TMI Tax Updates - e-Newsletter
September 29, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. RECENT ADJUDICATION ORDERS BY REGISTRARS OF COMPANIES

   By: DR.MARIAPPAN GOVINDARAJAN

2. CENVAT credit available on inputs used in the production of electricity supplied to Sister Unit FOC

   By: Bimal jain

News

1. GST revenue in September likely at Rs 1.45 lakh Cr

2. Cabinet approves release of additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners, due from 01.07.2022

3. Department for Promotion of Industry and Internal Trade (DPIIT), Invest India and the Embassy of the Netherlands formalize the India-Netherlands Fast-Track Mechanism (FTM)

4. The Finance Minister’s Award 2022 presentation ceremony held by the Income Tax Department at Delhi

5. Finance Minister Smt. Nirmala Sitharaman chairs performance review of Credit and other Welfare Schemes for Scheduled Castes in Public Sector Banks

Notifications

DGFT

1. 36/2015-2020 - dated 28-9-2022 - FTP

Amendment in Import Policy Condition under ITC(HS) 0802 80 10 of Chapter 08 of ITC(HS) 2022, Schedule – I (Import Policy).

2. 35/2015-2020 - dated 27-9-2022 - FTP

Extension for the period of exports of broken rice (HS code 1006 40 00) from 30th September, 2022 till 15th October, 2022 as mentioned in Notification No. 34 dt. 20.09.2022

GST - States

3. 10/2022-State Tax - dated 26-9-2022 - Delhi SGST

Filing of annual return - Seeks to exempt taxpayers having AATO upto Rs. 2 crores from the requirement of furnishing annual return for FY 2021-22

4. F.1-11(91)-TAX/GST/2022(Part-I) - dated 5-8-2022 - Tripura SGST

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs.10 Cr from 1st Oct, 2022

5. F.1-11(91)-TAX/GST/2022(Part-I) - dated 16-7-2022 - Tripura SGST

Seeks to amend Notification No.F.1-11(91)-TAX/GST/2019(Part) dated the 8th March, 2019

6. F.1-11(91)-TAX/GST/2022(Part-1) - dated 16-7-2022 - Tripura SGST

Seeks to amend Notification No.F.1-11(91)-TAX/GST/2019 dated the 8th March, 2019

7. 03/2022-State Tax (Rate) - dated 16-7-2022 - Tripura SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

8. 1626-F.T - dated 26-9-2022 - West Bengal SGST

Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs.10 crore with effect from 01.10.2022

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/130 - dated 28-9-2022

Amendments to guidelines for preferential issue and institutional placement of units by a listed REIT

2. SEBI/HO/DDHS/DDHS_Div3/P/CIR/2022/129 - dated 28-9-2022

Amendments to guidelines for preferential issue and institutional placement of units by a listed InvIT

3. SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2022/124 - dated 28-9-2022

Credit Ratings supported by Credit Enhancement (CE)

DGFT

4. 25/2015-20 - dated 28-9-2022

Procedure for Registration Certificate for Import of Fresh (green) Areca Nut from Bhutan without Minimum Import Price (MIP) condition

5. Trade Notice No. 17/2022-23 - dated 28-9-2022

Implementation of Notification No. 31/2015-20 dated 08.09.2022 regarding Export of Broken Rice

Highlights / Catch Notes

Income Tax

• Interest Expenditure Can Offset Interest Income; Section 40(ba) Misapplied to AOPs, Not Affecting Registered Societies.

  Case-Laws - AT : Income from other sources - interest expenditure is to be set off against the interest income. As regards the AO's contention that interest paid to member is not eligible deduction in the case of AOP under Section 40 (ba), we have perused the said Section. This clause excludes registered society from its applicability. Accordingly, this clause will not be applicable to the assessee society. Moreover, as rightly contended by the learned AR Section 40 (ba) is applicable while computing business income. This clause is not applicable while computing income from other sources. - AT
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• Court Rules Assessment u/s 147 Invalid for Deceased; Section 292B Inapplicable in Such Cases.

  Case-Laws - HC : Reopening of assessment u/s 147 - notice issued to the dead assessee - There cannot be an assessment against the dead person. As noticed above, the provisions of Section 292B are also not applicable and no assessment can be framed against a non-existing entity or a person who has died. - HC
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• TDS u/s 195: No Permanent Establishment in India; CIT(A) supports assessee, removes incorrect additions.

  Case-Laws - AT : TDS u/s 195 - profit attributable to the PE in India - the privity of contract is between the assessee and Indian customers, wherein, CCPL has no role to play. The aforesaid factual position emerging on record could not be effectively controverted by the Revenue through proper evidence. - the assessee cannot be construed as a dependent agent PE of CCPL - CIT(A) rightly deleted the additions - AT
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• Court Rules 40% Deduction of Gross Receipts for Unaccounted Professional Income Expenses is Fair and Equitable.

  Case-Laws - AT : Unaccounted professional income - Income estimation - the grant of 25% of the gross receipts towards expenses is very much on the lower side. In the interest of justice and equity, we are of the view that the expenditure of 40% towards the gross receipts should be allowed as deduction. - AT
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• Court Upholds Deletion of Unexplained Cash Credits u/s 68; Loans Proven Legitimate by Assessee's Evidence.

  Case-Laws - AT : Additions u/s.68 - unexplained cash credits in the form of unsecured loans - We are pained to find that the A.O had not even thought it fit to refer to the material which was placed on record by the assessee in support of his aforesaid claim of having raised authentic loans from the aforementioned lenders. - CIT(A) rightly deleted the additions - AT
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• Assessing Officer Applies 30% Tax Rate on Capital Gains, Classifying Depreciable Assets as Short-Term u/s 50.

  Case-Laws - AT : Rate of tax - 20% or 30% - share of depreciable assets - In the present case, it is not the plea of the Revenue that the property from which the capital gains arose was held by the assessee for less than three years. The Assessing Officer only by application of provisions of section 50 of the Act treated the gains as arisen from transfer of short term capital asset and hence applied the rate of tax @ 30% as applicable in case of short term capital gain. - AT
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• Interest Income on Loans Accrues Annually, Not Tied to Payment Receipt; Preference Shares Differ Due to Uncertainty.

  Case-Laws - AT : Accrual of income - If the sum paid by the assessee is loan and as per the terms of the loan agreement, certain rate of intereset is payable by the borrower every year then it can be said that under the mercantile system of accounting, interest accrues to the assessee as income, irrespective of actual receipt of payment. In the case of preference shares, such an inference cannot be drawn and the repayment of the face value of the preference shares as well as the premium on redemption is uncertain. - AT
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• TP adjustments for AMP expenses and warranty reimbursements not separate transactions without TPO rejecting trading segment margins.

  Case-Laws - AT : TP adjustments towards AMP expenditure pertaining to trading segment AND reimbursement of warranty expenses to AE - the AMP expenses and warranty expenses cannot be treated as a separate international transaction when the TPO has not otherwise rejected the margins of the assessee in the trading segment. - AT
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Customs

• Court Questions Legitimacy of Gold Origin; Appellant Lacks Evidence for Lawful Purchase of High-Purity Gold Bars.

  Case-Laws - AT : Smuggling - 3 Kgs of smuggled Gold Bars - foreign origin goods or not - The invoices, purchase register, stock register, delivery challan have failed to prove that the gold in question was lawfully purchased by the appellant that too of such a purity which was more than 995. The possibility of all these documents to be subsequently created cannot be ruled out. This inference gets support from the fact that the delivery challan as is mentioned to have been given was not found during his personal search- AT
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• Gold Smuggling Case: Co-Noticee Statements Need Independent Corroboration u/s 112(b)(i) of Customs Act 1962 for Penalties.

  Case-Laws - AT : Penalty u/s 112(b)(i) of the Customs Act 1962 - smuggling - Gold Bars - the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated with material particulars by independent evidence. The statement of co-accused cannot be used against the appellant, particularly when appellant has denied his involvement in respect of the goods in question - AT
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• Penalty Under Customs Act Section 112(b) Dismissed: Appellant Not Involved in Gold Smuggling Activities.

  Case-Laws - AT : Levy of penalty u/s 112(b)(i) of the Customs Act 1962 - petitioner has any role in the smuggling of Gold activity or not - Appellant is the financer of the importer - It is found that the appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. - AT
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FEMA

• FEMA Case: Show Cause Notice Must Clearly Define Scope for Charges on Foreign Property Transactions and Repatriation Issues.

  Case-Laws - HC : Offence under FEMA - Eligible charge against petitioner in SCN - repatriation of sale proceeds to person resident outside India and that acquisition and transfer of immovable property by her heirs residing outside India - It is essential for a show cause notice to indicate the precise scope of the notice and also to indicate the points on which the recipient of the show cause notice give a reply. - HC
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Corporate Law

• Shareholding Requirements in Oppression and Mismanagement Cases: Dominus Litis Role and Litigation Control Explained.

  Case-Laws - AT : Oppression and Mismanagement - requisite shareholding to maintain the Petition, present or not - There is no gain saying of the pivotal fact that Law does not coerce / force any Litigant to pursue the Litigation. In fact, in a Civil Suit / Civil Proceeding, a Plaintiff/ Petitioner is a Dominus Litis. - AT
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IBC

• Court Error in Rejecting Claim: No Evidence Loan to Corporate Debtor Was Repaid, Says Appellant.

  Case-Laws - AT : Seeking admission of the claim - There are no material to indicate that the loan which was disbursed by the DHFL to the Corporate Debtor was discharged at any point of time. The Adjudicating Authority committed error in refusing to admit the claim of the Appellant. - AT
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Central Excise

• CENVAT Credit Reversal on Broken Glass Beverage Bottles Complies with 2010 Circular; Impugned Order Not Upheld.

  Case-Laws - AT : Reversal of CENVAT Credit - breakage of glass beverage bottles - It is noted that substantial compliance with the circular of 2010 has been made by the appellant by reversing the CENVAT Credit on the inputs used in respect of the finished goods contained in the breakages. Thus, taking the note of the reversal made, the impugned order cannot be sustained. - AT
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Case Laws:

• GST

• 2022 (9) TMI 1265
  Maintainability of appeal - requirement of mandatory pre-deposit - appeal rejected on the ground that the mandatory deposit should have been made from the cash ledger - HELD THAT:- After hearing the counsel for the petitioner as well as learned Standing Counsel, this Court finds that pre-deposit has been made by the Firm before the Appellate Authority, and the Appellate Authority shall not insist the Firm to make deposit through electronic cash ledger and shall proceed to decide the appeal on merits strictly in accordance with law. The writ petition stands partly allowed.

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• 2022 (9) TMI 1264
  Seeking grant of Regular Bail - availment of irregular input tax credit - HELD THAT:- On perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. In the facts and circumstances of the present case and considering the role attributed to the applicant and the allegations levelled against him, the case of the applicant deserves consideration and, therefore, the case of the applicant needs to be considered. The applicant is ordered to be released on regular bail registered with Shahpur Police Station, Ahmedabad on executing a personal bond of Rs.10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - bail application allowed.

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• 2022 (9) TMI 1263
  Maintainability of appeal - time limitation - petitioner s appeal came to be dismissed on the ground that appeal was not filed within a period of three months provided under Section 107(1) of The Central Goods and Services Tax Act, 2017 - the appeal was delayed more than one month provided under Sub Section 4 of Section 107 of the CGST Act - HELD THAT:- In the affidavit in reply it is not denied that the order in original dated 14th November 2019 was not digitally signed. In the affidavit in reply it is specifically stated that the show cause notice was digitally signed by the issuing authority but when it refers to the order in original dated 14 th November 2019 there is total silence about any digital signature being put by the issuing authority. Conveniently, respondent stated that petitioner cannot take stand of not receiving the signed copy because the unsigned order was admittedly received by petitioner electronically. However, if this stand of respondent has to be accepted, then the Rules which prescribe specifically that digital signature has to be put will be rendered redundant - unless digital signature is put by the issuing authority that order will have no effect in the eyes of law. The petitioner s stand is agreed upon that only on the date on which the signature of Respondent No.4 issuing authority was put on the order dated 14th November 2019 for the purpose of attestation, time to file appeal would commence - the appeal is restored to file of Respondent No.3 who shall consider the appeal on merits and pass such order as deemed fit in accordance with law. Petition disposed off.

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• 2022 (9) TMI 1262
  Constitutional Validity of Rule 117(1) and the proviso thereto of both the CGST Rules, 2017 and Telangana GST Rules, 2017 - applicability of time limit of ninety days for filing Form GST TRAN-1 - HELD THAT:- Issue decided in the case of M/S PKL LIMITED VERSUS UNION OF INDIA [ 2022 (9) TMI 1193 - TELANGANA HIGH COURT ] where it was held that The issue decided in the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] where it was held that Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. Writ petition disposed off.

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• 2022 (9) TMI 1261
  Validity of condition imposed by the second respondent in regard to the furnishing of bank guarantee for the balance of the disputed tax and penalty - HELD THAT:- Taking into account the position that the petitioner has remitted 50% of the disputed tax, the petitioner is permitted to furnish a personal bond in respect of the balance of tax and penalty, to the tune of Rs.8,89,275/- Rs.11,30,122/- respectively within a period of four (4) weeks from today. Subject to the furnishing of personal bond by the petitioner, there shall be an order of stay of balance of the disputed tax and penalty till the disposal of the appeals by the first appellate authority. It is made clear that impugned orders dated 25.08.2022 stands modified. The Writ Petitions are disposed off.

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• 2022 (9) TMI 1260
  Seeking stay on operation of summons - seeking restraint on respondent no. 2 from issuing any further summon - seeking permission to petitioners to join the investigation through video conferencing - HELD THAT:- A perusal of the summons issued to the petitioners shows that the petitioners were required to be present before the concerned officer on 29.08.2022 - Since that date has passed, in case the respondents/revenue wishes to issue fresh summons to the petitioners and/or its directors or officers, they will follow the guidelines provided in instruction no.3 of 2020-2023 (GST-Investigations), dated 17.08.2022. Application disposed off.

