Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 24, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST
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G.S.R. 577 (E) - dated
22-9-2020
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CGST
Corrigendum – Notification No. 68/2020-Central Tax, dated the 21st September, 2020
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G.S.R. 576 (E) - dated
22-9-2020
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CGST
Corrigendum – Notification No. 67/2020-Central Tax, dated the 21st September, 2020
GST - States
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G.O.Ms.No.276 - dated
22-9-2020
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Andhra Pradesh SGST
Re-Constitution of Andhra Pradesh Authority for Advance Ruling under GST
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FTX.56/2017/Pt-I/445 - dated
19-8-2020
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Assam SGST
Seeks to provide relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020.
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FTX.56/2017/Pt-I/444 - dated
19-8-2020
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Assam SGST
Assam Goods and Services Tax (Seventh Amendment) Rules, 2020.
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44/2020 – State Tax - dated
4-9-2020
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Jharkhand SGST
Appoints the 8th day of June, 2020, as the date from which the provisions of the Jharkhand Goods and Services Tax (Fifth Amendment) Rules, 2020 , shall come into force.
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43/2020 – State Tax - dated
4-9-2020
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Jharkhand SGST
Appoints 18th Day of May, 2020 as the date on which the provisions of section 11 of the Jharkhand Goods and Services Tax (Amendment) Ordinance, 2020 shall come into force.
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G.O. Ms. No. 52 - dated
15-9-2020
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Puducherry SGST
Seeks to amend Notification G.O. Ms. No.44 dated the 7th September, 2020
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G.O. Ms. No. 51 - dated
15-9-2020
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Puducherry SGST
Seeks to amend Notification G.O. Ms. No. 34 dated the 5th August, 2019
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G.O. Ms. No. 50 - dated
15-9-2020
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Puducherry SGST
Puducherry Goods and Services Tax (Tenth Amendment) Rules, 2020
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G.O. Ms. No. 49 - dated
15-9-2020
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Puducherry SGST
Appointed day for section 10 of the Puducherry Goods and Services Tax (Amendment) Act, 2020
Income Tax
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75/2020 - dated
22-9-2020
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IT
Income-tax (21st Amendment) Rules, 2020.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Grant of anticipatory bail - Arrest of Superintendent working in the office of Commissioner of CGST, Rohtak - Demanding bribe - looking into the serious allegations against the petitioner, which suggest his active involvement in the case, custodial investigation of the petitioner is required - Petition dismissed. - HC
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Attachment of property while exercising the power to access the premises u/s 71(1) - The plain reading of Section 83 of the Act would indicate that the powers can be invoked during the pendency of proceedings u/s 62, 63, 64, 67, 73 and 74 of the Act - There is no power vested in the authorities to invoke the provisions of Section 83 during the pendency of the proceedings instituted u/s 71(1) of the Act. - HC
Income Tax
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Disallowance u/s 14A - Whether there is no tax free income earned during the year ? - To attract the provisions of Section 14A of the Act, 1961, it is necessary that the assessee should have earned any exempt income. If the assessee has not earned an exempt income and has not claimed so in his return of income, then the provisions of Section 14A would not be applicable. - HC
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Provisions for doubtful debts allowed as a expenditure even though the same is not written off - as per prevalent accounting principles which clearly lay down that loss on sale of investment should be taken into account while determining the commercial income, the assessee is entitled to expenditure in respect of provision for doubtful debt. - HC
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Liability to pay interest u/s 234B - In the light of legal position as it existed for the relevant Assessment Years prior to insertion of proviso to Section 209(1) of the Act, it is clear that if payer who was required to make payments to non resident had defaulted in deducting the tax at source from such payments, the non resident is not absolved from payment of taxes thereupon and non resident is liable to pay tax and the question of payment of advance tax would not arise. - it would not be permissible for the revenue to charge any interest u/s 243B - HC
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Income-tax Officer (Intelligence) authority to issue notice u/s 133(6) - Jurisdiction of Income Tax Authorities u/s 120 - From the reliance on the notification dated November 1, 2011, it is decipherable that the power of collection, collation and dissemination which earlier vested with Central Information Branch was transferred to Income-tax Officer (Intelligence), which would not mean that the notices issued and imposition of penalty by the Income-tax Officer (Intelligence) lacked jurisdiction. - HC
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MAT Computation - when the ld. CIT(A) is satisfied that the income which is exempt u/s. 10 of the Act is included in the book profit u/s. 115JB, which should not be done, the ld. CIT(A) is justified in directing Assessing Officer to follow the law and to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account. The action of the ld. CIT(A) is perfectly legal and does not suffer any infirmity. - AT
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Allowability of exemption u/s 10(23C)(vi) - Allegatin that, assessee Society has continued to divert its funds towards non-educational activities by way of huge advances to RNMCS - Non-charging of interest on the advances given allegation is not relevant in the context of S. 10 (23C) (vi) in as much as there appears no such specific clause/ provision in 15th Proviso or anywhere in S. 10 (23C)(vi) empowering the CIT, or as may be the case u/s 12AA (3) r/w S. 13 (1)(c). - AT
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Disallowance u/s.40(a)(ia) - Failure to deduct TDS - Scope of amendment - if a statute is curative of the previous law, retrospective operation is generally intended. - AO directed to restrict the 100% disallowance confirmed by the CIT(A) to the extent of 30% only taking into account the actual claim of the assessee in its profit and loss account. - AT
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Exemption u/s 11 - charitable activity u/s 2(15) - whether milk collection and distribution activity of assessee Trust was a business? - Held No - The milk collection and disbursement was only a support activity to achieve the purpose of women empowerment particularly that belonging to the backward rural area of the state of Rajasthan. - AT
Customs
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Flexi Tank Containers - Benefit of exemption on import - durable goods or not - entire emphasis of the Revenue is that the subject Flexi Tank Containers are not repeatedly used - Only because the containers do not have repeated use, the containers which are otherwise durable benefit of notification cannot be denied - AT
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DFIA Scheme - Actual user condition - the clarification of the Advance Licensing Committee issued in 2002 was withdrawn by the Norms Committee in 2013. The foundation of the impugned order is the attribution of retrospective effect to the subsequent withdrawal so as to render the impugned imports to be contrary to the list appended to the licence. - If the test of validity for retrospective effect of notifications, it surely must be no less applicable to clarifications. - Order of confiscation and penalty set aside - AT
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Levy of penalty - Valuation of imported goods - Apparently penalties under Section 112 are imposable both on the person who has imported the goods held liable for confiscation and on all those who had aided and abetted in the act of illegal importation. - As all the facts and evidences have been admitted by the appellants in their statements recorded under Section 108 of Customs Act, 1962 there are no merits in these appeals - AT
Corporate Law
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Rectification of register of members by deleting the transfer entry - transfer of shares - the action of challenging the validity of transfer deed dated December 22, 2006 was chosen to be filed on February 10, 2016 after a lapse of ten years from the date of execution and registration of the said transfer deed and ratification of the said transfer by investor grievance committee on March 31, 2007. The appellant has chosen to enquire into the matter only in the year 2015 and has lost his rights of challenging the transfer deed on account of delay and laches - Tri
Service Tax
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Works Contract Services - Evidently all the service recipients have been set up by the State Government, and are directly under the control of the various Ministries of the State Government. Thus, the service recipients are covered under sub clause (i) of clause (5), of the definition of the term ‘Govt. Authority’ - Benefit of exemption available - AT
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Business Auxiliary Service (BAS) - Trade Discount - in the entire transaction only two persons are involved, one the appellant as exporter of the goods and second the buyer of the goods. In the sale of goods, in case of service of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission - The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of imagination cannot be considered as commission paid towards commission agent service, hence cannot be taxable. - AT
Case Laws:
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GST
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2020 (9) TMI 886
Validity of Circular dated 15.03.2018 issued by the Government of India, Ministry of Finance - recovery of CGST short paid - HELD THAT:- A strong prima facie case has been made out for grant of an interim relief in terms of paragraph 25(D) of the petition. We accordingly grant such relief. The respondents shall be served by way of email.
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2020 (9) TMI 885
Clearance of detained goods alongwith vehicle - section 129 of CGST Act - requirement of furnishing of Bank Guarantee for the clearance of goods - HELD THAT:- On a consideration of the facts and circumstances of the case and the submissions made across the Bar, and finding that a final order under Section 129(3) in Form GST Mov 09 has already been passed, the writ petition is disposed off with a direction to the First Appellate Authority, before whom Ext.P12 appeal has been preferred by the petitioner, to consider and pass orders on Ext.P12 appeal within three weeks from the date of receipt of a copy of this judgment, after hearing the petitioner either through a physical hearing or through video conferencing. Petition disposed off.
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2020 (9) TMI 884
Grant of anticipatory bail - arrest of Superintendent working in the office of Commissioner of CGST, Rohtak - Demanding bribe - Evasion of GST - Section 120-B IPC and Section 7 of the Prevention of Corruption Act, 1988 - HELD THAT:- The argument raised by the counsel for the petitioner that the petitioner has been falsely implicated on account of a raid conducted by him for checking the difference of 6% GST to be paid by the complainant is a matter of evidence - It is undisputed fact that co-accused Kuldeep Hooda was arrested on the next day, i.e. 15.8.2020 and a huge unaccounted amount of ₹ 64 lacs was recovered from his house. Therefore looking into the serious allegations against the petitioner, which suggest his active involvement in the case, custodial investigation of the petitioner is required - Petition dismissed.
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2020 (9) TMI 883
Detention of Consignment of watches - detention on the ground that the consignment not accompanied by a valid e-way bill - HELD THAT:- There are force in the contention of the learned counsel for the petitioner that inasmuch as the effective value of the goods that was transported was only ₹ 8.99 as evident from Ext.P4 invoice, and the provisions of the Act and Rules mandate that an e-way bill is required only for consignments whose value exceeds ₹ 50,000/-, the detention at the instance of the respondent cannot be said to be justified. The respondent is directed to forthwith release the goods and the vehicle to the petitioner on the petitioner producing a copy of this judgment before the said authorities - petition allowed.
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2020 (9) TMI 882
Grant of Anticipatory Bail - It is submitted by the learned counsel for the petitioner not only the bail application is allowed without issuing any notice to the Department but the Court which granted anticipatory bail had no jurisdiction to grant the same as such application could have been listed either before the learned CMM or before the learned ASJ, Patiala House Courts, New Delhi. HELD THAT:- Issue notice to the respondents through all modes including email returnable on 20.10.2020.
