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TMI Tax Updates - e-Newsletter January 14, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Refund claim - exclusion of certain period due to COVID pendamic between the said period 15th March 2020 and 2nd October 2021 - Assistant Commissioner of CGST is bound by IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2021 (11) TMI 387 - SC ORDER] and is require to exclude the period of limitation falling during the said period. - Since the period of limitation for filing the third refund application fell between the said period 15th March 2020 and 2nd October 2021, the said period stood excluded - HC Visit to Get Source GST: Refund claim - exclusion of certain period due to COVID pendamic between the said period 15th March 2020 and 2nd October 2021 - Assistant Commissioner of CGST is bound by IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [2021 (11) TMI 387 - SC ORDER] and is require to exclude the period of limitation falling during the said period. - Since the period of limitation for filing the third refund application fell between the said period 15th March 2020 and 2nd October 2021, the said period stood excluded - HC Visit to Get Source GST: Refund claim - time limitation - it is claimed that tax was paid by mistake on account of non-supply of any service either wholly or partially - The option available to the petitioner was to request its customer/client to issue an appropriate credit notes to neutrilize the alleged excess payment of GST while generating and issuing invoices dated 01.11.2017 details of which was captured in their regular return and tax was paid - refund claim filed by the petitioner is clearly barred under the limitation prescribed u/s 54(1) of the respective enactments read with explanation (h). - HC Visit to Get Source GST: Refund of GST - rejection on the ground of time limitation - petitioner submits that in view of the deficiency pointed out in the earlier proceedings, the petitioner was unable to upload the refund applications for the period commencing from February 2019 to December 2019 and that the limitation for filing refund claim had expired under Section 54 of the CGST Act, 2017 - in view of earlier decision of HC, writ petition is disposed off by directing the respondent to consider the petitioner's representation dated 10.12.2021 without expressing any opinion on merits. - HC Visit to Get Source Income Tax: Power of ITAT u/s 254 - Addition on account of bad debt deleted - Tribunal has committed no illegality in upholding the finding of fact recorded by the commissioner income tax deleting the addition made on account of bad debt by holding that the assessee has not raised any claim of bad debts either in the profit and loss account or balance sheet. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - There is a mistake in the reasons recorded for reopening and according to respondents it is a typographical error that the figure of ₹ 3.02 lakhs was mentioned instead of ₹ 293.24 lakhs. In our view, this mistake demonstrates non-application of mind by respondent No.1 at the time of recording of the reasons for reopening the assessment. Though we do not find the approval under section 151 of the Act in the record and proceedings, we can certainly hazard a guess that even the Approving Authority would not have applied its mind or read the reasons recorded before granting approval. - Notice quashed - HC Visit to Get Source Income Tax: Addition u/s 68 - unsecured loans received - sole reason for confirming the addition was low income tax return in the year of issue whereas it was contended that it is not the case for the subsequent years - the assessee discharge the onus, proved the receipt and repayment of the loan received along with the interest and the same is also been brought before the Assessing Officer during the assessment proceedings. Hence, the reasons given by the revenue authorities for treating the loan amount u/s 68 is factually and legally not valid. - AT Visit to Get Source Income Tax: Correct head of income - compensation/liquidation damages received on account of relinquishment of right in the property - The word saleable condition cannot be a deciding factor that the assessee wanted to acquire the project for its business activities. Admittedly, it appears to us that the scale of the business of the assessee was not significant enough to acquire such a huge property for its business activities and similarly there was not sufficient funds available with it which is discernible from the financial statement of the assessee. But, again we are not in agreement with the decision of the authorities below on this aspect. The assessee might have some financier or exploring for some joint-venture. - the amount of compensation received by the assessee is not chargeable to tax in the hands of the assessee. - AT Visit to Get Source Income Tax: Revision u/s 263 - nature of payment received by the assessee- As per CIT-A amount received by the assessee is managerial remuneration and not professional fees - during the course of the proceedings before the Ld.PCIT the assessee had submitted various evidences including the service agreement dated 30/08/2008 and also the board resolution of the company and TDS certificate U/s.194J to justify his claim and the Ld.PCIT could not draw any negative inference from the same. Further there is also nothing on record to suggest that the assessee has received managerial remuneration. - AT Visit to Get Source Income Tax: Disallowance of the expenses claimed on account of employees benefit expenses - AO making the disallowance on the ground that assessee has claimed the expenses basically to reduce its profitability because to earn income from the bank deposits and rental income, one need not require to incur huge legal and professional fees and entertainment expenses and such other expenses - Genuineness of the expenditure is not in dispute and the Company in subsequent assessment years has shown income from operations, claim of expenses allowed - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - escapement of income determined by applying Rule 9A & 9B of Income Tax Rules, 1962, which deals with quantification of expenses allowable in case of film producer and distributor - reasons recorded by the Assessing Officer for reopening of assessment is a clear case of change of opinion, which is not permissible under the law - AT Visit to Get Source Income Tax: Addition of compensation payable for unauthorised slum dwellers - contingent liability or as an unascertained liability - assessee had been continuing to make payments by discharging the liabilities as could be seen in the table in subsequent years. Hence, we hold that Apatra Expenses and compensation payable to various slum dwellers are genuine liabilities not warranting any disallowance thereon.- AT Visit to Get Source Customs: Import of Antique item - idol/statue - baggage rules - confiscation - In this backdrop, since the petitioner agreed not to claim ownership of the said idol/statute and in view of the Revenue agreeing to hand over the possession of the said statue to Archaeological Survey of India under the provisions of Disposal Manual 2019 issued by the CBIC, it is directed that the Revenue shall not precipitate the pending proceedings against the petitioner described in prayer clause (a) or to initiate any fresh proceedings in furtherance of these proceedings against the petitioner. - HC Visit to Get Source Customs: 100% EOU - Inter-unit transfer of goods - It is well settled that all notifications are prospective in nature, in the absence of giving any retrospective effect specifically, no retrospective effect could be given to the exemption notifications - Secondly, the assertion of the department that no warehousing period was extended for the goods in consideration is also held to be unjustifiable, warehousing licence granted to the respondent is examined by the CESTAT and is held to be in accordance with Circular No.7/2005-Cus, dated 14.2.2005. - HC Visit to Get Source Customs: Levy of Anti-Dumping Duty - Whether the imports had taken place before or after issuing of the impugned Notification