TMI Tax Updates - e-Newsletter
September 23, 2021

Case Laws in this Newsletter:

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

Articles

1. EXTENTION OF FILLING APPLICATION FOR REVOCATION FOR CANCELLATION

   By: NIRMALA RANAWAT

News

1. AEPC organizes training Session for budding exporters at “Vanijya Utsav”

2. Beyond COVID: Towards a Stronger, Inclusive and Sustainable Economy (Keynote Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - Wednesday, September 22, 2021 - Delivered at the 48th National Management Convention of the All India Management Association (AIMA))

3. FDI Inflows grow 62% during first four months of current Financial Year over corresponding period last year

4. National Single Window System for Investors and Businesses Launched by Shri Piyush Goyal

5. Notwithstanding COVID19 induced challenges, India records close to 22% rise in export of agricultural and processed food products in April-August (2021-22)

Notifications

GST - States

1. 34/2021-State Tax - dated 17-9-2021 - Himachal Pradesh SGST

Seeks to extend timelines for filing of application for revocation of cancellation of registration to 30.09.2021, where due date for filing such application falls between 01.03.2020 to 31.08.2021, in cases where registration has been canceled under clause (b) or clause (c) of section 29(2) of the HPGST Act.

2. 33/2021-State Tax - dated 17-9-2021 - Himachal Pradesh SGST

Amendment in Notification No. 76/2018-State Tax, dated the 31st December, 2018

3. 32/2021-State Tax - dated 17-9-2021 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Seventh Amendment) Rules, 2021

Income Tax

4. 116/2021 - dated 21-9-2021 - IT

Corrigendum - Notification No. 112/2021 dated 16 September 2021

Circulars / Instructions / Orders

GST - States

1. CCT-PEl-POL-0155-2021/2/2021 11156 /CT&GST - dated 8-9-2021

Circulation of Circulars and instructions under GST Acts/Rules issued by CBIC, Government of India, Ministry of Finance, New Delhi

Highlights / Catch Notes

GST

• Treated Water for Industrial Use Taxed at 18% Under Entry No. 24, Notification No. 01/2017; Includes SGST and CGST.

  Case-Laws - AAR : Classification of goods - supply of the sewage treated water to BPCL - the impugned goods, called as “Treated Water”, is purified water which is used for own factory purposes and excess quantity sold to ‘BPCL’ for its further industrial use falls under Entry No. 24 of Notification No. 01/2017 - it is taxable and same would be taxable @18% (9% SGST & 9% CGST)/ IGST - AAR
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• Managerial Services by HQ to Group Companies Classified as "Supply of Service" Under GST, Subject to Tax.

  Case-Laws - AAR : Classification of supply - supply of service or not - managerial and leadership services provided by the Registered/Corporate Office to its Group Companies - In the subject case the site offices/group companies cannot be treated as persons who are employed by the applicant. The site offices are independent offices separately registered under the GST Laws. Similarly the group companies are also separately registered under the GST Laws - To be considered as “supply of service” and liable to GST - the lump sum amount charged against such services is liable to GST - - AAR
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• Court Orders Release of Goods Detained for Expired E-Way Bills; Confiscation Orders Deemed Unlawful Under CGST Act Section 130.

  Case-Laws - HC : Detention of goods - E-way bills expired - Constitutional validity of Section 129 of CGST Act, 2017 - deposit of tax again, once the tax is already paid - the petitioner could not able to show that the provisions of the enactments-in-question are unreasonable or the object of these enactments are to destroy a fundamental right/ constitutional right. - However, the respondents have completely failed to show that the petitioner was indeed, given an opportunity of being heard before the passing the orders of the confiscation in Form GST MOV-11. The confiscation orders dated 23.04.2021, passed under Section 130 in Form GST MOV-11, are not found to be passed in accordance with law. - Goods and vehicle to be released on furnishing of bond - HC
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• Bail Denied for Alleged Mastermind of 159 Crore Tax Fraud Involving Fake Goods Sales and Illegal Tax Credits.

  Case-Laws - HC : Seeking enlargement on bail - illegal input tax credit - The applicant is the mastermind of the entire fraud. The goods were sold on paper only without any actual production or supply. It is a financial fraud of more than 159 crores and if he is allowed to move around, he will manipulate the entire evidence - taking into consideration the gravity of the accusation, without expressing any opinion on the merits of the case, this Court finds that it is not a fit case for bail. - HC
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Income Tax

• Assessee Entitled to Set-Off Losses Despite Shareholding Change; Section 79 Provisions Deemed Inapplicable Due to No Management Shift.

  Case-Laws - AT : Set off of brought forward losses denied - change in the shareholding pattern of the assessee post merger - Considering the fact that the assessee is a subsidiary of TRIL, Actis and THPL before merger and after merger still a subsidiary of TRIL. It was brought to our notice that as on 31.03.2014 TRIL holds 100% shares of the assessee-company. In our considered view, effectively there is no change in the management as well as voting rights in the assessee-company. - Provisions of section 79 not applicable - appellant is entitled to set off the business loss brought forward from earlier years - AT
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• Court Quashes Assessment u/s 143(3) & 144-B Due to Natural Justice Violation; Case Sent for Reconsideration.

  Case-Laws - HC : Assessment u/s 143(3) r.w.s. 144-B - gross violation of principles of natural justice - In case of Companies registered under the Companies Act or other financial institutions, they would have a large team of legal experts to assess and who can appear before the Assessing Officer or who can furnish details, as called for by the Assessing Officer. This may not be a case, when it comes to an individual-assessee. - Order quashed - Matter restored back - HC
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• High Court Rejects Second Writ on Tax Evasion Merger; Emphasizes Repetitive PILs Are Not Maintainable.

  Case-Laws - HC : Allegation of Evasion of tax by merging of 3 companies - Tax Informant Scheme - PIL already filed - second writ petition on the same subject matter - a second writ petition on the same subject matter is certainly not at all maintainable. Such a practice deserves to be deprecated. - HC
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• Tax Officer Can't Reject Transactions Just for Tax Benefits; Genuine Planning Allowed, Avoidance Isn't.

  Case-Laws - AT : Tax planning versus Tax evasion - The Assessing Officer cannot disregard a transaction just because it results in a tax advantage to the assessee. Just as much as we cannot legitimize and glorify tax evasion through colourable devices and tax shelters, we cannot also deprecate and disapprove genuine tax planning within the framework of law. The line of demarcation between what is permissible tax planning and what turns into impermissible tax avoidance may be somewhat thin, but that cannot be excuse enough for the tax authorities to err on the side of excessive caution. - AT
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• Assessee Must Prove Land Sold Was Agricultural to Avoid Capital Gains; Submit Sale Deeds and Records for Verification.

  Case-Laws - AT : Addition to income from capital gains - Nature of land sold - Anyhow, to meet the ends of natural justice, we direct the assessee to file complete sale deeds of the properties sold, and other original relevant revenue records for verification of the properties as agricultural land or not by the Assessing Officer. The Assessing Officer is accordingly directed to verify complete documentary evidences for the claim of the assessee that the lands sold by it are agricultural land and it had been used for agricultural cultivation and in case, if the assessee fails to furnish complete documentary evidences for verification, the assessment already completed and confirmed the ld. CIT(A) stands sustained. - AT
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• Revision Limitation Under Income Tax Act: Original Assessment Date Section 143(3) Prevails Over Subsequent Order Section 153C.

  Case-Laws - AT : Revision u/s 263 - Revision barred by limitation or not? - Period to be computed from the date of original assessment u/s 143(3) or from the date of subsequent order passed u/s 153C - Once issue was not a subject matter of assessment proceedings pursuant to search, then date of assessment goes back to original assessment passed u/s.143(3) of the Act - AT
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• Incentive for Van Purchase Not Business Income; Falls Under Explanation 10 to Section 43(1), Not Section 28(iv).

  Case-Laws - AT : Addition u/s 28(iv) or 43(1) - Receipt of Special Redistributors' Incentive - The amount of incentive received by the assessee from M/s. Usha International Ltd. specifically for the purchase of van was not in the nature of any benefit or perquisite which had arisen from business so as to treat the value of the same as business income of the assessee in terms of Section 28(iv) - assessee that the case of the assessee is covered by Explanation 10 to Section 43(1) of the Act and not by Section 28(iv) of the Act. - Additions deleted - AT
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Customs

• Court Affirms Cash Refund Rights for MEIS Script Users, Equates Them with Other Creditable Scripts for Duty Payments.

  Case-Laws - AT : Refund of duty in cash of the amount which was paid by the appellant by using MEIS scripts - case of appellant is that the amount which stands credited under the scripts is as good as an amount in cash and the assessee is entitled for the refund - both scripts are creditable scripts hence there is no difference in the two at least for the nature of money lying credited therein and the utilization else refund thereof is concerned. - Refund allowed - AT
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IBC

• Supreme Court orders NCLT to expedite CIRP, resolve homebuyers' grievance within six weeks per certified order.

  Case-Laws - SC : CIRP in process - default to give possession of flats to homebuyers - grievance raised in this petition is that the application filed for the initiation of corporate insolvency against the first respondent was merely to stall the refund of the amount due to the homebuyers - If the petitioners have any objections to the Resolution Plan, they are to submit them before the Adjudicating Authority. We direct the NCLT to ensure that the application for approval is disposed of expeditiously and preferably within a period of six weeks form the date of receipt of a certified copy of this order. - SC
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• Indian Navy Refund Not an Asset of Corporate Debtor Under IBC, Per Sections 14(3)(b) & 3(31.

  Case-Laws - AT : Asset of the ‘Corporate Debtor’ - Revocation of performance guarantee - the amount refunded on reversal of the invocation by the Indian Navy cannot be said to be an asset of the ‘Corporate Debtor’, under IBC, Performance Guarantees are to be dealt with specifically keeping in view the provisions and exclusions under Section 14(3)(b) and Section 3(31) of the Code - there is no violation of Section 14 of the Code as the money appropriated by the Bank is not the asset of the ‘Corporate Debtor’ - AT
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• Court Upholds Initiation of CIRP Against Corporate Debtor Under IBC Section 9, Rejects Appellant's 'Icegate' Defense.

  Case-Laws - AT : Initiation of CIRP - existence of debt and dispute or not - dispute with regard to demand notice - The Adjudicating Authority has rightly found that there are dues outstanding which attract Section 9 of IBC. The Appellant is trying to confuse by referring to portal of ‘Icegate’ but when there are documents in favour of the Operational Creditor, it is not found that Appellant is able to show that the goods were not received and that the Corporate Debtor did not have any liability to pay. We do not find any fault with the impugned order admitting the Application under Section 9. - AT
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Central Excise

• Refund Entitlement Recognized: Misinterpretation of CVD and SAD Provisions Overturned, Allowing Cash Refunds Under New Framework.

  Case-Laws - AT : Unable to avail and utilized Cenvat Credit - Refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) - The order under challenge has wrongly rejected the refund despite an unambiguous provision not only giving entitlement of refund to the appellant but also recognizing for the refund eligible under erstwhile law to have been given in cash under new law. Order accordingly, is hereby set aside appeal resultantly stands allowed. - AT
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VAT

• Court Orders Refund for Unauthorized Tax Collection by STO in Cuttack Without Show Cause Notice Under Orissa VAT Act 2004.

