGST
  Gujarat Goods and Services Tax (Seventh Amendment) Rules, 2021.

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• EXN-F(10)-22/2017 - dated 2-9-2021 - Himachal Pradesh SGST
  Re-constitute the Himachal Pradesh Authority for Advance Ruling

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• 30/2021-State Tax - dated 1-9-2021 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax (Sixth Amendment) Rules, 2021.

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• S. R. O. No. 688/2021 - dated 13-9-2021 - Kerala SGST
  Amendment in Notification No. 62/2019/TAXES. dated the 30th March, 2019

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• S. R. O. No. 687/2021 - dated 13-9-2021 - Kerala SGST
  Amendment in Notification No. 72/2017/TAXES. dated the 30th June, 2017

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• S. R. O. No. 686/2021 - dated 13-9-2021 - Kerala SGST
  Amendment in Notification No. 62/2017/TAXES. dated 30th June, 2017

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• S. R. O. No. 685/2021 - dated 10-9-2021 - Kerala SGST
  Seesk to amend Notification No. 135/2018/TAXES. dated 18th August, 2018

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Income Tax

• 109/2021 - dated 13-9-2021 - IT
  Income-tax (29th Amendment) Rules, 2021 - Inquiry before assessment - Prescribed income- tax authority under second proviso to clause (i) of sub-section (1) of section 142

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Circulars / Instructions / Orders

DGFT

• TRADE NOTICE 17/2021-22 - dated 14-9-2021
  Procedure for refund of application fees deposited by applicants for Restricted Import Authorisation of Pulses for the period 2021-22

Highlights / Catch Notes

GST

• Refund of unutilised ITC on input services - Vires of Rule 89(5) vis-à-vis Section 54(3) of the CGST Act - While we are alive to the anomalies of the formula, an anomaly per se cannot result in the invalidation of a fiscal rule which has been framed in exercise of the power of delegated legislation. - We are affirmatively of the view that this Court should not in the exercise of the power of judicial review allow itself to become a one-time arbiter of any and every anomaly of a fiscal regime despite its meeting the jurisdictional framework for the validity of the legislation, including delegated legislation. - SC
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• Refund of unutilised ITC on input services - challenge to validity of Rule 89(5) - While the CGST Act defines the expression ‘input’ in Section 2(59) by bracketing it with goods other than capital goods, it is true that the plural expression ‘inputs’ has not been specifically defined. But there is no reason why the ordinary principle of construing the plural in the same plane as the singular should not be applied. To construe ‘inputs’ so as to include both input goods and input services would do violence to the provisions of Section 54(3) and would run contrary to the terms of Explanation-I which have been noted earlier - Consequently, it is not open to the Court to accept the argument of the assessee that in the process of construing Section 54(3) contextually, the Court should broaden the expression ‘inputs’ to cover both goods and services. - SC
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• Refund of the entire amount on deposit made by the petitioner/assessee - In a case such as this where the refund claim has arisen solely on the strength of the appeal order, unless the assessing authority may plead ignorance of the same, we also cannot remain unmindful of the fact, while rejecting such claims, the authorities are forcing the assessee to litigate and also defeating the claim of interest that is otherwise due on account of delay in processing the refund application. - HC
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• Provisional attachment of property - no proceedings under sections 62/63/64/67/73/74 of the Act were pending - Proceedings initiated against an entity different from the entity whose bank account is attached would not clothe the concerned officer, otherwise empowered to order attachment of property, to invoke Section 83 without the jurisdictional fact being present. If so invoked, the order has to be held ultra vires Section 83- HC
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Income Tax

• Unexplained cash deposits in bank account u/s 69A - time gap between withdrawal and deposits - mere time gap between withdrawals and deposits cannot be a sole basis for rejecting the explanation of the assessee regarding availability of cash in hand where there is no material that amount so withdrawn has been utilized somewhere else and thus supports the case of the assessee. We believe that there is no justifiable basis to hold that the explanation so furnished by the assessee cannot be accepted - AT
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• Levy interest u/s 234E - interest levied prior to amendment w.e.f. 1.6.2015 - diversified views - CIT(A) himself says, that the issue is debatable then the same takes the adjustment out of the jurisdiction of CPC Bangalore. As debatable issues cannot be decided under computerised adjustment. Hence to conclude since it has been held by higher courts that prior to enabling provision to levy interest under section 234E, the interest for earlier period return due cannot be upheld we set aside the order of learned CIT(A) and decide the issue in favour of assessee. - AT
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• Addition u/s 69 - The entire purchase of fixed assets has already been recorded by the assessee in its books of accounts. The source for making payments for such purchase of fixed assets have also been recorded and disclosed in the same books of accounts. Then, where is the question of applicability of provisions of Section 69 of the Act - The entire investments have been duly explained by the assessee. - No additions - AT
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• Deduction u/s 80IA - cargo handling contract entered into with BIAL by assessee - As rightly been concluded by the Appellate Authority that the assessee is engaged in development operation and maintenance of an infrastructure facility in the light of provisions of SPRH agreement. - Revenue was unable to point out any perversity in the findings of fact recorded by the CIT(A) as well as by the ITAT - substantial questions of law are answered in favour of the assessee - HC
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• Addition u/s. 36(1)(iii) r.w.s. 37 - interest-free loan to subsidiary in Malaysia out of borrowed funds - the CIT(Appeals) rightly held that the assessee company and subsidiary are in two different business being land development & construction and hospitality and the assessee has not been able to establish any business advantage derived by the assessee by advancing such loan - Additions confirmed - AT
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• Addition on account of interest u/s. 244A - Admittedly, the interest on income tax refund for the assessment year 2012-13 was received by the appellant society during the previous year relevant to the assessment year under consideration. The fact that such interest was adjusted against the outstanding demand of the appellant is immaterial as the adjustment of refund also amount to receipt of the interest. - Additions confirmed - AT
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• Addition u/s 68 r.w.s. 115BBE - assessment framed u/s 143(3) - amount being inheritance from his father by way of will - Burden to prove - where the assessee has disclosed primary facts then the burden shifts to the Revenue. In the instant case also the assessee has filed all the necessary evidences before the authorities below. However, no further investigation was carried out - once identity of the person giving the money is established and other evidences are placed before the AO pointing that entry is not fictitious then initial burden lying on the assessee can be said to be fully discharged. - AT
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• Payment of expenses in Cash over the specified limit - The primary object of enacting Section 40A(3) of the Act was two folds. Firstly, putting a check on treating transactions with a mind to evade the liability to tax on income earned out of such transactions and secondly, to inculcate the banking habits amongst the business community. That the genuineness of the transaction and it being free from vice of any device of evasion of tax is relevant consideration which could be examined before invoking rigours of Section 40A(3) of the Act. The above stated legal position is fully applicable in the facts of the present case. There is no doubt about the genuineness of the transactions. Payments to the employees / labourers were made out of compulsions by the assessee. - Claim allowed - AT
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Customs

• Condonation of delay in filing application - delay on the ground that the impugned order was not served - Even otherwise, it is evident from the said application that the appellant was aware on August 17, 2016 that an order had been passed on March 15, 2016 by the Commissioner after the personal hearing was conducted on March 8, 2016. Thus, when the appellant, even according to his own statement, was aware that an order had been passed on March 15, 2016, then the appellant should have taken immediate steps to obtain the order so that the appeal could be filed within the three months from the said date, but as it transpires the appeal was actually filed on October 25, 2019 after a period of almost three years and two months. - AT
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• Refund of excess basic customs duty - Refund rejected on the ground of time limitation - Exercise of Power of Commissioner (appeals) to condone the delay - appeal filed within the period of 30 days over and above the initial period of 60 days - Present is a fit case where learned Commissioner (Appeals) could have exercised the discretion provided to him under the statute - the appeal stands allowed by way of remand. - AT
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Service Tax

• Invocation of Extended Period - Utilisation of ineligible credit - in view of the fact that the issue as to whether credit could be taken or not was ultimately resolved by a Larger Bench of the Tribunal, the extended period of limitation could not have been invoked by the Department. The confirmation of demand for the period prior to March 2007 (normal period), therefore, cannot also be sustained for this additional reason. - AT
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Central Excise

• Levy of penalty u/s 11AC - Wrongful availment of CENVAT Credit - Even though the extended period was not invokable in the facts of the present case. The appellant have paid the said amount along with interest, which is not under contest - since there is no suppression of fact or misdeclaration, fraud or intent to evade duty on the part of the appellant, the penalty under section 11AC cannot be invoked. - AT
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VAT

• Recovery of Tax dues - First charge - Section 77 of the U.P. VAT Act - Overriding effect of IBC - Sovereign power of the State to enable the State - Most of the demands against the petitioner is subsequent to the effective date, i.e. 15.05.2018 when the adjudicating authority passed the order under Section 31 of the IBC. Therefore, for the purposes of the present case, the relevant date would be when the assessment orders were passed followed by demand notice and not the taxable event - when the interim orders were discharged, the right of the State to recover the amount has accrued. - HC
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Case Laws:

• GST

• 2021 (9) TMI 626
  Refund of unutilised ITC on input services - challenge to validity of Rule 89(5) on the ground that it is ultra vires Section 54(3)(ii) - interpretation of sub-Section (3) to Section 54 and Explanation 1 to sub-Section (1) of Section 54 - HELD THAT:- Parliament while enacting sub-Section (3) of Section 54 has stipulated that no refund of unutilized ITC shall be allowed other than in the two specific situations envisaged in clauses (i) and (ii) of the first proviso. Whereas clause (i) has dealt with zero rated supplies made without the payment of tax, clause (ii), which governs domestic supplies, has envisaged a more restricted ambit where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. While the CGST Act defines the expression input in Section 2(59) by bracketing it with goods other than capital goods, it is true that the plural expression inputs has not been specifically defined. But there is no reason why the ordinary principle of construing the plural in the same plane as the singular should not be applied. To construe inputs so as to include both input goods and input services would do violence to the provisions of Section 54(3) and would run contrary to the terms of Explanation-I which have been noted earlier - Consequently, it is not open to the Court to accept the argument of the assessee that in the process of construing Section 54(3) contextually, the Court should broaden the expression inputs to cover both goods and services. Refund is a matter of a statutory prescription. Parliament was within its legislative authority in determining whether refunds should be allowed of unutilised ITC tracing its origin both to input goods and input services or, as it has legislated, input goods alone. By its clear stipulation that a refund would be admissible only where the unutilised ITC has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies, Parliament has confined the refund in the manner which we have described above. While recognising an entitlement to refund, it is open to the legislature to define the circumstances in which a refund can be claimed. The proviso to Section 54(3) is not a condition of eligibility (as the assessees Counsel submitted) but a restriction which must govern the grant of refund under Section 54(3). Vires of Rule 89(5) vis- -vis Section 54(3) of the CGST Act - HELD THAT:- The challenge to Rule 89(5) as a piece of delegated legislation on the ground that it is ultra vires Clause (ii) of the first proviso to Section 54(3) is lacking in substance. As reasoned in the earlier part of this judgment, Clause (ii) of the first proviso is not merely a condition of eligibility for availing of a refund but a substantive restriction under which a refund of unutilized ITC can be availed of only when the accumulation is relatable to an inverted duty structure, namely the tax on input goods being higher than the rate of tax on output supplies. There is therefore no disharmony between Rule 89(5) on the one hand and Section 54(3) particularly Clause (ii) of its first proviso on the other hand. It would be material to advert to the provisions of Rule 42. Rule 42(1) provides that the ITC in respect of input goods or input services which attract the provisions of sub-Section (1) or sub-Section (2) of Section 17 being partly used for the purpose of business and partly for other purposes or partly used for affecting taxable supplies including zero rated supplies and partly for effecting exempts supplies shall be attributed for the purposes of business or for effecting taxable supplies in the manner which is indicated in the Rule. Sub-Section (1) of Section 17 provides that where the goods and services or both are used by a registered person partly for the purposes of any business and partly for any other purpose, the amount of credit shall be restricted to so much of the input tax as is attributable to the purpose of its business - Rule 89(5) provides for a refund. In both sets of rule clusters, Rules 42 and 43 on the one hand and Rule 89(5) on the other hand, a formula is used for the purpose of attribution in a post assimilated scenario. The use of such formulae is a familiar terrain in fiscal legislation including delegated legislation under parent norms and is neither untoward nor ultra vires. Parliament engrafted a provision for refund Section 54(3). In enacting such a provision, Parliament is entitled to make policy choices and adopt appropriate classifications, given the latitude which our constitutional jurisprudence allows it in matters involving tax legislation and to provide for exemptions, concessions and benefits on terms, as it considers appropriate. The consistent line of precedent of this Court emphasises certain basic precepts which govern both judicial review and judicial interpretation of tax legislation. The purpose of the formula in Rule 89(5) is to give effect to Section 54(3)(ii) which makes a distinction between input goods and input services for grant of refund. Once the principle behind Section 54(3)(ii) of the CGST Act is upheld, the formula cannot be struck down merely for giving effect to the same. The Division Bench of the Gujarat High Court in VKC FOOTSTEPS INDIA PVT. LTD. VERSUS UNION OF INDIA 2 OTHER (S) [ 2020 (7) TMI 726 - GUJARAT HIGH COURT] having examined the provisions of Section 54(3) and Rule 89(5) held that the latter was ultra vires. In its decision in VKC Footsteps India Pvt. Ltd, the Gujarat High Court held that by prescribing a formula in sub-Rule (5) of Rule 89 of the CGST Rules to execute refund of unutilized ITC accumulated on account of input services, the delegate of the legislature had acted contrary to the provisions of sub-Section (3) of Section 54 of the CGST Act which provides for a claim of refund of any unutilized ITC. The Gujarat High Court noted the definition of ITC in Section 2(62) and held that Rule 89(5) by restricting the refund only to input goods had acted ultra vires Section 54(3). The Division Bench of the Madras High Court on the other hand while delivering its judgment in Tvl. Transtonnelstory Afcons Joint Venture [ 2020 (9) TMI 931 - MADRAS HIGH COURT] declined to follow the view of the Gujarat High Court noting that the proviso to Section 54(3) and, more significantly, its implications do not appear to have been taken into consideration in VKC Footsteps India Pvt. Ltd. except for a brief reference. The appeals filed by the Union of India against the judgment of the Gujarat High Court dated 4 July 2020 in VKC Footsteps India Pvt. Ltd. and connected cases are allowed and the judgment shall be set aside - The appeals filed by the assessees against the judgment of the Madras High Court in Tvl. Transtonnelstroy Afcons Joint Venture (supra) and connected cases dated 21 September 2020 shall stand dismissed. Application disposed off.

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• 2021 (9) TMI 616
  Refund of the entire amount on deposit made by the petitioner/assessee - Rule 90(2) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- The facts being undisputed, at this stage itself, no useful purpose may be served in keeping the present petition pending or calling for a counter affidavit. Once the basic facts are admitted to the revenue authorities being entitlement of refund arising from the appeal order dated 08.01.2021 and it is also not disputed that the petitioner had filed application for refund through online mode, it was for the revenue authorities to scrutinize the same and inform the assessee in real time, of any defect in that application - upon scrutiny, the acknowledgment on Form GST-RFD-02 was issued acknowledging the claim filed by the petitioner. The revenue authorities also cannot deny existence of the appeal order dated 08.01.2021. Their further conduct to decline the refund on the reasoning or excuse of the application being incomplete, does not inspire confidence. In a case such as this where the refund claim has arisen solely on the strength of the appeal order, unless the assessing authority may plead ignorance of the same, we also cannot remain unmindful of the fact, while rejecting such claims, the authorities are forcing the assessee to litigate and also defeating the claim of interest that is otherwise due on account of delay in processing the refund application. Petition allowed.

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• 2021 (9) TMI 615
  Interest on tax payable in respect of supplies made during a tax period - during the pendency of this writ petition, Section 50 Sub-Section (1) of the GST Act has been amended by the Finance Act, 2021 under Section 112 of the Finance Act - Assessment Year 2017-18 and 2018-19 - HELD THAT:- In view of this amendment, the impugned notice of demand relating to interest in question is not sustainable in law and is set aside. Petition disposed off

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• 2021 (9) TMI 614
  Validity of setting off of part of the GST refund will be set off against future demand - Section 142 (8) (b) of the Central Goods and Services Tax Act 2017 - application for cash refund can be made - HELD THAT:- It is deemed appropriate that the petitioner first move an application for cash refund before the Authorities so that the same can be decided in accordance with law. Petition disposed off.

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• 2021 (9) TMI 612
  Provisional attachment of property - invocation of Section 83 of the CGST Act, 2017 - on date the order of provisional attachment was made, no proceedings under sections 62/63/64/67/73/74 of the Act were pending - HELD THAT:- The order is made on November 9, 2020 - It is evident from the reply affidavit that as on November 9, 2020, no proceedings against the petitioner had been initiated. If at all, proceedings were initiated on December 3, 2020 when the search of the petitioner s premises were conducted. Proceedings initiated against an entity different from the entity whose bank account is attached would not clothe the concerned officer, otherwise empowered to order attachment of property, to invoke Section 83 without the jurisdictional fact being present. If so invoked, the order has to be held ultra vires Section 83 - no proceedings of the nature as referred to in Section 83 of the Act were pending against the petitioner as on November 9, 2020, the order of provisional attachment is ultra vires Section 83 of the Act. Accordingly, the order of provisional attachment stands set aside. The writ petition stands allowed with direction to the respondents to forthwith defreeze the bank account of the petitioner.

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• 2021 (9) TMI 576
  Seeking grant of Anticipatory Bail - fraudulent availment of ITC - Appellant claimed protection from the arrest on the ground that he is falsely implicated in the alleged offence - Section 132 (b) of GST Act 2017 - Compoundable offence or not - HELD THAT:- Any offence under CGST Act 2017, is compoundable both before and after institution of prosecution, but the applicant had not offered to compound the offence, though compounding is permissible, even before the institution of prosecution. In third proviso of sub section (1) of Section 138 of CGST Act, Compounding can be allowed only on making payment of tax, interest and penalty involved in the said case. As per the allegations, the ITC availment to the tune of ₹ 30 Crores approximately, from M/s. Karnataka Jewellers, M/s. Balaji Enterprises, M/s. Kismat Enterprises has been made by the applicant. Therefore, argument of learned Advocate for applicant that as he has co operated the investigation and his statements have been recorded by the Department and therefore, there cannot be any arrest as long as offences are compoundable, is an argument which cannot be accepted. Considering the investigation as per the case diary and the allegations of Department against the applicant, the supplier of M/s. Gajmukhi Buillion, M/s. Maple Fine Jewellery, M/s. Alentraa Trading Private Limited, Pramod Suraj Prasad Gupta (Eagle Impex), M/s. Center core Multi trading Private Limited, M/s. Dolphin Multi Trade Company, M/s. Creative Overseas and M/s. Nevaki Enterprises Private Limited are bogus firms are seems to be created to do paper transaction only. The request of the applicant as regards grant of anticipatory bail application has to be turned down - application dismissed.

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• 2021 (9) TMI 575
  Revocation of cancellation of registration - non filing of returns for a continuous period of six months - contentions based on assumption and presumptions and without appraising the facts and circumstances in the legal perspectives - rejection of application for revocation of cancellation of registration as the appellant did not submit the reply to the notice issued within the time specified therein and also did not deposit the interest - HELD THAT:- The appellant has deposited ₹ 3,150/- towards interest on 04.05.2021 (vide DRC-03 ARN No.AD080521000252T Dated 04.05.2021 ₹ 1,575/- under CGST and ₹ 1,575/- under SGST for the period April- 2020 to December-2020. Further, the appellant submitted copies of DRC- 03 ARN No.AD080521000252T Dated 04.05.2021 and also copies of GSTR- 3B return for the period April-2020, May-2020, June-2020, July-2020, August-2020, September-2020, October-2020, November-2020 and December-2020 respectively. The appellant has filed returns upto date of cancellation of registration hence, it is found that the appellant has substantially complied with the above said provisions of the CGST Act/Rules, 2017 in the instant case - the registration of appellant may be considered for revocation by the proper officer - the proper officer is directed to consider the revocation application of the appellant after due verification of payment particulars of tax, late fee, interest and status of returns. Appeal disposed off.

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• 2021 (9) TMI 574
  Seeking grant of Bail - fraudulent availment of input tax credit - respondent has never served notice upon the applicant - offence punishable u/s 132 (1) (I) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- On perusal of the reply filed by the prosecution, it would reveal that the prosecution has come with the contention that the applicant was the partner of firm namely M/s. Agrim Impex. It is claimed that said firm had availed inadmissible Input Tax Credit on the basis of invoices issued by M/s. Advanced computers and Mobiles India Pvt. Ltd. and in turn have issued fake GST invoices without accompanying goods so as to enable the recipients to avail inadmissible Input Tax Credit to the tune of ₹ 33.92 Crores. Admittedly in this case, the prosecution has alleged that the has fraudulently availed Input Tax Credit amounting to ₹ 33.92 Crores. Therefore, it can be said that there are allegations against the applicant about commission of economic offence - bail cannot be allowed - Application dismissed.

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• Income Tax

• 2021 (9) TMI 625
  Unexplained cash deposits in bank account u/s 69A - time gap between withdrawal and deposits - why the explanation of the assessee that cash deposits in the year under consideration is out of earlier years withdrawals has not been accepted is that keeping huge cash at home for such a long period is beyond any imagination? - HELD THAT:- In the instant case, it has been submitted that the cash was withdrawn for the purposes of purchase of another property by the assessee for her son however, the transaction couldn t fructify and as a result, the assessee decided to re-deposit the amount in the bank account. In an ideal situation, such an explanation is expected to be supported by some documentary evidence however, mere absence of supporting documentation cannot be a reason enough to allege any malafide in the explanation so submitted especially where the assessee has explained and duly disclosed the source of deposits in the bank account out of which the withdrawals have been made and has thus established the necessary linkage and availability of cash in hand. The various decisions of the Coordinate Benches cited at the Bar by the ld AR also lays down a broad proposition that mere time gap between withdrawals and deposits cannot be a sole basis for rejecting the explanation of the assessee regarding availability of cash in hand where there is no material that amount so withdrawn has been utilized somewhere else and thus supports the case of the assessee. We believe that there is no justifiable basis to hold that the explanation so furnished by the assessee cannot be accepted and find the explanation so furnished is reasonable, appropriate and satisfactory in the facts and circumstances of the present case and hereby direct the addition so made be deleted. - Decided in favour of assessee.