is to be decided by a proper officer by issuing a notice to the petitioner under Section 28 of the Customs Act, 1962 after proper assessment in the Bill of Entries filed by the petitioner. It is for the petitioner to give a reply. - Since the import pertains to the year 2014-15, the second respondent is directed to finalise the assessment in the respective Bill of Entries, if they have not yet been already finalised, in accordance with law. - HC Visit to Get Source Customs: Classification of imported goods - In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - Since the revenue has not been able to discharge their burden of proof. Hence the classification of goods declared by the appellants cannot be disturbed. - AT Visit to Get Source Customs: Classification of imported goods - In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - Since the revenue has not been able to discharge their burden of proof. Hence the classification of goods declared by the appellants cannot be disturbed. - AT Visit to Get Source Customs: Goods /gold is classified under chapter heading 71081300 - import of baggage by a passenger coming from abroad - applicable rate of tax is 12.5% or 35%? - admittedly, appellant was travelling from Bahraich to Barabanki by bus; thus, it is a case of town seizure; accordingly, it is held that the rate of duty for import of baggage is not applicable, and the duty is payable @ 12.5% for gold, falling under CTH 71081300. - AT Visit to Get Source IBC: Approval of the Sale as a ‘Going Concern’ - If the Bidder is allowed to withdraw from the Bid at this stage and seek refund on the ground that their conditional offer has not been accepted, then the liquidation process would be a never ending one, defeating the scope and objective of the Code - The acceptance was conveyed to the Bidder on 25.09.2019. Clearly noting the terms and conditions that the Company was being sold as a ‘Going Concern in an as is very basis’, the Bidder cannot now be permitted to turn around and plead that their offer was conditional. - AT Visit to Get Source Service Tax: Seeking direction to Respondents to accept the application Form SVLDRS-1 filed by the Petitioner and to issue discharge certificate - If according to the Respondents the tax liabilities were not quantified and the Petitioner was not eligible, the Respondents ought to have given an opportunity of being heard to the Petitioner before passing such Order rejecting the application made by the Petitioner on the ground of ineligibility. - Matter restored back - HC Visit to Get Source Service Tax: Seeking reversal of CENVAT Credit - amount written off as bad debts - The appellant has correctly availed the cenvat credit on input services although the amount of non-recoverable taxable service has been written off by the appellant for the period prior to 01.04.2011. The appellant has admitted at bar that they have paid service tax on all the taxable services provided by them after 01.04.2011 at the time of provision of service. Therefore, if it is so, the appellant cannot be liable for reversal of cenvat credit for the services provided after 01.04.2011 on which the appellant has paid service tax. - AT Visit to Get Source Central Excise: Extended period of limitation - There is also no denial that show cause notices were issued to the appellant for the same reason as in the present appeal for the immediately prior period (2005- 2011). It does not lie in the mouth of the Department to still allege suppression. Otherwise also the entire dispute appears to be revenue neutral - there appear no revenue consequences. - Thus, extended period is held to have wrongly been invoked by the Department. Show Cause Notice itself gets hit by period of limitation. - AT Visit to Get Source VAT: Seeking restoration of cancelled registration of petitioner - blocking of input tax credit - except the show-cause notice, nothing else was furnished or nothing was attached to such show-cause notice. - The SCN has great significance in the adjudication proceedings for the mandatory compliance of the principles of natural justice - The SCN is the foundation on which the adjudicating authority has to build up its case - The impugned order, cancelling the registration is hereby quashed and set aside - HC Visit to Get Source VAT: Levy of Entertainment tax - Valuation - consideration towards the services excluding the service tax component or on both - No proof is available on records to show that service tax has been separately collected. It was further observed that the charging Section 4-G of the Act uses the expression 'on the amounts received or receivable' is liable for entertainment tax at 6%, and therefore, the assessing authority is correct in levying entertainment tax on service tax component, and the appellate authority is correct in confirming the same. - HC Visit to Get Source VAT: Levy of CST - inter-state sales effected without C-Form declarations - amount claimed as deduction by the petitioner to be in the nature of discount requiring compliance of Rule 3(2)(c) of the Karnataka Value Added Tax Rules, 2005 or not - Though the petitioner has contended before the Tribunal that issuing of credit note to the purchasing dealers could not be construed as discount, even assuming that it is discount not reflected in the books of accounts, the principles enunciated by the Hon’ble Apex Court in Southern Motors, would certainly apply to the facts of the case on hand. - Benefit allowed - HC Visit to Get Source Articles Time period between 15.03.2020 and 02.10.2021 would stand excluded for the purpose of determining the period of limitation for filing refund application under GST: Bombay High Court EXPECTATIONS IN 2022 BY LIQUOR INDUSTRY Power of provisional attachment under GST is draconian in nature Notifications Companies Law S.O. 148 (E) - dated 11-1-2022 - Co. Law Seeks to bring in force section 56 of the Companies (Amendment) Act, 2020 S.O. 147 (E) - dated 11-1-2022 - Co. Law Seeks to bring in force to clause (i) of section 80 of the Companies (Amendment) Act, 2017 G.S.R. 12 (E) - dated 11-1-2022 - Co. Law Companies (Registration Offices and Fees) Amendment Rules, 2022. GST - States 17/2021-State Tax (Rate) - dated 25-11-2021 - Gujarat SGST Amendment in Notification No. 17/2017-State Tax (Rate), dated 30th June, 2017 16/2021-State Tax (Rate) - dated 25-11-2021 - Gujarat SGST Amendment in Notification No. (GHN-41) GST-2017/S.11 (1) (7)-TH dated the 30th June, 2017 15/2021-State Tax (Rate) - dated 25-11-2021 - Gujarat SGST Amendment in Notification No. 11/2017-State Tax (Rate), dated 30th June, 2017 14/2021-State Tax (Rate) - dated 25-11-2021 - Gujarat SGST Amendment in Notification No. (GHN-31) GST - 2017/S.9(1)(1)-TH dated the 30th June, 2017 30/2021-State Tax - dated 1-11-2021 - Gujarat SGST Gujarat Goods and Services Tax (Sixth Amendment) Rules, 2021. 29/2021-State Tax - dated 1-11-2021 - Gujarat SGST Seeks to bring in force section 4 and section 5 of the Gujarat Goods and Services Tax (Amendment) Act, 2021 (4-I/2021) FD 02 CSL 2021 - dated 10-1-2022 - Karnataka SGST Karnataka Goods and Services Tax (Amendment) Rules, 2022. 40-F.T. - dated 10-1-2022 - West Bengal SGST Seeks to amend notification No. 1125-F.T. dated 28.06.2017 with effect from 01.01.2022 regarding goods rate. 39-F.T. - dated 10-1-2022 - West Bengal SGST Seeks to amend notification No. 1141-F.T. dated 28.06.2017 regarding tax payable by Electronic Commerce Operator (ECO) under section 9(5) w.e.f. 01.01.2022. 38-F.T. - dated 10-1-2022 - West Bengal SGST Seeks to amend notification No. 1136-F.T. dated 28.06.2017 with effect from 01.01.2022 regarding NIL rated services. 37–F.T. - dated 10-1-2022 - West Bengal SGST Seeks to notify 01.01.2022 as the date on which the provisions of section 3(2), and sections 3(6) to 3(13) of the WB Finance Act, 2021 shall come into force. 