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• Income Tax

• 2022 (9) TMI 1269
  Addition made on account of bogus expenses corresponding to the sundry creditors - ITAT deleted the addition - HELD THAT:- AO after opining on the genuineness of the purchases, disallowed the sundry creditors and held the creditors to be doubtful. ITAT and CIT(A) satisfied itself with respect to the genuineness of the sundry creditors through bank statements and thereafter deleted the addition. Revenue has been unable to bring out any deficiency in the said concurrent finding of the appellate authorities. The learned counsel s endeavor to urge this Court to examine the issue of bogus purchases by perusing the bills and statements of alleged suppliers in these proceedings cannot be accepted. This Court in exercise of its jurisdiction under Section 260A of the Act is confined to hearing substantial questions of law and interference on the finding of facts is not warranted if it involves re-appreciating of evidence. The learned counsel has not been able to point out any perversity in the finding of facts. We therefore, find no infirmity in the orders of the appellate authorities deleting the addition made on account of bogus expenses corresponding to the sundry creditors. Disallowance on account of static creditors - ITAT concurred with the findings of the CIT(A) and held that the AO could not have relied upon initial letter for making such an addition when to the knowledge of the AO the Assessee had retracted the said letter during the assessement proceedings. ITAT noted that the department representative had not brought on record any material on record to contradict the fact findings of the CIT(A) on this issue and accordingly upheld the said deletion. In this appeal as well, the learned counsel for the Revenue has not brought to our attention any material to indicate that the finding of the appellate authorities is incorrect. His sole contention was that since the Assessee initially had surrendered the income, no further enquiry was required to be conducted by the AO. He, however, could not point any infirmity in the findings of the CIT(A) while deleting the said addition. As per the Circular No. 14(XL-35) of 1955 dated 11th April, 1955, as well the Department has been directed to assist a taxpayer where the proceedings or other particulars before AO indicate that some refund or relief is due to the Assessee. We, therefore, find that in the present appeal, the appellate authorities have returned concurrent findings of fact by deleting the additions made by the AO. The ITAT is the final fact finding authority and no material has been placed on record to contradict the findings of the appellate authorities, therefore, no substantial question of law arises for consideration in the present appeal. Accordingly, the same is dismissed.

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• 2022 (9) TMI 1268
  Jewellery seized during the course of search - disclosure made by him in VDIS-97 and IDS-2016 - assessee filed a letter in the office of DDIT (Investigation) along with VDIS certification and valuation report stating that all the gold / diamond jewellery found from residence / lockers and valued by the various Government approved valuer is fully explained and supported by necessary documents / evidences and requested for release of jewellery seized during the search action - HELD THAT:- There are two adult ladies in the family i.e. assessee s wife and assessee s daughter (who got recently married). The ld. AR had pleaded in his written submissions that the value of addition towards gold coins constitute 2.16% of the gold and diamond jewellery found at the time of search which is insignificant compared to the stature of the assessee. We find that assessee had disclosed substantial amount of time and gold jewellery in VDIS 97 itself. During the intervening period of 22 years it is very likely that the household ladies resorting to change the old jewellery to be in tune with the latest fashion or design thereon. This fact has been duly submitted by the assessee before the ld. AO which was not accepted. In fact the assessee had also submitted that the diamond jewellery had been changed to be in tune with the latest trend and fashion which had resulted in reduction in carats of diamond and correspondingly, contributed to increase in gold jewellery. We are inclined to accept this line of argument advanced by the ld. AR in his written submissions and also the submission made before the lower authorities. However, it is also a fact that assessee had not brought any material on record to prove the receipt of gifts in the form of gold coins completely. As stature of the assessee and also considering disclosure made by him in VDIS-97 and IDS-2016, we hold that assessee should be given credit to the tune of 137 gms in the form of gifts received by it on various occasions. Accordingly, 100 gms of gold coins alone would be subject matter of addition. AO is directed accordingly to recomputed the addition. Hence, the grounds raised by the assessee are partly allowed.

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• 2022 (9) TMI 1267
  Income from other sources - Addition of interest earned on IBMS( Interest bearing maintenance security) - scope of principle of mutuality - set off of interest expenditure - AO was the opinion that deduction of the TDS on distributed interest income amongst members does not absolve the society/assessee from its taxation obligation, held that interest earned from banks on IBMS by the assessee society is liable to be taxed under the head of income from other sources - whether the interest received by the assessee on IBMS is taxable or not? - HELD THAT:- The said issue has been considered by the Coordinate Bench of the Tribunal in the case of Belaire Condominium Association [ 2018 (5) TMI 240 - ITAT DELHI] assessee society has paid interest each one after deducting tax at source. Thus, it is not a case of exemption on the principle of mutuality. Such interest paid by the assessee society is taxable in the hands of the Apartment owner. In view of these facts, we are of the view that interest expenditure is to be set off against the interest income. As regards the AO s contention that interest paid to member is not eligible deduction in the case of AOP under Section 40 (ba), we have perused the said Section. This clause excludes registered society from its applicability. Accordingly, this clause will not be applicable to the assessee society. Moreover, as rightly contended by the learned AR Section 40 (ba) is applicable while computing business income. This clause is not applicable while computing income from other sources. There is no prohibition in Section 57 (iii) under which deduction of interest is eligible to the assessee society. We direct the AO to delete the addition made on account of the interest. Appeal of assessee allowed.

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• 2022 (9) TMI 1259
  Disallowance being contribution to the approved pension fund - whether there is any ceiling fixed in respect of the contribution which have been made by the respondent/assessee? - whether it was towards an ordinary annual contribution or whether it was towards an initial contribution? - HELD THAT:- As noticed from the rules, the limitations have been prescribed only for the initial contribution and ordinary annual contribution to the funds. Thus, the consequence that would follow is that any other contribution made other than initial contribution or an ordinary annual contribution, would not be covered under the rules and no ceiling has been fixed with regard to the amount of such contribution. This has not been disputed by the revenue that the amount paid by the respondent/assessee in excess of 27% of the salaries of the employees are neither towards ordinary annual contribution nor towards initial contribution and the payment was necessitated due to short-fall discovered in the course of actuarial valuation of the funds which is in exceptional circumstances and has been made to ensure that the superannuation funds will be able to discharge its obligation to the employees. We are satisfied that the amount which was remitted by the respondent/assessee is neither towards an initial contribution nor towards an ordinary annual contribution and, therefore, the ceiling fixed under the rules will not apply to such a contribution. That apart, this contribution had to be made considering the peculiar circumstances and it was a one-time payment, therefore we are of the view that the learned Tribunal rightly allowed the appeal filed by the assessee. That apart the decision in the case of Glaxo Smithkline Pharmaceuticals [ 2011 (1) TMI 1530 - ITAT MUMBAI ] has been affirmed by the High Court of Judicature at Bombay [ 2013 (3) TMI 759 - BOMBAY HIGH COURT ] We find there are no ground to interfere with the order passed by the learned Tribunal. Accordingly, the appeal filed by the revenue dismissed.

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• 2022 (9) TMI 1258
  Expenditure incurred by the appellant in connection with the public issue of share application - setting off interest against expenses on public issue - Whether not to be deducted from the interest received on the share application monies from the banks? - whether interest accrued on account of deposit of share application money is taxable income at the hands of the assessee? - HELD THAT:- If money is deposited in the bank for the purpose of earning interest and accordingly interest is earned, then it is liable to be taxed as income from other sources. But, if the interest income accrued is merely incidental and not the prime purpose of earning interest income which resulted into accrual of some additional income, then such income is not liable to be assessed; eligible to be claimed as deduction. Applying the above ratio, Supreme Court Shree Rama Multi Tech Ltd. [ 2018 (4) TMI 1374 - SUPREME COURT] held that if the share application money received is deposited in the bank in the light of statutory mandatory requirement then the accrued interest is not liable to be taxed and would be eligible for deduction against public issue expenses. On the above basis, Supreme Court held that interest income earned out of the share application money is liable to be set off against the public issue expenses. On thorough consideration of all aspects of the matter, we are of the view that the above decision of the Supreme Court in Shree Rama Multi Tech Ltd. [ 2018 (4) TMI 1374 - SUPREME COURT] is squarely applicable to the facts of the present case. Accordingly, we answer the substantial question of law framed in favour of the assessee.

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• 2022 (9) TMI 1257
  Validity of proceedings u/s. 144 - notice of hardly three hours was given to the petitioners to attend the personal hearing - denial of natural justice - entire proceedings u/s. 144 were commenced and included within a short span of 11 days - HELD THAT:- In C.B. Gautam v/s. Union of India and others [ 1992 (11) TMI 1 - SUPREME COURT ] observed that the very fact that an imputation of tax evasion arises where an order for compulsory purchase is made and such an imputation casts a slur on the parties to the agreement to sell lead to the conclusion that before such an imputation can be made against the parties concerned they must be given an opportunity to show cause that the under valuation in the agreement for sale was not with a view to evade tax. It is, therefore, all the more necessary that an opportunity of hearing is provided. In Sahara India (Firm) vs. Commissioner of Income- tax, Central-I [ 2008 (4) TMI 4 - SUPREME COURT ] Hon ble Supreme Court highlighted the necessity and importance of opportunity of pre-decisional hearing to an asseesee and that too in the absence of any express provision. Show Cause Notices were issued on 19/02/2022 and the final impugned orders were made on 30/03/2022. There is some merit in the petitioners contentions about the failure of natural justice in the peculiar facts of the present case. Therefore, without going into the merits and by focusing on the peculiar facts and circumstances of the present case like the shortness of the notice coupled with the fact that the petitioners are a Government Company which functions through its officials, we think that the interest of justice would be served if the impugned orders are set aside and the matter is remanded to the Assessing Officer for passing fresh orders after granting a reasonable opportunity of hearing to the petitioners. The penalty notices, which were consequential to the impugned assessment orders are also set aside for the present. Further, if the occasion arises liberty is granted to the respondents to reissue such notices.

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• 2022 (9) TMI 1256
  Disallowance of claim of Corporate Social Responsibility ( CSR ) - qualify for deduction as CSR, the expenditure must fall in one of the categories enlisted in Schedule (VII) of the Companies Act, 2013, whereas admittedly, none of the institutions to whom donations have been made by the Assessee fall in the said category - HELD THAT:- AO after examination of the record held that the said amount has not been incurred for the purpose of business and therefore does not fall within the provisions of Section 37 - ITAT after perusing the details of the expenditure incurred by the Assessee on account of CSR returned a finding that the said expenses are not in the nature of CSR. ITAT held that in fact, the payment details show that these were in fact, in the nature of charity and donations made to the third parties listed therein and therefore, the same do not merit to be claimed as an expenditure. The appellant has failed to show any infirmity in the said finding of fact of the ITAT and therefore, in our opinion question does not arise for consideration and we decline to entertain the appeal on the said question.

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• 2022 (9) TMI 1255
  Reopening of assessment u/s 147 - notice issued to the dead assessee - main ground urged by the petitioner was that the notice was issued to the mother who was dead person and that the notice to the dead assessee was invalid and illegal - HELD THAT:- Division Bench of this Court in Urmilaben Anirudhhasinji Jadeja Vs. Income Tax Officer, Ward 7(1) (3) [ 2019 (9) TMI 356 - GUJARAT HIGH COURT] addressed the very issue. The Court considered various decisions of the Supreme Court and the High Court, touching the aspects of the issue, held that there cannot be any assessment against a dead person. In that case also, notice was issued to the dead assessee u/s 148 of the Act. The proceedings would be nullity against the dead assessee, the rider was provided that in cases where legal representatives participate in the assessment or reassessment proceedings, the proceedings may be maintained and continued. It was at the same time held that mere intimation by the legal representative to the assessing officer that the noticee is dead, would not amount to legal representation on participation in that proceedings. In Urmilaben Anirudhhasinji Jadeja [ 2019 (9) TMI 356 - GUJARAT HIGH COURT] while the revenue raised various contentions seeking a proposition that the proceedings against the dead assessee would be maintained, the Court negatived them all. One of the contention was based on Section 292BB - The said provision contemplates that the notice shall be deemed to be valid in certain circumstances. It mentions that where an assessee has appeared in any proceedings or cooperated in any inquiry relating to assessment or reassessment, it shall be deemed that a notice required to be served under the Act has been duly served upon him. Such, it is provided, shall be precluded by taking any objection about the service of the service of the notice and manner of the service. The law is well settled that unless the heirs and legal representatives of the deceased assessee could be said to have been submitted to the jurisdiction of the assessing officer and have participated in the assessment or re-assessment proceedings, notice to the dead assessee and commencement of assessment or re-assessment proceedings against dead person is rendered null and void. The attempt on the part of the income tax authorities to start proceedings for assessment or re-assessment against the dead person is viewed not merely as procedural irregularity but it is stated as jurisdictional defect. There cannot be an assessment against the dead person. As noticed above, the provisions of Section 292B are also not applicable and no assessment can be framed against a non-existing entity or a person who has died. Recapitulating the facts of this case, the mother of the petitioner Rosamma died as back as on 27.5.2014. The petitioner intimated the authorities about the death and also forwarded the death certificate. As conveyed that he was not the only heir and was not having knowledge about the transactions and the income affairs of the mother. Despite that the Income Tax Authority proceeded to issue notice and passed the assessment order. There was no circumstance could be pointed out by the respondent nor it emerged from the facts on record that the petitioner in any way submits about the jurisdiction of the Income Tax Authority or sequised in the proceedings. Intimation was given about the death of the mother- the assessee but the authorities did not pay heed. The position of law emanating from the decision of this court in Urmilaben Anirudhhasinji Jadeja Vs. Income Tax Officer, Ward 7(1)(3) [ 2019 (9) TMI 356 - GUJARAT HIGH COURT] and also in Himadri Kandarp Mehta L/H Of Late Kandarp Yashashvibhai Mehta [ 2022 (8) TMI 1038 - GUJARAT HIGH COURT] decided as per the judgment dated 1.8.2022, could not be disputed by learned advocate for the respondent. The present petition deserves to be allowed.