  Case-Laws - HC : Upfront collection of tax and penalty - SCN was not issued - whether Sales Tax Officer (STO) can collect upfront tax and penalty from the Petitioner at the time of a surprise inspection undertaken of his business premises without passing any assessment order? - Orissa Value Added Tax Act, 2004 (OVAT Act) - The Court holds that the collection of the tax and penalty by the STO, Cuttack from the Petitioner on 10th April, 2007 is without any authority of law. - The amount ordered to be refunded - HC
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Case Laws:

• GST

• 2021 (9) TMI 950
  Classification of goods - applicable rate of GST - supply of the sewage treated water to BPCL - forward supply - applicability of exemption under SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 (as amended) as Water (other than aerated, mineral, purified, distilled, medical, ionic, battery, de-mineralized and water sold in sealed container) or taxable at 18% by virtue of SI. No. 24 of Schedule - 111 of Notification No. 01/2017- Integrated Tax (Rate) dated 28th June 2017 (as amended)? HELD THAT:- The essentially involved process is removing bio-waste, grit and removing undesirable chemicals, biological contaminants, suspended solids, and gases from sewage water. The goal is to produce the water which is fit for being used in the factory of RCF, as well as, if it is available in surplus then the same shall be also sold; for usage as an industrial Input. The processes are carried out on raw sewage water in the STP, making it suitable for industrial use, may be said to be covered under the term purification processes . The Applicant is using sewage water as an input and is carrying out certain processes on said sewage water so that the output water obtained can be used for Industrial purposes. The water is covered under Chapter heading 2201 of GST Tariff - In the subject case, the impugned water is used by the applicant for its own use i.e. in its factory and is also supplied to BPCL. The said water is obtained after the treatment to sewage water as submitted by the applicant and the said water is not potable i.e. it is not potable. The said water is never to be used for human consumption as well as never to be used as normal water. Hence in our view entry No. 46 B which pertains to drinking water only is not applicable to the impugned product. As per the applicant s submissions, it is clear that various contaminants are removed from the sewage water, thus purifying it to make it purified sewage water which is useful for Industrial purpose. As per the contention of applicant Treated Water is not potable but it can be used for Industrial use. Hence the contention of the applicant that it is to be covered under exemption entry no 99 of Notification No. 2/2017 is not correct. The Treated water obtained from the STP supplied by the applicant is purified Water and is covered Entry No.24 of Notification No. 01/2017-C.T. (Rate) dated 28.6.2017. On the perusal of the clarification as per Circular No. 52/26/2018 dated 09.08.2018 , it is found that it is clearly mentioned that supply of drinking water for public purposes, if it is not supplied in sealed container, is exempt from GST but in the present matter, we find that the treated water is neither supplied for to be use as drinking water for public purposes, nor supplied in sealed container, as drinking water, to BPCL. Applicant has not submitted that the said treated water from sewage, is used for drinking water for public purposes, hence it should be liable for exemption under entry 99 of notification 2/2017. Therefore the contention of the applicant to allow the exemption to its impugned product, is not found acceptable - the impugned goods, called as Treated Water , is purified water which is used for own factory purposes and excess quantity sold to BPCL for its further industrial use falls under Entry No. 24 of Notification No. 01/2017. Thus, the Treated water obtained from sewage is covered under term waters . Hence it is taxable and same would be taxable @18% IGST under Entry 24 of Schedule-III of Notification No. 1/2017 Central Tax (Rate) dtd.28.06.2017 as amended by Notification No. 06/2018 and Central Tax (Rate) dtd.25.01.2018.

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• 2021 (9) TMI 949
  Classification of supply - supply of service or not - managerial and leadership services provided by the Registered/Corporate Office to its Group Companies - lump sum amount charged by the Registered/Corporate Office on its Group Companies - levy of GST under Section 8 of CGST Act, 2017 - related persons or not - charging certain lump sum amount for expenses incurred by Registered/ Corporate Office for supplying the services - method of valuation under Rule 31 of CGST Rules - input tax credit of GST paid. Supply of service or not - HELD THAT:- Section 7(1)(c) of the CGST Act states that the activities specified in Schedule Ito the CGST Act, shall be treated a supply of goods or services, even if made without consideration. As per Schedule I, Entry No. 2, Supply of goods or services or both between related persons or between distinct persons, as provided in Section 25, when made in the course or furtherance of business will be activities to be treated as supply even if made without consideration - In the subject case the site offices/group companies cannot be treated as persons who are employed by the applicant. The site offices are independent offices separately registered under the GST Laws. Similarly the group companies are also separately registered under the GST Laws and since both the site offices as well as the group companies cannot be treated as employees, the applicant cannot get the benefit of Entry No. 1 to Schedule III. The supply of services by the applicant will be covered under Entry No. 2 to Schedule I and is therefore taxable under GST Laws. Whether the lump sum amount charged on its Group Companies would be liable to GST under Section 8 of CGST Act, 2017? - HELD THAT:- The applicant will have to pay GST on the lumpsum amount charged by them to their Group Companies. Whether the Applicant can continue to charge certain lump sum amount, as has been done in the past, in terms of second Proviso to Rule 28 of CGST Rules, 2017? - HELD THAT:- Applicant may resort to valuation under Rule 28 of the CGST Rules, in respect of transaction with related/distinct persons who are eligible for full input tax credit as per the second proviso to Rule 28 of the CGST Rules, 2017. If the method of charging certain lump sum amount is not permissible, whether the Applicant can adopt the valuation in terms of the provisions of Rule 31 of CGST Rules, 2017, by arriving at a proportional ratio, based on total expenses incurred by Registered/ Corporate Office for supplying the aforesaid services and turnover of each of the distinct and related persons? - If the aforesaid method of valuation under Rule 31 of CGST Rules is also not permissible, whether the Applicant can adopt valuation in terms of Rule 30 of CGST Rules, 2017, by allocating related expenses at the Registered/Corporate Office in a reasonable proportion to the distinct and related persons considering turnover of each of them and adding ten percent, which would be at par with 110% of cost of provision of such services? - HELD THAT:- Since it is held that the applicant may resort to valuation under Rule 28 of the CGST Rules, the said questions are not taken up for discussion. What alternative feasible workable method of valuation can be suggested by this Authority considering the nature of industry in which the Applicant is engaged in? - HELD THAT:- This question does not relate to determination of value of supply of goods or services or both, rather the question is asking this authority to suggest procedures to be followed by the noticee. The question does not fall under the purview of Section 97 of the CGST Act, 2017 and is therefore not answered.

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• 2021 (9) TMI 946
  Validity of assessment order - time limitation - rejection on the ground of delay - the order of assessment was passed by the Superintendent of State Taxes on 03.06.2020, whereas the petitioner had filed appeal on 03.11.2020 which was held to be beyond limitation - HELD THAT:- The effect of this order was that the entire time lapsed between 15.03.2020 to 15.03.2021 in pursuing any legal proceeding, would be ignored for the purpose of limitation. In the present case, the Assessing Officer had passed the order of assessment on 03.06.2020 against which the petitioner preferred appeal on 03.11.2020. Both these events namely, the order of assessment which the petitioner had challenged and the presentation of appeal against such order fell within the immunity period provided by the Supreme Court in the said order i.e. the period between 15.03.2020 to 15.03.2021. There was thus no delay at the hands of the petitioner in preferring the appeal - The crucial dates of order of assessment and petitioner preferring appeal are identical and fall within the immunity period provided by the Supreme Court. The petitions are disposed of by quashing the respective orders passed by the appellate Commissioner rejecting the petitioner s appeals on the ground of delay - Petition disposed off.

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• 2021 (9) TMI 941
  Detention of goods alongwith the truck - it is claimed that without any reason or allegation, the goods were detained - Section 129 of the Central/Gujarat Goods Services Tax Act 2017 - HELD THAT:- Issue Notice returnable on 24.9.2021 - Let there be no further coercive actions.

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• 2021 (9) TMI 937
  Detention of goods - E-way bills expired - Constitutional validity of Section 129 of the Central Goods and Services Tax Act/State Goods and Services Tax Act, read with Rule 140 of the CGST/SGST Rules - Seeking declaration that Section 129 of the CGST Act does not mandate the deposit of tax again, once the tax is already paid - validity of SCN passed by the respondent-department under Section 129(3) of the CGST/SGST Act - legality of different orders, dated NIL, passed by the respondent no. 3 under Section 129(3) of the CGST/SGST Act - order passed by respondent no. 3, for detaining the trucks owned by the petitioner - validity of rectification/withdrawal orders dated, 23.04.2021, passed by the respondent no. 3 under Rule 142(7) of the CGST/SGST Rules - validity of order issued by the respondent No.3 under Section 130 of the CGST/SGST Act. Constitutional validity of the act - HELD THAT:- The constitutional validity of an Act can be challenged only on two grounds viz. (i) lack of legislative competence; and (ii) violation of any of the fundamental rights, guaranteed in Part III of the Constitution or of any other constitutional provisions. In STATE OF AP. VERSUS MCDOWELL CO. [ 1996 (3) TMI 525 - SUPREME COURT] , the Hon ble Supreme Court has held that except the above two grounds, there is no third ground on the basis of which the law made by the competent legislature can be invalidated and that the ground of invalidation must necessarily fall within the four corners of the aforementioned two grounds. Violation of of Article 14, 19 (1) (g) and Article 300 A of the Constitution of India or not - HELD THAT:- Article 19 (1) (g) of the Constitution guarantees that all citizens shall have the right to practice any profession, or to carry on any occupation, trade or business. However, these rights are not unqualified. It can be restricted and regulated by authority of law. Article 300 A provides that no person shall be deprived of his property save by authority of law. By Authority of Law means by or under a law made by the competent Legislature - In the facts and circumstances of the instant matter, the learned counsel for the petitioner could not able to show that the provisions of the enactments-in-question are unreasonable or the object of these enactments are to destroy a fundamental right/ constitutional right. Confiscation - Imposition of penalty - opportunity of being heard not given - HELD THAT:- Before invoking the provisions of Section 130 for confiscation, there should be a very strong base to proceed for confiscation. Mere suspicion is not sufficient to invoke the provision of the confiscation. Moreover, the petitioner should be given an opportunity of being heard according to the intent of the Legislature before passing the confiscation order as mentioned in sub-section (4) of Section 130 - However, the respondents have completely failed to show that the petitioner was indeed, given an opportunity of being heard before the passing the orders of the confiscation in Form GST MOV-11. The confiscation orders dated 23.04.2021, passed under Section 130 in Form GST MOV-11, are not found to be passed in accordance with law. Therefore, the said impugned orders dated 23.04.2021 are liable to be quashed and set aside. Maintainability of petition - availability of alternative remedy of appeal - Section 107 of the CGST Act/SGST Act - HELD THAT:- In DEVENDRA DWIVEDI VERSUS UNION OF INDIA ORS. [ 2021 (1) TMI 302 - SUPREME COURT] , the petitioner had challenged the constitutional validity of certain provisions of the CGST Act. The Hon ble Supreme Court dismissed the writ petition after holding, The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue . Both the writ petitions are allowed partly - the impugned orders dated 23.04.2021, passed by the respondent no.3 under Section 130 in Form GST MOV-11 are set aside - the respondents are directed to release the vehicles and goods in question, which have been detained since 31.03.2021, upon execution of a bond for the value of the goods in Form GST INS-04 and furnishing of a security in form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable, by the petitioner. The release of the vehicles and goods are subject to the final outcome of the confiscation proceedings.