36-F.T. - dated 10-1-2022 - West Bengal SGST Seeks to bring sub-rule (2) and sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the WBGST (Eighth Amendment) Rules, 2021 (1231-F.T. dated 21.12.2021) into force w.e.f. 01.01.2022 Circulars / Instructions / Orders DGFT - 45/2015-20 - dated 13-1-2022 Inclusion of Paragraph 2.79G in the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 to notify the procedure for General Authorisation for Export of Chemicals and related equipment (GAEC) DGFT - Trade Notice No. 30/2021-22 - dated 13-1-2022 Guidelines for submission of online application for One time registration for SCOMET license and Post-reporting requirements for Export of chemicals under General authorization for export of Chemicals and related equipments (GAEC) w.e.f 19.01.2022 News India-UK Joint Media Statement on Launch of FTA Negotiations India and UK Launch Free Trade Agreement Negotiations Case Laws: GST 2022 (1) TMI 495 Seeking grant of interim protection - grant of interim anticipatory bail - Section 132(1)(a)(b)(c)(d) (i) Central Goods and Services Tax Act - HELD THAT:- Since the applicant no. 2 has been granted interim protection vide order dated 07.12.2021 and 17.12.2021, till the next date, in the event of arrest of the applicant no. 2 Vipin Kumar, in pursuance of summoning order dated 22.3.2021, under Section 132(1)(a)(b)(c)(d) (i) Central Goods and Services Tax Act, he shall be released on interim anticipatory bail on his furnishing a fresh personal bond of ₹ 50,000/- with two sureties each in the like amount to the satisfaction of the concerned Officer of Central Goods and Services Tax Act, with the conditions imposed. Application allowed. 2022 (1) TMI 494 Refund claim - exclusion of certain period due to COVID pendamic between the said period 15th March 2020 and 2nd October 2021 - Constitutional validity of Rule 90(3) of the Central Goods and Services Tax Rules, 2017 - refund application for the period July 2018 to September 2018 on 21st August 2020 online on the GST portal - application rejected on the ground that there were certain deficiencies in the said application - HELD THAT:- It is not in dispute that the first and second refund applications were rejected on the ground of certain deficiencies in those applications filed by the Respondent No.2. The third refund application, which was required to be filed within two years in accordance with the Circular No.20/16/04/18- GST dated 18th November 2019, under Section 54(1) of the Central Goods and Services Tax Act, 2017. The limitation period fell between 15th March 2020 and 2nd October 2021, which period was excluded by the Hon ble Supreme Court in all such proceedings irrespective of the limitation prescribed under the general law or Special Law whether condonable or not till further Order/s to be passed by the Hon ble Supreme Court in those proceedings. Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (11) TMI 387 - SC ORDER] issued further directions that in computing the period of limitation in any Suit, Appeal, Application and or proceedings, the period from 15th March 2020 till 2nd October 2021 shall stand excluded. Consequently the balance period of limitation remaining as on 15th March 2021, if any shall become available with effect from 3rd October 2021. Respondent No.2 is also bound by IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (11) TMI 387 - SC ORDER] and is require to exclude the period of limitation falling during the said period. Since the period of limitation for filing the third refund application fell between the said period 15th March 2020 and 2nd October 2021, the said period stood excluded - The third refund application filed by the Petitioner thus was within the period of limitation prescribed under the said Circular dated 18th November 2019 read with Section 54(1) of the Central Goods and Services Act, 2017. The third refund application filed by the Petitioner before the Respondent No.2 is restored to the file of Respondent No.2 - petition allowed. 2022 (1) TMI 493 Maintainability of petition - alternative remedy of appeal - confiscation proceedings u/s 130 of GST Act - HELD THAT:- The petitioner must be relegated to pursue the statutory remedy of appeal under Section 107 of the Act. This writ petition is dismissed without prejudice to the right ot the petitioner to pursue the statutory remedy of appeal. 2022 (1) TMI 492 Refund claim - time limitation - it is claimed that tax was paid by mistake on account of non-supply of any service either wholly or partially - Section 54 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In this case, the tax was paid on 20.12.2017. Thus, the refund claim if it was to be filed ought to have been filed by the petitioner within the period of limitation prescribed under the Act. The refund claim should have been filed on or before 19.12.2019. However, refund claim was filed only on 30.05.2020. The refund claim was thus beyond the period of limitation prescribed under Section 54 of the CGST Act, 2017. In fact, if there was a wrong entry as was argued, the petitioner should have taken steps for rectification of the returns under proviso to Sub Section (9) to Section 39 of the Act - in this case, the petitioner has given a specific date of the invoice ie. 1.11.2017 and paid tax. Therefore, refund under Section 54 of the TNGST CGST Act, 2017 cannot be entertained by the respondent. The option available to the petitioner was to request its customer/client M/s.Caterpillar India Private Limited to issue an appropriate credit notes to neutrilize the alleged excess payment of GST while generating and issuing invoices dated 01.11.2017 details of which was captured in their regular return and tax was paid - refund claim filed by the petitioner is clearly barred under the limitation prescribed under Section 54(1) of the respective enactments read with explanation (h). Petition dismissed. 2022 (1) TMI 491 Refund of GST - rejection on the ground of time limitation - petitioner submits that in view of the deficiency pointed out in the earlier proceedings, the petitioner was unable to upload the refund applications for the period commencing from February 2019 to December 2019 and that the limitation for filing refund claim had expired under Section 54 of the CGST Act, 2017 - HELD THAT:- Prima facie it appears that the issue is now settled in favour of the petitioner in the light of the decision of the Hon'ble Bombay High Court in Lakshmi Organic Industries Limited Vs. Union of India and Ors [ 2021 (12) TMI 63 - BOMBAY HIGH COURT ] where it was held that it is observed that its term shall be applicable only to applications filed electronically on the common portal but would have no applicability to an application for refund which is filed manually. This writ petition is disposed off by directing the respondent to consider the petitioner's representation dated 10.12.2021 without expressing any opinion on merits. Income Tax 2022 (1) TMI 490 Reopening of assessment u/s 147 - Undisclosed interest income - information received from Investigation Wing about a particular entity entering into suspicious transaction - scope of change of opinion - HELD THAT:- In the computation of income, Petitioner has disclosed interest received of ₹ 1,41,18,920/- and payment of ₹ 1,43,43,518/- restricted to ₹ 1,42,05,185/-. Even in the capital account there is disclosure of interest receipt of ₹ 1,41,18,920/- and interest payment of ₹ 1,43,43,518/-. Therefore these details have been made available before the assessment was completed under section 143(3) of the Act. Just because some information has been received from the Investigation Wing, does not entitle Respondents to reopen assessment based on change of opinion. Merely, deposit of money into the bank account by way of cheque itself is not a ground for escapement of income. Mere high value deposit in the bank account cannot be a reason for reopening under section 148 - The reasons as made available to Petitioner merely indicates information received from Investigation Wing about a particular entity entering into suspicious transaction. That material is not further linked to the conclusion that Petitioner has indulged in any activity which can give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped assessment. It does appear that the Assessing Officer has merely issued a reopening notice on the basis of intimation received from the Investigation Wing and consequent to change of opinion - thus quash, cancel and set aside the impugned notice - Decided in favour of assessee. 