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2021 (3) TMI 1393
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee captive software development service providers need to be deselected as comparable. Turnover more than 200 crores and hence cannot be considered as good comparable companies.
Disallowance u/s 40(a)(ia) - AR submitted that assessee had deducted tax under relevant provisions of the act. It has been also deposited with the government Treasury but same has not been verified - HELD THAT:- We remand this issue to Ld.AO for due verification of the TDS deducted in the light of records and documents filed by assessee. The Ld.AO shall verify the same and grant credit to the TDS against which tax has been deducted and deposited.
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2021 (3) TMI 1392
Jurisdiction - definition of decree as given under the C.P.C. - nature of proceedings before RERA - can it be said that R.E.R.A. is a Court or a Quasi-Judicial body and has to act Quasi-Judicially when taking a decision under Section 7 of the Act?
HELD THAT:- The Court observed that in the definition of decree as given under the C.P.C., three words are important namely; adjudication, court and suit. The suit commences with the plaint and ends when the judgement or order is pronounced which culminates into a decree, the order of the Tribunal does not conform to any of the above requirements of a decree as it is rendered on a complaint and is not the result of adjudication in a suit. The proceeding before Real Estate Regulatory Authority is not in the nature of a suit instituted by filing a plaint. Real Estate Regulatory Authority derives jurisdiction on the complaint. Proceedings before it are not governed by strict Rules of Evidence as in a civil Suit. The order passed by Real Estate Regulatory Authority or by the Appellate Tribunal on Appeal arising out of such proceedings maybe executable as a decree of a civil court but the Appellate Tribunal will have all the powers of the civil court only in respect of execution of its orders. Sometimes, it may also send its orders to a civil court having local jurisdiction for execution in case the person or the property of the Promoter or builder or real estate agent is situated within the local jurisdiction of that Civil Court.
The Supreme Court has observed in Paramjit Singh Patheja v I.C.D.S Ltd. [2006 (10) TMI 419 - SUPREME COURT], in paragraph 36 that a legal fiction must be limited to the purpose for which it was created. In applying a legal fiction, one should not travel beyond the limits for which it has been created. Therefore the order of the Tribunal can only be considered to be a decree to facilitate its execution. It is otherwise similar to Income Tax Appeals filed under Section 260 of the Income Tax Act, which are not to be characterised as Second Appeal even if they are arising out of an Appellate order.
The Court observed that quasi judicial acts are such Acts which mandate an officer the duty of looking into certain facts not in a way in which it is specially directed but after exercising a discretion, in its nature judicial. The exercise of power by such Tribunal or authority contemplates the adjudication of rival claims of persons by an act of the mind, or judgement upon the proposed course of official action for the consequences of which the official will not be liable, although his act was not well judged. A quasi-judicial function has been termed to be one which stands midway between a judicial and an administrative function - where there are two or more parties contesting each other's claim and the statutory authority is required to adjudicate the rival claims between the parties, such a statutory authority was held to be quasi judicial and the decision rendered by it a quasi judicial order. Where there is a lis or two contesting parties are making rival claims and the statutory authority under the statutory provision is required to decide such a dispute, in the absence of any other attributes of a quasi judicial authority, such statutory authorities acquire the quasi judicial authority.
The language of Section 7 of the Act and the procedure applicable to the Authority while taking decision under Section 7 does not require the Authority to act judicially. The Act only requires that where the Authority is satisfied that condition for the exercise of its power of revocation of registration of the Promoter or real estate agent exist viz. it is established that the Promoter/ Real Estate Agent is adopting corrupt practices then the Authority may pass an order revoking the registration and the consequences mentioned under the Section would follow - The power under Section 7 is an Administrative Power. Therefore, the power given under Section 81 of the Act to sub delegate the actual drafting of the order giving detailed reasons for invoking its power under Section 7 of the Act against the promoter, the appellant herein, was rightly exercised by the Authority.
The appeal is dismissed.
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2021 (3) TMI 1391
Powers of Arbitral Tribunals - arbitral tribunals are tribunals over which jurisdiction under Art. 226/227 is exercisable by High Courts and the scope of interference? - Law governing applications under Section 16 of the Arbitration & Conciliation Act, 1996 and manner of consideration by arbitral tribunals - whether interference is warranted challenging the orders passed by the arbitral tribunal?
Maintainability - Whether arbitral tribunals are tribunals over which jurisdiction under Art. 226/227 is exercisable by High Courts and what is the scope of interference? - HELD THAT:- The law is well settled that Arbitral tribunals are a species of tribunals over which the High Court exercises writ jurisdiction. Challenge to an order of an arbitral tribunal can be raised by way of a writ petition. In UNION OF INDIA VERSUS R. GANDHI PRESIDENT MADRAS BAR ASSOCIATION [2010 (5) TMI 393 - SUPREME COURT] the Supreme Court observed on the question as to what constitutes 'Courts' and 'Tribunals' as The term 'Courts' refers to places where justice is administered or refers to Judges who exercise judicial functions. Courts are established by the state for administration of justice that is for exercise of the judicial power of the state to maintain and uphold the rights, to punish wrongs and to adjudicate upon disputes. Tribunals on the other hand are special alternative institutional mechanisms, usually brought into existence by or under a statute to decide disputes arising with reference to that particular statute, or to determine controversies arising out of any administrative law.