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• 2021 (9) TMI 936
  Seeking enlargement on bail - illegal input tax credit - issuance of fake invoices without supply of goods, passing the input credit illegally - HELD THAT:- For deciding the application for bail, the Court generally desists from considering the merits of the matter in detail. However, as learned counsel for the applicant has raised various issues, the same are being dealt with only for the purpose of deciding the bail application. Section 69 of CGST Act empowers the Commissioner to authorize any Officer of central tax to arrest a person, if the Commissioner has reasons to believe that a person has committed any offence specified in Clause (a) or (b) or (c) or (d) of subsection (1) of Section 132. During search of the premises, number of incriminating documents were recovered which proved his involvement in G.S.T. evasion of more than 159 crores. The applicant is the mastermind of the entire fraud. The goods were sold on paper only without any actual production or supply. It is a financial fraud of more than 159 crores and if he is allowed to move around, he will manipulate the entire evidence - taking into consideration the gravity of the accusation, without expressing any opinion on the merits of the case, this Court finds that it is not a fit case for bail. Bail application dismissed.

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• Income Tax

• 2021 (9) TMI 960
  Addition of sundry creditors u/s 41(1) - cessation of liability - disputed sundry creditors were being outstanding for more than 3 years and in compliance to notice under section 133(6) it was replied by them that they had no outstanding balance with the assessee - HELD THAT:- It is an admitted fact as evident from the impugned order that the ld. CIT(A) has endorsed the finding of the ld. AO in the matter of cessation of liability relying on the unilateral decision without rebuttal to the assessee and ascertain the fact that whether in the year under consideration i.e. the asstt. year 2013-14 any gains has accrued or arisen to the assessee in the given facts and circumstances of the case by way of remission or cessation as the said amounts were squared up / written off in earlier assessment years by the creditors. Any addition under section 41(1) of the Act, if at all can be made only in the year in which the remission or cessation of liability has taken place. The Assessing Officer has not rebutted the evidence that relied upon regarding cessation of liability of creditors collected u/s 133(6) of the act. Reply filed by the assessee has not been considered and disposed of by speaking order before jumping on the decision to confirm the finding of the AO regarding addition on account of on account of sundry creditors u/s 41(1) and u/s 40A(3) of the Act . We, therefore, held that it is a fit case to be restored back to the Ld. CIT(A) to decide afresh on both the issues by way of speaking order - Appeal of the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 959
  LTCG - Application u/s 50C - re-compute the long term capital gain after providing benefit for cost inflation indexation to the Assessee - HELD THAT:- Assessee submitted before the Revenue authorities that the assessee sold the shop at market price to a close relative with a guarantee that it would fetch good rent, however, it was lying vacant and the AO applied Section 50C of the Act. The assessee transferred the said shop in the assets and not claimed it as stock year after year. The genuineness of the transaction was never doubted by the Assessing Officer, and the buyer Smt. Upasna Devi is the daughter-in-law of elder brother of the Assessee. AO has applied Section 50C of the Act, but the CIT(A) has not given any finding as to why the Cost Inflation Index Benefit has to be given to the assessee. Therefore, it needs verification of the entire issue. Thus, we are remanding back this issue to the file of the AO for proper adjudication and decide the same afresh as per law. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 1 of the Revenue s appeal is partly allowed for statistical purpose. Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find merit in the contention of Assessee Company that the premium is worth by looking the orders in hand, the assets in possession and the workings of the tear results. The details of the issued capital and the confirmations were provided by the assessee to the AO. The copy of Bank Statement of the Share applicants along with ITR acknowledgments, the set of balance sheets were also forwarded to the AO. - change in the address of Investor Companies were also informed to the Assessing Officer. Thus, the assessee company had discharged the burden by proving the genuineness of the transactions by submitting the bank statements, the creditworthiness of the investors by submitting the set of balance sheets of the investor companies and also proved identity while submitting the details of their income tax acknowledges, the certificate of incorporations and the copy of addresses from the site of Ministry of Company Affairs. Merely stating that how the book value of shares was increased without any cogent evidence brought on record by the Assessing Officer the Assessing Officer cannot suspect the genuineness creditworthiness of the transactions. The decision of the Tribunal in case of Emm Vee Infrastructures [ 2017 (6) TMI 1353 - ITAT DELHI] relied by the Ld. AR is apt in the present case Thus, there is no need to interfere with the finding of the CIT(A). Hence, Ground No. 2 is dismissed. Addition being the land development expenses allegedly paid by the assessee for the works contract stated to have been received from Era Land Mark (India) Ltd. - no TDS was made on contract payment, and the entire expenses were unverifiable - CIT- A deleted the addition - HELD THAT:- Payments related to labour charges were paid to labourers on a daily basis were noted on the acquaintance sheets for each day as per the documents produced by the Assessee before the Revenue authorities. The acquaintance sheets were bunched together and the aggregate payments were debited to the accounts as one single sum of the day, because the individual payments were not in excess of the prescribed limits for TDS and that the payments to the several labourers were individually much below the TDS limits. Therefore, the CIT(A) was rightly deleted the said addition as department could not point out any factual error or deficiency in the order of the CIT(A). Thus, there is no need to interfere with the findings of the CIT(A). Ground No. 4 is dismissed. Agricultural income - Whether CIT(A) has erred in treating the income from agriculture against the income assessed under the head other sources ignoring the fact that the assessee failed to establish any activity relating to agriculture? - HELD THAT:- The assessee has given/produced letters and documents including copies of Khasara and Khatauni, bills of diesel, copy of bills of seeds, use of tractor and electricity bills. The assessee has proved before the Authorities that activity on land was purely agricultural in nature. Therefore, the CIT(A) has rightly held the said income to be agricultural income. There is no need to interfere with the findings of the CIT(A).

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• 2021 (9) TMI 958
  Computation of capital gain - JDA - as per CIT-A since the assessee has retained 1/3 share and transferred 2/3 share to the developer, the Ld.CIT(A) held that only the sale consideration of 13608 sq.ft needs to be brought to capital gains tax, after deducting the cost of acquisition - HELD THAT:- As per the JDA, land owners were entitled for 1/3rd share of constructed area along with 1/3rd share of car parking. Thus, it is clear that out of the total land transferred to the developer, the land owners were entitled for 1/3rd share of land. What was transferred to the developer was only 2/3rds of the land, but not the entire land as rightly observed by the Ld.CIT(A). Therefore, what is to be brought to tax under capital gains is 2/3rd of land area, but not the entire land. CIT(A) has rightly directed the AO to adopt 2/3rd of 19602 sq.ft instead of 19602 sft. adopting the SRO rate of Rs. 5,500 per sq.ft which worked out to 13068. Hence, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed. Pro-rata development expenses disallowance - HELD THAT:- It is a fact that the landowners have paid the development charges, additional FSI and other expenditure related to the project. The said development charges were intrinsically related to the project land. The benefit on account of additional FSI would accrue to the landowners also. Thus, the land owners have transferred the bundle of rights for constructing the residential cum commercial project including additional FSI, which is nothing but cost of improvement. Once it is agreed that the additional FSI and development charges are in the nature of improvement, the same required to be allowed as deduction. It is not the case of the department that both land owners and the promoters have claimed the expenditure - AO is incorrect in holding that the development charges and additional FSI charges are neither related to transfer nor cost of improvement. We are of the considered view that the amount of the expenditure on the project on account of development and additional FSI needs to be considered as cost of improvement and the assessee would be entitled for deduction of Rs. 5.18 crores out of Rs. 16.72 crores as observed by the Ld.CIT(A). Thus the deduction is covered in Section 48 of the Act, hence, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. Appeal of the revenue on this ground is dismissed. Cash deposits as unexplained and made addition u/s 69 - HELD THAT:- In the instant case the assessee had withdrawn the amounts in the immediately preceding year on six occasions. Thus the facts of the case law relied up on by the AO is distinguishable and has no application to the instant case, therefore, we are of the view that the assessee s case is squarely covered by the decision of this Tribunal in Mandava Ravi Kumar [ 2018 (7) TMI 2207 - ITAT VISAKHAPATNAM] and accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. The appeal of the assessee is allowed. Unexplained cash deposits - A.Y.2014-15 - source of the cash was explained to be withdrawals made from the bank account on 13.10.2012 - HELD THAT:- In the instant case, the assessee has withdrawn the money at one go on 13.10.2012, which was later deposited. Thus, keeping in view the explanation of assessee kept the cash for some time to meet the unforeseen expenses appears to be satisfactory and the facts of the case relied upon by the AO is distinguishable. This Tribunal in the case of Mandava Ravi Kumar [ 2018 (7) TMI 2207 - ITAT VISAKHAPATNAM] on similar facts accepted the source of earlier withdrawals for deposits made in the bank account - view taken by the Tribunal, we hold that the explanation of the assessee that the deposits were made out of earlier withdrawals is acceptable. Accordingly, we delete the addition made by the AO and allow the appeal of the assessee. In the result, appeal of the assessee is allowed.

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• 2021 (9) TMI 957
  Disallowance of depreciation on trademark - Addition for the reason that the Deed of Assignment of Trademark and Copyright entered into by the assessee with M/s. Univercell Telecommunications India Private Limited is an invalid agreement - HELD THAT:- As decided in own case [ 2020 (4) TMI 742 - ITAT CHENNAI] law is settled to the extent that it is outside the domain of the ld. AO to question the necessity of incurring an expenditure. Thus the reasons assigned by the Assessing Officer that the transaction for purchase of trademark are not genuine cannot stand test of the law. Furthermore, it is an settled principle of law that intangible assets such as trademark, goodwill are also qualifies for depreciation at prescribed rates. We do not concur with the views of the lower authorities in disallowing the claim for depreciation on trademark.- Decided in favour of assessee. Disallowance of advertisement expenditure professional charges - payment made towards Brand Ambassadors for promotion of the brand - HELD THAT:- As decided in own case [ 2020 (4) TMI 742 - ITAT CHENNAI] it is settled principle of law that the Assessing Officer is not expected to question the necessity of the expenditure. The brand expenditure is nothing but business promotion expenditure which is Revenue in nature and which is clearly allowed as deduction. - Decided in favour of assessee.

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• 2021 (9) TMI 956
  Deduction u/s 54F - HUF - reinvestment in multiple properties located in different addresses is not eligible for claiming deduction - HELD THAT:- As decided in the case of Smt. B. Vathsala [mother of Shri B. Sundararajan, assessee] [ 2019 (12) TMI 1543 - ITAT CHENNAI ] as relying case of Tilokchand Sons v ITO [ 2019 (4) TMI 713 - MADRAS HIGH COURT] has held that profit on sale of property used for purchasing more than one residential houses within stipulated time limit, the assessee would be entitled to the benefit of exemption under section 54 of the Act - So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. - Decided in favour of assessee. Computation of capital gain - cost of acquisition being the fair market value as on 01.04.1981 - HELD THAT:- Admittedly, the date of sale was on 19.03.2008 for a consideration of Rs..25,00,00,000/-. Without any valid document, the assessee has estimated the cost of acquisition of the property at Rs..25,00,000/- per ground, which appears to be on the higher side, but, at the same time, the value adopted by the Assessing Officer is only Rs..30,000/- per ground and that is also not correct value since the property is located at T. Nagar, Chennai. The decision in the case of CIT v. J. Chelladurai [ 2011 (12) TMI 41 - MADRAS HIGH COURT] relied on by the ld. Counsel for the assessee has no application since the property in that case was located in mofussil area, whereas, in the present case, the property is at prime locality of Chennai city. Thus, to meet the ends natural justice and considering the facts and circumstances of the case, we fix the value of the property at Rs..45,000/- per ground as on 01.04.1981 i.e., 45,000 x 4.5 = 2,02,500x5/9 comes to Rs..1,12,500/- and direct the Assessing Officer to adopt the value and allow relief to the above extent and recompute the capital gains. Thus, the ground raised by the assessee is allowed for statistical purposes.

