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TMI Tax Updates - e-Newsletter
September 15, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Customs
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76/2022 - dated
14-9-2022
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Cus (NT)
Manner to issue duty credit for goods exported under the continuation of Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) - Seeks to amend Notification No. 77/2021-Customs (N.T.), dated the 24th September, 2021
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75/2022 - dated
14-9-2022
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Cus (NT)
Manner to issue duty credit for goods exported under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) Notified - Seeks to amend Notification No. 76/2021-Customs (N.T.), dated the 23rd September, 2021
DGFT
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32/2015-2020 - dated
14-9-2022
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FTP
Amendment in Import Policy Condition under Chapter 39 of ITC (HS), 2022, Schedule - I (Import Policy)
GST - States
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S.O. No. 33 - dated
26-8-2022
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Jharkhand SGST
Standard Operating Procedure (SOP)/Directive for post-GST payments of pending bills related to work orders issued during pre-GST period.
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GST-1022/C.R.38/Taxation-1 - dated
13-9-2022
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Maharashtra SGST
Amendment in Notification No. MGST.1017/C.R.193/Taxation-1, dated 24th October 2017
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S.O. 58/P.A.5/2017/S.172/2022 - dated
22-6-2022
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Punjab SGST
Punjab Goods and Services Tax (Eighth Removal of Difficulties) Order, 2022
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S.O. 56/P.A.5/2017/S.172/2022 - dated
22-6-2022
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Punjab SGST
Punjab Goods and Services Tax (Sixth Removal of Difficulties) Order, 2022
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S.O. 55/P.A.5/2017/S.172/2022 - dated
22-6-2022
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Punjab SGST
Punjab Goods and Services Tax (Fifth Removal of Difficulties) Order, 2022
IBC
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IBBI/2022-23/GN/REG092 - dated
13-9-2022
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IBC
Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2022
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IBBI/2022-23/GN/REG091 - dated
13-9-2022
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IBC
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2022
Law of Competition
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A-12015/01/2022-HR/CCI - dated
12-9-2022
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Competition Law
Competition Commission of India (Procedure for Engagement of Experts and Professionals) Amendment Regulations, 2022
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking release of detained goods - Option available to transporter - While the owner or any person transporting the goods has been granted the right to seek release, only a limited benefit has been made available to a transporter, and that too, qua the release of conveyance alone - the transporter may seek release of only the conveyance, upon satisfaction of the statutory conditions. - HC
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Refund of tax paid - export of services - barred by time limitation or not - relevant date - Notification dated 05.07.2022 clearly postulates that the period from 1st March, 2020 to 28th February, 2022, for computation of period of limitation for filing refund application under Section 54 or Section 55 of the said Act shall stand excluded. - HC
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Exemption from GST - services provided to Uttar Pradesh Jal Nigam - As the UPJN does not qualify as a local authority and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services provided to UPJN - AAR
Income Tax
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Penalty u/s. 271(1)(c) - difference between the returned income (loss) and income(loss) as per computation - the claim made by the Assessee as bona fide and therefore cannot be termed as dishonest or mala fide, hence we are of the considered view that in facts and circumstances and the documents available on record as stated above, no penalty is leviable - AT
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Disallowance u/s 14A r.w.r 8D - AO observed that exempt income cannot be earned without making any expenses - the assessee has only tried to explain that no expense was incurred qua interest from tax free bonds and dividend income. However, nowhere explained as to how the long-term capital gains was earned. - AT
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Validity of revised return filed vis-a-vis claims made thereunder - revised return treated as non-est - the appellant filed his original return otherwise than u/s 139(1) or 142(1), the revised return filed u/s 139(5) of the Act became non-est in the eyes of law, consequently the claim of capital loss made by the appellant in his revised return. - AT
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TP adjustment - upward adjustment in imputing notional interest on the outstanding overdue receivables from Associated Enterprises - working capital adjustments on the ALP has been already factored in its pricing / profitability vis-à-vis that of its comparables - any further adjustment to the margin of the assessee on the outstanding receivables cannot be justified and no separate upward adjustment on outstanding export receivables is required - AT
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Unaccounted cash payments / expenditure - unaccounted cash receipts from patients - Addition u/s 69C - levy of tax u/s 115BBE at higher rate of tax - proof of source of income - the assessee is in the business of running a diagnostic centre and the only source of income is the receipts from patients which is stated to be the source for unexplained expenditure - Additions deleted - AT
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Exemption u/s 11 - Application of income - amount is shown under the heading “sundry debtors” but no capital expenditure was incurred as stated by the assessee - since the assessee has neither expended the money during the relevant assessment year nor filed Form-10 within the due date prescribed U/s. 139(1) of the Act, the exemption claimed by the assessee is not valid in law - AT
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Addition of income from other sources u/s 69A - Assessee was found in possession of loose slips - appellant was not found to be owner of any money, Bullion or Jewellery etc. - assessee challenged addition as made on assumption and presumption - CIT(A) was not justified in confirming the addition ignoring the affidavit and rebuttal in violation of principles of natural justice. - AT
Customs
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Classification of imported goods - Wireless Access Points [WAP] - Imported WAP is a networking equipment working in LAN connecting Wi-fi enabled devices such as laptops, smartphones, tablets, etc. to a wired network. Thus also, imported WAP is entitled to the exemption from the whole of the customs duties under the ITA. - WAP imported by the appellant works on technology and does not support LTE standard. Ingram Micro was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification - AT
IBC
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Jurisdiction - State Government is the appropriate Government under the scheme of the industrial Disputes Act or not - scope of Ministry of Commerce and Industry, Government of India - whether Rubber Wood India Private Limited, first petitioner in the second petition, can be said to be controlled and managed by the Central Government or not? - Held Yes - HC
Central Excise
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Levy of penalty - Invalid certificate issued by the W.B. Handloom & Powerloom Development - The adjudicating authority held that the certificates declaring that the yarn is going to be used only on handlooms as issued by the respondent and the other apex society are not based on factual verification but only based upon the certificate issued by the spinning mill concerned. - Tribunal is not justified in deleting the penalty - HC
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Area Based exemption - manufacture - The contention of the revenue is not acceptable, that the only change brought about by the appellant when the colouring matter is mixed to a solvent is to reduce the viscosity and this would not amount to manufacture. It cannot also be accepted that when the resultant product achieves superior quality, a new product marketable to the consumers as nail enamel does not come into existence as in the present case it has been found as a fact that a new marketable product comes into existence- AT
Case Laws:
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GST
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2022 (9) TMI 609
Cancellation of registration of petitioner - time limitation - no date of hearing has been fixed by the show cause notice issued for cancellation of registration and registration - cancellation of ex-parte order - principles of natural justice - HELD THAT:- Reliance placed in the case of M/S SINGH GROUP VERSUS STATE OF U.P. AND 2 OTHERS [ 2022 (8) TMI 97 - ALLAHABAD HIGH COURT] where it was held that Once the Government exercised its powers and reached a satisfaction (that there were defects on the common portal with respect to service of orders) and, provided relaxation of limitation, by suspending the period of limitation with respect to orders passed up to 12 June, 2020 and placed the date of any order passed up to that date, to be 31.08.2020 (on deemed basis) and further since the Government Notification dated 29.08.2021 suspended the period of limitation to file revocation applications for the period 01.03.2020 to 31.08.2021, it may never have been said that such an application if filed by the petitioner within the extended period of limitation, on 18.09.2021, would have been beyond time. The Appellate Authority has clearly erred in rejecting the appeal as time barred, the order dated 27.5.2022 is set aside and the matter is remitted to Appellate Authority to pass a fresh order strictly in accordance with law treating the appeal filed by the petitioner within limitation - petition allowed.
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2022 (9) TMI 608
Rejection of refund alongwith interest - works contract services - whether the request of the Petitioner was accepted or not? - HELD THAT:- The Writ Petitions are allowed setting aside the impugned Order, dated 28.05.2022, and the matters are remanded back to the Assistant Commissioner [State Tax] (1st Respondent herein) to deal with the same afresh after accepting the applications filed by the Petitioner in the month of January 2020, for refund of excess balance in the Electronic Cash Ledger, in accordance with law, by giving an opportunity of hearing to the Petitioner, preferably within a period of six [06] weeks from the date of receipt of the Order. No order as to costs.
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2022 (9) TMI 607
Seeking grant of bail - availment of wrong input tax credit - issuance of invoices without actual outward supply of any material - violation of provisions of Section 16 (2) (C) of Central and State Goods and Service Tax Act, 2017 - HELD THAT:- Keeping in view the fact that there is an allegation of evasion of taxes in which maximum punishment which can be imposed upon the applicant is imprisonment of one year, that the other allegations are based on the principle allegation of wrongfully claiming I.T.C. for which the maximum punishment is imprisonment for upto one year, whereas the applicant is languishing in jail for more than one year and also considering the fact that the applicant has no criminal history, it is opined that the applicant is entitled to be released on bail. The instant bail application is allowed.
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2022 (9) TMI 606
Validity of SCN - Jurisdiction - issuance of intimation prior to issuance of show cause notice to an assessee by the Proper Officer - opportunity of hearing not granted - it is alleged that the respondent-authority treated the information/intimation under Section 74 (5) of the Act to be show cause notice which is not legal - violation of principles of natural justice - HELD THAT:- It appears that admittedly; no opportunity of personal hearing has been granted to the petitioner and he was also not given the relied upon documents. In the instant case on 25.02.2020 DRC-01 A (intimation of tax) DRC-02 (Summary of Statement) and intimation of liability under Section 74 (5) of the Act was issued on the same date i.e. 25.02.2020, thereafter, on 04.06.2020 summary of show cause notice in the form of DRC-01 along with show cause notice was issued, fixing the date as 03.07.2020 for filing reply and thereafter, without giving any opportunity of hearing and without fixing any date for hearing adjudication order has been passed on 06.07.2020 - Here lies the lacuna committed by the respondents in non-compliance of the statutory provisions of the JGST Act and also the settled principles of natural justice. Admittedly; prior to passing of adjudication order, no notice of personal hearing as required under Section 75 (4) and 75 (5) was given to the petitioner which is against the provision of law. Since opportunity of personal hearing was not given to the petitioner; interest of justice demands that the matter should be remitted back to the authority for compliance of the necessary provision of the Act - Petition allowed by way of remand.