The following principles are well settled, in respect of the scope of interference under Article 226/227 in challenges to orders by an arbitral tribunal including orders passed under Section 16 of the Act:-
(i) An arbitral tribunal is a tribunal against which a petition under Article 226/227 would be maintainable;
(ii) The non-obstante clause in section 5 of the Act does not apply in respect of exercise of powers under Article 227 which is a Constitutional provision;
(iii) For interference under Article 226/227, there have to be 'exceptional circumstances';
(iv) Though interference is permissible, unless and until the order is so perverse that it is patently lacking in inherent jurisdiction, the writ court would not interfere;
(v) Interference is permissible only if the order is completely perverse i.e., that the perversity must stare in the face;
(vi) High Courts ought to discourage litigation which necessarily interfere with the arbitral process;
(vii) Excessive judicial interference in the arbitral process is not encouraged;
(viii) It is prudent not to exercise jurisdiction under Article 226/227;
(ix) The power should be exercised in 'exceptional rarity' or if there is 'bad faith' which is shown;
(x) Efficiency of the arbitral process ought not to be allowed to diminish and hence interdicting the arbitral process should be completely avoided.
The law governing applications under Section 16 of the Arbitration & Conciliation Act, 1996 and the manner of consideration by arbitral tribunals - HELD THAT:- Following the principle of kompetenze-kompetenze, an Arbitral Tribunal has the power to rule on its own jurisdiction - The other provisions of appeal are sections 50 and 59 of the Act which are relating to foreign awards and Geneva Convention awards. Therefore, it can be safely said that the impugned order is not appealable order and there is no other option before the petitioner except to approach this court.
In the opinion of this Court, the scheme of Section 16 of the Act envisages that issues of jurisdiction ought to be raised before the Arbitral Tribunal at the earliest, before the submission of the statement of defence. Under Section 16(5), the Tribunal is mandated to decide the said issue. The question that arises is at what stage is the objection to be decided - Depending on the facts and circumstances of each case, the Tribunal ought to decide the objection under Section 16 of the Act as soon as possible, as a preliminary ground. The following factors can be borne in mind when objections are raised under Section 16 of the Act:
i. If the issue of jurisdiction can be decided on the basis of admitted documents on record then the Tribunal ought to proceed to hear the matter/ objections under Section 16 of the Act at the inception itself;
ii. If the Tribunal is of the opinion that the objections under Section 16 of the Act cannot be decided at the inception and would require further enquiry into the matter, the Tribunal could consider framing a preliminary issue and deciding the same as soon as possible.
iii. If the Tribunal is of the opinion that objections under Section 16 would require evidence to be led then the Tribunal could direct limited evidence to be led on the said issue and adjudicate the same.
iv. If the Tribunal is of the opinion that detailed evidence needs to be led both written and oral, then after the evidence is concluded, the objections under Section 16 would have to be adjudicated first before proceeding to passing of the award.
The manner in which the Arbitral Tribunal, considered the objections/application under Section 16 in the present case - HELD THAT:- The ld. Arbitrator has fully applied his mind and given reasons as to why the application of Petitioners (Respondent No. 5 to 10 in the arbitration) under Section 16 of the Act is not to be adjudicated at this stage. The ld. Arbitrator observes that the property in question which was purchased by the Petitioners was subject matter of the reference which was made by the ld. Single Judge of this Court on 9th January, 2018. Ld. Arbitrator, further observes that the Petitioners may be genuine purchasers of the property, however, the sale consideration qua the said property was to be decided between the parties. Thus, notice was issued to the Petitioners so that their rights are not jeopardized in any manner. An application to recall notice of arbitration under Section 16 cannot, therefore, in the opinion of the ld. Arbitrator, be decided at this stage and would rightly have to await completion of pleadings and admission and denial - The property which the Petitioners have purchased is squarely in dispute in the arbitration and, therefore, the Ld. Arbitrator was of the view that the appropriate stage will only be the final stage and the application of the Petitioners was kept on file.
Considering this expression used in the order of reference, ld. Arbitrator was of the opinion that a final decision on the application of the Petitioners under Section 16 cannot be taken, without further evidence in the matter. The property which the Petitioners have purchased as per the Arbitrator is clearly subject matter of the arbitral proceedings and thus the ld. Arbitrator, after evidence being recorded may be required to mould relief in the same manner. Thus, the tests for interference under Article 226/227 being extremely strict, this Court does not deem it appropriate to interfere under Article 227.
