Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 9, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Input tax credit - Belated filing of return by the supplier - The applicant is not entitled for input tax credit claimed by him on the invoices raised by the upplier pertaining to the period Jan-2020, Feb-2020 and March-2020 for which the supplier has furnished FORM GSTR-1 and FORM GSTR-3B in the month of November’20 and the applicant is, therefore, required to reverse the said input tax credit. - AAR
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Lifting of provisional attachment - passing order in form GST DRC-07 - Its like recovery under the Bombay Land Revenue Code. This is possible or rather permissible only after proper attachment of any property of the assessee. This attachment which we are talking about has nothing to do with the provisional attachment under Section 83 of the Act. For the purpose of sub clause 3, the attachment is permissible even under the provisions of the Bombay Land Revenue Code. - the impugned order of provisional attachment set aside and quashed - HC
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Cancellation of registration of the writ petitioner - an opportunity of being heard not provided to assessee or provided on the date of public holyday - owing to the admitted error in SCN, this Court deems it appropriate to set aside the same also with a directive to reissue the SCN after eliminating the error. - HC
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Refund of GST alongwith interest - interpretation and scope of mutual lease (rent) agreement -who has to bear the burden of GST - seeking direction to first respondent to pay the GST on lease rent along with lease rent - scope of the word 'new introductions' occurred in Clause 14 would includes the GST or not - The present writ petition with the aforesaid prayer as has been sought for by the petitioner cannot be entertained by this Court at this moment. - HC
Income Tax
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Receipts from sale of carbon credit - No asset is generated in the course of business, but it is generated due to environmental concerns. It was also found that the carbon credit is not even directly linked with the power generation and the income is received by sale of the excess carbon credits. It was found that the Tribunal has rightly held that it is capital receipt and not business income - HC
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Reopening of assessment u/s 147 - The specific stand of the revenue is that the assessee who was a raising contractor engaged for extraction of iron ore by the lessee, the contract charges corresponding to the value of the excess production has been believed to have been suppressed. This aspect has to be gone into in the re-assessment proceedings. Therefore, we are of the clear view that the assessee has not made full and true disclosure of all material facts during the original assessment, the reopening of the assessment was not based on the change of opinion but the facts which emanated after the rectification application was filed by the assessee and it is incorrect on the part of the assessee to state that the reopening of the original assessment was on assumptions and presumptions. - HC
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Disallowance of deprecation on Goodwill - assessee had entered into an Asset Purchase Agreement (“APA”) to acquire the Global Travel Service Centre (“GTSC”) as a going concern for lump sum consideration ( slump sale basis) - claim of the assessee allowed - AT
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Maintainability of appeal - low tax effect - Penalty - Since the levy of penalty by no means could be construed as an addition within the meaning of Para 10(e) of the aforesaid circular, therefore, we do not find any merit in the claim raised by the revenue that the aforementioned exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its sweep penalty imposed by the A.O. under Sec. 271(1)(c) of the Act in respect of an addition of bogus purchases on the basis of an information received from Sales Tax Authorities i.e. an external agency. - AT
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Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - new plea before the authorities below - In this case in hand, there is no such plea raised by the assessee before the Assessing Officer at the initial stage. Hence, the notice issued under section 271(1)(c) of the Act is valid notice and therefore, the ground raised by the assessee is not acceptable. - AT
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Chargeability of capital gains on sale of land - nature of land sold - agricultural land - The development authority i. e. GUDA is a creation of statute. It cannot be equated with Municipal Corporation - As assessee has successfully demonstrated that the land parcels situated as Adalaj does not fall within the meaning of expression ‘Municipality’ or ‘Municipal Corporation’ and therefore falls in exception provided in sub-clause (a) to Section 2(14)(iii) of the Act - AT
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TP Adjustment - selection of MAM - RPM or TNMM or Profit Split method [PSM] - Assessee has came out with a contention that if the TNMM is to be applied, then its original ALP determination in the Transfer pricing study report should be accepted without remitting the matter to the AO. We cannot concur with this contention because the working done by the assessee in this regard has not been vetted either by the TPO or the DRP. The TPO rejected such a method and went ahead with the PSM and the DRP suggested the RPM. Hence veracity of the calculations made by the assessee under TNMM has yet to pass through the eyes of the authorities below. - Matter restored back - AT
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Penalty u/s 271(1)(c) - disallowance of transport expenses - payment made in cash - Just because the payments were made in cash cannot be a basis to doubt the genuineness of the expenditure. Since the disallowance are made on adhoc basis by applying the rate of 15%, holding the assessee liable to pay penalty for furnishing inaccurate particulars of income cannot be held to be justified. - AT
Customs
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Suspension of Customs Broker License - Deemed Suspension or automatic suspension? - There is no existence of any provision of “Deemed Suspension” or “automatic suspension” of licence of a Customs Broker under the Customs Act, 1962 or under the Customs Brokers Licensing Regulations, 2018 and action of the respondent Customs authority suspending the Customs Broker Licence of the petitioner infringing the petitioner’s right to livelihood is penal in nature and is without any authority of law and is without jurisdiction since respondent Customs authority has failed to show any document of formal order of suspension of Customs Broker licence under Regulation 16 of Customs Brokers Licensing Regulations, 2018 - HC
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Seeking provisional release of goods - Black Pepper - Goods of Sri Lankan Origin - prohibited goods or not - As it is a drastic decision to be taken by the Foreign Trade Department with the recommendation of Customs Department in any given case, where the documents are rightly available with the customs department, this Court feels that some check and balance measure can be ensured to be placed as against these kind of importers. - Respondents directed to allow the provisional release of goods subject to conditions - HC
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Refund claim - principles of unjust enrichment - duty of customs was paid @7.5% instead of 5% provisionally - the same has to be returned to the assessee once his books of accounts are showing such an excess duty paid as receivable. The same is the sufficient evidence for the fact that incidence of duty has not been passed on by the assessee/manufacturer from the end customers of the product manufactured. - AT
VAT
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Power of Tribunal to enhance the tax liability - The Tribunal is an independent adjudicatory authority having jurisdiction to determine the liability to pay tax. Under the Act it has no power to enhance the liability to pay tax determined by the taxing authorities. Where sufficient material exists on record the Tribunal is expected to decide the matter, on merits. It has no power to pass an order of remand only because it is of the opinion that a higher tax liability ought to be imposed although revenue has decided not to prefer any appeal against the determination of tax liability. - HC
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Refusal to reopen the Assessment Order - rejection of declarations in Form ‘C’ which were obtained by it in the year 2020 - time limitation - While deserving cases of unintentional delay ought to be condoned, law cannot be permitted to be misused at the hands of an indolent litigant by mechanically condoning delay without valid justification. - HC
Case Laws:
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GST
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2021 (9) TMI 382
Exemption form GST - Pure services - supply of Consulting Service for Programme Management and Accompanying Measures for implementation of Integrated Storm Water Drain for M1 M2 components of Kovalam Basin in the extended area of Greater Chennai Corporation - services were supplied to the Superintending Engineer, Storm Water Drain Department, Greater Chennai Corporation, Chennai - applicant is the 'Person' to whom the 'Project' is extended or not - Sl.No.3 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The applicant, in the case at hand has stated that they require the ruling in their individual capacity of M/s. Mukesh Associates, a Partnership firm and not as a Member of the JV or the 'Consultant' to whom the Project' is awarded. The applicant has stated that they offer services through their experts, raise invoice and receive payments and therefore they are eligible to seek the ruling pertaining to their part. Whether the applicant is the 'Person' to whom the 'Project' is extended and the one providing the service? - HELD THAT:- It is very clear that the project is executed by the 'Consultant', which is JV GITEC-NK Buildcon- Mukesh Associates. The applicant in his individual capacity is different from the JV, in which he is a member. The 'project' is awarded to the JV and not to the applicant. It is found that it is the Joint Venture with the Registered seat of the Association at Cologne, Germany is the 'Person' to whom the 'Project' is awarded and not the applicant. As per existing laws of the land, a Joint Venture Company, which is formed by 2 or more entities have a separate existence than that of the said entities. Further, as per the Joint Venture Declaration, it is seen that the Lead Member of the JV is the sole representative of the JV and any restrictions to the Power of attorney extended by the participating Members shall be invalid. Therefore supply of goods or services or both, being undertaken or proposed to be undertaken in respect of the 'Project' will be by the Joint Venture Company, and not the applicant. Thus the person who can make such application is the Joint Venture Company only and not the applicant, hence the application is not admitted for consideration on merits. The application is rejected as not maintainable.
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2021 (9) TMI 381
Input tax credit - Belated filing of return by the supplier i.e. after the due date of filing of annual return for the relevant financial year - credit already claimed on the invoices raised by the supplier pertaining to the period Jan-2020, Feb-2020 and March-2020 for which the supplier has actually paid the tax charged in respect of such supply to the Government - entitlement of reversal via cash or through utilization of input tax credit admissible in respect of such supply - requirement to reverse ITC already availed, where M/s Gayatri Project Ltd. has actually paid the tax. HELD THAT:- The applicant has availed credit of input tax upon receipt of services from M/s Gayatri Projects Limited and has furnished the return under section 39 for the relevant tax periods. The applicant is also in possession of tax invoices issued by the supplier of services. So, the applicant has complied with the conditions for availing of input tax credit specified in clause (a), (b) and (d) of sub-section (2) of section 16 of the GST Act - it is evident that while the applicant has availed input tax credit in the months of January 20, February 20 and March 20 respectively, the supplier has declared such outward supplies made by him in his respective FORM GSTR-1 in the month of November 20 and has also paid the taxes on such supply upon furnishing of return in FORM GSTR-3B in the month of November 20. Whether such belated compliances by the supplier towards payment of tax to the Government would disentitle the applicant to avail of input tax credit as per the condition laid down in sub-section (c) of section 16 of the GST Act read with the rules made there under? - HELD THAT:- The entitlement of input tax credit is governed by sections and rules made under CHAPTER V of the GST Act and Rule respectively. Further, section 41 of the GST Act which deals with Claim of input tax credit and provisional acceptance thereof speaks that every registered person shall be entitled to take the credit of eligible input tax on self-assessment basis subject to such conditions and restrictions as may be prescribed. We admit that FORM GSTR-2B has been made effective from 01.01.2021 but at the same time, the applicant cannot deny that the provisions of sub-rule (4) of rule 36 was already in force during the period when the applicant has availed of input tax credit issues of which we are dealing with in this case. It is thus concluded that the applicant has availed of input tax credit in excess of his entitlement prescribed under sub-rule (4) of rule 36 - The applicant is not entitled for input tax credit claimed by him on the invoices raised by M/s Gayatri Projects Ltd. pertaining to the period Jan-2020, Feb-2020 and March-2020 for which the supplier has furnished FORM GSTR-1 and FORM GSTR-3B in the month of November 20 and the applicant is, therefore, required to reverse the said input tax credit.
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2021 (9) TMI 377
Lifting of provisional attachment - after passing order in form GST DRC-07 dated 16.03.2020 whether the authority could have passed an order of provisional attachment of property under Section 83 of the Act? - HELD THAT:- The answer has to be in the negative. There is no question of invoking Section 83 of the Act for the purpose of provisional attachment once the final order in form GST DRC-07 is passed. The plain reading of the provisions would indicate that if any amount of tax, interest or penalty like the one in our case is payable by a person to the Government under any of the provision of this Act or the Rule then such amount can be recovered by a proper Officer of State Tax or the Union Territory as the case may be, as if it were an arrear of State Tax or the Union Territory Tax. In other words, this provision can be interpreted or can be understood as recovery of any debts, interest or penalty by way of revenue measures. Its like recovery under the Bombay Land Revenue Code. This is possible or rather permissible only after proper attachment of any property of the assessee. This attachment which we are talking about has nothing to do with the provisional attachment under Section 83 of the Act. For the purpose of sub clause 3, the attachment is permissible even under the provisions of the Bombay Land Revenue Code. The impugned order of provisional attachment purported to have been passed under Section 83 of the Act could be said to be without jurisdiction - Petition allowed.