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• 2021 (9) TMI 955
  Revised income filed through revised computation - whether provisions of section 139(4) of the I.T. Act that do not allow to accept revised income except only through filling of revised return of income? - Whether CIT(A) has erred in directing the AO to accept the revised income filed through the revised computation, by the assessee, which is contradictory to the provisions of section 139(4)? - HELD THAT:- It is clear from the order of Goetze India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] that it is on the power of the Assessing Authority to entertain the claim for deduction otherwise than by filing a revised return, that the embargo has been put by their Lordships. It has been made clear in the order itself that such issue does not impinge upon the power of the Tribunal under section 154. In Smt. Raj Rani Gulati vs. CIT [ 2011 (10) TMI 78 - ALLAHABAD HIGH COURT ], the Hon ble jurisdictional Allahabad High Court has taken the above position into account while holding Goetze India Ltd. vs. CIT (supra) to be not applicable. - Decided against revenue.

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• 2021 (9) TMI 954
  Disallowance of interest u/s. 57(iii) - interest expenditure Set off against the interest income - HELD THAT:- We find force in the contention of the ld. counsel for the assessee. In A.Y. 2012-13, on a similar quarrel, the Tribunal [ 2018 (7) TMI 2208 - ITAT DELHI] set aside the matter to the file of the Assessing Officer for fresh adjudication and we find that the Assessing Officer, vide assessment order dated NIL, framed u/s. 254 of the Act giving effect to the directions of the Tribunal has accepted the contention of the assessee and allowed set off of expenditure against the interest earned. Considering the facts in totality, we direct the Assessing Officer to delete the impugned addition. Assessee appeal allowed.

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• 2021 (9) TMI 953
  Revision u/s 263 by CIT - disallowance of 40% of the Diwali expenses and interest on late deposit of service tax - HELD THAT:- Observation of the ld. PCIT that there was no material to support the claim of the appellant and at AO accepted without verification is found to be contrary to the material available on record. AO is not expected to examine minutely the utilization of 150 wall clocks, 200 diaries and the calendars to whom they have been given and whether it is for business purpose or not, if so, what is the benefits derived thereof. PCIT has also not brought anything on record with regard to the prejudice or error in the assessment which led or indicate to loss of revenue by the way of bringing any cogent material on record. No material whatsoever has been brought on record by the Commissioner which shows that there was any discrepancy for falsity in submissions furnished by the assessee, the order of the Assessing Officer cannot be set aside for making deep enquiry in a heuristic way only on the presumption and assumption that something new may come out. - Decided in favour of assessee.

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• 2021 (9) TMI 952
  Set off of brought forward losses denied - agreement between the holding company and subsidiary companies - change in the shareholding pattern of the assessee during the assessment year post merger - provisions of section 79 should not be applied and set off of brought forward losses be denied - HELD THAT:- Effectively there is no change as far as the voting pattern and beneficial ownership as far as shareholding pattern in the assessee-company as on 31.03.2013. The shareholding pattern of TRIL in assessee-company is effectively increased from 24% to 76%. Considering the fact that the assessee is a subsidiary of TRIL, Actis and THPL before merger and after merger still a subsidiary of TRIL. It was brought to our notice that as on 31.03.2014 TRIL holds 100% shares of the assessee-company. In our considered view, effectively there is no change in the management as well as voting rights in the assessee-company. The company TRIL controls whole management directly as well as indirectly at the time of incurring loss and controlling directly after merger. It is effectively, the whole companies engaged in the same type of business and part of same group. The whole group managed by the same set of Directors and shareholders. The fact on record shows that TRIL is a holding company of assessee-company as well as THPL. Therefore, the position does not change before and after merger of THPL with TRIL. Effectively, TRIL was controlling and having beneficial ownership of 76% (directly 24% and indirectly 41%) before merger and 76% after merger. - Decided against revenue.

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• 2021 (9) TMI 951
  Deduction u/s 80IB(10) on pro rata basis - Few/some units satisfying the condition of the built-up area - HELD THAT:- Assessee is entitled to claim proportionate relief in respect of units satisfying the condition of the built-up area. In the case of ITO vs. Paras Builders [ 2015 (6) TMI 286 - ITAT PUNE] held that where the assessee had violated provisions of section 80-IB(10)(C) in respect of two units of housing project, denial of deduction u/s 80IB would be limited only to said two units and for balance units assessed would be entitled to deduction. Similarly, in the case of Om Swami Smaran Develpoers (P) Ltd.[ 2018 (1) TMI 1646 - ITAT MUMBAI] of the Tribunal has held that where the assessee developer had allotted three flats in a housing project to a single person in violation of section 80 IB(10)(f) of the Act, the assessee would be entitled to deduction in respect of the remaining flats. In the present case, since the assessee had claimed full deduction u/s 80IB(10) of the Act, without complying with the conditions laid down in respect of certain units, the Ld. CIT(A) has accepted the arguments advanced on the alternative ground in the light of the cases relied upon by the assessee and directed the AO to allow the deduction on proportionate basis. - Decided against revenue.

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• 2021 (9) TMI 940
  Reopening of assessment u/s 147 - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - Covid lockdown in India - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - grievance of the petitioner that the notice of like nature could have been issued till the cut off date 30.03.2021 as subsequent thereto the new Section 148A intervened before issuance of notice directly under Section 148 - HELD THAT:- The notification is made by the Ministry of Finance, Central Government considering the fact of lock down all over India, it can be always be assumed that the deferment of the application of section 148A was done in a control way. It is settled proposition that any modification of the Executives implies certain amount of discretion and to be exercised with the aid of the legislative policy of the Act and cannot travel beyond it and run counter to it or certainly change the essential features, the identity, structure or the policy of the Act. Therefore, this legislative delegation which is exercised by the Central Government by notification to uphold the mechanism as prevailed prior to March, 2021 is not in conflict with any Act and notification by executive i.e. Ministry of Finance would be the part of legislative function. Under the circumstances by the notifications the operation of Section 148 of the Income Tax Act was extended, thereby deferment of Section 148A was done. It was done by the Ministry of Finance by way of conditional legislation in the peculiar circumstances which arose during the pandemic and lock down and Central Government can not be said to have encroached upon turf of Parliament. Notification would show that it was issued in exercise of power conferred under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and time for issuance of notice under Section 148, the end date was initially extended uptill on 30th day of April 2021 and subsequently again by notification dated 27th April, 2021 the time limit of 30th day of April 2021 was further extended up till 30th day of June, 2021. By effect of such notification, the individual identity of Section 148, which was prevailing prior to amendment and insertion of section 148A was insulated and saved uptill 30.06.2021. The pandemic and lock down prevailed all over India. The people could not file their return or comply with the various mandate of Income Tax Act. Considering such situation for the benefit of the assessee and to facilitate the individual to come out of woods the time limit framed under Income Tax Act was extended - As the provisions of Section 148 which was prevailing prior to the amendment of Finance Act, 2021 was also extended. Here in this case, the power to issue notice u/s 148 which was prior to the amendment was also saved and the time was extended. In a result, the notice issued on 30.06.2021 (Annexure P-1) would also be saved - no interference is required to be made in the said issuance of notice and accordingly the petitions are dismissed.

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• 2021 (9) TMI 939
  Assessment u/s 143(3) r.w.s. 144-B - gross violation of principles of natural justice - Non providing of adequate opportunity - maintainability of a Writ Petition, when an alternative remedy was available - HELD THAT:- We have referred to the factual positions to demonstrate that the appellant-assessee has been dealt with in a most unfair manner. The appellant is an individual and to the best of his knowledge and ability, he has furnished the details. The Assessing Officer, while completing the assessment, false the appellant for not furnishing the statement of account of the credit cards. The appellant has stated as to why there was a delay in furnishing the details, as he had to obtain the same from the concerned banks and nine particulars called for were voluminous. It may be true that the assessment was an E-Assessment. Nevertheless, if it is a scrutiny assessment under Section 143(3) of the Act, the Assessing Officer is bound to provide adequate opportunity to the appellant. Adequacy of the opportunity would vary from case to case, and there is no straight jacket formula on the same. In case of Companies registered under the Companies Act or other financial institutions, they would have a large team of legal experts to assess and who can appear before the Assessing Officer or who can furnish details, as called for by the Assessing Officer. This may not be a case, when it comes to an individual-assessee. Especially, when a person, like an appellant, who states that he is employed and carrying on a part time business, who being a multi-level marketing person in a chain of marketing persons, who handle projects, manufactured / marketed by M/s. Amway. Assessment order has been passed in violation of principles of natural justice and therefore, the Writ Petition was maintainable.

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• 2021 (9) TMI 934
  Allegation of Evasion of tax by merging of 3 companies - Tax Informant Scheme - PIL already filed - second writ petition on the same subject matter - Seeking order or a direction directing the Chairman, Central Board of Director Taxes to take action under the Income Tax Act in respect of alleged tax evasion set out to the appellant under the Tax Informant Scheme - HELD THAT:- The issue of evasion of tax under the Tax Informant Scheme has already been raised in the PIL. This Court has already dismissed the identical writ appeal [ 2021 (3) TMI 1258 - KARNATAKA HIGH COURT] In the considered opinion of this Court, keeping in view judgment delivered in the case of in SARGUJA TRANSPORT SERVICE Vs. STATE TRANSPORT APPELLATE TRIBUNAL, M.P. GWALIOR AND OTHERS [ 1986 (11) TMI 377 - SUPREME COURT ] a second writ petition on the same subject matter is certainly not at all maintainable. Such a practice deserves to be deprecated. Therefore, this Court does not find any reason to interfere with the order passed by the learned Single Judge.

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• 2021 (9) TMI 925
  Set off of long term capital loss incurred on the sale of shares against the long term capital gains earned on the sale of a property - Tax planning versus Tax evasion - AO denied the claim of assessee assuming it to be fake/paper transaction - assessee is a non-resident Indian now fiscally domiciled in the United States - HELD THAT:- As documents filed before us evidence, post this transaction, not only the sale has been effected in records but there has also been a change in the composition of the board of directors, and buyer s wife also joined the company as a director. The ownership is transferred, the consideration is paid and the transaction is complete. The buyer was a director of the company in question and this is a sale of shares in a private limited company which is made only on private basis and not by way of, for example, a stock exchange. Those commercial decisions must be best left to the persons concerned. What the buyer of these shares does to the company is business of the buyer of the shares, and it is not even necessary that he would do anything immediately. It is incorrect to say that these shares are completely worthless inasmuch as these are majority shares in VCAM Investment Managers Pvt Ltd, and by virtue of holding these shares, a person gets control over that existing and duly incorporated juridical entity- whatever negligible be its worth. As to what use that juridical entity be put to, it is not necessary to have a ready answer thereto but one thing is certain that it can be put to use and it s a common practice to find such companies also changing hands, of course for a consideration, in the real-life situations. In any event, how is the assessee concerned about as to what how will the buyer of shares use the company so acquired by him As regards the objections of the Assessing Officer to the effect that the assessee was well known to the seller and they had many other transactions as well, the mere fact of these transactions, and resultant association with the assessee, does not mean that this transaction did not take place. The fact that the records of the Registrar of Companies still show address of the company as a premises belonging to the assessee cannot negate the fact that the ownership of the shares is with the buyer of these shares, and that the seller is not associated with, or is even beneficial owner of, this company- particularly when the company in question has no business activities at present. Nothing is on record to substantiate that implicit allegation that the assessee continued to be owner of the company. As also Saldhana, were shareholders in this company, and, as the assessee was no longer living in India and was not in any way associated with this company, and as investment in the said company turned out to be a dud investment, he sold entire shareholdings in this company to Saldhana, one of the directors of the company. There is nothing unusual about it. It was a commercial decision of Saldhana to buy these shares on a token consideration of Rs. 3 lakhs which was almost the same amount as its net effective worth and book value. There is nothing wrong, or even unusual, in this transaction either. As regards the transaction of sale of shares having been rendered illegal under section 23 and 24 of the Indian Contract Act, 1872 benefit of this long term capital loss could not be declined to the assessee, as long as transaction has been actually effected, only on the ground that if the assessee had not taken these proactive measures, even if that the sale of shares can be described as a proactive measure, he would have paid more taxes. The assessee may so end up saving taxes but then that is perfectly legitimate. The Assessing Officer cannot disregard a transaction just because it results in a tax advantage to the assessee. Just as much as we cannot legitimize and glorify tax evasion through colourable devices and tax shelters, we cannot also deprecate and disapprove genuine tax planning within the framework of law. The line of demarcation between what is permissible tax planning and what turns into impermissible tax avoidance may be somewhat thin, but that cannot be excuse enough for the tax authorities to err on the side of excessive caution. We deem it fit and proper to vacate the stand of the authorities below on this point. The Assessing Officer is directed to allow set-off of this long term capital loss on the sale of shares in VCAM Investment Managers Pvt Ltd, against the long term capital gains on the sale of the property. The assessee gets the relief accordingly.

