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2021 (6) TMI 883
Claim of additional depreciation u/s 32 (1) (iia) - HELD THAT:- As is brought to our notice that the issue of claim of additional depreciation under section 32 is recurring nature and we noticed that the respective assessing officers in assessment year 2012-13 and 2013-14 had disallowed the claim of additional depreciation and in those respective assessment years the issue was contested before coordinate benches of this tribunal and it was held in favour of the assessee [2019 (1) TMI 1899 - ITAT MUMBAI] - Since this issue is already settled in favour of the assessee, we do not see any reason to interfere with the findings of Ld. CIT(A). Accordingly ground No. 1 raised by the revenue is dismissed.
Delay in deposit of employees ESIC and labour welfare fund contribution - HELD THAT:- In the case of the assessee, it is observed from Tax audit report submitted by the assessee that, it has received from its employees towards Employee Contribution fund within dates but deposited to the fund houses before filing ITR - As considered that Sec 43B applies to both employee and employer contributions and if the contributions are paid to the fund houses before filing ITR, no disallowance u/s 36(1)(va) is warranted. It is established that when the employee deposits both of its contribution and employees' contribution to the fund houses before the date of filing ITR, the entire amount will be allowed as deduction in the profit and loss account of the assessee u/s 43B - AO is thus directed to delete the addition made to the total income of the assessee u/s 36(1)(va) of the Act and allow the said addition u/s 43B - This ground of appeal is allowed.
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2021 (6) TMI 882
Deduction u/s 80IC - substantial expansion - Initial assessment year - whether assessee has already claimed deduction @ 100% for 5 Assessment Years - HELD THAT:- The issue now stands squarely covered by the judgment of case of Pr. Commissioner of Income Tax vs. Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] and related cases wherein the Hon’ble Apex Court has laid down that in case substantial expansion is carried out as defined in clause (ix) of Sub-section-8 of Section 80IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become ‘initial assessment year’ and from that assessment year, the assessee shall be entitled to 100% deduction of profits and gains. It was also laid down by the Hon’ble Apex Court that deduction would be for a total period of 10 years.
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2021 (6) TMI 881
Accrual of income - real income - Addition to total income on account of capacity charges, deemed generation charges and capacity index incentives - assessee is following mercantile system of accounting - as submitted by the assessee that UERC, (Terms and Conditions for determination of Hydro Generation Tariff) Regulation, 2004, Regulation 20(2) provided for capacity charges, Regulation 29(1) provided for capacity index incentives and Regulation 31(1) provided for deemed generation - HELD THAT:- In the financial statements capacity charges, deemed generation charges and capacity Index incentive have been shown as a disclosure in the balance Sheet as an amount claimable by the assessee from UPCL which has not been acknowledged but disputed by the UPCL since inception and the matter has been referred to the Regulatory Authority for settlement from time to time. Facts on record demonstrate that since the methodology was to be determined and there were several technical aspects which were to be finalized, due to lack of clarity in the regulations, the determination of amount on account of capacity charges, deemed generation charges and capacity index incentives could not be quantified.
The issue was disputed by UPCL. UERC is a regulatory authority which fixes the tariff on annual basis in accordance with the Terms & Conditions for determination of Hydro Generation Tariff, Regulation 2004. The method of calculation of these charges was not clear and as such this matter became the subject matter of dispute. The assessee filed a petition before the UERC on 25th March 2014 due to prolonged dispute between UPCL and UJVNL and had also sought necessary directions from the UERC on the applicability and payability of capacity charges, deemed generation charges and capacity Index incentive. We find merit in submissions made by the Ld AR that since the basis, modality and the amount on which the capacity charges, deemed generation charges and capacity Index Incentives were to be determined/ quantified, it was difficult for the assessee to ascertain the correct and actual amount of charges recoverable from UPCL.
We are, therefore, unable to sustain the addition made by the AO.
AR has also brought on record the fact that the assessee has started receiving the disputed amounts from UPCL in monthly installments w.e.f, August, 2015 and that the assessee has voluntarily agreed to disclose the entire amount of capacity charges, Deemed Generation Charges and capacity index incentive charges during the FY 2015-16 relevant to AY 2016-17. Once the correct amount of income has already been offered to tax in AY 2016-17, we find no merit in the addition made by the AO in the present order of assessment. We, therefore, allow ground of the appeal and direct the AO to delete the addition made.