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• 2021 (9) TMI 624
  Deduction u/s 80P - deductibility of expenditure incurred for the business of a cooperative society in relation to the amount of profits and gains attributable to the activities specified u/s 80P(2) - AO found that the assessee has dealt in a number of commodities and that the common expenses relating to all the activities have been amalgamated in such a manner that the expenses relating to all the activities specified u/s 80P(2) cannot easily be ascertained - HELD THAT:- We note that business of the assessee-society under consideration is one and indivisible and in pursuing various activities, the expenditure incurred wholly and exclusively for the purpose of the business, irrespective of the fact that the income from one or more parts of the activities was not liable to tax, was allowable in entirety and could not be apportioned and attributed towards the claim u/s 80P(2) - As we have noted that the issue is squarely covered in favour of the assessee by the decision in the case of Jamnagar Jilla Shakari Kharid Vechan Sangh Ltd [ 2005 (12) TMI 65 - GUJARAT HIGH COURT] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Hon`ble Court (supra). Therefore, respectfully following the binding judgment of the Hon`ble High Court of Gujarat (supra), we allow the appeal of the assessee.

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• 2021 (9) TMI 623
  Disallowance u/s 14A r.w. Rule 8D to the extent of exempt income - HELD THAT:- As relying on decision of the Hon ble Supreme Court in the case of State Bank of Patiala [ 2018 (11) TMI 1565 - SC ORDER] in which the Hon ble Supreme Court uphold the decision of the Hon ble Punjab Haryana High Court [ 2017 (5) TMI 1551 - PUNJAB AND HARYANA HIGH COURT] in which the disallowance was restricted to the exempt income - Also held in JOINT INVESTMENTS PVT LTD [ 2015 (3) TMI 155 - DELHI HIGH COURT] and KOTAK SECURITIES LIMITED [ 2018 (9) TMI 1244 - ITAT MUMBAI] expenses to earn the exempt income was restricted to the extent of exempt income - thus we affirm the finding of the CIT(A) on this issue and decide this issue in favour of the assessee. MAT computation - Disallowance u/s 14A while computing the book profit u/s 115JB - HELD THAT:- No disallowance u/s 14A r.w. Rule 8D is required while computing the book profit u/s 115JB of the Act. The facts are not distinguishable at this stage. The issue has squarely covered by the decision in case of Vireet Investments Pvt. Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] , Bhushan Steel Ltd. [ 2015 (9) TMI 1424 - DELHI HIGH COURT] therefore, we are of the view that the finding of the CIT(A) is quite justifiable which is not liable to be interfered with at this appellate stage. Income from house property - addition on account of alleged Notional Annual Letting value of unsold flat held as stock in trade - HELD THAT:- The issue is squarely covered by the decision of the sister concern case titled as Runwal Builders Pvt. Ltd [ 2018 (2) TMI 1707 - ITAT MUMBAI] in which the income has been assessed as income from business in similar circumstances. The Hon ble Gujarat High Court in the case of CIT Vs. Neha Builders Pvt. Ltd [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] also speaks the same thing in the same sense. If, the property is used stock-in-trade then the said property would be become or part take the stock. Any income derived in stock would be the income from business and not the income from the house property. The assessee business is to construct the property and to sell and to construct and let out the same then it would be the income from business and accordingly liable to be treated. In view of the said discussion, we are of the view that the finding of the CIT(A) is not correct, hence, we set aside the finding of the CIT(A) and direct the AO to treat the said income as income from the business - Decided in favour of the assessee.

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• 2021 (9) TMI 622
  Levy of penalty u/s.272A(2)(k) - assessee-deductor had not filed quarterly TDS statements in Form No.24Q and 26Q for all the four quarters of the F.Y.2008-09 within the time prescribed by the I.T. Act - HELD THAT:- We find from the penalty order that the assessee has not filed TDS returns in the prescribed forms 24Q and 26Q for all the quarters within the stipulated time and, therefore, the AO levied penalty @ 100/- per day for delay in default for filing of TDS returns. Further, we find from the orders of authorities below that the entire tax along with interest thereon had been deposited in to Govt. account and later, the assessee filed quarterly TDS returns for all the quarters. The issue in dispute is squarely covered by the decision of MAHARASHTRA JEEVAN PRADHIKARAN WORKS DIVISION [ 2021 (5) TMI 584 - ITAT PUNE] we set aside the order of the CIT(A) and direct the AO to delete the penalty levied u/s 272A(2)(k) in the hands of the assessee. Accordingly the grounds raised by the assessee on this issue are allowed.

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• 2021 (9) TMI 621
  Levy interest u/s 234E - interest levied prior to amendment w.e.f. 1.6.2015 - diversified views - HELD THAT:- It is undisputed that period of TDS return is prior to the amendment. At that time there was no enabling provision for levying interest under section 234E. Several decisions from High Courts and ITAT were referred before learned CIT(A). Despite this the learned CIT(A) s rules that there is no ambiguity in law and he upholds the order of interest levy. There is no jurisdictional High Court decision on this issue. No effort has been done by learned CIT(A) to distinguish the case law of Vegetables Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] . The said case law provides that if two views are possible the view in favour of the assessee has to be adopted. Hence, if as per learned CIT(A) there are divergent views of Hon'ble High Courts, in absence of a Jurisdictional High Court decision, the learned CIT(A) should have followed the ratio from this Hon'ble Supreme Court decision and followed the high court decision in favour of the assessee. CIT(A) himself says, that the issue is debatable then the same takes the adjustment out of the jurisdiction of CPC Bangalore. As debatable issues cannot be decided under computerised adjustment. Hence to conclude since it has been held by higher courts that prior to enabling provision to levy interest under section 234E, the interest for earlier period return due cannot be upheld we set aside the order of learned CIT(A) and decide the issue in favour of assessee.

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• 2021 (9) TMI 620
  Validity of reopening of assessment u/s.148 - Addition u/s 69 - information from DDIT (Investigation) relied upon - reo pening within or beyond period of four years - date of reckoning of four years time limit - Whether four years time limit should be reckoned from the end of the relevant assessment year in which original assessment was completed? - HELD THAT:- From the reading of the proviso to Section 147 of the Act it only says where the assessment u/s.143(3) of the Act has been completed, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year. The relevant assessment year is A.Y.2006-07. Hence, the four years time limit from said date would expire on 31/03/2011. Since, the notice u/s.148 of the Act in the instant case has been issued on 28/03/2013, the reopening notice has been issued beyond four years from the end of the relevant assessment year. Hence, the first proviso to Section 147 would certainly come into operation in the instant case. Whether there was any failure on the part of the assessee in making full and true disclosure of all material facts before the ld. AO in the original assessment proceedings? - Assessee in response to questionnaire issued by the ld. AO in the original assessment proceedings along with notice u/s.142(1) of the Act dated 14/11/2008, had given a detailed reply vide letter dated 10/12/2008 furnishing the details of additions to fixed assets along with invoices above ₹ 10 lakhs in the prescribed format, as desired by the ld. AO. The ld. AO had verified each and every invoice in the original assessment proceedings and thereafter, concluded that assessee would be entitled for depreciation on fixed assets. This goes to prove that assessee had duly discharged its onus and the same had also been verified and examined by the ld. AO in the original assessment proceedings. While this is so, how can there at all be any failure on the part of the assessee to disclose true and material facts before the ld. AO in the original assessment proceedings. There was no failure on the part of the assessee to disclose the material facts that are material for the purpose of assessment in the original assessment proceedings, by giving full and true disclosure. Addition u/s 69 - As there is absolutely no investment made by the assessee so as to invoke the provisions of Section 69 of the Act. In any case, the allegation of the revenue seems to be that assessee had made purchases of fixed assets from Praj Industries Ltd., by excess value. The entire purchase of fixed assets has already been recorded by the assessee in its books of accounts. The source for making payments for such purchase of fixed assets have also been recorded and disclosed in the same books of accounts. Then, where is the question of applicability of provisions of Section 69 of the Act - The entire investments have been duly explained by the assessee. Hence, there cannot be any addition towards unexplained investment u/s.69 of the Act even on merits. - Decided in favour of assessee.

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• 2021 (9) TMI 619
  Revision u/s 263 - assessee`s case was selected for scrutiny under CASS - Whether assessment order passed by the assessing officer under section 143(3) of the Act is erroneous nor prejudicial to the interest of the Revenue? - HELD THAT:- From the question and answer, between assessing officer and assessee about the computation of capital gain in respect of immovable property as proved beyond doubt that assessee has replied the queries asked by the assessing officer and the assessing officer after getting the details from the assessee, applied his mind and framed order under section 143(3) of the Act, dated 26.02.2015. Therefore, order passed by the Assessing Officer should not be erroneous. Conversion of the immovable property into stock-in-trade - It is clear that during the assessment stage, the AO has examined the issue raised by the PCIT, about the conversion of the immovable property into stock-in-trade in F.Y. 2010-11 i.e. A.Y.2011-12. We note that when transferred asset was held as stock in trade, in that situation, section 50C would not apply, as held by Hon`ble Gujarat High Court in the case of Mukesh Kishor Barot Coowners, [ 2013 (10) TMI 147 - GUJARAT HIGH COURT]. Hence order passed by the assessing officer is neither erroneous nor prejudicial to the interest of the Revenue. Sale consideration received on transfer of said immovable property - assessee is found to have shown contract amount of ₹ 60,00,000/- and has claimed expenses under various heads. The ld PCIT noticed that these are not contract receipts but sale consideration received on transfer of said immovable property - We note that during the assessment stage, the assessing officer had verified this issue. The assessing officer, (vide his notice under section 142(1) of the Act), has asked the assessee to furnish details of expenses, Trading account, Profit and loss account and Balance Sheet etc. The assessing officer has examined the nature of amount of ₹ 60,00,000/-, therefore, order passed by him under section 143(3) of the Act, is neither erroneous nor prejudicial to the interest of revenue. Since, we find that the Assessing Officer has made enquiries and the action of Assessing Officer in accepting the claim of assessee, after detailed enquiry, is a plausible view, so , we do not find that the twin conditions required for exercising the jurisdiction u/s 263 of the Act is found missing /absent and, therefore, the Ld. PCIT ought not to have exercised his revisional jurisdiction under section 263 - Decided in favour of assessee.

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• 2021 (9) TMI 610
  Reopening proceedings u/s 147/148 - event of tracing out new tangible material or information - change of opinion - non-disclosure on the part of the assessee proved or not? - reopening beyond period of four years - deduction u/s 54F was sought for. Long term capital gain - reasons of reopening reveals that as per sub-section (2) of Section 54F, the assessee should not acquire another asset other than the new asset within two years - HELD THAT:- Here, the petitioner had acquired two more houses on the same date. The exemption under Section 54F is required to be withdrawn for violation of condition under sub-section (2) of Section 54F. Thus, it is apparently clear that for the purpose of withdrawal of the exemption granted under Section 54F, the assessment is reopened. Such a reopening cannot be construed as based on new tangible material. If at all any lapse committed during the original assessment proceedings or erroneous consideration based on the opinion formed by the Assessing Officer during the relevant point of time, the other possible opinion if at all raised for reopening of assessment is to be construed as change of opinion and cannot be considered as new materials for the purpose of reopening of assessment. In the present case, admittedly the assessee had submitted all the documents pertaining to the purchase of the three properties and all those documents were placed before the Assessing Officer and the Assessing Officer considered all those three documents and formed an opinion that, the petitioner / assessee is eligible to grant exemption under Section 54F of the Income Tax Act only in respect of one property. Exemption under Section 54F is required to be withdrawn for violation of condition under sub-section (2) of Section 54F - AO during the relevant point of time, when this issue was considered was very much aware of the fact regarding the implication of sub-section (2) of Section 54F and by considering all those aspects, he granted exemption for only one property alone. This being the factum, the Assessing Officer clearly formed an opinion for the purpose of grant of exemption under Section 54F while passing the original assessment order and now the reasons furnished for reopening of assessment would reveal that they are taking a different opinion on the same set of facts. Thus, the said reasons furnished for reopening the proceedings dated 06.04.2016 amounts to change of opinion beyond any pale of doubt. - Decided in favour of assessee.

