TMI Tax Updates - e-Newsletter
September 22, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Wealth tax

Articles

1. PROVISIONAL ATTACHMENT UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

2. Why Stock Market Crashes and its reason

   By: CAPushpkumar Sahu

News

1. Heed to Heal - Climate Change is the Emerging Financial Risk (Keynote Address delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - Thursday, September 16, 2021 - at the CAFRAL Virtual Conference on Green and Sustainable Finance)

2. Industrial Safety in Petroleum and Explosives Sector gets a Big Boost

3. Income Tax Department conducts searches in West Bengal

4. Income Tax Department conducts searches in Delhi, Punjab and West Bengal

5. CCI approves proposed acquisition of 10.4% of equity shareholding of Gangavaram Port Limited (GPL) by Adani Ports and Special Economic Zones Limited (APSEZ)

6. Auction for Sale (re-Issue) of (i) ‘5.63% GS 2026’, (ii) ‘GoI Floating Rate Bond 2034’, (iii) ‘6.67% GS 2035’, and (iv) ‘6.67% GS 2050’

7. Income Tax Department conducts searches in Nagpur

Notifications

GST - States

1. F-A-3-85-2017-1-V (66) - dated 15-9-2021 - Madhya Pradesh SGST

Amendment in Notification No. F-A-3-85-2017-1-V(07) dated 08th February 2019

2. F-A-3-16-2021-1-V (65) - dated 15-9-2021 - Madhya Pradesh SGST

Madhya Pradesh Goods and Services Tax Amendment rules, 2021.

3. F A 3-07-2021-1-V-(67) - dated 15-9-2021 - Madhya Pradesh SGST

Seeks to extend timelines for filing of application for revocation of cancellation of registration

Income Tax

4. 115/2021 - dated 20-9-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Gujarat Electricity Regulatory Commission’

5. 114/2021 - dated 20-9-2021 - IT

Central Government specifies the pension fund, namely, the BCI IRR India Holdings Inc.

Circulars / Instructions / Orders

GST

1. 160/16/2021 - dated 20-9-2021

Clarification in respect of certain GST related issues

2. 161/17/2021 - dated 20-9-2021

Clarification relating to export of services-condition (v) of section 2(6) of the IGST Act 2017

3. 159/15/2021 - dated 20-9-2021

Clarification on doubts related to scope of “Intermediary”

Highlights / Catch Notes

GST

• Indian Navy Warship Batteries Classified Under GST Tariff Heading 85, Sr. No. 252 of Notification No. 1/2017-C.T. (Rate.

  Case-Laws - AAR : Classification of supply - supply of batteries by the required Applicant for the use in warships such as submarines of the Indian Navy - The batteries are essential requirements in manufacture of submarines and are classified under heading 85 of the GST Tariff and are parts of submarines. - Such batteries will be classified under Sr. No. 252 of Notification No. 1/2017- C.T. (Rate) - AAR
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• Court Orders Reopening of GST TRAN-1 Portal for Petitioner Submission by Nov 1; Verification Allowed.

  Case-Laws - HC : Transitional credit - Direction to the Opposite Parties to accept the GST TRAN-1 form from the Petitioner - In the present case a direction is issued to the Opposite Parties to either open the portal and permit the Petitioner to file TRAN-1 form electronically on or before 1st November, 2021 or accept the TRAN-1 form from the Petitioner manually before that date. It will be open to the authorities to verify the genuineness of the claim of the Petitioner in accordance with law and pass appropriate orders. - HC
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• High Court Stays GST Recovery Order Over Late and Backdated Demand Notice; Non-Compliance with Section 73(1), Rules 118 & 142.

  Case-Laws - HC : Validity of Recovery order - demand notice was never supplied within time and it was communicated much after initial recovery order with back date - non-compliance of section 73(1) of the Act and Rules 118 & 142 of the GST Rules, 2017 - The issue need to be examined - stay granted subject to deposit of 10% of demand - HC
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Income Tax

• Court Rules No Additions u/s 153A Due to Lack of Incriminating Evidence in Non-Abated Assessments.

  Case-Laws - HC : Assessment u/s 153A - Addition made u/s 68 on account of unexplained credits and u/s 69C on account of unexplained expenses - 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. Consequently, no addition can be made under Section 153A of the Act as the cases of respondents are of non-abated assessments - HC
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• Court Rules Share Trading Income Not Speculative Business; Deletes Incorrectly Attributed Speculation Loss by Assessing Officer.

  Case-Laws - AT : Income earned from trading in Shares, Future and Options and derivatives - speculative business or not - Assessee has shown better income from sale and purchase of shares and lower loss in derivative business and, therefore, in our considered view, the Ld. CIT(A) has rightly appreciated this aspect, thereby deleting the addition made by the Ld. AO wrongly apportioning of expenditure towards alleged speculation/business, which gave rise to higher speculation loss. - AT
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• Appeals Challenge Additions u/s 153A; Assessments Completed Before Search Without Incriminating Material.

  Case-Laws - AT : Assessment u/s 153A - in these appeals also the additions has not been made on the basis of any incriminating material and rather has been made on the basis of entries in the books of accounts. The dates of filing of returns as mentioned in the chart reproduced earlier in this order are found to be correct from the copies of returns placed in respective paper book pages. The period of issue of notice u/s. 143(2) in the above cases expired on 30.09.2012 and 30.09.2013 respectively whereas the search took place on 31.08.2015 therefore assessments in these cases also stood completed before the date of search - AT
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• Assessee Cleared: Section 41(1) Scrutiny Finds Transaction Valid Despite Missing Confirmation Letter From Creditor.

  Case-Laws - AT : Non-genuine creditors u/s 41(1) - proof of liability ceased to exist - Simply because, the assessee could not produce the confirmation from this party, the genuineness of transaction cannot be doubted. All the relevant details proving the transaction as genuine were available on record despite that, the A.O’s mere emphasis was on the production of the confirmation from this party. In fact, the name and addresses were mentioned in the copies of bills of sale and purchase. - No Additions - AT
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• Income Tax Settlement Commission's protections u/s 245I apply only to applicants directly involved, not universally.

  Case-Laws - AT : Addition on protective addition - Application to Income tax Settlement Commission[ITSC] - the provisions of Section 245I does not give protection to the whole world with respect to the ‘matter’ as decided by the settlement commission, it only protects those applicants who are before the settlement commission. Therefore, this proposition raised by the learned authorised representative stands rejected. - AT
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• Section 69C Addition Fails: AO's Inadequate Inquiry into Unexplained Expenditure on Stamp Purchase via RTGS.

  Case-Laws - AT : Addition u/s 69C - unexplained expenditure - Since the assessee purchased the stamp and made the payment through RTGS then there is no question of considering the same has unexplained investment - AO issued the summon u/s 131 of The Act to the stamp vendor and by issuing the summon, the stamp vendor becomes the witness of the Revenue and thus, it was the duty of the Assessing Officer to collect the information from the stamp vendor and confront to the assessee but the AO failed to gather the information. - No additions - AT
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• Income Estimation at 8% Confirmed as Turnover Exceeds 40 Lakhs; Section 44AF 5% Rate Not Applicable.

  Case-Laws - AT : Computation of assessee income - GP estimation - For applying section 44 AF, it is clear that the total turnover of the assessee must be less than 40 lakhs of rupees. In the present case as mentioned hereinabove turnover the assessee, as per the case of the assessee as well as of the assessing officer was more than 40 lakhs, therefore the rate of 5% cannot be applied as claimed by the assessee - Estimation of income @8% confirmed - AT
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• Court Disallows Bogus Diamond Purchase Claims u/s 254; Rejects Assessee's Proposal for Profit Estimation on Turnover.