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2022 (9) TMI 605
Seeking release of detained goods - case of the petitioner is that the benefit granted to the owner of the goods to seek release of the detained goods on payment of penalty or furnishing of security, would be equally applicable to the case of a transporter as well - Section 129(6) of CGST Act - HELD THAT:- Section 129(1) specifically addresses any person transporting any goods or storing any goods. This aligns with the use of the phraseology, person transporting any goods or the owner of such goods that is used in sub-Section 6 - the entitlement to seek release under Section 129 is only qua the owner/agent/representative of the owner. This interpretation is supported by the language used in the first proviso that specifically uses the term 'transporter' and states that such transporter may seek release of the conveyance on payment of penalty or of a sum of Rs.1,00,000/- whichever was less. The legislature has been conscious of the roles of the various persons involved in a transaction of carriage of goods such as the consignor/agents/representatives, the consignee/purchasers and transporter. The entitlement to seek release has also been carefully and consciously sculpted. While the owner or any person transporting the goods has been granted the right to seek release, only a limited benefit has been made available to a transporter, and that too, qua the release of conveyance alone - the transporter may seek release of only the conveyance, upon satisfaction of the statutory conditions. The petitioners are permitted to file appeals accompanied by applications seeking release of the goods. Upon receipt of such appeals/petitions seeking interim release, the appellate authority shall hear the petitioners and pass orders in regard to the interim applications within a period of one week. Upon payment of the 25%, the seized goods become liable to be released automatically? - HELD THAT:- There is consensus on the position that this would not be the correct position and that the question of release, is one that will have to be decided by the appellate authority upon the strength of the case made out by the asessees including, but not limited to prima facie case, financial stringency and balance of convenience. Petition disposed off.
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2022 (9) TMI 604
Refund of tax paid - export of services - barred by time limitation or not - relevant date - Section 54 of the Central Goods and Services Tax Act, 2017 [CGST] and Andhra Pradesh State Goods and Services Tax Act, 2017 - Applicability of Circular dated 20.07.2021 - HELD THAT:- A perusal of the material on record would show that the refund application came to be made by the petitioner was on 22.09.2021, for the Tax period May, 2018 to May, 2019. Though, learned Government Pleader would contend that the said application came to be made beyond the period of two years, but the learned counsel for the petitioner would submit that, a reading of the Clause 2 to the Explanation to Section 54 of the CGST Act, show the relevant date is prescribed only for goods exported out of India, but, there is no provision determining the relevant date in respect of the supplies to SEZ units, which are considered as zero-rated sales under Section 16 of the Integrated Goods and Services Tax Act, 2017. It would be relevant to note that the recent Notification issued by Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, dated 05.07.2022 clearly postulates that the period from 1st March, 2020 to 28th February, 2022, for computation of period of limitation for filing refund application under Section 54 or Section 55 of the said Act shall stand excluded. It cannot be said that the application for refund was made beyond the period of limitation. Hence, the order under challenge is set aside and the matter is remanded back to the first respondent, for fresh consideration in accordance with law - petition disposed off.
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2022 (9) TMI 603
Exemption from GST - services provided to Uttar Pradesh Jal Nigam - service provided to a governmental authority under GST Laws or not - applicable GST rate on supply of works contracts services in relation to sewage treatment plant made by the Applicant to Uttar Pradesh Jal Nigam, on or after 1 st Jan 2022 - HELD THAT:- The definition of local authority in the CGST Act includes within its ambit any other authority legally entitled to or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund . Thus, for the purpose of the GST Laws, any authority legally entitled to or entrusted bythe Government with the control or management of a municipal or local fund qualifies as a local authority . The Apex court in the UNION OF INDIA ORS. VERSUS RC. JAIN ORS. [ 1981 (2) TMI 200 - SUPREME COURT] has held that the main requirement to qualify as a local authority is that the authority must be legally entitled to or entrusted by the Government with, the control and management of a Municipal or local fund. In case of UPJN, there is no local fund entrusted by the Government with UPJN. A perusal of the UPWSS Act would reveal that no municipal or local fund has been entrusted by the Government. The fund of UPJN is its own fund and cannot be equated with a fund entrusted by the Government. Thus, the important requirement in order to qualify as a local authority, viz. control and management of a municipal/local fund is absent in the present case. Whether the UPJN is Governmental Authority? - HELD THAT:- In order to qualify as a governmental authority, such authority must be set up by an act of Parliament/State Legislature, should have 90% or more stake of government, and should carry out any function entrusted to a Municipality under article 243 W of the Constitution of India - the UPJN is a body corporate formed by the State legislature under UPWSS Act enacted by the UP State Legislature. As such, the first requirement of a governmental authority stands fulfilled in the present case. Further, as per Section 3 of the UPWSS Act, UPJN is a body corporate established by the Government of U.P., as such, the second requirement of governmental authority has also been fulfilled in the present case. Moreover, the UPJN is constituted for the development and regulation of water supply and sewerage services in the State of U.P. Under the Section 14 of UPWSS Act, UPJN is inter alia entrusted with the function to operate, run, and maintain any waterworks and sewerage system. The requirement that the authority must be established to carry out any function entrusted to a Municipality under article 243 W of the Constitution has also been fulfilled in the present case. Thus, the UPJN is a governmental authority. By way of Notification No. 15/2021-Central Tax (Rate) dated November 18, 2021, the lower rate of tax of 12% provided by Entry 3(iii) of Notification No.11/2017- Central Tax (Rate) dated June 28, 2017, was restricted to works contract supplied to Central Government, State Government, Union territory and a local authority only. As the UPJN does not qualify as a local authority and it qualifies as a governmental authority, tax rate of 18% is applicable on the works contract services provided to UPJN by way of Entry 3 (xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.
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Income Tax
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2022 (9) TMI 602
TP Adjustment - comparable selection - Whether Tribunal was right by holding that M/s. Integrated Capital Services Ltd. and M/s. Motilal Oswal Investment Advisors Pvt. Ltd. are to be excluded and M/s. ICRA Management Consulting Services Ltd. and M/s. IDC Ltd. are to be included as comparables? - HELD THAT:- Whether Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd., which are engaged in providing investment banking services, could be declared as comparable to a company which was providing investment advisory services is no longer res-integra. As in the case of Carlyle India Advisors (P.) Ltd. [ 2013 (4) TMI 486 - BOMBAY HIGH COURT] as already held that the case of an investment advisor or sub-advisory cannot be compared with a merchant banker or investment banker. This view was reiterated in the case Blackstone Advisors India (P.) Ltd.[ 2019 (10) TMI 1509 - SC ORDER] Thus Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd cannot at all be held as comparables with the assessee company. For IDC India Limited - As this Court in Commissioner of Income-tax-3, Mumbai Vs. General Atlantic (P.) Ltd. . [ 2016 (3) TMI 736 - BOMBAY HIGH COURT] the Tribunal adopted only IDC India Ltd. as comparable. The Tribunal had adopted IDC India Limited, which was common between the Revenue and the assessee, as comparable to determine the Arm s Length Price, while rejecting the other eight comparables selected by the Revenue. The decision of the Tribunal was challenged by the Revenue in appeal, which was dismissed in Carlyle India Advisors (P.) Ltd. [ 2013 (4) TMI 486 - BOMBAY HIGH COURT] . ICRA Management Consulting Services Ltd. - Tribunal relied upon the decision of the Temasek Holdings Advisors India Private Limite d [ 2014 (11) TMI 483 - ITAT MUMBAI] and held that the same to be a good comparable in view of the fact that it was offering consultation services in the area of strategy, risk management and operations regulatory economics and translations Advisory and that its entire revenue was being generated from consultation fees. Respondent relied upon an order [ 2022 (3) TMI 1421 - BOMBAY HIGH COURT] in the case of the assessee, in which a similar issue was raised and rejected and the appeal dismissed. We are of the view that no interference is warranted in the order passed by the Tribunal.
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2022 (9) TMI 601
Income deemed to accrue or arise in India - Management Support fees received pursuant to an Agreement with Indian entity, for rendering services in the nature of Commercial, Management, Marketing and Administrative - assessee is a non-resident company incorporated in Sweden - as claimed that this amount was not chargeable to tax because of the Double Taxation Avoidance Agreement (DTAA) between India and Sweden read with the DTAA between India and Portuguese - HELD THAT:- The assessee rendered Managerial Support Services to its Indian entity. It claimed the benefit of Most Favoured Nation (MFN) clause contained in Protocol to India-Sweden DTAA, in turn, relying on India-Portuguese DTAA and claimed that the amount was not chargeable to tax. Per contra , the AO followed the orders passed by the DRP for earlier years deciding the issue in favour of the Revenue. It is seen that the subject matter under consideration came up for consideration before the Tribunal for the immediately preceding assessment year 2016-17 [ 2021 (6) TMI 667 - ITAT PUNE] following its order for earlier years, has held that the amount received by the assessee towards Management Service fees is not chargeable to tax. DR fairly accepted the position. Thus we overturn the impugned order and direct not to include amount in the assessee s total income. These grounds are allowed. Income received towards Human Resources services and Leadership Seminar and Conference services provided to its Indian entity by treating it as FTS - Scope of Fees for Included Services - assessee claimed the amounts as not chargeable because of India-Portuguese DTAA - HELD THAT:- Leadership training receipt has been specifically held to be not chargeable to tax in the light of Article 12(4)(b) of the DTAA between India and Portuguese. However, we find that for the year under consideration there is some overlapping in the receipts from HR services and Leadership Training. Assessee as placed on record certain additional evidence which, inter alia , is required to be examined afresh to precisely determine the nature of HR services, we consider it expedient to set aside the impugned order on the issue of Leadership training and HR services. We order accordingly and remit the matter to the file of the AO for examining if both the receipts are covered under Article 12(4)(b) of the DTAA between India and Portuguese. AO will examine the details of the receipts under both the heads for evaluating if such receipts, other than Leadership training, are covered under Article 12(4)(b) of the DTAA between India and Portuguese for determining their taxability or otherwise. Ground allowed for statistical purposes.
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2022 (9) TMI 600
Penalty u/s. 271(1)(c) - difference between the returned income (loss) and income(loss) as per computation - Addition made for not furnishing the documentary evidence regarding the value of property and other expenses incurred - addition for filing inaccurate particulars of income - additions qua capital gain and difference between the ITR vis a vis computation of income, by holding that the act of the Assessee was deliberate act to furnish the inaccurate particulars of income, which lead to evade the income - HELD THAT:- Almost all the relevant details, may not be in the form of documents specifically qua expenditures incurred, otherwise available before the Assessing Officer for consideration. As decided in Reliance Petro Products (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] held that a meremaking of the claim, which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars. Considering the peculiar facts and circumstances, as the Assessee had already closed down its business and therefore, could not file the part documents as required by the AO, however, from the documents produced, it is apparently clear that required details with regard to the purchase price/value of the property was available before the authorities belowand even also we find the claim made by the Assessee as bona fide and therefore cannot be termed as dishonest or mala fide, hence we are of the considered view that in facts and circumstances and the documents available on record as stated above, no penalty is leviable . Even otherwise wealso do not find any material/reason or justification for levy of penalty and affirmation thereof. Consequently, the penalty under challenge is deleted. - Decided in favour of assessee.