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• 2022 (9) TMI 1254
  Reopening of assessment u/s 147 - rectification proceedings and the various orders passed by Assessing Officer increasing or reducing the relief under Section 80HHC - HELD THAT:- As surprised to find that Tribunal has held that the assessee suppressed the material facts which was never the allegation in the reasons recorded for reopening. It is not clear as to on what basis the learned Tribunal came to such a conclusion. Tribunal has accepted the legal position that the assessment cannot be done on a mere change of opinion. As sought to justify the reassessment order on the ground that the certificate furnished by the Chartered Accountant the figure of loss was not shown, though the figure of the sale proceeds of the trading goods and the direct and indirect costs were shown - we find that the finding of the learned Tribunal that the assessing officer had no occasion to or did not examine the claim for deduction under Section 80HHC is thoroughly flawed and equally is the finding of tribunal that there was suppression of facts made by the assessee. As pointed out that not only once but twice proceedings under Section 154 of the Act was initiated and both the proceedings were on the very same issue as regards the entitlement of the assessee to claim deduction under Section 80HHC of the Act. Therefore, such finding of the learned tribunal was absolutely perverse. Tribunal also had held that no conscious opinion was formed by the assessing at the original assessment stage while allowing deduction u/s 80HHC and there was no exemption or deliberation. This finding appears to be no supported by any justifiable reasons but on a perusal of the assessment order it is definitely clear that the case was discussed with the assessee and thereafter taking into consideration the Chartered Accountant s certificate the deduction as claimed was granted. In fact, there were two decisions of the learned Tribunal which were namely, International Research Park Laboratories Ltd. and A.M. Moosa which decisions would clearly support the stand and the conclusion arrived at the by the assessing officer while completing the scrutiny assessment under Section 143(3) of the Act vide order dated 3.3.1997. Thus, we find that Tribunal erroneously reversed the order passed by the CIT(A) who has considered the facts and circumstances and rightly applied the legal position. In the result, we find that the order of the learned Tribunal calls for interference. - Decided in favour of assessee.

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• 2022 (9) TMI 1253
  Reopening of assessment u/s 147 - Necessity of discharging objections - primary grievance of the petitioner is that instead of disposing the objections raised by the petitioner against the re-opening notice, notice came to be issued by the respondent under section 142(1) in relation to the reopening proceedings in respect of the year under consideration - HELD THAT:- This petition is disposed of by directing the competent authority of the respondent Income Tax authority to consider the objections filed by the petitioner to the re-opening notice under section 148 of the Act within a period of eight weeks from the date of receipt of the order on its own merits and in accordance with law. As clarified that this court has not gone into the merits of the case of the either side and nor has expressed anything on merits.

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• 2022 (9) TMI 1252
  Reopening of assessment us 147 - authorities proposed to assess/reassess the income/loss of the deceased Assessee - whether the Assessment proceedings are maintainable against the dead person? - HELD THAT:- As assessee died on 20.08.2019. Notice under section 148 of the Income Tax Act came to be issued on 30.3.2021, that is after about nineteen months from the death of the assessee. The petitioner herein who happens to be the legal representative of the deceased assessee, intimated to the Income Tax officer concerned on 16.2.2022 by addressing letter that the noticee Gordhandas Madhavji Somaiya had died long back and that the notice was without jurisdiction. The Income Tax authorities did not pay heed to the said intimation. The facts of the case did not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings to persuade the court to hold otherwise. On the contrary, communication dated 16.2.2022 was sent to the Income Tax officer by the legal representative that the notice Goradhandas Madhavji Somaiya had died. Present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee, could not be sustained. Appeal of assessee allowed.

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• 2022 (9) TMI 1251
  TDS u/s 195 - disallowance of extended warranted expenses paid by the assessee - profit attributable to the PE in India - disallowance u/s 40(a)(i) due to non-deduction of tax at source - dependent agent PE - HELD THAT:- The extended warranty is an additional feature provided to the customers at their option. There is no compulsion on the customers to buy extended warranty. If some customers agree for extended warranty, the assessee purchases such warranty from CCPL, a Bentley recommended company, the consideration received from the customers towards the extended warranty is remitted to CCPL after retaining a part of it Extended warranties are in the nature of security and assurance to customers against any kind of defect/repair after lapse of original warranty and purely optional in nature. Material on record reveal, while entering into contracts for extended warranty, though, the assessee purchases such warranty from CCPL at a particular price, however, it independently negotiates price with the customers. Commissioner (Appeals) has referred to specific instances of invoices raised by the assessee to indicate that the price at which the extended warranty is sold to the customers is different from the warranty claimed to CCPL - there is no compulsion on the assessee to buy extended warranty only from CCPL or any other Bentley recommended party. Technically, assessee can buy extended warranty from anyone, subject to availability of original Bentley spares and accessories - the sales invoices raised by assessee to the Indian customers towards extended warranty are in its own name and does not mention the name of CCPL. Therefore, the privity of contract is between the assessee and Indian customers, wherein, CCPL has no role to play. The aforesaid factual position emerging on record could not be effectively controverted by the Revenue through proper evidence. Thus, in our view, the factual finding recorded by Commissioner (Appeals), to the effect that the assessee cannot be construed as a dependent agent PE of CCPL, deserves to be affirmed in absence of any contrary material brought on record by Revenue. Accordingly, we do so. Ground raised is dismissed.

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• 2022 (9) TMI 1250
  TDS u/s 194LD - assessee has invested in rupee denominated non-convertible debentures ( NCDs ) of Indian companies from which interest income accrued to the assessee during the subject year offered to tax by the assessee @ 5% in accordance with section 194LD r.w.s. 115A(1)(a)(iiab) - whether debenture should be considered as Bond in absence of any definition of this term in Income-tax Act? - AO took a view that Section 194LD is applicable only in case of interest from rupee denominated bonds ( RDBs ) of Indian company or a Government security whereas the assessee has earned interest from NCD and therefore, a concessional rate of 5% as mentioned in section 194LD was not available thereon - HELD THAT:- We find that the issue is covered in favour of the assessee in the case of DIT Vs. Shree Visheshwar Nath Memorial Public Ch. Trust [ 2010 (8) TMI 435 - DELHI HIGH COURT ] When ld. DR for the Revenue was asked whose exposition on the meaning of word debenture should prevail. She fairly agreed that it is Hon ble jurisdictional High Court order which is to be followed. Accordingly, respectfully following the precedent, we set aside the orders of the Revenue authorities and decide the issue in favour of the assessee.

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• 2022 (9) TMI 1249
  Unaccounted professional income - Income estimation - Reliance on statements recorded during the survey - applicability of provisions of section 44ADA - AO allowed the deduction of 25% towards the expenses out of the total undisclosed professional income disclosed by the assessee and concluded the assessment - HELD THAT:- Inspite of repeated requests, the statement recorded during the course of survey from the assessee was not placed on record either by the learned AR or by the learned DR. The solitary issue for our adjudication is whether the declaration made by the assessee is entitled to deduction of 50% towards expenditure against a sum declared during the course of survey. The assessee is an Advocate aged 65. The amounts disclosed as unaccounted professional income is admittedly gross receipt and not net. A.O. himself has allowed 25% towards expenditure out of amount disclosed as unaccounted professional receipts. The fact the assessee had declared only gross undeclared professional receipts is also evident from the A.O. s and CIT(A) s order. Assessee had disclosed gross undeclared professional income and A.O. estimated 25% of the expenditure incurred for earning the same. Section 44ADA permits a professional like the assessee to compute his total income on presumptive basis wherein 50% of the expenditure is allowed as deduction towards the gross receipts (provided the gross receipts does not exceed during the relevant assessment year more than Rs.50 lakh). In the instant case, admittedly, the gross professional receipts of the assessee during the relevant year exceeded Rs.50 lakh. Therefore, the assessee would not be governed by the provisions of section 44ADA of the I.T.Act. However, we can take a clue from the above said section, which permits a deduction of 50% gross receipts as expenditure. In the instant case, admittedly, since the AO and the CIT(A) had also taken the assessee s declaration as gross receipts from professional income, the figures arrived for arriving at the total income is only an estimation. The assessee , out of the undisclosed professional income would have certainly incurred expenses such as filing fees, clerkage charges, etc. On the facts of the instant case, we are of the view that the grant of 25% of the gross receipts towards expenses is very much on the lower side. In the interest of justice and equity, we are of the view that the expenditure of 40% towards the gross receipts should be allowed as deduction. Appeal filed by the assessee is partly allowed

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• 2022 (9) TMI 1248
  Disallowance of interest on estimated basis (50% of the total interest claimed in the profit on loss account) - interes disallowed on the ground that assessee has sufficient fund still the assessee has obtained loan - HELD THAT:- CIT (A) is trying to enter in the shoes of a businessman and decide when the businessman should take loan and when he should not take loan and use his own funds. It is settled law that such an exercise by the Revenue is not at all sustainable if the assessee has sufficient funds and it has not been diverted for activities which could not earn interest, disallowance cannot be made on the ground of prudence which should have been done in the opinion of the Revenue authorities. Hence, we are of the considered opinion that the order of ld. CIT (A) is not sustainable and accordingly we set aside the same on this issue. Funeral expenses - Assessee s claim was that the same was related for business inasmuch as expenditure represents payment mad to microfinance clients on the death of their family members. It was held by the Revenue authorities to be not related to the business of the assessee. In our considered opinion on the facts and circumstances of the case, this expenditure deserves to be allowed and same is directed to be allowed accordingly. Appeal of assessee allowed.

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• 2022 (9) TMI 1247
  Validity of Reopening of assessment u/s 147 - Reasons for the belief that income has escaped Assessment - disallowance of its claim of depreciation on dam/bridge on the ground that the said amount was even otherwise allowable as a revenue expenditure/deduction u/s.37 - HELD THAT:- Excess allowance of depreciation - Neither the misconceived and incorrect observation of the AO; nor his changed/new view as regards the entitlement of the assessee for depreciation on dam in absence of any provision of depreciation on dam in the IT Act would by any means fall within the realm of failure on the part of the assessee to disclose fully and truly all material facts which were necessary for its assessment for the year under consideration , which would have justifiably triggered the applicability of the second limb of the 1st proviso to Sec. 147 in the case of the assessee before us - though the AO had referred to the absence of any provision of depreciation on dam in the IT Act, but thereafter he had confined the reopening of the case on the aspect of excessive claim of depreciation on dam, for the solitary reason that the assessee having claimed 100 percent depreciation on dam was allowed excessive depreciation of Rs. 35.36 crore. As neither of the aforesaid observations of the AO would fall within the meaning of failure on the part of the assessee to fully and truly disclose all material facts which were necessary for its assessment for the year under consideration i.e AY 2008-09, therefore, its case on the aforesaid aspect would not fall within the four corners of the 1st proviso of Sec. 147 of the Act. Disallowance u/s.14A - As the assessee had came forth with full and truly disclosure of all material facts as regards its investments in shares and securities a/w a specific claim that no part of the expenditure was attributable to earning of the exempt income, therefore, it can safely be gathered that there was no failure on its part to disclose fully and truly all material facts necessary for its assessment in so far the aforesaid issue was concerned. As the aforesaid observation of the AO would by no means fall within the meaning of failure on the part of the assessee to fully and truly disclose all material facts which were necessary for its assessment for the year under consideration , therefore, the 1st proviso of Sec. 147 of the Act cannot be brought into play in its case. Allowance of additional depreciation - As observed by the A.O that as the assessee was engaged in the business of generation or generation and distribution of power which was eligible for additional depreciation contemplated in Section 32(1)(iia) of the Act only w.e.f. A.Y.2013-14, therefore, the additional depreciation so allowed to him for the year under consideration i.e. A.Y.2008-09 was liable to be disallowed. The aforesaid reason is in itself self-speaking of the fact that though there had been a full and true disclosure of all material facts on the part of the assessee qua the aforesaid issue as were necessary for its assessment, but the AO had on the basis of changed view sought to reassess the assessee on the said count. As the aforesaid view of the AO cannot be brought within the meaning of failure on the part of the assessee to fully and truly disclose all material facts which were necessary for its assessment for the year under consideration , thus, the extended time period provided in the 1st proviso of Sec. 147 i.e beyond a period of four years from the end of the relevant assessment year i.e AY 2008-09 could not have been availed by the AO for reopening the concluded assessment of the assessee company. Irregular disallowance of depreciation for pre-production period (before September) - As in the case before us the original assessment was framed by the A.O vide his order passed u/s.143(3), dated 31.12.2010, therefore, in absence of any income of the assessee chargeable to tax having escaped assessment for reason of failure on its part to disclose fully and truly all material facts necessary for its assessment, AO, as per the mandate of the 1st proviso to Sec. 147 of the Act could not have assumed jurisdiction for reopening the concluded assessment of the assessee beyond a period of four years from the end of the assessment year i.e beyond 31.03.2013. We, thus, concur with the claim of the Ld. AR that as the A.O had acted in defiance of the 1st proviso to Sec. 147 and had wrongly assumed jurisdiction and reopened the case of the assessee vide notice issued under Sec. 148, dated 23.08.2013 i.e beyond a period of 4 years from the end of the relevant assessment year, therefore, the assessment order so passed by him on the said count cannot be sustained and is liable to be struck down. We are of the considered view, that as claimed by the Ld. AR and, rightly so, as there had been no failure on the part of the assessee company to disclose fully and truly all material facts which were necessary for its assessment for the year under consideration i.e. A.Y.2008-09, therefore, the reopening of its concluded assessment de hors satisfaction of the said statutory requirement beyond a period of four years from the end of the relevant assessment year i.e. A.Y.2008-09 vide notice issued u/s.148 dated 23.08.2013 clearly militates against the mandate of the 1st proviso to section 147 - As the very assumption of jurisdiction by the A.O for reopening the concluded assessment of the assessee that was originally framed vide order passed u/s.143(3) dated 31.12.2010 smack of want of valid assumption of jurisdiction for framing of the impugned assessment u/s.143(3) r.w.s 147, therefore, we herein quash the assessment so framed by him. Assessee appeal allowed .