2022 (1) TMI 489 Power of ITAT u/s 254 - Addition on account of bad debt deleted - addition as the books of accounts of the assessee corporation were not audited under section 44AB of the income tax act, 1961 and it could not be ascertained whether bandits were actually written off in the books or not - ITAT deleted the addition - HELD THAT:- In the present case, the order of the Assessing Officer was challenged in appeal before the Commissioner. While deciding an appeal, the Commissioner has all the powers of Assessing Officer and he may affirm, reduce, endorse or annul the assessment. In the present case, the Commissioner, on the basis of material on record, recorded a categorical finding of fact, which has been affirmed by the Income Tax Appellate Tribunal in further appeal exercising the powers conferred on it by Section 254 (1) of the Income Tax Act, 1961 and we find no legal error in exercise of powers by the Income Tax Appellate Tribunal. Tribunal has committed no illegality in upholding the finding of fact recorded by the commissioner income tax deleting the addition made on account of bad debt by holding that the assessee has not raised any claim of bad debts either in the profit and loss account or balance sheet. Income Tax Appellate Tribunal is justified in dismissing the appeal of the Department by affirming the finding of fact recorded by the Commissioner regarding the addition having been made by the Assessing Officer and the orders of the commissioner as well as the Income Tax Appellate Tribunal or not perverse or erroneous. Penalty u/s 271(1)(c) - HELD THAT:- Since the order passed by the Assessing Officer holding that the assessee had wrongly claimed benefit of bad debts written off was set aside by the Commissioner in appeal and the Commissioner s order has been affirmed by the Income Tax Appellate Tribunal and Income Tax Appeal filed by the department against the aforesaid order of the Income Tax Appellate Tribunal has been dismissed, consequently this appeal is also liable to be dismissed. 2022 (1) TMI 488 Reopening of assessment u/s 147 - eligibility of reasons to believe - basis for reassessment is to disallow store launching expenses incurred during the year on the ground that these are classifiable as capital expenditure - HELD THAT:- No new or fresh information or fact that has come to the notice of the JAO subsequent to the assessment so as to initiate proceedings under section 148 of the Act. It is quite obvious that the reopening is based on the material which was already on record at the time of passing the assessment order under Section 143 - Once, the Assessment Officer, on consideration of the material on record, and the explanation offered, arrived at a final conclusion that the assessee is entitled to the deduction as claimed, then on the basis of the very same material, the AO cannot form a prima-facie opinion that the deduction is not allowable and, accordingly, reopen the assessment on the ground that income chargeable to tax has escaped assessment. A Division Bench of this Court in Cartini India Limited, (Formerly Godrej Appliances Ltd. [ 2009 (3) TMI 28 - BOMBAY HIGH COURT] has observed that where on consideration of the material on record, one view is conclusively taken by the assessing officer, it would not be open to the assessing officer to reopen the assessment based on the very same material with a view to take another view. There is a mistake in the reasons recorded for reopening and according to respondents it is a typographical error that the figure of ₹ 3.02 lakhs was mentioned instead of ₹ 293.24 lakhs. In our view, this mistake demonstrates non-application of mind by respondent No.1 at the time of recording of the reasons for reopening the assessment. Though we do not find the approval under section 151 of the Act in the record and proceedings, we can certainly hazard a guess that even the Approving Authority would not have applied its mind or read the reasons recorded before granting approval. If it had only been read, these errors would have come to light at that stage itself. Therefore, for all the aforesaid reasons, we quash the impugned notice under section 148 - Decided in favour of assessee. 2022 (1) TMI 487 Maintainability of appeal on low tax effect - claim of bogus LTCG on penny stock for which no monetary limits were applicable - Scope of Circular No.23 of 2019 dated 06.09.2019 along with an Office Memorandum No.279 dated 16.09.2019 providing that the cases involving Organized Tax Evasion Scam to bogus Long Term Capital Gain/ Short Term Capital Loss on penny stocks - Whether the Appellate Tribunal is justified in law and on facts in disposing the appeal of the revenue on account of low tax effect without deciding the appeal on merits even when the issue under appeal was claim of bogus LTCG on penny stock for which no monetary limits were applicable? - HELD THAT:- On the date when the Tribunal dismissed the appeal on the ground of low tax effect, indisputably, the CBDT Circular No.23 of 2019 dated 06.09.2019 was not in force. However, Mr. Bhatt, very fairly pointed out that the argument of the Revenue that such circular should be applied with retrospective effect came to be negatived by a Coordinate Bench of this Court in the case of Principal Commissioner of Income-tax (Central), Ahmedabad vs. Anand Natwarlal Sharda [ 2021 (6) TMI 1065 - GUJARAT HIGH COURT ] - This Court took the view that there is nothing to suggest in the Circular/Office Memorandum referred to above that the same would have a retrospective effect. The Office Memorandum dated 16.09.2019 was issued pursuant to the said circular dated 06.09.2019 stating inter alia that by virtue of the powers of CBDT under Section 268A of the Income Tax Act, the monetary limits fixed for filing appeals before ITAT/High Court and SLPs/Appeals before Supreme Court shall not lie in case of assessees claiming bogus LTCG/STCL through penny stocks and appeals/ SLPs in such cases appeals shall be filed on merits. There is nothing to suggest in the said Circular/ Office Memorandum that they shall have retrospective effect. On the contrary, from the language employed in the said Circular dated 06.09.2019, it clearly transpires that the appeals may be filed on merits as an exception to the other Circulars issued earlier, where the Board by way of special order direct filing of Appeals on merits in the cases involved in organized tax evasion activity. Therefore, by virtue of the said Circular dated 06.09.2019, the appeals could be filed on merits, irrespective of the monetary limits fixed in earlier cases, if the Board passes special order for filing appeals in cases involving tax evasion activity. The said Circular speaks about the Appeals that may be filed with the special order of the Board in future, and hence could not be construed to have retrospective effect. Tribunal interpreting the said Circular/ Office Memorandum in the impugned order has rightly observed that in respect of each case or category of cases whether an appeal should be filed in view of the Circular dated 06.09.2019 or not shall be decided by the Board by way of special order, and thus a specific requirement of issuance of special order by CBDT is a must. The Tribunal therefore has rightly held that the CBDT Circular No. 23/2019 dated 06.09.2019 should be read along with the Office Memorandum dated 16.09.2019, in respect of the appeals to be filed pursuant to such special orders of CBDT and shall apply to all the appeals filed on or after 16.09.2019 by the revenue, where the tax effect may be low but the appeal could still be filed by the revenue on merits. 