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• 2021 (9) TMI 924
  Deduction u/s 80P(2)(a) - income is attributable to the dealing with regular members and nominal members - HELD THAT:- The Division Bench of the Tribunal in the case of M/s.Ravindra Multipurpose Co-operative Society Limited [ 2021 (9) TMI 342 - ITAT BANGALORE] had remanded the identical issue to the files of the A.O. for de novo consideration - As restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. Deduction u/s 80P(2)(d) - assessee has violated the principle of mutuality - If the assessee receives interest / dividend income out of investments earned with co-operative society, the same is entitled to deduction u/s 80P(2)(d) of the I.T.Act. With these observations, we direct the A.O. to examine the claim of deduction u/s 80P(2)(d) of the I.T.Act, afresh.

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• 2021 (9) TMI 921
  Addition u/s 14A r.w. Rule 8D - average value of investment which yielded exempt income - HELD THAT:- As perused the decision in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] wherein, as observed that as long as an exempt income was earned, the expenditure incurred as attributable to earning such exempt income, had to be disallowed under section 14A - also irrespective of the objective of investment in shares (when the shares are held as stock-in-trade with a view to earn trading profits or as investment representing controlling interest) and the taxpayer earned an incidental exempt dividend income, section 14A was triggered which was based on the theory of apportionment of expenditure between taxable and exempt income. In this case, the assessee has not admitted any expenditure warranting any specific satisfaction to be recorded by the Assessing Officer a contended by the assessee in the grounds of appeal - Assessing Officer is directed to consider only those investments for computing average value of investment which yielded exempt income during the year under consideration as per Rule 8D(2)(iii) in view of the case of ACIT v. Vireet Investment (P) Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] and the disallowance shall be recomputed. Thus, this ground of appeal is partly allowed. Addition to income from capital gains - Nature of land sold - Whether land was agricultural land? - As per AO assessee has not filed the sale deed from which the relevant survey can be ascertained. Further, the ld. CIT(A) has held that the land is situated beyond the distance of 5 kms from Kancheepuram is also not verifiable in the absence of sale deed of the property, on the basis of which these claims can be verified - HELD THAT:- What prevented the assessee in filing the sale deed either before the authorities below or before the Tribunal has not been explained. Moreover, the assessee has placed on record sample documents in the form of Encumbrance Certificate pertaining to Neervallur village property, whereas, as per the said schedule of immovable properties, this property disappears. Anyhow, to meet the ends of natural justice, we direct the assessee to file complete sale deeds of the properties sold, and other original relevant revenue records for verification of the properties as agricultural land or not by the Assessing Officer. The Assessing Officer is accordingly directed to verify complete documentary evidences for the claim of the assessee that the lands sold by it are agricultural land and it had been used for agricultural cultivation and in case, if the assessee fails to furnish complete documentary evidences for verification, the assessment already completed and confirmed the ld. CIT(A) stands sustained.

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• 2021 (9) TMI 920
  Revision u/s 263 - Revision barred by limitation or not? - Period to be computed from the date of original assessment u/s 143(3) or from the date of subsequent order passed u/s 153C - unexplained cash credit u/s.68 - HELD THAT:- It is a well settled principles of law by various courts that PCIT/CIT can exercise his revisional powers on the issue which was subject matter of assessment proceedings whether or not said issue was discussed by the AO. In this case, PCIT has taken up revision proceedings on the issue of deduction claimed u/s.80IA of the Act, and said issue was not a subject matter of assessment in pursuant to search action u/s.143(3) r.w.s. 153C of the Income Tax Act, 1961. Once issue was not a subject matter of assessment proceedings pursuant to search, then date of assessment goes back to original assessment passed u/s.143(3) of the Act and if you go by said assessment order, then date shall be reckoned from 28.03.2016. If you go by that date, revision order passed by the PCIT dated 09.12.2020 is clearly beyond two years from the end of financial year in which order sought to be revised was passed. This legal position is fortified by the decision in the case of M/s.Skyline Builders Vs. CIT [ 2019 (1) TMI 1533 - KERALA HIGH COURT ] where under identical set of facts, the Hon ble High Court held that where no revisional order was passed by CIT at the time of completion of original assessment, limitation period for passing order u/s.263 had to commence from first order of assessment. We are of the considered view that revision order passed by the learned PCIT dated 09.12.2020 is barred by limitation because, said order was passed after expiry of two years from the end of financial year in which order sought to be revised was passed. Hence, we quash revision order passed by the learned PCIT u/s.263 - Decided in favour of assessee.

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• 2021 (9) TMI 918
  Reopening of assessment u/s 147 - Scheme of amalgamation undertaken - issuance of notice u/s. 148 of the Act in the name of a non-existent Company or person - notice in the amalgamating company i.e., predecessor - HELD THAT:- In view of the above ratio decidendi of the Hon ble Apex Court in the case of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] the assessee succeeds on this legal issue. We hold that the order of assessment framed in the name of a non non-existent entity after it ceased to be a subsisting entity, was ab-initio initio void and therefore, null in the eyes of law. On similar facts and circumstances of the case and law applicable, the ITAT, Bangalore bench in ACIT v iGate Infrastructure Management Services Ltd. [ 2015 (12) TMI 1113 - ITAT BANGALORE] held that assessment order passed by the Income tax authorities in Delhi, after change in registered office of the company from Delhi to Bangalore, is without jurisdiction and bad in law. The assessment made and the order passed on the amalgamating company i.e., predecessor when the said company is dissolved/not in existence is a nullity. We therefore hold that the impugned assessment order is non-est and ab initio void and, therefore is hereby annulled.

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• 2021 (9) TMI 914
  Addition u/s 28(iv) or 43(1) - Receipt of Special Redistributors Incentive - Addition u/s 28(iv) being the amount of cost of demo van disbursed by M/s. Usha International Ltd. - As per assessee case of the assessee is covered by Explanation 10 to Section 43(1) - failure of the assessee to submit any proof regarding the utilisation of the incentive amount in question for purchase of van, the AO treated the incentive amount as the business income of the assessee as per Section 28(iv) - assessee in the present case is a partnership firm which is engaged in the business of distribution of agro machineries i.e. pumping set, generator set, agricultural engines, power tiller, lubricants, spare parts etc and works as dealer/redistributor of other companies - HELD THAT:- The amount of incentive in question thus was received from M/s. Usha International Ltd. for the specific purpose of purchase of van which was to be utilised for the display and demonstration of the logo of M/s. Usha International Ltd. and since the said amount was actually utilised for purchase of van in the immediately succeeding year, find merit in the contention of the assessee that it was a case where a portion of cost of asset claimed by the assessee had been met directly by M/s. Usha International Ltd. in the form of subsidy or grant and it was rightly excluded by the assessee from the actual cost of the asset in order to determine the cost of acquisition for the purpose of Section 43(1) of the Act as specifically provided in Explanation 10 thereto. The amount of incentive received by the assessee from M/s. Usha International Ltd. specifically for the purchase of van was not in the nature of any benefit or perquisite which had arisen from business so as to treat the value of the same as business income of the assessee in terms of Section 28(iv) - assessee that the case of the assessee is covered by Explanation 10 to Section 43(1) of the Act and not by Section 28(iv) of the Act. Therefore, delete the addition made by the AO u/s. 28(iv) . Addition of freight inward expenses - HELD THAT:- As freight inward expenses claimed by the assessee were incurred in cash and the same were supported by only self-made vouchers - The claim of the assessee for the freight inward expenses to that extent, in my opinion, therefore was not fully verifiable as rightly held by the authorities. However, find some merit in the alternative contention raised by the ld. Counsel for the assessee that the disallowance of 15% made by the AO and confirmed by the ld. CIT(A) is excessive and unreasonable keeping in view the nature of the business of the assessee and it would be fair and reasonable to restrict the same to 7.5%. Accordingly modify the order of the ld. CIT(A) on this issue and direct the AO to restrict the disallowance of 15% to 7.5%. Ground No. 2 of the assessee s appeal is treated as partly allowed.

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• 2021 (9) TMI 913
  Income taxable in India - balance receipts not attributable to PE in India - whether the balance receipts not attributable to permanent establishment of the assessee can be taxed as fees for technical services under Article-13 of the India-UK Tax Treaty - HELD THAT:- As issue raised in the present appeal is identical to the issues raised in the assessee s own case for A.Ys. 2010-11 to 2016-17 and in those years the issues has been decided against the assessee. In the absence of any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years, we following the decision of the Co-ordinate Bench of Tribunal in assessee s own case for A.Y. 2010-11 [ 2016 (11) TMI 65 - ITAT DELHI] and for similar reasons dismiss the appeal of the assessee. Thus the appeal of the assessee is dismissed.

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• 2021 (9) TMI 912
  Penalty u/s 271(1)(c) - HELD THAT:- We are of the view that penalty U/s 271(1)(c) of I.T Act levied by AO has no legs to stand at present, when the corresponding additions made by the AO have already been deleted by ITAT vide its aforesaid order [ 2021 (1) TMI 670 - ITAT DELHI] when the aforesaid quantum addition does not survive, the penalty levied U/s 271(1)(C) of I.T. Act on the corresponding quantum addition also cannot survive. We take support from judicial precedent in the case of K.C. Builders vs. ACIT [ 2004 (1) TMI 7 - SUPREME COURT] in which the Hon ble Apex Court held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, by ITAT or otherwise, the penalty cannot stand by itself and is liable to be cancelled. In such a situation, there is no basis at all at present for sustaining the penalty U/s 271(1)(c) of I.T. Act , and therefore, in such a case, such penalty cannot survive presently. In view of the foregoing, the penalty levied U/s 271(1)(c) of I.T. Act is hereby cancelled. Accordingly, appeal filed by the assessee is allowed.