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2020 (9) TMI 881
Bail application - input tax credit - only difference between the case of the petitioner and co-accused is of the quantum involved - HELD THAT:- Taking note of the fact that maximum sentence involved is five years and petitioner has remained in custody for a period of 19 months and also taking note of the fact that matter is still at the stage of pre-charge evidence and co-accused has been enlarged on bail by this Court, it is deemed proper to allow the fourth bail application. This fourth bail application is accordingly allowed and it is directed that accused petitioner shall be released on bail provided he furnishes a personal bond in the sum of ₹ 10,00,000/- together with two sureties in the sum of ₹ 5,00,000/- each to the satisfaction of the learned trial court with the stipulation that he shall appear before that Court and any court to which the matter is transferred, on all subsequent dates of hearing and as and when called upon to do so.
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2020 (9) TMI 880
Maintainability of appeal - learned Single Judge has only relegated the appellant to appear before the Assessing Officer and submit their application and the Assessing Officer was directed to forward such application to the Nodal Officer, who in turn would forward it to the concerned Grievance Committee - HELD THAT:- Since the learned Single Judge has only directed the appellant to raise their grievance before the Nodal Officer/Nodal Committee, there is nothing to interfere with the said order by the Division Bench in the present intra court appeal. The case of the Assessee is admittedly pending before the learned Commissioner of Appeals as of now. Therefore, any observation on the merits of the case is likely to prejudice the case of the parties before us, either the assessee or the Revenue. Therefore, we decline to make any observation on the merits of the case. This writ appeal is disposed off by relegating the appellant before the learned Commissioner of Appeals, where the appeal is pending and we expect, the said Authority to decide the appeal in accordance with law, after giving an opportunity of hearing to both the sides, as expeditiously as possible - appeal disposed off.
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2020 (9) TMI 879
Attachment of property while exercising the power to access the premises u/s 71(1) - invocation of powers during pendency of proceedings - whether the impugned order of attachment of property under Section 83 of the Act could have been passed on the ground of proceedings instituted u/s 71(1) of the Act? HELD THAT:- The plain reading of Section 83 of the Act would indicate that the powers can be invoked during the pendency of proceedings under Sections 62, 63, 64, 67, 73 and 74 of the Act - There is no power vested in the authorities to invoke the provisions of Section 83 during the pendency of the proceedings instituted under Section 71(1) of the Act. In fact, there cannot be any proceedings, which could be instituted under Section 71 of the Act - In such circumstances, the impugned order of attachment under Section 83 of the Act is hereby quashed and set aside. It is needless to clarify that the Appeal preferred by the writ-applicant against the final order of assessment shall be decided in accordance with law by the Appellate Authority - Application disposed off.
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Income Tax
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2020 (9) TMI 878
Addition u/s 68 - alternate addition under section 41(1) - transaction of sales of shares to the assessee - HELD THAT:- It is undisputed fact that assessee has purchased 5 lacs of shares of Parsoli Corporation for a consideration of ₹ 6.75 crore through Parsoli Corporation Ltd. who is also a registered share broker with the BSE and out of these shares 4200 were sold during the year under consideration and the assessee has declared short term capital gain of ₹ 21,82,462 on the sale of these shares. CIT(A) has categorically established in his findings that these shares issued were not purchased from Radharaman Holding Pvt. Ltd. but 5 lacs shares of Parsoli Corporation Ltd. was purchased through Parsoli Corporation Ltd. and these transactions were not correctly declared in the books of account of the assessee as one of the directors of the assessee company was a relative of the director of Parsoli Corporation Ltd. for the reason of apprehension of action from SEBI. Considering the fact and circumstances, we do not find any reason to interfere in the finding of ld. CIT(A), therefore, the appeal of revenue is dismissed
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2020 (9) TMI 877
Disallowance u/s 14A - Whether there is no tax free income earned during the year ? - ITAT upholding the order of the CIT(A) that no disallowance u/s 14A can be made - HELD THAT:- CIT(A) as well as the Appellate Tribunal rightly applied the dictum as laid by the Supreme Court in the case of Maxopp Investment Ltd [2018 (3) TMI 805 - SUPREME COURT] as held that as the assessee had not made any claim for the exemption of any income from payment of tax, the disallowance under Section 14A of the Act cannot be made. To attract the provisions of Section 14A of the Act, 1961, it is necessary that the assessee should have earned any exempt income. If the assessee has not earned an exempt income and has not claimed so in his return of income, then the provisions of Section 14A would not be applicable. Concurring finding of fact recorded by the two authorities is that in the year under consideration, the assessee company had not earned any exempt income and had not claimed any such exempt income in his return of income. - Decided against revenue.
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2020 (9) TMI 876
Revision u/s 263 - Deduction u/s 10A - not excluding the expenditure incurred in foreign currency from export turnover for computing deduction - HELD THAT:- The assessee is engaged in the business of computer software development and services. The expenditure incurred in foreign currency on traveling, professional charges and onsite service charges are for development of software at clients site outside India, the assessee has neither rendered any technical services nor has earned any receipt from rendering technical services. Therefore, there is no need to exclude the expenditure incurred in foreign currency from the export turnover. See CHANGEPOND TECHNOLOGIES (P) LIMITED. [ 2008 (2) TMI 486 - ITAT MADRAS-A] and PATNI TELECOM (P) LIMITED. [ 2008 (1) TMI 452 - ITAT HYDERABAD-A] View taken by the Assessing Officer was a plausible view and the view taken by him cannot be said to be erroneous. Therefore, in view of well settled legal position, invocation of powers in the fact situation of the case under Section 263 of the Act could not have been held to be justified. - Decided in favour of assessee.
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2020 (9) TMI 875
Revision u/s 263 - as per CIT-A AO failed to examine the expenditure incurred by the assessee towards the exempt income as required under Section 14A - lack of enquiry / inadequate enquiry - twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 - HELD THAT:- We examine the facts of the case in hand. In 'CIT VS. SUNBEAM AUTO LTD. [ 2009 (9) TMI 633 - DELHI HIGH COURT ] held that Assessing Officer in the order of assessment is not required to give detailed reasoning in respect of each and every item of deduction and therefore, the question whether there has been an application of mind before allowing expenditure has to be examined from the record of the case. The question of lack of enquiry / inadequate enquiry is also required to be kept in mind and mere inadequacy of the enquiry would not confer jurisdiction on the CIT u/s 263. In the instant case, the Commissioner of Income Tax has held that the enquiry conducted by the Assessing Officer is inadequate and has assumed the revisional jurisdiction. The assessee has filed all the details before the AO who accepted the contention of the assessee that no expenditure is attributable to the exempt income during the relevant Assessment Year. Thus, while recording the aforesaid finding, the AO has taken one of the plausible views in allowing the claim of the assessee and therefore, the CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry, the order passed by the Commissioner of Income Tax is not sustainable in law and the same has rightly been set aside by the Tribunal - Decided in favour of the assessee.
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2020 (9) TMI 874
Exemption u/s 11 - assessee is a charitable institution registered under Section 12A - Charitable activity u/s 2(15) - Whether AO had no locus standi to examine the activities of the assessee trust in order to find out whether they were carrying charitable activity as the assessee had already been granted exemption under Section 11 of the Act? - HELD THAT:- CIT (Appeals) has held that the AO has ignored the submission made by the assessee that the assessee provides free meals to the general public on every Sunday morning in free distribution hall and therefore, the finding recorded by the AO that assessee has not carried any charitable activity is perverse. The aforesaid finding has also been affirmed by the Income Tax Appellate Tribunal by holding that all the pilgrims who visit ISKON Temple are served with 'Prasadam' without probing into their caste, creed, religion and nationality. Thus, the expenditure has definitely been incurred on a section of the society and therefore, the same would tantamount to a charitable purpose. The aforesaid concurrent findings of fact have been recorded by the CIT(Appeals) as well as Income Tax Appellate Tribunal on the basis of meticulous appreciation of evidence on record. No perversity could be pointed out in the aforesaid concurrent findings of fact. Therefore, in the fact situation of the case, the first substantial question of law in fact, does not arise for consideration as the assessee was carrying on charitable activity. Provisions for doubtful debts allowed as a expenditure even though the same is not written off and the same is continued as a provision in the assessee's books - HELD THAT:- It is well settled in law that income of the trust has to be computed in a normal commercial manner and only the real income has to be taken into account. The loss of sale of investment is not allowable in computing the income for the purposes of Section 11 of the Act. [See: 'COMMISSIONER OF INCOME TAX- III vs. RAJASTHANI AND GUJARATI CHARITABLE FOUNDATION, POONA [ 2017 (12) TMI 1067 - SUPREME COURT] ]. As submitted a remand report, however, AO did not offer any comment with regard to additional evidence adduced by the assessee before the CIT (Appeals). The purchase of immovable properties for the purposes of objects of the Trust is the application of income and even if the assessee has earned income from selling the land for achieving objects of the Trust, the same would be allowable under Section 11 of the Act. The Tribunal has also held that as per prevalent accounting principles which clearly lay down that loss on sale of investment should be taken into account while determining the commercial income, the assessee is entitled to expenditure in respect of provision for doubtful debt. Accordingly, the aforesaid substantial question of law is answered against the revenue and in favour of assessee.
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2020 (9) TMI 873
Liability to pay interest u/s 234B - non payment of tax in respect of Assessment Year 2005-06 and 2006-07 - payer had approached the department claiming that payments to be made to the assessee are not chargeable to tax in India and to determine the chargeability and after determination of the tax liability by the department, the deductor has deducted the tax at source and has remitted the balance to the assessee - HELD THAT:- Section 195(1) of the Act provides for deduction of Tax at Source by any person responsible for paying to a foreign company any other sum chargeable under the provisions of the Act at the time of credit of such income to the account of the payee. It is axiomatic that assessee was entitled to, in its computation of its advance tax liability to take a tax credit of the amount, which was deductible or collectible irrespective of fact whether the amount was actually deducted or collected. Under the aforesaid provision, the assessee was entitled to tax credit of an amount that was deductible even if it was not actually deducted. Therefore, in order to remove the anomaly in law, the parliament inserted a proviso to Section 209(1) by Finance Act, 2012 with effect from 01.04.2012. In the light of legal position as it existed for the relevant Assessment Years prior to insertion of proviso to Section 209(1) of the Act, it is clear that if payer who was required to make payments to non resident had defaulted in deducting the tax at source from such payments, the non resident is not absolved from payment of taxes thereupon and non resident is liable to pay tax and the question of payment of advance tax would not arise. Therefore, it would not be permissible for the revenue to charge any interest under Section 243B of the Act. - Decided in favour of assessee.