2022 (1) TMI 486 Addition u/s 68 - unsecured loans received - sole reason for confirming the addition was low income tax return in the year of issue whereas it was contended that it is not the case for the subsequent years - HELD THAT:- For unsecured loans from Kaypee Mercantile Pvt. Ltd. subsequent to the receipt of the reply from the lender, the AO did not conduct any further enquiry. The report of the DDIT(Inv.), Kolkata relied upon by the ld. CIT(A) and the AO was much before 21.12.2017 i.e. with response to the letter issued by the DDIT(Inv.), Noida on 14.10.2015. It is apparent from the facts on record, while as per the report of 2015, the notice u/s 131 could not be served whereas during the assessment proceedings in 2017, the entire details have been submitted by the assessee. The response to the notice issued u/s 133(6) was full and comprehensive. The amounts have been received by the assessee on 27.07.2009 of ₹ 16,00,000/- and ₹ 18,00,000/- on 31.07.2009 as ICD bearing interest of 9%. The same has been repaid on 07.01.2014 along with the interest agreed upon. The date of search in the group was conducted on 26.08.2015. Having examined the receipt of loan independently disregarding the date of search, we find that the assessee discharge the onus, proved the receipt and repayment of the loan received along with the interest and the same is also been brought before the Assessing Officer during the assessment proceedings. Hence, the reasons given by the revenue authorities for treating the loan amount u/s 68 is factually and legally not valid. Hence, we hereby direct the addition made be obliterated. Unsecured loan received from Cindy Goods Supply Pvt. Ltd. - ITAT [ 2020 (2) TMI 1224 - ITAT DELHI] has duly considered the identity of the company and found it to have been incorporated in the year 1995, the amounts have been accepted as genuine during the assessments completed u/s 143(3), the returned income range from ₹ 1.4 crores, ₹ 75 lacs, ₹ 11 lacs for the A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2015-16 respectively proving that the lender company cannot be considered as a accommodation entry provider/paper company. The company has duly responded to notices issued u/s 133(6) to the revenue authorities. Further, the Director of the company namely, Mr. Vipul Kumar has confirmed the investments made in the assessee company during the statement recorded u/s 131 of the IT Act by the AO. Hence, keeping in view, the facts narrated above, we find that the observation of the revenue authorities holding that the identity, genuineness and creditworthiness of the lender company could not be proved is contrary to the facts on record. Hence, the addition made by the revenue authorities is liable to be obliterated. Addition of the 8% non-convertible, preference shares received by the assessee u/s 68 - Co-ordinate Bench of the ITAT [ 2020 (2) TMI 1224 - ITAT DELHI] has considered the identity of the companies and found that Giri Financial Services Pvt. Ltd. to have been incorporated in the year 1995, the amounts have been accepted as genuine during the assessments completed u/s 143(3), the returned income range from ₹ 53.9 lacs, ₹ 9.16 lacs, ₹ 148 lacs for the A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2015-16 respectively in the case of Giri Financial Services Pvt. Ltd. and in the case of Pabla Leasing Finance Pvt. Ltd. ₹ 30.85 lacs for the A.Y. 2013-14, Rs.(-) 52.22 lacs for A.Y. 2014-15 and ₹ 93.18 lacs for A.Y. 2015-16 which undisputedly proves that the investor companies cannot be considered as a accommodation entry provider/paper company. The company has duly responded to notices issued u/s 133(6) to the revenue authorities. Further, Shri Virendra Tripathy, Managing Director of M/s Pabla Leasing Finance Pvt. Ltd., has confirmed the investments made in the assessee company during the statement recorded u/s 131 of the IT Act by the revenue authorities. Mr. Anshul Mittal , Director of the company has submitted all the relevant details before the revenue authorities. Hence, keeping in view, the facts narrated above, we find that the observation of the revenue authorities holding that the identity, genuineness and creditworthiness of the lender company could not be proved is contrary to the facts on record. Hence, the addition made by the revenue authorities is liable to be obliterated. 2022 (1) TMI 485 Exemption u/s. 54F denied - amount invested in purchase of two adjacent flats - AO denied the exemption claimed by noting both the said flats are independent and separate executed through different Sale Deeds - Assessee argued that amount invested in purchase of two adjacent flats bearing Flat Nos. 701 and 702 as single unit - HELD THAT:- We find force in the arguments of the AR that the two adjacent flats are being used as single residential unit by opening the common wall between the two living and dining areas. Coming to the decision in the case of Devdas Naik [ 2014 (7) TMI 173 - BOMBAY HIGH COURT] we note that the Hon ble High Court was pleased to observe that the decision in the case of Ms. Sushila M. Jhaveri [ 2007 (4) TMI 289 - ITAT BOMBAY-I] has been confirmed by this Court in the case of CIT Vs. Raman Kumar Suri [ 2012 (12) TMI 421 - BOMBAY HIGH COURT] . Therefore, as discussed above the Special Bench in the case of Ms. Sushila M. Jhaveri [ 2007 (4) TMI 289 - ITAT BOMBAY-I] held exemption is allowable u/s. 54F of the Act if the two adjacent or contiguous untis converted into one residential house by having common passage/stair case, common kitchen etc. intended to be used as single house for the residence of the family. In the present case, as we noted above that two adjacent flats converted into one unit by opening a common wall between two living and dining area and being used as single unit for residential purpose of the assessee, therefore, in our opinion, the ratio of Hon ble High Court of Bombay is applicable to the case on hand. Thus, we hold that the assessee is entitled to claim deduction u/s. 54F of the Act for entire amount which was invested in purchase of two adjacent flats bearing Flat Nos. 701 and 702 as single unit. The order of CIT(A) is not justified and it is set aside. The grounds raised by the assessee are allowed. 2022 (1) TMI 484 Correct head of income - compensation/liquidation damages received on account of relinquishment of right in the property - business receipts or Short term capital gain - relinquishment deed between the assessee and M/s JRPL was entered - AO held that the amount of compensation received by the assessee represents the business transaction and therefore the same cannot be treated as capital receipt - income has accrued in the year under consideration as the relinquishment deed was signed dated 16th December 2010 in the year under dispute corresponding to assessment year 2011-12 - difference between the right to sue and right to seek conveyance of property from the taxation point of view - HELD THAT:- We note that there is no single test or criteria to decide whether a receipt represents the capital or the business receipt. It depends upon the facts and circumstances of each case. It is the decision of the assessee to acquire the project as asset or stock in trade ignoring the object clause appearing in the memorandum of association. It is for the reason that the object clause appearing in the memorandum of association which authorises the assessee to carry on the activity of real estate cannot be a criteria to hold that the assessee intended to acquire impugned project as stock in trade. It is because the assessee while carrying out the real estate business can also hold certain assets as fixed assets to be used for the purpose of the business. But, we note that there is no direct/indirect evidence available on record indicating that the assessee was intending to acquire such project to be used for the purpose of its business activities of trading in shares and securities - there is no circumstantial evidences suggesting so. On the contrary, there are enough indications available on record as highlighted by the authorities below that the assessee was intending to acquire the impugned project as stock in trade. These indications have been highlighted by the learned CIT (A) which have been reproduced in the preceding paragraph. Thus it appears that, the assessee was intending to acquire the impugned project as stock in trade. It is for the reason that the revenue cannot sit on the armchair of the assessee to decide the decisions of the assessee. Therefore, nothing adverse can be drawn against the assessee on presumption and assumptions based on indications until and unless the documentary evidence or other materials are available on record. The word saleable condition cannot be a deciding