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2022 (9) TMI 599
Grant of approval u/s 10(23C)(vi) - delayed filing of application seeking approval - statutory provision to condone the delay in presenting the application under section 10(23C)(vi) - Commissioner of Income-Tax (Exemption) jurisdiction to condone the delay - as per AO assessee had failed to apply for the approval u/s 10(23C)(vi) within the stipulated time period, therefore, the application so filed before him was not maintainable - HELD THAT:- CIT (Exemption), Bhopal was not vested with any power to condone the delay involved in filing of the application by the assessee society u/s 10(23C)(vi), therefore, the same had rightly been rejected by him. We, thus, finding no infirmity in the view taken by the CIT (Exemption), Bhopal who had rightly rejected the assessee s application for approval under Sec. 10(23C)(vi), uphold the same. Considering similar facts which had came up in the case of All Angels Educational Society [ 2016 (8) TMI 156 - MADRAS HIGH COURT] had though rejected the assesses request for condonation of delay involved in filing of its application for approval under Sec. 10(23C)(vi) for A.Y. 2012-13, but accepting its alternative contention that as its application for the said year i.e. A.Y. 2012-13 was pending consideration and the impugned order came to passed only on 13.11.2013, therefore, it could not have filed an application for the subsequent assessment year i.e. A.Y. 2013-14, had therein remanded the matter to the file of the CIT, Exemption with a direction to consider the same as the assessee s application for the succeeding year i.e. A.Y. 2013-14. Thus we herein remand the matter to the file of the Commissioner of Income-Tax (Exemption), Bhopal with a direction to consider the present application filed by the assessee for approval under Sec. 10(23C)(vi) as that filed for the immediate succeeding year i.e. A.Y. 2015-16. We, though we decline the assessee s request for condonation of the delay involved in filing of its application for approval under Sec. 10(23C)(vi) for A.Y. 2014-15, but at the same time remand the matter to the file of the Commissioner of Income-Tax (Exemption), Bhopal with a direction to consider the aforesaid application of the assessee as that filed for the immediately succeeding year i.e. A.Y. 2015-16.
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2022 (9) TMI 598
Disallowance u/s 14A r.w.r 8D - condition precedent to embarking upon the determination of the amount of expenditure incurred in relation to exempt income - Scope of amended Rule 8D - HELD THAT:- We find that Ld. NFAC/Ld. CIT(A) while confirming the disallowance under section 14A ignored the amended Rule 8D whereas interest disallowance as existed prior to 01.06.2016 under Rule 8D(2)(ii) done away from by amending Rule 8D w.e.f.1st June, 2016. AO has made disallowance under Rule 8D(2)(ii) only and not under Rule 8D(2)(iii) (as does not exist on the statute book). Disallowance made by AO are strictly in accordance with the existing provision of Rule 8D2(ii). The figure of investment for earning exempt income as on 31.03.2016 and 31.03.2017 respectively, is not disputed by ld. AR for the assessee. Therefore, we do not find any reason to interfere with the disallowance worked out by Assessing Officer. Whether no satisfaction was recorded by AO before invoking the formula of Rule 8D for making disallowance under section 14A? - We are not convinced with the submission made by assessee as the Assessing Officer has duly recorded his satisfaction about the correctness of claim of assessee and held that exempt income cannot be earned without making any expenses. We find that the submission made by assessee that assessee is making more emphasis on the duty of the Assessing Officer rather to show or offer a suo motu reasonable indirect expense incurred for earning exempt income. We find that the assessee has not even offered a token amount for suo motu disallowance except contending that no expenditure was incurred for earning exempt income. The exempt income consists of dividend income, interest from tax free bonds and long-term capital gains - We find that the assessee has only tried to explain that no expense was incurred qua interest from tax free bonds and dividend income. However, nowhere explained as to how the long-term capital gains was earned. Therefore, we do not find any reason to deviate from the disallowance worked out by Assessing Officer. Decided against assessee.
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2022 (9) TMI 597
Addition in lieu of rent received - rental income in the nature of interest on deposits received by the assessee from its tenant - notional interest on interest free deposits for the purpose of computing assessee s rental income - HELD THAT:- It has come on record that this tribunals co-ordinate bench s order in assessee s case [ 2018 (12) TMI 1958 - ITAT PUNE] itself has examined the very issue on merits while deciding the same against the department (supra). That being the case, we find no merit in the Revenue s vehement arguments seeking to revive the impugned addition representing the notional interest on interest free deposits for the purpose of computing assessee s rental income. CIT(A) findings under challenge stand upheld therefore.
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2022 (9) TMI 596
Revision u/s 263 by CIT - Failure to produce documentary evidence in respect of agricultural receipts - case was selected for limited scrutiny under CASS guidelines for the reason of 'Large Agricultural Income' - Assessment was completed u/s. 143(3) at the returned income with the observation Large Agricultural Income Stands Explained - HELD THAT:- AO has indeed conducted an in depth inquiry in respect of the various issues which the Ld. PCIT has pointed out in the impugned order. It is evident that the assessee has duly responded to the queries raised by the AO and has also substantiated such replies with necessary documentary evidences. Although, the extent of the inquiry having been conducted by the AO may not be apparent from a reading of the assessment order but that would not mean that the AO did not conduct any inquiry on the issue. It would also not mean that the AO has not applied his mind to the issue of large agricultural produce before him. It is settled law that elaborate discussion of the issue in the body of the assessment order would not mean that there has been a lack of inquiry or non-application of mind. Therefore, if the records prove otherwise, non-mentioning of the issues examined by the AO would not make the assessment order erroneous and prejudicial to the interest of the Revenue. In the present case no inquiry has been carried out by the Ld. PCIT and he has simply directed the Assessing officer to carry out detailed inquires. In our considered opinion, the Ld. PCIT, without making further inquiries on his own account, has simply stated in the impugned orders that the Assessing officer was required to make more inquiries. The Ld. PCIT has not pointed out as to what further inquiries was the AO required to make and as to how without those inquires the order of the AO were erroneous in so far as prejudicial to the interest of the Revenue. We are not inclined to agree with the observations of PCIT that the assessment order was passed without conducting any inquiry by the AO and, therefore, the same was erroneous in so far as being prejudicial to the interest of the Revenue - Decided in favour of assessee.
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2022 (9) TMI 592
Validity of Assessment u/s 153A - Whether addition was not based on incriminating material found during the search? - HELD THAT:- This Court finds that both the CIT(A) and the ITAT have given concurrent findings of fact that no incriminating evidence/material had been found during the search. The ITAT also recorded that the present case of the Respondent was of non-abated assessment. In Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd . [ 2021 (9) TMI 902 - DELHI HIGH COURT] has held that where the assessment of the Respondents had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made under Section 153A of the Act as the cases of the Respondents were of non-abated assessment - no substantial question of law arises for consideration.
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2022 (9) TMI 591
Reopening of assessment u/s 147 - initiation of proceedings u/s 148 - scope of amendment with effect from 01.02.2021, proceedings under Section 148 could not be initiated without first drawing proceedings u/s 148A - HELD THAT:- This Court had protected the petitioner taking into consideration that the notice under Section 148 of the Act was digitally signed only on 02.04.2021. The Hon'ble Supreme Court by its authoritative pronouncement in the case of Union of India Others Vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] We find that the department has proceeded to pass the order u/s 148A(d) against the petitioner. In these changed circumstances, particularly taking into consideration the scope and ambit of the pending petition, we are inclined to close this writ petition also, however, giving liberty to the petitioner to challenge order passed u/s 148A(d) of the Act on such grounds as may be available to the petitioner under the law.
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2022 (9) TMI 590
Unexplained money u/s 69A - Unexplained deposit in the bank account - Assessee argued cash deposits was out of cash in hand with the members of HUF and due to demonetization Rs. 500 and Rs.1000 notes, the same was deposited in the bank account and nothing was from undisclosed sources - HELD THAT:- Once, the assessee has explained before the CIT(A) that the cash was deposited in the bank account after the demonetization as it was required to deposit in the bank otherwise the value of the currency would be zero and keeping the same with the assessee would be illegal. The assessee has declared this deposit in the return of income and therefore, the explanation of the source as past saving of the assessee HUF and its members cannot be doubted having regard to the fact that in the past there are the entries of withdrawal of more than 1,00,000/- from the bank account of the assessee. Though, these withdrawals were in the long past and there is a big gap between the withdrawals and deposits but once the assessee has declared this amount of Rs. 1,00,000/- and by considering this amount as well as the total income declared by the assessee at Rs. 1,39,090/- which is below a minimum amount of taxable income the assessment of the income of the assessee under the provisions of section 115BBE is not justified. Accordingly when the assessee has explained the source of Rs. 1,00,000/- as past savings of the assessee HUF and its members and there is no other deposits during the demonetization the addition made by the Assessing Officer is deleted. The appeal of the assessee is allowed.
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2022 (9) TMI 589
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income? - HELD THAT:- Penalty u/s 271(1)(c) was not leviable when the notice issued by AO did not specify as to whether the proceedings were initiated for concealment of particulars of income or for furnishing of inaccurate particulars of income. We, therefore, following the decision in the case of Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] are of the view that the AO was not justified in levying penalty under Section 271(1)(c) of the Act. We accordingly set aside the levy of penalty levied by Assessing Officer and that was confirmed by the learned Commissioner of Income-Tax (Appeals). Thus, the ground of the Assessee is allowed.
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2022 (9) TMI 588
Validity of revised return filed vis-a-vis claims made thereunder - revised return treated as non-est - original return of income was filed belatedly u/s 139(4) - Validity of action of the ACIT not considering the revised return of income filed by the appellant u/s 139(5) of the ITA, 1961 as original return of income was filed beyond time limit prescribed u/s 139(1) - whether income reported by filing belated return filed can be varies by filing revised return u/s 139(5) of the Act? - HELD THAT:- It is enough to state that, the provisions relating to furnishing of a revised return is provided u/s 139(5) which entitles an assessee to furnish a revised return if he discovers any omission or any wrong statement in the original return hitherto filed, however the very fact that, for the impugned assessment year, this right or entitlement of revision was given to an assessee who has filed his original return either u/s 139(1) or in pursuance of notice u/s 142(1) of the Act, this by necessary implication means that, such a right was denied and not at all available to the assessee who has filed the return u/s 139(4) this view has been historically held in Kumar Jagdish Chandra Sinha Vs CIT [ 1996 (4) TMI 5 - SUPREME COURT] . Thus, in the case before us, the appellant filed his original return otherwise than u/s 139(1) or 142(1), the revised return filed u/s 139(5) of the Act became non-est in the eyes of law, consequently the claim of capital loss made by the appellant in his revised return. Whether income reported under belated return can be varied on the pretext of its un-realisation or unearned for any good and sufficient reasons? - As the evidential documents as regards to re-computation of capital loss were duly placed before the Ld. AO during the course of scrutiny assessment proceedings and after considering them, the assessment was culminated assessing the taxable income in terms of belated return, consequently it concludes that, the income actually earned by the appellant as verified from the records was taxed and not the unreal income, and nothing contrary has shown to us in the present facts which would warrant taking a diverse view. In omnibus, we find no substance in the claim of the appellant vis-a-vis no infirmity with the order of tax authorities below to deviate, ground number 1 to 4 raised stand dismissed. Appeal of the appellant assessee is dismissed.