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2021 (6) TMI 880
Condonation of delay of forty eight days in filing of the present Application on behalf of the Applicant - applicability of time limitation in section 7 and 9 of IBC - HELD THAT:- It is no longer res Integra as held by the Hon'ble Supreme Court of India in a couple of decisions that Section 5 of the Limitation Act, 1963 would apply to a proceeding under Section 7 or 9 of IBC, 2016 and hence bowing down to the provisions of Article 141 of the Constitution of India, though this Tribunal had expressed a view otherwise in the matter of M/S. FNA MULTI-TRADE PRIVATE LIMITED VERSUS M/S. VA TECH WABAG LIMITED [2020 (9) TMI 1188 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI] taking into consideration the decision of the Hon'ble Madras High Court under the Presidency Town Insolvency Act, 1909. Be that as it may, the Applicant who seeks for condonation of delay has to adequately explain to the satisfaction of this Tribunal the 'sufficient cause' and 'reasonableness' for condoning the delay in filing the main Application.
It is the cardinal principle of limitation that the Applicant, who seeks to condone the delay, has to explain the delay for each and every day as sought for, more particularly this Tribunal is of the considered view in relation to a proceeding under IBC, 2016 being a proceeding in rem and has an impact on all the stakeholders of the Corporate Debtor unlike a suit for recovery of money filed before the Civil Court and in the circumstances this Tribunal is required to be more circumspect in condoning the delay as compared to a liberal approach as canvassed by the Applicant.
The stand of the Applicant that the Operational Creditor is operating its office from Chennai depot is not a 'sufficient cause' or a 'reasonable cause' for the Tribunal to condone the delay in filing the main Application. In the present case, the Applicant has not satisfactorily explained to this Tribunal the delay of 48 days (albeit 79 days) in filing the main Application - Application dismissed.
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2021 (6) TMI 879
CENVAT Credit - supplementary invoices - goods cleared to sister concern on stock transfer basis - contravention of Rule 9 of the Cenvat Credit Rules, 2004 - HELD THAT:- M/s.Jai Balaji Industries Ltd. (Unit-I) was initially discharging their duty on the goods cleared to their sister concern on stock transfer basis, sales price to independent buyers during the relevant period. However, at the instance of the department, M/s.Jai Balaji Industries Ltd. (Unit-I) discharged their differential duty on the revised assessable value taking into consideration 110% of the cost of manufacture of the goods as per Rule 9 read with Rule 8 of Central Excise Act Valuation Rules, 2000. This has resulted in payment of differential duty. After discharging differential duty they had issued supplementary invoices in favour of the appellant-assessee on which the appellant-assessee had availed Cenvat credit - Rule 9(1)(b) of the Cenvat Credit Rules, 2004 prescribes that Cenvat credit availed on subsequent invoices involving sale of goods is denied in the circumstances where suppression of fact, misstatement etc. are involved.
In the present case there is no sale of goods, but the differential duty has been paid on stock-transfer of goods by M/s.Jai Balaji Industries Ltd. (Unit-I) to the appellant-assessee - the entire exercise is revenue neutral and therefore Cenvat credit cannot be denied on the supplementary invoices issued to the sister concern for the differential duty paid - Appeal allowed - decided in favor of appellant.
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2021 (6) TMI 878
Valuation of imported goods - imported motorcycle parts - redetermination of value based on market survey - levy of fine and penalty - Rule 9 of the Customs Valuation (Determination of value of imported goods) Rules, 2007 - HELD THAT:- In more or similar fats and circumstances when the re-determined value has been accepted by the importers, this Tribunal in COMMISSIONER OF CUSTOMS DELHI VERSUS M/S HANUMAN PRASAD & SONS [2020 (12) TMI 1092 - CESTAT NEW DELHI] after analyzing the principles of law on the subject held that importer cannot go back on such acceptance and be allowed to dispute the re-determined value, when the same was categorically accepted by him.
Applying the principle of the said case to the facts of the present case, there are no iota of hesitation to arrive at the conclusion that in the present case also, the proprietor of the appellant categorically accepted the re-determined assessable value on the basis of market survey carried out in his presence vide statement dated 20.01.2010, which has never been retracted, therefore, the same is binding on him.
Penalty - HELD THAT:- There are no merit in the order of the authorities below in mechanically imposing fine and penalty on the appellant. In the order of the adjudicating authority, no justification has been recorded for imposition of penalty and directing confiscation of the goods - there are no circumstances brought on record to show that the value declared by the appellant is intentionally manipulated or suppressed; the Department has re-determined the value on the basis of market survey after rejecting the transaction value declared by the appellant.