factor that the assessee wanted to acquire the project for its business activities. Admittedly, it appears to us that the scale of the business of the assessee was not significant enough to acquire such a huge property for its business activities and similarly there was not sufficient funds available with it which is discernible from the financial statement of the assessee. But, again we are not in agreement with the decision of the authorities below on this aspect. The assessee might have some financier or exploring for some joint-venture. In fact, it was the call of the assessee how to arrange the fund and use the impugned project for its business activities. The revenue cannot enter into the business strategies of the assessee to draw any inference based thereon. The assessee has received the compensation which is not chargeable to tax in the light of the above principles laid down in M/S. SAURASHTRA CEMENT LIMITED [ 2010 (7) TMI 11 - SUPREME COURT] - Accordingly we hold that, the amount of compensation received by the assessee is not chargeable to tax in the hands of the assessee. Whether amount in lieu of cancellation agreement should be taken into consideration while determining the taxable income of the assessee? - Admittedly, the cancellation agreement was made by the assessee for a consideration of E40 crores. It is the undisputed fact. However, at the same time we cannot ignore the fact that what has actually been received by the assessee. As per the record available before us the assessee has received a sum of 4.89 crore only. There was no allegation by the revenue that the assessee has received over and above the amount of rupees 4.89 crores either in the form of cash or in any other form. Thus we are of the view that the only real income should be brought to tax after ignoring the documents available on record. Thus we are of the view that the sum of E4.890 crores should only be subject matter of tax, if any liability is there. Whether the assessee has adopted colourable device by entering into the transaction with M/s JRPL? - Amount receivable only at ₹ 4.83 crores whereas as per deed it was to receive ₹ 40 crores only and loss on sale of share occurred after the finalization of books of account. Thus it is transpired that the assessee along with M/s JRPL arranged all the transaction in dubious manner which is nothing but a colourable devise. Once the amount was finalised at E4.89 crores only, then why the assessee agreed in the cancellation agreement for E40 crores. It is also a fact on records that M/s JRPL has claimed the deduction for E40 crores as expenses in the financial statement. Thus if we see all the facts in the aggregation of aforesaid information, it is transpired that the assessee along with M/s JRPL has adopted the colourable device. The prime purpose of the colourable device is to extend the benefit to M/s JRPL which is the beneficiary of major amount. The assessee in this process derived the benefit of E4.89 crores only as conduit. As far as tax liability is concerned even in case of colourable device, it seems to us that the party who has been benefited from such colourable device should only be brought to tax. Indeed, the assessee was a party in such colourable device but the same cannot be made subject to tax for the reason that the beneficiary of the colourable device is M/s JRPL. The Revenue is at liberty to proceed against M/s JRPL in the manner as provided under the provisions of law. Thus the ground of appeal of the assessee is allowed. Allowance of brought forward losses - HELD THAT:- The assessee is very much entitled to claim brought forward losses subject to the conditions specified under the provisions of law. Accordingly in the interest of justice and fair play, we are restoring this issue to the file of the AO for fresh adjudication as per the provisions of law. The assessee is also directed to cooperate and furnish the necessary documents before the AO during the proceedings. The assessee also directed not to seek any adjournment without any justifiable cause. Hence the ground of appeal of the assessee is allowed for the statistical purposes. 2022 (1) TMI 483 Disallowance of interest - assessee had utilised his borrowed funds for making investments in shares - HELD THAT:- It is pertinent to mention that the assessee is entitled to withdraw his own capital from the profession, which is interest free, for any other purpose, and yet perform his professional activities utilizing his interest-bearing funds. Therefore, it is apparent that the Ld.AO and the Ld.CIT(A) has not taken into consideration of these factors while making disallowance towards interest expenditure. In this situation, we are of the view that the addition made by the Ld. A.O which was further sustained by the Ld. CIT(A) is not appropriate. It is also evident that the assessee has interest free borrowings also to certain extent. These aspects were also not taken into consideration by the Ld. Revenue Authorities while arriving at the conclusion. Therefore, we hereby delete the addition made by the Ld. A.O on this count which was further sustained by the Ld. CIT(A). Addition u/s 68 - unexplained loan credits - HELD THAT:- From the facts of the case, it is apparent that the assessee has furnished the particulars of the loan creditors such as name, address, PAN etc. It is also a fact that the transactions are routed through banking channels. In this situation, the Ld. Revenue Authorities ought to have made some further enquiry on this regard before making addition in the hands of the assessee. It is also apparent that the assessee had repaid the amount of ₹ 62,50,000/- to M/s. Kawrat Associates and also obtained confirmation statement from Sri Ganesh Associates. In this situation, we are of the view that the addition made by the Ld. A.O. which was further sustained by the Ld. CIT(A) is unwarranted. Hence, we hereby set aside the order of the Ld. CIT(A) on this issue and direct the Ld. A.O to delete the addition made invoking the provisions of Section 68. Revision u/s 263 - nature of payment received by the assessee- As per CIT-A amount received by the assessee is managerial remuneration and not professional fees - HELD THAT:- The assessee is a Doctor by profession and the assessee has got controlling interest in the Ravindranath GE Medical Associates Private Limited which is running hospital. These aspects have been well examined by the Ld. A.O and he has held that the amount received by the assessee is professional income received for his professional service as Doctor and also granted deductions for the expenditure incurred by the assessee while disallowing certain interest expenditure. Being a Doctor the assessee is eligible to receive professional fee for the services rendered to the patients admitted in the Hospital. Further during the course of the proceedings before the Ld.PCIT the assessee had submitted various evidences including the service agreement dated 30/08/2008 and also the board resolution of the company and TDS certificate U/s.194J to justify his claim and the Ld.PCIT could not draw any negative inference from the same. Further there is also nothing on record to suggest that the assessee has received managerial remuneration. Therefore the observation of the Ld.PCIT is devoid of merit. Hence, we hereby set-aside the order of the Ld. Pr. CIT passed u/s 263. Assessee appeal allowed. 2022 (1) TMI 482 Disallowance of the expenses claimed on account of employees benefit expenses - AO making the disallowance on the ground that assessee has claimed the expenses basically to reduce its profitability because to earn income from the bank deposits and rental income, one need not require to incur huge legal and professional fees and entertainment expenses and such other expenses - HELD THAT:- Hon ble Calcutta High Court following the decision in the case of CIT vs., Rampur Timber Turnery Co. Ltd. [ 1981 (2) TMI 75 - ALLAHABAD HIGH COURT] held that such expenses are allowable for the purpose of keeping the business of the assessee-company alive and for retaining the status of the assessee-company. A limited company, even if it does not carry on business, even if it derives income from other sources, has to maintain its establishment for complying with statutory obligation so long it is in operation and its name is not struck off the register or unless the company is dissolved which means cessation of all corporate activities of the company for all practical purposes. So long as it is in operation, it has to maintain the status as a company and it has to discharge certain legal obligations and for that purpose it is necessary to appoint clerical staff and secretary or accountant and incur incidental expenses. In this background, the conclusion of the Tribunal that the expenses incurred were wholly and exclusively for the activities to earn income is pre-eminently a reasonable conclusion. We have considered a similar case in New Savan Sugar Gur Refining Co. Ltd.