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2022 (9) TMI 587
TP adjustment - upward adjustment in imputing notional interest on the outstanding overdue receivables from Associated Enterprises - HELD THAT:- As working the assessee s margin is significantly higher than the operating margin of the comparable companies. There may be a delay in the collection of receivables even beyond the agreed time limits due to a variety of factors which has to be decided on a case to case basis. When TNM method is considered as the most appropriate method, which was also not disputed by Revenue, the net margin thereunder would take care of such notional interest cost. It was further explained by Ld.AR that the impact of the delay in collection of receivables would have a bearing on the working capital of the assessee. We find that these working capital adjustments on the ALP has been already factored in its pricing / profitability vis- -vis that of its comparables. We therefore are of the considered view that any further adjustment to the margin of the assessee on the outstanding receivables cannot be justified and no separate upward adjustment on outstanding export receivables is required and therefore we direct the Ld.AO to delete the upward adjustment made towards overdue receivables from AE. We therefore allow this ground raised by the assessee. Adjustment towards corporate guarantee commission on the gross guarantee given to AE - AR pleaded that it is not an international transaction as the assessee has not charged the AE - HELD THAT:- TPO made the adjustment by instances referring to the commercial banks providing financial guarantees but did not contemplate the issue of corporate guarantee. The concept of bank guarantees and corporate guarantees was explained in the case of Prolifics Corporation Ltd[ 2015 (1) TMI 551 - ITAT HYDERABAD] by the Hyderabad Tribunal wherein it has observed that the provisions of corporate guarantee always involves risk and there is a service provided to the AEs in increasing its creditworthiness in obtaining loans in the market. We find that there must be a minimum charge on the P L Account but there is an enhanced risk which cannot be ruled out in providing guarantees. Ultimately, the Hon ble Tribunal upheld the adjustment made on guarantee commissions given to AEs. We find merit in the arguments of the Ld. AR that the rate of corporate guarantee should be restricted to the amount utilized by the AE, @ $ 11.5 Million USD, but should not be applied on the gross corporate guarantee. In view of the above discussion and by respectfully following the ratio laid down in the case of CIT vs. Everest Kanto Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] we are of the considered view that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount utilized, by the AE. We therefore allow the grounds raised by the assessee. Disallowance u/s 14A - Assessee argued assessee has not earned any exempt income - HELD THAT:- We find from the records submitted by the Ld. AR that the assessee has not earned any exempt income during the relevant assessment year mandating the invoking of provisions of section 14A of the Act. The Hon ble Supreme Court in CIT vs. Chettinad Logistics (P.) Ltd [ 2018 (7) TMI 567 - SC ORDER] has dismissed the SLP of the Revenue and held that section 14A can only be triggered if assessee claims any expenditure against an income which does not form part of the total income under the Act. The Hon ble Supreme Court further observed that Rule 8D only provides for a method to determine the amount of expenditure incurred in relation to income which does not form part of the total income of the assessee. Appeal of assessee allowed.
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2022 (9) TMI 586
Unverifiable expenses - disallowance being 30% of the direct expenses claimed by the assessee - HELD THAT:- Profit and loss account now filed by the assessee is not even signed by the assessee or his authorized representative as a true copy and in the absence of any books of account maintained by the assessee as admitted during the course of assessment proceedings before the AO we are of the view that no credence can be given to the same. Insofar as arguments raised on behalf of the assessee challenging the applicability of Section 69C of the Act, we find that disallowance out of direct expenses claimed by the assessee was made by the AO to the extent of 30%; and, having regard to the observation/findings recorded by the AO in the assessment order, the same was made on account of unverifiable elements involved in the direct expenses claimed by the assessee since there was a failure on the part of the assessee to furnish the details and documents in order to support and substantiate his claim for the said expenses. Reference to Section 69C made by the AO, therefore, was totally unwarranted and it appears that the reference to Section 69C was made by the AO through inadvertent mistake. In our opinion, such inadvertent reference made by the Assessing Officer to Section 69C could not or should not come in a way to sustain the disallowance in question made by the Assessing Officer which otherwise was justifiably made on account of unverifiable elements involved in the direct expenses claimed by the assessee. As such, considering all the facts of the case, we are of the view that the disallowance made by the AO out of direct expenses was fully justified and there was no infirmity in the order of the CIT(A) in confirming the same. We, therefore, uphold the impugned order of the CIT(A) on this issue and dismiss this appeal filed by the assessee.
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2022 (9) TMI 585
Revision u/s 263 - brought forward losses set off against current year gain - CIT was of the view that the AO has not examined the veracity of the brought forward short term capital loss which is set off against the current year s short term capital again - no details of any transaction are available in the SFT data under ITS details in 360 degree view of the assessee and the AO did not verify the exempt income claim of the assessee - HELD THAT:- PCIT must have some material which would enable to form a prima facie opinion that the order passed by the AO is erroneous, insofar as it is prejudicial to the interests of the Revenue. In the present case, the PCIT has not brought out any material on record to substantiate that the brought forward losses set off against current year gain is not the right amount. PCIT in his order has stated that the sale consideration for AY 2014-15 is much lower than the cost of acquisition and that the AO has not examined the veracity of the short term capital loss and has allowed the set off of the same from current year gains. This view of the ld. PCIT, in our opinion, is not the right reason for exercising revisionary powers u/s. 263 of Act as the error envisaged by Section 263 of the Act is not one that depends on possibility as a guess work, but it should be actually an error either of fact or of law. Thus in our considered view, is not tenable since the verification of loss incurred in the years beginning AY 2009-10 is beyond the scope of scrutiny assessment of AY 2017- 18. From the perusal of facts, the security transactions have been scrutinized in the proceedings u/s.143(3) for AY 2015-16 and the revenue has accepted the losses including the brought forward losses. This supports the contention of the ld AR that since the brought forward loss has already been verified and accepted by the revenue during the assessment proceedings of AY 2015-16 the order of the AO passed for the year under consideration cannot be considered as erroneous on this ground. AO in the given case has conducted enquiry and perused the details submitted and has taken a decision to accept the brought forward loss based on explanation provided by the assessee after proper application of mind. We therefore hold that the PCIT is not justified in setting aside the order of the AO with regard to the issue of verification of brought forward losses and accordingly the impugned order of the PCIT is quashed to the limited extend of this issue. Order of the AO to be erroneous for non-verification of STT paid data before allowing the long term capital gain to be exempt - We notice that the PCIT in the order u/s 263 has noted the fact that the assessee has submitted the details of STT paid in From 10DB and hence there is no dispute with regard to the fact that the details are furnished before the AO. However, there is nothing noted in the order of the AO that he has verified the details furnished and has reconciled the long term capital gains claimed as exempt by the assessee with the amount furnished in Form 10DB. The PCIT for this specific reason has invoked the provisions of section 263 and to this extent, we are of the considered view that the action of the PCIT is justified. We therefore uphold the order of the PCIT setting aside the order of the AO to the limited extent of verification of long term capital gain claimed exempt on STT being paid. In view of the above discussion the order of the PCIT u/s. 263 is modified to the extent that order u/s.143(3) is set aside with regard to allowing the claim of exemption of long term capital gains based on payment of STT. Appeal by the assessee is partly allowed.
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2022 (9) TMI 584
Unaccounted cash payments / expenditure - unaccounted cash receipts from patients - Addition u/s 69C - levy of tax u/s 115BBE at higher rate of tax - proof of source of income - set off the current year loss against the additional income offered to tax as business income - test of reasonableness - AO treated the additional income as a separate item of income and taxed the same as per the provisions of section 115BBE and therefore recomputed the business loss to be carried forward without adjusting the additional income - CIT(Appeals) while upholding the order of the AO observed that the source for unaccounted cash payments is unaccounted cash receipts and that the assessee has not provided the details of patients from whom cash receipts were received - HELD THAT:- When an assessee offers no explanation or the explanation offered is not satisfactory in the opinion of the AO, then the amount of such expenditure is to be taxed as income u/s. 69C of the Act. The satisfaction to be recorded by the AO should not be objective satisfaction exercised at his discretion, but a subjective satisfaction based on the facts of the case. It would then mean that justification for exercise of the power has to be found by the authority by making a subjective satisfaction on the basis of objective material and such satisfaction must be reflected in the reasons recorded in writing while exercising the power. (Vide: Dee Vee Projects Ltd. v/s. Union of India Ors. [ 2022 (2) TMI 569 - BOMBAY HIGH COURT ] In the present case, the assessee is in the business of running a diagnostic centre and the only source of income is the receipts from patients which is stated to be the source for unexplained expenditure. That being the case the AO has not brought any contrary material on record to state that the source for the expenditure was other than from business income and has formed the opinion based on conjectures and surmises. While exercising the quasi-judicial functions, the administrative authorities have to reach satisfaction on the basis of material available and not on conjectures and surmises. The test of reasonableness has to be satisfied which in our view failed in the case under consideration. Therefore, we are of the view that the additional income offered cannot be taxed u/s. 115BBE and the impugned addition is hereby deleted. Accordingly the assessee is allowed to set off the current year loss against the additional income offered to tax as business income.Appeal by the assessee is allowed.
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2022 (9) TMI 583
Exemption u/s 11 - Application of income - amount is shown under the heading sundry debtors but no capital expenditure was incurred as stated by the assessee - assessee has also not filed Form-10 to claim accumulation U/s. 11(2) of the Act while filing the return of income U/s. 139(1) - assessee has not filed condonation of delay petition before the Ld. CIT as per the Circular No. 7 of 2018, dated 20/12/2018 - HELD THAT:- Even though the claim of the assessee is that there is an expenditure incurred during the impugned assessment year and considered as advances since the invoices for the supply of materials have been received in the subsequent financial year. The invoices are also accounted in the AY 2017-18 only. The assessee has also failed to upload Form-10 within the due date prescribed U/s. 11(2) r.w.s 139(1) of the Act. The Ld. AR also failed to demonstrate before us whether the same expenses have been claimed in the AY 2017-18 also. No documentary evidences are produced before us for non-claiming of the same expenditure in the AY 2017-18. The Hon ble High Court of Kerala in the case of CIT vs. Shree P. Subramoniam Religious Trust [ 2008 (12) TMI 374 - KERALA HIGH COURT] has laid down that merely an advance cannot be treated as the actual application of funds that this advance would be utilized for the purchase of cement later. In view of the above discussions, we are of the considered view that since the assessee has neither expended the money during the relevant assessment year nor filed Form-10 within the due date prescribed U/s. 139(1) of the Act, the exemption claimed by the assessee is not valid in law and hence the grounds raised by the assessee are dismissed.