The present petition is disposed of.
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2021 (3) TMI 1390
Seeking grant of bail - recovery of heroin - intermediate quantity - offences punishable under sections 21/29 NDPS Act - HELD THAT:- It is not in dispute that in the present case, 200 gms. of heroin was recovered from the petitioner which is an intermediate quantity. But as per CDR of mobile phone recovered from possession of the petitioner proves his connection with master mind of this international drug cartel, Ali & Roza from where he got directions to receive drugs. Further, there is CDR connectivity of the petitioner from mobile number with co-accused Chand Basha on his mobile numbers and accused Ali on his number (Kingpin from Kuwait), accused Salim (supplier) and accused Adham Khan (Kingpin from Germany), who were in constant touch with each other.
It is not in dispute that 200 gms. of heroin was recovered from the petitioner, but the total recovery in the present case is of 36.240 kgs from all the accused persons, hence, bar under section 37 of NDPS Act is attracted to the present case - bail cannot be granted to the petitioner - application dismissed.
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2021 (3) TMI 1389
Confiscation of goods - marble blocks - restricted goods or not - When the order confiscating the goods has been issued and the party has not opted to pay fine in lieu of confiscation, then would the sale proceeds remain with the Government if the goods are auctioned or they have to be paid to the importer after deduction of such payment or without such deduction?
HELD THAT:- The records indicate that it was only on April 28, 2014 that the respondent informed the adjudicating authority that it had filed an appeal against the order passed by the Additional Commissioner and was awaiting orders - there is nothing on the record to indicate whether any application was filed by the respondent for recall of the order 20.08.2013 by which the appeal was dismissed nor the date on which the application for condoning the delay was filed by the respondent has been mentioned.
What is important to notice is that the Commissioner (Appeals) has also ordered for payment of the entire sale proceeds to the respondent after deduction of the penalty amount. Section 126 of the Customs Act provides that where any goods are confiscated under the Act, such goods shall thereupon vest in the Central Government. The respondent did not make any request for either the redemption of the goods or the sale proceeds and, therefore, a direction for payment of the sale products to the respondent could not have been issued. Of course, the redemption fine can be imposed only when a request for redemption of the “goods” or the “sale proceeds” is made. Imposition of the penalty is independent of the request for redemption and can be imposed under section 112 of the Customs Act.
When the order confiscating the goods has been issued and the party has not opted to pay fine in lieu of such confiscation, then the goods can be sold and the sale proceeds would vest with the government. Penalty can still be imposed under section 112 of the Customs Act. An order for payment of all sale proceeds without deduction of redemption fine cannot, therefore, be issued - The issue as to whether the party can still opt to pay fine in lieu of such confiscation at this stage, has not been considered or decided by this Larger Bench and it will be open to the respondent to raise this issue before the Division Bench, if it is permissible in law to raise this issue at this stage.
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2021 (3) TMI 1388
Bogus purchase - addition made through accommodation entries received - HELD THAT:- Neither the copy of statement, nor any evidence proving the allegation was provided to the assessee to defend his case. No opportunity of cross-examination was allowed to the assessee though specifically asked for by the assessee. Hon`ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] held that not allowing the assessee company to cross examine the witness by the adjudicating authority though the statements of those witness were made the basis of impugned order is a serious flaw which makes the order nullity.
We note that statement of Shri Gautam Jain has not been provided to the assessee. The opportunity of cross examination has not been provided to the assessee, therefore statement of Shri Gautam Jain does not apply to the assessee. That being so we decline to interfere in the order of the CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by the Revenue is dismissed.
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2021 (3) TMI 1387
Bogus Purchases - CIT-A deleted the addition - HELD THAT:- Hon`ble High Court of Gujarat in the case of Nangalia Fabrics (P) Ltd, [2013 (8) TMI 80 - GUJARAT HIGH COURT] held that where purchases were supported by bills, entries were made in books of account and payment was made by cheques, said purchases could not be held as bogus purchases.
Purchases are supported by bills, there is entries in the books of account, payment was made by account payee cheques and assessee maintains quantitative details, and we also noted that Assessing officer did not find any inflation in purchase price. Besides, Assessing officer has failed to prove that payment made by assessee for these purchases came back to assessee in cash. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue is dismissed.
Addition on account of unexplained, unsecured loan and disallowance of interest thereon - HELD THAT:- Once the AO gets hold of the PAN of the lenders, it was his duty to ascertain from the AO of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. In the assessee`s case department had accepted repayment of loan in subsequent year. The assessee provided the assessing officer, the new addresses of these parties during the assessment proceedings along with the confirmations, ledger account, capital account, bank statement, Income Tax Return and computation of income. All these persons are assessed to tax and the balance sheet filed by them reflect the unsecured loans given to the assessee.