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2021 (9) TMI 373
Cancellation of registration of the writ petitioner - an opportunity of being heard not provided to assessee or provided on the date of public holyday - violation of principles of natural justice - TNGST Act - HELD THAT:- On instructions it is submitted by learned Revenue counsel that no personal hearing was held on 02.10.2019 or thereafter. This by itself becomes a ground to set aside the impugned order and relegate the matter back to respondent. However, owing to the admitted error in SCN, this Court deems it appropriate to set aside the same also with a directive to reissue the SCN after eliminating the error. The impugned order is set aside solely on the ground that show cause notice dated 25.09.2019 has been issued inadvertently by fixing personal hearing on a public holiday on account of Gandhi Jayanthi i.e., 02.10.2019 (at 11.00 a.m.) which error is regretted. There is no disputation or disagreement that no personal hearing was held and it is submitted that SCN is a computer generated notice which has caused error - petition disposed off.
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2021 (9) TMI 372
Permission for withdrawal of petition - Exempt commodity or not - unbranded rice - rice was sold in 5 kgs, 10 kgs and 25 kgs gunny bags - HELD THAT:- The captioned Writ Petitions are dismissed as withdrawn. Consequently, connected miscellaneous petitions are dismissed as withdrawn. There shall be no order as to costs.
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2021 (9) TMI 371
Principles of natural justice - seeking release of goods and conveyance to the petitioner transporter, pending disposal of the main appeal - violation of principles of natural justice - HELD THAT:- Though the several contentions have been urged by both sides in support of their respective claims, having regard to the fact that the main appeal filed by the petitioner before the respondent No.1-Appellate Authority is posted on 01.09.2021, without expressing any opinion on the merits/de-merits of the rival contentions, it is deemed just and appropriate to dispose off this petition reserving liberty in favour of the petitioner to urge all contentions before the respondent No.1-Appellate Authority and file such application along with documents which shall be considered by the respondent No.1-Appellate Authority who shall pass appropriate order in accordance with law after hearing the parties. Petition disposed off.
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2021 (9) TMI 367
Refund of GST alongwith interest - interpretation and scope of mutual lease (rent) agreement -who has to bear the burden of GST - seeking direction to first respondent to pay the GST on lease rent along with lease rent - scope of the word 'new introductions' occurred in Clause 14 would includes the GST or not - HELD THAT:- The prime object of the petitioner in moving this writ petition by invoking Clause 14 of the agreement is that, the GST component if at all to be payable shall be paid only by the first respondent and not by the petitioner. Therefore, it is the lis between, primarily, the petitioner and the first respondent. Even though, the argument has been extended by the learned counsel for the petitioner as to the very leviability of GST on lands and buildings in the teeth of Entry 49 of list II of Schedule 7 of the Constitution, those issues cannot be agitated here, as the issue admittedly had been pending before the Hon'ble Supreme Court. Whether the word 'new introductions' occurred in Clause 14 would includes the GST, which was introduced on 01.07.2017 or not, and if it includes, the same would be borne by which party is the only question or lis to be resolved by the arbitrator before whom the parties can be relegated by invoking Clause 21 of the agreement? - HELD THAT:- It is the settled proposition that when there is an arbitration clause in writing, where both parties have signed, without invoking Arbitration Clause, the parties cannot be permitted to come before the High Court, especially by invoking Article 226 of the Constitution - this is a classic case, where, there is a written provision/clause available in the agreement, signed by both parties, where Arbitral Tribunal can be constituted, for which the sole arbitrator can be nominated by mutual consent of both parties, before whom, whatever be the controversy (ies)/dispute(s)/difference(s)/claim(s)/claim(s) in tort in relation to the agreement, the same can be very well referred to. The present writ petition with the aforesaid prayer as has been sought for by the petitioner cannot be entertained by this Court at this moment. Hence, for all these reasons, this Court is inclined to dispose of this writ petition with the following orders: that the prayer sought for herein cannot be granted and therefore the writ petition is liable to be rejected and accordingly, it is rejected.
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Income Tax
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2021 (9) TMI 383
TP Adjustment - comparable selection - international transactions of provision of Software Development services ('SWD services' ) and Information Technology Enabled services ('ITES') by the Assessee to its Associated Enterprises ('AE') - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Larsen Toubro Infotech Ltd., (L T) - Assessee did not object to inclusion of this company before the TPO but objected to inclusion of this company before DRP. The DRP did not adjudicate the objection. In these circumstances, we are of the view that exclusion of this company from the list of comparable companies has to be examined by the TPO/AO and we remand the issue to the TPO/AO. The law is well settled that the assessee is entitled to object to inclusion/exclusion of companies at the stage of appellate proceedings and there is no estoppel. Sasken Communication Technologies Ltd - This company derives income from 3 segments viz., (i) software services; (ii) software products and (iii) other services. The segmental operating margins are however not available. Therefore the operating margin for the SWD service segment of this company cannot be compared with that of the assessee. As relying on ELECTRONICS FOR IMAGING INDIA PVT. LTD. [ 2016 (2) TMI 1123 - ITAT BANGALORE] we direct at exclusion of this company from the list of comparable companies. Persistent Systems Ltd - DRP in its order accepted that the Annual Report of this company and says that this company is both into SWD services and products. No segmental details are available so that the margins of the SWD segment can be compared with that of the assessee. Hence this company cannot be regarded as comparable. For the very same reason this company was regarded as not comparable with a SWD service provider in the case of Electronics for Imaging (supra). DRP suo moto directing the exclusion of Thinksoft Global Services Ltd., R.S. Software (India) Limited and Mindtree Limited from the list of comparables - The said companies were selected by the Assessee and subsequently included by the TPO in the final list of comparables. These companies pass all the filters applied by the TPO. The assessee is seeking inclusion of the aforesaid companies as comparables. The Revenue in its appeal also seeks inclusion of these companies as comparables. In this regard, we find that the DRP has excluded the said comparables by applying the onsite revenue filter that too without putting the Assessee on notice as regards the same. We therefore hold and direct that these three companies be included as comparable companies. The relevant grounds of appeal of the assessee and Revenue are accordingly allowed. Exact comparability. - ICRA Techno Analytics Ltd. ('ICRA') - This company is engaged in software development consultancy services, licensing and sub-licensing fee, engineering services, web development hosting, business analytics, business process outsourcing services and product development and therefore, is functionally not comparable to the assessee. This Tribunal in DCIT v. Electronics for Imaging India P. Ltd [ 2016 (2) TMI 1123 - ITAT BANGALORE] directed this company to be excluded as a comparable in the case of assessees similar to the assessee herein. We therefore find no merit in ground No. 2 raised by the Revenue. Infosys Technologies Ltd. ( Infosys ) - We are of the view that the differentiating factors pointed out by the assessee cannot be said to be not material differences. Even if they are to be regarded as immaterial, the quantification of accurate adjustment to account for the differences is not possible. In such circumstances, it is safe to exclude the company as a comparable. This company is being consistently excluded from the list of comparables in similar cases. Tata Elxsi Ltd AND KALS Information Systems Ltd - The difference in functions is evident from the annual report of the company. Profit margin of the assessee adopted in MAP ought to be adopted as ALP mark-up for non-US based AE transactions - HELD THAT:- As the assessee or TPO have not made any distinction between US and Non-US AE transactions. In such circumstances, the margin accepted in MAP in respect of US AE transaction has to be regarded as Arm's Length mark-up cost for the Non-US AE transaction in the ITES segment. We hold and direct accordingly. In view of the above conclusion, the other grounds raised by the Revenue and assessee in their appeals on determination of ALP in the ITES segment become infructuous and calls for no adjudication and are dismissed. Grievance in the action of the TPO in not giving opportunity to assessee before making adjustment on account of negative working capita l - We are of the view that this issue was not raised by the assessee before DRP and hence, we deem it appropriate to direct the TPO/AO to consider the same in the proceedings for giving effect to this order in the set aside proceedings. Set off of brought forward loss - HELD THAT:- The assessee had filed its return of income claiming setting off of business loss based on the actual loss incurred and brought forward as per the Return of Income. Although the DRP directed to AO to verify and allow set off of the same, it was not done by the AO in the final Assessment Order. The assessee has therefore prayed that the same be allowed to be set off against income. We deem it proper to direct the AO to consider the claim of the assessee in accordance with law. Computing deduction under section 10A - export turnover inclusion/Exclusion - HELD THAT:- Whatever is excluded from export turnover should also be excluded from the total turnover following the decision of the Hon'ble Karnataka High Court in the case of Tata Elxsi . [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] - The decision of case of CIT Vs. HCL Technology Ltd.[ 2018 (5) TMI 357 - SUPREME COURT] settles the issue and it has been held therein that while computing deduction under section 10A of the Act by applying the formula set out in the said section, whatever is excluded from export turnover should also be excluded from the total turnover.
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2021 (9) TMI 376
Receipts from sale of carbon credit - proceeds realized by the assessee on sale of certified emission reduction credit, which the assessee had earned on the clean development mechanism in its wind energy operations - Revenue or capital receipt - HELD THAT:- As decided in S.P. SPINNING MILLS PVT. LTD. [ 2021 (1) TMI 1081 - MADRAS HIGH COURT] Carbon Credit is not an offshoot of business, but an offshoot of environmental concerns. No asset is generated in the course of business, but it is generated due to environmental concerns. It was also found that the carbon credit is not even directly linked with the power generation and the income is received by sale of the excess carbon credits. It was found that the Tribunal has rightly held that it is capital receipt and not business income. - Decided against the Revenue.
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2021 (9) TMI 375
Reopening of assessment u/s 147 - assumption of jurisdiction by the second respondent - Proceedings after expiry of four years from the end of the assessment year - taxability of the benefit derived from one time settlement (OTS) - waiver of loan liability as trading liability or capital liability - HELD THAT:- AO while completing the original assessment, took note of the submissions and in the assessment order dated 27.7.2009 u/s 143(3) of the Act, there was a discussion in respect of the OTS and the loans, etc. With regard to the hire purchase interest, AO noted that the same was not disallowed in the earlier years under Section 43(B) of the Act and as such, when it was waived, it became income of the assessee since the same was allowed in the earlier years as trading liability. Accordingly, a sum was assessed to tax under Section 41(1) of the Act. The issue, which appears to be the reason for reopening, was, in fact, discussed by the AO in the original assessment and it was completed. If such is the factual position, unless and until the AO has fresh tangible material brought on record while recording the reasons for reopening, the reopening of assessment, if permitted, would amount to review of the earlier decision, which is impermissible in law. Thus, we are satisfied that the assumption of jurisdiction by the second respondent to reopen the assessment is not sustainable. - Decided in favour of assessee.