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2022 (9) TMI 582
Penalty levied u/s 271B - assessee has not filed the audit report of accounts in 3CB Form on or before the due date under section 139(1) - proof of reasonable cause for the delay in filing the tax audit report under section 44AB - submissions of the assessee that his accounts were audited by the auditor within the prescribed time and copy was furnished before the AO and the auditor informed him that he had been uploading the report in the income tax website every year thus under bonafide belief assessee believed auditor had been uploading the tax audit report - HELD THAT:- On perusal of the orders of authorities below, we find that it is the case of the assessee that tax audit report under section 44AB of the Act was not filed before the due date of filing the same, but it was filed belatedly. Moreover, it is also not the case of the assessee that the accounts were not audited by the auditor within the prescribed time. The tax audit report was obtained well within the stipulated due date apart from mentioning of the same in the returns filed by the assessee. Considering the explanations that the assessee was prevented by reasonable cause for the delay in filing the tax audit report under section 44AB of the Act, we are of the considered opinion that the penalty levied u/s 271B is liable to be deleted. Accordingly, the penalty levied u/s 271B is deleted for both the assessment years. - Decided in favour of assessee.
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2022 (9) TMI 581
Penalty u/s. 271B - delay for filing the audit report within the time frame prescribed under law - reasonable cause for filing the audit report belatedly provided or not? - HELD THAT:- As brought to our notice that the delay in filing the audit report occurred due to conversion of the business into private limited company and it was the first year of the company and due to the said reason assessee company required to do several formalities in compliance with the Companies Act and other ancillary laws do smooth transaction of the business to the company. There is only delay in filing the return of tax audit report on time which was accidental and unintentional on the part of the appellant assessee. According to the Ld. AR their exists reasonable cause for filing the audit report belatedly and under the foregoing reasons he submitted before us to quash the impugned order, we have satisfied with the explanation given by the assessee and in our opinion this is not a fit case for levying penalty u/s. 271B of the Act due to technical breach which was beyond the control of the appellant assessee and considering the facts and circumstances of the case, we are inclined to delete the penalty levied u/s. 271B of the Act. Appeal filed by the assessee is allowed.
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2022 (9) TMI 580
Payment of remuneration to working partner - Addition u/s 40(b) - remuneration was paid to the partner in view of the amended deed - HELD THAT:- The assessee has apportioned the remuneration which comes to Rs.7,13,709/- but paid only a sum of Rs.6 lakhs and claimed deduction of the same. We noted from the CIT(A) s order that he noted that the assessee has not supported the basis of allocation by any document produced and according to him, the said document was executed before the close of financial year is not very clear. Assessee before CIT(A) categorically made representation in the written submissions that the deed was amended w.e.f. 01.01.2012 by the amended deed dated 12.01.2012 that means the partner Smt. Kanchan Devi became working partner from January, 2012 and for three months, she is entitled for remuneration. The entire details was available before CIT(A) i.e., partnership deed, the computation of book profit and allocation of remuneration to this working partner Smt. Kanchan Devi. Assessee has rightly allocated Rs.6 lakhs rather it is less because if we allocate the remuneration to working partner which comes for these three months. We are of the view that the assessee has rightly claimed the payment of remuneration to working partner Smt. Kanchan Devi in term of provisions of section 40(b) and CIT(A) as well as AO both erred in not allowing the claim. We allow the claim and reverse the orders of lower authorities. - Decided in favour of assessee.
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2022 (9) TMI 579
Admission of additional evidence before CIT-A - Determination of Work-in-progress - Default in CIT-A admitting additional evidence regarding the WIP of NH-9 project - whether CIT (A) has erred in deciding the issue without remanding the matter to the AO for verification of additional evidence produced by the assessee u/s. 46A of the I.T. Rules, 1962? - HELD THAT:- As submitted assessee had indeed filed additional details before the CIT (A) regarding the impugned work-in-progress for the first time in lower appellate proceedings only. We appreciate learned counsel s fair statement and deem it appropriate to restore the Revenue s instant second substantive ground back to the Assessing Officer for his afresh factual verification of the assessee s relevant details as per law within three effective opportunities of hearing in consequential proceedings. Ordered accordingly. This Revenue s appeal succeeds for statistical purposes.
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2022 (9) TMI 578
Disallowance u/s 43B - unpaid Service-Tax - Whether service tax component is not an item of deduction? - CIT-A deleted the addition - case of the assessee before the Lower Authorities that the assessee Company did not claim deduction in this regard nor did it deposit the amount as expenditure under P L Account - HELD THAT:- CIT(A) while deleting the addition correctly observed that since the service tax component is not an item of deduction that has been claimed by way of debited to the P L Account by the assessee . Reliance on case of Noble and Hewitt India (P) Ltd. [ 2007 (9) TMI 238 - DELHI HIGH COURT] Since, in the present case, the service tax component is not an item of deduction that has been claimed by way of debit to the P L Account by the assessee, the above ratio laid down by the Jurisdictional High Court is squarely applicable. By respectfully following the said ratio, we do not find any error or infirmity committed by the Ld. CIT(A) . Decided against revenue.
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2022 (9) TMI 577
Disallowance u/s 36(1)(vii)(a) - provision for bad and doubtful debt - provision made against the standard loan (contingent liability) - Eligibility of deduction to Co-operative Banks other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank - AO restricted the allowance u/s 36(1)(vii)(a) of the Act to 7.5% (Income + Provision) and disallowed excess provision - HELD THAT:- Bare perusal of provisions of section 36(1)(viia) will reveal that Cooperative Banks other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank shall be eligible and entitled for claiming deduction u/s 36(1)(viia)(a) so far as first limb is concerned to the tune of seven and half percentile of total income. Deduction claimed @ 10% of aggregate average advanced made by the rural branch assessee, is too disallowed - So far as second limb of section 36(1)(viia) (a) is concerned, the deduction allowed is 10% of aggregate average advances made by the Rural Branches of such bank computed in the prescribed manner, as is stipulated in section 36(1)(viia)(a) of the 1961 Act. While including 'Co-operative Bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank' in section 36(1)(viia)(a) effective from 1-4-2007, law makers have brought eligible Co-operative Banks to be entitled for deduction under first limb, and while referring to 'such bank' in the second limb, in our considered view by literal reading and interpretation, eligible Co-operative Banks shall also be entitled to claim deduction under second limb. As the use of the term 'such bank' in the second limb of section 36(1)(viia)(a), will relate back to the banks as specified in the first limb which, inter-alia, will include eligible Co-operative Banks. In Explanation to section 36(1)(viia), it is provided that rural branches means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year. The inclusion of Co-operative Bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank were brought within the ambit of section 36(1)(viia) by way of inserting in sub-clause (a) to clause (viia) to sub-section (1) to section 36 by Finance Act, 2007 w.e.f. 1-4-2007, but there was no corresponding amendment in Explanation to section 36(1)(viia), and Co-operative Banks are not included here for ascertaining the manner to identify Rural Branches of Co-operative Bank. Section 36(1)(viia)(a) stipulates that the deduction under second limb towards aggregate average advances made by Rural Branches of such bank shall be computed in prescribed manner. Thus, the matter is remitted back to the file of the AO for fresh adjudication, as is directed by us in this order. The evidences/explanations submitted by assessee in its defence shall be admitted by AO, and adjudicated by AO on merits in accordance with law. We order accordingly.
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2022 (9) TMI 576
Addition of income from other sources u/s 69A - Assessee was found in possession of loose slips - assessee challenged addition as made on assumption and presumption - HELD THAT:- As in the case at hand, it abundantly clear that the appellant was neither found to be owner of any money, Bullion or Jewellery etc., nor there was any value of such assets recorded in the books of account of the Assessee and further the explanation offered relating to the alleged amount supported by the statement of Mrs. Balwant Kaur as proves that no such amount was carried by the appellant to the office of Sub Registrar on 30.08.2010. Accordingly, the addition confirmed by the CIT(A) based on assumption and presumption u/s 69A of the act, without support of any cogent material evidence on record to establish that any disputed cash was found in the custody of the appellant and therefore, in our view, the addition confirmed by the CIT(A) is unjustified, unwarranted and illegal. The same is deleted. Thus ground nos. 3 and 4 are allowed. Addition on account of alleged rented building to UCO Ban - as argued the said income belonged to bigger HUF namely Badri Nath Khanna (HUF) up to 20.03.2014 - HELD THAT:- After the Assessment Year 2001-02, the total income of Badri Nath HUF being below taxable limits, no Income Tax Return was filed. However, it was also explained vide letter stating that after the demise of Sh. Badri Nath Khanna, the property let out to UCO Bank was transferred in the names of Sh. Rajiv Khanna and Smt. Chand Rani his mother, while Badri Nath Khanna HUF still remained undivided. Since, the said HUF got dissolved on 20.03.2014, on the death of Smt. Chand Rani and thereafter, from assessment year 2015-16, the property income from UCO Bank was shown in the hands of the appellant. We hold that the Ld. CIT(Appeal) was not justified in confirming the addition as property income in the hands of appellant. Accordingly, the addition is deleted. Violation of principles of natural justice - Addition relying upon the statement of Mr. Rohtash Kumar recorded, through the commission appointed under section 131(1)(d) at the back of the Appellant without granting the opportunity of cross examination and ignoring the affidavits filed during the assessment as well as appellate proceedings - It is pertinent to mention that addition based on the statement of the person where there was a clear denial of having made any advance was recorded at the back of the assessee without allowing opportunity to cross-examination in rebuttal is held void in violation of principles of natural justice and against the mandate without being substantiated with corroborative cogent documentary evidences. In the instant case, even the statement of Mr. Rohtash Kumar was recorded on 16.11.2016, at the back of the Assessee, denying the opportunity to cross examine the witness cannot be used against him, being against the principles of natural justice as held by their Lordships of Supreme Court in the case of Andaman Timber Industries[ 2015 (10) TMI 442 - SUPREME COURT] Further, all the case laws relied upon by department in support are distinguishable on peculiar facts of the case. CIT(A) was not justified in confirming the addition ignoring the affidavit and rebuttal in violation of principles of natural justice. As such, the addition is deleted. Appeal of assessee allowed.
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2022 (9) TMI 575
Penalty u/s. 271(1)(c) - estimated addition for alleged low G.P. - AO rejected the books of account and estimated @ 8% gross profit on the turnover - addition on account of brokerage made - HELD THAT:- We note that the penalty was levied on the assessee on estimated addition and it is settled principle of law that no penalty u/s. 271(1)(c) can be levied on addition made on estimation. See Gopilon Texturising Pvt. Ltd. [ 2021 (4) TMI 860 - ITAT SURAT ] Thus we delete the penalty imposed by Assessing Officer u/s. 271(1)(c) of the Act. Appeal of the assessee is allowed.