The transactions have been made through account payee cheques and the bank accounts have not been credited with any cash deposits. The loan amount has also been repaid during the subsequent assessment year. In view of the above facts, we note that assessee has discharged the onus of proof and therefore the addition made by the assessing officer and the consequent disallowance of the interest were rightly deleted by ld CIT(A). That being so, we decline to interfere in the order of the Ld. CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by the Revenue is dismissed.
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2021 (3) TMI 1386
Seeking direction to Resolution Professional to restore the claim of the applicant as it was lodged in accordance with the arbitration award - seeking to direct the RP to provide details, documents and information sought by the applicant in stipulated time period - HELD THAT:- It is found that RP received the claim from the applicant and verified the same according to the information available, thereafter, on receipt of additional information from Mr. Vasant Modi (Suspended Board of management) regarding the arbitration award. Hence the claim was provisionally admitted taking into consideration the arbitration award. However, on receipt of a mail from suspended board of management and RBI, as stated herein above, the claim of the applicant is refused by the RP. The said facts are duly been updated to the applicant about the status of his claim.
Based on the documents and the information so provided by the applicant, the RP has to collate and place the same before the CoC for their decision. The Supreme Court of India in Essar Steel India Limited [2019 (11) TMI 731 - SUPREME COURT] as relied by the RP, wherein it is observed that it is the responsibility of the RP to collect, collate and finally admit claims of all creditors. The role of the RP is not adjudicatory but administrative. Hence, the allegation so made by the applicant in the application is baseless and without any substance.
The application so filed by the applicant is not maintainable, as the RP has already collated the genuine claim of the applicant based on the document, so filed by the applicant - Application dismissed.
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2021 (3) TMI 1385
Ex-parte order passed by CIT - Addition u/s 68 - Despite issuance of various fixation notices the assessee neither attended the appellate proceedings nor submitted any written statement/paper book in support of the grounds of appeal, CIT(A) therefore, dismissed the appeal and confirmed the addition HELD THAT:- It appears to us that in the reliance placed by the Ld. CIT(A) in the case of Estate of late Tukojirao [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] is a misplaced one. Impugned order is not in compliance with the requirement of section 250 (6) which obliges the CIT(A) to dispose of an appeal in writing, after stating the points for a determination and then rendered a decision on each of the points which arises for consideration with the reasons in support.
Further under section 251 (1) (a) and (b) of the Act, Ld. CIT(A) has the power to confirm, reduce, enhance or annul and assessment and/or penalty. It is, therefore, clear that once the assessee filed an appeal under section 246A of the Act, it is not open for the Ld. CIT(A) to dismiss the appeal in limine without any reasons being assigned on the points from for a determination. According to us, therefore, the dismissal of appeal by Ld. CIT(A) in limine is incorrect because the impugned order does not render any assistance to us to appreciate the contentions of the assessee on merits. Further such an order does not render any assistance to us to appreciate the contentions of the assessee on merits. Appeal of the assessee is allowed for statistical purpose.
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2021 (3) TMI 1384
Vivad Se Vishwas Scheme - HELD THAT:- We are of the opinion that there is no necessity of keeping this matter alive since the assessee has already applied for settlement of dispute under the Scheme. Consequently, the appeal filed by the Revenue is liable to the dismissed as such. However, liberty is granted to the Revenue to seek restoration of this appeal in the event the application filed under Vivad Se Vishwas Tax Scheme is not accepted by the Department. As further made clear that in such eventuality if the Revenue seeks restoration of the present appeal by filing misc. application, the delay, if any, should be condoned without insisting upon filing any application for condonation of delay. With the aforesaid observations, the appeal is dismissed.
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2021 (3) TMI 1383
Application for withdrawal of company petition - litigation involving the liquidation and winding up of the Baranagore Jute Company has been pending for almost 30 years - direction to pay the worker dues - HELD THAT:- The amount is directed to be released but however it is found important to have the amount crystallized and the persons to whom the amount to be paid identified before the said amount is released.
In addition to the above application, persons who claim to be the legal heirs of the partners of a partnership firm, which was the petitioning creditor(s) have also filed an application for withdrawal of the main company petition - the application for withdrawal of the company petition would have to be made before the Calcutta High Court, as there may be other persons interested in the proceedings.
SLP disposed off.
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2021 (3) TMI 1382
Acceptance of proof of claim submitted by the Applicant - treating Applicant as a secured financial creditor entitled to all rights and privileges of a secured financial creditor - seeking reconstitution of Committee of Creditors within 7 (Seven) days from the date of disposal of this Application - seeking utilization of refund amount, first to pay the outstanding dues / loan amounts as set out under the proof of claim submitted by the Applicant - HELD THAT:- Once a Resolution Plan was approved by the CoC, no claim can be accepted and the same shall amount to ‘hydra head popping’, which would throw into uncertainty the amounts payable by the prospective Resolution Applicant who successfully takes over the business of the Corporate Debtor.