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• 2021 (9) TMI 606
  Deduction u/s 80IA - cargo handling contract entered into with BIAL by assessee - agreement with a statutory body - Whether contract is with statutory body satisfying condition set forth in section 80IA(4) when BIAL is only a Company whose motive only making profit and is only a instrument of State? - HELD THAT:- As decided in own case [ 2021 (2) TMI 36 - KARNATAKA HIGH COURT] Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. In CHETTINAD LIGNITE TRANSPORT SERVICES P. LTD [ 2019 (4) TMI 684 - MADRAS HIGH COURT] it has been held that proviso intends to extend the benefit of deduction under Section 80IA of the Act even to a transferee or a contractor who is approved and recognized by the concerned authority and undertakes the work of development of infrastructure facility or only operates or maintains the same. As rightly been concluded by the Appellate Authority that the assessee is engaged in development operation and maintenance of an infrastructure facility in the light of provisions of SPRH agreement. Revenue was unable to point out any perversity in the findings of fact recorded by the Commissioner of Income Tax (Appeals) as well as by the Tribunal. It is well settled in law that the concurrent findings of fact do not suffer from any perversity warranting interference of this court in exercise of powers under Section 260A of the Act. [SEE: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. [ 2016 (10) TMI 1233 - SUPREME COURT] and PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE ORS. VS. SOFTBRANDS INDIA P. LTD. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] - Decided in favour of the assessee.

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• 2021 (9) TMI 603
  Revision u/s 263 by CIT - omission on the part of AO not to refer the valuation of asset/flats to DVO - incorrect valuation of the flats - CIT was of the opinion that AO still erred in accepting the Registered Valuer s valuation report of flats less than stamp valuation authority value and according to Ld. Pr. CIT, the AO ought to have referred the valuation to the Departmental Valuation Officer ( DVO ) to reach a judicious and proper conclusion - whether the Ld. PCIT s allegation against the AO s action/omission can be termed as erroeneous as well as prejudicial to the Revenue? - HELD THAT:- Section 55A of the Act empowers the AO to refer the value of a capital asset to Department Valuation Officer (DVO) provided he is not satisfied with the FMV of the capital asset estimated by the registered valuer of the assessee. So, it can be seen that the AO has acted as per the section 55A of the Act and has exercised his discretion as empowered by the law, so it cannot be termed as erroneous. Further the AO s action of accepting the fair market value of the flats on the basis of the estimate prepared by the registered valuer of the assessee as per section 55A of the Act cannot be held to be perverse because it was based on material i.e. registered valuer s report. Therefore, in the aforesaid facts the action of the AO cannot be held to be erroneous. Whether the amendment made by Finance Act, 2013 w.e.f. 01.04.2014 in section 56(2)(vii)(b) of the Act is applicable in this case? - since the date of agreement for sale of flats was on 15 Feb 2013, we find that the amendment brought in by Finance Act, 2013 w.e.f. 1.04.2014 by inserting sub-clause (ii) in section 56(2)(vii)(b) of the Act is not applicable in the case of the assessee. And as per the law as was applicable in the case of the assessee before the pre-amendment even sub- clause (i) in section 56(2)(vii)(b) is not applicable since assessee s case is not a case wherein no consideration was given for receiving the immovable property. AO as per section 55A of the Act since satisfied with the estimate prepared by the registered valuer of the assessee has adopted at ₹ 67,57,600/- as the fair market value of the capital assets/flat as full value of consideration for the capital asset which action of the AO is his discretion which he has exercised as empowered by the statute. So it cannot be called as a wrong/erroneous order, whereas it is a plausible view. Therefore, the said action of AO to accept the estimated value of the flats at ₹ 67,57,600/- cannot be held to be erroneous. Even if the Ld. PCIT has a different view which may be a possible view that cannot be a ground to invoke the revisional jurisdiction u/s 263 of the Act unless the Ld. PCIT is able to show that the AO s view was unsustainable in law, which is not the case of the Ld PCIT. CIT erroneously has usurped the jurisdiction u/s. 263 of the Act, so we are inclined to quash the same - Decided in favour of assessee.

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• 2021 (9) TMI 602
  Revision u/s 263 - allowability of interest expenditure - AO issued statutory notices calling for details in respect of the items selected for Limited Scrutiny - deduction of interest incurred in the course of business - As per CIT AO had failed to examine the commercial expediency of the assessee in advancing interest free loan to the partners, when the assessee-firm was paying interest on the borrowed capital - HELD THAT:- Assessee had demonstrated before the AO that the loan was availed from ICICI Bank for business purpose and in connection and for the benefit of their project Ozone . Having regard to the facts as discussed in the foregoing, it thus cannot be said that arrangement carried out by the assessee with these two partners lacked commercial expediency. AO, after being satisfied with the explanation/ submission/documents, had allowed the deduction of interest incurred in the course of business. Such view taken by the AO was indeed a plausible view and cannot be said to be unsustainable in law . Appreciating the commercial expediency involved, the AO s successor did not take any adverse view in AY 2017-18 even though debit balance in current account of these partners were M/s. P. S. Group Realty Ltd.and M/s. Srijan Realty Pvt. Ltd.- Having regard to the foregoing facts and applying the rule of consistency, we are of the opinion that the Ld. Pr. CIT ought not to have disturbed the assessment order for the relevant year on this issue of allowability of interest expenditure. The net withdrawal by the partners during the year was only to the tune of ₹ 15.37 crore and not ₹ 74 crore as wrongly assumed by the Ld. Pr.CIT. We thus find force in the argument of the Ld. AR that the impugned order was passed by the Ld. Pr.CIT without due application of mind to the facts of the case and material available on record. Pr.CIT wrongly asserted that AO did not examine the balance sheet of the assessee and did not enquire into the commercial expediency of withdrawal of fund by the partners. The facts and figures assumed by the Ld. Pr.CIT are also found to be erroneous. We find that the AO had discharged his duty as an investigator on this issue. And his view as an adjudicator on this issue is based on the relevant material placed on record, which we find to be in consonance with the decision of the Hon ble Apex Court in S. A. Builders vs. CIT [ 2006 (12) TMI 82 - SUPREME COURT] - Following the decision of Apex Court in Malabar Industries Ltd.[ 2000 (2) TMI 10 - SUPREME COURT] we are thus of the considered opinion that, while passing the assessment order the AO did not follow a view which can be said to be 'unsustainable in law'. The jurisdictional facts for usurping the jurisdiction, being absent, we hold that the action of Ld. Pr. CIT was without jurisdiction and therefore null in the eyes of law. We accordingly quash the order of Ld. Pr. CIT impugned before us - Appeal of the assessee is allowed.

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• 2021 (9) TMI 600
  Disallowance of amount transferred to reserve fund u/s.45IC of the RBI Act - HELD THAT:- We find that an identical issue has been considered by the Tribunal in the case of Shriram Transport Finance Company Ltd. [ 2018 (5) TMI 1935 - ITAT CHENNAI] where the Tribunal by following its earlier order in the case of M/s. Shriram Transport Finance Co.Ltd.[ 2016 (8) TMI 1204 - ITAT CHENNAI] held that transfer of funds as required u/s.45IC of the RBI Act, is only application of income, therefore, it is liable for taxation. The facts are being identical for year under consideration and thus, consistent with view taken by the co-ordinate Bench in the cases discussed hereinabove, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the assessee. Claim of depreciation on royalty amount - HELD THAT:- CIT(A) has rejected alternative plea taken by the assessee claiming depreciation on royalty on the ground that when royalty expenses has been held to be revenue in nature and deductible, then alternative plea of the assessee for claiming depreciation on said expenditure is infructuous and hence, not maintainable. The fact remains unchanged. The assessee failed to bring on record any valid reason to take a different view from the view taken by the learned CIT(A) and hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the assessee. Recomputation of book profit u/s.115JB - additions towards amount transferred to statutory reserve - HELD THAT:- We find that the Tribunal has considered identical issue and held that amount transferred to special reserve fund as required under section 45IC of the RBI Act, is only appropriation of profits below the line in the profit loss account and thus, same is not deductible while computing book profit u/s.115JB of the Income Tax Act, 1961. Therefore, consistent with view taken by co-ordinate Bench, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the assessee. Disallowance of expenses u/s.14A r.w.r 8D - As per assessee Nil exempt income earned for the relevant assessment year - HELD THAT:- The Hon ble Madras High Court in the case of Redington India Pvt.Ltd. [ 2017 (1) TMI 318 - MADRAS HIGH COURT] had considered an identical issue and after considering Board Circular No.5 of 2014 dated 11.02.2014 held that where there is no exempt income in relevant year, there cannot be disallowance of expenditure u/s.14A of the Act. In this case, the learned CIT(A) has recorded categorical finding that the assessee has not earned any exempt income for impugned assessment year and hence, deleted additions made by the Assessing Officer towards expenses u/s.14A of the Act. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the revenue. TDS u/s 194H - disallowance of commission payment u/s.40(a)(ia) - HELD THAT:- CIT(A) has recorded a categorical finding in light of various evidences including list of payment of commission to individual recipients by the assessee and held that a sum is out of scope of section 194H of the Act, because payment in respect of each person does not exceed ₹ 5000/- and hence, the assessee does not require to deduct TDS, as per provisions of section 194H of the Act, and thus, disallowance u/s.40(a)(ia) of the Act for non-deduction of TDS cannot be made. The revenue has failed to bring on record any evidence to counter findings of fact recorded by the learned CIT(A), except stating that the learned CIT(A) has accepted additional evidence in contravention of Rule 46A of Income Tax Rules,1962. Therefore, we are of the considered view that there is no error in the findings recorded by the learned CIT(A) to delete additions made towards commission payment. Remaining commission payment assessee sought for deduction on the ground that said payment has been made before end of relevant financial year in light of decision in the case of CIT Vs.Vector Shipping Services Pvt.Ltd. [ 2013 (7) TMI 622 - ALLAHABAD HIGH COURT] The fact remains that as subsequently reversed decisions of various High Courts in the case of Palam Gas Service [ 2017 (5) TMI 242 - SUPREME COURT] and held that provisions of section 40(a)(ia) of the Act, is applicable for non-deduction of TDS under respective provisions of the Act, even though impugned payments are made before end of relevant financial year. The learned CIT(A), after considering relevant facts has rightly sustained additions made by the Assessing Officer towards disallowance of commission. Recomputation of book profit u/s.115JB of the Act by making additions towards disallowance u/s.14A r.w.r 8D - We find that this issue is squarely covered in favour of the assessee by the decision in the case of ACIT Vs. M/s.Vireet Investments Pvt.Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] where it was held that computation under clause (f) of Explanation (1) to section 115JB of the Act is to be made without resorting to computation as contemplated u/s.14A r.w.r 8D of Income Tax Rules, 1962. The co-ordinate Bench of ITAT., Chennai in the case of Shriram Transport Finance Company [ 2017 (7) TMI 1396 - ITAT CHENNAI] had considered an identical issue and held that disallowances made u/s.14A by invoking Rule 8D cannot be added back to book profit computed u/s.115JB of the I.T Act, 1961. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards recomputation of book profit by making additions towards disallowance u/s.14A r.w.r 8D