[ 1969 (2) TMI 7 - SUPREME COURT] Genuineness of the expenditure is not in dispute and the Company in subsequent assessment years has shown income from operations, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the addition. - Decided in favour of assessee. 2022 (1) TMI 481 Revision u/s 263 by CIT - Nature of receipt - amount received on cancellation of the long-term lease right - compensation received for cancellation of rights under the lease agreement - Revenue or capital receipt - HELD THAT:- When the subject matter of the lease constitutes the source of profit-making to the assessee and any compensation received for cancellation of such rights, it would impact the profit-making capacity of the assessee and therefore, falls in the domain of capital receipt and not a Revenue receipt. Going by such rule it is clear that in this case it cannot be said that the assessee was wrong in offering such proceeds to tax under the head capital gains or the learned Assessing Officer accepting the same as something erroneous. It could be seen from the record that in the assessment order the assessing officer had stated that the details filed in respect of various items called for and were examined before accepting the returned income of the assessee. Assessing Officer applied his attention to this particular receipt and having called for the details on this aspect and by perusing them he accepted the same. In the preceding paragraphs it is held that the view taken by the learned Assessing Officer is certainly one of the several plausible views. In this context, it is worth the referring to the decision of the Hon'ble Apex Court in the case of CIT vs. Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] wherein it was held that where two views are possible and the learned Assessing Officer had taken one such view, with which the learned CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the learned Assessing Officer is unsustainable in law. Non-agreement of the Ld. PCIT with the view taken by the learned Assessing Officer, unless such a view of the learned Assessing Officer is unsustainable in law, does not afford any ground to the Ld. PCIT to revise the impugned assessment order. Accordingly, we find it difficult to sustain the order passed by the Ld. PCIT under section 263 - Decided in favour of assessee. 2022 (1) TMI 480 Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition given a finding that assessee has not earned any exempt income - HELD THAT:- As CIT-A held that no disallowance can be made in the absence of exempt income and for the aforesaid proposition, he relied on the decision of Lakhani Marketing [ 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT] . Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue nor has Revenue placed on record any contrary binding decision in its support. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. 2022 (1) TMI 479 Reopening of assessment u/s 147 - escapement of income determined by applying Rule 9A 9B of Income Tax Rules, 1962, which deals with quantification of expenses allowable in case of film producer and distributor - additions towards interest on loans and unsecured loans u/s.68 - HELD THAT:- In this case, assessment has been reopened after a period of four years from the end of relevant assessment year and further, except audit objection, on application of Rule 9A 9B, there is no tangible material with the Assessing Officer to form reasonable belief of escapement of income. In our considered view, reasons recorded by the Assessing Officer for reopening of assessment is a clear case of change of opinion, which is not permissible under the law. The learned CIT(A) after considering relevant facts has rightly quashed reassessment proceedings for assessment year 2004-05 and thus, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue. Disallowance made towards post production expenses in respect of feature film 7G Brindabhan Colony (Telegu) - AO disallowed post production expenses on the ground that the assessee has acted only as producer, but not a distributor for the film 7G Brindavan Colony (Telugu), which is evident as per financial statement filed by the assessee for relevant assessment year which shows that there is no realization from the above film - HELD THAT:- As we have already stated in earlier paragraph of this order, Rule 9A / 9B is applicable only in a case where a person acts in a capacity of producer and distributor. In this case, in respect of 7G Brindavan Colony (Telugu), the assessee seems to have acted as a producer and distributor, because there is no realization from picture, it means he has not acted as an exhibitor. Therefore, post production expenses incurred by the assessee is not governed under rule 9A or 9B of I.T.Rules, 1962. Therefore, deductibility of same needs to be considered u/s.37(1) of the Act as expenditure wholly and exclusively incurred for purpose of business of the assessee. This proposition is supported by decision of the Hon ble Bombay High Court in the case of Dharma Productions Ltd. [ 2019 (3) TMI 1271 - BOMBAY HIGH COURT] where it was clearly held that where the assessee was engaged in business of production and distribution of films, cost of print as well as publicity and advertisement expenses incurred after production as well as certification by censor board, same would not be governed by Rule 9A and hence, same would be allowable as business expenditure u/s.37(1) - Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue. Estimation of income from resale of set materials - AO estimated 10% of cost of set materials as realization from resale and accordingly, made addition - CIT(A) has restricted additions to 2% of set expenses - HELD THAT:- Although, the Assessing Officer has adopted 10% cost of set materials as resale value, but no reason was given and further, not brought on record any comparable cases of similar nature. At the same time, though learned CIT(A) has restricted addition to 2% of cost of set materials as resale value, but has not given any valid reason. Even before us, both the parties have failed to file necessary details, to adopt a particular rate for estimation of income from resale of set materials. Therefore, considering facts and circumstances of the case and also to settle dispute between the parties, we deem it appropriate to estimate 5% total cost incurred for set materials as realization from resale. Hence, we direct the Assessing Officer to estimate 5% of total cost incurred for set materials for estimation of income on resale. Additions made towards estimation of interest on loans from M/s. Focus Computers and M/s. Rakesh Sarin Sons - assessee was not able to prove loan taken form said party, same has been treated as unexplained cash credit and added back to total income for the assessment year 2003-04 - HELD THAT:- There is no clarity in the facts brought out by the Assessing Officer in respect of disallowance of loan from M/s. Focus Computers in assessment year 2003-04. Similarly, there is no clarity in respect of difference in loan claimed to have been received from M/s. Rakesh Sarin Sons. Similarly, the learned CIT(A) has also deleted additions made by the Assessing Officer without recording any factual finding as to whether addition was made for said loan in assessment year 2003-04 or not. Therefore, we are of the considered view that the issue needs to go back to the file of the Assessing Officer to ascertain correct facts with regard to loans taken from the above two parties and consequent interest paid for impugned assessment year. Hence, we set aside the issue to the file of the Assessing Officer and direct him to reconsider the issue afresh, after providing reasonable opportunity of hearing to the assessee. Additions made towards unsecured loans - HELD THAT:- There is no clarity on the issue of additions made towards unsecured loans in the assessment order. The Assessing Officer has simply stated that for want of evidences he has made additions. Similarly, the learned CIT(A) deleted additions by holding that the assessee has annexed details of loan taken from parties with their addresses and PAN, but such information is not emanating from return of income filed for relevant assessment years. Even before us, both the parties failed to bring on record relevant materials to justify their claim. Therefore, we are of the considered view that this issue needs to go back to the file of the Assessing Officer for fresh consideration. 