The ratio of Essar Steel judgment and JSW Steel was followed by the Hon’ble NCLAT in the case titled followed by the Hon’ble NCLAT in SANTOSH WASANTRAO WALOKAR, DALMIA CEMENT (BHARAT) LIMITED, M/S SNEHA TRADERS, M/S SHAMRAO BALIRAM, MR. NITIN MURLIDHAR SUGANCHAND AGRAWAL, MR. LALCHAND MALOO, MS. PRAKRITI NIGAM VERSUS VIJAY KUMAR V. IYER, DALMIA CEMENT (BHARAT) LIMITED, M/S. MURALI INDUSTRIES LIMITED [2020 (4) TMI 385 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], wherein it was held that the Resolution Applicant cannot be suddenly faced with undecided claims after the Plan submitted by him has been accepted.
There are force in the contention of the Respondent that the resolution professional has sought for the clarifications/ documents with regard to the claim. The Applicant sat on their unsubstantiated claim for various months, without furnishing the proof substantiating her claim, owing to which their claim could not be verified. In the absence of documents supporting the claim of the Applicant, the RP cannot process and accept the claim of the Applicant - If the claim of said home buyers who had taken loans from applicant is already admitted then same amount of claim cannot be again admitted by RP which will amount to duplication.
The present application fails and is rejected.
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2021 (3) TMI 1381
Penalty u/s 271(1)(c) - allegation of defective notice u/s 274 and non specification of clear charge - non striking of inappropriate words - interest income received in respect of enhanced compensation - as per AO the assessee concealed the income - HELD THAT:- First of all, in the notice issued u/s 274 r.w.s 271(1)(c) there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income. From the notice produced by the Ld. AR during the hearing, it can be seen that the AO was not sure under which limb of provisions of Section 271 the assessee is liable for penalty.
In the present case the enhanced compensation and interest received thereon was taken into account but the Assessing Officer observed that the interest received on compensation or interest received on enhanced compensation is taxable under the income from other sources and will not come under the purview of the exemption under Section 10(37) - AO initiated penalty under Section 271(1)(c) as relating to concealment of income due to the fact that the assessee had not filed the return of income and never declared the compensation and the interest received thereon. Merely not filing the return of income cannot amount to concealment of income. Therefore we are taking up the contention of the assessee that there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 - See M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SC ORDER]
As inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Appeal of assessee allowed.
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2021 (3) TMI 1380
Input Tax Credit - goods/services received for construction of hotel building - work contract service received for construction of hotel building - goods/services received for construction of banquet hall which is rented further to customer - work contract service received for construction of banquet hall which is rented further to customer - input credit on work contract service or any goods/service received for construction of such hotel/banquet hall - expression “plant & machinery” would include hotel/banquet building' under section 17 - specified goods viz. lifts, sanitary items, underground cables etc. fall under the expression “plant & machinery” or not - freight paid to GTA on such items under RCM - Section 17(5)(c) & 17(5)(d) of CGST Act.
HELD THAT:- Powers to restrict flow of credit also exist under Section 16(1) of the CGST Act which empowers the Central Government to impose conditions and restrictions on availing input tax credit. This shows a Legislative intent that input tax credit may not always be allowed partially or fully. Input tax credit provisions do not provide for that all the tax paid on inputs should be available as credit. Some credits have been denied under Section 17 in the Act itself and to allow flexibility, the Act provides that restrictions can be placed on availability of credit - under the GST regime, more input tax credit is available to tax payers along the entire supply chain as compared to the previous tax regime. Further, the transitional provisions under the CGST Act provide adequate credit of taxes accumulated under the erstwhile taxation regime to taxpayers in the GST regime.
The legislative intent flows from the sovereign power given in the CGST Act, 2017 vide Section 16(1) of the Act. As per said provision input tax credit is allowed to a registered person subject to such conditions and restrictions as the Government thinks proper, against the supply of goods or services received which are used or intended to be used in the course or furtherance of his business. Here it is pertinent to mention that construction of an immovable property (hotel/restaurant or banquet hall) is a different business and hotel accommodation or renting of banquet hall is a different business. Thus supply chain is not the same for both the businesses. The thin line here is the break in the nature of business. For both the businesses input supply of goods or services are totally different from each other. Input supply of goods or services received for one business cannot be used for furtherance of other business.
Lifts, Sanitary items and underground cables etc - HELD THAT:- Lifts, Sanitary items and underground cables etc. being integral parts of a building are immovable properties as these items are attached to building for the permanent beneficial enjoyment of the said building and therefore cannot be termed as “plant and/or machinery”.