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• 2021 (9) TMI 599
  Addition u/s. 36(1)(iii) r.w.s. 37 - interest-free loan to subsidiary in Malaysia out of borrowed funds and has not derived any business advantage by advancing such a huge amount - As per DR no commercial expediency to advance such loan - HELD THAT:- Though the assessee advanced interest bearing funds to subsidiary in Malaysia, the assessee has not been able to establish any commercial expediency to such advancing of interest free loan to this company and both the companies are in different line of business. Further, after receiving the loan from assessee company, subsidiary Company used the same funds to advance to the related parties from year to year as seen from its annual accounts reproduced in earlier para. Being so, the CIT(Appeals) rightly held that the assessee company and subsidiary are in two different business being land development construction and hospitality and the assessee has not been able to establish any business advantage derived by the assessee by advancing such loan to Amethyst Hospitality (P) Ltd. - CIT(Appeals) is justified in sustaining the addition made by the AO by invoking the provisions of section 36(1)(iii) of the Act.- Decided against assessee.

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• 2021 (9) TMI 598
  Late payment of Employee's Contribution towards EPF and ESI u/s 36(1)(va) - HELD THAT:- Since in terms of the provision of Section 36(1)(va) r.w.s. 2(24)(x) the deduction from employees contribution is allowable only if such sum is credited by employer to the employees account in the relevant fund or funds before due date which has admittedly not done by the assessee, AO disallowed such claim. First Appellate Authority relying upon the ratio laid down in the order passed in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC) [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] confirmed such addition made by the AO which, in our considered view, is just and proper, without any ambiguity so as to warrant interference - we confirm the addition made by the CIT(A). The assessee's appeal is thus, found to be devoid of any merit and hence, dismissed.

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• 2021 (9) TMI 597
  Capital gain computation - Addition of capital gains by allowing further proportionate cost - assessee society constructed office premises for the commercial purpose on the land taken on lease for 99 years from MMRDA - CIT(A) while determining the capital gain at ₹ 3,92,000/- had categorically observed that the ld. AO had accepted the said computation in the remand proceedings which is quite evident from the fact that the ld. AO had no comments to offer in his remand report in respect of this issue - HELD THAT:- On perusal of the remand report that the ld. AO had categorically stated that he has no comments to offer on the submissions made by the assessee before the ld. CIT(A). Hence, it could be safely concluded that the ld. AO had nothing adverse to state on the submissions made by the assessee. Having accepted the contentions of the assessee in the remand report, the Revenue ought not to have preferred any appeal on this issue before us. Reliance in this regard is placed on the decision of the Hon ble Madras High Court in the case of B Jayalakshmi vs. ACIT [ 2018 (8) TMI 208 - MADRAS HIGH COURT] . Accordingly, the ground No.1 raised by the Revenue is dismissed. Income from house property - Fair rental value in respect of let out property - annual value for the purpose of taxability under the head income from house property - AR argued that in the year 2007, substantial development took place which had contributed for the enhanced rental value that could be derived by the assessee from a different tenant i.e. Trans Expo Trade Pvt. Ltd - HELD THAT:- AO had adopted the annual rent derived by the assessee in A.Y.2007-08 for the similar extent of property let out to a completely different party i.e. Trans Expo Trade Pvt. Ltd., at ₹ 10,25,000/- per month and had discounted 25% from such value in order to arrive at the fair rental value of the property let out to M/s. Lupin Ltd., in A.Y.2004-05. This in our considered opinion, is not correct approach. AO ought to have determined the fair rental value in the year under consideration based on certain comparable data. Since that was not done by the ld. AO and also in view of the fact that the actual rent received by the assessee is also more than the municipal value for the year under consideration, which fact is not disputed by the Revenue before us, we hold that actual rent received by the assessee at ₹ 3,50,000/- per month in respect of property let out to M/s. Lupin Ltd., should be considered as annual value for the purpose of taxability under the head income from house property . This is the precise direction given by the ld. CIT(A) also by considering the provisions of the Act, on which we do not find any infirmity.Ground No.2 raised by the Revenue is dismissed. Determination of Annual Lettable Value (ALV) on vacant properties - Intention to let out - HELD THAT:- Considering the fact that intention to let out is of no relevance and same cannot be equated with the word let in Section 23 of the Act. Hence, the argument advanced by the ld. AR in this regard that intention to let out is to be seen, stands dismissed, in the light of the decision of in the case of Vivek Jain [ 2011 (1) TMI 897 - ANDHRA PRADESH HIGH COURT] Determination of annual value by the ld. AO in respect of vacant properties based on the actual rent received by the assessee for let out property in A.Y.2007-08 - As already held that the actual rent received by the assessee in respect of let out property to some other tenant in subsequent assessment year cannot be used as a fair rental value for an earlier assessment year in respect of property that is let out to different tenant. While that has been held for a let out property, the same principle would indeed be applicable for vacant property also. As also held in ground No.2 of the Revenue hereinabove that in such a scenario, municipal value should be adopted with the actual rent and higher of those two should be considered as the annual value. We find that the ld. CIT(A) has also directed the ld. AO to consider only the municipal value as the annual value in respect of vacant properties, on which finding, we do not find any infirmity - order of the ld. CIT(A) with regard to determination of annual value for the vacant properties is upheld. Accrual of income - Disallowance in respect of amount received on account of transfer fee from incoming member of the society - The issue in dispute before us is already decided by the Hon ble Apex Court in the case of ITO vs. Venkatesh Premises Co-operative Society Ltd. [ 2018 (3) TMI 675 - SUPREME COURT]. Thus we hold that the receipt on account of transfer fee / amenities fee cannot be brought to tax as income of the assessee. Accordingly, the ground raised by the assessee is allowed.

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• 2021 (9) TMI 596
  Disallowance u/s 14A - addition in respect of indirect expenses under clause (iii) of Sub-rule (2) of Rule 8D of the Rules - HELD THAT:- Methodology of computation of average value of investment is not in accordance with the provisions of Rule 8D of the Rules prevalent during the relevant period. Hence, we remand the matter back to the file of the AO with a direction to compute the amount of disallowance under clause (ii) of Sub-rule (2) of Rule 8D in accordance with the provisions of Rules as applicable at the relevant point of time. Accordingly, this ground of appeal stands partly allowed. Addition on account of interest u/s. 244A - Addition being interest on income tax refund for the assessment year 2012-13 as the same was not offered to tax by the appellant society on account of ignorance of this fact as the interest refund was adjusted against the tax liability - HELD THAT:- Admittedly, the interest on income tax refund for the assessment year 2012-13 was received by the appellant society during the previous year relevant to the assessment year under consideration. The fact that such interest was adjusted against the outstanding demand of the appellant is immaterial as the adjustment of refund also amount to receipt of the interest. Therefore, we uphold the findings of the lower authorities on this issue. Accordingly, this ground of appeal filed by the assessee is dismissed.

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• 2021 (9) TMI 595
  TP adjustment in respect of interest payment on debentures - not done the benchmarking of the payment of interest on debentures/compulsory Convertible debentures (CCDs) properly - HELD THAT:- As decided in own case [ 2021 (8) TMI 979 - ITAT PUNE] tribunal has countenanced the assessee's stand by holding that the assessee rightly issued debentures and CCDs to its AEs and the AO was not justified in re-characterizing the transactions. As regards the ALP determination, the Tribunal restored the matter to the file of AO/TPO for a fresh determination. Addition on reworking of WIP - As argued by assessee alternatively interest accrued and paid on the CCDs had been capitalized to its WIP and had not been claimed as expenditure in the year under consideration - HELD THAT:- The amount of capitalized interest on debentures/CCDs to the work in progress for the assessment year 2013-14 only as is in excess of its ALP freshly determined by the Assessing Officer/TPO should be disallowed proportionately in the years in which the work in progress containing the amount of such interest standing as on 31.03.2013, i.e. FY 2013-14 relevant to AY 2014-15, is reversed on the sale of flats/plots. The same exercise has to be carried on for the assessment years 2014-15 and 2015-16 as well. Following the same parity of reasoning in assessee own case's decision of the Pune Bench of the Tribunal [ 2021 (8) TMI 1037 - ITAT PUNE] . 'Education cess' and 'Secondary and Higher Education Cess' - whether claim may be allowed as a deduction while computing the total income of the assessee company? - HELD THAT:- As decided in own case [ 2021 (8) TMI 979 - ITAT PUNE] matter is remanded to the file of the Assessing Officer to ascertain the exact amount of education cess and then allow a deduction for it, after allowing opportunity of hearing to the assessee.

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• 2021 (9) TMI 594
  Revision u/s 263 - sale of land being long term capital gain - allocation sale consideration towards agriculture land and the other industrial land and according to CIT the allocation towards agriculture land was disproportionate - even if the proportionate to area the value is bifurcated, the allocation to the industrial land should have been more - Whether order passed by the AO is erroneous and prejudice has been caused to the interest of revenue? - HELD THAT:- In the instant case, while recording the conclusion that the order passed by the AO is erroneous and prejudicial to the interest of the Revenue, apparently the record of the assessment proceedings was not examined by the Principal CIT in its entirety and objectivity. The allocation was made on the basis of the rates adopted for stamp duty purposes and if on the said basis the allocation of the composite sale consideration has been made, such a fact cannot be ignored and cannot be said to be an erroneous judgment of the Assessing Officer. It is one of the basis on which such valuation can be accepted. It is not the case that the total value as per stamp duty purposes as per section 50C was more than what was adopted for the different capital assets being sold. The assessment order appears to have been made after due consideration of the material. In this view of the matter, the material on record and the conclusions arrived at, the proceeding initiated by the Principal CIT u/s 263 of the Act is not justified - Decided in favour of assessee.

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• 2021 (9) TMI 593
  Revision u/s 263 - As per PCIT deduction of interest and bank commission against income from other sources and there was no income under the head income from other sources and as such the deduction was not allowable u/s. 57 - PCIT directed the AO to reexamine the issue after affording due opportunity of the hearing to the assessee - HELD THAT:- PCIT is also not of the firm view whether the deduction so claimed is correct or not and directed to re examine the issue afresh - AO during the course of the assessment proceedings had duly examined this issue and had found that the funds were used for the purpose of the business carried on under her proprietorship business. The utilization of the these funds in the business is also shown from the Audited Balance Sheet of the business concerns as well as per personal Balance Sheet which were duly examined by the AO during the course of the assessment proceedings. The funds in question are also from the family members, and are duly accepted deposits. The unsecured loans are also genuine and accepted deposits. The payment of interest is also not disputed only the head of income under which such deduction is to be allowed is being disputed - in relation to the query letter issued by the AO reply was duly submitted to the AO on these issues which were raised and filed the detailed replies to all the query raised - PCIT has failed to specify as to how and on what ground the said order is erroneous and how the same is prejudicial to the interest of revenue - order u/s. 263 cannot be sustained as we find that the assessment order passed by the AO cannot be said to be erroneous or prejudicial to the interest of revenue - Decided in favour of assessee.