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2020 (9) TMI 872
Assessment of income - cash compensatory assistance and duty drawback - liable to tax receipt basis and not on the accrual basis contrary - HELD THAT:- First substantial question of law has already been answered against the revenue by this Court in 'COMMISSIONER OF INCOME-TAX Vs. ASEA BROWN BOVERI LTD.' [ 2020 (7) TMI 20 - KARNATAKA HIGH COURT] . The aforesaid fact could not be disputed by the learned counsel for the revenue. For the reasons assigned in the aforesaid judgment, the first substantial question of law framed in this appeal is answered against the revenue and in favour of the assessee. Deduction u/s.80HHC - Whether the Tribunal was correct in holding that other income has to be reduced by 90% of such net income when computing profits of business for the purpose of allowing deduction u/s.80HHC of the Act and not gross income when other income was not derived from export activity? - HELD THAT:- Substantial question of law has been answered by the Supreme Court against the revenue in 'ACG ASSOCIATED CAPSULES [ 2012 (2) TMI 101 - SUPREME COURT] The aforesaid fact could not be disputed by the learned counsel for the revenue. Second substantial question of law framed in this appeal is answered against the revenue and in favour of the assessee. Expenditure incurred towards upgradation of personal computers- whether has no enduring benefit - Revenue or capital expenditure - HELD THAT:- As question of law has already been answered against the revenue - appeal is answered against the revenue and in favour of the assessee. Expenditure incurred for acquiring MS-OFFICE Software - Whether is only a license and no asset is acquired or no benefit of enduring nature for the assessee? - HELD THAT:- Substantial question of law has already been answered by this Court against the revenue in 'COMMISSIONER OF INCOME- TAX Vs. IBM INDIA LTD.' [2013 (10) TMI 1225 - KARNATAKA HIGH COURT]
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2020 (9) TMI 871
Income-tax Officer (Intelligence) authority to issue notice u/s 133(6) - Jurisdiction of Income Tax Authorities u/s 120 - Whether the notice under section 133(6) issued by the Income-tax Officer (Intelligence) is valid prior to Notification No. 77 of 2014 of the Central Board of Direct Taxes on the delegation of power dated December 10, 2014 ? - Whether the 'Inquiry' under section 133(6) in the absence of an 'enquiry' under any of the provisions of the Act, conducted by the Income-tax Officer (Intelligence) is right in the eye of law ? - HELD THAT:- As relying on Kodur Service Co-operative Bank Ltd. v. DIT (Intelligence) [2015 (2) TMI 819 - KERALA HIGH COURT] by office order dated November 1, 2011, the Income-tax Officer, Thiruvananthapuram, Alappuzha, Kochi and Thrissur were authorised to function as Income-tax Officer (Intelligence) of the above three places. Letter dated September 2, 2013, is issued by the Director of Income-tax (Intelligence) to the above Income-tax Officers (Intelligence) authorising them to issue notices to co-operative banks/ urban co-operative banks/credit co-operative societies coming under the respective jurisdiction calling for information as contemplated under section 133(6) of the Income-tax Act. By virtue of these documents, the Income-tax Officer (Intelligence) is the authorised person who could issue exhibit P1, therefore, the allegation that the officer who issued exhibit P1 had no authority has to be rejected. Then coming to section 133(6) of the Income-tax Act, in Kathiroor Service Co-operative Bank's case (supra), various co-operative societies registered under the Kerala Co-operative Societies Act engaged in banking business were before this court when notices were issued to the societies under section 133(6) of the Act calling for particulars of cash transaction above rupees one lakh with details of account holders/deposit holders in the format prepared by the authority issuing the notices. The societies challenged the validity of the notices. After referring to section 133(6) of the Act, prior to the introduction of the second proviso and its effect and after the introduction of the second proviso to section 133(6), their Lordships opined that there was no scope for interfering with validity of notices. From the reliance on the notification dated November 1, 2011, it is decipherable that the power of collection, collation and dissemination which earlier vested with Central Information Branch was transferred to Income-tax Officer (Intelligence), which would not mean that the notices issued and imposition of penalty by the Income-tax Officer (Intelligence) lacked jurisdiction.
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2020 (9) TMI 870
MAT Computation - adding capital gains arsing out of sale of agricultural land for the purpose of computing book profit u/s. 115JB - AO treated the agricultural land as capital asset u/s. 2(14)(iii) and income arising out of transfer of such land under the head Long-term Capital gains - HELD THAT:- Land that was sold was located in village Kishora, which is more that 8 kms away from municipal limits and the profits earned on sale of such land are exempt u/s. 10. Provisions of section 115JB(2)(k)(ii) provide that the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, shall be reduced from computation of book profit, if any such amount is credited to the statement of profit and loss. Assessee computed the book profits while crediting thesale consideration of agricultural land to the profit and loss account and offered thesame to tax. Obviously, it is a mistake. In view of the decision of Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT] such a mistake has to be rectified by the Revenue Authorities when it is brought to their notice and they are satisfied with the genuineness of the claim. Therefore, when the ld. CIT(A) is satisfied that the income which is exempt u/s. 10 of the Act is included in the book profit u/s. 115JB, which should not be done, the ld. CIT(A) is justified in directing Assessing Officer to follow the law and to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account. The action of the ld. CIT(A) is perfectly legal and does not suffer any infirmity. We see no ground to interfere with the same. - Decided against revenue.
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2020 (9) TMI 868
Addition of provision of average one month expenses - accrued liability or ascertained liability as such allowable u/s 37(1) - whether no disallowances can be made under section 40(a)(ia)? - HELD THAT:- The assessee made provision with regard to 31 different items. The Assessing Officer has not brought any fact on record that recipient were certain or identifiable. The assessee has made provision in the last month the Financial Year only on the basis of estimation of earlier month of the Financial Year. AO has not examined whether the provision made for the month of March 2015 was not a reliable estimate on account of past obligations. Similarly, in case of Abad Builders (P.) Ltd. [ 2013 (11) TMI 1679 - ITAT COCHIN] made disallowance under section 40(a)(ia) as the assessee has not made TDS on provision of sundry creditor. The assessee claimed deduction of the same amount in subsequent AY. CIT(A) confirmed the disallowance by taking view that the assessee cannot claim double deduction of a very same amount on which assessee deducted and paid TDS. In the said case, the recipient was identifiable and the assessee has not pleaded that such obligation was a result of past events. We may further reiterate that in both the case law relied by ld. DR for the revenue a recipient was identifiable, however, in the case in hand, no such recipient were identifiable, moreover, the provisions were made for multiple purposes. The assessee made provision of ₹ 10.24 crore and ultimately made expenses of ₹ 10.46 crore, which clearly demonstrate that assessee made the provision after due diligence which cannot be said to be an adhoc provision. - Decided against revenue.
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2020 (9) TMI 867
Short deduction of TDS - tds u/s 194J or u/s 194C - assessee being resident corporate assessee is stated to be engaged in the marketing and distribution of home video VCDs DVDs etc - HELD THAT:- Remand proceedings was well elaborated by the assessee before Ld. CIT(A) in its submissions dated 24/01/2018 wherein the attention was brought to the fact that assessee s submissions during remand proceedings were considered, deliberated and verified by Ld. AO and a finding was rendered that TDS was deducted at correct rates u/s 194C. Lastly, the fact of remand proceedings was noted by Ld. CIT(A) also at para 2.3 of the impugned order. Therefore, Ld. CIT(A), in our opinion, has erred in not considering the findings rendered by Ld. AO in the remand proceedings wherein it has been clearly stated that tax was correctly deducted u/s 194C. In that case, nothing survives against the assessee. Therefore, by deleting the impugned demand, we allow the appeal.
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2020 (9) TMI 866
Rectification application u/s 154 - application moved u/s 154 by the CIT(A) without giving assessee proper opportunity of hearing - HELD THAT:- CIT(A) has not passed any speaking order in respect of the mistakes pointed out by the assessee. As per assessee, there was legal as well as factual mistakes in the order passed by the ld. CIT(A) which were pointed out by the assessee and the same has already been reproduced in the written submissions of the assessee mentioned above. Passing a speaking order or reasoned order is considered as third limb of natural justice. As per India legal system, the maxims Nemo debet esse judex in propria causa and Audi alterem partem are considered the two limbs of natural justice and passing of speaking order or reasoned order is considered as a third limb of natural justice. Characteristics of a speaking order is that, it should contain adequate and sufficient reasons in support of the decision. The principles of nature justice and fair play inaction requires recording of reasons and as per the order passed by the ld. CIT(A) while rejecting the application of the assessee U/s 154 we see that the ld. CIT(A) has not passed any reasoned or speaking order . Be that as it may, taking into consideration the legal proposition as discussed by us above, we restore the matter back to the file of the ld. CIT(A) to be adjudicated and decided application U/s 154 of the Act afresh in accordance with law after passing a speaking order after providing due and reasonable opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes
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2020 (9) TMI 865
Penalty u/s 271(1)(c) - trading addition - Defective notice - non striking off the irrelevant portion of the printed show cause notice - assessment u/s 143(3)/153A making trading additions by applying the GP rate of 10% as against GP rate declared by the assessee - HELD THAT:- AO had made the addition on account of application of G.P. Rate of 10% whereas no findings were recorded by the AO in the assessment order that the assessee had furnished inaccurate particulars of income or had concealed the income. The AO had invoked the provisions of Section 145(3) of the Act and estimated the income of the assessee on the basis of earlier history of the case. Therefore, we are of the view that it is a case of an estimate against an estimate. Hence, no penalty is leviable in such a case where additions are based purely on estimate basis. The mere revision of income to a higher figure on estimate basis by the AO does not automatically warrant an inference of concealment of income by the assessee. The addition to the income of the assessee in this case is based on estimate basis whereas the concealment in our views implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. See CIT vs K.R. Chinni Krishna Chetty [ 1998 (6) TMI 5 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2020 (9) TMI 864
Penalty u/s 271AAB(1)(c) - undisclosed income on account of advances - Search proceedings - Whether CIT(A) is justified in holding that the income was found recorded is other documents maintained by the assessee in normal course as per clause (c) of sub section (1) to explanation of Section 271AAB ? - CIT-A deleted penalty - HELD THAT:- It is not imperative repeat the facts of the case as the ld. CIT(A) has elaborately discussed the issue in detail by taking the reference of ITAT Judgement in the case of Raja Ram Maheshwari [ 2019 (1) TMI 1546 - ITAT JAIPUR] and thus the ld. CIT(A) had partly allowed the appeal of the assessee We concur with the findings of the ld. CIT(A) in the case of the assessee. Thus the appeal of the Revenue is dismissed.