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• 2021 (9) TMI 911
  Validity of the final assessment order passed by the respondent u/s 143(3) read with Section 144-B - violation of principles of natural justice - Non providing of adequate opportunity - adjudicate the mixed question of facts and law - maintainability of a Writ Petition - Entertaining a Writ Petition before exhausting the appellate remedy - HELD THAT:- The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself - the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The appellate forums are the final fact finding authorities and more so, possessing expertise in a particular field. Thus, the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. Petitioner is at liberty to approach the jurisdictional Appellate Authority as contemplated under the Act for the purpose of redressal of his grievances.

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• 2021 (9) TMI 910
  Unexplained cash u/s. 69A - search and seizure and survey operations u/s. 132/132A conducted - HELD THAT:- It is true that the assessee is a Senior Citizen of 75 years of age. Therefore, it can be easily accepted that he must be keeping cash at home for medical emergencies. But at the same time, non-explanation of the source cannot be brushed aside lightly. We find that search party had seized only Rs. 2 lakhs which means that the search party itself must have accepted the source for Rs. 54,200/-. In light of these facts, we direct the Assessing Officer to restrict the disallowance to Rs. 2 lakhs only. The assessee shall get part relief.

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• Customs

• 2021 (9) TMI 919
  Refund of Customs Duty - denial on the ground of principles of unjust enrichment - refund is denied since the said amount was not shown as receivable as on 31st March, 2011 the said amount became expenditure and consequently became part of the cost of the product, for which the incident has been passed on - HELD THAT:- The fact is not under dispute that the value of three bills of entries in question was included in the closing stock on 31st March, 2011. As per the grounds of appeal, only because the amount of refund was not shown as receivable as on 31st March, 2011 in the balance sheet the said amount stand expensed and become a cost of product. Even though the amount was not shown as receivable but it is included in the closing stock as on 31st March, 2011. The said amount has not become part of expenditure and therefore, cannot be treated as absorbed in the cost of final product. In the financial year 2011-12 admittedly the said amount shown as receivable in the balance sheet as on 30th September, 2011. With this fact it is clear that right from the closing position of 31st March till 30th September, 2011 the amount of refund has not been absorbed in the cost of final product. Therefore, the question of passing of incident of the said amount does not arise. Appeal dismissed - decided against Revenue.

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• 2021 (9) TMI 916
  Refund of duty in cash of the amount which was paid by the appellant by using MEIS scripts - case of appellant is that the amount which stands credited under the scripts is as good as an amount in cash and the assessee is entitled for the refund - HELD THAT:- This Tribunal in the case of CCE, DELHI II APPELLANT VERSUS M/S SUN PHARMACEUTICALS INDUSTRIES LTD. [ 2018 (1) TMI 366 - CESTAT NEW DELHI] has been held that the credit which stands deposited with the Department is required to be refunded to the assessee in cash on the simple ground that the same was not recoverable from the assessee at all. Learned DR though has impressed upon that MEIS scripts and the credit lying there-under is different from the credit lying under DEPB Scheme but that issue also stands decided by this Tribunal only in the case of C C-NEW DELHI ICD TKD EXPORT VERSUS SEL MANUFACTURING COMPANY LTD [ 2019 (3) TMI 718 - CESTAT NEW DELHI] wherein the issue of allowing the cash refund of payment made rather through DEPB Scripts was under consideration. It was held that DEPB Scripts are again the similar scripts under which the money of the assessee stands credited for his future liabilities and once there remains no more liability that amount is to be refunded to the assessee that too in cash. There are no contention in the submissions put forth by ld. D.R. Commissioner (Appeals) is also observed to be miserably silent about citing any reason for which the DEPB scripts shall be considered as different from any MEIS scripts as far as the issue of refund of amount lying credited vide those scripts to concerned - both scripts are creditable scripts hence there is no difference in the two at least for the nature of money lying credited therein and the utilization else refund thereof is concerned. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2021 (9) TMI 948
  CIRP in process - default to give possession of flats to homebuyers - grievance raised in this petition is that the application filed for the initiation of corporate insolvency against the first respondent was merely to stall the refund of the amount due to the homebuyers - resolution plan pending approval - HELD THAT:- The conspectus of facts before this Court reveals that the petitioners have participated in the proceedings before the RP and later, the CoC. The Resolution Plan which has been submitted by the consortium of home buyers stands approved by the CoC and the proceedings are now pending before the Adjudicating Authority, awaiting its approval under Section 31(1) of the under the IBC. If the petitioners have any objections to the Resolution Plan, they are to submit them before the Adjudicating Authority. We direct the NCLT to ensure that the application for approval is disposed of expeditiously and preferably within a period of six weeks form the date of receipt of a certified copy of this order. The Resolution Plan is still to be approved by the Adjudicating Authority under the provisions of Section 31(1) of the IBC. Hence, at this stage, when the Resolution Plan awaits approval, it would not be appropriate for this Court to issue a direction of that nature. After the Resolution Plan is approved under the provisions of Section 31(1), consequences emanating from the statutory provision would ensue to the benefit of the home buyers. Hence, it is already directed that the NCLT shall dispose of the approval application filed on 21 August 2021, within a period of six weeks from the date of receipt of a certified copy of this order - Further, since the moratorium declared in respect of the first respondent Corporate Debtor continues to operate under Section 14 of the IBC, no new proceedings can be undertaken or pending ones continued against the Corporate Debtor. Application disposed off.

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• 2021 (9) TMI 932
  Asset of the Corporate Debtor - Revocation of performance guarantee - Seeking to refund the amount and deposit the same in the Account of the Corporate Debtor with interest as it forms part an Asset of the Corporate Debtor - whether the Corporate Debtor has any right with respect to money received from reversal of invocation of a Performance Bank Guarantee (which had been invoked prior to the initiation of CIRP), specifically when the margin money was also not deposited by the Corporate Debtor ? - Can the said refund amount be construed as an asset belonging to the Corporate Debtor ? HELD THAT:- The definition of security interest under the Code includes an interest that has been created in favour of the Secured Creditor by a transaction which secures payment or performance of an obligation, but though it includes performance obligations, the Legislature decided to exclude performance based Guarantees from the definition. The Legislature by carving out an exception for Performance Guarantee under Section 3(31) intended invocation of Performance Bank Guarantee during the Moratorium period. The observations of the Insolvency Law Committee Report, 2018 specify that the assets of the surety are separate from those of the Corporate Debtor and proceedings against the Corporate Debtor may not be seriously impacted by the actions against asset of third party like sureties . A simple interpretation would mean that the contractual principles of the guarantee are required to be respected even during the Moratorium period and any alternate interpretation could not have been the intention of the Code as is clear from a plain reading of Section 14. The intent of the Code was not to terminate Agreements that have created legal rights in favor of third parties without adhering to due process of Law. Such a termination of legally binding Agreements would be in violation of the provisions of Section 30(2)(e). In the instant case, the issue pertains to amounts refunded by reversal of invocation of Performance Bank Guarantee where even the margin money was paid by the Bank and not by the Corporate Debtor - the liabilities under a Performance Bank Guarantee cannot be terminated by action of a third party. A Bank which gives a Performance Guarantee must honour the guarantee according to its terms. Thus, the amount refunded on reversal of the invocation by the Indian Navy cannot be said to be an asset of the Corporate Debtor , under IBC, Performance Guarantees are to be dealt with specifically keeping in view the provisions and exclusions under Section 14(3)(b) and Section 3(31) of the Code - there is no violation of Section 14 of the Code as the money appropriated by the Bank is not the asset of the Corporate Debtor - appeal allowed.

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• 2021 (9) TMI 931
  Suit for eviction for non-payment of rent (of alternate premises) - appellant claims to be allottee of the Corporate Debtor - appellant claims that she could not be evicted from the alternate premises till the flat allotted to her is provided to her and the liability to pay the rent is also of Mr. Vidur Bhardwaj-Respondent No. 3 - HELD THAT:- The dispute in the present matter is centering around the rent agreement dated 27th November, 2018 (Annexure A-6, Page 88). This agreement dated 27th November, 2018 is between the Respondent No. 2-Ms. Aarti Saraf and the Appellant-Ms. Indrani Brahmachari. Respondent No. 2 is referred as Landlady/First Party and the Appellant is referred as Tenant/Second Party. It relates to Flat No. 1101, Tower No. 30 situated at Lotus Panache Island, Sector 110 Noida. The Document states that the landlord has agreed to let out the premises to the tenant on rent for 24 months. Parties have not brought on record anything to show that all the allottees of the Corporate Debtor in CIRP are being given any such preferential treatment. In the facts of the matter, the prayers of the Appellant in I.A. 2468 of 2020 could not be granted. It would not be in consonance with the scheme of IBC. Under the scheme of IBC, the allottee can be dealt with under Resolution Plan or if the Corporate Debtor goes into Liquidation, the allottees would get treatment as per provisions but the same would have to be similar to all. Even if the veil is lifted, what appears is that one of the directors of the holding company gave some preferential benefit to the Appellant. However, when CIRP has been initiated, the Corporate Debtor with whom no prior contractual arrangement is proved, cannot be forced to continue with the same treatment. Appeal disposed off.

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• 2021 (9) TMI 930
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - NPA - debt was within time limitation or not - appellant claims that the said debt is time-barred and that State Bank of India could not have initiated proceedings under Section 7 of IBC - HELD THAT:- Section 7 of IBC provides that Financial Creditor either by itself or jointly with other Financial Creditors or any other person on behalf of Financial Creditor as may be notified by the Central Bank may file an Application for initiating Corporate Insolvency Resolution Process against a Corporate Debtor before the Adjudicating Authority when a default has occurred. Considering this, even if the State Bank of India was part of the consortium or there are documents executed between the parties, or there are circulars of RBI as to how Banks should try to help the defaulting debtors with CDR Packages and how date of NPA should be calculated, still in IBC for Section 7 of IBC, the material factor is that the State Bank of India is a Financial Creditor whose debt is outstanding and it was in default on the part of the Corporate Debtor and thus the State Bank of India has a right to move Application under Section 7 of IBC. The personal documents between the parties cannot take away such statutory right of the Bank to initiate proceedings. If the Lead Bank for any reason does not take steps or fails to take steps, the other Banks in the consortium cannot be left high and dry without any remedy, as Limitation Act does not differentiate on such count. It is clear that if that account of the Corporate Debtor with the State Bank of India became NPA on 15.01.2013 there is firstly acknowledgement in Letter dated 21st May, 2015 and then there is another acknowledgment vide letter dated 15.06.2016 as referred above. As such, Section 7 of IBC Application filed on 05th March, 2018 must be said to be within limitation - It is clear from Clause (a) of the Explanation of Section 18 of the Limitation Act that even if an acknowledgment is made to person other than a person entitled to the property or right, still it shall fall in the definition of Explanation below the Section 18 of the Limitation Act. The Adjudicating Authority rightly found the Application to be within limitation and has rightly admitted the Application filed by the State Bank of India - Appeal dismissed.