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• 2021 (9) TMI 591
  Deduction u/s 80IC - Income from scrap sales - AO was of the opinion that the sale of scrap generated during the manufacturing cannot be said to have been derived from industrial activities - HELD THAT:- CIT(A) was convinced that the assessee has successfully demonstrated that all the items of scrap are generated out of its manufacturing activities. CIT(A) further found that the cost of all these items have been charged to profit and loss account and eligible profit u/s 80IC - CIT(A) considered the following judgment of the Hon'ble jurisdictional High Court of Delhi in the case of Sadhu Forging Ltd. [ 2011 (6) TMI 9 - DELHI HIGH COURT] . We could not point out any error or omission in the findings of the ld. CIT(A) which is supported by the decision of the Hon'ble Jurisdictional High Court of Delhi [supra]. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). - Decided against revenue.

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• 2021 (9) TMI 590
  Penalty u/s 271(1)(c) - levy of penalty lie in the assessment order framed u/s 153A - Income was not declared in the original return of income filed u/s 139 - addition on account of peak credit balance in HSBC Bank and on account of accrued interest - HELD THAT:- Once income is returned in the return filed u/s 153A of the Act, then the return filed u/s 139 of the Act gets superseded by the return filed u/s 153A of the Act, which means that any initiation of penalty u/s 271(1)(c) of the Act should be based on the assessed income u/s 153A of the Act qua the return filed. In our considered opinion, the returned income u/s 139 of the Act should not be considered in initiating penalty proceedings u/s 271(1)(c) of the Act qua the assessment made u/s 153A - See SHRI NEERAJ JINDAL, SHRI NEERAJ JINDAL, SHRI ANKUR AGGARWAL [ 2017 (2) TMI 1002 - DELHI HIGH COURT] Levy of penalty on deposits made in HSBC account and interest earned thereon - As decided in SHRI KRISHAN LAL MADHOK AND SHRI KRISHAN LAL MADHOK VERSUS THE A.C.I.T. CENTRAL CIRCLE 15 NEW DELHI [ 2021 (8) TMI 119 - ITAT DELHI] we are of the considered opinion that the action of the Assessing Officer defies the taxability of concept of real income. The undisputed fact is that in the alleged sheets of bank deposits received from the French government under DTAC, there is no mention of any interest paid by the bank to the assessee. Therefore, it is illogical to compute interest and that too at the rate prevailing in India - As in case the foundation is removed, the super structure falls. Since the foundation [assessment] has been removed, the super structure i.e. penalty must fall. Accordingly, the penalty is directed to be deleted. - Decided in favour of assessee.

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• 2021 (9) TMI 589
  Accrual of income - Supply of steam free of cost - Estimation of Profit from sale of steam - Addition of notional receipt from supply of steam - assessee why no income has been accounted on the account of sale of steam supplied to SBEC Sugar Ltd. and why rate of steam sold to SSL should not be taken at ₹ 236/- per ton as per earlier years - HELD THAT:- We find that CIT(A) while deciding the issue in favour of the assessee had noted that identical issue arose in assessee's own case in earlier years and the Tribunal has decided the issue in those years in assessee's favour. We also find that identical issue arose in assessee's own case in A.Y. 2014-15. In Revenue's appeal, the Co-ordinate Bench of Tribunal vide order dated 19.03.2021 [ 2021 (3) TMI 936 - ITAT DELHI] and by following the order of the Tribunal [ 2012 (3) TMI 665 - ITAT DELHI] for A.Y. 2007-08 had dismissed the appeal of the Revenue thereby deciding the issue in favour of the assessee.

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• 2021 (9) TMI 588
  Addition u/s 68 r.w.s. 115BBE - assessment framed u/s 143(3) - amount being inheritance from his father by way of will - Burden to prove - necessary ingredients of creditworthiness of the donor and genuineness of the transactions were not proved - HELD THAT:- The assessee filed letter of confirmation from Mr. Mustafa Husain, Dubai who is one of the three sons of late Shri M.F. Husain certifying that the amount was given to the assessee by way of inheritance out of his father estate pursuant to his will. The assessee has discharged the onus cast upon it by filing these evidences before the authorities below and the authorities below have not carried out any further investigation to prove that the facts as placed by the assessee before the Revenue Authorities are unproved or false. The case of the assessee finds support from the decision of Indo-Aden Salt Manufacturing Trading Co. (P) Ltd. Vs CIT [ 1986 (3) TMI 342 - SUPREME COURT] in which it has been held that where the assessee has disclosed primary facts then the burden shifts to the Revenue. In the instant case also the assessee has filed all the necessary evidences before the authorities below. However, no further investigation was carried out - once identity of the person giving the money is established and other evidences are placed before the AO pointing that entry is not fictitious then initial burden lying on the assessee can be said to be fully discharged. Under these circumstances, we are not in agreement with the conclusion drawn by the Ld. CIT(A). - Decided in favour of assessee.

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• 2021 (9) TMI 587
  Penalty u/s 271C - default due to late deposit of TDS - bonafide belief or not - only explanation for non-deduction of tax by the assessee is that the amount paid to M/s. Haryana Ware Housing Corporation was booking advance for the space - HELD THAT:- As stated that under the bonafide belief that no tax is liable to be deducted on such amount, the assessee did not deduct tax. When it came to the notice of the assessee, the entire amount alongwith interest thereon was duly deposited with the Government account. As argued that there is no loss of revenue hence, penalty u/s 271C ought not to have been imposed and sustained by the CIT(A). As argued that the assessee has demonstrated bonafide reason for non-deduction of tax, therefore, authorities below ought not to have imposed the penalty in terms of section 273B - assessee has also placed reliance on Hindustan Coca Cola Beverages Pvt.Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] to buttress the contention where the assessee has deposited tax and interest thereon and disclosed the income in the return of income, no disallowance is called for - as further stated that Haryana Ware Housing Corporation has also disclosed this income and due taxes have already been paid. As coupled with the fact that due taxes alongwith interest thereon, have been deposited in the Government account. This fact is not controverted by the Ld. Departmental Representative - the assessee has demonstrated the bonafide for non-deducting the tax. We, therefore, direct the Assessing Officer to delete the penalty imposed u/s 271C - Appeal decided in favour of assessee.

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• 2021 (9) TMI 579
  Exemption u/s 11 - Rejection of application moved for registration u/s 12AA - Charitable activity u/s 2(15) - whether activities of the assessee society were oriented towards the achievement of its objects of alleviation of poverty and preservation of environment and its operations fall under the limb advancement of other objects of general public utility U/s 2(15)? - HELD THAT:- In the present case, it appears that the ld. CIT(E) while rejecting the application moved by the assessee for registration u/s 12AA of the Act held that there was no expense that has been shown by the assessee which could qualify as utilization for charitable purposes - he had not asked the explanation from the assessee that how and in what manner, its objects were not charitable in nature. On the contrary, the claim of the assessee was that its activities were charitable in nature and its operations fall under the limb advancement of other objects of general public utility as mentioned in Section 2(15) of the Act, the said contention of the assessee was not considered by the ld. CIT(E) in right perspective - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 578
  Estimation of income - Bogus purchases - HELD THAT:- For estimation of the gross profit on the alleged bogus purchases we restrict the addition at the rate of 10% - Decided partly in favour of assessee.

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• 2021 (9) TMI 577
  Payment of expenses in Cash over the specified limit - Disallowance u/s 40A(3) in respect of deduction claimed by the assessee u/s 35DDA(1) read with section Rule 6DD of the Income Tax Rule, 1962 - genuine business expediency - prolonged labour strike - cash payment under the VSS scheme - HELD THAT:- As per the submission of the assessee, since the labour was on strike and there was a settlement arrived between the assessee-company and the labourers under which the part payment of their VSS benefits were made in cash out of compulsion so that the operation of the factory may be resumed. Hon'ble Supreme Court in the case of Attar Singh Gurmukh Singh vs. Income Tax Officer Ludhiana Etc. [ 1991 (8) TMI 5 - SUPREME COURT] has held that the Rule 6DD which provides for exceptions u/s 40A(3) of the Act against applicability of sec. 40A(3) of the Act, is not exhaustive enough to visualize all kinds of business expediency in all possible situations and it is for the appropriate authority to decide regarding genuine business expediency. As further held that rule must be interpreted in a manner so as to advance and not to frustrate the object of the legislature. That primary object of enacting Section 40A(3) of the Act was two folds. Firstly, putting a check on treating transactions with a mind to evade the liability to tax on income earned out of such transactions and secondly, to inculcate the banking habits amongst the business community. That the genuineness of the transaction and it being free from vice of any device of evasion of tax is relevant consideration which could be examined before invoking rigours of Section 40A(3) of the Act. The above stated legal position is fully applicable in the facts of the present case. There is no doubt about the genuineness of the transactions. Payments to the employees / labourers were made out of compulsions by the assessee. Therefore, we are of the view this is not a fit case of to apply rigours of section 40A(3) of the Act. The disallowance made by the lower authorities is, therefore, deleted. - Decided in favour of assessee.

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• 2021 (9) TMI 573
  Computation of deduction u/s 10A - Tribunal excluding the freight and insurance expenses both from the Export turnover and also from the Total turnover while computing deduction u/s 10A - HELD THAT:- As decided in M/S. CHENGEPOND TECHNOLOGIES PVT. LTD. [ 2021 (8) TMI 567 - MADRAS HIGH COURT] if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software u/s 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. Even in the common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well - expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover - Decided against the Revenue.

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• Customs

• 2021 (9) TMI 617
  Refund of IGST with interest - goods exported by the Petitioners during the Transitional Period - Vires of Paragraph 11(d) read with 12A(a) (ii) of the Notes and Conditions of the Notification No.131/2016-Cus. (N.T.) dated 31.10.2016 (Annexure P-3) [as amended by Notification No.59/2017-Cus. (NT) dated 29.06.2017 (Annexure P4) and Notification No.73/2017-Cus. (NT) 26.07.2017 (Annexure P5)] - vires of Circular No.37/2018-CUSTOMS dated 09.10.2018 - duty drawback - HELD THAT:- The issue decided in the case of TMA INTERNATIONAL PVT. LTD. ORS. VERSUS UNION OF INDIA ANR. [ 2021 (4) TMI 230 - DELHI HIGH COURT ] where it was held that While granting refund to the petitioners, the petitioners will be granted interest at the rate of 7% simple, from the date, when the shipping bills were filed by them, till the date of actual refund, which, in this case, ought not to go beyond 26.04.2021. The respondents are directed to carry out a verification exercise of the claim made by the petitioners within 12 weeks from today and submit a report to this Court. The petitioners shall be at liberty to file the relevant documents as may be called for by the jurisdictional authority in support of its claim. In case the respondents find the claim of the petitioners to be correct, the refund shall be processed by the respondents without awaiting further orders from this Court in accordance with law. List for reporting compliance on 10th January, 2022.