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2022 (9) TMI 574
Reopening of assessment u/s 147 - Notice beyond period of four years - undisclosed investment u/s.69 - reliance on statement recorded u/s. 132 - payments in form of on money were made by various purchasers/buyers - Directors and promotors of the group have agreed to receive on-money from the purchasers of the flat - assessee submitted the details of flat purchased from M/s. Crescendo Associates a concern of Hiranandani Group - HELD THAT:- As reasons recorded and supplied by the Assessing Officer exactly similar and the reasons recorded are that in the case of Hiranandani Group search case, the Directors and promotors of the group have agreed to receive on-money from the purchasers of the flat. Therefore, the additions were made merely relying on the finding in the case and Assessing Officer completed the assessment without giving opportunity to the assessee for cross examination and not shared with the informations relied upon to make additions. We observe from the submissions of the parties that the case of the assessee was reopened mainly on the basis of information acquired in the case of Hiranandani group case wherein the director and promotor of the company had agreed that they have received on-money from the purchasers of the flat. In the case of assessee it is fact on record that the assessment was reopened after the expiry of four years and completed assessment u/s. 143(3) r.w.s. 153A. Considered the facts on record and facts in the said case Anil Jaggi [ 2018 (2) TMI 51 - ITAT MUMBAI] are exactly similar and the conclusion reached therein by the Coordinate Bench are respectfully followed and accordingly, the assessment made u/s. 147 r.w.s. 143(3) of the Act is bad in law. Following the above facts on record we allow the appeal filed by the assessee.
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2022 (9) TMI 573
Enhancement of income by CIT-A - Denial of natural justice - not allowing reasonable opportunity of show cause as contemplated u/s. 251(2) of the Act before exercising his power to enhance the assessed income - HELD THAT:- While perusing the order passed by the CIT(A), we find that although notice was issued upon the assessee on 14-03-2018 for enhancement of assessed income. However, from the order passed by the CIT(A) shows that whether the notice was properly served upon the assessee, it cannot be ascertained from record. As such the assessee was unrepresented before the Ld. CIT(A) and therefore, CIT(A) decided the appeal against the assessee. We, therefore, looking into the facts/issues involved in this appeal, in the interest of justice as well as fair to both the parties and in order to facilitate the assessee, restore the appeal to the file of the CIT(A) for fresh adjudication with a direction to assessee to furnish necessary details as and when called for to submit and should not take any adjournment unless otherwise required for reasonable cause. Appeal of the assessee is allowed for statistical purpose.
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2022 (9) TMI 572
Assessment u/s 153A - Unrecorded sales lower G.P ratio - Addition based on loose papers seized during search indicated unrecorded cash sales - main argument taken up by the assessee before the ld. CIT(A) was that there was no seized incriminating material found based on which the assessment was completed and also that during the regular assessment, the receipt of the share capital has been duly examined and accepted - CIT-A deleted the addition - HELD THAT:- As in the absence of any incriminating material relating to AY 2010-11 and following the ratio of judgement of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT ] the action of the AO in assuming jurisdiction u/s 153A and thereafter framing assessment u/s 153A/143(3) of the Act is not justified. The AO failed to appreciate that the assessment for AY 2010-11 had already attained finality and the proceedings for AY 2010-11 were not abated and therefore fresh assessment proceedings u/s 153A were not justified when no incriminating material relating to AY 2010-11 was found during the search action. We decline to interfere with the order of the ld. CIT(A). Addition made on account of extra profit - CIT(A) after obtaining the remand report dated 10.12.2018 categorically held that the AO has failed to point out any incriminating material found during the search on the basis of which addition on account of extra profit was made. AO has stated in the remand report that goods sold in cash were not recorded in the books of accounts and this was extrapolated for all the Assessment Years falling in the block period. Thus, it is clear that there was no incriminating material found in course of search action relating to Assessment Year in question. Hence, we decline to interfere with the order of the ld. CIT(A). Decided against revenue.
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2022 (9) TMI 571
Addition u/s. 68 - Accommodation entries by way of bogus loans from entities - CIT(A) deleted the additions - HELD THAT:- Assessee has taken loan from three parties i.e. Easy Mercantile Company, Ryan International and Sevem Star Gems. It is fact on record that assessee has filed all the relevant documents, relevant for the loan transactions which includes bank statement, confirmations, financial records, return of income and also affidavits from the loan creditors to prove that these transactions are genuine. All these facts were clearly submitted before the CIT(A) and CIT(A) considering the submissions and verifying each loan transactions in detail the loan confirmations, affidavits, etc., filed by these parties. CIT(A) after verification of the bank statements came to the conclusion that there is no cash deposits nowhere involved in any of the transactions entered into by the assessee as well as the lenders. As observed that merely statement of having given accommodation entries is not sufficient to make the addition, such statements remained uncorroborated by any independent evidences as to having carried any fictitious trade in diamond as claimed in the statement. After duly verifying the details submitted before him he came to the conclusion that assessee has proved the identity, creditworthiness and genuineness of the transactions and in the similar cases the Coordinate Bench has also deleted the similar additions made in the cases involving PKJ. We are in agreement with the Ld.CIT(A) that assessee has proved the genuineness, identity and creditworthiness in these transactions. It is relevant to note that the assessee has not only taken the loan and also repaid the loan. Therefore, we do not find any reason to disturb the finding of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed.
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2022 (9) TMI 557
Non grant of Foreign Tax Credit ('FTC') - CIT(A) denied the credit on the ground that the tax was not paid by the assessee and secondly Form 67 was filed belatedly - assessee claimed Relief u/s 90 / 90A which was denied by CPC - HELD THAT:- FTC has been offered by the assessee as perquisites in the gross total income and taxes have been paid thereon. Once this income has been offered to tax, the corresponding credit of the same would be available to the assessee. It could be seen in another perspective. Even if it is assumed that the assessee has not paid these taxes (as pleaded by Ld. Sr. DR) then it could be viewed as excess salary received by the assessee which was not received but retained by the foreign employer for payment of foreign taxes. Therefore, once the payment has been included by the assessee in the income and taxed have been paid thereon, then this credit would certainly be available to the assessee. We order so. So far as filing of Form 67 the same has been held to be mere directory requirement by SMC bench of Bangalore Tribunal in MS. BRINDA RAMA KRISHNA [ 2022 (2) TMI 752 - ITAT BANGALORE] and M/S. 42 HERTZ SOFTWARE INDIA PVT. LTD. [ 2022 (3) TMI 834 - ITAT BANGALORE] It is the finding of Ld. CIT(A) that the assessee has already filed Form No.67 although belatedly. Therefore, we direct Ld. CIT(A) to verify the form and allow tax credit to the assessee, if found in order. Appeal partly allowed.
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Customs
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2022 (9) TMI 595
Direction for implementation of order of re-export of Gold Articles on payment of redemption fine and penalty - HELD THAT:- Once mentioned amount is deposited, as indicated in the communication dated 04.07.2022, the proceedings for re-export of the subject goods can commence. Petition closed.
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2022 (9) TMI 594
Benefit of exemption from Import duties - Classification of imported goods - Wireless Access Points [WAP] - to be classifiable under Customs Tariff Item [CTI ] 8517 62 90 or otherwise? - period 11.07.2014 to 30.06.2017 - exemption under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - HELD THAT:- India is a signatory to the Information Technology Agreement [ ITA ] dated 13.12.1996 by the World Trade Organization. The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement. India signed the Agreement on 01.07.1997. Pursuant to ITA, India introduced the notification. At the time of introduction, all goods falling under CTH 8517 were exempted from payment of duties. In 2014, on specified telecommunication products that were not covered under the ITA, the Government imposed customs duties by notification dated 11.07.2014. The Finance Minister's Budget Speech for the year 2014-15 and Tax Research Unit letter dated 10.07.2014 clarify that BCD on specified telecommunication products not covered under the ITA was being increased from NIL to 10%. As WAP is an Information Technology product and is specifically covered under the ITA as Network Equipment in Attachment B, the intention was clearly not to exclude WAP imported by Ingram Micro - Imported WAP is a networking equipment working in LAN connecting Wi-fi enabled devices such as laptops, smartphones, tablets, etc. to a wired network. Thus also, imported WAP is entitled to the exemption from the whole of the customs duties under the ITA. It is also well settled law that an exclusionary clause in an exemption notification should be strictly construed and must be given a narrow meaning so as to not frustrate the intention behind the exemption notification. WAP imported by the appellant works on technology and does not support LTE standard. Ingram Micro was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. There is, therefore, no infirmity in the order dated 23.12.2019 passed by the Additional Director. Appeal dismissed - decided against Revenue.
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2022 (9) TMI 593
Maintainability of appeal - non-deposit of the statutory amount contemplated under section 129E of the Customs Act, 1962 - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.204 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT ], examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT ] examined the provisions of section 35F of the Central Excise Act, 1944 which are pari materia to section 129E of the Customs Act and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. Thus, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit - appeal dismissed.
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Corporate Laws
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2022 (9) TMI 570
Seeking grant of Anticipatory Bail - signature of some of the shareholders is forged is incorrect - forged and fabricated Power of Attorney - offences punishable under Section 120-B read with Section 420 of IPC with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act - HELD THAT:- This court is of the opinion that non-availability of Original Power of Attorney alone would not call for any custodial interrogation. It can be seen that applicant Mukesh Bhanwarlal Bhandari, who is a senior citizen has appeared before the Investigating Officer on 09.06.2022, 26.06.2022, 16.08.2022, 23.08.2022. The applicant Siddharth Mukesh Bhandari also appeared on 09.06.2022, 22.06.2022, 14.08.2022, 16.08.2022 and 23.08.2022 before the Investigating Officer. The offences alleged against the applicants are under Sections 420/468/471/120-B of the IPC. The maximum punishment is up to seven years with a fine. The offences in question are triable by Magistrate. There is no reasonable apprehension of the accused persons to tamper with the evidence or to influence the witnesses. They being permanent residents of the State of Gujarat, having their movable and immovable property therein, cannot be expected to flee from justice. There are no criminal antecedences except a few litigations between the parties. There is no significant interest of the public or of the State involved in the matter. The dispute predominantly relates to dominance on a company. There is a long-standing dispute between both the groups. The accused have undertaken that at any stage of the investigation if they are able to get the Original Power of Attorney, they would produce it before the Investigating Officer. It is thus seen that merely on the ground that the Original Power of Attorney is not available with the Investigating Officer, the accused cannot be denied the benefit of anticipatory bail when it is found that they have been able to prove all other factors in their favour. This Court finds it appropriate to grant anticipatory bail to both the applicants. Accordingly, it is directed that in the event of arrest, the applicants be released on anticipatory bail subject to their furnishing personal bonds in the sum of ₹50,000/- each with one surety each in the like amount to the satisfaction of the Arresting Officer/Investigating Officer/SHO of the concerned Police Station and also subject to the further conditions imposed. Application allowed.