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• 2022 (9) TMI 1246
  Disallowance of deduction u/s 54F - acquisition of new asset was not supported by registered deed of purchase - CIT-A deleted the addition - whether or not the CIT(A) was right in law and the facts of the case in allowing the assesse s claim of having purchased a new residential house on the basis of an unregistered purchase agreement and consequently accepting his claim for deduction u/s.54F ? - HELD THAT:- As the assessee before us had vide an unregistered purchase agreement, dated 30.03.2015 purchased a residential house and, had made not only made the payment of the entire amount of purchase consideration to the seller amounting to Rs.2.91 Crore (approx.) out of his bank account with IDBI Bank, Branch : Raipur on 31.03.2015 (after deducting TDS ) and had taken the possession of the property, therefore, it can safely be concluded that he had duly satisfied the requirement of having purchased a residential house within the stipulated time period contemplated in Section 54(1) - We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(Appeals), who in our considered view had rightly vacated the disallowance of the assessee s claim for deduction u/s.54F uphold his order to the said extent. Thus, the Grounds of appeal No.(s) 1 to 3 raised by the revenue are dismissed in terms of our aforesaid observations. Whether CIT(Appeals) was right in allowing the assessee s claim of indexed cost of improvement, despite the fact that the same was not substantiated on the basis of supporting documentary evidence by the assessee before the lower authorities? - We finding no infirmity in the same are inclined to subscribe to the same. CIT(Appeals) in the backdrop of the ground realties i.e the purchase of sand, cement and incurring of labour expenses form part of an unorganized sector, had thus rightly observed that the fact that the assessee could not have obtained the purchase bills/receipts qua the incurring of the expenses could not be ruled out. As rightly observed by him that a conjoint perusal of the facts attending to the case of the assessee, viz. (i) that the assessee had vide a registered sale deed sold a double storied house; and (ii) that now when the assessee had placed on record the purchase bills of iron and steel, therefore, the fact of having incurred expenses towards purchase of other building material, viz. sand, cement and incurring of labour expenses could not be ruled out as otherwise the coming into existence of the double storeyed house would not have been possible. Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who had rightly allowed the assessee s claim for deduction of indexed cost of improvement, we, thus, uphold his order to the said extent. Thus, the Ground of appeal No.4 raised by the revenue is dismissed in terms of our aforesaid observations.

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• 2022 (9) TMI 1245
  Rejection of books of accounts - estimation of gross profit - HELD THAT:- CIT(A) noted that there is force in the arguments of the assessee that there is no fall in the GP of the post survey period. Assessee has shown overall GP of 17.14% as per tax audit report during the year under consideration and even otherwise, if the GP re-worked by the Assessing Officer is considered after adding the disclosure income which is business income in nature, and the GP ratio shall be Rs. 14.23% and the same is reasonable and in lines with average GP of succeeding years. Hence, ld CIT(A) considering these facts deleted the addition of Rs.3,51,57,284/- on account of low gross profit. We do not find any error in the above conclusion reached by ld CIT(A), hence we concur with findings of ld CIT(A) and dismiss the ground raised by the Revenue. Under valuation of excess stock found during the course of survey - HELD THAT:- CIT(A) observed that survey team has made a detailed working of valuation quality wise which was confronted to the assessee and on the basis of such efforts by the survey team, the declaration could be made. AO cannot be expected to brush aside the valuation done by survey team to enhance the valuation without pointing out any defect in the valuation done by survey team. CIT(A) held that there is force in the argument of the assessee that the issue of valuation is revenue neutral in as much the value of closing stock on the date of survey becomes the opening stock of the post survey period and the same is captured either in Sales with profit margin or in closing stock at same value and hence there is no effect on the profit and loss account per se - CIT(A) deleted the addition correctly - dismiss the ground raised by the Revenue. Addition on account of under valuation of chemical stock - HELD THAT:- AO cannot dictate the assessee to follow a particular method of valuation of closing stock without citing any cogent reason to do so. The assessee is consistently following the method of valuation in subsequent years also and the closing stock of colour and chemicals shall become the opening stock of the next year and hence there is no incentive for the assessee to choose a particular method. Hence, based on this factual position, ld CIT(A) deleted the addition - We note that ld CIT(A) has passed a reasoned and speaking order therefore we do not find any infirmity in the conclusion reached by him, hence we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. Addition on account of unaccounted purchase - CIT-A deleted the addition - HELD THAT:- CIT(A) observed that there is no mismatch as worked out by the AOr. AO has also not given any other evidence which proves that assessee has made any unaccounted purchases - CIT(A) deleted the addition Correctly. Based on the factual position stated above, we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. Unexplained cash credit - CIT-A deleted the addition - HELD THAT:- Unsecured loans from all the lenders as cash credit based on wrong appreciation of facts and law, hence ld CIT(A) has rightly deleted the addition - We confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. Nature of expenses - repair and maintenance of building - Unexplained capital expenditure - HELD THAT:- We note that assessee submitted various vouchers and bills relating to bajri, retti and cement expenses and we note that these expenses are incurred by the assessee for the purpose of current repairs and maintenance, hence such expenditure does not fall in the domain of capital expenditure, therefore we direct the Assessing Officer to treat it as revenue expenditure. Addition on account of late payment of PF and ESIC - HELD THAT:- We are of the view that the issue may be remitted back to the file of the Ld. CIT(A) to decide the matter after taking into account the judgment of the Hon ble Supreme Court as and when will be passed by the Hon ble Supreme Court. Therefore, this appeal at this stage is dismissed. However, if the Supreme Court reverses the judgment in the case of the Hon`ble Gujarat High Court in the case of CIT vs. GSRTC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT ] it would be open for the assessees to revive this appeal by filing an application for such purpose within three months from the date of the judgment.

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• 2022 (9) TMI 1244
  Additions u/s.68 - unexplained cash credits in the form of unsecured loans - HELD THAT:- We concur with the view taken by the CIT(Appeals) that as not only the assessee had duly substantiated the authenticity of the transaction to the hilt on the basis of supporting corroborative documentary evidences, but it is also a fact to which we cannot be oblivion that the A.O in the present case before us had except for harping upon certain unsubstantiated allegations, had however, failed to placed on record any such material which would have refuted the authenticity of the documents that were placed on record by the assessee before him to drive home its claim of having raised genuine loans in question. We are pained to find that the A.O had not even thought it fit to refer to the material which was placed on record by the assessee in support of his aforesaid claim of having raised authentic loans from the aforementioned lenders. Accordingly we, finding no infirmity in the view taken by the CIT(A) who had rightly vacated the characterization of the loans raised by the assessee company from the aforementioned seven lenders as unexplained cash credits u/s.68 uphold the same. Thus, the Grounds of appeal raised by the revenue are dismissed in terms of our aforesaid observation - Decided against revenue.

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• 2022 (9) TMI 1243
  Maintainability of appeal - Monetary limit - Penalty u/s 271(1)(c) - HELD THAT:- We find that similar issue arose for consideration before the Co ordinate Bench of the Tribunal in appeal in DCIT v/s Aluvind Architectural Pvt. Ltd [ 2021 (4) TMI 1340 - ITAT MUMBAI] wherein the Tribunal, while deciding the issue in favour of the tax payer. As tax effect on the amount disputed by the Revenue in the present appeal is below the revised monetary limit of Rs.50 lakh, as per CBDT Circular no. 17/2019, dated 08/08/2019, r/w CBDT Circular no.3/2018, dated 20/08/2018. In view of the aforesaid, Revenue s appeal deserves to be dismissed.

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• 2022 (9) TMI 1242
  Rate of tax - 20% or 30% - share of depreciable assets - applicability of section 50 - use of assets more than thee years / long term assets - HELD THAT:- Provisions of section 50 of the Act provides for procedure for computation of capital gains in case of transfer of capital asset which forms part of block of assets and in respect of which depreciation has been allowed under the Act. Therefore, only for this limited purpose, the capital gains arising from transfer of the assets, as covered in section 50 of the Act, is treated as capital gains arising from transfer of short term capital assets. Further, section 50 of the Act also clarifies that the same is restricted for the purpose of provisions of section 48 and 49 of the Act which, inter alia, deals with mode of computation of capital gains. We find that similar issue arose for consideration before the Co ordinate Bench of the Tribunal in Smita Conductors Ltd. ( 2013 (9) TMI 1056 - ITAT MUMBAI] wherein it was held that even in case where capital gain has been computed under section 50 of the Act, tax rate applicable will be the rate in respect of the long term capital gain in respect of property held for more than three years. Section 50 of the Act, which is a special provision for computing the capital gains in the case of depreciable assets, is not only restricted for the purposes of Section 48 or Section 49 of the Act as specifically stated therein and the said fiction created in sub section (1) (2) of Section 50 has limited application only in the context of mode of computation of capital gains contained in Section 48 and 49. See V.S. DEMPO COMPANY LTD. [ 2016 (10) TMI 62 - SUPREME COURT] In the present case, it is not the plea of the Revenue that the property from which the capital gains arose was held by the assessee for less than three years. The Assessing Officer only by application of provisions of section 50 of the Act treated the gains as arisen from transfer of short term capital asset and hence applied the rate of tax @ 30% as applicable in case of short term capital gain. Therefore, respectfully following the aforesaid judicial precedents, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed.

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• 2022 (9) TMI 1241
  Capital gain computation - assessee company had acquired the business of two companies on slump sale basis without assigning any values to individual assets or liabilities - AO has taken the value of assets of the two companies that were taken over by the assessee at the WDV of the assets as on 31.03.2007 on the ground that the copy of the audited financial statements of M/s. Ferico Laboratories Pvt.Ltd. was not submitted and the assessee has not filed any valuation report - HELD THAT:- The appeal for the AY 2008-09 is still pending before the ld.CIT(A) for adjudication. The outcome of the appeal for the AY 2008-09 in our opinion will have a bearing on the out come of this appeal. Since the appeal for AY 2008-09 is still pending before the ld.CIT(A) and the ld.CIT(A) has passed a very cryptic order, therefore, considering the totality of the facts of the case and in interest of justice, we deem it proper to restore the issue to the file of the ld.CIT(A) with a direction to admit the additional evidences, which has got a bearing on the outcome of this appeal and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. While doing so, he shall also keep in mind how the valuation report dated 02.07.2007 was prepared when the separate business Transfer Agreements are dated 16.05.2007 and therefore, whether such valuation report is a colourable device/sham instrument and self serving document. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2022 (9) TMI 1240
  TDS on the reimbursement of Leave Fare Concession in view of Section 10(5) and Rule 2B - Whether expenditure incurred on foreign LFC was not except? - notice u/s 201(1)/201(1A) of the Act issued to the assessee - assessee mainly contended that as per Section 10(5) of the Act read with Rule 2B of Income Tax Rules, the LFC (Leave Fare Concession) has to be only to a designated place in India and the same has been complied with - HELD THAT:- The issue involved in the Assessment Year 2013-14 and that of the present appeal are similar in nature, i.e. whether assessee is liable for deduction of TDS on the reimbursement of Leave Fare Concession in view of Section 10(5) and Rule 2B of the Act or not? The said issue is already under consideration by the Hon ble Supreme Court which will be binding on the revenue and also on the assessee. Since the Ld. A.O has to give effect to the order that would be passed in Special Leave Appeal [ 2022 (7) TMI 1323 - SC ORDER] in respect of A.Y 2013-14 in Assessee s own case, we deem it fit to restore the issue also (for A.Y 2016-17) to the file of A.O. to consider the same after disposal of the Special Leave Appeal and decide same in compliance with outcome of the order of the Hon ble Supreme Court. Therefore, the issue involved in the present appeal is restored to the file of the A.O. to decide the same after disposal of Special Leave Appeal. Appeal of assessee allowed for statistical purpose.

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• 2022 (9) TMI 1239
  Revision u/s 263 by CIT - advances received from customers and capitalization of project expenses - HELD THAT:- Admittedly, it is an undisputed fact that assessee has disclosed advances received from customers in its audited balance sheet on the date of 31.03.2016 and 31.03.2017 - It is a rudimentary knowledge of accountancy that balance sheet is prepared with the balances in the books of accounts taken at a particular point of time, which is 31.03.2017 in the present case and a statement of assets, liabilities and capital of a business or an organization is prepared depicting financial picture at a particular given point in time Balance sheet gives the whole picture which is a cumulative reflection of the assets, liabilities and capital on a particular date. The amount of advance from customers reported in the balance sheet as on 31.03.2017 for an amount of Rs. 3,72,77,107/- signifies the amount received from customers as advance upto the date of 31.03.2017 when the said balance sheet was drawn. Thus, this balance as on 31.03.2017 is inclusive of Rs. 20 lacs which was received by the assessee in the period prior to the financial year 2016-17 for which the balance was drawn as on 31.03.2016 wherein the advance received from customers till that date was reported at Rs. 20 lacs in that balance sheet prepared as on 31.03.2016. Lack of such a rudimentary knowledge of accountancy for reading a balance sheet and thereby invoking the revisionary proceedings by holding that Rs. 20 lacs has been understated is not appreciated. Project expenses in the tax audit report - Assessee has accounted for cost of purchases of raw material under an inclusive method but since there has been no sale during the year, the entire project expenses have formed part of the closing stock/work in progress taken on the income side of the profit loss account. Thus the VAT component is on both sides of the P L A/c, on the debit side included in the cost of purchases and on the credit side in the closing stock. Therefore, there is no loss to the revenue on this account. Even if, by adopting the exclusive method of accounting, the VAT component is removed from the cost of purchases then at the same time, it will get removed from the closing stock/work in progress, making it revenue neutral. From the above factual matrix of the two issues raised by the ld. PCIT, we find that ld. PCIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act. We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by various decisions. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. We find that the two issues in the present case are purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of the assessee reveals the correct state of their affairs in respect of the two issues raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position. Accordingly, on the issues raised by the Ld. PCIT in the revisionary proceedings, no action u/s 263 of the Act is justifiable which in our considered view cannot be sustained - Decided in favour of assessee.

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• 2022 (9) TMI 1238
  Disallowance u/s 14A read with 8D - absence of any exempt income - HELD THAT:- Going by the language employed in section 14A of the Act, the possession which emerges is that whether the assessee has not earned any exempt income, there cannot be disallowance of the expenditure as it would resulting imposing tax on hypothetical income which is wholly impermissible in law, in view of the decision rendered by various High Courts as well as Tribunal. As noted that while deciding the issue, CIT(A) relied on the judgement in the case of CIT vs Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER] filed by the revenue against the judgement of Hon ble Delhi High Court [ 2018 (2) TMI 1861 - DELHI HIGH COURT] by relying upon the decision in the case of CIT vs Essar Teleholdings Limited [ 2018 (2) TMI 115 - SUPREME COURT] - The Hon ble Delhi High Court had rules that, in absence of any exempt income, disallowance u/s 14A of the Act of any amount was not permissible. In arriving at this conclusion, the Hon ble Delhi High Court had relied upon its earlier decision in the case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] . The above proposition of law has been well accepted by various courts and as such we do not want to interfere in the order passed by the CIT(a) and following the decision of Co-ordinate Bench in the case of ACIT vs K. Raheja Corporate Services Pvt. Ltd. [ 2022 (7) TMI 1044 - ITAT MUMBAI] . Appeal of the revenue is dismissed.