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2021 (9) TMI 374
Reopening of assessment u/s 147 - Allowability of TDS credit - assessee filed a rectification application under Section 154 - as submitted that the reopening is sought to be done on the basis of Form 26AS and the report of the Justice MB Shah Commission - contentions raised by the assessee is that the TDS issue could not have been the basis for reopening the assessment as Form 26AS was very much available at the time of scrutiny assessment and based upon the said Form, TDS credit was granted to the assessee and based on the very same material, the Assessing Officer is not justified in reopening the proceedings - HELD THAT:- There is a mismatch in receipts appearing in Form 26AS vis-a-vis receipts credited in P L account. The receipts and TDS from the above mentioned parties were not appearing in Form 26AS whereas it was claimed by the assessee in the rectification application dated 20.07.2011. Assessing Officer has recorded that the assessee has claimed less TDS in respect of some other deductors and thereby suppressed corresponding receipts to that extent and during the assessment proceedings, the assessee did not produce the accurate particulars of income and TDS claimed and it is only after the rectification application was filed the issue cropped up. Further the Assessing Officer has noted from the rectification application that the assessee has claimed TDS which was neither claimed in the return under Section 143(1) nor during the assessment proceedings AO recorded that the assessee never disclosed and claimed the above TDS during the assessment proceedings though he had opportunity to do so and therefore, deliberately concealed the particulars during assessment proceedings. Therefore, we are fully satisfied that the issue which is now subject matter of the reopening was never discussed during the original assessment proceedings and no opinion was formed by the Assessing Officer during the original assessment proceedings on this issue. In fact, the issue cropped up only after the assessee filed the rectification application. Therefore, the contention of the assessee that the reopening is a case of change of opinion and based on surmises and conjunctures has to be outrightly rejected. What would be the effect of the report of Justice MB Shah Commission? - The writ petition filed by the State of Odisha was dismissed on the technical ground. In any event, it is too early for this Court to rule on the effect on the judgment of State of Odisha qua the assessee and undoubtedly this is a matter which is required to be adjudicated on facts. The specific stand of the revenue is that the assessee who was a raising contractor engaged for extraction of iron ore by the lessee, the contract charges corresponding to the value of the excess production has been believed to have been suppressed. This aspect has to be gone into in the re-assessment proceedings. Therefore, we are of the clear view that the assessee has not made full and true disclosure of all material facts during the original assessment, the reopening of the assessment was not based on the change of opinion but the facts which emanated after the rectification application was filed by the assessee and it is incorrect on the part of the assessee to state that the reopening of the original assessment was on assumptions and presumptions. The reliance placed on the interim directions which were issued during the pendency of the writ petitions is of little avail as the the main writ petitions have been dismissed which is subject matter of challenge before us in these appeals. Therefore, the assessee cannot be heard to say that they can advance their case based on certain interim directions issued in the writ petitions when the cases were pending before the learned Single Bench. Reopening proceedings have been validly done and the assessee should co-operate in the re-assessment to be done by the Assessing Officer. - Decided against assessee.
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2021 (9) TMI 363
Disallowance on account of delayed deposit of Employees Contribution to PF and ESI - delay in clearance of cheque - as argued the delay in such deposit was attributable to the technical reasons of delay in clearance of cheque although such cheques had been issued by the assessee on due dates as per the respective Acts of ESI and PF? - whether for the purpose of section 36(1)(va) of I.T. Act, date of deposit of cheque in the bank is relevant or the date of clearance of the cheque is relevant? - HELD THAT:- As decided in REPCO HOME FINANCE LTD. [ 2014 (11) TMI 487 - MADRAS HIGH COURT] even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques. The Hon ble High Court further held that once the cheque issued by the assessee is encashed, the payment relates back to the date of receipt of the cheque. We are of the view that the relevant date to be considered for the purpose of section 36(1)(va) of I.T. Act is the date of deposit of cheque in the bank, and not the date of clearance of the cheque. Consequently, we hold that the aforesaid amount as allowable under section 36(1)(va) of I.T. Act. Accordingly, we direct the Assessing Officer to allow the aforesaid amount - Assessee appeal is allowed.
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2021 (9) TMI 361
Disallowance of deprecation on Goodwill - assessee had entered into an Asset Purchase Agreement ( APA ) to acquire the Global Travel Service Centre ( GTSC ) as a going concern for lump sum consideration ( slump sale basis) - HELD THAT:- We find that the Co-ordinate Bench of Tribunal while deciding the issue in favour of the assessee on identical facts in A.Y. 2012-13 2013-14 2015-16 [ 2021 (3) TMI 472 - ITAT DELHI ] Revenue has not pointed to any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years. Revenue has also not placed any material on record to demonstrate that the ITAT orders in assessee s own case for earlier years has been stayed/ set aside/ overruled by higher judicial forum. AO was not justified in disallowing the claim of depreciation. - Decided in favour of assessee. Disallowance u/s 14A - details furnished by the assessee noted that assessee had earned dividend income which was claimed as exempt income - HELD THAT:- We therefore, following the order of the Tribunal in assessee s own case [ 2021 (3) TMI 472 - ITAT DELHI] for earlier years and for similar reasons hold that the AO was not justified in disallowing the expenses u/s 14A r.w.r 8D of the Act. We therefore direct the AO to delete the disallowance of expenses. Claim of deduction on account of payment of education cess - assessee in the return of income did not claim deduction for the education cess paid before the due date of filing return of income - HELD THAT:- We therefore, following the order of the Tribunal in assessee s own case for earlier years [ 2021 (3) TMI 472 - ITAT DELHI] and for similar reasons direct the AO to allow the claim of deductibility of cess - Thus the ground of the assessee is allowed.
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2021 (9) TMI 360
Credit of TDS - payments were received as an agent of the Government of Maharashtra - Assessee a wholly owned company of Government of Maharashtra and it is acting as an agent of the Government for carrying out all activities and statutory duties for the development of new town and the taxes were deducted on various payment made to the assessee - whether said amount is not included in the total income of the assessee? - HELD THAT:- The assessee had received the payments as an agent for representing as Development Authority or Special Planning Authority on behalf of the Government of Maharashtra. Therefore, the payments received by the assessee is not belongs to the assessee. Therefore, the TDS deducted on amount which is not the income of the assessee then whatever tax deducted as to be refunded to the assessee and which is belongs to the Government of Maharashtra. DR raised the issue that this refund will be income of the assessee or how this amount will be handled by the assessee is not known. This apprehension may not be proper as the assessee received only commission income as their service charges and all other income or money belong to the Government of Maharashtra and the payments never intended for the assessee - Decided against revenue.
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2021 (9) TMI 357
Disallowance u/s 14A - expenditure incurred for earning exempt income - HELD THAT:- Since the assessee had earned dividend income the CIT(A) has restricted the disallowance to that extent. Therefore, we do not find any infirmity in the decision of the CIT(A) and accordingly, upholding the same, we dismiss the ground raised by the revenue in all the appeals under consideration. Deduction u/s 80IA on Gross total income instead of on business income - whether the assessee can claim deduction u/s 80IA from the gross total income of the assessee? - HELD THAT:- As relying on case M/S. RELIANCE ENERGY LTD. (FORMERLY BSES LTD.) THROUGH ITS M.D. [ 2021 (4) TMI 1237 - SUPREME COURT] we deem it fit and proper to remit the issue back to the file of the AO with a direction to recalculate the deduction as per the provisions of section 80IA. Accordingly, ground No. 3 raised by the revenue on this issue in all the appeals under consideration is allowed for statistical purposes.
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2021 (9) TMI 355
Maintainability of appeal - low tax effect - exception carved out in Para 10(e) of the CBDT Circular No. 3/2018, dated 11.07.2018 - as argued issue involved in the appeal in question pertains to a penalty that was imposed u/s. 271(1)(c) of the Act in respect of addition of bogus purchases that was made on the basis of information received from the Sales Tax Authorities i.e. an external agency, therefore, pursuant to the exception carved out in Para 10 of the CBDT Circular No. 3/2018, dated 11.07.2018 the appeal was maintainable - HELD THAT:- Quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s. 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum addition. As is discernible from Para 10(e) of the aforesaid CBDT Circular No. 3/2018 (as amended on 20.08.2018), the same applies only to additions which were based on information received from external sources. Since the levy of penalty by no means could be construed as an addition within the meaning of Para 10(e) of the aforesaid circular, therefore, we do not find any merit in the claim raised by the revenue that the aforementioned exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its sweep penalty imposed by the A.O. under Sec. 271(1)(c) of the Act in respect of an addition of bogus purchases on the basis of an information received from Sales Tax Authorities i.e. an external agency. Accordingly, not finding any merit in the present miscellaneous application filed by the revenue, we dismiss the same.
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2021 (9) TMI 354
Addition u/s 68 - onus tp prove - identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions not proved - HELD THAT:- As seen that the assessee has duly discharged the primary onus of establishing the identity of the investor entities, proving their respective creditworthiness and to establish the genuineness of the transactions. The same stem from the fact that the assessee had furnished name, addresses, PAN, relevant bank statements, financial statements, Income Tax return copies of the share applicants, their respective confirmations, copy of Form No.2 filed with ROC towards allotment of shares etc. It is the findings of Ld. CIT(A) that the investments were sourced from transfer entries and there was no immediate cash deposit in the account of the investor entities. Onus was on revenue to rebut these evidences by bringing on record cogent material to dislodge assessee s evidences. However, except for relying upon the investigation findings, no independent enquiries or verifications have been done by Ld. AO. The sole basis of addition is the third party statements given by the directors of these entities. These were merely third party statements which, on standalone basis, could not form the basis of making additions in the hands of the assessee - allegations are not supported by any corroborative evidences. Once the initial onus was discharged by the assessee, it was incumbent upon revenue to carry out further investigation to support the allegation that the credits were unexplained - nothing of that sort has been shown to have been carried out. It is trite law that no additions could be based merely on doubts, conjectures or surmises - additions as made by Ld. AO are not sustainable in the eyes of law. - Decided in favour of assessee.
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2021 (9) TMI 352
Validity of Reopening of assessment - whether no justifiable reason for the AO to reopen the assessment in this case? - HELD THAT:- Since, the Department has miserably failed to show that there were any cogent and convincing reasons for the Assessing Officer to form belief that the income of the assessee has escaped the assessment or that there was any escapement of income because of the failure on the part of the assessee to disclose fully and truly all material facts. Since no document showing the compliance of the above mandatorily requirements for reopening of the assessment u/s 147 r.w.r 148 of the Act has been produced on the file, therefore, we hold that the reopening of the assessment, in this case, is bad in law. Accordingly, the impugned assessment order passed u/s 147 of the Act is hereby quashed. - Decided in favour of assessee.
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2021 (9) TMI 351
Disallowance on account of agriculture income - as per AO no proof of agricultural operation including purchase of inputs, sale of output and bills/vouchers for operational expenses provided by assessee - HELD THAT:- CIT(A) in the impugned order observed that no evidence for cultivation of the land, irrigation facilities, purchase of inputs etc. have been produced in the First Appellate Authority - As rightly pointed by the ld. DR and also emanating from the record that no evidences in support of claim were furnished in all the authorities including this Tribunal, therefore, we find no infirmity in the order of CIT(A) and it justified. Thus, the ground No. 1 raised by the assessee is dismissed. Addition made on account of Sundry Creditors - addition made as no evidence supporting the claim of assessee give - HELD THAT:- AO having confirmed the details of other parties in the books of account only sought information regarding the two parties. The assessee, however, failed to give the details as sought by the AO in the assessment proceedings and no evidences even filed before the CIT(A) in First Appellate proceedings and as rightly contended by the ld. DR no evidence before this Tribunal supporting the claim of assessee in respect of the addition made on sundry creditors. Therefore, we agree with the finding of CIT(A) - Decided against assessee.
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2021 (9) TMI 350
Deduction claimed u/s 10A - exclude expenditure incurred in foreign currency from export turnover while computing deduction u/s 10A - HELD THAT:- As relying on own case [ 2021 (6) TMI 987 - ITAT BANGALORE] we restore this issue to the file of Ld CIT(A) for examining it afresh. Reduce expenses incurred towards telecom charges and expenditure incurred in foreign currency from both export turnover and total turnover while computing deduction u/s 10A - It is now settled that the amount reduced from the export turnover has to be reduced from the total turnover also as held in the case of HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT] Accordingly, the decision rendered by Ld CIT(A) on this issue does not require interference TP adjustment in respect of Software development services (IT services) - Comparable selection - HELD THAT:- Exclusion of companies functionally different from that of assessee - companies with RPT in excess of 15% of operating revenues need to be rejected. Rejection of deduction u/s 10A in respect of sale proceeds which have not been realised within a period of six months - HELD THAT:- We notice that the circular issued by RBI allowed a period of 12 months for realisation of export proceeds. Accordingly, we direct the AO to recompute the deduction u/s 10A of the Act by considering the permitted period of realisation of export proceeds as 12 months. Disallowance u/s 14A - AO noticed that the assessee has earned exempt dividend income from mutual funds - AO computed disallowance under Rule 8D(2)(iii) @ 0.50% of average value of investments - HELD THAT:- The assessee has made fresh investments in six schemes of mutual funds during this year, out of which three schemes fall under Growth/reinvestment schemes. Considering the less number of schemes, in our view, it may not be proper to apply Rule 8D mechanically. Accordingly, we are of the view that the disallowance may be estimated to meet the requirements of sec.14A of the Act. Accordingly, we estimate the disallowance u/s 14A at ₹ 2.00 lakhs and in our view, the same would meet the requirements of the provisions of sec.14A of the Act. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s 14A to ₹ 2.00 lakhs. Disallowance of expenses on foreign language training of spouses of employees - AO disallowed the above said claim holding that the expenses incurred on spouses of employees for imparting training in foreign language is not for the purposes of business - CIT(A) also confirmed the same - HELD THAT:- CIT(A) has held that the payment for language skill enhancement of spouses of employees has got no link with the business of the assessee. In our view, the Ld CIT(A) was justified in holding so, since we also do not find any connection between the expenditure and the business of the assessee. Accordingly, we confirm the disallowance made by the AO. Short credit of TDS amount - HELD THAT:- Since this issue requires verification of factual aspects, we restore this issue to the file of the AO.