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Insolvency & Bankruptcy
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2022 (9) TMI 569
Jurisdiction - State Government is the appropriate Government under the scheme of the industrial Disputes Act or not - scope of Ministry of Commerce and Industry, Government of India - whether Rubber Wood India Private Limited, first petitioner in the second petition, can be said to be controlled and managed by the Central Government or not? HELD THAT:- Any officer of the Central Government when deputed by that Government shall have the right to attend the meetings of the Board and take part in the proceedings but shall not be entitled to vote. Chairman shall be appointed by the Central Government and two members to represent the State of Tamil Nadu and one of whom shall the person representing the rubber producing interests. Rubberwood India Private Limited is an instrumentality of the Central Government, has been established under the Rubber Act, 1947 (Central Act) and the membership of the Company has been restricted to only Rubber Board, Andamans Timber Industries Limited, Kerala State Industrial Development Corporation Limited (KSIDC) and any other person/Registered Co-operative Societies /Company formed under the Companies Act, 1956 /Statutory Bodies approved by the Board. Rubber Board shall have the power to nominate five Directors, KSIDC shall have the power to nominate one Director and Financial institutions, banks extending loan to the Company may nominate one Director each and two Directors to be appointed by the Company in General meeting. After the appointment of the Interim Resolution Professional whether the reference to the Central Tribunal can be permitted to continue or workmen represented by the Union are required to submit the claims before him? - HELD THAT:- Regulation 9 provides that a person claiming to be a workman or employee of the corporate debtor, which in present case would be Rubberwood India Private Limited represented through Interim Resolution Professional, shall submit a claim with proof to said Professional in person, by posts or by electronic forms prescribed in Form D of the Schedule. It can also submit supplementary documents or clarifications in support of the claim and for the dues more than one workman or employee any authorised representative is permitted to submit one claim - The right to challenge the decision of the Resolution Professional has also been provided under the Act through an appeal under Section 60(5) of the Code of 2016 before NCLT, and again before NCLAT under provisions of Section 61 of the Code. Thus, workmen respondents are directed to file their respective claims before the Interim Resolution Professional in accordance with the Regulation 9 ibid. Interim resolution professional is directed to adjudicate the claim of the workmen strictly as per the Regulations and afford an opportunity to the workmen to inspect the record and prove their case in support of the claim and adjudicate the same within a period prescribed under the Code - petition disposed off.
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2022 (9) TMI 568
Failure to invite the Public Announcement of the Liquidation Order - Time limitation - HELD THAT:- Ordinarily, it is for the Applicant / Appellant, when there has occasioned a delay in preferring a Condone Delay Application in a given Proceeding or an Appeal, to specify / mention the exact number of days of Appeal that had occasioned by computing / calculating the same - It cannot be gainsaid that the ingredients of Section 5 of the Limitation Act, 1963, is a Hard Taskmaster and the delay that has occurred in the instant case is an exorbitant one, which cannot be condoned by this Tribunal, as the application lacks Bona-fide. Appeal dismissed.
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2022 (9) TMI 567
Seeking issuance of directions by this Tribunal, to the Resolution Professional, to communicate the revised Settlement Proposal to the Committee of Creditors - Rule 31 of the NCLAT Rules, 2016 - prime contention of the Applicant/Appellant is that the Settlement Agreement is to be placed before the Committee of Creditors and in any event the Appellant is required to abide by the decision taken by the Members of the Committee of Creditors - HELD THAT:- It cannot be gainsaid that an inherent power of a Tribunal/Court of Law, cannot be exercised in violation or in conflict with or upon ignoring express and specific provision of Law. It is pertinently pointed out that the Object of the I B Code, 2016, is to reorganised and evolve Insolvency Process of Corporate Persons in a time bound manner for maximisation of such Persons. If there is a delay, in regard to the maximisation of value of assets of the Corporate Debtor, it will debilitate the value of realisation of Potential Creditors, in the considered opinion of this Tribunal. No wonder, Time is the essence of the I B Code, 2016. Without any simmering doubt, Speed is the gist of the Code. A timely Liquidation is preferred over endless Resolution Proceedings, as opined by this Tribunal. This Tribunal, taking note of the primordial fact, that there is no provision under the I B Code, 2016, authorising this Tribunal, to grant the relief of issuance of direction to the Resolution Professional, in communicating the Settlement Proposal of the Applicant/Appellant to the Committee of Creditors and to place the same for e-voting and since I.A. No.558 of 2022 in the instant Appeal is not filed by the ₹ 1st Respondent/Association at whose behest, the Corporate Insolvency Resolution Process was initiated, added further, the said application is not accompanied with the mandatory Form FA (Application for withdrawal of CIRP under 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, as prescribed, all the more, the Draft Settlement Agreement/Proposal has not received the ascent /consent/ approval of the Home Buyers, especially, forming part of the ₹ 1st Respondent/Association who hold approximately ₹ 56% voting share in the Committee of Creditors, and considering the whole gamut of the matter in a holistic fashion, comes to an irresistible, inevitable and inescapable conclusion that application filed by the Applicant/Appellant (under Rule 31 of NCLAT Rules, 2016), is not a Bonafide one. The appeal filed by the Applicant/Appellant is dismissed to prevent an aberration of justice and in furtherance of substantial cause of justice.
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2022 (9) TMI 566
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - pre-existing dispute between the parties or not - time limitation - HELD THAT:- On the ground of limitation, it is pertinent to mention that, the Corporate Debtor has submitted that, the Operational Creditor has annexed an invoiced dated 04 August, 2018 and 04 April, 2019 in the Petition. Further, in order to avoid limitation, the Operational Creditor again raised three invoices dated 10 January, 2020 - Notwithstanding, the fact that the Operational Creditor raised the invoice twice, this instant application has been filed on 03 August, 2021 before this Adjudicating Authority. Even if we take into account the dates of the invoices raised on 04 August, 2018 and 04 April, 2019, then also this application would fall within limitation. Pre-existing disputes - HELD THAT:- Upon perusal of the alleged emails [Annexure E at pages 47 50 of the reply], it is seen that the same do not appear to be genuine as they are not printed from the webpage, but appear to have been typed out. The Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] ] has observed that all that the Adjudicating Authority has to see at the stage of Admission is whether there is a plausible contention which requires further investigation and that the Dispute is not a patently feeble legal argument or an assertion of fact or a moonshine defence unsupported by tangible materials/evidence. Further, upon perusal of the record at pages 42 43 of the reply [Annexure C], it is seen that the Corporate Debtor failed to fulfill its obligations by not clearing the dues of the Operational Creditor on time, which in a cascading manner, resulted in the delay in the completion of the purchase order. The present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time - petition admitted - moratorium declared.
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2022 (9) TMI 565
Maintainability of application - initiation of CIRP - Corporate Debtor committed a default in payment of it dues - failure to execute the lease deed - Financial Creditors - existence of debt and dispute or not - principles of natural justice - HELD THAT:-Admittedly, the Letter of Intent (LOI) has been executed between the petitioner and the respondent qua lease of place situated in Block No. 249-G Udyog Vihar, Gurgaon i.e. entire building comprising three basements plus ground plus three floors for lump sum value of Rs. 48.00 lacs per month including Rs. 8.00 lacs towards maintenance charges on rent. In response to that the applicant herein had to deposit six months' rent on which part deposit equivalent three months' rent payable within seven days of the signing of the Letter of Intent and the post clearance of the Legal Due Diligence (LDD) - It is admitted that a sum of Rs. 1.2 crore were extended as per LOI dated 30.07.2015 and the lease was to be executed by the parties accordingly in view of the said LOI. But no lease deed was executing afterward hence the said LOI did not fructify into the lease deed. The applicant herein deposited an amount of Rs. 1.2 crore as earnest money, according to the LOI dated 30.07.2015. This Tribunal makes it abundantly clear that Hon'ble NCLAT in SPICEJET LTD. VERSUS AFFORDABLE INFRASTRUCTURE AND HOUSING PROJECTS PVT. LTD. [ 2020 (2) TMI 1506 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, DELHI] does not bar any right of the parties and it is open to the respective parties to raise all factual and legal pleas before the Competent Authority/Adjudicating Authority when the necessary Application seeking appropriate relief is filed by the concerned party and further that said Authority' shall determine the said Application on merits, of course, after providing due opportunities to the contesting parties to air their the views, by adhering to the Principles of Natural Justice. Hon'ble Supreme Court of India in the matter of M/S CONSOLIDATED CONSTRUCTION CONSORTIUM LIMITED VERSUS M/S HITRO ENERGY SOLUTIONS PRIVATE LIMITED [ 2022 (2) TMI 254 - SUPREME COURT] , clearly laid down that if any advance payment has been made for providing goods and services, that would fall within the definition of Operational Debt. Herein, the applicant paid advance money Rs. 1.20 crore to the respondent corporate debtor for taking the premise situated in Gurgaon on lease and the said amount was not repaid as the respondent failed to execute the lease-deed. Further, it is also observed in this context that advance made of Rs. 1.2 crore to the respondent Corporate Debtor was without any interest accrued thereon, therefore, the same does not come to the purview of the definition of Financial-Debt as 5(8) of the Code as the same was not for the time value for money, as defined under Section 5(8) of the Code. The present petition under Section 7 of the Code qua the advance payment for the goods and services is not maintainable as the said advance payment does not come under the purview of definition 'Financial Debt' rather the same amounts to Operational Debt. This Tribunal is of the view that the present petition under Section 7 of the Code is not maintainable. Accordingly, the present petition u/s. 7 stands rejected, with no order as to costs.
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2022 (9) TMI 564
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - requirements for admitting an application under section 10 of the Code, 2016, complied with or not - HELD THAT:- The existence of debt and default is established and no winding up proceedings are pending against the Corporate Applicant and Corporate Applicant is not covered by the ineligibilities provided under Section 11 of the Code, 2016. The Corporate Applicant is entitled to move an application under Section 10 of the Code in view of the admitted outstanding financial debt and default of the same by the Corporate Applicant. As a sequel of the above discussion and in terms of Section 10(4) of the Code, 2016, the instant Petition is admitted in terms of Section 10 of the Code and CIRP is initiated against M/s. IT Power Consulting Private Limited. Petition admitted.