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• 2021 (9) TMI 929
  Ex-parte order filed by the Corporate Debtor filed for initiation of CIRP - power of Adjudicating Authority to use power under Rule 49 of National Company Law Tribunal Rules, 2016 at belated stage - Section 424 (1) of the Companies Act, 2013 r/w Rule 11 of the National Company Law Tribunal, Rules, 2016 - HELD THAT:- Admittedly, the Ld. Adjudicating Authority has vide order dated 27.05.2020 admitted the application under Section 9 of the IBC filed by the Operational Creditor Respondent No. 1 and the Appellant has filed the Application for setting aside the ex-parte order on 06.11.2020 under Section 424 (1) of the Act r/w Rule 11 of NCLT Rules, 2016 stating that the Corporate Debtor has not received the notice. It is also an admitted fact that CoC has been constituted on 20.11.2020 i.e. after filing of the aforesaid Application for setting aside ex-parte order of admission. It is settled that once the Application under Section 7 or 9 is admitted and CIRP initiated, such proceeding is in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. Before a CoC is constituted, a party can approach the Adjudicating Authority directly and the Adjudicating Authority may in exercise of its powers under Section 12A of the IBC r/w Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 allow or disallow an application for withdrawal or settlement - after constitution of CoC the Adjudicating Authority cannot set aside even ex-parte admission order and in such a situation the Corporate Debtor has to file the Appeal under Section 61 of the IBC. In the present case, the Application under Section 9 was admitted on 27.05.2020 and the Appellant (Corporate Debtor) has filed the Application for setting aside the ex-parte admission order on 06.11.2020 whereas the CoC has been constituted thereafter on 20.11.2020. In such a situation before constitution of CoC the Ld. Adjudicating Authority can consider the Application for setting aside ex-parte admission order but after constitution of the CoC the Ld. Adjudicating Authority cannot in exercise of power under Rule 49(2) of the NCLT Rules, 2016 set aside the ex-parte admission order. Ld. Adjudicating Authority has passed the impugned order after constitution of CoC i.e. on 23.03.2021, therefore, there are no illegality in the impugned order. Appeal dismissed.

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• 2021 (9) TMI 928
  Squaring off was preferential transaction under Section 43 - undervalue without permission of the Resolution Professional - Violation of Principles of Natural Justice - Squaring off Receivables against Debt - Sale of Car in Moratorium - HELD THAT:- The Impugned Order shows that for the Appellant Mr. Navin Arora I/B AA Associates had appeared. There is nothing on record to show that this Advocate apprised the Adjudicating Authority that he is not instructed in I.A. 1108 of 2020 or that he apprised the Adjudicating Authority that for I.A. 1108 of 2020 for same Appellant (Respondent before Adjudicating Authority) there were different advocates appearing. We reject such approach, which are means of creating grounds to protract matter. There is no material also to show that on 07th January, 2021 or soon thereafter any grievance was raised with the Adjudicating Authority in writing that name of wrong advocate is shown for Respondent with regard to the M.A. concerned - the ground that Principles of Natural Justice were violated is rejected. Squaring off Receivables against Debt - HELD THAT:- The entries were made by the Appellant who was functioning as Chief Executive Officer which was admittedly done on 31st March, 2018 which was after filing of the Application under Section 7 of IBC on 6th March, 2018. He has squared off what he had to receive against what was to be received by the Corporate Debtor from the three entities referred. What is the deal/understanding between him and the three entities is within the knowledge of the Appellant - On record fact remains that there is transfer of interest of the Corporate Debtor (which was to receive the amounts from the three entities) for the benefit of the Appellant Chief Executive Officer of Corporate Debtor who had to receive back unsecured loan given to Corporate Debtor, and this would put to detriment the other creditors of the Corporate Debtor - the Appellant was hit by Section 43 of IBC. Sale of Car in Moratorium - HELD THAT:- The Appellant is guilty not only with regard to the contravening moratorium and liable for action under Section 74 of IBC but is also liable for misconduct in course of CIRP under section 70 of IBC. It appears that the Resolution Professional and the Adjudicating Authority need to ask the Appellant to explain the amount actually received under the sale of the car and to consider if it is also a case of criminal misappropriation - No doubt this is an appeal filed by the Appellant to clear himself of the liability to pay but Resolution Process, not being an adversarial litigation, when we notice violation of the provisions of IBC, under Rule 11 of NCLAT Rules we can make such orders as are necessary for meeting the ends of justice and to prevent abuse of the process of the Tribunal. The directions given by the Adjudicating Authority directing the Appellant to deposit Rs. 91,56,687/- toward amount which was squared off by the Appellant

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• 2021 (9) TMI 927
  Benefit of provision of 90 days to pay balance sale consideration - amended clause 12 of Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- Considering the material placed by them, it does appear to us that the laudable object with which Clause 12 was substituted is defeated by issuing such Circular dated 26.08.2019. When in an auction somebody has given a higher bid, if instead of 15 days, the person gets a breathing time of 90 days to make a payment, no other person gets affected - Para 3.2 of the Discussion Paper referred to Regulation 32 and the option to explore sale of Corporate Debtor as a going concern along with the other available sale options and the need to provide complete framework to enable the Liquidator to exercise the option. The Discussion Paper tries to balance need to be within timeframe for maximisation of the value and the need to have sufficient time for steps to be taken. In such backdrop, Para 5.2.2 was included in the Discussion Paper with regard to difficulties found by Liquidators when time is of mere 15 days. Power of Board under Section 196(1) (p) or (t) to issue guidelines cannot be expanded to interpreting provisions made. That is job of Courts to interpret and apply law. Reading the Regulation as amended we find it must be held to be applicable to liquidation process which are pending, and the provision can be applied considering stage of the process, irrespective of the date whether the liquidation process started before 25.07.2019 or on or after 25.07.2019 when Clause 12 Schedule I of the Regulations was substituted. This is not to say that sales already cancelled before 25.07.2019 for default of payment under earlier existing clause 12 can be reopened. Liquidators can rely on the amendment at the time of issue of Auction Notice being issued, irrespective of date of liquidation order of Adjudicating Authority. The Circular dated 26.08.2019, we hold is not legally enforceable to interpret applicability. Such Circular cannot be in the nature of substituting existing Regulation in the name of guidelines. The order passed by the Adjudicating Authority is modified and it is held that the Appellant- Liquidator would be at liberty to apply and enforce amended Clause 12 of Schedule I of the Liquidation Regulations to the liquidation process even though initiated before 25.07.2019 - appeal disposed off.

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• 2021 (9) TMI 926
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debt and dispute or not - dispute with regard to demand notice - HELD THAT:- It is not that anybody has come on behalf of Operational Creditor to object to the manner in which the resolution was passed. On the basis of technicalities raised by the Corporate Debtor, it is not found that much weight can be given to the argument raised on this count. Dispute raised with regard to the notice under Section 8 of IBC or not - HELD THAT:- The Notice is dated 11.12.2017 at Appeal page 87 to 89. The dispute raised is that this notice is not in format and as required under Section 8 read with Rule 5(a) of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 ( Rules in short). There is Form 3 below the Rules with regard to the format - For mere technicality that the notice should purport to be in the format (although sufficiently meeting the requirements of the format) we do not want to ascribe undue weight to such argument which is mere technicality. The Adjudicating Authority has rightly found that there are dues outstanding which attract Section 9 of IBC. The Appellant is trying to confuse by referring to portal of Icegate but when there are documents in favour of the Operational Creditor, it is not found that Appellant is able to show that the goods were not received and that the Corporate Debtor did not have any liability to pay. We do not find any fault with the impugned order admitting the Application under Section 9. Appeal dismissed.

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• Service Tax

• 2021 (9) TMI 935
  Levy of tax, claimed under Form SVLDRS-1 - service tax dues, was paid late - It is contended that the respondent No. 4, without considering the provision of Scheme of 2019 and without giving any opportunity of hearing to the petitioner passed the order in a mechanical manner by which the Form SVLDRS-1 submitted by the petitioner was summarily rejected - HELD THAT:- According to the Scheme, once the assessee avails the Scheme and files the return by declaration, the verification of declaration by the designated committee was prescribed under Section 126 of the SVLDRS Scheme and the issue of statement by the designated committee is covered under Section 127 of the SVLDRS Scheme - As per Section 127 of the SVLDRS Scheme, when the declaration made by the petitioner was rejected, meaning thereby he would be liable to pay further interest and penalty on late payment and return. However, to levy any such liability under Section 127 of the SVLDRS Scheme, under Section 127(3), it mandates that after the issue of estimate under Section 127(2), the designated committee shall give opportunity of being heard to the declarant, if he so desires, before issuing the statement indicating the amount payable by the declarant. The order which is on record whereby the declaration of the petitioner was rejected, meaning thereby he would be liable to pay the additional amount, which would be a levy imposed. In order to impose such levy, the designated committee was duty bound to hear the petitioner by giving him an opportunity of hearing. Considering the benevolent scheme which has been set into motion by the respondents, the petitioner was required to be heard even otherwise under the statutory mandate The order whereby the Form SVLDRS-1 was rejected by the designated committee which is embodied in the remarks column is set-aside. The cases are remanded back to the designated committee with a direction to give an opportunity of hearing to the petitioner by adhering to the rules of natural justice - Petition allowed by way of remand.

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• 2021 (9) TMI 923
  Maintainability of appeal - non-prosecution of the appeal - Reduction in the quantum of penalty - section 78(1) of the Finance Act, 1994 - HELD THAT:- In view of Rule 20 of the CESTAT (Procedure) Rules, 1982, this appeal is liable for dismissal on the ground of non-prosecution of the appeal in terms of Rule 20 of the CESTAT (Procedure) Rules, 1982. Quantum of penalty - HELD THAT:- The issue is squarely covered against the appellant by the decision of the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] wherein the Hon ble Apex Court has held that We completely fail to see how payment of the differential duty, whether before or after the show cause notice is issued, can alter the liability for penalty, the conditions for which are clearly spelled out in Section 11AC of the Act - the appeal is liable to be dismissed on merits also. The appeal is dismissed both under Rule 20 of the CESTAT (Procedure) Rules, 1982 for non-prosecution and on merits too.

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• 2021 (9) TMI 922
  Levy of service tax - Air Travel Agent service - commission received from the airlines - rule 6 (7) of the Service Tax Rules, 1994 - HELD THAT:- This issue was referred to a Larger Bench of the Tribunal by a Division Bench in KAFILA HOSPITALITY AND TRAVELS PVT LTD VERSUS C.S.T. -SERVICE TAX - DELHI [ 2018 (11) TMI 983 - CESTAT NEW DELHI ] where it was held that In view of difference of opinion, matter should be referred to Larger Bench. We direct the Registry to place the records before Hon ble President for constitution of Larger Bench. In view of the discussion, the findings and the answers given by the Larger Bench on the six issues, the impugned order dated July 27, 2015 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.

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• Central Excise

• 2021 (9) TMI 942
  Seeking permission for withdrawal of appeal - benefit of the Settlement Scheme already availed - CENVAT Credit - input service - outward transportation of goods delivered at the doorsteps of the buyers - equating the definition of input under section 2(k) and input services under section 2(l) especially when the expressions clearance of final products from the place the removal is conspicuous by its absence under the definition of input - scope of various expressions - interpretation of statute - HELD THAT:- The appellant is permitted to withdraw this Appeal, as they have availed the benefit of the Settlement Scheme. The Appeal stands dismissed as withdrawn and the substantial questions of law are left open.