Availability of input credit on the same and freight paid to GTA on such items under RCM, Repair & maintenance of specified goods and Architect services etc. - HELD THAT:- Section 17(5)(c)(d) blocks credit of input tax when works contract services are supplied for construction of an immovable property as well as when goods or services or both received by a taxable person for construction of an immovable property where immovable property is not “plant and/or machinery”. Since Lifts, Sanitary items and underground cables etc. are also immovable property therefore input tax credit of works contract service supplied for construction of these items or goods or services or both received for construction of these items together with construction of hotel/banquet hall will also not be available to the applicant, however this aspect of allowing input tax credit under Section 17(5)(c) & (d) is pending decision before Hon'ble Supreme Court in case of M/s Safari Retreats Pvt. Ltd [2020 (3) TMI 1150 - SC ORDER].
Repair & Maintenance itself is not a construction service. Roll of repair or maintenance starts when a building or any immovable property comes into existence. Repair & Maintenance is done on the already constructed buildings, civil structures etc. Further, input tax credit of the GST paid on Repair & Maintenance service supplied for repair or maintenance of an immovable property is not denied under CGST Act. Therefore input tax credit of the GST paid on Repair & Maintenance service is allowable under CGST Act.
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2021 (3) TMI 1379
TP Adjustment - Comparable selection - determination of ALP for provision of SWD services - HELD THAT:- Companies functionally dissmilar with that of assessee need to b deselected from list of comparables.
As relying on case of M/s.NXP India Ltd. [2020 (5) TMI 86 - ITAT BANGALORE] we direct exclusion of the following three companies from the list of comparable companies viz., CG Vak Software & Exports Ltd., Larsen & Toubro Infotech Ltd., and Persistent Systems Ltd.
Also we find that in the decision in the case of NXP India Pvt.Ltd. [2020 (5) TMI 86 - ITAT BANGALORE] directed inclusion of the following 2 companies viz., Helios & Matheson Information Technology Ltd., and R.Systems International Ltd.
Inclusion of R.Systems International Ltd., in the list of comparable companies and remand the question of comparability of the company M/S.Helios & Matheson Pvt.Ltd., to the AO/TPO for fresh consideration as directed in the case of NXP India Pvt.Ltd. (supra) after affording Assessee opportunity of being heard.
Spry Resources India Pvt. Ltd to be included as relying on case of Synamedia India (P) Ltd. [2020 (5) TMI 211 - ITAT BANGALORE] dealt with an identical claim made by the assessee who a SWD service provider such as the assessee and in whose case also, the very same 7 comparables chosen in the case of assessee in the appeal was chosen as comparable by the TPO.
Inclusion of a company by name Evoke Technologies Ltd. - Reasons given by the DRP for not considering this company as a comparable company was due to inconsistency in export turnover for different AYs and incurring of consultancy charges which was alien in the business of SWD services. In this regard, the learned Counsel for the assessee has drawn our attention to a decision of the ITAT Delhi Bench in the case of DCIT Vs. Sumi Motherson Innovative Engineering Ltd. [2014 (2) TMI 652 - ITAT DELHI]
Tribunal took the view that while applying TNMM, it is not allowed to compare each and every item of operating cost incurred by assessee with similar cost in case of comparables to ask for adjustment, rather it is overall effect of all such individual items culminating into operating profit, which is considered for benchmarking assessee's international transaction.
We are of the view that Evoke Technologies Pvt. Ltd., which is admittedly rendering SWD services should be regarded as a comparable company and the reasons given for not including the comparable by the DRP cannot be sustained. We direct the inclusion of the aforesaid companies.
Nature of expenses - software expenses - revenue or capital expenditure - HELD THAT:- We have perused the final Order of Assessment and in para 2, the AO has not followed the directions of the DRP. The DRP had given a specific direction to the AO to examine the invoice and ascertain the nature of expenses and if it is noticed that the expenses are only renewal of licence fees for application software for an year or less, then the expenditure has to be allowed as a revenue expenditure. We therefore deem it fit and proper to set aside the order of AO and remand the issue to AO for fresh consideration in accordance with directions of the DRP. We hold and direct accordingly.
Disallowance on account of provision for leave encashment - HELD THAT:- We are of the view that deduction to the extent of leave encashment as actually been paid should be allowed. We direct the AO to examine the claim of the assessee in this regard and allow deduction on the basis of the actual payment. The other grounds of appeal are purely consequential and does not require any adjudication.
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2021 (3) TMI 1378
Prohibition with respect to the sale of assets of Corporate Applicant during moratorium period - whether after imposition of moratorium any transaction done with respect to the assets of the Corporate Debtor/Corporate Applicant deemed to be valid or not? - priority of IBC over other laws - HELD THAT:- It is also on record that by filing revised claim in Form-C on 11.02.2019 before the RP by the Appellant, the Appellant clearly violates the order of moratorium. The Appellant Bank lost sight of the fact that IBC is a complete Code itself and Section 238 of IBC has overriding effect over all other laws including SARFAESI Act, 2002.