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• 2022 (9) TMI 1237
  Non-speaking order passed by CIT- A - Dismissal of assessee s appeal summarily for non-prosecution - HELD THAT:- In the present case, we note that the Ld. CIT(Appeals) passed a non-speaking order and dismissed the appeal of the assessee summarily without discussing the merits of the case and the issues for consideration and the grounds of appeal raised by the assessee. However, we also note that adequate opportunity was not given to the assessee to present his case on merits (as many as 6 opportunities were provided by Ld. CIT(Appeals)). Therefore, in the interests of justice, we are restoring the file to Ld. CIT(Appeals) to decide the appeal afresh, after giving due opportunity of hearing to the assessee to present his case on merits. However, in the instant case we have also noted that despite several opportunities, the assessee neither caused appearance before Ld. CIT(Appeals) and for which assessee has not been able to produce any convincing reason. Respectfully following the decision of Shri Vipul V. Dhakan [ 2022 (5) TMI 1455 - ITAT RAJKOT] cited by the assessee before us, and in the interests of justice we are setting this matter back to the file of the Ld. CIT(Appeals) subject to the condition that the assessee shall deposit cost of Rs. 1,000/- with the Department within 60 days from receipt of this order.

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• 2022 (9) TMI 1236
  Assessment u/s 144C - AO passed a draft assessment order - constitution of dependent agent PE and taxability of royalty income under Article 7 of India UK DTAA - Whether there was no variation in income returned by the appellant and, therefore the impugned order passed by the AO is void ab initio and, therefore, is liable to be quashed? - HELD THAT:- We find that the Assessing Officer has only recharacterized the income which was shown as royalty income by the assessee and was taxed as business income by the Assessing Officer without there being any variation in income returned by the assessee. In our understanding of the provisions of section 144C of the Act mentioned hereinabove, we are of the considered view that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Act when there is no variation in the income returned by the assessee. See IPF INDIA PROPERTY CYPRUS (NO. 1) LTD. [ 2020 (2) TMI 1500 - ITAT MUMBAI] We hold that the AO wrongly assumed jurisdiction u/s 144C of the Act, and therefore, the final assessment order framed in Assessment Years 2007-08 and 2010-11 to 2015-16 are barred by limitation and accordingly, the impugned assessment orders are liable to be quashed as void ab initio. This additional ground is, accordingly, allowed. Determination of income - consideration for use of brand [ie for Royalties ] in India as liable td tax Tat 40% as Business Income under Article 7 instead of being liable to tax as Royalties [at 15%] under Article 13 of DTAA between UK and India - assessee moved an application u/r 29 of the ITAT Rules requesting for admission of additional evidences - HELD THAT:- It is true that the entire assessment has been based on the reading of the trade mark license agreement dated August 08, 2002. It is equally true that supplementary trade mark licence agreement dated April 04, 2013 changes the color of the entire transaction. Such an agreement which goes to the root of the matter cannot be brushed aside lightly. Therefore, in the interest of justice and fair play and as contended by the ld. DR, we deem it fit to restore the entire quarrel to the file of the Assessing Officer. AO is directed to consider the agreement dated April 04, 2013 and decide the issue afresh after giving reasonable and adequate opportunity of being heard to the assessee. Thus, ITA is allowed for statistical purposes.

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• 2022 (9) TMI 1235
  Accrual of income - Addition being notional premium receivable on preference shares as income of the assessee - HELD THAT:- As rightly pointed out by assessee, the payment of redemption premium can be only out of profits of the company or out of reserves. Even if one were to be regarded the premium as akin to dividend, the assessee cannot claim dividend as a matter of right and it is for the directors of the Company to declare dividend which needs to be approved by the shareholders in an Annual General Meeting (AGM). By no stretch of imagination can it be said that the preference shares issued by the assessee is in the nature of equity. It is only when the assessee has a right to receive periodic payments can it be said that income has accrued to an assessee under the mercantile system of accounting. If the sum paid by the assessee is loan and as per the terms of the loan agreement, certain rate of intereset is payable by the borrower every year then it can be said that under the mercantile system of accounting, interest accrues to the assessee as income, irrespective of actual receipt of payment. In the case of preference shares, such an inference cannot be drawn and the repayment of the face value of the preference shares as well as the premium on redemption is uncertain. In such circumstances, the action of the Revenue authorities in making the impugned additions cannot be sustained. We, therefore, hold that the income brought to tax by the Revenue authorities cannot be sustained and the said addition is directed to be deleted. Whether the revenue authorities can overlook the legal effect when a person holds cumulative preference shares and treat as loan instrument rather than a share capital/equity instrument? - The revenue authorities cannot disregard the legal effect of issue of cumulative preference shares and say that the same is akin to debt and therefore the cumulative preference shares which is a capital instrument is a debt or in the nature of debentures. The decision of ENAM SECURITIES (P.) LTD. [ 2012 (5) TMI 257 - BOMBAY HIGH COURT] is a complete answer to the question that the revenue authorities cannot disregard the legal effect of a document evidencing a debt and that which evidences holding shares in a limited liability company. The legal consequences thereof cannot be ignored and a share characterized as a debt instrument. Such a course is permissible under the thin capitalization rules which were introduced w.e.f. 1.4.2018 by virtue of the provisions of Sec.94B of the Act, but those provisions are applicable only in the case of transactions with Associated Enterprise which is not a tax resident of India. It is a common practice among multinational companies globally to lessen their tax outgo by resorting to extensive use of legal arrangements for parking profits in low or no-tax jurisdictions, formally coined as base erosion and profit shifting (BEPS). One of the simplest profit-shifting techniques available in international tax planning is by way of interest payments and therefore, specific Action Plan, viz., Limiting Base Erosion Involving Interest Deductions and Other Financial Payments ( BEPS Action Plan 4 ) has been devoted by the OECD to tackle BEPS through payments in the nature of interest and payments economically equivalent to interest. In BEPS Action Plan 4, OECD has set out the best practice approaches for countries to prevent erosion of their tax base by way of excess interest deductions claimed by multinational group entities. BEPS Action Plan 4 is focused on the use of third-party, related-party, and intra group debt to obtain excessive deductions or to finance the production of exempt or deferred income. Adopting the recommendations of BEPS Action Plan 4, India introduced section 94B in the domestic tax law, viz., Income-tax Act, 1961 ( the Act ), as an anti-tax avoidance provision to restrict deduction of interest paid to non-resident associated enterprises (AEs). As already stated, the said provisions are applicable only when interest is paid to non-resident associated enterprises and such a feature is absent in the present case. Application of the provisions of Sec.14-A - . The law is clear that premium on redemption is exigible to tax under the head Income from Capital Gains as laid by the Hon ble Supreme Court in the case of Anarkali Sarabai [ 1997 (1) TMI 5 - SUPREME COURT] and Karthikeya Sarabai [ 1997 (9) TMI 2 - SUPREME COURT] and is not exempt from tax. Further the investment in preference shares is to be regarded as an investment in an unlisted and unquoted security and is therefore definitely exigible to tax. Section 14A comes into play only in the case of investment, income from which, is completely exempt from tax. Hence the question of any disallowance u/s 14A in respect of interest paid on loans, which are utilised to make the investment, is to be allowed as a business expenditure. If the same is claimed and allowed as a business expenditure, the same cannot be treated as part of cost of investment and be allowed for indexation while determining cost at the time of redemption of the shares. Therefore, the disallowance cannot be sustained even by application of the provisions of Sec.14-A of the Act. We hold that the Revenue authorities were not justified in adding a sum being notional premium receivable on preference shares as income of the assessee. The appeal of the assessee is accordingly allowed. Interest on delayed remittance of TDS - Whether such interest partakes the character of tax and hence is not an allowable deduction? - HELD THAT:- In so far as the nature on the interest on delayed remittance of TDS is concerned, this Tribunal has been taking a consistent view following the decision of the Hon ble Madras High Court in the case of CIT Vs. Chennai Properties and Investments Ltd.[ 1998 (4) TMI 89 - MADRAS HIGH COURT] that interest paid takes colour from the nature of principal amount required to be paid but not paid in time and this principal amount being income tax, interest was also in the nature of direct tax and cannot be regarded as a compensatory payment and allowed as business expenditure. Thus we reverse the order of the CIT(A) in so far as it relates to the sum being remittance of delayed TDS and hold that the said sum is not an allowable deduction. Admission of additional evidences by CIT-A - Whether CIT(A) ought to have remanded additional evidences w.r.t. disallowance of trade payable made by the AO before admitting and accepting the same? - HELD THAT:- Rule 46A(1) lays down that additional evidence shall be admitted by the CIT(A) only for reasons stated therein and Rule 46A(2) lays down that only after recording in writing reasons for admitting additional evidence, can additional evidence be admitted. Further, Rule 46A(3) specifically provides that CIT(A) shall not take into account any additional evidence produced under Rule 46A(1) of the Rules unless AO has been allowed reasonable opportunity to examine the additional evidence to produce evidence in rebuttal. Thus, in the present case, there is a clear violation of the mandate laid down in Rule 46A(3) of the Rules. Whether under 46A(4) of the Rules, the CIT(A) can call for additional evidence on his own to decide the controversy in appeal and in such event, he need not follow the requirements of 46A(3) of the Rules? - As we find that the CIT(A) in the present case has not called for additional evidence on his own and it has been produced only by the assessee before the CIT(A). In such circumstances, we are of the view that the assessee cannot place reliance on the decision of the Hon ble Karnataka High Court in the case of CIT Vs. Sam Family Trust (supra). In the given facts and circumstances of the case, we are of the view that it would be just and appropriate to set aside the order of the CIT(A) on the issue raised in ground 2 to the AO for fresh consideration with a direction to the AO to consider the additional evidence filed by the assessee before CIT(A) and also such other evidences the assessee may seek to rely on in support of its claim. Appeal of the assessee is allowed while appeal of the Revenue is partly allowed.

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• 2022 (9) TMI 1234
  Unexplained money u/s 69A - unexplained deposits - HELD THAT:- As there was no cash involved in inter-banking deposit or rejection of return of cheques. The bank details have been submitted before us and it is seen that ICICI Bank out of total bank transaction except for an amount in respect of rejection of cheque, the remaining amount was on account of transfer of funds from Majumder Hosiery the proprietorship concern of the appellant. The details of the date wise transfer with narration and amount is seen to be matching with the bank entries as per record and therefore there is not discrepancy in the matter as alleged. As in respect of ICICI Bank and Bandhan Bank out of inter-bank transactions details of date wise transfer with narration and amount is seem to be matching with the bank entries and there are no discrepancies found as alleged by the AO in his order. The view taken by the AO in respect of impugned addition as unexplained deposit u/s 69A of the Act was deleted by the ld. CIT(A) since assessee clearly explained the transaction by furnishing details of date-wise transfer with narration and amounts are matching with bank entries and no discrepancies found in the transactions and therefore, we do not want to interfere in respect of this issue and view taken by the ld. CIT(A) is affirmed. Addition on account of realization from sundry debtors account from the order - The books of accounts were not disturbed and on the settled principle that once books of assessee are not rejected and explanation furnished is reasonable no addition can be made. The ld. CIT(A) also relied on the various decisions pronounced by the Hon ble High Court as well as Hon ble Apex Court and stand taken by the AO was deleted. We also going through the facturl matrix of the case, we do not want to interfere in the findings given by the ld. CIT(A) since one goods have been sold the buyer became the debtor and such in respect of money from him is nothing but realization of such debt. As such section 68 cannot be applied in the case of assessee and the addition made by the AO stand deleted by the ld. CIT(A) and we do not want to interfere in the order passed by the ld. CIT(A) in respect of this issue and ground taken by the revenue is dismissed. Unexplained deposits - On perusal of the assessment order as well as the order passed by the ld. CIT(A), we noticed that the AO never rejected the books of accounts of the assessee and without rejecting the books of accounts, the addition made by the AO cannot be sustained and it is settled principle of law that without rejecting books of accounts, the addition made by the AO cannot be sustained and as such the addition confirmed by the ld. CIT(A) is hereby deleted. Appeal of assessee allowed.

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• 2022 (9) TMI 1233
  TP adjustments towards AMP expenditure pertaining to trading segment AND reimbursement of warranty expenses to AE - separate international transaction or not? - HELD THAT:- The warranty expenses and AMP expenses have been considered as part of operating cost for the purpose of computing the margins of the assessee. We also notice from the order passed under section 92CA of the Act that the TPO has not made any adjustments towards the margin of trading segment thereby accepting the ALP analysis of the assessee with regard to trading segment. We hold that the AMP expenses and warranty expenses cannot be treated as a separate international transaction when the TPO has not otherwise rejected the margins of the assessee in the trading segment. Therefore, the adjustments made in this regard is deleted and the appeal is allowed in favour of the assessee.

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• 2022 (9) TMI 1232
  Revision u/s 263 by CIT - a report from DDIT (Investigation) Kolkata with respect to price manipulation of penny stock but the AO did not consider the same - As per CIT, assessment order has been passed by AO without making inquiries or verification with respect to the deduction/exemption claimed under section 10(38) - HELD THAT:- Phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue. Now coming to the facts of the case before us, we note that the AO during the course of assessment proceedings, has made enquiries on this issue and after consideration of written submissions filed by the assessee and documents / evidence placed on record. Thereafter, the AO framed the assessment under section 143(3) of the Act accepting the return of income. It is not the case that the AO has not made enquiry. Indeed, the Pr. CIT initiated proceedings under section 263 of the Act on the ground that the AO has not made enquiries or verification which should have been made in respect of exemption claimed under section 10(38) of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, the Ld. AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. We thus find no error in the order of Ld. AO so as to justify the initiation of 263 proceedings by the Ld. Pr. CIT. assessee is thus allowed. No error in the assessment framed by the AO under section 143(3) causing prejudice to the interest of revenue. Thus, the revisional order passed by the learned principal CIT is not sustainable and therefore, we quash the same. Hence the ground of appeal of the assessee is allowed.