The re-determined value being in excess of the declared value ipso facto cannot be construed as ground warranting confiscation and imposition of penalty on the appellant in absence of reasons and evidences justifying the said action which are missing in the orders of the authorities below - Appeal allowed in part.
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2021 (6) TMI 877
Depreciation on assets for which the actual cost as per section 43(1) of the Income Tax Act, 1961 was nil - demerger in terms of explanation 4 to section 2(19AA) recognised - second round of appellate proceedings - AO has disallowed depreciation on the ground that the assessee had received assets free of cost from the Government of Uttaranchal - HELD THAT:- As per settled accounting principles, every rupee invested in the business has a cost. The cost of borrowing from the bank is known to the business depending on the rate of interest but that does not mean that the capital introduced in the form of shareholders fund has no cost.
In the present case, assets generating hydro power have been received by the assessee from the demerger of UP Jal Vidyut Nigam along with corresponding liabilities which it owns to the Uttaranchal Government and others. This liability represents nothing but the cost of the assets received on demerger. The assessee is entitled to depreciation on the written down value of these assets which been prescribed in Explanation 2B of section 43(6) of the Income Tax Act, 1961. The assessee is, therefore, entitled to depreciation.
Somewhat similar situation arose in case of M/s Bharat Sanchar Nigam Limited (BSNL) when it got incorporated in 2000. Prior to BSNL’s incorporation, the telecommunication services were being provided by Government of India, Ministry of Communication through its two departments, namely Department of Telecommunication Services and Department of Telecommunication Operation. The AO in case of BSNL referred to the capital structure of the BSNL to draw an inference that the cost of assets was being met by the general reserve as reflected in the capital structure of the company. As per AO, a sum equal to the general reserve would be required to be reduced from the cost of the assets in terms of Explanation 10 of Section 43(1) of the Act. This has been negated by the Hon’ble Delhi High Court [2013 (5) TMI 416 - DELHI HIGH COURT] - Decided against revenue.
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2021 (6) TMI 876
Principles of Natural Justice - Issuance of pre-assessment notice or show cause notice - assessment order is not preceded by a pre-assessment notice or show cause notice - HELD THAT:- In the present case, the Revenue has not placed on record any proof for receipt of acknowledgement of the show cause notice alleged to have been sent via Registered Post Acknowledgement Due (RPAD) and hence till one can hardly assume that the respondent has exhausted the direct methods of service. Service by indirect methods, such as publication and affixture (S.153 (1) (d) and (e) must be only after service by direct means set out in Section 153(1)(a),(b) and (c) have been attempted and established to have failed.
The impugned order has been passed in violation of the principles of natural justice, the same is set aside - Petition allowed - decided in favor of petitioner.
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2021 (6) TMI 875
Assessment u/s 144C - issuance of draft order as mandatory and contemplated u/s 144(C) not adhered to - whether the draft assessment order has been passed in the present case or not? - HELD THAT:- Considering the findings of the ITAT, this Court is of the considered opinion that once again following the procedures right from the beginning as contemplated under Section 144C would not arise at all. Admittedly, the procedures contemplated u/s 144C in the present case had been scrupulously followed by the respondent by passing a draft assessment order on 31.03.2016 and the assessee filed an objection before the Disputes Resolution Panel, who in turn, also passed an order and thereafter, a final assessment order under Section 143(3) was passed on 25.03.2016.
Once again commencing from the beginning is not the idea behind the provision and therefore, the very principles mooted out by the petitioner to commence the proceedings right from the initial stage deserves no merit consideration and stands rejected. Once the procedure has been followed and the Appellate Tribunal remitted the matter back to decide the particular issue with a specific finding, then it is sufficient if the remitted issue was decided by the AO / TPO and a final assessment order is passed.
Repetition of the same procedures would become an empty formality, which is not intended under the provision and therefore, this Court is of the considered opinion that when the matter was remitted with reference to a particular issue to be clarified or decided by the competent authority, it is sufficient if such an issue is decided and thereafter, a final assessment order is passed. Even in such circumstances, the assessee is having a right of appeal under the provisions of the Act and therefore, in the event of any grievance with reference to an assessment order subsequent passed after remitting the matter by the ITAT, the petitioner is at liberty to file an appeal and thus, the grounds raised once again to pass the draft assessment order would not arise at all.