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2021 (9) TMI 349
Revision u/s 263 by CIT - amount received by the assessee company on sale of carbon/Voluntary Emission Reduction (CER/VER) certificates and renewable Energy Certificates (REC) which have been claimed exempt - As per the Pr. CIT, the said exemption was not allowable under any provisions of the Act and there is a complete failure on the part of the AO to examine the said exemption claimed by the assessee company - HELD THAT:- AO issued a specific show cause notice dated 28.09.2018 asking the assessee company to explain the carbon emission receipts as to how and under what statutory provisions the same has been claimed as exempt income when the same is in the nature of Revenue receipt. In response, the assessee company vide its submission dated 11.10.2018 has again reiterated its earlier submissions. In the instant case, AO has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order - assessee has also submitted its response explaining the factual as well as the legal position and the fact that the matter has been examined earlier by the Tribunal in assessee s own case for A.Y 2007-08 and which has also been affirmed by the Hon ble Rajasthan High Court - where the AO has taken into consideration the decision of the Tribunal as well as of jurisdictional High Court in assessee s own case and find that identical facts and circumstances of the case are prevailing during the year under consideration, the opinion formed by the AO cannot be held as erroneous in nature. It is therefore not a case of lack of inquiry as held by the Pr. CIT rather it is a case where the AO has taken into consideration the factual and the legal position, the decision in assessee s own case rendered by the Tribunal and affirmed by the Hon ble High Court and also the fact that there is prospective amendment in the statue which is not applicable in the instant year - findings of the ld. Pr. CIT to the effect that there is a failure on the part by the AO to examine the claim of exemption by the assessee and the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside. Amount paid by assessee company to organize the event Resurgent Rajasthan in nature of assistance/contribution and no details/nature of expenditure/utilization by the nodal agency, was available on record - Government of Rajasthan also entered into various agreements with Fertilizers, Cement and Steel Industries to setup new plants or expand their manufacturing activities which will directly benefit the assessee in increasing its turnover and profits as the main raw material in Fertilizer industries is Rock Phosphate, in Cement Industry is Limestone and Gypsum - steel industry also uses limestone for its various manufacturing activities. These industries will be having huge power requirement and assessee is a major supplier of Lignite used in power plants in the State of Rajasthan. Accordingly there are several direct and indirect benefits to the assessee by incurring this expenditure. Copy of the publication of the State Government showing various partnerships/MOUs taking place in the Resurgent Rajasthan 2015 Summit is enclosed as Annexure-II. Thus the expenditure is incurred solely for the purpose of the business of the assessee. Even if by incurring the expenditure, third party is also benefited, the same is a allowable expenditure u/s 37(1) - reliance was placed on various Hon ble Supreme Court and High Court decisions. It was accordingly submitted that where the Assessing Officer has made necessary inquiry/verification which he should have made and has applied his mind and has allowed the claim of the assessee, the order cannot be said to be erroneous in so far as prejudicial to the interest of the Revenue. In this second matter as well, the AO has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order. The assessee has also submitted its response explaining the factual position as to how the sponsorship payment to Bureau of Investment Promotion, the nodal agency for organizing Resurgent Rajasthan 2015 Summit has been incurred for the purposes of its business duly approved by its Board of Directors and its claim duly supported by various Court decisions, the opinion formed by the AO cannot be held as erroneous in nature. It is therefore not a case of lack of inquiry as held by the ld. Pr. CIT rather it is a case where the Assessing Officer has taken into consideration the factual and the legal position and then has decided to accept the claim of the expenditure so claimed by the assessee. Therefore, the findings of the ld. Pr. CIT to the effect that there is a failure on the part by the Assessing Officer to examine the claim of expenses by the assessee and the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside - Appeal of the assessee is allowed.
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2021 (9) TMI 348
Deduction u/s 54F - claim denied as date of completion of new house not give by assessee - it is not clear whether the house property was constructed within 3 years from the date on which transfer of original asset - HELD THAT:- The assessee has reinvested entire sale consideration of ₹ 19,20,000/- for purchase of land and constructed residential house property. It is also not in dispute that the assessee has completed construction of house property within 3 years from the date of sale of old asset. In fact, the AO in his assessment order had admitted that the assessee has completed construction of new house within 3 years. Thus once the assessee has reinvested its entire sale consideration for purchase / construction of another new asset within extended due date of filing return of income u/s.139(4) 139(5) of the Act, and also filed necessary evidences to prove that construction of house property was completed within 3 years from the date of sale of original asset, then there is no reason for the ld.CIT(A) to direct the AO to once again verify whether house property was constructed within 3 years from the date of transfer of original asset. Hence, we set aside the direction given by the CIT(A) and direct the AO to allow deduction claimed u/s.54F of the Act - Decided in favour of assessee.
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2021 (9) TMI 347
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - new plea before the authorities below - HELD THAT:- On perusal of the paper book filed by the assessee, we find that the penalty notice was issued on the assessee on 27.12.2016 and the assessee has filed reply vide letter dated 17.01.2017 as well as letter dated 30.06.2017 - at no earlier point of time, the assessee had raised the plea before the authorities below that on account of the defect in the notice, it was put to prejudice on the ground that the notice issued under section 274 r.w.s. 271(1)(c) of the Act, the Assessing Officer has not specified any specific charge either for furnishing of inaccurate particulars or concealment of income. In view of the factual position, the ground raised by the assessee is devoid of any merits. Our view is duly supported by the decision of the Hon ble Jurisdictional High Court in the case of Sundaram Finance Ltd. [ 2018 (5) TMI 259 - MADRAS HIGH COURT ] which was affirmed by the Hon ble Supreme Court reported in [ 2018 (10) TMI 1451 - SC ORDER ] The Hon ble Jurisdictional High Court has rejected the additional substantial question of law on the reason that the assessee had at no earlier point of time pointed out the defect in the notice that the notice issued under section 274 r.w.s. 271(1)(c) of the Act did not specifically state the grounds mentioned in section 271(1)(c) of the Act. In this case in hand, there is no such plea raised by the assessee before the Assessing Officer at the initial stage. Hence, the notice issued under section 271(1)(c) of the Act is valid notice and therefore, the ground raised by the assessee is not acceptable. Whether mere omission or negligence would not constitute a deliberate act of suppression? - The assessee has very well aware that the interest income from mutual fund is liable for taxation and accordingly filed the original return by offering the income for taxation. But, while filing the revised return, the assessee claimed the interest income as exempt, without any basis or evidence, and thus, the act of the assessee cannot be held as mere omission or negligence. Under the above facts and circumstances, we sustain the penalty levied under section 271(1)(c) of the Act and confirmed by the ld. CIT(A). - Decided against assessee.
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2021 (9) TMI 346
Chargeability of capital gains on sale of land - nature of land sold - capital asset within the meaning of Section 2(14) OR agricultural land - whether the agricultural land parcel in question situated at Village Adalaj, Gujarat falls within the definition of capital asset under s. 2(14)? - doctrine of consistency - claim of deduction u/s 54B - HELD THAT:- The view taken in the case of other co-owner has attained finality and ought to have been followed as a matter of judicial discipline. The Revenue cannot be permitted to take different stand in two different cases emanating from same set of facts. The case of the assessee for exclusion of agricultural land from the definition of capital asset placed in identical factual matrix thus requires to be upheld on this ground alone. As assessee has successfully demonstrated that the land parcels situated as Adalaj does not fall within the meaning of expression Municipality or Municipal Corporation and therefore falls in exception provided in sub-clause (a) to Section 2(14)(iii) of the Act. As stated on behalf of assessee, the development authority i. e. GUDA is a creation of statute. It cannot be equated with Municipal Corporation in the light of the ratio of decisions of Hon ble Kerala High Court in the case of Murali Ldge [ 1991 (6) TMI 38 - KERALA HIGH COURT] and Smt. T. Urmila [ 2012 (12) TMI 610 - ITAT HYDERABAD] as rightly pointed out on behalf of the assessee. Hence the impugned land falls outside the ambit of definition of capital asset provided in Section 2(14) of the Act. Consequently, the capital gains arising on sale of agricultural land which is not a capital asset cannot be brought to charge under s. 45 of the Act. We thus find merit in the plea of the assessee for exemption of capital receipt from ambit of taxation.Once, it is found that the capital gains arising from sale of agricultural land itself is not susceptible to chargeability, the claim of deduction under s.54B becomes infructuous and therefore not adjudicated upon. - Decided in favour of assessee.
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2021 (9) TMI 345
Addition u/s 36(1)(va) r.w.s. 2(24)(x) - Disallowance of employee s contribution towards EPF - assessee has made remittance pertaining to employee s contribution to EPF beyond the due dates - HELD THAT:- Respectfully following the above decision of the Hon ble Jurisdictional High Court in the case of CIT v. Industrial Security Intelligence India Pvt. Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] we direct the Assessing Officer to delete the disallowance of EPF contribution and accordingly, the ground raised by the assessee is allowed. Expenses claimed towards lease rent and interest paid to NBFC - Addition on the ground that the tax has not been deducted at source in respect of these payments - HELD THAT:- By filing certificates from Karvy Financial Service and Cholamandalam Investment Finance Co. Ltd., the ld. Counsel for the assessee has submitted that the recipients have declared the income and paid tax. Since the above certificates were not produced before the authorities below, we direct the assessee to produce the same before the Assessing Officer for verification and allow the deduction in view of the decision in the case of CIT v. Ansal Land Mark Township P. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] . Thus, the ground raised by the assessee is allowed for statistical purposes.
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2021 (9) TMI 344
Exemption u/s 54 - computation of capital gain - as new asset was purchased more than one year prior to the date on which the transfer in respect of the residential house had been effect AO disallowed the claim of exemption whether valid transfer took place within the meaning of section 2(47)? - assessee has intentionally projected the date of agreement of purchase of new asset, being May 2016/August, 2016 instead of the actual date of signing of Memorandum of Understanding only for the purpose of claiming exemption under section 54 - CIT-A allowed the deduction - HELD THAT:- CIT(A) has not discussed anything to hold that the sale of Bangalore flat by the assessee in March, 2017 was well within the permissible period of one year from the date of purchase of the new flat in question. S. No. 4 in the table given in the assessment order in page 3 shows that the assessee has paid a sum on account payee cheque on 18.02.2016 to M/s. DLF Home Developers Ltd., whereas, the DLF has issued allotment letter dated 05.04.2016. However, the ld. CIT(A) has not discussed anything about the above variation. Subsequent to DLF allotment letter dated 05.04.2016, M/s. DLF Home Developers Ltd. executed registered conveyance deed only on 16.08.2016, but in his written submission dated 06.03.2019 filed before the Assessing Officer, the assessee has claimed that physical possession of the flat was given to him sometime in May, 2016. CIT(A) has not considered the above facts in his appellate order. Therefore, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) and the ld. CIT(A) should examine the nature of entire payments and decide exact date of valid sale transaction of the new flat by passing an elaborate speaking order in accordance with law. Ground raised by the Revenue is allowed for statistical purposes.