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• 2022 (9) TMI 1231
  Addition u/s 45(3) - assessee has contributed land as contribution towards capital in the partnership firm - determination of cost of acquisition - HELD THAT:- The purchase cost of the said part of the land was determined at Rs.3,43,12,394 as against the purchase cost computed by the assessee at Rs.4,60,75,840. The assessee contended that the Assessing Officer had not taken into consideration, the improvement cost accepted by the revenue determined from year to year in the past while computing the proportionate cost of the land. AO had not considered the relevant evidences and documents furnished at the time of assessment proceedings. In this regard, we direct the AO to follow the direction of the CIT(A) to verify the sum capitalised by the assessee and considered the correct cost of acquisition as accepted by the Revenue in the preceding years and recompute the capital gains accordingly. Therefore Ground of the assessee is allowed for statistical purposes. Applicability of provisions of section 45(3) or provision of section 50C of the Act in the case of the assessee - Section 45(3) is the specific provision which states that profit or gain arising from the transport of the capital asset by a person to a firm or other association of persons or body of individual (not being a company or a co-operative society) in which he becomes a partner or member by way of capital contribution shall be chargeable to tax as his income for the previous year for which such transfer takes place. For the purpose of section 48, the amount recorded in the books of accounts of the firm as capital asset shall be deemed to be full value of consideration received or accrued as a result of the transfer of capital assets. Hon ble Supreme Court in the case of Pr. CIT Vs. Dr. Ramamurthy ( 2018 (9) TMI 1102 - SC ORDER ) held that for the purpose of computing capital gain u/s.45(3) of the Act, value of assets recorded in the books of account of a firm on date of transfer would be deemed to be full value of consideration received or accrued as a result of transfer. In the case of DCIT Vs. Amartara Pvt. Ltd. [ 2020 (4) TMI 222 - ITAT MUMBAI] it is held that profit or gains arising from the transfer of capital asset by a partner to a firm in which he become a partner by way of capital contribution, then for the purpose of section 48, the amount recorded in the books of accounts of the firm shall be deemed to be full value of consideration received or accrued as a result of transfer of capital asset. - Decided in favour of assessee.

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• Customs

• 2022 (9) TMI 1230
  Seeking provisional release of the vehicle - Issuance of summons under Section 108 of the Customs Act, 1962 - Section 110A of Customs Act - HELD THAT:- This Court is unaware as to the identity or otherwise of the facts in the present case with the facts in the case dealt with by the Telangana High Court. That apart, the order of provisional release dated 29.12.2021 has also, as on date, become final. However, there is no bar and Mr.Sundareswaran would agree with me on this, for the petitioner to seek modification of the conditions imposed by the Commissioner and attempt to persuade the Commissioner to vary the conditions imposed originally. As far as the present Writ Petition is concerned, much water has flown under the bridge from the time of issuance of seizure memo, with which this Writ Petition has been rendered infructuous - Petition closed.

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• 2022 (9) TMI 1229
  Condonation of delay of 5 days in filing appeal - applicability of time limitation - it is claimed that the date mentioned is just and inadvertent error - HELD THAT:- On perusal of the impugned order, it is noted by the Commissioner (Appeals) that the Order-in-Original is signed by the adjudicating authority on 06.04.2015. Merely because the appellant had mentioned the date of receipt of the order in Form C.A.1 as 09.03.2015, the Commissioner (Appeals) has blindly accepted this date for computing the period of limitation. When it is obvious that the date mentioned in Form C.A.1 is an inadvertent error, the Commissioner (Appeals) ought to have considered the argument put forward by the appellant with regard to the error committed by them. The OIO having been signed on 06.04.2015 and the impugned order having been received by the appellant only on 09.06.2015, when computed from the date of receipt of the impugned order, the appeal ought to have been filed on 08.08.2015. The appeal is filed on 13.08.2015 with a delay of 5 days which is within the condonable period of limitation. The matter requires to be remanded to the Commissioner (Appeals) who shall give an opportunity to the appellant to file an application for condonation of delay in filing the appeal - Appeal is allowed by way of remand.

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• 2022 (9) TMI 1228
  Seeking provisional release of confiscated goods - Confiscation - redemption fine - penalty - import of used Digital Multifunctional Printers / Devices (MFDs) - prohibited goods or not - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20 - mis-declaration of value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962. HELD THAT:- Reliance placed in the decision of the Hon ble Apex Court in M/s. Delhi Photocopiers [ 2021 (8) TMI 1244 - SUPREME COURT] , where it was held that The goods involved in these petitions, are allowed to be provisionally released on the same terms that have been indicated in all the other cases. In the light of the decision of the Hon ble Apex Court in the case of M/s. Delhi Photocopiers and the fact that the First Appellate Authority has not brought on record any peculiar / distinguishing facts which were not available in respect of other assessees-appellants who are in appeal before the First Appellate Authority, the impugned order as to remand is not sustainable as the same suffers from inconsistency - the Revenue s appeals are liable to be dismissed and the cross objections filed by the respondent are required to be allowed. Appeal dismissed - decided against Revenue.

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• 2022 (9) TMI 1227
  Seeking provisional release of seized goods - import of used Digital Multifunctional Printers / Devices (MFDs) - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20 - non-production of Chartered Engineer certificate in complete - failure to comply with the conditions imposed under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - HELD THAT:- Reliance placed in the case of THE COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KUTTY IMPEX [ 2022 (9) TMI 1049 - CESTAT CHENNAI] , wherein it was held that the First Appellate Authority was correct in allowing the appeal thereby ordering provisional release of the goods in question, and since there is no change in the facts, the same is required to be followed in the case on hand as well. Following the above ratio decidendi, therefore, the appeals of the Revenue are dismissed.

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• 2022 (9) TMI 1226
  Smuggling - 3 Kgs of smuggled Gold Bars - foreign origin goods or not - reliability of statements - whether the compliance of 138 B of the Customs Act, 1962 was mandatory and that as to whether the non-compliance thereof amounts to no evidence on record to disprove the allegations of show cause notice? - HELD THAT:- Perusal of Section 138B of Customs Act makes it clear that it is mandatory on the adjudicating authority to examine the witnesses before itself prior relying upon the statement irrespective it has not been so asked by the party whose statement has been recorded or who is relying upon the said statement - These are the observations of this Tribunal in the case of M/S. ANIL GADODIA VERSUS C. C-NEW DELHI (PREV) [ 2020 (4) TMI 82 - CESTAT NEW DELHI] . No doubt department has also relied upon a decision of Kerala High Court where denial of cross examination of witnesses was upheld. But perusal reveals that in that case the cross examination of departmental officers was denied on the ground that those are the officers who assessed, audited and examined the import consignment and on the ground that show cause notice has not relied upon any of those statements but has been issued on the basis of the documents. Hence the said decision do not appear to squarely cover the present case. There are no reason to differ from the decision in the case of M/s. Anil Gadodia. As the result thereof it is held that statement of Shri Ankit Bansal cannot be read into evidence. For the same reason the statements even of Shri Pankaj Tayal and Shri Vivek Aggarwal as relied upon by the learned Counsel for the appellant are held not to be admissible into evidence. From the Panchnama, it is clearly apparent that three gold bars were seized being packed in the paper having marking KOLHAPUR GOLD LAB by the Customs Preventive Officers from Shri Ankit Bansal having inscription RAND REFINERY LTD, SOUTH AFRICA . This perusal is sufficient to hold that no error has been committed by the department by reasonably believing the seized good to be the gold of foreign origin. Such an inscription has otherwise not been disputed by the appellant even at the stage of making final submissions - Mere production of delivery challan on the record at subsequent stage is highly insufficient to prove that the said delivery challan was in possession of Shri Ankit Bansal at the time he was intercepted with three gold bars. It was purely for the appellant to prove that the gold was not smuggled and that Shri Ankit Bansal was legitimately possessing the said gold which otherwise was not of foreign origin. The invoices, purchase register, stock register, delivery challan have failed to prove that the gold in question was lawfully purchased by the appellant that too of such a purity which was more than 995. The possibility of all these documents to be subsequently created cannot be ruled out. This inference gets support from the fact that the delivery challan as is mentioned to have been given to Shri Ankit Bansal was not found during his personal search, nothing cogent has been brought on record to prove that the said challan was with Shri Ankit Bansal at the time of search and the seizrue of the gold. In the light of above discussion, even if the statements of the witnesses are not looked into due to the non-compliance of Section 138 B of Customs Act, 1962 but the documents on record are held insufficient to prove the appellant s case. The onus of appellant to prove that the goods were not smuggled goods stands un-discharged. The allegations in the show cause notice are held to have rightly been accepted by the adjudicating authorities below. The confiscation of 3 gold bars is held to have rightly been confirmed - there are no infirmity with the order of imposition of penalty upon Shri Mukul Aggarwal. As far as Shri Ankit Bansal is concerned, he being the possessor of the gold was equally responsible, in terms of the provisions of Customs Act, to have all genuine documents proving the valid possession of the gold having foreign mark with him. There are no infirmity in the order imposing penalty even on Shri Ankit Bansal. Appeal dismissed.

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• 2022 (9) TMI 1225
  Seeking provisional release if seized goods - import of used Digital Multifunctional Printers / Devices (MFDs) (second hand goods) - to be classified under CTH 84433100 or not - non-compliance with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012 - failure to obtain DGFT authorization as required for the import of second hand goods - misdeclaration of value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962 - HELD THAT:- The ratio of tdecision of the Hon ble Apex Court in the case of M/S DELHI PHOTOCOPIERS VERSUS THE COMMISSIONER OF CUSTOMS (GR. 5) CHENNAI II ORS. [ 2021 (8) TMI 1244 - SUPREME COURT] has been followed in the case of THE COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KUTTY IMPEX [ 2022 (9) TMI 1049 - CESTAT CHENNAI] , wherein it was held that the First Appellate Authority was correct in allowing the appeal thereby ordering provisional release of the goods in question, and since there is no change in the facts, the same is required to be followed in the case on hand as well. The appeal of the Revenue is dismissed.

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• 2022 (9) TMI 1224
  Penalty u/s 112(b)(i) of the Customs Act 1962 - smuggling - Gold Bars - reliability of statements of persons recorded in impugned matter - HELD THAT:- Upon perusal of these statements nowhere it has been found that the Appellant had knowledge about the use of fund in smuggling of gold. It is admitted fact that Appellant has financed the fund against the security of blank cheques and amount financed in June 2014 was also adjusted by the Appellant against the purchase of one plot in Akshar Industrial Estate, Ahmedabad from Shri Rutugna Trivedi. Detail of the said transaction alongwith ledger also submitted by the Appellant to the investigation authority during the investigation. From the evidence available on record and statement of Appellant it is clear that he was engaged in normal course of his business of lending the fund. The business activity of financing of fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on the part of the person has to be established. From the above statement of Appellant it is also clear that he had not confessed in his statement that he had knowledge about use of the funds provided to Shri Rutugna for alleged smuggling of gold activity. The evidence on record is not sufficient to hold that the appellant was involved in alleged activity of smuggling of gold. It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated with material particulars by independent evidence. The statement of co-accused cannot be used against the appellant, particularly when appellant has denied his involvement in respect of the goods in question - The evidence brought out by the department nowhere suggests that the appellant was aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1223
  Levy of penalty u/s 112(b)(i) of the Customs Act 1962 - petitioner has any role in the smuggling of Gold activity or not - Appellant is the financer of the importer - HELD THAT:- On going through the statements of persons recorded in impugned matter, nowhere it has been found that the Appellant had knowledge about the use of fund in smuggling of gold. Appellant has financed the fund against the mortgage of properties owned by Shri Mehul Bhimani, Shri Jitendra Rokad, Ms.Hina Rutugna Trivedi and Shri Rutugna Trivedi. Details of the property mortgaged to lenders were also furnished by the Appellant to the investigation authority during the investigation. It is also fact that Airport Intelligence Unit did not find incriminating documents against the Appellant to show prima facie that the Appellant financed money for smuggling of gold into India. Even no evidence whatsoever was found to substantiate the finding of the Respondent that the Appellant financed to Shri Rutugna Trivedi for smuggling of gold. Admittedly, the appellant is only arrange the finance in their regular course of business, appellant did not deal with alleged gold smuggling activity in question. Facts borne on record revealed that the appellant has maintained all along that it never had the possession of the impugned goods nor was in any way concerned with the carrying, removing, etc., of the consignments in question and hence, it was beyond their comprehension that the goods in question were per se liable for confiscation under Section 111(d) ibid - Undisputed peculiar facts of the case are that the appellant is neither the importer nor the owner who had acquired possession nor in any way concerned with the carrying, removing, etc., of the goods in question, and Revenue has nowhere ascribed knowledge of the appellant as to the confiscation. Penalty under Section 112(b) can be imposed when a person acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111. It is submitted that it is not the case of the Revenue that the Noticee was indulged in any of the activities as mentioned under Section 112(b) of the Customs Act. As the Appellant did not acquire possession of or in any way concern with import of gold, penalty under Section 112(b) ought not to have been imposed. It is found that the appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him. It is now well established that mens rea is an important ingredient for imposing a penalty on the persons enumerated in Section 112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellants were aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable imposition of penalty under Section 112(b) of the Customs Act, 1962 - the penalty is set aside - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1222
  Maintainability of appeal - non-compliance with the requirement of pre-deposit - section 129E of the Customs Act - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT ], examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. A Division Bench of Delhi High Court in M/S. VISH WIND INFRASTRUCTURE LLP, M/S. J.N. INVESTMENT TRADING CO. PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI [ 2019 (8) TMI 1809 - DELHI HIGH COURT ] examined the provisions of section 35F of the Central Excise Act, 1944 which are pari materia to section 129E of the Customs Act and held that every appeal filed before the Tribunal after the amendment made in section 35F of the Excise Act and section 129E of the Customs Act on 06.08.2014 would be maintainable only if the mandatory pre-deposit was made. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court and the Delhi High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Appeal dismissed.