The Hon’ble Supreme Court in Anand Rao Korada, Resolution Professional Vs. Varsha Fabrics (P) Ltd. and Others [2019 (11) TMI 1280 - SUPREME COURT]held that Section 14 IBC on the insolvency commencement date, the Adjudicating Authority shall by order, declare a moratorium prohibiting the institution of suits, or continuation of pending suits or “proceedings” against the Corporate debtor, including execution of any judgment, decree or order in any Court of law, tribunal, arbitration panel, or any other authority. Further, the Hon’ble Supreme held that Section 238 IBC give an overriding effect to the IBC over all other laws - The Hon’ble Supreme Court in Anand Rao Korada, Resolution Professional Vs. Varsha Fabrics (P) Ltd. and Others clearly held that once the proceeding under IBC had commenced and an order declaring moratorium was passed by NCLT, on 04.06.2019, the High Court was not justified in passing the order dated 14.08.2019 and 05.09.2019 for carrying out auction of the assets of the Respondent i.e., Corporate Debtor before the NCLT.
The imposition of moratorium as per Section 14 of IBC is to protect the interest of the Corporate Debtor by protecting the assets of the Corporate Debtor for the sole objective to maximisation the value of assets. This Tribunal in the matter of Encore Asset Reconstruction Company Pvt. Ltd. Vs. Charu Sandeep Desai and Others [2019 (8) TMI 529 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] also held that Section 238 of IBC will prevail over any of the provisions of the SURFAESI Act, 2002 if it is inconsistent with any of the provisions of IBC.
From the judgment of the Hon’ble Supreme Court it is clear that when the Adjudicating Authority commences the CIRP proceeding and imposes moratorium, no proceeding shall be continued or commenced and not to carry out any auction of the assets of the Corporate Debtor. Therefore, in the facts of the present case and upon deliberating the issues as framed in paragraph 22 it is held that:
1) When the moratorium was imposed by the learned Adjudicating Authority, receipt of the balance sale consideration is illegal and the learned Adjudicating Authority rightly set aside the sale transaction.
2) Further Section 238 of IBC, have overriding effect over other laws as held by the Hon’ble Apex Court, and this Tribunal in Encore Asset Reconstruction Company Ltd.
The stand of the Appellant that the Respondent No. 2 should have availed remedy under SARFAESI Act, 2002 is uncalled for - In the present case, the sale was not completed and it is evident that balance sale amount was received after imposition of moratorium.
The Assets of the Corporate Debtor/Applicant forms part of valuation. Learned Adjudicating Authority has rightly set aside the sale of assets of the Corporate Applicant - the sale of assets of the Corporate Applicant during moratorium is against the spirit of Section 14 of IBC - there are no infirmity in the order passed by the learned Adjudicating Authority.
Appeal dismissed.
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2021 (3) TMI 1377
Demand for recovery of drawback, sanctioned and paid to the respective exporters - validity of recovery in the absence of bar of limitation in rule 16 of Customs and Central Excise Duties Drawback Rules, 1995 - quantum of market value of export goods - HELD THAT:- The entire proceedings is premised on the acceptance of market value of the export goods as being less than the drawback amount claimed and sanctioned to them. It is also noted that the Customs, Central Excise Duties Drawback Rules, 1995, invoked by the adjudicating authority and claimed by the Learned Authorised Representative to be invoked without bar of limitation, arises from the power conferred under section 75 of Customs Act, 1962 and section 37 of Central Excise and Salt Act, 1944.
There is no doubt that rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 does not prescribe any limitation; indeed it should not have to as the empowerment of the sanctioning authority is limited to computation of eligibility from the scheduled rate. Though the time-limit has been held by the Tribunal to be non-existent in re Sun Exports [2008 (4) TMI 151 - CESTAT MUMBAI], it is found that the decision of the Hon’ble High Court of Gujarat in re Pratibha Syntex Ltd [2013 (3) TMI 480 - GUJARAT HIGH COURT] has held that in the facts of the present case, the show cause notices which have been issued after a period of more than three years from the date when the drawback came to be paid to the petitioners, cannot by any stretch of imagination be said to have been issued within a reasonable period of time. Under the circumstances, the show cause notices have to be held to be bad on the ground of being time barred. Once the show cause notices are held to be invalid, the very substratum of all the orders passed pursuant thereto, including the impugned orders would fall, rendering the same unsustainable.
Thus, there are no record in the impugned order that the bar of limitation was considered by the adjudicating authority or that it was even raised before him. The appellant did not question the correctness of the valuation of export goods undertaken but did, nevertheless, seek cross-examination of certain persons which had been refused; in the light of the substantial delay between the exports and the initiation of proceedings for recovery, this aspect is relevant.
In order to enable proper appreciation of these issues now raised, it would be appropriate to set aside the impugned order and remand the matter back to the original authority for disposal of the issues that the appellants may raise - appeal disposed off.