  Case-Laws - AT : Revision u/s 254 - NP estimation on turnover - Bogus bills for purchase of diamonds - it is nothing, but a bogus claim of expenditure recorded in the books of accounts of the assessee against which no revenue towards turnover could be attributed. Therefore, estimation cannot be made on the bogus purchases at 8 or 10 % as claimed by the assessee and the entire bogus claim of expenditure has to be disallowed - AT
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Service Tax

• Sabka Vikas Scheme 2019 Application Rejected Due to Unquantified Liability, No Calculated Duty by Deputy Commissioner.

  Case-Laws - HC : Sabka Vikas (Legacy Dispute Resolution) Scheme 2019 - petitioner was orally informed that the applicability of scheme has been rejected as the Deputy Commissioner till date has not calculated any duty/tax liability - In the present case as well, there was a reference to a unilateral declaration of liability by the petitioner and not a quantification of demand by the Revenue in the letter/notice dated 20.11.2018 and therefore, the same does not make the petitioner eligible to avail the benefit of SVLDRS. - HC
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• Service Tax Exemption Granted for Services to US Embassy After Meeting Notification Conditions.

  Case-Laws - AT : Claim of exemption from service tax - services provided to the US Embassy - In the present case, the appellant was able to correlate the invoices with the undertakings. It can, therefore, be concluded that the appellant satisfied the substantial conditions set out in the Exemption Notifications - Benefit of exemption allowed - AT
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Case Laws:

• GST

• 2021 (9) TMI 909
  Classification of supply - supply of batteries by the required Applicant for the use in warships such as submarines of the Indian Navy - goods falls under Entry 252 of Schedule I to N/N. 01/2017-integrated Tax (Rate) dated 28.06.2017 and hence is taxable @ 5% GST or otherwise? - goods covered within the meaning of Parts of Goods of CTH 8901, 8902, 8904, 8905, 8906 and 8907 or not? - HELD THAT:- The batteries are essential parts of a submarine. A submarine cannot be imagined to be in existence without batteries because all internal controls and systems in the submarines, work on the power supplied by these batteries and without batteries, the submarine will not be able to function at all. Further, the batteries manufactured for such supplies are specifically designed and manufactured for use only in warships more particularly in submarines. The batteries will be considered as parts of vessels falling under heading 8901, 8902, 8904 to 8907, only if they are used in manufacturing goods falling under Tariff Headings 8901, 8902, 8904 to 8907 - the applicant s contention is agreed upon that the batteries supplied by them for exclusive use in goods falling under heading 8901, 8902, 8904 to 8907 will be taxable @ 5% IGST. However it is to reiterate that the benefit of reduced CGST and SGST for such batteries is only available if the said batteries are used as parts of goods falling under heading 8901, 8902, 8904 to 8907 of the GST Tariff. The benefit of reduced GST rates would not be available in respect of subject batteries supplied for use in goods other than goods of heading 8901, 8902, 8904 to 8907 of the GST Tariff. The batteries are essential requirements in manufacture of submarines and are classified under heading 85 of the GST Tariff and are parts of submarines. Since the subject goods are meant for use in manufacture of submarines and are supplied for purpose of use or application in manufacture of goods that are classifiable under Tariff headings 8901, 8902, 8904, 8905, 8906, 8907, the said goods can be considered as parts of a submarine. Entry at Sr. No. 252 covers goods which merit classification under Any Chapter of the GST Tariff wherein the description in Sr. No. 252, is Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 . Accordingly, in the present matter, the Subject Goods will be covered under Sr. No.252. The supply of batteries by the Applicant exclusively and directly to the Indian Navy for use in the manufacture of submarines will be classified under Sr. No. 252 of Notification No. 1/2017- C.T. (Rate), dated 28-6-2017.

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• 2021 (9) TMI 907
  Transitional credit - Direction to the Opposite Parties to accept the GST TRAN-1 form from the Petitioner - petitioner was not allowed the facility of ITC since as per GST system log, there are no evidences of error or submission/filing of TRAN-1 - Rule 117 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- It is seen that the near identical circumstances the Delhi High Court in AAGMAN SERVICES PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2019 (11) TMI 1248 - DELHI HIGH COURT] permitted the Petitioner in that case to submit his TRAN-1 form either electronically or manually. In that case too, the Petitioner s case was considered in the meeting of the GST Council. In the present case a direction is issued to the Opposite Parties to either open the portal and permit the Petitioner to file TRAN-1 form electronically on or before 1st November, 2021 or accept the TRAN-1 form from the Petitioner manually before that date. It will be open to the authorities to verify the genuineness of the claim of the Petitioner in accordance with law and pass appropriate orders. Petition disposed off.

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• 2021 (9) TMI 905
  Validity of section 96(10) of the CGST Rules as amended by N/N. 54/2018 Central Tax dated 9th October, 2018 - validity of retrospective operation to N/N. 54/2018 Central Tax dated 9th October, 2018 - issuance of the summons by Senior Intelligence Officer of Directorate General of Goods Service Tax Intelligence, Zonal Unit, Ahmedabad - HELD THAT:- Issue urgent Notice making it returnable on 30th September, 2021. It is noticed that this summons which had been issued was in the month of February, 2021 in compliance with which the process is on and therefore, the apprehension is ventilated by the petitioner of possible coercive action on the part of the authority. Without prior permission of the Court, no coercive action shall be taken till the returnable date. Matter to be tagged with Special Civil Application no.12835 of 2021 and allied matters.

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• 2021 (9) TMI 904
  Validity of Recovery order - demand notice was never supplied within time and it was communicated much after initial recovery order with back date - non-compliance of section 73(1) of the Act and Rules 118 142 of the GST Rules, 2017 - HELD THAT:- The recovery notice DRC 07 Annexure P-12 dated 13.08.2021 refers to order dated 30.07.2021 and Prima facie the summary of show cause notice is not reflected and the demand which is made under section 73 of the Recovery Notices has not been shown. Subsequently the order dated 30.07.2021 is placed on record. A perusal of the envelop whereby the order dated 30.07.2021 was communicated would show that it was dispatched by the department on 23.08.2021 i.e., much after initial recovery order was issued on 13.8.2021, therefore, whether the order of recovery dated 13.08.2021 was followed after due procedure of law is required to be examined. Let the reply be filed by the State - In the meanwhile, it is directed that on petitioner s depositing 10% of recovery which is sought by order dated 13.08.2021 (Annexure P-12), rest of the recovery amount shall remain stayed till the next date of hearing.

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• 2021 (9) TMI 903
  Reopening of Form GST TRAN-1 - filing of GST TRAN-1 - transfer of transitional credit into its electronic credit ledger - HELD THAT:- This writ petition is disposed of by directing the respondent concerned to consider and dispose of the aforesaid representation of the petitioners dated 31st May, 2018 in accordance with law by passing a reasoned and speaking order and after giving an opportunity of hearing to the petitioners or its authorised representative within eight weeks from the date of communication of this order and shall communicate his decision to the petitioners within one week after passing of such order. At the time of hearing, the respondent concerned shall consider the judgments upon which the petitioners want to rely as to whether in the facts and circumstances of this case those judgments are applicable in the case of the petitioners or not. Petition disposed off.

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• 2021 (9) TMI 876
  Refund of Integrated tax - no export of any goods after 05.09.2019 on payment of integrated tax - Validity of Sub Rule (10) of Rule 96 of the CGST Rules, 2017 - ultra vires Section 16 of the IGST Act - ultra vires Sections 54 and 164 of the CGST Act - 2017 - ultra vires Articles 14 and 19(1)(g) of the Constitution of India - HELD THAT:- No recovery shall be effected on the tax paid for the goods exported and refunded upto 05.09.2019, till the next date of hearing - Noticing the fact that many such matters are pending from the year 2019 and there is an urgency made out by learned advocate Mr. Paresh Dave, let all those matters be posted for hearing on 30.09.2021.