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2020 (9) TMI 863
Excess interest over and above the receipts of interest - addition has been made exclusively on the basis that the assessee has made interest free advances to its sister concern whereas this money was advanced for business purposes - HELD THAT:- Assessee was required to pay interest free refundable security deposit of ₹ 56,00,000/- to the owner of the land in lieu of the owner granting license for carrying out the development project. Thus, the advance made by the assessee was wholly and exclusively for the purposes of business. In view of these facts the A.O. was not justified in making any disallowance out of interest payment. Development Agreement with Kalyan Gems Export Ltd. has been executed on 03.09.2011. As per terms of this agreement, copy of which is available on paper book as cited supra the assessee agreed to develop a plot of land measuring 2994.62 sq. meter situated at K. No. 184 185/685, Village Manoharpura, Tehsil Sanganer, Jaipur the agreement that assessee was to act as a developer and was required to develop a project comprising of multi-storied commercial and residential complex. It was under this agreement that assessee paid a sum of ₹ 2,21,00,000/- Lacs to Shri Kalyan Realty Ltd on 03.09.2011 as a security deposit. This was done in compliance of terms at para 4.1 of the development agreement. As per this para the assessee was required to pay interest free refundable security deposit of ₹ 2,21,00,000/- to the owner of the land in lieu of the owner granting license for carrying out the development project. Thus, the advance made by the assessee was wholly and exclusively for the purposes of business. The development agreements establish beyond doubt that the amount advanced to both the concerns was under business agreements, therefore there is no occasion for making any disallowance of interest. No merit in the disallowance so made by the A.O. - Decided in favour of assessee.
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2020 (9) TMI 862
Penalty U/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- From the notice u/s 274 dated 27.12.2011, neither the assessee nor anyone else could make out as to 'for what precise charge, the assessee was asked to show cause viz. whether the charge is for furnishing inaccurate particulars of income or concealment of particulars of such income. In notice, under the point which is intended towards proposed penalty u/s 271(1)(c), the word OR has been used between the charge of concealment of income and furnishing inaccurate particulars of income. These facts and circumstances make it abundantly clear that in the case of assessee, penalty notice is completely vague and ambiguous. AO simply issued a preprinted notice without striking off the unnecessary charge and not mentioning the precise charge. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind which resulted into issuing a completely vague jurisdictional notice u/s 274 and the jurisdictional notice being vague, the consequent levy of penalty is illegal and deserves to be deleted in full - Initiation of penalty proceeding is void ab initio - Decided in favour of assessee.
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2020 (9) TMI 861
Allowability of exemption u/s 10(23C)(vi) - As alleged assessee Society has continued to divert its funds towards non-educational activities by way of huge advances to RNMCS - assessee is a society and running an educational institution in the name of M/s Seth Ramji Das Modi Vidya Niketan society as registered u/s 12AA of the Act w.e.f. 3rd July 1986 and thereafter the assessee was approved u/s 10(23C) by the CCIT, Udaipur for A.Y.2009-10 and onwards - scheme of demerger - CIT-DR has contended that the trust deed was not amended as it contains clause relating to hospital or if amended there is no evidence of filling thereof to the Registrar Societies and/or his approval and so on - non-charging of interest on the advances given HELD THAT:- Non-charging of interest on the advances given allegation is not relevant in the context of S. 10 (23C) (vi) in as much as there appears no such specific clause/ provision in 15th Proviso or anywhere in S. 10 (23C)(vi) empowering the CIT, or as may be the case u/s 12AA (3) r/w S. 13 (1)(c). Such a basis being otherwise contrary to the pre-dominant test theory propounded by the Supreme Court, is completely irrelevant and has to be ignored. No such provision can be read if it is missing as per the doctrine of Casus Omissus. Secondly, there was no condition of charging interest on such loan between the parties and it was only as a financial help necessitated as a result of demerger. Thirdly, it is wrong to say the Society had claimed the interest of ₹ 56,71,990/- Lacs in as much as the society had already applied its income at 91.02% that is more than 85% as required by law. Therefore, the fact of interest bearing loan taken, the alleged diversion thereof and the allegation of non-charging of interest, are completely irrelevant. In the context of various allegations levelled by the ld. CIT(Exemptions), we observe that there is no gain to the revenue for the simple reason that even assuming had the assessee charged interest of ₹ 56.72 Lacs (approx.) from RNMSCS, revenue was not going to get any tax there upon because the assessee had admittedly fulfilled the condition of applying its income more than 85% on one hand. Similarly, on the other hand, RNMSCS also being a charitable society running a hospital enjoying exemption under S. 12A, (paying of interest or not paying) to the assessee was not going to make any difference because, either way entire income of RNMSCS was also exempt. Further, the group members having charged interest had already declared in their ROI and paid taxes thereon and thus, the group as a whole rather paid taxes. Notably, assessee is registered u/s 12AA hence not been withdrawn so far. We found that even the ld CIT (E) himself did not rescind the notification on this ground. He raised a query and the assessee submitted a copy of a resolution letter dt. 01-04.2016 pr. 2 amending the object removing the clause i.r.t. hospital and he felt satisfied therefore he has not raised this issue in final order. The Assessee society has also informed the Registrar vide letter dated 28.04.2016 bearing the acknowledgement by the registrar office. Hence allegation is factually wrong. No approval for amendment is required and if so the ld. CIT-DR merely alleged but did not show the relevant provision. Demerger took place in 2014 on the insistence of Department but even after a lapse of more than six years the registration granted u/s 12A/ 12AA still continues applying that implying that the Revenue by their own conduct accepted the state of affair i.e. even without amendment of the trust deed, the assessee is imparting education. Moreover, the ld. CIT-DR did not allege that the clause relating to hospital was ever acted upon. Therefore, reliance on Desales [ 2018 (6) TMI 62 - ITAT VISAKHAPATNAM] is not relevant. CIT-DR reliance on the case of Desales Education Society vs. PCIT (E) (Supra) and B.S. Abdur Rahman Institute of Science Technology V. CCIT [2016 (3) TMI 760 - MADRAS HIGH COURT] are not relevant in the above admitted factual context and moreover they are also related to registration matter and not related to withdrawal / rescinding under 15th proviso to 10(23C)(vi). Hence not applicable. We also observe that the ld. CIT-DR himself agreed that the RNMCS could have taken loan directly from the members as contained by the assessee also that there was no motive and it was only the after effects of the demerger. Facts and circumstances of the case and the legal position, the order passed by the ld. CIT(exemptions) u/s 10(23C)(vi) of the Act is not sustainable. - Decided in favour of assessee.
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2020 (9) TMI 860
Income from sale of land/building - Business income or Capital gain computation - Addition invoking provisions of Section 50C - HELD THAT:- The intention of the assessee in making above referred transaction of sale purchase was of business nature and was therefore assessable under head Income from Business. Although in the return of income, assessee made a bonafide mistake by showing all such transactions under the head Income from Capital Gain instead of Income from Business. Later during assessment proceedings assessee claimed the transaction as business/ adventure in the nature of trade on this logic that his nature of transactions are of business. Assessee made a request that provisions of section 50C are not applicable on him as the said section is applicable on Capital assets only. Assessee is not liable to pay capital gain tax. Income from sale of land building is taxable under the head income from business and profession where provisions of Section 50C are not applicable in so far as the shops were sold on agreement basis prior to 1st October, 2009 when the provisions of Section 50C of the Act are not applicable. Thus, the A.O. was not justified in invoking provisions of Section 50C of the Act. Accordingly, the A.O. is directed to delete the addition made u/s 50C of the Act. Addition u/s 69C and 69 - HELD THAT:- Assessee has made investment for ₹ 1,60,651/- out of advance received from the sale of other shops i.e. out of ₹ 4,82,000/- and out of his own capital. It is worth to mention that the assessee has declared other income of ₹ 1,54,000/- from partnership business during the year and is an old income tax assessee. Ld CIT(A) accepted the claim of ₹ 1,93,315/- only and rejected the appeal for ₹ 6,34,000/-. Ld CIT(A) did not consider that the assessee was having ₹ 5,66,664/- prior to 29/06/2009 and has also withdrawn a sum of ₹ 1,00,000/- from saving bank a/c on 29/06/2009 itself. Both these amounts are more than ₹ 6,34,000/-. Accordingly, no justification for the addition of ₹ 6.34 lacs upheld by the ld. CIT(A). Hence, the A.O. is directed to delete the same.
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2020 (9) TMI 859
Disallowance u/s.40(a)(ia) - Failure to deduct TDS - Scope of amendment - whether the said amendment is having the retrospective effect or not? - HELD THAT:- We find that the issue involved in the present appeal has already been decided by the coordinate bench of the Tribunal in the case of Om Sri Nilamadhab Builders Pvt. Ltd [ 2019 (11) TMI 1373 - ITAT CUTTACK ] wherein it is held that if a statute is curative of the previous law, retrospective operation is generally intended. The fact remains that this taxpayer has not tendered any details of the actual nature of expenditure. We therefore find no reason to disagree with the lower authorities' conclusion quoting assessee's failure in filing the relevant details. Coupled with this, the fact also remains that the legislature has itself amended Section 40(a)(ia) vide the Finance Act, 2014 w.e.f. 01.04.2015 restricting a disallowance made u/s 40(a)(ia) from 100% to 30% only. This tribunal's order in Dipak Parui vs. JCIT [ 2018 (7) TMI 2066 - ITAT KOLKATA ] holds the above proviso inserted in the Act to be a curative one having retrospective effect. We therefore, direct the Assessing Officer to restrict the impugned disallowance to the extent of 30% only We direct the AO to restrict the 100% disallowance confirmed by the CIT(A) to the extent of 30% only taking into account the actual claim of the assessee in its profit and loss account. We order accordingly. Thus, the sole ground of appeal of the assessee is partly allowed.