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2021 (9) TMI 343
Deduction u/s 80P - assessee has earned interest on investment in Co-operative banks, nationalised banks - AO was of the view that principle of mutuality were violated by assessee and therefore denied the deduction - whether the authorities below were justified in denying the claim of the assessee for reduction u/s 80P(2)(a)(i) of the Act.? - HELD THAT:- Hon ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] has held that the expression Members is not defined in the Income-tax Act. Hence, it is necessary to construe the expression Members in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act.- facts are to be examined in the light of principles laid down by the Hon ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). Accordingly, we remit this issue of deduction u/s.80P(2)(a)(i) of the Act to the file of Ld.AO to examine the same de novo in the light of the above judgment. Accordingly grounds 2 stands allowed for statistical purposes Interest from investment in Cooperative banks, nationalised banks - HELD THAT:- This issue has been decided by coordinate bench of this Tribunal in case of Potters Cottage Industrial Co-Operative Society Ltd. [ 2021 (9) TMI 137 - ITAT BANGALORE ] - As relying on it we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d) - Grounds raised by assessee stands allowed for statistical purposes.
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2021 (9) TMI 342
Deduction u/s. 80P(2)(a)(i) - Denial of deduction as appellant deals with nominal and associate members - HELD THAT:- In respect of associate/nominal members, Hon ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] has held that the expression Members is not defined in the Income-tax Act. Hence, it is necessary to construe the expression Members in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act. The facts are to be examined in the light of principles laid down by the Hon ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). Accordingly, we remit this issue of deduction u/s.80P(2)(a)(i) of the Act to the file of Ld.AO to examine the same de novo in the light of the above judgment. Needless to say that proper opportunity of being heard is to be granted to assessee in accordance with law Accordingly grounds 2-4 and Additional Ground No.1 stands allowed for statistical purposes. Interest from investment in Co-operative banks, nationalised banks - HELD THAT:- This issue has been decided by coordinate bench of this Tribunal in case of Potters Cottage Industrial Co-Operative Society Ltd., for assessment years 2015-16 [ 2021 (9) TMI 137 - ITAT BANGALORE]. Thus as relying on it we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d). Grounds raised by assessee stands allowed for statistical purposes.
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2021 (9) TMI 341
TP Adjustment - selection of MAM - RPM or TNMM or Profit Split method [PSM] - assessee applied the TNMM for determining the ALP of the international transaction of 'Sale of finished goods' - TPO rejected such a method and applied the PSM - DRP has finally held that the RPM is the most appropriate method - assessee is in appeal challenging the correctness of the RPM as the most appropriate method - HELD THAT:- The entire mechanism in the subsequent sub-clauses of rule 10B(1)(b) is a consequence of this foundational fact. If the international transaction is not that of purchase by an Indian entity, then the RPM cannot be applied. Here is a case in which the assessee sold goods to its AE in the international transaction rather than purchasing the same. In fact, the purchases for such a resale were made from non-AEs. In such a scenario, we cannot countenance the DRP's direction to apply the RPM for the ALP determination of the international transaction of 'Sale of finished goods' to the AEs. Once the application of the PSM has been ruled out by the DRP and rightly so and further we have held hereinabove that the RPM is not the correct method to be applied, then there can be no hitch in accepting the assessee's contention of applying the TNMM as the most appropriate method in the facts and circumstances of the case. In fact, the DRP also directed to apply the TNMM for the next two years, which are part of this batch of appeals, in which the international transactions are sale of manufactured goods to the AEs. Assessee has came out with a contention that if the TNMM is to be applied, then its original ALP determination in the Transfer pricing study report should be accepted without remitting the matter to the AO. We cannot concur with this contention because the working done by the assessee in this regard has not been vetted either by the TPO or the DRP. The TPO rejected such a method and went ahead with the PSM and the DRP suggested the RPM. Hence veracity of the calculations made by the assessee under TNMM has yet to pass through the eyes of the authorities below. Under these circumstances, we set aside the impugned order and remit the matter to the file of the AO for a fresh determination of the ALP of international transaction of 'Sale of finished goods' under the TNMM as per law after allowing reasonable opportunity of hearing to the assessee. Operating cost base for computing the assessee's PLI - Expenses as brand building costs qualifying for exclusion - Assessee incurred Employee cost and Operating administrative expenses in relation to its manufactured products, which were sold in the year under consideration both in the domestic market to non-AEs and in the foreign market to the AEs. In such a situation, the assessee cannot justify the exclusion by correlating the same with its impact in the years to come -AR admitted that these costs were not capitalized in the books of account but were taken as revenue expenses for the year under consideration. Once these costs are incurred for the year in question and claimed as deduction in entirety in this year alone, we fail to understand as to how these can be correlated with the sales to be made in future years without capitalizing them for accounting or tax purpose. Albeit the assessee claims to have incurred ₹ 10.94 crores for the A.Y. 2012-13 and ₹ 23.89 crores for the A.Y. 2013-14 as operating cost for the future years, but neither capitalized them in the accounts for the years under consideration nor included them in the operating costs base for any of the future years. If we accept the contention of assessee to exclude such expenses, then they will neither form part of operating cost base for the years under consideration nor in the future years though these have actually been granted deduction in the computation of total income for the years in question. As the so-called brand building exercise done by the assessee facilitated making of the sales in the years under consideration, we are in full agreement with the DRP that the expenses so carved out and excluded from the operating cost base were liable to be included back. Whether brand building expenses have no relation with the sale of finished goods to the AEs and hence should be excluded? - We again fail to appreciate as to how brand building exercise does not help in facilitating profit from sales to related parties. Every sale to the AEs has a corresponding manufacturing also. A good brand not only helps in accelerating revenue side by pushing sales across the board to the related and unrelated parties but also reins in economies and efficiencies on the cost side - economies in terms of relatively cost-effective purchases of quality raw material and efficiencies in terms of having good and satisfied work force preferring to stick with an established and reputed brand thereby adding the value. Thus we do not countenance the contention that brand building exercise has no impact on the profitability from sales made to related parties. The position which finally emerges is that neither the Employee Cost and Operating and administration expenses have any relation with the 'brand building' nor even genuine brand building expenses can be excluded from the operating cost base on the facts and in the circumstances of the case. Thus the contention of the Ld. AR for reducing the operating cost base with the expenses of ₹ 10.94 for the A.Y. 2012-13 and ₹ 23.89 crores for the A.Y. 2013-14 is repelled. To sum up, we hold that the DRP rightly ordered the inclusion of such costs in the operating cost base for computing the assessee's PLI for both the years under consideration. Assessee's Additional ground contending that the reference made by the AO to the TPO for the second international transaction, without granting opportunity of hearing to the assessee - HELD THAT:- For the two years instantly before us, again the ALP determination by the TPO is confined to the only reported international transaction of sale made to the AEs. Unlike in the case of OIE, there is no second transaction referred by the AO to the TPO. Following the raison d'etre given for the preceding year, the additional grounds for these two years are also dismissed.
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2021 (9) TMI 340
TP Adjustment - interest-free debt funding of the SPV of the assessee - ALP adjustment on account of notional interest on a loan stated to be of this nature by the assessee company to its fully owned foreign subsidiary, which is used as an SPV for overseas acquisitions - HELD THAT:- We see no reasons to take any other view of the matter than the view so taken by us in assessee's own case for immediately preceding assessment year. For the sake of completeness, however, we may add that a part of the ALP adjustment here is on account of interest imputation on exchange difference on account of conversion of GBP denominated interest-free funding remittance in INR, and notional adjustment of the subsequent conversions in equity, by converting from GBP to INR. When the base transactions are in GBP, balances reflected on account of exchange difference for such notional conversions cannot be treated as outstanding dues, and, for this reason also, the ALP adjustments on account of interest attributable to resultant exchange difference must stand deleted. In any event, as the very conceptual basis for ALP adjustment for interest, under the CUP method, does not meet our approval and the entire addition stands deleted for this reason also. Respectfully following the order for the assessment year 2009-10, we uphold the plea of the assessee and delete the impugned ALP adjustment. Denial of admission for an additional claim at the stage of DRP on the ground that such a plea could only be raised by way of a revised return - HELD THAT:- As Learned representatives fairly agree that the issue in covered in favour of the assessee inasmuch as the Tribunal undisputedly has the powers to admit any new issue, whether or not the same is raised before the authorities below. We, therefore, admit the claim with respect to loss of ₹ 5 written off by the assessee, and remit the issue to the file of the Assessing Officer for adjudication on merits. That is precisely what the assessee is praying for. The assessee succeeds on this point as well.
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2021 (9) TMI 339
Block assessment u/s. 158BC - undisclosed income of the assessee - addition of the credit entries in two bank accounts - addition on protective basis on the ground that the assessee had withdrawn cash from two bank accounts - Second AO jurisdiction to make the addition substantively in the hands of the assessee - appeal raised by the assessee before the Tribunal in second round - assessee challenges that the AO was wrong in making the addition in the second reassessment order of 2002 on a new issue which was not subject matter to the set aside assessment by the Tribunal - HELD THAT:- It is common knowledge that after search u/s. 132 of the Act take place, the ADIT (Inv) files his Investigation Report taking into account, the seized material from all the searched persons/entities which throws light on the discovery of the unearthed undisclosed income of searched persons/entities and if the AO deviates from crucial aspects/facts the Ld. Pr. CIT/CIT would be expected to have stepped into by exercising his revisional jurisdiction u/s 263 of the Act, which has not happened in this case. So the First AO s action of only making protective assessment is more probable in the overall facts of the case and in all probability therefore, the same was added on a substantive basis in the hands of M/s SWC which fact could not have been disturbed in the facts discussed - Second AO could not have reviewed the order of his predecessor AO which power he does not enjoy. The action of the second AO to hold in the impugned order that no substantive addition was made in the hands of M/s. SWC for ₹ 11.86 cr. is clearly reviewing the order of the First AO and that action AO cannot do, but only the CIT/PCIT u/s 263 of the Act as per the Scheme of the Act is empowered to do; and this finding that no substantive addition of ₹ 11.86 crore was made in the hands of M/s SWC is contradicting as noted supra when in the same breath the Second AO notes that in the Second block re-assessment order of M/s SWC nothing was altered meaning status quo ante i.e. as it is without any change in the case of assessment of M/s SWC is concerned - Second AO did not enjoy the jurisdiction to make the addition substantively in the hands of the assessee Merits of the addition - Assessee has satisfactorily explained that the money has come from the coffers/bank accounts of M/s. SWC and its subsidiaries. And M/s SWC has funded it from ₹ 89.02 crores from ICDs of ₹ 219.77 crores, therefore AO in the block assessment of M/s SWC has disallowed interest expenditure of ₹ 67.65 crores alleging it to be for non-business purpose . Since substantive addition made originally in the hands of M/s SWC has been reiterated by the AO in its reassessment order dated 30.03.2000, the protective assessment was not warranted in the hands of assessee because the assessee has been able to discharge the onus of showing the nature and source of the credit entries in the bank accounts of M/s. Kalo and M/s. Pragati as well as in the bank accounts of Shri N. C. Jain and Shri P. L. Mittal which in turn are sourced from M/s. SWC and its subsidiaries; and it is evident that the source of money for M/s. SWC and subsidiaries was in turn from ICDs as discussed which prompted the AO to disallow in the hands of M/s. SWC the interest expenditure to the tune of ₹ 67.65 crores. Therefore, the addition to the tune of ₹ 12.41 crores made in respect of credit entries in the bank account of M/s. Kalo and M/s. Pragati are unjustified and, therefore, directed to be deleted. Thus, the assessee succeeds on the legal issue as well as on merits. - Decided in favour of assessee.