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• Income Tax

• 2021 (9) TMI 902
  Assessment u/s 153A - Addition made u/s 68 on account of unexplained credits and u/s 69C on account of unexplained expenses - Whether any incriminating documents/materials had been found and seized during searches? - HELD THAT:- No specific ground that any incriminating material had been found during the search. The Tribunal s finding that It is an admitted fact that in the search action under Section 132 of the Act, no incriminating document/material was found and seized at the time of search and also subsequently is correct and suffers from no perversity. Consequently, it is not open to the appellant to contend that incriminating documents/materials had been found and seized during searches. As in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C. Thus 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. Consequently, no addition can be made under Section 153A of the Act as the cases of respondents are of non-abated assessments. - Decided in favour of assessee.

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• 2021 (9) TMI 899
  Disallowance of claim of deduction u/s 80P - AO noticed that the assessee was having income both from members and non-members - Since the assessee was having income from non-members - HELD THAT:- As in the case of Mavilayi Service co-operative Bank Ltd. Ors. [ 2021 (1) TMI 488 - SUPREME COURT] had held that expression members is not defined under the Income-tax Act. Therefore, it was held by the Hon ble Apex Court that necessarily the expression members in section 80P has to be construed in the light of the expression as contained in the respective State Co-operative Societies Act. The Hon ble Apex Court held that if associate / nominal members are treated as members under the State Co-operative Societies Act, there is no violation of the provisions under the State Co-operative Societies Act, and therefore, the assessee would be entitled to the benefit of deduction u/s 80P - the issue of deduction u/s 80P needs to be reconsidered afresh by the A.O - The issues raised in this appeal are restored to the files of the A.O - Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 898
  Deduction u/s 80P - definition of co-operative society as enacted by sec. 2(19) - deduction denied assessee was only registered under the Karnataka Souhardha Sahakari Act, 1997, and therefore, was not a co-operative society within the purview of section 2(19) - HELD THAT:- Hon ble Karnataka High Court in the case of M/s.Swabhimani Souharda Credit Co-operative Ltd. [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] had decided an identical issue and held that the entities registered under the Karnataka Souharda Sahakari Act, 1997, fit into the definite term Cooperative Society - also see SIDDARTHA PATTINA SOUHARDA SAHAKARI NIYAMITHA [ 2019 (7) TMI 1390 - ITAT BANGALORE] . In the instant case, since the A.O. has decided the issue against the assessee solely for the reason that the assessee is not a Co-operative Society because it is registered under the Karnataka Souhardha Sahakari Act, 1997, thus matter needs to be examined afresh by the A.O. The A.O. is directed to examine afresh the claim of deduction u/s 80P - Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 895
  Disallowance u/s.14A - CIT(A) sustained the disallowance to the extent of exempt income - HELD THAT:- Assessee failed to rebut the finding of the ld. CIT(A) by placing any finding of judicial precedent to controvert the finding of ld. CIT(A) confirming the disallowance made u/s. 14A of the Act to the extent of exempt dividend income earned during the year - no infirmity in the finding of the ld. CIT(A). - Decided against assessee. Addition u/s.68 - Unexplained loan transaction - HELD THAT:- In confirmation of accounts there is no transaction during the year and interest has been charged on the opening balance. Other documentary evidence in the form of bank statement has also been filed to prove that the alleged fund was not received during the assessment year under consideration. This fact remains undisputed at the end of the ld. DR also. We, therefore, under the facts and circumstances of the case, are of the considered view that since the alleged sum of Rs. 4 lakhs was not received during the A.Y under consideration, the addition made u/s. 68 of the Act is not called for during the A.Y under consideration - Thus we delete the addition u/s. 68 - Decided in favour of assessee. Disallowance u/s. 69C of interest expenditure on the alleged unexplained cash credit - HELD THAT:- Since the addition made u/s. 68 of the Act for alleged cash credit stands deleted by us and there being no other finding of the ld. AO challenging the genuineness of the interest expenditure, no disallowance is called for. Relevant finding of the ld. CIT(A) is set aside and addition made u/s. 69C of the Act by the ld. AO stands deleted.- Decided in favour of assessee.

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• 2021 (9) TMI 894
  Revision u/s 263 by CIT - case assessment order u/s.143(3) r.w.s. 153C r.w.s. 153A(1)(b) passed - HELD THAT:- For instituting a valid proceeding under Section 263 of the Act, there should be a valid legal proceeding before the Assessing Officer. Once the assessment order was quashed on the ground that it was passed after limitation provided in the Act for passing such order, then it is to be construed that no assessment order is available on which learned Commissioner could form an opinion as to whether any error is available in such order or not. Section 263 of the Act specifically contemplates that there should be an error either in the proceedings or in the assessment order which has caused prejudice to the interests of the Revenue. Now, in the present appeal, as the assessment order itself has already been quashed by the Tribunal vide order dated 12.11.2020, no subsequent further proceedings can be initiated. For the completeness of the facts, we take note of the operating part of the order of the for Assessment Years 2009-10 to 2014-15, wherein the Tribunal, after an elaborate discussion, has quashed the assessment orders. Commissioner has committed an error in holding that Even though these issues are interlinked, but to keep the issue alive and in the interest of revenue, this proceedings are completed . Therefore, in view of the above discussions, the impugned order is not sustainable in the eyes of the law. Accordingly, we quash the order passed under Section 263 of the Act for the year under consideration and allow the appeal of the assessee.

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• 2021 (9) TMI 893
  Condonation of delay - eligible reasons of delay - HELD THAT:- If we examine the explanation given by the assessee, then it would reveal that the appeals could not be filed by the assessee in time mainly on account of laxity on the part of Chartered Accountant, who has been instructed for further follow up in the matter including filing of the appeal before the Tribunal. Second reason given by the assessee is that of old age and the time taken for collecting various information and documents for filing appeal before the Tribunal. Though, we do not have any material to verify this pleadings, but considering age of the assessee and the facts that the assessee would not gain anything by not filing the appeal in time, more so when he has good cause in hand for defending the case before the Tribunal, we condone the delay. Assessment u/s 153A - incriminating material belong to the assessee found at the premises of the some other person or not? - HELD THAT:- As relying on KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] there is no seized material referred by the AO while making additions. Hence, the impugned additions are not sustainable.

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• 2021 (9) TMI 892
  Assessment u/s 153C - Addition u/s 68 - reopening of assessment u/s 147 - HELD THAT:- The decision of the coordinate bench in the case of Naval Oil and Containers Pvt. Ltd [ [ 2020 (3) TMI 1367 - ITAT DELHI] ] squarely applies on the facts of the case in hand, in as much as, in that case also, information was received out of the search operation carried out in S.K. Jain group of cases - Decided in favour of assessee.

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• 2021 (9) TMI 890
  Income earned from trading in Shares, Future and Options and derivatives - apportioning of expenditure towards alleged speculation/business - AO firstly re-calculated the loss by apportioning the expenditure incurred during the year, computing loss and further, treated the alleged loss from trading of Shares, Future and Options and derivatives as speculative in nature, not liable to be set off from the other business income - HELD THAT:- As regards the apportionment of expenditure incurred during the year, the Ld. AO erred to taking note of the fact that the income from commission brokerage is computed on the basis of turnover carried out on recognised exchange of which the assessee is a member - Assessee has shown better income from sale and purchase of shares and lower loss in derivative business and, therefore, in our considered view, the Ld. CIT(A) has rightly appreciated this aspect, thereby deleting the addition made by the Ld. AO wrongly apportioning of expenditure towards alleged speculation/business, which gave rise to higher speculation loss. Thus, ground no. 1 raised by the revenue stands dismissed. Characterization of loss - Treating the loss/income incurred by the assessee for trading in shares, Future and Options and derivatives as business loss as against the finding of the Ld. AO treating the same as speculation loss - HELD THAT:- We find this issue has come up before this tribunal in assessee s own case for the A.Y 2012-13 [ 2021 (2) TMI 1204 - ITAT KOLKATA] wherein the Tribunal after placing reliance on the judgment of the Hon ble Jurisdictional High Court in assessee s own case for the A.Y 2005-06 by order dated 12-03-2014, has held that the income from derivatives, Future and Options and Share trading carried out on recognised Stock Exchange is not in the nature of speculation and it is a business income. Addition u/s 2(24)(x) r.w.s. 36(1)(va) in respect of employees contribution towards PF/ ESI - delay on payment of employees contribution to PF as prescribed by the respective Act - HELD THAT:- As alleged sum was duly deposited with the respective authority before the due date of filing of return of income for the A.Y 2011-12 prescribed u/s. 139(1) of the Act. We find that the case of the assessee is covered by the judgment of the Hon ble Jurisdictional High Court of Calcutta in the case of Vijayshree Ltd [ 2011 (4) TMI 63 - ITAT KOLKATA] as decided in favour of assessee.