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• 2021 (9) TMI 611
  Clearance of goods as stock transfers for self-consumption - seeking forbearance on respondents, their servants, agents and subordinated from carrying out any assessment in contravention with 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:- The fact remains that by referring to the Advance Ruling and the Circulars issued by the Department / CBEC, an order was passed on 03.02.2014 and challenging the said order passed, another writ petition in W.P.No.4156 of 2014 was filed. The writ petitioner has challenged both the Circular as well as the orders passed by the respondents and therefore, the relief as such sought for in GE India Industrial Private Limited Versus The Union of India, The Central Board of Excise and Customs, The Commissioner of Customs Central Excise, The Specified Officer, J Matadee Free Trade Zone, The Authorized Officer, Tamil Nadu [ 2021 (9) TMI 553 - MADRAS HIGH COURT ] cannot be considered. Petition disposed off.

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• 2021 (9) TMI 609
  Maintainability of petition - availability of alternative remedy of appeal - Seeking release of seized vehicle provisionally - Toyota Fortuner - HELD THAT:- The affidavit-in-reply filed by the respondent No.3, in paragraph Nos. 5.7.3 and 5.8, on page-253, clearly states that the petitioner has an efficacious remedy of getting the impugned vehicle provisionally released by making an application to the adjudicating authority i.e. the Additional Director General (Adjudication), DRI, Mumbai, office at New Customs House, Ballard Estate, Mumbai. This petition is disposed off with a direction to the newly added respondent No.4 i.e. the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai, New Customs House, Ballard Estate, Mumbai, to consider and decide the application for provisional release which may be moved by the petitioner along with a certified copy of this order within a period of four weeks from the date of receipt of such application in accordance to law.

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• 2021 (9) TMI 608
  Maintainability of petition - SCN issued without prejudice to any other action that may be taken against the noticee and the petitioner was provided with an opportunity - petitioner instead of defending the case, has chosen to file the present writ petitions - HELD THAT:- No writ is entertainable against the show-cause notice in a routine manner. A writ against the show-cause notice may be entertained, if such notices are issued by an incompetent Authority, having no jurisdiction directly in violation of any of the statutory provisions. If an allegation of malafides are raised, then also a writ may be entertained, provided the authority against whom such an allegation of malafides are raised, if impleaded as a party respondent in his personal capacity in the writ proceedings - the noticee is bound to respond to the show-cause notice and the Authority Competent is bound to adjudicate the merits in accordance with law and take a decision and pass orders. The petitioner made a submission that the petitioner has paid the entire Customs Duty including the interest. In view of the fact that the petitioner has already deposited the entire demand of Customs of Duty, the case is to be adjudicated on merits and in accordance with law. The petitioner is at liberty to submit its objections, defense statements, documents, evidences etc., to the respondents, within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2021 (9) TMI 607
  SAD Refund - Validity of Condition No.2(b) of Notification 102/2007-Customs dated 14.09.2007 - seeking to consider petitioner's refund claim in File No.S24/SAD/2219/12-REFUNDS without applying the aforesaid condition - HELD THAT:- The issues are to be reconsidered by the 4th respondent / original authority. The matter is remitted back to the 4th respondent for fresh consideration. Accordingly, the 4th respondent is directed to reconsider the issues raised by the petitioner afresh on merits and in accordance with law and by affording opportunity to the writ petitioner, take a decision and pass orders as expeditiously as possible - Petition allowed by way of remand.

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• 2021 (9) TMI 592
  Condonation of delay in filing application - delay on the ground that the impugned order was not served upon the appellant and that it is lying in the file of the Department after the envelope was returned by the postal authorities - Revocation of Customs Brokers License - HELD THAT:- Under section 129A(3) of the Customs Act 1962 [Customs Act ], every appeal has to be filed within three months from the date on which the order sought to be appealed against is communicated to the party preferring the appeal. It was, therefore, imperative for the appellant to have specifically stated the date on which the order was communicated to the appellant. Even in the short synopsis filed by the appellant at the time of hearing of the delay condonation application, the appellant has not disclosed the date on which the order was communicated to him and all that has been stated is that he was given a photocopy of the impugned order much after he had handed over the application dated August 17, 2016 to the concerned official. Even otherwise, it is evident from the said application that the appellant was aware on August 17, 2016 that an order had been passed on March 15, 2016 by the Commissioner after the personal hearing was conducted on March 8, 2016. Thus, when the appellant, even according to his own statement, was aware that an order had been passed on March 15, 2016, then the appellant should have taken immediate steps to obtain the order so that the appeal could be filed within the three months from the said date, but as it transpires the appeal was actually filed on October 25, 2019 after a period of almost three years and two months. It is apparent that the appellant was not interested in pursuaning the matter and infact it was only in 2019, and that too after the period for which the licence was granted expired on November 10, 2017, that this appeal was presented. The request made by the learned Counsel appearing for the appellant for inspection of the records produced by the Department was not accepted for the reason that the learned Counsel for the appellant wanted to conduct a roving enquiry - it has been found that the file does not contain the original order sent to the appellant. It is for the appellant to explain the delay in filing the appeal on the basis of facts which are in his knowledge. The delay condonation application, therefore, deserves to be rejected as the appellant has not been able to satisfy that the appellant was prevented by sufficient cause from filing the appeal within the stipulated time. It is, accordingly, rejected - appeal dismissed.

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• 2021 (9) TMI 585
  Refund of excess basic customs duty - Refund rejected on the ground of time limitation - Exercise of Power of Commissioner (appeals) to condone the delay - appeal filed within the period of 30 days over and above the initial period of 60 days - HELD THAT:- The Commissioner (Appeals) has taken a hyper-technical approach as far as the pleas of limitation are concerned. He has failed to exercise the discretion provided to him under the statute. Mentioning of unavoidable circumstance is opined to be a sufficient reason for not meeting the time limit in filing the appeal which is otherwise within the scope of condonable limit. Law has been settled that adjudication on merits has to be preferred instead of rejecting on the technical issues as that of time, unless and until there is an apparent delay that too either with malafide intent or negligence or lack of due diligence. In the present case, none of the circumstances are apparent. Reliance placed in the case of MULLAJI PRINTS P. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS, SURAT [ 2003 (11) TMI 431 - CESTAT, MUMBAI] wherein it has been held that when the contention of appellants is such that they got a good case on merits non-condonation of delay may result in injustice to them. Otherwise also learned Apex Court has always taken liberal view in condoning delay. Present is a fit case where learned Commissioner (Appeals) could have exercised the discretion provided to him under the statute - the appeal stands allowed by way of remand.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 584
  Maintainability of application - initiation of CIRP - Personal Guarantor to the Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is pertinent to mention that as per part-III of Form-C, the total debt from the personal Guarantor, by way of personal Guarantee given to M/s. Hitech Grain Processing Pvt. Ltd., including the rate of interest as on 31.08.2020, amounts to ₹ 209,61,09,614/- - this Tribunal heard the arguments advanced by the Ld. counsel for the Applicant and perused the averments made in the application as well as the documents enclosed with the application. Further, the Respondent has not filed any submissions and on the date of hearing there was no representation from the side of the Respondent i.e., the Personal Guarantor. Based on the documents produced and placed on record before this Tribunal and on the submissions made by the Applicant, it can be concluded that there is a 'default' on the part of the Personal Guarantor, by not fulfilling the debt owed to the Corporate Debtor, i.e., M/s. Hitech Grain Processing Pvt. Ltd. as per the Deed of Guarantee entered between the parties through the Deed of Guarantee dated 06.06.2017. The Tribunal Allows the Present Application filed by Mr. S.V. Saravanan, Authorized Person on behalf of State Bank of India, the Financial Creditor, under Section 95 of the Insolvency Bankruptcy Code, 2016 read with Rule 7 of the IBC Rules 2019, against Mrs. Asha Mittal, the Personal Guarantor of the Corporate Debtor, (M/s. Hitech Grain processing Pvt. Ltd.). The Interim Moratorium as per Section 96(1) of the Code has commenced from the date of filing of Application by the Financial Creditor, i.e., 14.07.2021. Application admitted - moratorium declared - List the matter for further proceedings in the case on 09.09.2021.

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• 2021 (9) TMI 583
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to repay the dues despite receiving Demand Notice, nor replied to the notice, nor repay the outstanding amount - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Corporate Debtor Mr. Vinod Sharma has admitted the existence of debt and default and in view of the above correspondence the debt and default in this case is establish and the above company petition is liable to be admitted. The petitioner also suggested the name Mr. Manish Motilal Jaju as Interim Resolution Professional and enclosed the consent letter given by the proposed IRP in Form-2. The above company petition is complete in all respects. Time Limitation - HELD THAT:- The present petition is filed on 15.06.2021, and the amount is less than ₹ 1 crore. But the default occurred on 01.12.2019, hence Section 10A will not affect the present petition from getting admitted. This tribunal is of the considered opinion that the company petition is liable to be admitted - Petition admitted - moratorium declared.

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• 2021 (9) TMI 581
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - Operational Debt in terms of Section 5(21) of IBC, 2016 - any dispute exists between the parties that exist before the issuance of the Demand Notice by the Operational Creditor - foreign Award has become legal enforceable in India or not. Whether the debt of the Petitioner qualify to be an operational debt in terms of Section 5(21) of IBC, 2016 and as such the Petitioner would qualify to be an Operational Creditor in respect of the Corporate Debtor under the provisions of the IBC, 2016? - HELD THAT:- As to the facts of the present case, the right to claim money from the Corporate Debtor emanates from a SPA dated 19.09.2012, pursuant to which the Corporate Debtor had acquired the shares from the Operational Creditor. The transaction as transpired between the parties could have been treated as an 'operational debt' had it occurred in the 'ordinary course of business' of trading in shares by one seller and another purchaser, in which context the expression 'shares' would partake the characteristics of 'goods' as envisaged under the Sale of Goods Act, 1930. However, it is not so in the present case and the parties to the present proceedings are governed by a 'Share Purchase Agreement', and non - adherence/violation of the said terms and conditions envisaged thereunder, cannot be, under any circumstances, be treated as a claim in respect of the 'provision of goods' as defined under Section 5(21) of IBC, 2016 - the alleged 'debt' as claimed by the Operational Creditor in the present Application does not fall within the definition of the expression 'operational debt' as defined under Section 5(21) of the IBC, 2016. Whether there is any dispute exists between the parties that exist before the issuance of the Demand Notice by the Operational Creditor - HELD THAT:- There exists a 'dispute' between the parties before the issuance of the Demand Notice itself and the defence raised by the Corporate Debtor on the grounds of existence of a dispute cannot be considered as spurious, hypothetical, illusory or misconceived. Further this Tribunal in exercise of summary jurisdiction cannot adjudicate upon the dispute between the parties. Whether the Award passed by the Arbitral Tribunal, which is a foreign Award has become legal enforceable in India and if so what would be the consequences? - HELD THAT:- The Supreme Court in the matter of GOVERNMENT OF INDIA VERSUS VEDANTA LIMITED AND ORS. [ 2020 (9) TMI 1178 - SUPREME COURT ] has held that a petition for enforcement and execution of a foreign award by way of a petition is required to be filed under Section 47 and a foreign award does not become a decree until and unless it passes the muster of Section 47 to 49, only after which it acquires the status of a decree. Only after the Court adjudicates on the enforceability of the foreign award under Section 47 to 49, the foreign award would deem to be a decree of the Court - However, in relation to the enforcement of 'Domestic' award that is not the case; in respect of the 'Foreign' Award, a further declaration is required to be made in respect of its enforcement and admittedly the award in the present case is yet to be enforceable under Section 47 to 49 of the Act, 1996. While this being the fact, and also by taking into consideration the divergent views expressed in this regard by NCLT Hyderabad Bench and Bombay Bench, this Tribunal does not wish to render its finding in relation to the said Issue. Issue decided in favour of the Corporate Debtor and against the Operational Creditor and that there exists dispute between the parties and also the 'debt' as claimed in the Application does not partake to the character of an operational debt - application dismissed.