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2021 (9) TMI 338
Validity of reopening of the case u/s.147/148 - Bogus/paper transactions - reopening pursuant to the report received from the ADIT(Investigation), Ludhiyana information was received from the investigation wing, Ludhiana mentioning that Madan Lal Pahuja had issued bogus purchase bills - HELD THAT:- From the reasons to reopen, it is clear that the whole allegation was based upon the statement of Madan Lal Pahujarecorded by the Investigation wing on 7.1.2015. To our surprise, the statements of Jatinder kumar prop. Shree Nath Ispatudhyog and proprietor of M/S Lovy Steel Allied Industries were never recorded by the AO or the investigation wing. The allegation of bogus purchases from the said two parties were based upon the statement of Madan Lal Pahuja who had made the transactions with them. Assessee not provided the copy of the statement of Shri Madan Lal Pahuja recorded on 07.01.2015 - It is essential for the Assessing Officer to provide the copy of the foundation fact ,namely the statement of Shri Madan Lal Pahuja,to the Assessee at the time of providing reasons for reopen the assessment. The same has not been done by the Assessing Officer, which is contrary to the law laid down by Delhi High Court in the matter of Sabh Infrastructure [ 2017 (9) TMI 1589 - DELHI HIGH COURT] . From the reading of the answer given by Shri Madan Lal Pahuja in response to question no. 6 and 8 it is clear that the name of the Assessee have not been mentioned by the said Shri Madan Lal Pahuja, as beneficiary party to whom the alleged bogus bills were given by him. He had merely mentioned the name of Brokers with whom, he was carrying the transactions. However there is no evidence to link, the brokers, assessee and MrPhauja on record. Further there is no evidence brought to record , that the assessee had recerived bogus bills from the entities of Phauja. Once the information was available in the assessment record of the Assessee company for the assessment year 2010-11, which was subject matter of scrutiny assessment and on the basis of this information, the assessment was completed and the additions were made. In our opinion, the same information was admitted to be correct by the Assessing Officer in the reasons to reopen as it is matching with the information received from the Investigation wing. In our considered opinion, once the Assessing Officer formed an opinion on the information available on record and framed the assessment, then the Assessing Officer cannot be permitted to change his opinion based on same information. Assessing Officer at one point is saying that the purchases were made for ₹ 4.26 Crores and other point as against the figure given for ₹ 3.28 Crores. The abovesaid, clearly shows there was total non-application of mind by the Assessing Officer at the time of reopening the assessment. In view of thecontradictory facts on the matter of quantum of purchases, we quashed the reopening made by the Assessing Officer on this ground also. - Decided in favour of assessee.
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2021 (9) TMI 332
Unaccounted investment in land - Investment from undisclosed sources - Purchase of land in joint name - acceptance of registered sale deed over the Agreement - HELD THAT:- Agreement though mentions names of 15 persons as sellers but is actually signed by only one person. Similarly, it records 2 persons as buyers but has been signed only by one buyer. Further, this is not a registered document. Thus, on one hand, there is the Agreement which is partly signed by the parties and whose contents have not been verified by the AO and on the other there is a registered sale deed duly signed by all the buyers as well as sellers indicating the sale consideration of ₹ 45.00 lakh. Factor which weighs in accepting the registered sale deed over the Agreement is that the stamp value of the plot of land purchased by the assessee, as recorded in the impugned order, is ₹ 12.09 lakh, which is far away from the value given in the Agreement. - there are two buyers of the plot of land viz., the assessee and Mr. Nitin Navandar. The ld. DR was directed to give the status of the assessment in the case of Mr. Nitin Navandar for ascertaining if similar addition was made in his hands as well. On the next date of hearing, the ld. DR submitted that no addition has been made in the hands of Mr. Nitin Navandar. The registered sale deed needs to be acted upon in preference to the Agreement dated 17-06-2010. We are, therefore, satisfied that the plot was purchased for ₹ 45.00 lakh as given under the registered sale deed. Thus, no addition made in the hands of the assessee is called for. We, therefore, order to delete the same. - Decided in favour of assessee.
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2021 (9) TMI 331
Estimation of income - Bogus Purchases - HELD THAT:- Profit element embedded in the value of disputed purchases that needs to be brought to tax in the instant case should be 3%. Accordingly, the grounds raised by the assessee are partly allowed.
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2021 (9) TMI 330
Reopening of assessment u/s 147 - reopening argued as time barred - assessee argued there cannot be two notices u/s 148 of the Act for the same transaction - addition made invoking of section 50C(1) - HELD THAT:- During the course of hearing, Ld. Sr. DR fairly conceded that these grounds have not been adjudicated by way of a speaking order. We, therefore, set aside the impugned order and restore the grounds of appeal raised by the assessee in this appeal before Ld.CIT(A) to decide the appeal afresh by way of speaking order on each ground raised in Form No.35 by the assessee The case being very old related to the Assessment Year 2006-07. However, in the absence of a specific adjudication by the First Appellate Authority, we deem it proper to restore the grounds to the file of Ld.CIT(A) for adjudicating the grounds raised in Form No.35. Ld.CIT(A) is hereby directed to dispose of grounds - Appeal of assessee allowed for statistical purposes.
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2021 (9) TMI 329
Validity of reopening of assessment u/s 147 - valid satisfaction recorded by the Ld. JCIT under section 151 or not? - mandation of approval of the competent authority i.e; JCIT - addition of capital gain - HELD THAT:- As relying on Shri Satnam Singh, Jalandhar [ 2021 (6) TMI 1060 - ITAT AMRITSAR] approval given by the JCIT, Range-1, Bathinda, it is clear that the satisfaction has been recorded in a mechanical manner, without applying the mind, for issuing the notice under section 148 of the Act - reopening of the assessment under section 147 of the Act by issuing the notice under section 148 of the Act is quashed - Decided in favour of assessee.
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2021 (9) TMI 328
Overriding nature and supremacy of the provision of IBC, 2016 - income Tax, Sales Tax/VAT/GST, Excise, Entry Tax, Municipality, Land Due, Water Department Dues etc. by way of Taxes, Fees, Penalties, penal Interest, Damages, TDS, VAT, GST etc. over and above the Amount stated in the Resolution Plan - Liabilities accrued/due under Statutory Dues - Liabilities/Litigations/Disputes/Appeals with Income Tax Dept - Approval by NCLT for all Statutory Dues accrued or may get accrued due to Past Liabilities as on insolvency commencement date - HELD THAT:- As the resolution plan filed by the corporate debtors which has been approved by the COC has been accepted by the NCLT under the provision of section 31(1) of the Insolvency Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016 ). We note that this order is binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. AR submits that the order of NCLT is binding on the Income Tax Department and the Hon ble Apex Court in the case of PCIT Vs. Monnet Ispat Energy Ltd. [ 2018 (8) TMI 1775 - SC ORDER ] opined the overriding nature and supremacy of the provision of IBC, 2016. In view of the aforesaid Resolution Plan approved by the NCLT, we note that this appeal filed by the revenue cannot be further pursued by them and, therefore, the appeals have to be dismissed.
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2021 (9) TMI 327
Penalty u/s 271(1)(c) - disallowance of transport expenses - payment made in cash - Proof of concealment of income - onus of proof shifted to the assessee - HELD THAT:- In the present case penalty has been levied by the Ld. A.O for furnishing the inaccurate particulars of income but nowhere from the assessment order or the penalty order is discernable that what type of particulars have been filed incorrectly by the assessee. No efforts were made by the Ld. A.O during the course of assessment proceedings to examine the genuineness of the transaction of transport charges paid by the assessee to M/s Kosar Transport Company. Just because the payments were made in cash cannot be a basis to doubt the genuineness of the expenditure. Since the disallowance are made on adhoc basis by applying the rate of 15%, holding the assessee liable to pay penalty for furnishing inaccurate particulars of income cannot be held to be justified. - Decided in favour of assessee.
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Customs
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2021 (9) TMI 380
Suspension of Customs Broker License - Deemed Suspension or automatic suspension? - validity of respondents action of displaying of Alert in the Customs EDI system - infringement of petitioners right to livelihood and right to carrying on its business - Section 154 of the Customs Act, 1962 - Security deposit has the same nature and character legally as of Duty and Penalty or not - pre-deposit of the penalty amount imposed in the original adjudication order - pre-deposit would amount to automatic stay or revocation of the order of the forfeiture of security deposit passed in the original adjudication order - HELD THAT:- The impugned action of suspending Customs Broker Licence of the petitioner which is penal in nature depriving livelihood of the petitioner, is not supported by any provision of law and has no legal sanction and is not sustainable in law since it is settle position of law that every action of the statutory authority must be supported by legal provisions and authorization by the statute and a statutory authority cannot act or do anything which has not been authorised under the law and it shall act only in the manner it has been authorised by law - The impugned order of corrigendum under Section 154 of the Customs Act, 1962 is not sustainable in law since in the name of rectification of clerical or arithmetical or typographical mistake neither any additional penal order of suspension of licence can be inserted nor any fresh condition can be imposed for restoration of Customs Broker licence when the punishment of suspension of licence itself had no existence in the original order of adjudication. Whether the term Security deposit has the same nature and character legally as of Duty and Penalty ? - whether by mere pre-deposit of 7.5% of the penalty amount imposed in the original adjudication order, in filing the appeal would amount to automatic stay or revocation of the order of the forfeiture of security deposit passed in the original adjudication order against which appeal has been filed? - HELD THAT:- The term Security deposit cannot be equated with the term Penalty or Duty and their nature and character are totally different since security deposit does not arise out of any demand and Security Deposit is a condition precedent for granting Customs Broker Licence while the Duty and Penalty arise out of a transaction and adjudication proceeding and security deposit has nothing to do with Duty or Penalty which arise out of an adjudication proceeding. Petitioner itself before filing the appeal has made predeposit of 7.5% of the penalty only which was imposed in the adjudication proceeding and not any pre-deposit of any percentage of amount of the security deposit - On perusal of Section 129 E of the Customs Act, 1962, it is found that it talks only about pre-deposit of certain percentage of duty demand or penalty imposed before filing appeal and nowhere it talks anything about the security deposit. Considering the circulars and relevant provisions of Customs Act etc., only by mere pre-deposit of 7.5% of the penalty in filing appeal against the order of adjudication imposing both penalty and forfeiture of security deposit, order of forfeiture of security deposit will not stand stayed/revoked automatically unless specific order of stay of the same or is revoked by the appropriate authority. This position becomes more clear from the conduct of the petitioner that it has made pre-deposit of 7.5% of the penalty only and not pre-deposit of any percentage of amount of security deposit which has been forfeited by the adjudicating authority. There is no existence of any provision of Deemed Suspension or automatic suspension of licence of a Customs Broker under the Customs Act, 1962 or under the Customs Brokers Licensing Regulations, 2018 and action of the respondent Customs authority suspending the Customs Broker Licence of the petitioner infringing the petitioner s right to livelihood is penal in nature and is without any authority of law and is without jurisdiction since respondent Customs authority has failed to show any document of formal order of suspension of Customs Broker licence under Regulation 16 of Customs Brokers Licensing Regulations, 2018 - Regulation 18 (3) of the Customs Brokers Licensing Regulations, 2018 and no other provisions of the said Regulations or the Customs Act does confer any power upon the Commissioner of Customs to waive or dispense with the fulfilment of criteria and compliance of formalities under Regulation 16 (1) (2) of the Customs Brokers Licensing Regulations, 2018, for suspending Customs Broker licence of the petitioner. Petition disposed off.