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2020 (9) TMI 858
Exemption u/s 11 - charitable activity u/s 2(15) - Assessee i.e. Nari Utthan Sansthan is a charitable Institution, which is registered under Societies Registration Act and also under section 12AA - whether milk collection and distribution activity of assessee Trust was a business? - HELD THAT:- The assessee society was not at all indulged or involved in any kind of milk business. The activities of milk collecting and disbursement were only in the nature to support to women welfare. Such giving up of milk chilling plant and other allied facilities including equipment etc. held by NUS (assessee society) to FPO created and run by women beneficiaries fully substantiates that there was no business taken up by the assessee. Definition of the term business as per section 2(13) of the Act defining it as any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce or manufacture. Purely and merely a hypothetical thought made by the A.O. without understanding the genuineness of the assessee s case to treat milk collecting and disbursement activity as business carried out by the assessee. The milk collection and disbursement was only a support activity to achieve the purpose of women empowerment particularly that belonging to the backward rural area of the state of Rajasthan. Perusal of the list of various women beneficiaries further demonstrate that women beneficiaries under the project were including SC/ST/OBC/BPL, Widows as well as other needed section of the society - We can safely conclude that the milk collecting and disbursement activity by no means could be treated as business carried out by the assessee. The charitable purpose carried out and ensured by the assessee trust may it be running an orphanage cum old age home in the name of Snehalaya - Activity of milk collection and disbursement carried out by trust was only to provide a platform to disadvantaged women beneficiaries from rural background particularly being economically highly weaker areas therefore undoubtedly to be treated as charitable purposes promoting relief to poor . Accordingly, the A.O. was not justified in invoking proviso to Section 2(15) of the Act and denial of exemption under section 11 12 of the Act to the assessee society is unjustified under the facts and circumstances of the case. Separate books of accounts were not maintained by the assessee for milk trading as required u/s 11(4A) - HELD THAT:- We found that the assessee had got its books of accounts duly audited and submitted the details to the extent possible for the kind reference of the AO even. The milk collection and disbursement activity was conducted as per the scheme sanctioned by the donors only and the assessee did not itself carried out such activity on its own which distinguishes the requirement of following the provisions of section (4A) of section 11 of the Act in the facts and circumstances of the case. Observations recorded by learned CIT(A) in his appellate order allowed the ground of appeal raised by the assessee in its favour. The detailed findings given by the ld. CIT(A) at para 6 of his appellate order are as per material placed on record. Accordingly, we do not find any reason to interfere in the findings of the ld. CIT(A) wherein he held that the AO was not correct in holding that the assessee was required to maintain project wise books of accounts and thus, working out/addition of surplus held as erroneous. The ground of appeal is allowed. Application of fund on account of aid loans/advance - neither any assurance was given nor any affidavit was filed by the assessee society that these loans/advances given by it were not to be re-paid by these beneficiaries - HELD THAT:- The documents so filed during the assessment proceedings substantiates assessee s claim in an explicit manner that the assessee society has distributed only aid / assistance amongst various beneficiaries which was never recovered back from them or was never paid back to the assessee society all. Out of the 11 statements recorded during the course of additional evidence proceedings not a single beneficiary accepted to have returned or repaid the amount disbursed to them. The actual facts are only that the amount distributed amongst women beneficiaries was aid / assistance only which was never returned back. Detailed finding has been recorded by the ld. CIT(A) which are as per material on record and do not require any interference. Accordingly, we do not find any infirmity in the order of the ld. CIT(A) in giving relief of ₹ 2.50 crores and directing the A.O. to recalculate accordingly the application of income and surplus. Corpus fund allowance - HELD THAT:- Assessee society has not claimed value of such assets in computation of application of income of the assessee trust which substantiates the assessee s claim that the treatment of corpus fund as general fund is incorrect and unlawful. Even if the capital assets acquired were treated as general fund than corpus fund, the AO while computing the total income of the assessee society in his assessment order dated 30.03.2015 did not reduce such amount therefore again adopted an unlawful action on his part. A detailed finding has been recorded at page No. 26 of his appellate order at para 8.2 and after considering the various judicial pronouncements, directed the A.O. to treat sum of ₹ 60,95,870/- as corpus fund. Detailed finding so recorded by the ld. CIT(A) are as per the material on record and do not require any interference on our part. CIT(A) has dealt with each and every objection of the A.O. threadbare and after giving detailed findings, deleted the addition so made by the A.O. - Appeal of revenue dismissed.
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Customs
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2020 (9) TMI 857
Permission for withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) (SVLDR) Scheme, 2019 - HELD THAT:- The respondent cannot object to the appellant withdrawing any portion of the appeal, provided the appellant is not seeking any benefit from Court on account of the withdrawal. The appeal shall be treated as withdrawn only in respect of the dispute arising out of the excise component - Application allowed.
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2020 (9) TMI 856
Flexi Tank Containers - durable goods or not - Benefit of exemption N/N. 104/94-Cus dated 16/03/1994 - entire emphasis of the Revenue is that the subject Flexi Tank Containers are not repeatedly used - scope of SCN - Time Limitation. HELD THAT:- Tribunal in various cases has categorically held that merely because the container does not have repeated use, the nature of durability cannot be rejected. The only criterion to be seen is that whether the container in itself is durable in nature. As per the nature of container and use thereof, it is clear that the container imported by the assessee is durable. Moreover, even taking reference from the above judgments, we find that on comparison basis also, all the packing containers which were subject matter in the above cases, the Flexi Tank Container is much durable. Therefore, applying the ratio of the judgments in the above cases, in our view, it is clear that the Flexi Tank Containers imported by the assessee is durable container. Consequently notification no. 104/94-Cus is available to such containers. We also observe that neither the Show Cause notice nor Order in original, raise any dispute that Flexi Tank Containers are strong enough to withstand and endure the rigours of sea waves. Therefore, durability of the containers in isolation is not in dispute. Only because the containers do not have repeated use, the containers which are otherwise durable benefit of notification cannot be denied - reliance can be placed in the case of M/S. SAM AGRI TECH. LIMITED VERSUS CCE, C ST, HYDERABAD [ 2017 (4) TMI 678 - CESTAT HYDERABAD]. Scope of SCN - HELD THAT:- Learned Counsel also pointed out that apart from the issue of durability, the Adjudicating Authority has also taken a ground for denying the exemption that re-export of the Flexi Tank Containers was not done by the present assessee but by the exporters of liquid cargo and also on the ground that exporters to whom the appellant has sold the Flexi Tank Containers have claimed drawback by factoring in the process of Flexi Tank Containers in the exports. We find that this allegation was not raised in the show cause notice. Therefore, this particular finding is beyond the scope of show cause notice. The Adjudicating Authority cannot raise any new grounds in the Adjudication Order which was not raised in the Show Cause Notice. Time Limitation - HELD THAT:- There is no dispute on the fact that the appellant have made a correct and true declaration of description of the goods in their Bills of entry. The goods have been physically examined by the Custom department and examination report has been submitted. As per the condition of notification, the appellant had executed the bond which after fulfilment of condition that re-export of the container duly filled with liquid cargo bond has been cancelled. The appellant with a bonafide belief claimed the exemption notification 104/94-Cus without making any mis-declaration. The Custom department has very consciously after satisfying themselves allowed the exemption notification and not only that they have cancelled the bond after satisfying that export obligation is fulfilled. In this undisputed fact, there is no suppression of fact on the part of the assessee and custom department was free to interpret in their own manner whether the exemption to be allowed or not. Therefore, it cannot be said that there is any suppression of fact, mis-statement or misdeclaration on the part of the assessee - Appeal is unsustainable also on time bar. Appeal dismissed - decided against Revenue.
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2020 (9) TMI 855
Levy of penalty under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 - Valuation of Export goods - High Seas Sale - rejection of declared value based on contemporaneous imports - the case of the Appellant is that they had been denied an opportunity of personal hearing by the Adjudicating Authority - principles of natural justice - HELD THAT:- Since the statement of Mr. Kuntal Mitra (CHA) has contributed substantially to the case made out by the Department against the Appellant, the Department ought to have granted an opportunity of cross-examination to the Appellant. The process of cross-examination is not a mere empty formality but a part of an assessee s right to put forth a proper defence. The reasoning given by the Department for denying the cross-examination to the appellant, that they failed to appear on the appointed date is not acceptable in as much as the Appellant had made the request for providing cross-examination at the adjudication stage. Hon ble Gujarat High Court in Manek Chemicals Pvt. Ltd. v. Union of India [ 2015 (12) TMI 1267 - GUJARAT HIGH COURT ] has held that cross-examination is an integral part of the Principles of Natural Justice. Therefore, by denying an opportunity of cross-examination to the Appellant, the Adjudicating Authority has acted in violation of the Principles of Natural Justice. The matter is remanded to the Adjudicating Authority to allow the Appellant an opportunity for cross-examination of the CHA and pass an order after considering the evidence on record - Appeal allowed by way of remand.
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2020 (9) TMI 854
DFIA Scheme - Actual user condition - Benefit of exemption in notification no. 40/2006-Cus dated 1st May 2006 - - the impugned order finds that float glass was not amenable to use in the manufacture of finished leather from hide of cow/buffalo , that the intent of the policy had been violated as the flexibility of importing alternative inputs, allowed in circular dated 24th March 2009, did not extend to goods that were not capable of being used in the industry, and that clarification dated 14th February 2002 on use of float glass as glazing glass stood withdrawn by the advisory of 15th January 2013. HELD THAT:- It is clear from the narration in the impugned order that the item permissible for import in the norms relating to finished leather from hide of cow/buffalo , as well as in the impugned licences, was glazing glass and, in the former, continues to be so. It is also on record that the clarification of the Advance Licensing Committee issued in 2002 was withdrawn by the Norms Committee in 2013. The foundation of the impugned order is the attribution of retrospective effect to the subsequent withdrawal so as to render the impugned imports to be contrary to the list appended to the licence. With the description in the norms continuing to remain unamended, the deemed insertion of the specific description, embodied in the advisory of 2013, may not find ready acceptance. The adjudicating authority has appeared to stretch the proposition for retrospective application of withdrawal of clarification on the basis of cited decisions which, as we have pointed out, were made in an entirely different context. Furthermore, to permit any individual acting on deliberated decisions of an authorized body to be subject to any detriment subsequently is tantamount to incentivizing the irresponsible decision-making by designated authorities. Indubitably, passage of time and hindsight tend to promote wisdom and the perception of errors of the past, in the light of such wisdom, does not erase an assurance offered. If the test of validity for retrospective effect of notifications, it surely must be no less applicable to clarifications. Imports, if any, made against the impugned licences after issue of clarifications of 2013 are on a footing entirely different from those made before - The impugned order, thus, stands on weak foundations in penalizing past imports. Accordingly, the confiscation as well as imposition of penalties under section 112 and 114AA of Customs Act, 1962 fails. Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 853
Levy of penalty - Valuation of imported goods - Laminated Sheets and Plywoods - rejection of declared value - Rule 12 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 - HELD THAT:- The order of confiscation of goods and imposition of redemption fine is not under challenge. We also find that importer M/s Shri Saibaba Impex is not in appeal before us. As per the scheme of Section 111 and Section 112 of the Customs Act, 1962, penalties under Section 112 of the Customs Act, 1962 flow as natural consequence of goods being liable for confiscation under Section 111 of Customs Act, 1962. Apparently penalties under Section 112 are imposable both on the person who has imported the goods held liable for confiscation and on all those who had aided and abetted in the act of illegal importation. From the order of the Commissioner it is quite evident that adequate opportunity was extended to the appellants to file the reply to the show cause notice adn also appear for personal hearing. It is for the appellants to avail the opportunity that has been granted. It is not the case where no opportunity was granted for making representation against the show cause notice however appellant chose not to avail the same and appear before the adjudicating authority. In our view when sufficient opportunity has been granted by the adjudicating authority before making the order to noticees in the case, and noticee do not make use of those opportunity then the order cannot be said to be bad for the reason that it hit by vice of Natural Justice. There are no merits in any of the submissions made by and on behalf of the appellants. More so over there is no challenge by the importer to the confiscation of goods before us. As all the facts and evidences have been admitted by the appellants in their statements recorded under Section 108 of Customs Act, 1962 there are no merits in these appeals. Appeal dismissed - decided against appellant.