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• Corporate Laws

• 2022 (9) TMI 1218
  Oppression and Mismanagement - requisite shareholding to maintain the Petition, present or not - waiver of the shareholding requirements mentioned in Section 244 (1) (a) of the Companies Act, 2013 - Section 241 and 242 of the Companies Act, 2013 - seeking withdrawal of second waiver application - HELD THAT:- Admittedly, before passing of the impugned order, an opportunity of Hearing was given to the Appellants. In this connection, a cursory perusal of the ingredients of Rule 111 (1) of the NCLT Rules, 2016, Filing of objections by Respondent, Form and Consequences, unerringly points out that the Respondent, if so directed, shall file Objections or Counter within the time allowed by the Tribunal. In effect, the Tribunal has an inherent power while exercising its discretion not to direct the Respondent to file a Counter / Reply / Response in regard to the First Waiver Application, as opined by this Tribunal. In the case on hand, under Section 241 of the Companies Act, 2013, there are no pending Proceedings before the Tribunal. Therefore, this Tribunal, safely, securely and in a cocksure fashion holds that the Appellant(s) cannot seek the aid / invocation of Rule 82 of the NCLT Rules, 2016. There is no negation of the principles of natural justice, in as much as the impugned order was to allow a filing of Fresh Petition, as per the ingredients of Section 244 of the Companies Act, 2013, pertaining to the affairs of the Appellant (in Comp. App (AT) (CH) No. 54 of 2021) / Rs. 1st Respondent(Ambadi Investments Limited). It cannot be brushed aside that at the time of passing the impugned order, the First Waiver Application Viz. CP/29/CHE/2021 was pending and the Petition (filed under Section 241 of the Companies Act, 2013) was not to be numbered, till the time the Tribunal, permitted the CP/29/CHE/2021 (the First Waiver Application, under Section 244 of the Companies Act, 2013) - It cannot be gainsaid that the Prospective Company Petition of the Respondent Nos. 1 and 2 filed with the First Waiver Application (CP/29/CHE/2021) in the eye of Law, cannot be construed to be a Petition filed under Section 241 of the Companies Act, 2013 / or under the NCLT Rules, 2016, because of the Rule 29 of the NCLT Rules, 2016, which categorically enjoins that on admission of Appeal or Petition or Caveat Application, the same shall be numbered and registered in the appropriate Register maintained in this behalf and its number shall be entered therein. There is no gain saying of the pivotal fact that Law does not coerce / force any Litigant to pursue the Litigation. In fact, in a Civil Suit / Civil Proceeding, a Plaintiff/ Petitioner is a Dominus Litis. This Tribunal considering the divergent contentions advanced on either side, keeping in mind the facts and circumstances of the present case and also on going through the impugned order dated 29.09.2021 in MA(Comp. Act)/79/CHE/2021 in CP/29/CHE/2021, comes to a consequent conclusion that the views arrived at by the National Company Law Tribunal, Division Bench-I, Chennai, in permitting the Withdrawal of CP/29/CHE/2021 (First Waiver Application) on its file, dismissing the same as Withdrawn and taking the CP/95/CHE/2021 (Second Waiver Application) on its file, to take up the objections, if any, in relation to the Second Waiver Application at an appropriate stage, etc. are free from any legal flaws. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2022 (9) TMI 1221
  Seeking directions for review of the observations conclusions as contained in the Judgement and Order [ 2022 (3) TMI 998 - TRIPURA HIGH COURT] - whether Review Petitioner was not a party to the original PIL proceedings? - HELD THAT:- The Case at hand is an example of the interplay between the explanation to Section 18 and other provisions of the Code on the peculiar facts of the case, in our considered view, the NCLT correctly found that the decreed property was an asset of the Review Petitioner held in trust by the corporate debtor. In fact, it was even being maintained by the Review Petitioner in terms of orders of the Bombay High Court. The said property was merely in possession of the Provisional Liquidator of SRUIL, held in constructive trust for the Review Petitioner. The NCLT has recorded in its order dated 08.10.2021 that the IRP does not have any funds to run the CIRP. This is also borne out by the orders passed by the Bombay High Court, that acknowledge that neither the Provisional Liquidator, nor the IRP was in a position to maintain the property and carry out repairs on the fallen boundary wall due to lack of funds. Further, the IRP has categorically averred before the NCLT, that the creditors of SRUIL had refused to infuse any funds to carry out the CIRP. In this context, the Rs.75,30,00,000/- that is to be received by SRUIL in terms of the orders passed by the Bombay High Court and upheld by the Hon ble Supreme Court, are crucial to ensure that the CIRP of the corporate debtor in the present matter happens in a meaningful manner. Further, once we have observed that the property itself is not an asset of SRUIL, maximisation of assets of the corporate debtor can be achieved, only by the IRP moving to secure the Rs. 75,30,00,000/-, which surely is a receivable of SRUIL. Looking into the facts pertaining to the case of the Review Petitioner, the Impugned Order did not appreciate the need to balance the considerations of Section 18 of the Code viz-a-viz the moratorium under Section 14 of the Code. The Impugned Order is therefore modified to the extent that it shall not effect the rights of the Review Petitioner to the subject property that has been upheld upto the Supreme Court and also stands crystallised by various orders passed by the Hon ble Bombay High Court which are still in operation. As held by the NCLT, the conveyance however, shall be subject to the payment of the balance consideration by the Review Petitioner. The Review Petition is allowed.

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• 2022 (9) TMI 1220
  Acceptance of claim of the Resolution Professional for payment of fee - Section 61 of Insolvency and Bankruptcy Code, 2016 - main contention of the Respondents before the Adjudicating Authority was that he was having only 25.54% of voting right being creditor and cannot be compelled to pay half of the share of remuneration and expenses and that he is not liable to pay the legal expenses which was not approved by the CoC and agreed to pay the fee payable to Resolution Professional and other expenses approved by CoC. HELD THAT:- A conjoint reading of Regulation 25A, 26 and 27 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Regulation 31 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the expenses incurred under the different heads covered by Regulation 31 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall be paid by the creditors - In the instant case, the cost incurred by erstwhile RP and remuneration payable to him was approved by CoC in the CoC meetings, the total amount payable is Rs. 16,09,402/-, thus, the legal heirs of deceased RP are entitled to claim the remuneration payable to erstwhile RP and cost incurred by him, approved in CoC meetings. One of the major contentions of the Appellant herein is that the Appellant is having only 25.54% voting share and liable to pay its share of costs. As per provisions of the Act, the Respondent before the Adjudicating Authority Appellant herein, the creditors have to bear the cost of resolution process and remuneration payable to the Resolution Professional in proportionate to voting share, but the Adjudicating Authority directed the creditors to pay 50% of the cost payable to erstwhile RP. Therefore, the direction to the extent of payment of remuneration equally by the creditors is contrary to the provisions of IBC and relevant Regulations. The direction to pay equally with other creditor is erroneous, since, the Respondent before the Adjudicating Authority is having 25.54% voting share and therefore liable to pay the expenses in proportionate to the voting share of Appellant herein and before the Adjudicating Authority. Accordingly, the order of the Adjudicating Authority is modified to this extent - the Appeal is allowed in part modifying the order directing the Appellant to pay remuneration and cost of resolution process approved in CoC meeting i.e. Rs. 16,09,407/- proportionate to its voting share.

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• 2022 (9) TMI 1219
  Seeking admission of the claim - whether from the internal correspondence it can be concluded that loan disbursed to the Corporate Debtor by the Appellant stood discharged? - HELD THAT:- The internal correspondence between the Corporate Debtor and the RDPL who s Promoters are same, does not lend support to their case that the loan payable by Corporate Debtor to the Appellant against disbursal of Rs.32.50 Crore stood discharged. The Adjudicating Authority, thus, erroneously relied on the said correspondence which is wholly irrelevant for proving any discharge of the loan amount. There are no material to indicate that the loan which was disbursed by the DHFL to the Corporate Debtor was discharged at any point of time. The Adjudicating Authority committed error in refusing to admit the claim of the Appellant. Resolution Professional also did not correctly and properly look into the materials placed before it by the Appellant as well as the Ex-Director of the Corporate Debtor and erred in not verifying the claim of the Appellant. The order passed by the Adjudicating Authority is unsustainable and deserved to be set aside - appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1217
  Approval of Resolution Plan - section 31 of IBC - HELD THAT:- Reliance placed in the BANK OF MAHARASHTRA AND ORS. VERSUS VIDEOCON INDUSTRIES LTD. AND ORS. [ 2021 (7) TMI 1292 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] , wherein the Hon ble NCLAT had observed that Statutory compliances does not fall under the commercial wisdom of the CoC. Hence, the statutory compliances as mandated by proviso to Section 31(4), have to be ensured before the Resolution Plan is approved by CoC. In the present case, it is clear that before approval of the Resolution Plan, all the compliances have to be met by the Resolution Applicants. At this stage the Resolution Plans are under consideration of the Committee of Creditors and no decision has been arrived at with respect to the approval of the Resolution Plans submitted by the Respondent Nos. 3, 4 and 5 respectively. It is found that the Applicant is not affected merely by the submission of the Resolution Plans by the Respondent Nos. 3, 4 and 5 respectively. Petition dismissed - List the main Company Petition on 31.10.2022.

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• FEMA

• 2022 (9) TMI 1266
  Offence under FEMA - Eligible charge against petitioner in SCN - no permission was given for repatriation of sale proceeds to person resident outside India and that acquisition and transfer of immovable property by her heirs residing outside India would be covered - petitioner has contravened the provisions of Section 6(3)(i) of FEMA read with Rule 8 of FEMA (Acquisition and Transfer of Immovable Property in India) Regulations 2000 (FEMA Regulations) and thereby petitioner has rendered itself liable to be proceeded against under Section 13(1) read with Section 42(1) of FEMA - HELD THAT:- Issuance of a show cause notice is not an empty formality. Its purpose is to give a reasonable opportunity to the affected persons to contend that they have not committed any breach. Proper opportunity should be given to the person likely to be affected by the order proposed to be made a notice of the action intended to be taken, inform him about the materials on the basis of which the appropriate authority proposes to take action and give a fair and reasonable opportunity to such person to represent his case and to correct or controvert the material sought to be relied upon against him. It is essential for a show cause notice to indicate the precise scope of the notice and also to indicate the points on which the recipient of the show cause notice give a reply. In our view, there is nothing in the show cause notice to give any indication as to what are the allegations to which petitioner should furnish a statutory explanation. In paragraph 9 of the show cause notice, it is stated that without obtaining the prior permission of RBI, petitioner has repatriated the sale proceeds to M/s Salvation Army but the provisions relied upon in the show cause notice by respondent no.2 has nothing to do with repatriation of any sale proceeds. Further, Regulation 8 of the said Regulation only provides save as otherwise provided in the act or regulations no person resident outside India shall transfer any immovable property in India . It does not refer to any acquisition. As could be seen from the show cause notice itself the admitted position is Mrs. Meerabai Dawson held immovable property in India, which she inherited from her parents, who were resident in India. The Executors of the Will of Mrs. Meerabai Dawson only disposed the immovable property that she had inherited from her parents who were residents in India, and repatriated the sale proceeds to the beneficiaries of her Will. The beneficiaries did not transfer any property in India from respondent no.2 to allege breach of Regulation 8. Moreover, petitioner was, admittedly, only the power of attorney holder and legal counsel of the Executor s of the Will of Mrs. Meerabai Dawson and therefore, cannot be held liable in the facts of the present case. We are inclined to exercise our jurisdiction under Article 226 of the Constitution of India and quash and set aside the impugned show cause notice.

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• PMLA

• 2022 (9) TMI 1216
  Money Laundering - seeking grant of regular bail - sick and suffering from serious co-morbidities - commission of scheduled offences - generation, acquisition, layering and siphoning off the proceeds of crime - Section 45(1) of the PMLA - HELD THAT:- The proviso to Section 45(1) of the PMLA carves out an exception from the rigours of Section 45 for persons who are sick or infirm. Once a person falls within the proviso of Section 45(1), he need not satisfy the twin conditions under section 45(1). Whether the applicant falls within the category of sick or infirm so as to grant him the benefit of the proviso to section 45(1) PMLA? - HELD THAT:- In view of the medical report, it leaves no room for doubt that the applicant is both, sick and infirm. He is functioning on 30% capacity of one kidney and the other kidney is dead. He requires constant monitoring otherwise his fluctuations can cause death. He has undergone multiple surgeries for removal of his large intestine, gall bladder, peptic ulcer, colostomy and even a hernia operation. He has a pacemaker installed due to his heart condition and is also suffering from Spondylitis and Vertigo. During his period in jail, the applicant contracted Syphilis on 27.10.2021 and Covid-19 on 17.01.2022. Out of the other ailments, only spondylitis and vertigo may be of lesser degree but all other medical conditions are serious and life threatening. Whether the applicant suffers from a condition which cannot be addressed from the jail? - HELD THAT:- Prisons provide medical facilities but the services are not comparable to or equivalent to the level of treatment and care one can avail from private hospitals. The facilities in the jail are of a general nature and character which is inadequate to monitor proper health of the applicant who is suffering from multiple serious ailments. The jail is not equipped to provide special and intensive treatment and care that the applicant is in need of. Though the medical report dated 24 May 2022 from Atal Bihari Vajpayee Institute of Medical Sciences states that the applicant is in a stable condition and no new ailments have been detected, the fact remains that the applicant is functioning on a single kidney which is only 30% functional and he has undergone major surgeries with respect to vital organs. Furthermore, during incarceration, the applicant contracted two more diseases viz., syphilis on 27.10.2021 and Covid-19 on 17.01.2022 - The fact that the applicant is suffering from these ailments from the year 2001 is also not of much help to the respondents as it is a given fact that ailments aggravate with age. In 2001, which is 21 years ago, the applicant would have been younger, healthier and in a better position to meet the requirements of his frail health. With age, the response, the resistance, the resilience and the capacity of the body to fight ailments and recuperate efficaciously, decreases. It is already discussed that ailments which, coupled with old age brings the applicant within the purview of Infirm Person . The level of care, attention, minute to minute monitoring, emergent response which the applicant can get from a hospital cannot be provided at the jail. The Applicant continues to suffers from serious co-morbidities, including but not limited to a serious heart condition and a nonfunctional kidney, with the other working in a compromised position. Considering that the applicant is aged, sick and infirm, who is suffering from various complicated diseases, the application needs to be allowed - the bail application is allowed subject to conditions imposed.