The procedures as contemplated u/s 144C must be meaningfully followed and constructive interpretation is to be adopted. Repeatedly passing draft assessment order is not the spirit of the provision. The legislative intention is to provide an opportunity to an assessee before passing the final assessment order.
Such an opportunity is already provided and the assessee also availed of the opportunity by submitting an objection before the Disputes Resolution Panel and the Assessing Officer and thereafter, a final assessment order is passed and after remitting the matter by ITAT to decide a particular issue, the same procedure in entirety contemplated under Section 144 C of the Act need not be followed and such a repetition is not only unnecessary, but not contemplated. The very intention of the provision is to provide an opportunity to the assessee. The opportunity has already been provided.
The opportunity is made available before the Appellate authority to redress the grievances. In the event of again directing the authorities to follow the procedures right from the beginning, the proceedings would not only be prolonged, it will be protracted, which would provide an undue advantage to the assessee in the matter of payment of income tax.
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2021 (6) TMI 874
Permission to approach the appellate authority under the Goods and Service Tax Act, 2017 - HELD THAT:- Limitation for filing of appeal has been extended by the Supreme Court in a series of decisions viz., In Re: Cognizance for Extension of Limitation [2020 (5) TMI 418 - SC ORDER], [2020 (5) TMI 671 - SC ORDER], [2021 (1) TMI 261 - SC ORDER] and [2021 (3) TMI 497 - SC ORDER].
Since this writ petition is pending on the file of this Court from 12.03.2021, the petitioner is granted four (4) weeks from today, within which time, a statutory appeal may be filed challenging the order of assessment dated 20.05.2020 before the Commissioner (Appeals) - Petition disposed off.
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2021 (6) TMI 873
Exemption u/s 10 (23C) (vi) - Denial of approval - HELD THAT:- Approval has to granted if an educational institution satisfies the fundamental requirement of existence for educational purpose and does not exist solely for the purposes of the profit. Merely because an educational institution generates surplus is not a ground for disqualifying it from granting approval to it.
Once an approval is granted, it is to be in force for a period of three years. As open for the prescribed authority to stipulate the conditions for ensuring there is no misuse by such an educational institution of the approval.
Clause 51 of the Articles of Association clearly states that shareholders are not entitled to share the surplus of each year i.e., the excess of the income over the expenditure by way of dividend, bonus share. Surplus generated is not available for being declared either dividend or as a bonus share to the shareholders. Thus, there is no scope for inferring profit motive. Similarly, clause 52 which has been extracted above also indicates that there is no profit motive.
Clauses 55 and 56 of the Articles of Association of the petitioner do not allow an interference of profit motive. These two clauses clearly indicate that the surplus generated by the petitioner is to be ploughed back.
The Memorandum of Association of the petitioner also does not indicate the profit motive. The main object of the petitioner indicates that it is in the field of education. There are also indication that the petitioner had not otherwise indulged in any other activity to make profit and it was engaged only in the field of education in all the years of its existence since 1992.
Denial of approval to the petitioner u/s 10 (23C)(iv) is not justified. The respondents ought to have granted approval but at the same time and laid down on strict conditions for the petitioner to comply with the said requirements. Therefore, the present writ petition deserves to be allowed.
Since the petitioner had applied for exemption as early as 15.09.2010, though approached the wrong forum, it was incumbent on the part of the office of the Chief Commissioner of Income Tax-I to have either returned the application to the petitioner for a proper presentation or transferred to the 1st respondent immediately. On the other hand, the Income Tax Department took about three years for the application to be jostled from the office of the Chief Commissioner of Income Tax-I to the office of the 1st respondent.
Since this Court has come to conclusion that the petitioner is entitled to approval, we direct the 1st respondent to issue Approval Certificate to the petitioner for the past period within a period of ninety (90) days from the date of receipt of this order. The 1st respondent may stipulate such stringent conditions in the approval as are necessary for an educational institution to operate so that the legitimate benefit of exemption under the aforesaid provision are not abused by the petitioner keeping the views expressed in American Hotel and Lodging Association Educational Institute Vs CBDT [2008 (5) TMI 17 - SUPREME COURT] and the views expressed by the Hon'ble Supreme Court in Queens Educational Society Vs CIT [2015 (3) TMI 619 - SUPREME COURT].