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Corporate Laws
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2020 (9) TMI 852
Issuance of summons to the petitioner - petitioner is one of the 287 persons/entities that are accused in the said complaint and against whom summons have been directed to be issued in terms of the impugned summoning order - offences under Sections 128, 129, 448 read with Section 447 of the Companies Act, 2013. HELD THAT:- It is clear from the plain language of Section 16A(2)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act that a Nominee Director would not incur any obligation or any liability by reason only of his being a director or for anything done or omitted to be done in good faith in discharge of his duties as a director or anything in relation thereto - It is also well settled that a Director cannot be vicariously held responsible for any offence committed by the company unless the relevant statute itself so indicates or there is material to indicate that the particular individual is responsible for perpetrating the said offence. A plain reading of the provisions of Section 448 of the Companies Act indicates that a person would be liable under Section 447 of the Act only if he makes a statement knowing it to be false or omits any material fact knowing that the said fact is material. Thus, knowledge that the statement is false or fails to disclose material fact(s) is an essential ingredient of an offence under Section 448 of the Companies Act - Undisputedly, the petitioner cannot be prosecuted solely for the reason that he was a Director on the Board of BSL at the material time when the Board of Directors had approved the financial statements and the Director s Report for the year ended 31.03.2017. The petitioner cannot be proceeded against for any acts of commission or omission done in good faith in discharge of his duties as a Nominee Director. SFIO s contention that all members of the Board of Directors of BSL can be prosecuted for violating Sections 128(1) and 129(1) of the Companies Act, because no other officer had been charged for maintaining the accounts is plainly unmerited. As discussed above, the obligation to maintain true and fair accounts is that of the Company and the Directors of a Company are not vicariously liable for the acts of the Company in the absence of a statutory provision imputing such liability. They can, of course, be proceeded against if it is established that they had individually committed the offence. Further, Section 16A(2)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act expressly grants immunity to a director nominated by a bank for any acts done or omitted to be done in that capacity - Even if it is accepted that the petitioner can be proceeded against for violation of Section 128(1) and/or 129(1) of the Companies Act, on account of the Company not maintaining accounts, books and papers reflecting a true and fair view of the state of affairs of the company, the same can be done only if there is material to allege that the petitioner was aware of the same and had not acted in good faith. Whether there is any allegation in the Investigation Report or any material on record which would indicate that the petitioner has connived or has been complicit with the promoters and/or other entities in perpetuating the fraud by approving financial statements, which he knew to be not fairly and truly reflecting the affairs of BSL? - HELD THAT:- It is at once clear that there is no allegation in paragraph 5.12.11 and 5.13.14 of the Investigation report that the Nominee Directors were aware that figures of certain assets had been falsely inflated in earlier years or that they were aware that the accounts had been recast under the guise of compliance with IndAS to correct the inflated values of current assets. There is also no allegation that the Nominee Directors were aware that the statements approved by them did not reflect true and fair view of the affairs of BSL - There is no allegation that the petitioner had knowingly been a party to make false statements or conceal any material fact. There is a material difference between the allegation that a Nominee Director has been negligent or has failed to discharge his responsibility and an allegation that he has connived or has been complicit in approving statements, which he knows to be false or conceal material information. While the latter may constitute an offence under Section 448 of the Companies Act, the former does not constitute any such offence. In this view, it is clear that the SFIO has not made any allegation in its Investigation Report or in its complaint against the petitioner that falls within the scope of Section 448 of the Companies Act. Neither the complaint made by the SFIO nor the Investigation Report submitted by the SFIO contains any specific allegations against the petitioner of being complicit or having acted in bad faith. The reasoning of the learned Court that the petitioner had connived with the Promoters and is liable to be proceeded against, is clearly unsustainable and not supported by the allegations made in the complaint or the Investigation Report furnished by the SFIO - Undisputedly, the scope of examination at the stage of issuing process is limited and the concerned Court is not required to evaluate the evidence in any detail. However, it is well settled that even at the stage of taking cognizance, the concerned Court does not act mechanically or as a post office. The Court must apply its mind to the facts of the case and the law applicable thereto. It must satisfy itself that the allegations made in the complaint constitutes an offence. In the present case, the learned Trial Court has issued summons on the reasoning that it is alleged that the petitioner has connived with the Promoters. However, it is seen that there is no such allegation either in the complaint or in the Investigation Report furnished by the SFIO. Thus, in the given circumstances, this Court does not consider it apposite to relegate the petitioner to approach the Trial Court for seeking a discharge - This Court has confined the examination only to the complaint, Investigation Report and the material placed by the SFIO before the Trial Court to persuade the Court to issue the summons. The impugned summons issued to the petitioner and the impugned order, to the limited extent that it directs issuance of summons to the petitioner, are set aside - Petition allowed.
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2020 (9) TMI 851
Jurisdiction - elections to the Board of Directors (APEX Council) of a company - allegations of oppression and mismanagement - wrongful appointment of an Ombudsman in violation of Articles of Association - Whether adjudication can be done by a civil court or whether jurisdiction vests exclusively with the National Company Law Tribunal (NCLT)? - Section 430 of the Companies Act, 2013. HELD THAT:- What emanates from the preceding arguments and on consideration of the comparative chart presented, is that sections 241, 242 and 244 of the Companies Act deal with all the issues which have been raised in the suit. The NCLT has been specifically conferred powers to address grievances relating to the affairs of the company, which may be prejudicial or oppressive to any member of the company, or for issues of appointment of directors. The appointment of an Ombudsman, would also form a part of the conduct and management of the affairs of the company. The Supreme Court has held in SHASHI PRAKASH KHEMKA (DEAD) THROUGH LRS. AND ANOTHER VERSUS NEPC MICON (NOW CALLED NEPC INDIA LTD.) AND OTHERS [ 2019 (2) TMI 971 - SUPREME COURT] that the scope of Section 430 is vast, and jurisdiction of the civil court is completely barred when the power to adjudicate vests in the Tribunal. As has been held in VIJI JOSEPH VERSUS P. CHANDER, ESWARAN ANNAMALAI, THE PRESIDENCY CLUB, , M/S P. SRIRAM ASSOCIATES, , M/S NSDL LIMITED,, INTEGRATE REGISTRY MANAGEMENT SERVICES PVT. LTD., TARUN KUMAR BAGGA, K. GOPAL, T.K. SRINIVASAN, SANKARAIAH, CHIRAG BATAVIA, CHARI RAMESH, SANJAI SHANKAR, DR. S. RAMACHANDRAN, RAMESH JAGTIANI AND THE PRESIDENCY CLUB, REP., BY ITS HONY. SECRETARY VERSUS P. CHANDER, ESWARAN ANNAMALAI [ 2019 (12) TMI 395 - MADRAS HIGH COURT] , the issue of election to the Board of Directors would be amenable to jurisdiction of the NCLT. The issue is the same in the present suit. Likewise, the lis and grievances raised in the suit can be agitated only before the NCLT. A civil court would have no jurisdiction. As far as the specific allegation apropos the manner in which the Ombudsman was appointed are concerned, it too, is an issue which will come within the ambit of Tribunal i.e. appointment of people who would conduct the affairs of the company/the management. The video recording of the manner of appointments at the AGM in question, could well be examined by the NCLT. That being the position, the issue of maintainability ought to have been determined first by the trial court. It did not have jurisdiction to entertain the suit. Appeal allowed.
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2020 (9) TMI 850
Reduction of Share Capital - HELD THAT:- The Petitioner Company has complied with the requirements as per the directions of the Tribunal vide Order pronounced on 3rd August, 2020. In pursuance of the said Order, a Brand Valuation Report for the Petitioner Company along with a Covering Affidavit, annexed with a Legal Submission was filed with the Tribunal on 14th August, 2020. A copy of the same was furnished to the Regional Director on the 14th August, 2020 - the Petitioner Company further submits that the Petitioner Company has complied with all statutory requirements as per the directions of the Tribunal. Moreover, the Petitioner Company also undertakes to comply with statutory requirements, if any under the Companies Act, 2013 and the Rules made thereunder, as may be applicable. Since the requisite statutory procedure has been fulfilled, the Company Petition is made absolute in terms of the prayer clause of the Petition. All concerned regulatory authorities to act on certified copy of the order and the form of minutes forming part of the Petition, duly certified by the Deputy/Assistant Registrar of this Tribunal. The Petitioner Company undertakes to file the same with the Registrar of Companies within thirty days from the date of the receipt of the order.
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2020 (9) TMI 849
Restoration of the name of the company to the Register of Companies maintained by the Registrar of Companies, Maharashtra, Mumbai - section 252(3) of the Companies Act, 2013 - HELD THAT:- The Bench has observed that the company has assets and liabilities in its Books of Accounts during the immediately preceding two years from the date of striking off of its name by the Registrar of Companies. Besides, the petitioner company is in the business of real estate, and has taken advances from customers for its projects. Therefore, it would be just, equitable and in the interest of justice to provide an opportunity to the company to rectify its defaults and continue the business, so that the interests of its customers are not adversely affected. The prayer sought by the Petitioner company deserves to be allowed - Petition seeking restoration of the Company s name in the register of companies maintained by the Registrar of Companies, Maharashtra, Mumbai is allowed.
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2020 (9) TMI 848
Sanction of scheme of merger by absorption - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- Various meetings have been dispensed with - In compliance of sub-section (5) of section 230 of the Act and rule 8 of the Companies (CAA) Rules, the applicant-companies shall send a notice of meeting in Form No. CAA-3 with a copy of the scheme of arrangement, the explanatory statement and the disclosures mentioned under rule 6. Application disposed off.