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• 2022 (9) TMI 1215
  Money Laundering - seeking grant of bail - allegations of money laundering pertain to the year 2011-2013; at that time, the petitioner s age would be around 15-17 years - petitioner had connection with the business s day-to-day affairs or not - HELD THAT:- Without commenting on the case s merits, in the facts and circumstances peculiar to this case, and for the reasons mentioned above, the petitioner makes a case for bail, subject to the following terms and conditions, which shall be over and above and irrespective of the contents of the form of bail bonds in chapter XXXIII of CrPC, 1973. In the event of arrest, the petitioner shall be released on bail in the case mentioned above, subject to furnishing a personal bond of Rs. One lac only (INR 1,00,000/-), and furnishing one surety for Rs. Five lacs, to the satisfaction of the Trial Court - In the alternative, the petitioner may furnish a personal bond of Rs. One lac only, and hand over to the the attesting officer, a fixed deposit(s) for Rs. One lac only, made in favour of the Trial Court. Such Fixed deposits may be made from any of the banks where the stake of the State is more than 50%, or any of the well-established and stable private banks, with the clause of automatic renewal of principal, and the interest reverting to the linked account. Such a fixed deposit need not necessarily be made from the applicant s account. Petition disposed off.

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• 2022 (9) TMI 1214
  Money laundering - Seeking grant of bail - petitioner s age at the time of commission of the present offence - case is that the accused Vikram Seth operated a few bogus entities in his name and also in the name of the family members - HELD THAT:- Given the petitioner s age at the time of the offence and that he was a student at Jalandhar, coupled with the nature of allegations against him, there would be no justification to send the accused to pre-trial custody at the stage of framing of the charges. In GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT ] a Constitutional Bench of Supreme Court held that the bail decision must enter the cumulative effect of the variety of circumstances justifying the grant or refusal of bail. The possibility of the accused influencing the investigation, tampering with evidence, intimidating witnesses, and the likelihood of fleeing justice, can be taken care of by imposing elaborative and stringent conditions - Without commenting on the case s merits, in the facts and circumstances peculiar to this case, and for the reasons mentioned above, the petitioner makes a case for bail, subject to the following terms and conditions, which shall be over and above and irrespective of the contents of the form of bail bonds in chapter XXXIII of CrPC, 1973. In the event of arrest, the petitioner shall be released on bail in the case mentioned above, subject to furnishing a personal bond of Rs. One lac only, and furnishing one surety for Rs. Five lacs, to the satisfaction of the Trial Court - In the alternative, the petitioner may furnish a personal bond of Rs. One lac only, and hand over to the the attesting officer, a fixed deposit(s) for Rs. One lac only, made in favour of the Trial Court. Petition allowed.

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• Central Excise

• 2022 (9) TMI 1213
  CENVAT Credit - agreement entered into by the noticee with their consignment stockist - sales promotion agreement or a commission agent agreement for sale of goods? - eligible input service or not - Explanation inserted by notification No. 02/2016-CE(NT) dated 03.02. 2016 into the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 is retrospective in nature or otherwise? - allegation against the respondent is that the commission paid to various parties was only for the purpose of procuring orders for the respondents and nothing more - Extended period of limitation - suppression of facts or not. HELD THAT:- The basis for issuance of the show cause notice was the decision in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD II VERSUS M/S CADILA HEALTH CARE LTD. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT ]. The said assessee was engaged in the manufacture of medicaments and had availed CENVAT Credit on service tax paid on the technical and analysis service, commission paid to the foreign agents, courier service etc. The revenue took a stand that CENVAT Credit of service tax paid on the above services is not admissible. Challenging the findings of the adjudicating authority, appeal was filed before the tribunal. Ultimately the matter travelled to the High Court. The High Court held that in the absence of any material on record, there is nothing to indicate that commission agent were involved in the activities of sales promotion and that the claim of the assessee was accordingly rejected. Thus, the Court took note of the factual position in the case that there was nothing to indicate that the commission agents were involved in the sales promotion activities, contrary to the case on hand where agreements were produced before the authority to show what is the nature of services rendered by those commission stockists. Firstly, the decisions of one other High Court in all cases will not bind another High Court and such decisions were held to be of persuasive value. In any event on facts in Cadila Health Care Limited, the Court found no material on record to indicate that commission agents were involved in the activities of sales promotion - Further it is seen that the commission paid by the respondent to the commission stockist is included in the assessable value of the goods on which excise duty has been paid by the respondent on the final products namely carbon black. In fact, this has been noted by the adjudicating authority. Extended period of limitation - suppression of facts or not - HELD THAT:- The respondent had also resisted the show cause notice by contending that extended period of limitation could not have been invoked. On plain reading of the show cause notice, it is clear that except for the use of the word suppression of material facts , that there is nothing on record to indicate as to on what basis the adjudicating authority invoked the extended period of limitation. More so, when the assessee had disclosed all the materials in their returns and the assessee was also subjected to audit earlier and there was no objection raised by the audit department. Therefore, on the said ground also the assessee is entitled to succeed. The appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.

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• 2022 (9) TMI 1212
  Rejection of de-sealing of the machine and DG sets - non-filing of fresh declaration in compliance with Trade Notice 04/2020-2021 dated 18.01.2021 - HELD THAT:- The contents of the Panchnamas filed as Annexure-P/1 to P/4 along with the writ petition clearly reveal that these panchanamas were pasted at the front gate of the factory premises. The security guard was also present at the time of the search therefore, it cannot be believed that the petitioner did not know about these searches. Even otherwise, after a lapse of two years challenging the panchanamas is of no consequence when show cause notice has been issued to the petitioner. The petitioner may raise all the available grounds in reply to the show cause notice before the adjudicating authority. Shri Malhotra learned Counsel for the petitioner has failed to point out any prejudice caused to the petitioner for the aforesaid searches on various dates which have culminated into the issuance of show cause notice. Panchanamas are part of the search and investigation in the factory of the petitioner. The petitioner will have a complete opportunity to dispute the contents of the panchanamas in the adjudicating proceedings. Petition dismissed.

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• 2022 (9) TMI 1211
  Reversal of CENVAT Credit - breakage of glass beverage bottles - recovery of excise duty in respect of these breakages treating them as finished goods beverages, along with interest and penalty - HELD THAT:- The present case is not in respect of the loss of goods during storage or transportation but is case of the demand of the duty in respect of the breakages of glass bottles during storage and handling. Further the issue is with regards to applicability of the Circulars of 1971 and 1975 to determine whether the breakages was within the prescribed limit. Since the issue in our view is not covered by the above provision of the section 35 B of the Central Excise Act, 1944 the objection raised by the authorized representative cannot be sustained. The reliance placed by the Commissioner (Appeal) on the Circular dated 09.07.2010 to decide the issue against the appellant for the period prior to issuance of the said circulars is contrary to the fact that during the period of dispute there were two circulars of 1971 and 1975 which have been followed by the appellant. It is not even stated in the impugned order that these two circulars were not applicable to the appellant. It is also noted that the MODVAT credit scheme was introduced in the year 1986 and CENVAT credit scheme is refined form of the said scheme. These circulars continued to hold field throughout till 09.07.2010. Observations made by the Commissioner (Appeal) in para 8 of the impugned order cannot be sustained for this simple reason. It is noted that substantial compliance with the circular of 2010 has been made by the appellant by reversing the CENVAT Credit on the inputs used in respect of the finished goods contained in the breakages. Thus, taking the note of the reversal made, the impugned order cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2022 (9) TMI 1210
  Clandestine removal - MS Ingots - shortage of 623.275 M.T. of Ingots - statements were made voluntary or it was made under threat - reliability of panchnamas - pen drive is admissible evidence or not - mandatory procedure prescribed under section 36B, followed or not - HELD THAT:- When the statutory procedure was not followed, the pen drive is not admissible in evidence. Reliability of panchnamas - Stand taken is that Panch witnesses were not residents of the area and, therefore, the Panchnama itself was not proper - HELD THAT:- On a specific enquiry from the bench as to whether this issue was raised before the Original Authority in the reply to the show cause notice or during personal hearing, learned Counsel for the appellant showed us the reply dated 15.05.2018 to the show cause notice filed by the appellants before the Commissioner. The reply shows that the question of the address of the Panch witnesses was not raised before the Original Authority. Further, the Panch witnesses could have recorded their permanent addresses in the Panchnama and unless it was alleged that they were not residents of the area, and an opportunity was given to the department, the appellant cannot be permitted to raise this issue at this stage. Demand of Rs. 18,72,41,951/- made on the basis of the documents which were resumed as well as some demands raised on the basis of evidence in the Pen drive - HELD THAT:- Since the amount covered in the Pen drive was larger, they have been reckoned to subsume the demands raised on the basis of other documents which were resumed. Since it is found that as the mandatory requirement under Section 36B of the Central Excise Act was not followed in this case, the Pen drive cannot be taken as evidence, the Original Authority should be given an opportunity to examine the demands in respect of the other documents resumed de-hors the data derived from the Pen drive and determine, whether any duty liability can be sustained. The Adjudicating Authority should consider the documents, which were resumed and examine whether the said proposed demand can be confirmed on their basis - matter remanded to the Adjudicating Authority to decide the matter afresh ignoring the evidence in the Pen drive. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2022 (9) TMI 1209
  Additional levy of tax on supply of cement to the contractor by the Assessee - Sale of Cement - point of sale - HELD THAT:- It is an admitted fact that Tata Steel Ltd. purchased cement after paying tax, which was leviable at first point of tax and supplied the same to its contractor for executing works in its behalf and has, admittedly, deducted the amount towards supply of cement from the bills of the Contractor - Thus, in view of the ratio of the Judgments laid down by the Hon ble Apex Court in the cases of NM GOEL AND COMPANY VERSUS SALES TAX OFFICER, RAJNANDGAON [ 1988 (10) TMI 106 - SUPREME COURT] , and RASHTRIYA ISPAT NIGAM LTD. VERSUS STATE OF ANDHRA PRADESH [ 1998 (2) TMI 480 - SUPREME COURT] , there is no dispute on the proposition that transaction of supply of cement by the Assessee to its contractor and recovery of the amount from bills of the contractor would amount to second sale of cement by the Assessee to its contractor. In fact, Respondent-Tata Steel Ltd. has not joined issues on said proposition of law and has accepted said proposition of law. In the entire writ application, no dispute is raised that cement is leviable at first point of sale and tax has already been paid on such cement - on examination of provisions of Section 11 of the Bihar Finance Act, 1981 and the relevant Notification dated 26th December, 1977. Section 11 of the Bihar Finance Act, 1981 enables the State Government to prescribe point or points in the series of sales at which the sales tax shall be levied. Admittedly, in exercise of the said power, sales tax was levied on cement only on the first point of sale, and, any subsequent sale of cement was not leviable to tax. It is declared that although transaction of supply of cement by Assesse-Tata Steel Ltd. to its contractor and recovering the amount from bills of the contractor would amount to second sale of cement, the same would still not be subjected to levy of tax on the second sale, as, admittedly, cement was levied to tax only at the first point of sale and, admittedly, tax on such cement has duly been discharged by the assesse-Tata Steel Ltd. There are no merit in the writ application and the same is dismissed.

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• Indian Laws

• 2022 (9) TMI 1208
  Dishonor of Cheque - insufficiency of funds - fading of the ink of the signatures - whether the cheque were not signed at the time of filling up of the contents of the pro-notes and cheques? - HELD THAT:- It is pertinent to note that as per the directions of the learned Single Judge in A. INAYATHULLAH VERSUS A. RAMESH [ 2015 (1) TMI 1482 - MADRAS HIGH COURT] , the Assistant Director appeared before the Court and informed that there is no scientific method available anywhere in this State, that there is one institution known as Nutron Activation Analysis, BABC, Mumbai, where there is facility to find out the approximate range of the time, during which, the writings would have been made and he submitted that even such opinion cannot be exact. He further submitted that the said Nutron Activation Analysis is confined only to atomic research, the documents relating to prosecutions and other litigations cannot be sent to that institution. This Court in KANAGARA VERSUS RAMAMOORTHY [ 2021 (10) TMI 1365 - MADRAS HIGH COURT] has observed that it is very much clear that there is no mechanism or scientific method to find out the age of the writing or ink. But the learned Additional District Judge, without considering the non-availability of any such mechanism, by simply observing that the defendant has to be given an opportunity to prove his defence and no prejudice would be caused to the plaintiff, allowed the petition. Hence, this Court has no hesitation to hold that the impugned order is not good in law and the same is liable to be set aside. The impugned order, dismissing the petition filed by the accused cannot be found fault with and consequently, this Court concludes that the above Criminal Revision Petition is devoid of merits and the same is liable to the dismissed - this Criminal Revision Petition is dismissed.

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• 2022 (9) TMI 1207
  Legality and validity of the notification dated 11.06.2020 issued by the Ministry of Environment, Forest and Climate Change - advisory for dealing with import of exotic live species of animals and birds in India and declaration of stock - HELD THAT:- The judgment of the Allahabad High Court in DINESH CHANDRA VERSUS U.O.I. THRU. ADDL. PRIN. CHIEF. CONSERVATOR OF FOREST OTHERS [ 2020 (7) TMI 750 - ALLAHABAD HIGH COURT] is a complete answer to the present PIL filed by the petitioner. Any interpretation to the contrary as suggested by the petitioner would defeat the very object of the Advisory. Once a declaration within the window of six months as provided under the Advisory is made, the exotic live species, including its progeny, the declarant or transferee(s) are fully exempt from explaining the source of exotic live species. The exotic live species which is declared or its progeny, are not liable to confiscation or seizure by any Central Agency or State Agency. Consequently, the declarant or the transferee(s) of such declarant will be immune from prosecution under any civil, fiscal and criminal statute by any Central or State Agency. Any other interpretation would lead to absurdity. However, any declaration made after the expiry of the window under the Advisory shall carry no such exemption and the declarer shall have to comply with all requisite documentation under the extant laws and regulations. Writ petition is dismissed.

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