As found that the petitioner had deviated in any of the assessment years of the conditions that may be prescribed in the approval, the Assessing Officer may pass appropriate orders in respect of those assessments and complete the same within a period of ninety (90) days thereafter. The petitioner has complied with the requirements of such approval, appropriate orders may be passed to revise the assessment order by extending such benefits.
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2021 (6) TMI 872
Entitlement to statutory appeal/revision - issue in this petition is that the Assessing Officer has erroneously applied the provisions of the Tamil Nadu Value Added Tax Act, 2006 and passed the assessment order which resulted exercise of jurisdiction erroneously - Section 51 of the TNVAT Act - HELD THAT:- Institutional respect is of paramount importance. Even the point of jurisdiction, limitation, error apparent on the face of the record, are on merits and all are to be adjudicated before the appellate authority and the appellate authority, more specifically, the Appellate Tribunal or the Commissioner (Appeals), as the case may be, is empowered to adjudicate all such legal grounds raised by the respective parties and make a finding on merits. Thus, usurping the powers of the appellate authorities by the High Court by invoking its powers under Article 226 of the Constitution of India is certainly unwarranted. The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law.
The parties must be provided an opportunity to approach the appropriate authorities for redressal of their grievances in the manner known to law. In the event of entertaining all such writ petitions, the High Court will not only be over-burdened, but usurping the powers of the appellate authority, which is certainly not desirable - Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated.
The growing practice in the High Court is to file writ petitions under Article 226 of the Constitution of India without exhausting the statutory remedies provided under the Act. The points raised in this regard are statutory violations. However, even such statutory violations can be dealt with by the Appellate authorities or the Appellate Tribunals. This apart, in a writ petition, if such orders are passed with jurisdictional errors and quashed without any remand, then an injustice would be caused to the very spirit of the statute enacted for the benefit of the public at large. Thus, Courts are expected to be cautious, while granting exoneration of liability merely on the ground of jurisdictional errors, if any committed by the authorities competent - The procedures to be followed in the department for assessment are well settled. Thus, the authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. Liability and jurisdictional errors are distinct factors, and therefore, Courts are expected to provide an opportunity to the Department to decide the liability on merits and in accordance with law with reference to the provisions of the Act and Rules and guidelines issued by the Department.
Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the remedy by following the procedures as contemplated under law. Such writ petitions are filed may be on the ground of jurisdiction or otherwise - In the absence of exhausting such remedies, High Court is losing the benefit of deciding the matter on merits, as the High Court cannot conduct a trial or examine the original records in the writ proceedings under Article 226 of the Constitution of India. Thus, the Courts shall not provide unnecessary opportunities to the assessee to escape from the liability merely on the ground of jurisdictional error, which is rectifiable.
This Court has no hesitation in arriving a conclusion that the petitioner is bound to exhaust the statutory appellate remedy as contemplated under the provisions of the TNVAT Act - Petition disposed off.
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2021 (6) TMI 871
Recovery of duty draw back - Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 - non-application of mind - proceedings vitiated by delay and latches - HELD THAT:- This Court is unable to appreciate the challenge for more than one reason. Firstly, the grounds raised in the writ petition do not merit any serious consideration and also the grounds are not worthwhile enough for this Court to intervene in the matter of impugned proceedings, for the present.
The conclusion is on the basis of the reason that the appellate remedy is available under the provisions of the Customs Act and in matters like this, it is always better for the petitioner to approach the Appellate Authority and convince the Authority on the basis of the grounds raised in the present writ petition.
This Court finds that the writ petition is not maintainable - Petition dismissed.
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2021 (6) TMI 870
Reopening of assessment - alternate remedy - TP Adjustment - Arm’s Length Price (ALP) towards Corporate Service Fee was considered as “Nil” - downward adjustment towards corporate support service fees - HELD THAT:- Payments made during each of the assessment year may differ. Therefore, the orders passed by the Tribunal in respect of reference made against an order passed under Section 92C(A) for a particular assessment year is not binding for the subsequent assessment years. The decision of the Supreme Court in Union of India vs. Kamalakshi Finance Corporation Ltd., [1991 (9) TMI 72 - SUPREME COURT] cannot be quoted as an authority to quash the impugned order of the 1st respondent. There the order of the Assistant Collector’s was set aside by the Appellate Collector and the matter was remitted back to the Assistant Collector to pass a speaking order.
Instead of following the said order of the Appellate Collector, there the Assistant Collector reiterated the order which had been set aside. It was in that context the decision of the Hon’ble Supreme Court made the above observations.