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2021 (9) TMI 369
Seeking provisional release of goods - Black Pepper - Goods of Sri Lankan Origin - prohibited goods or not - Section 110A of the Customs Act, 1962 - HELD THAT:- There is no dispute that the petitioner is having licence to import and he has admittedly imported eight consignments of Black Pepper from Sri Lanka, which is the originating country and it had been imported through the Tuticorin port. The same has been intercepted and it has been seized on the ground allegedly that the goods imported is a prohibited goods, in view of the notification dated 25.07.2018 of DGFT. One thing has become clear that, it is not the stand of the Customs authorities while passing the impugned order that, the petitioner does not have even the right of making application seeking provisional release of the goods before adjudication commences. However, now the stand has been taken by the respondent Customs, as has been vehemently contended and projected by the learned Standing counsel for the respondent that, even the right of making application to get the provisional release of the goods, if it is a prohibited one, does not arise. If at all the Customs Department finds with documents to substantiate that the goods in question having been imported by the petitioner is prohibited goods within the meaning of 25.07.2018 notification issued by DGFT, apart from taking a decision of declaring the goods as prohibited goods and imposing penalty etc., they can also make a strong recommendation to the DGFT to initiate action against the importer under the provisions of Foreign Trade (Development and Regulation) Act, 1992, especially under Section 8 referred to above and to allow the same to reach its logical conclusion. As it is a drastic decision to be taken by the Foreign Trade Department with the recommendation of Customs Department in any given case, where the documents are rightly available with the customs department, this Court feels that some check and balance measure can be ensured to be placed as against these kind of importers. The respondent is hereby directed to pass orders for releasing the goods in question by way of provisional release ofcourse by imposing the conditions - Petition disposed off.
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2021 (9) TMI 359
Refund claim - principles of unjust enrichment - duty of customs was paid @7.5% instead of 5% provisionally - At the time of final assessment, the benefit of notification was extended - Entitlement to preferential rate of BCD - ELD THAT:- once it is an admitted fact that duty has been collected in excess from the appellant during pendency of finalization of provisional assessment, the same has to be returned to the assessee once his books of accounts are showing such an excess duty paid as receivable. The same is the sufficient evidence for the fact that incidence of duty has not been passed on by the assessee/manufacturer from the end customers of the product manufactured. The facts of the present case are absolutely in contrast from the decision in the case of HINDUSTAN PETROLEUM CORPN. LTD. VERSUS COMMR. OF CUS. (IMPORTS) , MUMBAI [ 2015 (2) TMI 1136 - CESTAT MUMBAI] . In M/s HPCL case, the assessee had shown the amount as was prayed to be refunded by him, as expenditure in his books of accounts. It has been held in the said decision that once the amount has been shown as expenditure and not as receivables it definitely becomes the case of unjust enrichment. Admittedly, in the present case, the amount in question was shown as recoverable/receivables. The bar of unjust enrichment is therefore held to have wrongly been invoked by the Commissioner (Appeals). As there have been sufficient documentary evidences in the form of books of accounts on record and thus the Commissioner (Appeals) has been held to have wrongly ignored the said document. In addition to those documents, there has been a certificate by the authorized auditor of the appellant produced on record certifying that the amounts as has been prayed to be refunded has been the receivables by the appellant, the incidence thereof has not been passed on to any other person. The said certificate has to be considered as comprehensive proof in respect of the fact that the burden of duty has not been passed on by the appellant to the respondent more so for the reason that the department has not been able to show that the certificate is incorrect or doubtful. The certificate has to be considered as the sufficient evidence to prove that present is in the case of unjust enrichment. Refund allowed.
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Corporate Laws
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2021 (9) TMI 336
Sanction of Composite Scheme of Arrangement - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- Considering the factual position of the present case for sanctioning of the Scheme of Arrangement, it seems that all statutory compliances have been fulfilled. Therefore, the Petition filed is made absolute in terms of prayers made in the Petition. The present joint Company Petition is allowed.
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2021 (9) TMI 335
Reduction of share capital - Section 66 of the Companies Act, 2013 - HELD THAT:- The Petitioner Company availed loans from Allahabad Bank and Bank of India and it could not repay the same. Subsequently these loans were converted into shares and even the company collected share premium of ₹ 15.00 per share from the Bank of India. These shareholders are really Financial Creditors for practical purpose - the company has been incurring loss for last 18 years. There is no operation and no staff. The management has failed to operate and earn profit. At this stage, the Company passes Resolution to cancel the shares including the shares of the Financial Creditors almost 100% with an intention to mobilize fresh funds/investment from new Financial Creditors/Investors showing a Rosy Balance Sheet to the Public. This Company is considered to be a fit case for winding up so that further Lenders or Investors are not duped and attracted to the proposed Window Dressing Balance Sheet to sanction loan or invest. This is a company is of 73 years old and it may earn some amount by way of sale/transfer of Brand Value of Brook Bond Estates India Ltd./Assambrook Ltd. on winding up or Resolution and distribute the proceeds among the Creditors and Shareholder. The prayer made by the Applicant to confirm the resolution passed is rejected - Petitioner is hereby directed to send the copy of this Order to all shareholders having shares of 5% and above as on 31.03.2020 including the SASF besides uploading the Order at the Company's Website and file the proof of delivery of the Order to such shareholders with the Registry within 15 days from today.
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2021 (9) TMI 333
Sanction of Scheme of Amalgamation - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2021 (9) TMI 364
Seeking necessary instructions to the RP to consider the claim without having any regard to the delay - admission of claim of the Applicant before RP - adoption of Resolution Plan (not been approved till today and the approval of which would render the present application infructuous), without the admission of the instant claim of the applicant - the claim was duly presented before the RP at an appropriate stage which warranted admission as per the settled law - HELD THAT:- The fact is categorically established that the Appellant was having full knowledge of the CIRP and deliberately not submitted his claim within time and after expiry of 90 days filed the claim which was rightly rejected by the Resolution Professional. There is no illegality committed by the Ld. Adjudicating Authority - Appeal dismissed.
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2021 (9) TMI 362
Jurisdiction - power of Adjudicating Authority to adjudicate the matter under the I B Code - Respondent/Applicant is neither a Financial Creditor nor an Operational Creditor - debt and default existing in terms of the I B Code or not - case of Appellant is that there is no provision for return of money together with interest under the Share Purchase Agreement between the parties and therefore, the Respondent is not a Financial Creditor viz-a-viz the Appellant - HELD THAT:- The essence of any debt to be described as financial debt is the time value of money as Borrowing is a name for money transaction. The word debt is applicable to a sum of money which has been promised at a future day as against a sum nor due and payable. In fact, a sum of money which is certainly and in all events payable is a debt, in regard to the fact whether it is payable now or at a future date - Under the I B Code, 2016 the shift is from inability to pay to an existence of default. No doubt, the Adjudicating Authority is not required to decide the amount of default. Even if a debt is disputed, if the same is more than ₹ 1,00,000/- then the application filed under Section 7 of the Code is maintainable in Law. The actuality of debt was proven by virtue of the concerned terms which formed part of the order of the Adjudicating Authority dated 24.09.2020. When a Settlement was arrived at between the parties, it is the pre-module duty of the Corporate Debtor to effect payments proposed by virtue of the Settlement after committing default, the Appellant cannot take altogether different stand, especially when the tenor and spirit of Share Purchase Agreement was not adhered to - when the Appellant had promised to repay the advanced sum paid by the Respondent/Applicant to it, then there is not only a violation of the Share Purchase Agreement dated 21.11.2012 but also the non-payment of amounts comes squarely under definition of Section 5(8) of the I B Code pertaining to Financial Debt. In the instant case, it is quite clear that the order admitting the application under Section 7 of the Code, filed by the Respondent/Applicant has not been assailed by the Appellant. In fact, in the Impugned Order dated 30.03.2021 passed by the Adjudicating Authority in IBA/13/KOB/2020 whereby and whereunder the application filed by the Respondent/Applicant was admitted, the said Adjudicating Authority came to the conclusion that the Respondent/Applicant had proved the existence of a debt as well as existence of default and had discussed in detail about the same in the order dated 25.08.2020, which speaks for itself. This Tribunal comes to an inevitable and inescapable cocksure conclusion that the aforesaid promise comes squarely within the ambit of definition of Financial Debt and that the Respondent/Applicant is without any haziness is a Financial Creditor in the eye of Law - Suffice it for this Tribunal to pertinently point out that the Appellant/Corporate Debtor had not adhered to its commitment in respect of Share Purchase Agreement dated 21.11.2012 and had not paid the amount admittedly, especially in the teeth of the fact that the debt due arises out of the said Share Purchase Agreement. The Impugned Order passed by the Adjudicating Authority (National Company Law Tribunal, Kochi Bench, Kerala) in admitting the Application IBA/13/KOB/2020 does not suffer from any material irregularity or patent illegality in the eye of law - Appeal dismissed.
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2021 (9) TMI 337
Correctness of admitting the application - for same debt two proceedings could not be maintained or not - Co-borrowers and Guarantor - interpretation of scope Borrower and Pledgor - Loan cum Pledge Agreements - HELD THAT:- M/s Premier Ltd. and M/s Doshi Holdings were Co-borrowers and promised to pay back the loan with interest. Their liability to pay is joint and several liability. The Promisee may recover the amounts jointly or severally. Here we are not concerned with rights and liabilities inter-se between the Co-borrowers when debt is enforced against one or the other or both of them - A Co-borrower is as much a Borrower like the other entity and is fully liable to repay the loan taken and it is immaterial as to in which account Co-borrowers received the money, when receipt is an admitted position. The Appellant is arguing that for same debt two proceedings could not be maintained. Piramal s [ 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] Judgment was matter relating to filing of proceeding against Principal Borrower as well as Corporate Guarantor and in that context this Tribunal had held that for same debt there could not be two separate proceedings and that in one proceeding filed under Section 7 of IBC action against two Corporate Debtors was not contemplated. We need not enter into the question if in Pledgor-Pledgee relationship would it be Financial Debt. Doshi Holdings, in addition to stepping into the shoes of Co-borrower, which is financial debt, additionally pledged shares. The liability invoked by Financial Creditor is on the basis of Corporate Debtor being Co-borrower and not merely Pledgor. It is surprising to find that the Appellant is denying liability on account of Doshi Holdings when the Appellant has signed joint documents after documents in favour of Respondent No.1 as Authorised Signatory for both the Companies - Corporate Debtor cannot be permitted to back out from the documents and promises made. When the Adjudicating Authority admitted the Application under Section 7 of IBC although there was error in observations where reference is made interchangeably to Co-borrower and Guarantor. The Adjudicating Authority at the same time dealt with the case as a matter of Co-borrower. It is a case of Co-borrower, we decline to interfere with the impugned order admitting the Application. Appeal dismissed.
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2021 (9) TMI 334
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors failed to make repayment of its dues - Rate at which green tea supplied, was not mentioned - amount payable and the date of default established or not - existence of debt and dispute or not - HELD THAT:- It is evident from the Agreement that the Rate per kg. of green tea leaves is not fixed on the date of agreement. It would be fixed in future. On the other hand, the Respondent is expected to supply 12.50 lacs kgs. of quality green tea leaves to the Applicant without knowing the rate. It is clearly established that the amount payable and its due date are not known neither to the Petitioner nor to the Respondent. Hence, the amount payable and the date of default is not established - It is further found from the documents and submissions made during the arguments that the Applicant has not provided the details to the Respondent relating to the quantum of green tea leaves received, rate at which it is sold, the amount of sales proceeds credited and the said bank account maintained. Derivative arrangement or provision is also not there. The Auditor has not shown this amount as Overdue/NPA in its report. Tea Industry is a going concern. The Applicant has reportedly given further advance of ₹ 98,50,000.00 on its own. Auditor has reported that the copy of the Original Agreement was not furnished to them while the balance sheet was being prepared by them. No further balance sheet has been prepared after 31.03.2018. Existence of debt and dispute or not - HELD THAT:- One of the prime conditions for admission of Application filed under Section 7 of IBC is that there should exist a debt which has become due and payable by the CD, the CD has committed default in payment of the same on due date and the date of default must be established. In this case, the documents have not been produced by the Petitioner to show the quantum of green tea leaves received from CD, the rate at which green tea leaves purchased/sold and the amount payable to/receivable from the CD and thereby it is clear that the amount of default and the date of default are not established. Then the pleadings of the Applicant that the Respondent has defaulted in making payment of the amount due do not carry any substance - the Application filed under Section 7 of IBC needs to be rejected on this ground also. The appropriate Authority may take cognizance of prevailing of this type of Agreement and take suitable measures so these type of Agreements with such terms and conditions are not in operations and the needy Tea Estates Companies availing advance from others for supply of Green Tea Leaves are prohibited from the Debt Trap, Exploitation, Imminent Closure, Hostile Takeover and Liquidation, When Advances/loans are available from the established Financial Institutions/Banks with transparent, fair terms conditions, insurance coverage and reasonable/lower rate of interest to the Tea Estates/Tea Plantation/Agriculture Advance/MSME Tea Industries. This Application filed under Section 7 of IBC is rejected.