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• 2021 (9) TMI 889
  Assessment u/s 153A - importance of existence of incriminating material for making the additions - as case where proceedings are not pending, could not be applied in absence of any incriminating material - HELD THAT:- Assessing Officer had not made the addition on the basis of any incriminating material and rather he has made the addition on the basis of entries in the books of account which is not in accordance with law with the settled position of law in a number of cases it has been held by various High Courts that in case of concluded assessment the addition can be made only on the basis of incriminating material found during search. Even Hon ble Supreme Court in the cases of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] has dismissed the SLPs filed by the Department against the order of Hon ble High Courts. The Lucknow Bench in a number of cases has allowed this ground of appeal under similar facts and circumstances after placing reliance on the order of Hon ble Supreme Court in the case of Meeta Gutgutia [ 2018 (7) TMI 569 - SC ORDER] The existence of incriminating material for making additions u/s 153A is strengthened from the decision of Hon ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society[ 2017 (8) TMI 1298 - SUPREME COURT] where Hon ble Supreme Court in a case u/s 153C has again highlighted the importance of existence of incriminating material for making the additions. The Hon ble Supreme Court went on to hold that the Assessing Officer, while relying on the incriminating material, has to make reference in the satisfaction note regarding year-wise existence of incriminating material. Since there is an interplay between section 153A and section 153C, the findings of Hon ble Supreme Court in a case u/s 153C are also applicable for making additions u/s 153A of the Act. We find that in these appeals also the additions has not been made on the basis of any incriminating material and rather has been made on the basis of entries in the books of accounts. The dates of filing of returns as mentioned in the chart reproduced earlier in this order are found to be correct from the copies of returns placed in respective paper book pages. The period of issue of notice u/s. 143(2) in the above cases expired on 30.09.2012 and 30.09.2013 respectively whereas the search took place on 31.08.2015 therefore assessments in these cases also stood completed before the date of search . - Decided in favour of assessee.

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• 2021 (9) TMI 888
  Bogus purchases - CIT-A deleted the addition - HELD THAT:- AO could not point out any discrepancies in assessee s documentary evidences. The time allotted to the assessee to produce the parties was inadequate. However, during assessment / remand proceedings, the assessee furnished copies of sale purchases invoices, confirmation of accounts, affidavits of the suppliers, Income Tax Returns of the suppliers, bank statements, and statements of on-to-one mapping of the purchases with corresponding sales. Notices issued u/s 133(6) during remand proceedings were duly responded to by the suppliers along with documentary evidences as desired by Ld. AO. Further, there was no adverse remark in the remand report regarding the authenticity of documents submitted by the assessee as well as by the suppliers. The three suppliers were well in existence as on-going business concerns. Therefore, the assessee, in our considered opinion, had duly substantiated the purchases transactions and the additions have rightly been deleted by Ld. CIT(A) in the impugned order. - Decided against revenue. Addition u/s 68 on unsecured loans - availability of funds with the lenders at that point of time when it is claimed that such finance was transacted and transferred to the bank account of the appellant - HELD THAT:- Lenders transacted in sizeable amounts during the impugned assessment year and there was sufficient credit balance in their bank accounts to lend money to the appellant. The transactions have duly been confirmed by the lender and confirmatory affidavits have been placed on record. The additional documents furnished by the assessee were forwarded to Ld. AO and the same were verified in the remand proceedings - AO has not pointed out any discrepancy in the said documentary evidences. It is noteworthy that notices issued u/s 133(6) during remand proceedings were duly responded to by the lenders along with documentary evidences. Few of the lenders appeared before Ld. AO and confirmed the transactions. The interest was paid on loans after complying with TDS requirements - conclusion of Ld. CIT(A) that the assessee demonstrated fulfillment of primary ingredients viz. identity and creditworthiness of the loan creditors and genuineness of the loan transactions, could not be faulted with - interest paid by the assessee on these loans was to be allowed. Finding no reason to interfere in the findings of Ld. CIT(A) - Decided against revenue.

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• 2021 (9) TMI 887
  Non-genuine creditors u/s 41(1) - proof of liability ceased to exist - case of the assessee was selected for limited scrutiny under CASS - CIT-A deleted the addition - HELD THAT:- As the assessee had not written off outstanding liabilities in his books of accounts and made the payments to these creditors in subsequent years through banking channels - no addition could have made under section 41(1) without proving that liability ceased to exist and that too in the year under consideration. Nothing has been brought on record to show that some benefit has actually accrued to the assessee during the year under consideration - CIT(A) has passed a speaking and reasoned order discussing all the facts and circumstances as well as legal propositions of law therefore, considering the totality of facts and circumstances and case laws exactly similar to the facts and circumstances of the present case, we find no reason to interfere in the order of the ld. CIT(A) qua this issue, hence, we uphold the same. - Decided in favour of assessee. Unexplained credits u/s 68 - advances or cash received against which goods is supplied - assessee could not produce the confirmation from party HELD THAT:- The assessee furnished confirmation account, bank details, purchase and sale bills. Upon perusal of these details and evidences furnished by the assessee, we agree with the assessee s claim. The assessee has produced copy of confirmation before the lower authorities duly reflecting the creditor s name along with its address, PAN, advance amount etc. - advances or cash received against which goods is supplied subsequently is not a cash credit as contemplated by section 68 of the Act. Simply because, the assessee could not produce the confirmation from this party, the genuineness of transaction cannot be doubted. All the relevant details proving the transaction as genuine were available on record despite that, the A.O s mere emphasis was on the production of the confirmation from this party. In fact, the name and addresses were mentioned in the copies of bills of sale and purchase. Besides, the assessee by way of various documents duly proved that he had already supplied the goods against the advance amount subsequently on 28- 03-2017. In this regard, the assessee duly furnished bills - Decided in favour of assessee.