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• 2021 (9) TMI 917
  Unable to avail and utilized Cenvat Credit - Refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) - Validity of appeal of Department under the provisions of GST before the Commissioner (appeals) Central Excise - HELD THAT:- The apparent and admitted fact remains on record is that the entire customs duty with respect to the inputs imported by the appellant stands fully deposited by the appellant not only alongwith interest but also with the penalty as was directed to be paid while seeking said redemption. These admitted facts are sufficient to hold that the appellant became entitled to avail Cenvat Credit of the CVD/SAD paid by him on the imported inputs in terms of Rule 3 of Cenvat Credit Rules, 2004 (CCR). Apparently, the said Cenvat Credit could not be availed any more due to the erstwhile law i.e. Central Excise Act, 1944 being taken over by New GST Act, 2017. Perusal thereof shows that the Act contains a provision to take care of such unutilized credits of the assessee to be refunded to them in cash. Further, it is also observed that the appeal before Commissioner (Appeals) was filed by the Department not under the erstwhile law but under the GST Act, 2017 - As objected by ld. DR himself that this Tribunal is not competent to deal with the appeals under GST Act. The appeal before Commissioner (Appeals) was not maintainable under GST Act for a refund application which was filed under the erstwhile law. The appeal as such was not maintainable. The order under challenge has wrongly rejected the refund despite an unambiguous provision not only giving entitlement of refund to the appellant but also recognizing for the refund eligible under erstwhile law to have been given in cash under new law. Order accordingly, is hereby set aside appeal resultantly stands allowed. Appeal allowed - decided in favor of appellant.

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• 2021 (9) TMI 915
  CENVAT Credit - 2 percent CVD paid on import of coal - benefit of N/N. 12/12-Cus dated 17.03.2012 - HELD THAT:- The issue is squarely covered by decision of CESTAT in the case of M/S. ASAHI SONGWON COLORS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST., VADODARA [ 2018 (9) TMI 159 - CESTAT AHMEDABAD] where it was held that Admittedly, the appellant have imported Coal and CVD of 2% is leviable in terms of Customs N/N. 12/2012-Cus. There is no restriction provided in Rule 3 as regards duty paid under Customs notification - This restriction is applicable only in case of indigenous goods on which the excise duty @ 2% was paid availing N/N. 12/2012-CE, which is not a case here. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (9) TMI 947
  Area Based Exemption - Grant of certain incentives in the form of subsidy to specified industries set up on or after 01.04.2012 - time limitation - rejection of application on the sole ground that the claims were submitted after expiry of two years from the period to which the claims related - Tripura Industrial Incentives Promotion Scheme, 2012 - HELD THAT:- The impugned order suffers from proper understanding of the order of the Court dated 12th January, 2021 and also suffers from lack of proper analysis of the provisions of the scheme. While disposing of the writ petition by the said order dated 12th January, 2021 we had made certain significant observations - the purpose was to allow the authority to examine the facts more minutely expecting that if the petitioner was prevented from making application for refund in time because a department of the government did not provide him requisite certificates, such delay would be condoned. The authority shall examine the petitioner s refund applications on merits and dispose of the same within two month from today - Petition disposed off.

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• 2021 (9) TMI 945
  Upfront collection of tax and penalty - SCN was not issued - whether Sales Tax Officer (STO) can collect upfront tax and penalty from the Petitioner at the time of a surprise inspection undertaken of his business premises without passing any assessment order? - Orissa Value Added Tax Act, 2004 (OVAT Act) - HELD THAT:- As explained in MG. GARMENTS VERSUS SALES TAX OFFICER, INVESTIGATION UNIT, BHUBANESWAR AND OTHERS [ 2008 (11) TMI 618 - ORISSA HIGH COURT] , the penalty under Section 73(10) of the OVAT Act can be imposed only after giving the dealer an opportunity of being heard and after holding such further enquiry as the authorised officer concerns may consider necessary. In that case, the sum had been collected on 4th February, 2008 even before the Petitioner could reply to the show cause notice issued to it on 2nd February, 2008. In the Present case, the situation appears to be even worse while the collection of tax and penalty took place on 10th April, 2007, the assessment order itself was passed subsequently on 16th April, 2007. However, no show cause notice was issued to the Petitioner at any time prior to the collection of the above amount on a surprise inspection. It is plain from the second proviso to 16-D (5) of the OST Act that it envisages payment of the amount of tax by the person affected in respect of such goods to be assessed in the prescribed manner as well as the penalty equivalent to twenty per centum of the value of the goods seized as a condition of the goods seized - the question of first collecting the tax and penalty upfront under Section 73 (10) of the OVAT Act and then assessing the person from whom the amount was collected, is not permissible in law. The Court holds that the collection of the tax and penalty by the STO, Cuttack (Opposite Party No.3) from the Petitioner on 10th April, 2007 is without any authority of law. Accordingly, it is directed that the aforementioned sum of Rs. 3,29,787/- collected from the Petitioner will be refunded to him together with interest as applicable under the relevant rules within a period of four weeks from today. It is made clear that the interest will be continued to be paid till the date of actual refund - Petition allowed.

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• 2021 (9) TMI 944
  Benefit of concessional rate of duty - C-Form not issued - purchase of high speed diesel for manufacture of cement - HELD THAT:- Taking into consideration the fact that in case the C-Form is subsequently found to be wrongly issued or obtained then it is always within the power of the State to charge a higher rate of GST payable alongwith the penalty for which the petitioner shall always be exposed. Withholding the C-Form in any way will not serve any bodies purpose as the petition will take some time for final hearing. It is directed that the State shall issue C-Form to the petitioner which would be subject to the final adjudication of the entitlement of the petitioner s C-Form and if it is found that the petitioner were not entitled to get the C-Form, then in such case they shall be liable for the consequences of penalty and higher rate of GST and other measures which are provided under the law - List the case after six weeks along with WPT No. 42 of 2021.

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• Indian Laws

• 2021 (9) TMI 943
  Dishonor of Cheque - accusation of cheating - acquittal of the accused - fraudulent or dishonest intention at the time of making promise or representation - conviction under 420 of IPC - HELD THAT:- This Court finds that although the allegation was made in the complaint petition that the petitioner had not only induced the complainant to take E.S.S. from the company but had also, on false assurance of handsome return as well as employment of son and son-in-law of the complainant, took huge amount from the complainant, but failed to return the money - The learned trial court considered the conduct of the petitioner after the transactions, particularly with regards to non-payment of any amount pursuant to agreement entered during the pendency of the case and convicted the petitioner for offence under section 420 IPC. The learned appellate court, after considering the materials on record, from perusal of the evidences adduced by the witnesses examined by the complainant it transpires that the money was given by the complainant to the petitioner as friendly loan. The learned appellate court also considered the conduct of the petitioner and held that it was never his intention to repay the amount to the complainant and considered that in part payment of the loan amount the petitioner issued cheque in favour of the complainant, but the same also stood dishonoured twice and the cheque issued to Suresh Agarwal was also dishonoured - Considering the conduct of the petitioner including the agreement which was entered into after the institution of the case, the learned appellate court was convinced that it was never the intention of the petitioner to repay the loan amount to the complainant and with these findings, the learned appellate court upheld the conviction of the petitioner for offence under Section 420 IPC. It is a well-established principle of law that every breach of contract or every dispute under an agreement or every dispute in connection with transaction of money and failure to repay does not amount to the offence of cheating. It would amount to cheating only in those cases where there was any deception played at the very inception. To establish the offence of cheating, the accused should be shown to have had fraudulent or dishonest intention at the time of making promise or representation - the learned appellate court, while upholding the conviction under section 420 IPC, recorded the conduct of the petitioner relating to events after the completion of entire transaction i.e. bouncing of cheques issued by the petitioner and non-adherence to the agreement to pay the amount which was entered into between the parties during the pendency of the case to give a finding that the petitioner never intended to return the amount. Such consideration of the conduct of the petitioner subsequent to completion of transaction could not have been relied upon by the learned appellate court to sustain the conviction of the petitioner under Section 420 of Indian Penal Code as the basic ingredient of the offence is dishonest intention of the petitioner since inception, which is totally absent in the instant case. This Court also finds that the dispute between the petitioner and the complainant was essentially in the realm of civil dispute and there being no evidence on record that the petitioner had the intention to cheat the complainant right from the inception of the transaction of extending friendly loan, the conviction of the petitioner under Section 420 of Indian Penal Code cannot be sustained in the eyes of law - the conviction and sentence of the petitioner for alleged offence under Section 420 of Indian Penal Code is hereby set-aside. The criminal revision petition is allowed.

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• 2021 (9) TMI 938
  Grant of anticipatory bail - Dishonor of cheque - complainant has issued the cheque to the applicant or not - misuse of cheque - HELD THAT:- Taking into consideration, the nature of allegations levelled in the complaint against applicant and two other persons. Applicant has placed on record Annexure A-2 which are the bills towards supply of material to Ganga Construction. After dishonoring the cheques on 18.1.2017 legal notice was issued thereafter the complaint case under Section 138 of Negotiable Instrument Act was filed before the court of competent jurisdiction. The fact that co-accused Nandkishor on 12.08.2021 withdrawn proceedings filed under Negotiable Instrument Act by him against complainant mentioning that settlement has been arrived between the parties, without commenting anything on merits of the case, the bail application is allowed. It is directed that in the event of arrest of applicant in connection with the crime in question (278/2017), he shall be released on anticipatory bail by the Officer arresting him on his executing a personal bond in the sum of Rs. 25,000/- with one surety in the like sum to the satisfaction of the concerned arresting Officer - the applicant shall make himself available for interrogation before the Investigation Officer as and when required - Application allowed.

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• 2021 (9) TMI 933
  Seeking grant of anticipatory bail - Bribery - defalcation of huge amount of the University - section-438 of the Code of Criminal Procedure - HELD THAT:- The legislative extent behind the introduction of the section-438 of the Code of Criminal Procedure is to safeguard the individual personal liberty and the protect him from the possibility of being humiliated and from being subjected unnecessary police custody. However, the Court has to keep in mind that a criminal offence is not an offence against an individual; rather the larger societal interest is on stake. Therefore, the delicate balance is required to be established between two rights safeguarding the personal liberty of an individual and the societal interest, depending upon the facts and circumstances of the case. The prosecution case is that the Petitioner is one of the Founder Trustees of the University and the other accused namely, Ashutosh Padhy who is said to be an associate of the Petitioner and present at the spot is the Senior Manager of the Accounts attached to GTET attached to the GTET, the social entrepreneurial outreach of the University. As per the F.I.R., the CBI Officials received the informations from the reliable source that M/s. Centurion Institute of Technology (CIT) had received the notice from the Commissioner, Audit, GST and Central Excise for conduct of audit for the financial year, 2017-18 and it is said that during audit inspection, accused-A.B. Kar, Superintendent, GST with his team had informed the accounts section of the said Institute about the violations with respect to GST with their accounts. So, it is the case of the prosecution that there was demand of bribe from the side of the leader of the team comprising of GST Officials entrusted with the audit work and all the members of the team had their approval so as to have pecuniary gain. The CFO having stated of being not aware of the GST avoidance issue has also gone to say that he had his indulgence in the matter with GST Officials and then however says that he was against that. The statements of all those witnesses to the trap laid have already been recorded. The Petitioner is having his root at Bhubaneswar and the Institutions including the CIT under the University are running within the State of Odisha. The materials so far said to have been collected against this Petitioner-Trustee is that he had engaged that accused-Ashuthosh Padhy to resolve the GST issues and thus had the approval in the matter of meeting the demand of the bribe advanced from the side of the GST Officials entrusted in the audit of the accounts of the CIT. Taking into account the surrounding circumstances and in the absence of any such material as suggestive of the fact that the Petitioners release on prearrest bail shall cause hindrance to free and fair investigation in which the Petitioner expresses to cooperate; it is directed that in the event of arrest of the Petitioner in connection with the above noted case, he be released on bail by the Arresting Officer on executing bonds for a sum of Rs. 1,00,000/- with two sureties of the like amount with further conditions that he will appear in person before the Investigating officer on 22nd March, 2021 in between 10 am to 1 pm and on such other date/s and time as would be so required by the Investigating Officer and co-operate with the investigation. Application disposed.

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