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2020 (9) TMI 847
Oppression and mismanagement - sections 213 and 241 of the Companies Act, 2013 - petitioners contended that the second respondent and his family members are in the helm of affairs of the company and they mismanage the affairs of the company and also oppressed the other stake holders since incorporation - HELD THAT:- It is a fact admitted that the respondent-company was incorporated under the provisions of section 25 of the Companies Act, 1956 and it is carrying on with several religious and charitable operations - It could be seen from the pleadings that the petitioners have made allegations such as oppression and mismanagement and fraudulent conduct of company business, misappropriation of ₹ 80 lakhs, embezzlement of ₹ 4 to 5 crores in Tsunami Relief Fund embezzlement of ₹ 4 crores by sale of property at Jubilee Hills diversion of donations of US $400,000 meant for Dalit Education Centres in India through hawala which is contrary to the FERA/FEMA and public trust acts/laws, diversion of embezzled funds into private investments in the name of the members of family, and charging exorbitant fees and accumulating funds in fixed deposits and the same allegations could be seen in the complaint dated September 29, 2016, sub-mitted by the first petitioner on which the FIR No. 22 of 2016 was came to be registered. It is a fact that the petitioners herein are the members of the company and since they satisfy the threshold limit of qualification for filing a petition under sections 213 and 241 of the Act, have filed the present petition. However, whereas the law requires them to show good reasons for seeking investigation supported by such evidence as may be necessary , they have relied only on the complaint filed in FIR No. 22 of 2016 which is already pending before the police authorities for investigation. At the time of filing the instant petition the petitioners have not filed any documents in support of their case and allegation/averments made in the company petition. Learned counsel for the respondents rightly pointed out that the petitioners have not filed any documents in support of invoking the provisions of sections 213 and 241 of the Act, 2013. In view of the already pending investigation in the affairs of the company and against other respondents by the investigation agencies, we are not inclined to pass any orders on the merits of the instant petition and accordingly the petition is dismissed.
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2020 (9) TMI 846
Rectification of register of members by deleting the transfer entry - transfer of shares - direction to respondent to return to the appellant the share certificate pertaining to the said 1,66,550 equity shares - time limitation - HELD THAT:- This appeal is barred by limitation - The company has recorded the transfer of shares on the basis of the share transfer deed lodged with them in the year 2006. The validity of such transfer is being questioned at a belated stage after the lapse of ten years. Any action which ought to have been brought about to enforce the rights or revoke the transfer of shares by a deed of transfer within three years as per the Limitation Act, in the instance case, the action of challenging the validity of transfer deed dated December 22, 2006 was chosen to be filed on February 10, 2016 after a lapse of ten years from the date of execution and registration of the said transfer deed and ratification of the said transfer by investor grievance committee on March 31, 2007. The appellant has chosen to enquire into the matter only in the year 2015 and has lost his rights of challenging the transfer deed on account of delay and laches - The company being a listed company, having dematerialised shares cannot access to the transfer of shares. The shares of the public company are traded at the stock exchange and evidently the shares are held by Jayneer Capital P. Ltd., from the year 2006. Appeal dismissed.
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2020 (9) TMI 845
Allotment of Shares to Subsidiary Company - membership of Holding Company - violation of provisions of section 42(1) of the Companies Act, 1956 - HELD THAT:- The Bench has gone through the pleadings on record and the submissions made by learned counsel for the petitioner herein and accordingly came to the conclusion that the petitioners/defaulters herein had violated the provisions of section 42(1) of the Act. For such violation the punishment is provided under section 629A of the Companies Act, 1956. The allotment of 1,00,000 equity shares made to its subsidiary company DBFS Derivatives and Commodities Ltd., on April 21, 2007 is hit by section 42(1) of the Companies Act, 1956. Therefore, by each officer in default as members of the board of directors is subjected to a fine of ₹ 5,000 (rupees five thousand only), that too as a deterrent for not repeating the impugned default in future. The imposed remittance shall be made by the petitioner in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, Chennai within three weeks from the date of receipt of this order. Application disposed off.
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Insolvency & Bankruptcy
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2020 (9) TMI 844
Validity of SCN - inclusion of name of petitioners in the list of wilful defaulters as per the Reserve Bank of India (RBI) Guidelines - whether the Company and the petitioners can be subjected to proceedings for identification of Wilful Defaulters under the RBI Master Circular, 2015 in the face of the ongoing CIRP under the Insolvency and Bankruptcy Code, 2016? - HELD THAT:- Section 14 of the IBC is relevant. Paragraph 1 of the writ petition describes the petitioners as the erstwhile directors as well as the erstwhile promoters and guarantors of the Company, Mohan Motor Udyog Private Limited, which is presently undergoing CIRP by virtue of an order dated 17th March, 2020 passed by the NCLT, Kolkata Bench. By the said order, Moratorium was declared for the purposes as referred to under Section 14 of the IBC. The order of Moratorium is to remain effective from the date of admission till the completion of the CIRP. Validity of the impugned Show-Cause Notice - Challenge made on the ground that the said notice does not comply with the RBI guidelines relating to wilful defaults by an entity as expressed in the Master Circular which is binding on the respondent Bank - HELD THAT:- Section 29-A (Persons not eligible to be Resolution Applicant) lists the categories of persons who are not eligible to submit a resolution plan and includes a wilful defaulter under the RBI guidelines (clause (b)) as well as a connected person enumerated under clause (j) including a promoter of the resolution applicant (the Company in this case). Against these provisions, the case sought to be made out on behalf of the petitioners is that the petitioners would altogether be excluded from participating in the resolution process despite being inextricably linked to the fate of the corporate debtor. Whether the post of Deputy Managing Director (mentioned as the head of the appropriate committee in the impugned notice) is equivalent to that of the Executive Director (under clause 3(a)) of the Master Circular? - HELD THAT:- This court also takes judicial notice of the fact that there are presently no Executive Directors on the Board of the State Bank of India which is comprised of a Chairman, Managing Directors and Directors. As on 7th September, 2020, the Board of Directors of SBI comprises of a Chairman, 2 Managing Directors, 2 Shareholder Directors and 2 Nominee Directors. The State Bank of India Act of 1955 also does not contemplate a post of Executive Director. Therefore, the first contention with regard to an improperly constituted Committee under a Deputy Managing Director instead of the recommended Executive Director, fails. Allegation that the appointed Committee not applying its mind or making such non-application evident in the Show Cause Notice thus rendering it vulnerable - It is necessary for a Show Cause Notice to disclose the basis of the conclusion arrived at by the Committee under clause 3(a)? - If yes, how can such application of mind/formation of opinion be made apparent on the face of the Show Cause Notice? - HELD THAT:- In the facts of the present case, the contention of the petitioners of the impugned Notice being devoid of any indication of application of mind by the Committee is not acceptable on two grounds. First, the Master Circular does not require it and more important, the Annexure to the Show Cause Notice coupled with the Resolution of the Committee dated 17th June, 2019 provides sufficient material (and particulars specific to the Company of which the petitioners are guarantors) to satisfy that the Committee had indeed fulfilled its mandate under both sub-clauses (a) and (b) of clause 3. One of the most obvious ways in which working of the mind or some sort of deliberation by the persons concerned can be shown is by articulation of the findings arrived at with reference to a meeting (including of minds) where such deliberation palpably took place and the findings being relatable to the materials/evidence before the Committee entrusted with the duty to sift through the evidence to come to the conclusions. The conduct of the petitioners as would appear from the facts of the present case would further lend credence to the prejudice point as considered in Pawan Kumar Patodia; or in other words, whether the petitioners have suffered any prejudice by issuance of the impugned Show Cause Notice. The scheme of clause 3 of the Master Circular (Mechanism for Identification of Wilful Defaulters) contemplates a two-tier system of identification where the decision of the first Committee under clause 3(b) would be subject to review by a second Committee under clause 3(c). Hence, no finality is attached to the decision of the first/identification Committee and more so at the stage of a Show-Cause Notice. Further, the Petitioners in this case received the impugned show-cause notice dated 14th November, 2019 together with the Annexure on 18th November, 2019. The date of receipt would appear from the reply of the petitioners dated 19th December, 2019 to the Show-Cause Notice. The challenge to the impugned Show Cause Notice dated 14th November, 2020 and the Notice dated 6th August, 2020, fails - Petition dismissed.
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2020 (9) TMI 843
Winding up of Corporate Debtor - application under Section 7 of the I B Code - HELD THAT:- Rule 11 is merely declaratory in the sense that this Tribunal is armed with inherent powers to pass orders or give directions necessa ry for advancing the cause of justice or prevent abuse of the Appellate Tribunal's process. Even in absence of Rule 11 this Appellate Tribunal, being essentially a judicial forum determining and deciding rights of parties concerned and granting appropriate relief, has no limitations in exercise of its powers to meet ends of justice or prevent abuse of its process. Such Powers being inherent in the constitution of the Appellate Tribunal, Rule 11 can merely be said to be declaring the same to avoid ambiguit y and confusion. Having said that, the Rule cannot be invoked to revisit the findings retuned as regards the assertion of facts and pleas raised in the appeal and it is not open to reexamine the findings on questions of fact, how-so-ever erroneous they may be. The mistake/error must be apparent on the face of the record and must have occurred due to oversight, inadvertence or human error. An application under Section 7 of the I B Code admitted by the Adjudicating Authority being an independent proceeding has to be decided in t erms of the provisions of I B Code and the insolvency resolution process has to proceed unhindered and notwithstanding pendency of any other proceedings. The bar only operates against the Corporate Debtor against whom a liquidation order has been made and not to a Financial Creditor or an Operational Creditor. The effect of this would clearly be that in terms of law laid down in 'Forech India Ltd.' application filed by 'SREI Equipment Finance Ltd. (Financial Creditor) under Section 7 of I B Code would be maintainable. Therefore, there should be no difficulty in arriving at the conclusion that in para 5 of the judgment of this Appellate Tribunal an error has crept in as regards maintainability of application under Section 7 of the I B Code filed by 'SREI Equipment Finance Ltd.' (Financial Creditor). The error has to be rectified. Appeal dismissed.
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2020 (9) TMI 842
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - existence of debt and dispute or not - HELD THAT:- The issue do not fall under the provisions of Code. Moreover, there is substantial dispute raised by the Respondent by various legal notices and correspondence exchanged between the Parties as enclosed to the Company Petition. It is also relevant to point out here, as stated supra, there is an arbitration clause available both in MOU and Settlement Deed, to invoke arbitration clause, in case, any dispute arise between the Parties out of implementation of terms and conditions contained in the Deeds in question, so as to settle those issues. However, the Petitioner failed to invoke arbitration clause, if it feels aggrieved by the action of Respondent. It can also invoke appropriate provisions of Companies Act, 2013 if the affairs of Corporate Debtor are oppressive in nature and mismanaging its affairs, failure to implement duly approved deeds etc. Therefore, the instant Petition is filed on misconceived facts and law. The instant Application is filed with an intention to recover the alleged disputed outstanding amount, arise out of MOU dated 31.03.2018 and Settlement Deed dated 05.04.2018 - the instant Company Petition is liable to be dismissed as not maintainable.