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• 2021 (9) TMI 886
  Assessment u/s 153A - jurisdiction assumed by the Ld. A.O. u/s 153C - scope of the provisions of Section 153C of the act and whether such assessment years are barred by the limitation or not? - 6 years are to be reckoned from what date? - additions made on protective basis by the Ld. A.O - Assessee argued satisfaction recorded by the assessing officer in the case of searched person was not brought on record by the AO of the assessee and only a summary was provided to the assessee - HELD THAT:- It is apparent that Assessment year which can be assessed u/s 153C of the act in this case is only from AY 2008-09. Thus, the assessments made by the ld AO u/s 153C of the act for AY 2006-07 and 2007-08 are beyond time prescribed u/s 153C of the act and are quashed. Thus, First question is answered in favour of the assessee. Whether the assessment order passed for assessment year 2011-12 u/s 153C is without jurisdiction and void ab initio, as no satisfaction has been recorded by the assessing officer of the searched person? - It is the responsibility of the AO of the other person to verify that material and specified assets to determine for which year same are taxable. Based on this the AO of the other person will issue notices to the other person. Otherwise, the satisfaction recorded by the AO of searched person will determine the assessee ability of income any assessment year in the hands of the other person. If the proposition canvassed by the learned authorised representative is accepted then the AO of the other person, will simply become a postman for issuance of notice u/s 153Cof the act. That is not the mandate of the law. Therefore the argument of the learned authorised representative is rejected that when the AO of the searched person has specifically not included assessment year 2011 12, the authority of the assessing officer of the other person is curtailed in issuing notice for assessment year 2011 12 and hence the assessment order passed Under Section 153C of the act for assessment year 2011 12 is liable to be quashed. Hence, we reject this argument of the learned AR. In view of this, we are of the opinion that the assessment order passed for assessment year 2011 12 cannot be quashed at least on this count. Thus, second question is answered against the assessed. Whether the pen drive seized from the premises of one of the employees of the group concern can be said to be belonging to the assessee when four different applicants have owned it before the settlement commission and settlement commission has accepted the above proposition after considering the objections of revenue before it? - Pen drive does not belong to the assessee company wherein for different applicants have owned it before the settlement commission and the settlement commission has accepted the content of the pen drive data contained therein and the income comprised in those documents chargeable to tax in the hence of those four applicants accepting the amount of disclosure made by them. The satisfaction recorded by the assessing officer of the person searched does not fulfill the requirement of provisions of Section 153C of the act as it is a defective satisfaction for the reasons given above. Assessment order framed u/s 153C read with Section 143 (3) for assessment year 2006 07 to 2011 12 in case of the assessee are ad verbatim copies of the orders of the learned Deputy Commissioner of income tax, central circle 2 in the case of Dalmia cement Bharat Limited and therefore there is no application of independent mind by the learned assessing officer on the facts and the materials available before him while taxing the income in the hands of the assessee on protective basis. Therefore the consequent assessment order passed u/s 153C of the act for assessment year 2006 07 to 2011 12 are also not sustainable in law. Addition on protective addition - Application to Income tax Settlement Commission[ITSC] - Whether the assessee can claim that order of the settlement commission was conclusive u/s 245I of the act and where income covered in the pen drive has been accepted by the settlement commission as belonging to the four different applicants and accepting the disclosure, can now the assessing officer make the similar addition out of the same pen drive in the hands of the assessee on protective basis? - When looked into the provisions of Section 245I, we are of the opinion that it gives the protection to the applicants before the settlement commission only that such matter cannot once again be taxed in the hands of only those four applicants in different proceedings for the same assessment year or in different assessment years. According to us, the provisions of Section 245I does not give protection to the whole world with respect to the matter as decided by the settlement commission, it only protects those applicants who are before the settlement commission. Therefore, this proposition raised by the learned authorised representative stands rejected. Whether the assessment order passed in the case of the assessee on protective basis ? - When the substantive additions are deleted, the protective additions also cannot survive. It can survive in one of the situation where there is a finding in the case of the person in whose hands substantive addition is made that the income belongs to the person in whose hands protective additions are made. We could not find such finding by any authority in the case of assessee in whose hands substantive additions are deleted - when the substantive additions is deleted in the hands of another assessee without holding that income does not belong to that assessee but to this assessee, protective additions cannot be sustained in the hands of this assessee - when on the identical facts and circumstances, identical additions even on protective basis are deleted in the hands of the other assessees by ld CIT (A) and such orders are remained unchallenged , we do not find any reason that such protective additions should be sustained in the hands of the assessee. Whether the disclosure made before ITSC covers the amount of data involved in the pen drive? - ITSC has covered, the complete data of 125 pages found from the pen drive, deduced the income of Rs. 95 crores, and held that such a disclosure is full and true. In absence of any infirmities pointed out by revenue about any leakage of income from the seized data, we find that revenue is not in a position to controvert findings of ITSC on adequacy of income offered for taxation. Thus, Issue decided in favour of the assessee.

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• 2021 (9) TMI 885
  Addition u/s 69 on account of unexplained investment - HELD THAT:- As during the course of assessment proceedings it was found that the assessee has made the cash payment of Rs. 50,000/- out of the books. During the course of assessment proceedings as well as appellate proceedings, the assessee failed to explain the source of investment. Even before us, the Id. Counsel for the assessee could not bring any contrary material to controvert the findings of the Revenue Authorities. - the addition made by the AO as confirmed. Therefore, the first ground raised in the appeal of the assessee is dismissed. Addition u/s 69 on account of unexplained investment - during the course of survey, it was found that assessee had made the cash payment to the land owners against the purchase of their land - CIT(A) discussed the relevant judicial pronouncements and found that neither the retraction was made nor communicated to the Revenue Authorities and the record suggests that no threat or coercion has been exerted during the confession statement of the assessee - HELD THAT:- CIT(A) discussed the evidentiary value as per Indian Evidence Act and reached to the conclusion that no retraction communicating to the Revenue Authorities was made and it is also evident from the record available that no threat or coercion had been exerted during the confession statement of the assessee. Even before us, the finding of the Id. CIT(A) could not be controverted by the Id. CIT(A) by bringing any contrary material on record, thus, we are in agreement with the Id. CIT(A) in observing that the evidence of testimony cannot be wiped out and does not become non-existent and therefore, this evidence can well be utilized to frame the assessment. Accordingly, we do not find any reason to interfere with the findings of the Id. CIT(A). Hence, the findings recorded by the Id. CIT(A) are confirmed. Therefore, last ground i.e. ground no.2 raised in the appeal of the assessee is also dismissed. Addition u/s 69C - unexplained expenditure - HELD THAT:- We find that the assessee made the payment by RTGS and the source of payment and destination can be found on the bank statement. Since the assessee purchased the stamp and made the payment through RTGS then there is no question of considering the same has unexplained investment - AO issued the summon u/s 131 of The Act to the stamp vendor and by issuing the summon, the stamp vendor becomes the witness of the Revenue and thus, it was the duty of the Assessing Officer to collect the information from the stamp vendor and confront to the assessee but the AO failed to gather the information. Even before us, the Id. CIT-DR could not controvert the findings of the CIT(A) on this issue. Accordingly, we confirm the findings of the Id. CIT(A) on this issue. Hence, ground no. 1 raised in the appeal filed by the Revenue is dismissed. Unexplained and undisclosed investment u/s 69B - HELD THAT:- Assessing Officer failed to discharge his onus and simply on guess work, presumption and suspicion, the addition in this regard had been made. The allegations of the Assessing Officer were merely without having brought any corroborative material on record and Id. CIT-DR also could not bring any contrary material to rebut the findings of the Id. CIT(A), therefore, we do not find any reason to interfere with the finding recorded by the Id. CIT(A). We confirm the same. Accordingly, the ground no.2 raised in the appeal of the Revenue is also dismissed.

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• 2021 (9) TMI 884
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - failure to strike off the irrelevant default in the body of the SCN - assessee submitted that as the A.O had failed to strike off the irrelevant default in the Show cause notice - HELD THAT:- As relying on MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] validity of penalty imposed u/s 271(1)(c) de-hors striking off the irrelevant default in the SCN, had observed, that the said failure despite a clear recording of satisfaction for imposing the penalty on one or other, or both grounds mentioned in Sec. 271(1)(c) in the assessment order, would, however, on account of the aforesaid defect vitiate the penalty proceedings. Ain the case of the present assessee before us, it is a matter of an admitted fact that the A.O had failed to strike off the irrelevant default in the body of the SCN , dated 23.01.2015, therefore, the penalty thereafter imposed by him u/s 271(1)(c) of the Act, vide his order dated 27.07.2015 cannot be sustained and is liable to be struck down. - Decided in favour of assessee.