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2021 (3) TMI 1376
Validity of Rule 2(vi)(a) of the Hazardous and Other Wastes (Management and Transboundary Movement) Amendment Rules, 2019 - Note-Import is permitted to units in Special Economic Zone (SEZ) and Export Oriented Units notified by the Central Government was omitted in Schedule VI against Basel No. B3010 in Column (2) - Basel No. B3010 pertaining to Solid Plastic Waste Polymethyl Methacrylate was omitted from Schedule-III, Part D of the Hazardous and Other Wastes (Management and Transboundary Movement) Amendment Rules, 2016.
HELD THAT:- In view of the amendment brought in the Rules, 2016, by notification dated 27-1-2021, the SEZ units and EOU units notified by the Central Government are permitted to use the raw materials against Basal No. B3010 in Schedule VI in the Rules, 2016. Though the petitioners have imported the materials prohibited by the Rules, 2019 the same were not put to use by the petitioners pursuant to the directions issued by this Court. The petitioners therefore, may approach the respondent authorities with an application to permit the petitioners to use the raw materials lying in the custody of the petitioners in view of the Rules, 2021 vide notification dated 27-1-2021. On receipt of such application, the respondent authorities are directed to permit the petitioners to use the raw materials which were imported by the petitioners and which were the subject matter of the petitions and such materials being kept separate unutilised by the petitioners as per the directions of this Court. The undertaking given by the petitioners before this Court is also discharged in view of the fact that now the petitioners can use such raw materials in SEZ units after the notification dated 27-1-2021.
It is pertinent to note that Rules, 2016 are issued by the Ministry of Environment, Forest and Climate Change, Government of India and in view of the amendment in Rules, 2016 by Rules, 2019 by the said Ministry, the respondent authorities did not permit the petitioners to clear the goods for use. Now in view of the amendment brought by Rules, 2021 vide notification dated 27-1-2021, the petitioners are permitted to use such goods which are imported by it. Therefore, it cannot be said that though the goods were imported during the subsistence of Rules, 2019 cannot be used even after the petitioners are permitted to use in view of the change in policy of the Central Government with effect from 27-1-2021 - as the goods imported by the petitioners were never used in view of the directions of the Court, are now being permitted to be used by notification dated 27-1-2021, there is no need to restrain the petitioners from use of such raw materials which is otherwise permissible to be used.
All the petitions are disposed of as having become infructuous with the direction to the respondent authorities to permit the petitioners to use the raw materials/goods which are kept unused pursuant to the directions issued by this Court on an application which may be made by the petitioners before the respondent authorities so as to remove the seal put up by the respondent authorities to enable the petitioners to use such goods.
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2021 (3) TMI 1375
EPCG Licence scheme - Failure to discharge the export obligations - declared as defaulter - placed in the Denied Entity List (DEL) so that benefit under Foreign Trade Policy are stopped including pending/future refusal of licence under Section 7.1(k) of the Foreign Trade (Regulation) Rule, 1993 - levy of penalty u/s 11(2) of the FTDR Act, 1992 - suspension of IEC under Section 11(7) of FTDR Act, 1992 as amended during 2010 - HELD THAT:- The petitioner has filed the present writ petition and submits that even if the petitioner has not paid the penalty that was originally passed by an order dated 16.01.2014 and subsequently in the remand proceedings. The cancellation of IE Code has to be in accordance with law in terms of Section 8 of the FTDR Act, 1992.
The fact remains that a show cause notice 2013 was issued to the petitioner in November by the Assistant Director General of Foreign Trade. In the show cause notice, there was also a proposal as to why the Import and Export Code of the petitioner should not be suspended under Section 11(7) of FTDR Act, 1992 as amended during 2010 - the said show cause notice also culminated in an order dated 16.01.2014 of the first respondent. It did not however suspended the license of the petitioner. It was passed however without prejudice to any other action that may be taken under the Act, Rules or Regulations in force.
Since no further show proceedings were initiated against the petitioner for cancellation of the there Import and Export code of the petitioner. The jurisdictional officer under the Foreign Trade (Development and Regulation) Act, 1992 is directed to issue appropriate show cause notice to the petitioner under the provisions of the aforesaid Act to show casue as to why Import and Export Code of the petitioner should not be cancelled? Such show cause notice may be issued within a period of 30 days of receipt of this order.
The status quo as on date shall continue for a period of 90 days and will be subject to further outcome of the proposed order to be passed by the jurisdictional officer under the provisions of the aforesaid Act.
Petition disposed off.
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2021 (3) TMI 1374
Reduction of Share Capital - section 66 read with section 52 of the Companies Act, 2013 - HELD THAT:- The Petitioner Company submitted that the Company has complied with all statutory requirements as per the directions of the Tribunal vide its order dated 22.01.2020 and has filed necessary affidavits to that effect with the Tribunal. Moreover, the Company also undertakes to comply with statutory requirements, if any, under the Act and the Rules made thereunder, as would be applicable. The undertaking given by the Petitioner Company is accepted.
Since the requisite statutory procedure has been fulfilled, the Company Petition is made absolute in terms of prayer made in the Petition - Application allowed.
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