In this case, the assessment years are different and the transactions are different and the nature of payments are different. During the assessment year 2013-14 the issue was pertaining to certain payments made to the associated enterprises alone. Whereas the impugned order there are indications that there are adjustments of payments made for the services received and services provided to the associated enterprises. Therefore, it cannot be said that the said order of the Tribunal was binding for the assessment year in question.
That apart, the challenge to the impugned order is premature. The petitioner has options under the Act to approach the Dispute Resolution Panel and if such was orders are passed the order, liberty is always available by way of statutory appeal before the income tax appellate Tribunal.
Whether the High Court was justified in interfering with the order passed by the Assessing Authority under Section 148 of the Act in exercise of its jurisdiction under Article 226 when an equally efficacious alternate remedy was available to the assessee under the Act? - When in a fiscal statute, hierarchy of remedy of appeals are provided, the party has to exhaust them instead of seeking relief by invoking the jurisdiction of this Court under Article 226 of the Constitution of India and as held in Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] the Court will have to take into consideration of the legislative intent enunciated in the enactment in such cases. It is not as if the alternative remedy is neither efficacious nor effective”.
Thus we are not convinced with the present writ petition. Accordingly, this writ petition is dismissed.
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2021 (6) TMI 869
Grant of parole/interim Bail - offence under Section 132(1) (b) (c) and (i) of CGST Act - directions issued by "HPC" not followed - HELD THAT:- On perusal of direction issued by "HPC" on 30.4.2021, it is found that no such condition on the basis of which impugned order has been passed by Special Chief Judicial Magistrate, Meerut, therefore, impugned order lacks merit and is liable to be quashed.
The order passed by Special Chief Judicial Magistrate, Meerut is quashed and petition is allowed - Special Chief Judicial Magistrate, Meerut is directed to reconsider the application of petitioner and pass reasoned order within one week from the date of production of computer generated copy of this order strictly in accordance with direction issued by "HPC" vide letter dated 30.4.2021.
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2021 (6) TMI 868
Dishonor of Cheque - efficacious remedy by way of filing appeal - compounding of the offences - amicable settlement of the dispute - Section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- Considering the object of Section 138 of the NI Act, which is mainly to inculcate faith in the efficacy of banking operations and credibility of transacting business through cheque as also taking into account the provisions of Section 147 which states that every offence punishable under this Act shall be compoundable. Further, it is mainly a transaction between the private parties where the State is not affected.
This Court is aware that the ideal remedy for the parties ought to have been to prefer an appeal as available under the law. The guidelines as prescribed in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT] also provide for instituting proceedings for compounding the offence before the appellate court as the present proceedings are preferred after an order of conviction by a competent court.
Taking into account the fact that the parties have settled the dispute amicably,in view of this court the compounding of the offence is required to be permitted - Application allowed.
Generally the powers available under Section 482 of the Code would not have been exercised when a statutory remedy under the law is available, however considering the peculiar set of facts and circumstances it would not be in the interest of justice to relegate the parties to appellate court. Additionally when both the parties have invoked the jurisdiction of this Court and there is no bar on exercise of powers and the inherent powers of this court can always be invoked for imparting justice and bringing a quietus to the issue between the parties and hence, the present application is entertained.
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2021 (6) TMI 867
Assessment u/s 153A - “relevant assessment year” - tenth year calculated from the end of the assessment year - whether the assessing officer/respondent herein is possessed of the power to issue the notice? - HELD THAT:- In the case on hand, the statute has prescribed one mode of computing the six years and another mode for computing the ten years. Section 153 A(1)(b) states that the assessing officer shall assess or reassess the total income of six years immediately preceding the assessment year relevant to the previous year in which search is conducted. Applying this yardstick, the six years would go up to 2013-14. The search assessment year, namely, 2019-20 has to be excluded. This is because, the statute talks of the six years preceding the search assessment year. But, while computing the ten assessment years, the starting point has to be the end of the search assessment year - search assessment year has to be including in the latter case.
It is not for me to fathom the wisdom of the parliament. We cannot assume that the amendment introduced by the Finance Act, 2017 intended to bring in four more years over and above the six years already provided within the scope of the provision. When the law has prescribed a particular length, it is not for the court to stretch it. Plasticity is the new mantra in neuroscience, thanks to the teachings of Norman Doidge. It implies that contrary to settled wisdom, even brain structure can be changed. But not so when it comes to a provision in a taxing statute that is free of ambiguity. Such a provision cannot be elastically construed.