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2020 (9) TMI 841
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- As per Section 10(4) the Adjudication Authority, can admit an Application if the Application is complete and no disciplinary proceedings are pending against the proposed Resolution Professional. In the instant case, admittedly, the Corporate Applicant has become insolvent by losing its worth having so many claims against it by Financial Creditors and Operational Creditors, as detailed supra. And the instant Company Petition is filed in accordance with law and also suggested a qualified Resolution Professional namely Shri Rakesh Chaturvedi, who has also filed his written Communication in Form-2 dated 10.02.2020, inter-alia declaring that he is a qualified Resolution Professional, he is not serving in any proceedings and there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. The Shareholders of Applicant Company, in their Extraordinary General Meeting, held on 30.09.2019 passed a Special Resolution by approving to file an Application, U/s 10 of Code by authorising Mr. Sanjay G. Bichu, Managing Director of the Company to take necessary action in the that regard. Accordingly, the instant Application/Petition is filed by seeking to initiate CIRP respect of the Company. Application admitted - moratorium declared.
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2020 (9) TMI 840
Exclusion of period of 4 days from CIRP period - these were the days when the copy of admission order was not available and the Resolution Professional could not take control of the Corporate Debtor - HELD THAT:- In the present case, it is a matter of record that the RP had to deal with various litigation relating to non-payment of dues by DISCOMS as well as withdrawal of approval of the Power Purchase Agreement from Hon'ble APERC and also had to struggle to run the Corporate Debtor as a going concern in view of suspension of supply of gas by GAIL due to non-payment of their dues - It also appears that while the RP was struggling with these issues, Form-G was published on 06.07.2019 and 9 EoIs were received from the prospective Resolution Applicants. However, only one Resolution Plan was received in view of the litigation with DISCOMS, withdrawal of Power Purchase Agreement and disruption of supply of gas and the operations remaining standstill. The circumstances prevailing during the period had adversely impacted the CIRP process in achieving the objectives of the Code i.e., maximisation of value of the assets of the Corporate Debtor and running the Corporate Debtor as a going concern - This Adjudicating Authority is of the view that the facts and circumstances of the instant case will squarely fall within the category of unforeseen circumstances which have adversely impacted the CIRP process. Thus, the period during which the supply of gas remain suspended/disrupted i.e., from 04.07.2019 to 04.10.2019 should be excluded from the CIRP period and therefore the exclusion of a period of 92 days from computation of 270 days is allowed with immediate effect for completion of the CIRP process. Application disposed off.
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2020 (9) TMI 836
Liquidation of Corporate Debtor - section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There is no scope for revival of the company, considering the situation of the company and further, there is no asset and income of the company to meet the CIRP expenses. Therefore, the CoC has resolved for liquidation of the Corporate Debtor vide its Third meeting dated 23.01.2020. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC. Application is allowed and the Adjudicating Authority passes an order for initiation of liquidation of the Corporate Debtor - moratorium shall cease to have effect.
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2020 (9) TMI 835
Dispensation of office objection raised by the Registry regarding the aspect of record of default with the information utility (NESL) - Rule 11 of the NCLT Rules, 2016 - 'Home Buyers', whether fall within other creditors as a residuary class? - HELD THAT:- Since the Petitioner has filed the appropriate documents in support of debt and default raised in the instant Company Petition and following the law as cited by the Learned Counsel, we are inclined to dispense with objections raised by the Registry, as prayed for. Application allowed.
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2020 (9) TMI 834
Exclusion of a period of 21 days from CIRP period - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The applicant is seeking an extension of 21 days in completion of Corporate Insolvency Resolution Process. Since, there is scope for revival of Corporate Debtor and approval of a Resolution Plan, we are of view that exclusion of 21 days ought to be granted. The period of 21 days is excluded from the Corporate Insolvency Resolution Process - application allowed.
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Service Tax
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2020 (9) TMI 838
Reverse Charge mechanism - Business Auxiliary Service - Foreign Commission Agent Service - allegation that appellant neither obtained service tax registration nor paid the service tax on the services received by them from their foreign commission agent to whom commission of 11%-12.5% was passed on - whether there is any commission paid by the appellant to Commission Agent in relation to export of their goods exists and whether that commission is liable to service tax under the head Business Auxiliary Service? - time limitation. HELD THAT:- It is seen that against the C F value shown is sales value in the invoice, the amount equivalent to 11%-12.5% was shown as deduction under the head commission and therefore, the net invoice value is the value after deduction of said 11%-12.5%. As per the invoice, 11%-12.5% commission was extended to the foreign buyer of the goods. Since there is transaction of sale and purchase between the appellant and buyer of the goods, whatever value shown in the invoice is a sale value and the deduction shown is nothing but discount given by the exporter to the foreign buyer. As per the bank realization certificate of exporter, in appendix 22A, the amount after deduction of 11%-12.5% which was shown in column 12. Admittedly, in the entire transaction only two persons are involved, one the appellant as exporter of the goods and second the buyer of the goods. In the sale of goods, in case of service of commission agent, if involved, there has to be third person as service provider to facilitate and promote the sale of exporter to a different foreign buyer. In the present case, there is absolutely no evidence that this 11% is paid to some third person as commission. There is no contract of commission agent service with any of the commission agent, there is no person to whom payment of commission was made therefore, it is clear that no service provider i.e. foreign commission agent exists in the present case and no service was provided by any person to the appellant. In the absence of any provision of service, no service tax can be demanded. The trade discount even though in the name of commission agent was given by the appellant to the foreign buyer, by any stretch of imagination cannot be considered as commission paid towards commission agent service, hence cannot be taxable. Time Limitation - HELD THAT:- On merit itself as no service exists, and secondly, the appellant have shown all the figures and data in the documents and 11%-12.5% commission in the invoice, shipping bills and bank realization certificate, therefore, there is absolutely no suppression of facts on their part - Since undisputedly, the amount of commission considered by the Revenue as against Business Auxiliary Service is related to export of goods, the same in any case will not be taxable. For this reason also no malafide can be attributed to the appellant. Hence longer period of demand shall not be invoked. Since no service exists, the entire demand would not stand - Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 837
Works Contract Services - service provided to organisations like Andhra Pradesh Power Generation Corporation (AP GENCO), Andhra Pradesh Tourism Development Corporation (APTDC), etc. - Government/ local authority/ Government authority or not - benefit of N/N. 25/2012-ST - whether the appellant has provided service to Government/ local authority/ Government authority as per the exemption Notification No. 25/2012-ST.? - HELD THAT:- All the companies / Corporations have been established by the Government of Andhra Pradesh under the various Acts and /or Government order , as aforementioned and thus we hold that the appellant has provided service to Governmental authority. Evidently all the service recipients have been set up by the State Government, and are directly under the control of the various Ministries of the State Government. Thus, the service recipients are covered under sub clause (i) of clause (5), of the definition of the term Govt. Authority , in Notification No. 25/2012-ST as amended by Notification No. 2/2014-ST (by way of substitution). Accordingly, the appellant is entitled to exemption under Notification No. 25/2012-ST, and the demand of ₹ 97,63,710/- is set aside. Liability of service tax on the flats constructed and allocated to the land owner under the development agreement - HELD THAT:- The construction of flats under the development agreement with the land owner by the appellant is on principal to principal basis. In such transaction, there is neither any element of service provided to the land owner, nor any element of sale. Accordingly, we hold that service tax is not imposable on this transaction and accordingly set aside the demand of ₹ 5,55,458/- - demand set aside. Non payment of service tax on trenching works done for GTL Limited - case of appellant is that the Court below failed to appreciate the fact that the said demand is for services rendered during the period 2010-11 whereas the show cause notice have been issued on 09.12.2016 - extended period of limitation - HELD THAT:- The appellant has already provided the service as well as raised the invoice before 30.06.2011. Further, admittedly appellant have not given the option for payment of tax as per the date of receipt of consideration. Thus, we hold that demand of tax, relying of Rule 11 of Point of Taxation Rules is bad. Accordingly, we set aside the demand of ₹ 63,973/-. Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 833
Non-payment of service tax - museum fee/admission charges and camera ticket - appellant is a public charitable trust with the object of setting up a world class museum for the benefit of public, at large - exempt service or not - CBEC Notification No. 9/2017-ST dated 28.02.2017 - HELD THAT:- In view of the Notification No. 9/2017-ST, extending the benefit of exemption on services by way of admission fee to museum etc., with effect from 01.07.2012, the demand vide the impugned order against the appellant, does not survive. Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 832
Reverse Charge mechanism - Liability of Service Tax - GTA Service - no consignment note issued - it appeared to Revenue that the appellants being corporate body private limited company , are liable to pay service tax on reverse charge basis - HELD THAT:- The learned Commissioner (Appeals) have misconceived the provisions of law as he has considered the provision for payment of tax under reverse charge mechanism as the charging section - Admittedly, charging section does not provide for levy of service tax in case of GTA service, where no consignment note is issued. Appeal allowed - decided in favor of appellant.
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2020 (9) TMI 831
Quantum of penalty - Both the assessee and Revenue preferred appeal before the Commissioner (Appeals). Assessee had challenged 15% of penalty whereas Revenue has prayed for enhancement of penalty to 50% - HELD THAT:- Learned Counsel for the appellant confirms that they have filed declaration form SVLDRS-1 on 22.10.2019 and accordingly they have been issued final settlement certificate in Form-SVLDRS-4 dated 05.12.2019. Thus, the dispute in these appeals stand settled as regards the tax, interest and penalty matter. Accordingly, these appeals are disposed of in terms of the settlement between the parties.
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Indian Laws
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2020 (9) TMI 839
Release of Passport - order of declaration of proclaimed person not present - Section 10(3) (h) of the Passports Act, 1967 - opportunity of hearing not provided to petitioner - HELD THAT:- In the writ petition Respondent No.1 had impugned the seizure memo dated 23.04.2019 (Annexure P.11) and letter dated 17.05.2019 (Annexure P.14) conveying the reason for the action. Ld. Single Judge has rightly concluded that not only was the impugned action void and illegal being violative of the principles of natural justice even the reason furnished for impounding that she had been declared a proclaimed person was non- existent. The passport had not been impounded under Section 10(3) (e) on the ground of proceedings in respect of a criminal offence pending against respondent No.1 which is the ground pressed by the appellant to justify its impounding - It is well settled that the validity of an administrative order has to be justified solely by the reasons mentioned therein. On that touchstone the impugned orders cannot sustain. Appeal dismissed - However the costs are reduced to ₹ 10,000/- from ₹ 1,00,000/-.
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