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PMLA
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2021 (9) TMI 370
Provisional attachment of immovable properties - scheduled offences under para A of the schedule to the PML Act - proceeds of crime - recovery of cash amount form residential premises - equitable relief under the writ jurisdiction of this Court - Section 5(1) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The petitioners have not challenged the show-cause notice and are only seeking to challenge the provisional attachment order. The reason assigned by the petitioners is that the present challenge was filed before this Court on 28th April, 2021 i.e. much prior to the show-cause notice dated 17th June, 2021 and thus, the same will remains alive inspite of the show-cause notice. The petitioners cannot thwart the due process of law and halt the investigation under the guise of raising insignificant things. We have already discussed the scheme of the PML Act. The petition has been filed on mere issuance of the provisional attachment order dated 9th April, 2021 under Section 5 of the PML Act. The respondent has filed original complaint on 7th May, 2021 in the present provisional attachment order. The said order is required to be confirmed by the adjudicating authority constituted under Section 6 of the Act. The authority has had after receipt of the complaint issued show-cause notice requiring the party to file their reply. The order which would be passed by the adjudicating authority is appealable one under Section 26 of the PML Act before the appellate Tribunal - The petitioners are required to be relegated to the concerned authorities as prima facie it appears that the authorities are proceeding by following due process of law. The petitions are devoid of merits and looking to the conduct of the petitioners, they are not entitled to seek any equitable relief under the writ jurisdiction of this Court - Petition dismissed.
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Service Tax
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2021 (9) TMI 358
Refund of service tax paid - input services utilized in connection with the authorized operations of their SEZ unit - exempt services or not - rejection on the ground that the said services are not approved by the Development Commissioner, VSEZ except for partial refund as shown in the list of invoices as per the provisions of N/N. 12/2013-ST dated 01.07.2013 - overriding effect of SEZ Act - HELD THAT:- The provisions of Section 26 read with Rule 31 of the SEZ Rules have overriding effect over anything inconsistent contained in any other law for the time being in force, which would include the Finance Act. It needs to be noted that the Notification dated March 3, 2009 has been issued in exercise of the powers conferred by Section 93 of the Finance Act. Thus, when the services rendered by the appellant are fully exempted from service tax in terms of the provisions of the SEZ Act, the condition of exemption by way of refund imposed under the Notification issued under the Finance Act would be inconsistent with the provisions of the SEZ Act. It also needs to be noted that the SEZ Act was enacted in 2005, much after the enactment of the Finance Act in 1994. This Tribunal in M/S DLF ASSETS PVT. LTD. VERSUS THE COMMISSIONER, SERVICE TAX, DELHI I [ 2020 (11) TMI 35 - CESTAT NEW DELHI] , placed reliance upon the aforesaid decision of the Andhra Pradesh High Court in GMR Aerospace Engineering Ltd., and observed that the conditions set out in the notification dated March 3, 2009 were not required to be examined in view of the provisions of the SEZ Act - In MAST GLOBAL BUSINESS SERVICES INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [ 2018 (9) TMI 258 - CESTAT BANGALORE] , the Tribunal held that the SEZ Act had an overriding effect, in view of the provisions of Section 51 of the SEZ Act, over all other laws and, therefore, the ground for rejecting the refund claims was not tenable in law and even otherwise, approval from UAC was only procedural in nature and not a mandatory condition. The finding of Commissioner (Appeals) that since ocean freight service has been included in the list of services with SEZ services authorities only on 27.11.2017 i.e. subsequent to their refund application, the retrospective application can not be allowed is not sustainable - appeal allowed - decided in favor of appellant.
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2021 (9) TMI 356
Levy of penalty - non-payment of service tax - reverse charge basis - GTA services - commission to foreign entity - service tax was paid on being pointed out - malafide intent present or not - HELD THAT:- The appellant has paid the service tax as soon as it was pointed by the auditor and again in cash when it was pointed out that it has to be paid in cash. In these circumstances, there are no malafide on the part of the appellant. Therefore, benefit of section 80 should be extended for the appellant and penalty under section 76 and 78 are set aside. The appellant have already conceded that they are not contesting the payment of duty. Demand of service tax - reverse charge basis - commission to a foreign entity - levy of penalty - HELD THAT:- The period is prior to introduction 66A when the duty is not leviable. In this circumstance, there are no justification in imposition of penalty under section 76, 77 and 78. The penalty imposed under section 76, 77 and 78 are set aside. The appellant has already conceded that they are not contesting payment of duty. The appellant has however conceded payment of penalty under section 77 in respect of first charge. Appeal allowed in part.
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Central Excise
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2021 (9) TMI 353
CENVAT Credit - credit availed on capital goods but not utilized and maintained in the credit balance - reversal of the amount on being pointed out - applicability of exemption N/N. 30/2004-CE - HELD THAT:- Since the credit was availed but the same was reversed before utilization, it will amount to non-availment of credit as held by Hon ble Gujarat High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS ASHIMA DYECOT LTD. [ 2008 (9) TMI 87 - HIGH COURT GUJARAT ] and maintained by Hon ble Supreme Court reported in [ 2009 (3) TMI 975 - SC ORDER ]. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (9) TMI 379
Jurisdiction - Power of Tribunal to enhance the tax liability - Section 57 of the U.P. Value Added Tax Act, 2008 - manner of assessment by the taxing authorities, correct or not - working days ought to have been worked out treating it to be 300 working days, whereas assessment was made on the basis of lesser days of working - Whether the Tribunal being a last fact finding authority is legally correct in remanding the case to appellate authority for decision afresh when all the material for deciding the case was available on record? - HELD THAT:- It is admitted fact that the order of assessment the assessee preferred appeal and all facts and materials relating to determination of petitioner's liability to pay tax were available on record before the appellate authority. When the matter was carried further in appeal before the Tribunal, all relevant records were available with the Tribunal itself. The Tribunal, in such circumstances, could exercise its power in the manner specified in Sub-section (8) of Section 57 of the Act of 2008 - the enquiry contemplated in Sub-section (b) of Section 57(8) of UP VAT Act, is with regard to determination of facts which are not sufficient for determining the liability to determine tax. Materials for correct determination of liability to pay tax did exist on record. The Tribunal would not be justified in suggesting a different course only for enhancing the tax liability. The Tribunal is an independent adjudicatory authority having jurisdiction to determine the liability to pay tax. Under the Act it has no power to enhance the liability to pay tax determined by the taxing authorities. Where sufficient material exists on record the Tribunal is expected to decide the matter, on merits. It has no power to pass an order of remand only because it is of the opinion that a higher tax liability ought to be imposed although revenue has decided not to prefer any appeal against the determination of tax liability. Remand would not be permissible unless it is eminently required for justifiable reasons - The Tribunal could have either accepted the determination made by the authorities or could have varied such order but a direction of remand is not justified since all relevant materials did exist on record before it. In such circumstances the order of remand passed by the Tribunal is not found to be in consonance with statutory scheme, as has been interpreted by this Court. The Tribunal is not justified in directing remand for a fresh determination of liability by the appellate authority in the manner suggested by the Tribunal - answered in favour of the assessee.
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2021 (9) TMI 368
Seeking substitution of the name of the petitioner - issuance of certificate of incorporation by the Registrar of Companies, Ministry of Corporate Affairs, Government of India pursuant to the change in the name - petitioner submits that the application may be allowed in view of the change in name of the original petitioner - HELD THAT:- Having regard to the declaration of law by the Apex Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ], all dues including the statutory dues owed to the Central Government, any State Government or any local authorities, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudication authority grants its approval under Section 31 of the Code would be continued. Let the matter appear on 06.09.2021. Affidavit, if any be filed by the parties latest by 02.09.2021.
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2021 (9) TMI 366
Refusal to reopen the Assessment Order - rejection of declarations in Form C which were obtained by it in the year 2020 - time limitation - power to reopen the proceedings after lapse of four years - no sufficient cause has been made out by the petitioner to explain the delay in filing declarations in Form C - Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT:- The declaration in Form C or Form F or the certificate in Form E-1 or Form E-II under the AP VAT Act is to be filed within the time frame as envisaged in Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 - A perusal of the said Rule shows that the assessee is required to furnish the declaration in Form C or F or E-1 or E-II within three months after the end of the period for which declaration or the certificate relates, i.e., the Assessment Year. Proviso to the Rule, however, empowers the prescribed authority to permit such declarations/certificates beyond the aforesaid time provided sufficient cause to the satisfaction of the authority is shown. In the present case, there is hardly any explanation offered with regard to the circumstances which stood in the way of the petitioner/assessee to submit declarations in Form C within the stipulated time. A vague averment has been made that the business had closed down. However, no material particulars are placed on record with regard to the date of such closure. It is argued that the declarations in Form C are genuine and there was delay as the forms had to be obtained from the business entities beyond the State. However, no contemporaneous documents are placed on record to support the claim that efforts had been made on the part of the petitioner to obtain declarations in Form C from such business entities - While deserving cases of unintentional delay ought to be condoned, law cannot be permitted to be misused at the hands of an indolent litigant by mechanically condoning delay without valid justification. Thus, no sufficient cause has been made out by the petitioner to explain the delay in filing declarations in Form C - no case for directing to reopen the assessment is made out - petition dismissed.
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2021 (9) TMI 365
Maintainability of petition - availability of alternative remedy of appeal - deviation of proposal on revision of accounts - HELD THAT:- The deviation was made pursuant to the inspection conducted by the Enforcement Wing of the Commercial Taxes Department, in the business premises of the petitioner. This being the factum, this Court is of the considered opinion that the order impugned dated 21.04.2011, which is appealable is to be taken by way of an appeal by the petitioner before competent appellate authority. Admittedly, the petitioner has not preferred an appeal and has chosen to file the present Writ Petition. Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy. However, it is to be ensured that there is an imminent threat or gross injustice warranting urgent relief to be granted. Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India, as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise - The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions. The appellate institutions provided under the statute at no circumstances be undermined by the higher Courts. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The petitioner is at liberty to prefer an appeal to the appellate authority under the provisions of the Act, in the prescribed format and by complying with the provisions, within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.
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Indian Laws
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2021 (9) TMI 378
Dishonor of Cheque - cheque was issued for discharge of a debt or a liability or not - rebuttal of presumption - acquittal of the accused - Section 148 of the Negotiable Instruments Act - HELD THAT:- Prima facie it appears that the accused had taken no steps to discharge his liability. The appellate Court, therefore, ought to have insisted on the accused depositing at least 20% of the amount of fine imposed by the Magistrate. Under the circumstances, the respondent No.1 is directed to deposit a sum of ₹ 2,00,000/- before the Sessions Court within sixty days from today. Upon such deposit the amount shall be released in favour of the appellant which release shall be subject to the order that may be passed in terms of proviso to sub-section (3) of Section 148 of the Negotiable Instruments Act if the accused is acquitted by the Sessions Court. The observations made in this order are only prima facie in nature and for the purpose of dealing with the request of the petitioner for depositing the amount under Section 148 of the Negotiable Instruments Act and the Sessions Court shall decide the appeal of the accused unmindful of any of these observations. Such appeal shall be taken up for hearing only after the amount is deposited by the accused as provided in this order. Petition disposed off.
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