One other contention urged by the standing counsel has to be dealt with. It is pointed out that the petitioner has invoked the writ jurisdiction at the notice stage. Since the petitioner has demonstrated that the subject assessment year lies beyond the ambit of the provision, the respondent has no jurisdiction to issue the impugned notice. Once lack of jurisdiction has been established, the maintainability of the writ petition cannot be in doubt.
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2021 (6) TMI 866
Dishonor of Cheque - legally enforceable debt or not - admissible evidence or not - primary or secondary evidence - section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- There is no dispute that respondent No.2 filed a complaint under Section - 200 of the Code for the offence under Section - 138 of the Act, 1881 against the petitioners herein and others and it is also not in dispute that respondent No.2 herein has filed original documents as mentioned in the list of documents appended to the complaint. In the Photostat copy of the certified copy of the said complaint, it is specifically mentioned that the original documents filed in the Court along with complaint returned to respondent No.2 herein on 19.06.2012.
In view of the law laid down by the Division Bench in KRISHNAPATNAM PORT COMPANY LTD. VERSUS CARGILL INDIA PVT. LTD. AND ORS. [2018 (7) TMI 2188 - TELANGANA HIGH COURT], respondent No.2 has filed original documents along with the complaint and the same were returned to it after verification of the same upon obtaining an undertaking from respondent No.2 to the effect that it would produce the same at the time of trial. On verification of the same only, the learned Magistrate has taken the cognizance of the offence under Section - 138 of the Act, 1881 vide C.C. No. 5 of 2019. The learned Magistrate then issued summons to the petitioners herein and other accused. There is an endorsement to the said effect in the complaint itself.
Respondent No.2 has filed an application under Section 65 (c) of the Act, 1872 which was signed by its GPA Holder, specifically contending the aforesaid facts. Just because respondent No.2 has not lodged any complaint with the police concerned about lost of original documents, the said application cannot be thrown away. There is no reason as to why the petition filed by respondent No.2 signed by its GPA holder and Authorized Signatory stating that the originals were misplaced cannot be believed. According to this Court, respondent No.2 has laid down a factual foundation by filing an application under Section 65 (c) of the Act, 1872 - the learned Magistrate has rightly allowed the application filed by respondent No.2 under Section 65 (c) of the Act, 1872.
Petition dismissed.
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2021 (6) TMI 865
Validity of assessment order - lesser sales turnover reported - assessments were shown both under TNVAT Act as well as Central Sales Tax Act, 1956 - period 2012-13, 2013-14 and 2014-15 - HELD THAT:- The petitioner had filed statutory appeals questioning them before the Hon'ble CESTAT. As on date, the petitioner has not been able to obtain any interim order of stay. Mere pendency of the CESTAT appeals cannot by itself whittle down the effect of the findings set out in the final orders passed by the Central Excise Department. At the same time, question arises as to what would happen if the CESTAT chooses to allow the appeals filed by the petitioner herein. Interest of justice therefore requires that this Court requests the CESTAT, Chennai to dispose of the appeals filed by the petitioner herein within a period of five months from the date of receipt of copy of this order. Till then, the impugned orders shall be kept in abeyance. It is for the petitioner to obtain final order or interim order at the hands of CESTAT in the meanwhile. If the petitioner fails to obtain any interim order within a period of five months or fails to succeed in getting the appeals allowed, the orders impugned in these writ petitions will spring back to life and thereafter it will be enforced.
The period during which these writ petitions were pending and the period during which the impugned orders are kept in abeyance will of course be excluded in the matter of computing limitation - Petition disposed off.
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2021 (6) TMI 864
Allowability of the interest paid to the partner by the assessee firm calculating on the opening balance of the capital account of the partner without considering the subsequent withdrawals made by the partner - HELD THAT:- Assessee has taken a stand that since the partnership deed provides the payment of interest on the opening balance of the capital account of the partner, therefore, the subsequent withdrawals of the amount from the capital account of the partner is irrelevant. It is pertinent to note that Section 40(b)(iv) is restrictive in nature and not a provision enabling the deduction.
For allowing the claim of interest paid to the partner it has to be first considered in terms of Section 36(1)(iii) or the section 37(1) of the Act and then the claim has to be restricted as per the provisions of section 40(b)(iv) of the Act.