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• 2021 (9) TMI 580
  Acceptance of after expiry of EMD Deposit Date - postponing the relevant dates of Auction, by way of the impugned corrigendum - violative of procedures/fairness/sanctity attached with Auction Process or not - HELD THAT:- The IBBI - the Respondent no. 3 is not the necessary party and therefore, directed the Applicant to delete the name of the IBBI from the Memo of Parties to the application. Further, the Applicant has submitted that Respondent no. 3 may be directed to nominate the Liquidator. Since it is already observed through our Order dated 15th February 2021 that the IBBI is not a necessary party in the proceedings, therefore, we are not inclined to give any directions to the IBBI as prayed at Sl. No. vii x of the prayers. Hence, the prayers of the Applicant are not liable to be accepted. The application is Dismissed being infructuous.

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• Service Tax

• 2021 (9) TMI 618
  Levy of Service Tax on the services by way of transportation of goods by a vessel from a place outside India upto the customs station for clearance in India - POPOS Rules - Validity of N/N. 22/2014-ST dated 16 th September, 2014 - Vires of Article 14 of the Constitution of India and Rule 3 of the Service Tax Rules, 1994 or not - HELD THAT:- Issue notice. Learned counsel for the respondents accept notice. They pray for and are permitted to file their counter-affidavits within two weeks. Rejoinder-affidavits, if any, be filed before the next date of hearing. List on 30 th September, 2021.

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• 2021 (9) TMI 605
  Levy of interest and penalty - Utilisation of ineligible credit - capital goods like angles, beams, channels, etc., used in erection of towers/pre-fabricated buildings/shelters - excess availment of credit on capital goods taken in excess of 50% - period from September 2004 to December 2007 - invocation of extended period of limitation. CENVAT Credit - capital goods - angles, beams, channels, tower/tower materials and pre-fabricated shelters - items fall under rule 2(a) of the Credit Rules or not - denial also on the ground that they do not qualify as accessories or components - HELD THAT:- The two conflicting views have been expressed by the Delhi High Court in Vodafone Mobile Services [ 2018 (11) TMI 713 - DELHI HIGH COURT] and the Bombay High Court in Bharti Airtel Ltd. [ 2014 (9) TMI 38 - BOMBAY HIGH COURT] . It, therefore, needs to examined as to which of these two decisions should be relied upon in this appeal, which is being decided by the Bangalore Bench of the Tribunal. In the present case, the judgment of the Bombay High Court rendered in Bharti Airtel was considered by the Delhi High Court in Vodafone Mobile Services and it was distinguished as is clear from paragraph 48 of the judgment having held that [ 2018 (11) TMI 713 - DELHI HIGH COURT] It is, therefore, considerd appropriate to follow the decision of the Delhi High Court in Vodafone Mobile Services. The appellant would, therefore, be entitled to claim CENVAT credit on tower/tower materials and pre-fabricated buildings/shelters. Correct availment CENVAT credit on capital goods - whether the appellant had utilized more than 50% of the credit on capital goods during the Financial Year 2005- 2006 because if the appellant had not utilised more than 50% of the credit on capital goods , it would not be liable to pay interest or penalty? - HELD THAT:- This issue was decided in favour of the appellant in Satish Industries [ 2012 (9) TMI 383 - BOMBAY HIGH COURT] where it was held that If the credit of the subsequent financial year wrongfully taken in the initial financial year if not utilized till the commencement of the subsequent financial year, then no prejudice is caused to the Revenue and the decision of the Tribunal deserves acceptance. In view of the specific finding recorded by the Commissioner in the impugned order that though the appellant had taken credit of ₹ 13,60,54,686/- during the year 2005-2006, but the appellant had utilized only half the amount i.e. ₹ 6,80,27,343/-, the appellant would not be liable to pay interest or penalty on the balance amount since it was not utilised by the appellant, in view of the aforesaid two decisions of the Bombay High Court and the Karnataka High Court in Satish Industries and Bill Forge Pvt. Ltd. [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] . Invocation of Extended Period - HELD THAT:- In the instant case, the period of dispute is from September 2004 to December 2007. The show cause notice was issued on 14.05.2008. The period from April 2007 to December 2007 would fall within the normal period, while that from September 2004 to March 2007 would fall beyond the normal period contemplated under section 73(1) of the Finance Act - in view of the fact that the issue as to whether credit could be taken or not was ultimately resolved by a Larger Bench of the Tribunal, the extended period of limitation could not have been invoked by the Department. The confirmation of demand for the period prior to March 2007, therefore, cannot also be sustained for this additional reason. Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 604
  Levy of service tax - stock broker service or not - NSE/BSE transaction charges - SEBI turnover fees paid by the stock brokers to the concerned agencies and recovered from their client - HELD THAT:- This issue is no longer res- integra as this tribunal decided this issue in the case of M/S KUNVARJI FINSTOCK PVT LTD VERSUS C.S.T. -SERVICE TAX AHMEDABAD [ 2018 (12) TMI 344 - CESTAT AHMEDABAD] where it was held that the charges realized by appellants were not being of commission or brokerage are not taxable and shall not form part of gross value of taxable service. Thus, the issue stands settled in favour of the assessee. Accordingly, NSE/BSE transaction charges and SEBI turnover fees is not liable to service tax under head of stock broker service - appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 601
  Condonation of delay of 9 years and 222 days in filing the appeal - appellant had not received copy of the impugned order and that they came to know about the order only after receiving a letter with regard to Sabka Vishwas Scheme on 20.12.2019 - HELD THAT:- Undisputedly, the appellant through his Consultant has appeared for the personal hearing on 23.3.2010. The appellant has thereafter apparently abandoned the litigation and has not pursued the same. Although, it is stated in the application that they did not receive the order, later when the documents were produced by the Department to evidence the service of the impugned order, the appellant has taken a U-turn by filing an affidavit on 25.8.2021. In the affidavit, it is stated that the order must have been served on some staff of the appellant firm. This fact that appellant filed appeals against the orders passed upon Show Cause Notices issued for subsequent periods was taken up as a major ground to canvass that there was no mala fide on the part of the appellant - We fail to understand why the appellant chose to sleep over the order impugned in this appeal/application. Even if there be oversight/omission, the delay cannot be so huge when they attended the personal hearing. There is deliberate inaction which does not befit normal human conduct. When it is established that the impugned order is served, the appellant has to set forth sufficient cause for not filing the appeal within time. There is huge delay in filing these appeals, especially when they have attended the personal hearing. The appellant has not made out sufficient cause for condoning the delay - COD application dismissed.

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• 2021 (9) TMI 582
  Refund of the amount of tax with interest paid - Ocean Freight Charges - double taxation - Reverse charge mechanism - HELD THAT:- The transaction value for Custom duty and Excise duty (CVD), includes the ocean freight, and accordingly it is held that the appellant has suffered the double taxation, by again paying the service tax on the ocean freight as demanded by the Revenue. The appellant is entitled to refund of service tax amounting to ₹ 3,51,199/- plus the amount of interest deposited ₹ 41,599/-, and /or the total the amount of ₹ 3,92,798/-. This amount should be refunded to the appellant within a period of 45 days alongwith interest as per the provisions of Section 11BB of the Central Excise Act - Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 572
  Condonation of delay of 335 days in filing the appeal - reasonable explanation provided or not - failure on the part of the receipt clerk in placing the envelope sent by speed post before the officer concerned - HELD THAT:- It transpires in the present case that as soon as the copy of the order was provided by the Department to the appellant on 09.07.2020, the appeal was filed on 20.08.2020. In the present case, it is seen that though the appellant had sent letters to the department on 08.01.2020 and 02.03.2020 to provide a copy of the order but it was provided only on 09.07.2020. The records indicate that when the order was received from the department on 09.07.2020, the appeal was filed in less than two months on 20.08.2020 - the averments made in the delay condonation application and the submissions advanced by learned Counsel for the appellant satisfies that the appellant has satisfactorily explained the reasons for not filing the appeal within the stipulated time. The delay having been satisfactorily explained, needs to be condoned and the application is allowed.

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• Central Excise

• 2021 (9) TMI 586
  Levy of penalty u/s 11AC - Wrongful availment of CENVAT Credit - input services - rent a cab operator service - contribution of employee recovered by the appellant - Suppression of facts or not - HELD THAT:- Under section 11AC penalty can be imposed only when the demand is confirmed invoking proviso to section 11A (1). In this case though the demand was confirmed invoking proviso to section 11A (1) and the appellant has not contested the said demand and they have paid the same along with interest. However, they are contesting the imposition of penalty on the ground that there is no ingredients existing as to the facts of this case whereby the proviso to section 11A (1) can be invoked. It is a settled law that when there is a doubt and difference of views on issue and subsequently it is settled by any court of law, the suppression or intention to evade the duty cannot be alleged in such cases. Even though the extended period was not invokable in the facts of the present case. The appellant have paid the said amount along with interest, which is not under contest - since there is no suppression of fact or misdeclaration, fraud or intent to evade duty on the part of the appellant, the penalty under section 11AC cannot be invoked. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2021 (9) TMI 613
  Recovery of Tax dues - First charge - Section 77 of the U.P. VAT Act - Overriding effect of IBC - Sovereign power of the State to enable the State to raise money by taxation for adequate revenue - liability of an assessee/ dealer under the U.P. VAT Act and the U.P. Tax on Entry of Goods into the Local Areas Act, 2007 - HELD THAT:- The definition of the word charge in IBC shall relate to the subject matter of the IBC which cannot be read or borrowed for interpreting Section 77 of the U.P. VAT Act. Section 77 of the U.P. VAT Act, cannot be said to be referable to any of the entries of List-III Concurrent List. Overriding effect of IBC - HELD THAT:- The provisions of Section 238 of the IBC cannot be read as overriding the provisions of the U.P. VAT Act including Section 77. Liability of an assessee/ dealer under the U.P. VAT Act and the U.P. Tax on Entry of Goods into the Local Areas Act, 2007 - HELD THAT:- Assessment followed by demand notice crystallises the liability of an assessee/ dealer under the U.P. VAT Act and the U.P. Tax on Entry of Goods into the Local Areas Act, 2007. Most of the demands against the petitioner is subsequent to the effective date, i.e. 15.05.2018 when the adjudicating authority passed the order under Section 31 of the IBC. Therefore, for the purposes of the present case, the relevant date would be when the assessment orders were passed followed by demand notice and not the taxable even - when the interim orders were discharged, the right of the State to recover the amount has accrued. Put up tomorrow at 2 P.M. for further hearing, along with connected writ petitions.

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