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• 2021 (9) TMI 883
  Exemption u/s 11 - addition of the Corpus Donation and considering that the same was not for specific purposes and was a revenue receipt - registration under section 12A was not available at the time of assessment proceedings - HELD THAT:- It is an admitted fact that the A.O. disallowed the claim of the assessee for the reasons that the assessee did not furnish the evidence relating to the registration under section 12AA - He also mentioned that he had not examined the details and also did not call for specifically the same, in the absence of registration under section 12AA. In the present case, CIT(A) pointed out that the assessee had not furnished the confirmation of donors regarding donation for specific purpose. On the contrary the claim of Assessee was that the details were furnished before the A.O. and the assessee was having the registration under section 12AA - therefore we deem it appropriate to remand this issue back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable of being heard to the assessee. Amount spent on construction of the capital funds claimed to be application of receipts which was not allowed - HELD THAT:- In the present case it is an admitted fact that the assessee reduced the amount of the assessee s paper book and if the assessee had not reduced the said amount then it could have been shown separately on the asset side and the capital funds was to be increased by the same amount. Objection of the Department that the assessee was not having any land, the Ld. CIT(A) mentioned that the assessee has filed a copy of certificate mentioning therein that the land being used by school belonged to the society Hindu Shiksha Samiti, Haryana and the land and building thereon will devolve to the Hindu Shiksha Samiti without any payment on closure of the school which clearly shows that the assessee was the owner of the building till the closure of the school and the said building would be handed over to Hindu Shiksha Samiti without any payment only on closure of school. This fact was not appreciated either by the A.O. or by the Ld. CIT(A) - We deem it appropriate to set aside this issue back to the file of the A.O. for proper verification. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 882
  Revision u/s 263 - disallowance of the assessee s claim for deduction of interest expenditure u/s 36(1)(iii) - HELD THAT:- Assessee had sufficient owned funds to source the interest-free advance that was given to its subsidiary company is not in dispute. The controversy involved in the present appeal hinges around the aspect, that as per the department if an assessee had borrowed certain funds on which liability to pay interest is being incurred; and on the other hand had advanced certain amounts to its sister concern or other third parties without charging any interest and without any business purpose, then, the proportionate interest correlating to the amount so advanced without charging any interest was liable to be disallowed u/s 36(1)(iii) of the Act. We are of a strong conviction that the aforesaid view taken by the lower authorities is absolutely misconceived and in fact misplaced. In our considered view, if there be interest-free funds available with an assessee which are sufficient to meet its interest free investments; and at the same time the assessee had raised interest bearing loans, then, the presumption would be that the investments in question were made by the assessee from the interest-free funds so available with it. Our aforesaid view is fortified by the judgment of CIT vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] as observed that in case if the assessee had advanced interest-free amounts out of its mixed funds i.e interest free and interest bearing funds lying in common pool, then, the presumption would be that the amount so advanced was from the interest-free funds available with the assessee company. We are unable to persuade ourselves to subscribe to the view taken by the lower authorities who had disallowed the assessee s claim for deduction of the interest expenditure under Section 36(1)(iii) of the Act, for the reason, that as the assessee was in receipt of interest bearing funds, therefore, it was to be presumed that the interest-free funds given by it to its subsidiary company, viz. SRPL were out of such interest bearing funds. We, thus, not finding favor with the view taken by the lower authorities set-aside the order passed by the CIT(A), to the extent he had upheld the disallowance of the assessee s claim for deduction of interest expenditure u/s 36(1)(iii) of the Act. - Decided in favour of assessee.

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• 2021 (9) TMI 881
  Computation of assessee income - GP estimation - Addition u/s 68 - deposits made in the undisclosed bank account - reopening of assessment - assessee s income computation by treating the entire deposits in the Bank as business receipts and applying the G P rate over that - HELD THAT:- When the assessee had received the deposits through the banking channels, than names and bank accounts of the persons from whom amounts were received and paid by the assessee, could be retrieved by the assessing officer by using his powers under section 133(6) of the Income Tax Act however, the notices were only issued 7 persons to verify the transactions, whose details were provided by the assessee, out of 7 persons, only one person had responded and acknowledged that it was in a business relationship with the assessee - nothing was brought on record concerning the remaining 6 persons. No efforts were made by AO , to find out the real nature of transactions by issuing the summons to the Banks officials of these five Bank accounts. Revenue has unbridled power to summon, examine, and collect the evidence to prove its case and enforce the attendance of six people to whom the lower authorities issued the notices under section 133. In our opinion once the assessing officer had reopened and examined the case of the assessee by treating the receipt deposited in the bank accounts as the business receipts, then the assessing officer has two options either to reconcile the bank entries by drawing the trading account based on bank entries and compute profit of the assessee or treat the entire bank deposits as turnover of the assessee and apply gross profit over that. Once the assessment is made based on the undisclosed bank accounts, the debit and the credit in the bank accounts were required to be considered for making the addition u/s 68 - The income that has accrued to the assessee is taxable as per law. What income has really occurred to be decided based on material available with the AO, not by reference to physical receipt of income(credit entry in Bank ), but by also giving the benefit/ adjustment of debit entry ( in the bank account ), the difference would solely represent the income of the assessee, in the present case. Being the amount paid were on account of business connections, required to be verified by the lower authorities either from the bank account or from the bank authorities or from the beneficiaries - assessee had failed to produce various persons with whom he had the financial transactions for the purchases/sale of goods. Nothing had been brought on record to substantiate that invoices produced by the assessee were not genuine or that the assessee had not made business transactions from the above noted seven entities. GP estimation - We have only left the second recourse, whereby the assessee s income was required to be computed by treating the entire deposits in the Bank as business receipts and applying the G P rate over that - the assessee was not maintaining any books of account in respect of the business carried out by the assessee nor was the assessee able to show that he was registered with the VAT department. In other words the books of account as required under section 2(12A) were not maintained by the assessee, in our view it is this requirement of invoking section 68 of the act that the assessee should have maintained the books of account and the entries have not been shown in the books of account. Section 68 is a deeming provision, which provides that if any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation then the sum so credited may be charged to income tax as the income of the assessee. For applying section 44 AF, it is clear that the total turnover of the assessee must be less than 40 lakhs of rupees. In the present case as mentioned hereinabove turnover the assessee, as per the case of the assessee as well as of the assessing officer was more than 40 lakhs, therefore the rate of 5% cannot be applied as claimed by the assessee - AO has not brought on record that the assessee is having any other source of income other than doing the business, as mentioned by the assessing officer in the reasons to reopen the assessment. Therefore, only the GP addition can be made on the bank deposits, treating it as a business turnover. Best rate which can be applied in the given set of facts would be 8% GP on the turnover in all the assessment years. This will be tune with the 44AD of the IT Act.The profit forall three years, after applying GP rate of 8% would come to Rs. 76,90,622.88/-, however, if we compute the profit based on trading accounts for all three years , it will come to Rs. 38,99,852/- Undoubtedly the assessing officer in the assessment order, had accepted the return of income, declaring business income, filed by the assessee after receipt of the notice under section 148 and had given the credit while computing the income of the assessee based on the bank deposits.Income of the assessee shall be as under for all three assessment years after giving the benefit of the amounts declared by the assessee during all these assessment years and after applying 8% for all these assessment years.

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• 2021 (9) TMI 880
  Bogus purchases - Addition of commission on notional basis - HELD THAT:- Similar, is the grounds in Assessment Year 2014-15 wherein purchases made from Sarvesh Mercantile Pvt. Ltd by assessee was added by Assessing Officer and confirmed by CIT(A) i.e. commission on the above purchases. Similarly, confirming the addition of commission on sales made by assessee to Ecoscapes International Pvt. Ltd on notional basis.Since, the facts and circumstances are exactly identical in these years also, respectfully following our finding in Para 6 of this order, we delete the addition of commission in these years also. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- This issue is covered by the decision of Hon ble Supreme court in the case of Maxopp Investment Ltd. vs. CIT [ 2018 (3) TMI 805 - SUPREME COURT ], wherein it is held that disallowance of section 14A read with Rule 8D of the Rules cannot exceed the exempt income claimed by assessee. Hence, we direct the Assessing Officer to restrict the disallowance to the extent of exempt income only. Hence, this common ground of the assessee in all the three appeals is partly allowed. Unexplained expenditure under section 69C - HELD THAT:- We have also gone through these nothings and as well as loose papers, which are indicative of incomings and outgoings but these notings does not indicate which amount pertain to which document and these are dumb notings. Even Revenue now could not controvert the above arguments, hence, we are of the view that addition made by Assessing Officer under section 69C is without any basis and hence, we delete the same. This issue of assessee s appeal is allowed.