In the case in hand, there is no dispute that the opening balance in the capital account of the partner, Shri Satish Kumar Agarwal was ₹ 8,72,785/- but during the year the said partner has withdrawn a sum of ₹ 8,55,587/- which means the substantial amount except a meager sum of ₹ 3,80,630/- was withdrawn by the partner and was not available with the partnership firm for its business purpose.
Hence, the claim of interest for full year @ 12% is otherwise not allowable in terms of Section 36(1)(iii) or Section 37(1) of the Act as the case may be. Once the basic condition as prescribed u/s 36(1) (iii) or Section 37(1) of the Act was not satisfied regarding allowability of particular claim of interest then the said claim cannot be allowed by invoking the Section 40(b)(iv) of the Act, which is a restrictive provisions and not enabling provision. Accordingly, the Assessing Officer has rightly allowed the claim on pro-rata basis i.e. the average of opening and closing balance was taken as eligible amount while allowing the interest paid to the partner. This ground of the assessee’s appeal is dismissed.
Disallowance of 5% of repair and maintenance expenditure - AO asked the assessee to explain the details of TDS payment on transport expenses - HELD THAT:- Except the narration of being cash paid for plant repair and maintenance no other particulars or details are mentioned in the ledger account. Even the vouchers claimed by the assessee are not produced before the Tribunal and the same are claimed as self-made vouchers. Since the assessee has not produced the vouchers, therefore, the only inference can be drawn from ledger account of the repair and maintenance expenses is that these expenses are not substantiated by the assessee by producing a verifiable supporting documentary evidence. The nature of payment being each less than 20,000/- shows that the assessee has carried out the entries to avoid the TDS provisions. Since all the payments are made in cash and no details are provided by the assessee to whom the payments are made therefore, the assessee has failed to prove that the claim of expenditure incurred by the assessee on account of repair and maintenance is a genuine claim. Accordingly, in the facts and circumstances of the case 5% disallowance made by the Assessing Officer is found to be reasonable and justified. Accordingly, this ground of the assessee’s appeal is dismissed.
Valuation of closing stock of dust - HELD THAT:- AO in the assessment order has made an adhoc addition to the closing stock of dust without even considering the volume or any other para meters for such adhoc valuation. Even the Assessing Officer has not tried to estimate by wild guess work but the addition is purely on adhoc addition without any reasonable basis. Once the Assessing Officer is not satisfied about the valuation of the closing stock of the dust then it is incumbent upon the Assessing Officer to conduct a proper enquiry and to apply proper criteria or basis for valuation of the closing stock. The wrong valuation of the closing stock on the part of the assessee does not authorized the Assessing Officer to make a wrong addition.
Therefore, even if the valuation of the closing stock made by the assessee is not found to be correct the Assessing Officer has to make the valuation on some proper guidance and criteria. In the absence of any basis the adhoc addition made by the Assessing Officer is not justified and the same is deleted. It is pertinent to note that since the closing stock shown by the assessee is regarding the dust of the stone chip which is generated during the course of the manufacturing of the stone chip. Therefore, the assessee has explained the reasons for not maintaining the quantitative details and maintaining the stock register of such dust stock. Once the explanation of the assessee is reasonable keeping in view the nature of scrap generating during the manufacturing process then the action of the Assessing Officer in making the adhoc addition is not justified. Hence, the addition made by the Assessing Officer is deleted.
Disallowance of entertainment expenses @ 20% - HELD THAT:- It is noted that the Assessing Officer has made disallowance of 20% of the entertainment expenses on the ground of not fully verifiable. The Assessing Officer made a similar disallowance in respect of the repair and maintenance expenses but @ 5% which has been confirmed by this Tribunal in the preceding part of this order. Accordingly to maintain the rule of consistency the disallowance made by the Assessing Officer is restricted to 5%. This ground of the appeal is partly allowed.
Disallowance @ 20% of telephone expenses on the ground of personal use of partners - AO made the disallowance on the ground of personal use in respect of telephone expenses - HELD THAT:- AO has not discussed anything about the personal use of telephone. Hence, except the suspicion of the AO regarding the possible personal use of telephone by the partners nothing has been brought on record by the Assessing Officer to substantiate such suspicion of personal use. Further, since the telephone expenses are fully verifiable and supported by the bills and other details therefore, once the assessee has claimed the telephone expenses based on actual payment/due then the disallowance on the ground of personal use cannot be allowed without bringing some tangible material or facts on record. Accordingly, the disallowance made by the Assessing Officer on account of telephone expenses is not justified, the same is deleted.
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