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PMLA
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2022 (9) TMI 563
Seeking grant of bail - money laundering - proceeds of crime - incorporation and operation of 450 Indian entities and 104 foreign entities for routing proceeds of crime and also enabling purchase of offices and properties as if with untainted funds - applicability of Section 45 of the PMLA - HELD THAT:- In the present case, therefore, since this is a fresh bail application, the court would be required to consider whether there are fresh circumstances or subsequent events that call for a fresh application of mind or whether it is a mere repetition of previous grounds. Even without the application of the principle of issue-estoppel, the court in order to maintain consistency in the decision making, would be slow in entertaining such pleas, which are mere repetition of the earlier pleas, which had not found favour with it - Since the question of adherence or non-adherence to the provisions of Section 19 of the PMLA have been raised and rejected by a Coordinate Bench, there is no cause to discuss that again here. The conclusions remain the same. This bail application would have to be considered in terms of the provisions of Section 45 of the PMLA and the twin requirements, namely, (i) that there are reasonable grounds for believing that he is not guilty of such offence and (ii) that he is not likely to commit any offence while on bail, will have to be met. The allegations against the applicant are very serious in nature. A huge amount of rupees ninety-six thousand crores is supposed to have been laundered. There has been multiple layering, calling for painstaking and detailed investigations. The applicant has fully participated in the money laundering by lending his companies accounts to his brother and making accommodating entries. A sum of Rs. 35 crores is directly traceable to the applicant. A mere exculpatory statement to the respondent can never suffice to form a ground, leave alone a reasonable ground to believe that the applicant is not guilty of the offence - the pendency of those investigations does not enure in favour of the applicant. Rather, considering his previous conduct, in furnishing fake addresses and remaining out of bounds of the investigating agencies for almost two years, necessitating the issuance of NBWs, interference with investigations is a possibility that cannot be ignored. His remaining away from the reach of the law is also suggestive of his being a flight risk . Considering the gravity of the offence, the previous reluctance of the applicant to co-operate with the investigating agencies, providing of fake addresses as well as absconding from law, are all factors indicative of the non-fulfillment of the twin conditions under Section 45 of the PMLA, to justify the grant of bail to the applicant. Bail application dismissed.
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Service Tax
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2022 (9) TMI 562
Levy of service tax - Club Membership services or not - providing infrastructural support services to the two caterers for running their catering business inside the club premises - HELD THAT:- The issue related to taxability of Club Membership was under litigation before various forums. Finally, the hon ble Supreme court in the case of CALCUTTA CLUB LTD [ 2019 (10) TMI 160 - SUPREME COURT] the larger bench has decided the issue - Though the issue is settled as per the Hon ble Supreme Court judgment, each case has to be re-considered applying the judgment of the hon ble Supreme Court viz-a-viz the facts of each case. The present issue needs to be reconsidered by the adjudicating authority on the basis of the law laid down by the Hon ble Supreme Court vis- -vis facts of each case therefore, the impugned order is set aside and matter remanded to the adjudicating authority for passing a fresh order - appeal allowed by way of remand.
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Central Excise
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2022 (9) TMI 561
Waiver of penalty imposed in terms of Rule 209A of the erstwhile Rules read with Rule 26 of the Central Excise Rules, 2001 - benefit of the notification relating to issuance of certificate that the yarn is to be used only in handlooms - whether the benefit of certain notifications issued by the Department were misused and the respondent/assessee being a party to the modus? - HELD THAT:- The adjudicating authority on analysing the documents available on seizure and on scrutiny of the statements which were recorded from various persons, pointed out that the purchasing bills instead of delivering the cross reel hank yarn to the respondent and the noticee no.3, the apex bodies, delivered them directly to various trading concern who appear to be merchants and traders of yarn and not handloom weavers. The respondent has not controverted by producing any evidence to this alleged conclusion that a modus has been adopted by which the respondent received a commission and ultimately the yarn which was to be distributed to handloom weavers were taken of by the trades and other agencies. Thus, on analysing the evidence the adjudicating authority held that the system was evolved only to ensure that the sale should look like a sale from the spinning mill, the noticee no.1 to the respondent, the noticee no.2 and this was done in order to avail the benefit of exemption whereas the actual sale took place between the spinning mill and the private traders while the respondent and the other apex society merely acted as a commission/selling agent thereby earning commission at the rate of 1.5% as profit. Thus, the adjudicating authority records that this point could not be controverted by the respondent neither at the time of making written submission nor at the time of personal hearing. The adjudicating authority held that the certificates declaring that the yarn is going to be used only on handlooms as issued by the respondent and the other apex society are not based on factual verification but only based upon the certificate issued by the spinning mill concerned. Thus, the adjudicating authority held that the conditions stipulated in the notification for the purpose of exemption are not favourable in the case on hand - The tribunal observed that the goods were purchased by the respondent, apex body for further distribution to traders who further sold the same to ultimate handloom weavers but might be located at the interior of the country having no access to the respondent/apex body for direct purchase of the goods. With regard to the certification which was also one of the conditions under the notification, the learned tribunal has not examined the aspect pointed out by the adjudicating authority that the certificate issued by the respondent and the other apex body was not based on any verification done by them, but solely based upon the certificate issued by the spinning mill. The order passed by the tribunal is utterly perverse, as it has not dealt with any of the findings which has been rendered by the adjudicating authority by appreciating the facts and evidence brought on record - there are no hesitation to hold that the tribunal committed a serious error in interfering with the order of the adjudicating authority. Appeal allowed - decided in favor of Revenue.
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2022 (9) TMI 560
Area Based exemption - manufacture and clearance of Nail Polish and Nail Polish - process amounting to manufacture or not - invocation of extended period of limitation - peripheral activities - Marketable goods or not - whether the appellant had undertaken any other process or processes amounting to manufacture in the State of Uttarakhand or Himachal Pradesh, which is a condition contemplated in paragraph 4 of the exemption notification? - HELD THAT:- There is no dispute that the appellant had undertaken the peripheral processes mentioned in paragraph 4 of the notification. Whether any other process or processes, apart from peripheral processes, had been undertaken by the appellant so as to amount to manufacture contemplated in section 2(f) of the Excise Act would have to be examined. The adoption of any other treatment on the goods to render the product marketable to the consumer is one of the requirement set out under section 2(f) of the Excise Act for the process to result in manufacture . Thus, what has to be seen is whether in the present case, adoption of any other treatment on the goods had rendered the product marketable to the consumers. The colour solution supplied in 20/50 Kg drums from Fiabila cannot be regarded as nail enamel. The packing of nail enamel as contemplated in HSN General Explanatory Notes and the Cosmetics Act has special significance, as without the goods being packed in the specified packing they will not be classifiable or commercially known as nail enamel. The nail enamel takes its name, character and use as such only after being packed in the manner provided - A conjoint reading of the definition of manufacture in section 2(f) (iii) of the Excise Act and Chapter Note 5 of Chapter 33 of the First Schedule to the Excise Act and the aforesaid treatment adopted on the goods (colour solution) by the appellant would render the product marketable to the consumer as nail enamel and, therefore, the appellant would be covered by the exemption notification dated 10.06.2003 since the appellant has adopted such a treatment to the goods that rendered them marketable to the consumer. It is, therefore, not possible to accept the contention advanced by learned authorised representative appearing for the Department that the only change brought about by the appellant when the colouring matter is mixed to a solvent is to reduce the viscosity and this would not amount to manufacture. It cannot also be accepted that when the resultant product achieves superior quality, a new product marketable to the consumers as nail enamel does not come into existence as in the present case it has been found as a fact that a new marketable product comes into existence - appellant would, therefore, clearly be entitled to the benefit of the area based exemption notification dated 10.06.2003. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (9) TMI 559
Validity of assessment order - input tax credit - raw rubber purchases made at the stage of last purchase within the State of Tripura in respect of the purchases made from unregistered dealer - assessment years 2013-14 and 2016-2017 - HELD THAT:- The TVAT Act, 2004 provided for and Section-3 thereof specifically required every dealer engaged in the purchase of taxable goods mentioned in the Schedule VIII liable to be VAT in accordance with the provisions of the TVAT Act, 2004. While section 5 of the TVAT Act, 2004 dealt with the Levy of Tax on Sale . Section 5A of the TVAT Act, 2004 which is a charging section in respect of the levy of tax on purchase. Section 5A clearly provides that the tax payable by a dealer under Section 3(1)(a)(iii) shall be levied at the gross taxable purchase of goods as mentioned in the Schedule VIII. There is no dispute that the raw rubber purchased by the petitioner is a good falling under Schedule VIII. More importantly, Section 10 of the TVAT Act also prescribes that Input Tax Credit claim shall be applicable to all taxable purchase of goods as mentioned in Schedule VIII. Even insofar as the statute is concerned, clearly the TVAT Act has made distinction between purchases made from registered and unregistered dealers. Undisputedly, purchases made from registered dealers required the Input Tax credit to produce a tax invoice. But, in so far as purchase of goods under Schedule VIII is concerned, no such stipulation was stipulated that only some purchases made from registered dealer alone would be qualified for the benefit of input tax - there is no bar on the petitioner from effective purchases from unregistered dealers of items covered under Schedule VIII inasmuch as the legislative wisdom of the State and it was considered by the State to be appropriate to collect tax from the purchasers of such goods rather than on the sellers. Consequently, if a purchaser of such goods has made the deposit of purchase tax under the TVAT Act, 2004 clearly such amount deposited by the purchaser would make the petitioner entitled to seek credit on input tax for all such purchases provided the necessity of the requirement of law insofar as deposit of purchase tax is concerned is complied with. Matter remanded to the Assessing Officer who is directed to approach the matter afresh and re-compute the input tax credit benefit that the petitioner may be entitled to and thereafter to conclude the fresh assessment proceeding within a period of 6 months - petition allowed by way of remand.
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2022 (9) TMI 558
Rejection of Books of accounts - evidence on record of purchase of wheat from outside the account books or not - sale of Chokar - 48 quintals of chokar were sold out of the stock of 76 quintals - rejection of account books and making best judgment assessment merely on presumption and surmises - HELD THAT:- Admittedly, the business premises of the revisionist was surveyed on 8.11.2006 when the flour mill was closed and as no business activity was carrying on, as stated, no responsible person was available on account of which the books of account could not be shown. Nonetheless, subsequently, the books of account was shown in which no discrepancy was pointed out. The adverse inference has been drawn against the revisionist on the basis of two bills, i.e., 759 and 760 dated 26.10.2006 by which certain bags of wheat flour and Chokar were sold and at the time of interception for 46 quintals of Chokar no bill was produced, for which explanation has been submitted that the driver by mistake could not take the bill no. 759. Once, in absence of any material on record to suggest that any purchases have been made except the sale of Chokar in question that too was issued from the stock maintained by the revisionist, no adverse inference can be drawn. The liability of sales tax has been fastened upon the revisionist only on the basis of the aforesaid discrepancy which has been accepted by the First Appellate Authority but the Tribunal without any material and cogent reason has reversed the same and restored the assessment order which is bad. The impugned order passed by the Tribunal is set aside - the revision is allowed.
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9911796707