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• 2021 (9) TMI 879
  Rectification of mistake u/s 254 - NP estimation on turnover - Additions towards Bogus bills for purchase of diamonds - HELD THAT:- Net Profit ratio is works out to 0.33% (Rs. 1,33,921.90 X 100 / Rs. 4,05,50,960). Further, assessee had declared Rs. 40,45,000/- as excess stock not disclosed in the books of account during the course of survey proceedings U/s. 133A of the Act which has to be treated separately as undisclosed income and therefore, this amount cannot be included while computing the NP ratio of the assessee from its regular disclosed turnover in the books of accounts. Hence, the Net Profit arrived in the order of the Tribunal at 0.33% is in order. Bogus bills for purchase of diamonds and debited in its profit loss A/c for which payments were made through cheques and the same was received back by way of cash and the assessee did not receive the diamonds. In such situation it is obvious that, it is nothing, but a bogus claim of expenditure recorded in the books of accounts of the assessee against which no revenue towards turnover could be attributed. Therefore, estimation cannot be made on the bogus purchases at 8 or 10 % as claimed by the assessee and the entire bogus claim of expenditure has to be disallowed which the Tribunal had correctly dealt with in its order. Hence, there is no mistake apparent on record in the Order of the Tribunal on this issue also - MA filed by the assessee is dismissed.

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• 2021 (9) TMI 878
  Revenue recognition - Income from sale of plots - as per AO assessee should have followed the percentage of completion (POC) method instead - HELD THAT:- As decided in own case [ 2015 (3) TMI 847 - DELHI HIGH COURT] upheld the contention of the assessee that the project completion method followed by the assessee will not result in deferment of tax and there is no justification for the Ld. Assessing Officer to adopt POC method for one year on selective basis.So far as these facts are concerned, they remain un-challenged and un-impeached. Since there are no compelling reasons to deviate from this consistent view taken by the Tribunal and Hon ble High Court, we are of the considered opinion that the findings of the ld. CIT(A) cannot be found fault with. On this premise, we find the grounds of Revenue s appeals as bereft of merits and consequently dismiss the same. Interest free advances to the sister concern - disallowance of interest in respect of the investments made by the assessee in the subsidiaries, on which no interest was charged by the assessee - HELD THAT:- It remains an established fact that for the assessment years 2008-09 and 2009-10, as against the interest free funds in the hands of the assessee to the tune of Rs. 104.18 crores and 118.68 coress respectively, the assessee made investments only to the tune of Rs. 37.25 crores and 75.77 crores respectively. It goes without saying that for these two assessment years, the own funds of the assessee are in far excess of the investments made- when the assessee had substantial capital and interest free funds available with it, which far exceed the interest free advances to the sister concern, there is no scope to make any addition, though the assessee was maintaining a bank account with mixed common funds, in which all deposits and withdrawals were made. See Reliance Utilities Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2021 (9) TMI 877
  Disallowance of interest on late payment of TDS - Claim of deduction u/s 37(1) on the plea that the delay in remittance of TDS had suffered interest which is compensatory in nature - whether the said payment of interest on late payment of TDS could be construed as compensatory in nature or penal in nature? - HELD THAT:- We find that the payment of interest is provided separately in the statute which is a permissible payment and accordingly compensatory in nature. Apart from this, the statute also provides for payment of penalty which is penal in nature. Hence the legislature in its wisdom had enacted separate provisions for payment of interest and penalty separately. Hence payment of interest on delayed remittance of TDS could not be construed as penal in nature. We find that the reliance in this regard has been rightly placed on case of DCIT vs Rungta Mines Ltd [ 2018 (10) TMI 672 - ITAT KOLKATA ] which dealt with the similar issue of punitive charges paid to Railways for overloading of wagons as an allowable expenditure being compensatory in nature - we direct the ld AO to grant deduction for interest on delayed payment of TDS - Decided in favour of assessee. Disallowance of project expenditure at 10% on an adhoc basis - HELD THAT:- We find that the lower authorities had not given any finding with regard to the aforesaid details filed by the assessee and had simply resorted to make adhoc disallowance of project expenditure at 10% of value thereon without any basis and by passing a cryptic order. Hence we have no hesitation in directing the ld AO to delete the adhoc disallowance made in the instant case. - Decided in favour of assessee.

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• Customs

• 2021 (9) TMI 906
  Declination to allow the claim for reward under the Merchandise Exports From India Scheme (MEIS) - HELD THAT:- In Anu Cashews and Mangalath Cashews [ 2019 (11) TMI 795 - KERALA HIGH COURT ], learned Single Judge of the Kerala High Court was dealing with an identical situation where in the shipping bill the exporter had inadvertently ticked No while clearly mentioning in the shipping bill, as has been done in the present case that he intended to claim reward under MEIS . The learned Single Judge perused the screen shot which confirmed that indeed the exporter had indicated the above intention in the shipping bill although inadvertently No had been ticked in the reward column - The learned Single Judge held that the denial of a claim for export benefit could not have been done in a mechanical manner merely because there was a technical lapse on the part of the exporter concerned in not checking a particular box in the web portal, more so when there was sufficient indication from the other details entered therein that pointed to the exporter s intention to claim the reward. In the present case too, with the basic facts not being disputed viz., that the Petitioner declared its intent to claim the reward in as many words in the shipping bill in question itself, and indavertently ticked N in the reward column in the shipping bill in question, the Court finds no reason to deny the relief claimed for by the Petitioner which has been granted by various High Courts. The Court sets aside the impugned decision dated 6th and 13th August, 2020 of the PRC as communicated by the DGFT on 20th August, 2020 and directs the Opposite Parties, the sub-ordinate agents to allow the benefit of the reward under the MEIS to the Petitioner in respect of the shipping bill in question dated 14th June, 2018 - Petition allowed.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 891
  Non-filing of claim by appellant despite public announcement as well as the intimation through email to Insolvency Professional - It is the case of the Appellant that they were neither intimated nor were they aware about the fact that the last date of submission of claim has expired - HELD THAT:- In the instant case the Resolution Plan was approved by 91.02% of the Members of CoC and is pending approval before the Adjudicating Authority and was last listed for hearing on 16.06.2021. The literal language of Section 12 mandates strict adherence to the time frame it lays down. Time and again, the Hon ble Supreme Court in [ 2017 (9) TMI 58 - SUPREME COURT ] has noted that the model timelines provided in Regulation 40A of the CIRP Regulations should be followed as closely as possible - In this case, on account of lockdown and pandemic the last date was extended from 31.03.2020 to 16.08.2020 to facilitate all creditors to file their claims. In the background of this factual matrix, we hold that the delay/latches are on behalf of the Appellant and there is no dereliction of duty on behalf of the IRP/PR. The Resolution Professional was not duty bound to collate claims which are belatedly received after the last date thereby delaying the entire CIRP which is a time bound process and further having regard to the fact that the claim of the Appellant was incorporated in the Information Memorandum which was circulated to the Prospective Resolution Applicant and the Members of the Committee of Creditors for their consideration, there is no dereliction of duty on behalf of the IRP/RP as provided for under Sections 18 and 21(1) of the Code. Appeal dismissed.

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• Service Tax

• 2021 (9) TMI 908
  Sabka Vikas (Legacy Dispute Resolution) Scheme 2019 - unilateral declaration of liability by the petitioner - quantification of demand not made - petitioner was orally informed that the applicability of scheme has been rejected as the Deputy Commissioner till date has not calculated any duty/tax liability - HELD THAT:- Form SVLDRS-1 placed by the petitioner as Annexure P-3 itself contains the ground of its rejection as, ground of ineligibility with remarks, amount neither quantified nor communicated . It is, therefore, apparent that the application form annexed by the petitioner itself shows its rejection as also the reason for the rejection. The petitioner, therefore, cannot plead ignorance of the same. In the present case as well, there was a reference to a unilateral declaration of liability by the petitioner and not a quantification of demand by the Revenue in the letter/notice dated 20.11.2018 and therefore, the same does not make the petitioner eligible to avail the benefit of SVLDRS. There are no merit in the petition - petition dismissed.

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• 2021 (9) TMI 897
  Recovery of Service Tax - air travel agent services - services provided to the US Embassy - non-fulfillment of the conditions laid down in the said Notifications dated 23.05.2007 till 30.06.2012 and Notification dated 20.06.2012 - rule 5A of the Service Tax Rules, 1994 - amendment in changed address in the Registration Certificate as per the provisions of Act - extended period of limitation - liability of interest and penalty - HELD THAT:- The Exemption Notifications was issued by the Central Government of India in the public interest to exempt taxable services provided to a foreign diplomatic mission or consular post in India. As is evident from clause (i) of both the Notifications, the underlying purpose is to uphold the principle of reciprocity amongst the nations. It is only to ensure that there is no evasion of tax and that services have been rendered specifically to those diplomatic missions/ consular officers to whom a certificate has been issued by the Protocol Officer that the Notifications require a correlation to be established between the invoices and the undertakings. Once these two documents can be correlated, though not in a manner provided for, the substantive conditions to the Exemption Notifications stand fulfilled and the exemption cannot be denied. In the present case, the appellant was able to correlate the invoices with the undertakings. It can, therefore, be concluded that the appellant satisfied the substantial conditions set out in the Exemption Notifications - It needs to be noted that even for the subsequent period, the appellant continued to provide such services to the US Embassy and the exemption has been allowed. Extended period of limitation - HELD THAT:- The period of dispute in the present appeal is from 01.10.2008 to 31.03.2013. The show cause notice was issued on 16.04.2014 - the appellant had in the ST-3 returns clearly mentioned about availing the benefit of the Exemption Notifications. The Department cannot, therefore, contend that the appellant had suppressed any fact, much less with an intent to evade payment of service tax - It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression or collusion is wilful with an intent to evade payment of duty. The invocation of the extended period of limitation, therefore, cannot be sustained. It would not be necessary to examine the contention advanced by learned counsel for the appellant that impugned order has gone beyond the allegations made in the show cause notice - Appeal allowed.

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• CST, VAT & Sales Tax

• 2021 (9) TMI 901
  Concessional rate of Entry Tax - purchase of raw materials like Coal, Caustic Soda, HFO and LDO etc. - Rule 3(4) (b) as existed prior to 2nd amendment of OET Rules - Coal, Caustic Soda, HFO and LDO utilized by the Petitioner in its CPP units are all raw material for production of electricity as a finished good - requirement to disclose raw material in the registration certificate or not - HELD THAT:- The registration certificate issued to the NALCO did mention the items viz., Coal, Caustic Soda, HFO and LDO by an entry made with effect from 14th March, 1987. To say that the entry should have further mentioned that these were raw materials is, in the considered view of the Court, hyper technical. There appears to be no dispute between the parties that in fact those materials were used as raw materials by the Petitioner. In fact, in its original order dated 21st November 2011, the Tribunal accepted that these materials were in fact used as raw materials. The mere fact that the registration certificate does not mention them as raw materials cannot result in depriving the Petitioner of the concession to which it is statutorily entitled. In other words NALCO cannot be made to suffer for the failure of the authority concerned to mention in the registration certificate issued under the OST Act that the above items are raw materials. Whether under the facts and circumstances of the case, no Entry Tax is excisable on purchase of raw material such as Coal, Caustic Soda, HFO and LDO, upto 6 th November 2000 in view of Rule 3(4) (b) as existed prior to 2nd amendment of OET Rules? - HELD THAT:- The position under the OET Rules after 6th November 2000 was that, in terms of Rule 3 (4) of the OET Rules, goods specified in Parts I and II of the Schedule to the OET Act when used as raw materials by a manufacturer on its first entry in a local area other than that specified in clause (a) above shall not be exigible to tax. Rule 3 (4) (a) envisages the entry of the goods in a local area notified as a municipality or municipal corporation or a notified area council, in which case the goods would be exigible to tax at 50 % of the rate to which they are exigible under Rules 3 (2) and 3 (4) of the OET Rules. However, if the entry is in a local area other than municipality, municipal corporation or notified area council then no tax would be leviable - It is held that for assessment year 1999-2000, no entry tax was leviable on the purchase by the Petitioner-NALCO of raw materials such as Coal, Caustic Soda, HFO and LDO up to 6 th November, 2000 in view of Rule-3 (4) (b) as it existed prior to the second amendment to the OET Rules. Revision disposed off.

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• 2021 (9) TMI 900
  Jurisdiction - Suo motu revisional power - power of ACST to exercise revisional power - Section 79(1) of the Orissa Value Added Tax Act, 2004 (OVAT Act) read with Rule 119 of the Odisha Value Added Tax Rules, 2005 (OVAT Rules) - HELD THAT:- A careful reading of Section 106 (2) (c) of the OVAT Act would reveal that during the transitional period between the repeal of OST Act and till such time there was a fresh delegation of the powers of the Commissioner under the OVAT Act, the earlier delegation of powers under the OST Act would continue. The Court s attention has been drawn to the fact that under the Notification No.14171-I-ST-76 dated 3rd August 1963 read with earlier order dated 5th May, 1963 the suo motu powers of the Commissioner exercisable under Section 23 (4) (a) was in fact delegated to the ACST in so far as the order sought to be revised is that the STO. This delegation of power continued till 17th July, 2008 when the notification of the OVAT Act was issued for the first time delegating the power of the Commissioner to the ACST under Section 79(1) of the OVAT Act. The position is that as on 31st January, 2008, the ACST could validly exercise the delegated power of suo motu revision in terms of Section 106 (2) (c) of the OVAT Act. Consequently, the challenge to the impugned notification on the ground that ACST did not have any power to issue such notice is hereby negatived. The second ground of challenge is that no reasons have been set out in the impugned notice for exercise of suo motu revisional power by the ACST. A plain reading of the impugned notice reveals the reasons that weighed with the ACST - the Court finds no merit in this contention - Petition dismissed.

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• Wealth tax

• 2021 (9) TMI 896
  Wealth tax assessment - estimation of value of asset - assessee failed to justify value adopted in wealth tax returns with necessary evidences - Revenue authorities determine value of the property as per market value - HELD THAT:- As regards property at Bharaniputtur, there is a dispute between the assessee and Assessing Officer in respect of extent of landholding. The assessee claims that he owned 0.4 acres of land, whereas the Assessing Officer has adopted 0.8 acres of land. A similar issue has been considered by the Tribunal for assessment years 2009-10 and 2010-11, where issue has been set aside to the file of Assessing Officer to ascertain date of purchase of land and extent of land held by the assessee. Even before us, the assessee has filed necessary evidences to prove that extent of land held by the assessee is only 0.4 acres. Therefore, we set aside this issue to the file of the Assessing Officer to ascertain fact with regard to extent of land held by the assessee. As regards land at Sholinganallur the assessee has sold property on 28.04.2011, just after 28 days from the date of valuation and thus, estimated price of the property as on valuation date shall be at least value derived by the assessee from sale of property. Therefore, we are of the considered view that there is no merit in the arguments of the assessee that value of the property as on valuation date is at Rs. 10.99 crores. However, fact remains that when the rules prescribed for determining value on the basis of fair market value, the Assessing Officer has adopted guideline value prescribed for payment of stamp duty. In our considered view, guideline value fixed by stamp duty authorities is not relevant to decide value of any asset, other than cash, as on valuation date. Hence, we direct the Assessing Officer to adopt market value of the property as on valuation date at Rs. 21.06 crores, which is the price derived by the assessee from open market when the property was sold in the month of April, 2011. Appeal filed by the assessee is partly allowed for statistical purposes.

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