2022 (1) TMI 478 Validity of proceedings u/s 153C - incriminating material found during the search or not? - unaccounted capital deployed by the assessee - transactions found on cloud data - addition of unexplained unaccounted capital, advances and interest earned were on the basis of incriminating seized data - HELD THAT:- Pursuant to search action in case of M/s Manglam Group, the action was taken in the hands of the assessee u/s 153C of the Act based on transactions in N Trading Company found on cloud data found and seized during the course of search and the assessment was completed u/s 143(3) r/w 153C wherein addition on account of unaccounted capital employed in various projects of the Manglam Group and addition on account of interest earned on such capital employed were made by the AO. The fact that the order of the Settlement Commission has been challenged by the Revenue by way of writ before the Hon ble Rajasthan High Court and similarly, the fact that another set of writ petitions have been filed before the Hon ble Rajasthan High Court against the decision of the Coordinate Benches in case of Shri Jugal Kishore Garg [ 2021 (5) TMI 814 - ITAT JAIPUR] cannot be the basis for not following the decision so passed by the Coordinate Benches in aforesaid case as nothing has been brought on record in terms of the specific grounds basis which the findings in aforesaid orders have been challenged by way of writ petition and secondly, whether the order of the Settlement Commission and that of the Coordinate Benches have been stayed by the Hon ble Rajasthan High Court or not. Where the decision of the Coordinate Bench is not acceptable to the Revenue, the Revenue is well within its right to pursue the matter before the Courts and however, till such time, the order of the Coordinate Bench is not stayed or overruled by the Courts, the assessee is well within his rights to draw support from the said decision. Where the matter is adjudicated by the Hon ble Rajasthan High Court in favour of the Revenue, the Revenue is not without recourse and is free to take action as per law. Therefore, following the principle of consistency, where the Coordinate Jaipur Benches have taken a view in the matter under identical set of facts and circumstances of the case and no restriction has been placed by the Courts in terms of effect and operation of the said order of the Coordinate Benches including following the same in other cases as facts and circumstances so justify as in the instant case, we see no justifiable reason to deviate and take a different view in the matter and addition so made in the hands of the assessee is hereby held to be rightly deleted by the ld CIT(A) and we hereby affirm his findings in this regard. The grounds of appeal so taken by the Revenue are thus dismissed. 2022 (1) TMI 477 Addition of on-money received on sale of shops in the JEM Complex - evidence of On- money found of cloud data - CIT-A deleted the addition - AR submitted that in search of the assessee, no document or material was found to indicate that the assessee has received any on money on sale of the shops/office at JEM Project and addition has been made on the basis of the alleged tally data found from the premises of MBDL - HELD THAT:- We find that pursuant to search action in case of M/s Manglam Group and where the assessee s premises were also searched, the action was taken in the hands of the assessee u/s 153A of the Act based on transactions in N Trading Company found on cloud data found and seized during the course of search at the office premises of M/s MBDL and the assessment was completed u/s 143(3) r/w 153A wherein addition on account of on money found in N Trading Company cloud data relating to JEM project were made by the Assessing officer. On appeal by the assessee, CIT(A), while adjudicating the merits of the case and which are under challenge before us, has again recorded a similar findings, as recorded by the Coordinate Benches in SHRI JUGAL KISHORE GARG (DEREWALA) [ 2021 (5) TMI 814 - ITAT JAIPUR] , that M/s Manglam Builder Developer Ltd had owned up all the N Trading Company data found in cloud as belonging to them and basis the same, it filed settlement petition before Settlement Commission on 28.03.2018 and the On money receipts relating to various real estate projects Pertaining to JEM project has been declared by MBDL and after considering the expenditure incurred, MBDL has offered additional income of ₹ 72.32 cr before the Settlement Commission and which has been accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where on-money received in JEM project belong to MBDL and MBDL has offered the same which has been accepted and no evidence was found in search to indicate that the appellant has received any share in on-money , the AO was directed to delete the additions in the hands of the assessee. We therefore find that the facts of the aforesaid case are pari-materia arising out of same search action on M/s Manglam Group and same set of data in form of N trading Company found in cloud data which has formed the basis of addition in the aforesaid case and the matter has already been examined by the Coordinate Jaipur Benches basis the filings and acceptance of MBDL s petition before the Settlement Commission and the addition has been deleted. The Revenue has not been able to highlight and demonstrate before us as to how the findings of the Coordinate Benches should not be followed in the instant case. Addition so made in the hands of the assessee is hereby held to be rightly deleted by the ld CIT(A) and we hereby affirm his findings in this regard and the grounds of appeal so taken by the Revenue are thus dismissed. 2022 (1) TMI 476 Validity of Reopening of assessment u/s 147 - Reopening on direction/suggestion of the Investigation Wing of the Department - demonstration of link between the tangible material and formation of reason to belief that income had escaped assessment - Addition u/s 68 - HELD THAT:- Since the A.O. in the instant case has reopened the assessment mechanically without independent application of mind and has not considered the assessments completed under sections 153A/153C of the I.T. Act, 1961, prior to the date of recording reasons under section 147 of the I.T. Act, 1961 and since the assessments of the applicant companies were the out-come of the search and seizure operation carried out in the premises of Shri S.K. Jain and Shri Virender Kumar Jain group of cases which is also the basis for reopening of the assessment in the instant case, therefore, we are of the considered opinion that such reopening of the assessment is not in accordance with law. We, therefore, quash the re-assessment proceedings. Addition u/s 68 - assessee has filed the copies of the returns of income for A.Y. 2010-11 of all the applicants, copies of their audited balance-sheets as on 31.03.2010 containing the names of the assessees in the Schedule to the audited balance-sheets, confirmation of transactions by the share applicants, copies of their bank statements, copies of their assessment order for the impugned assessment year passed under sections 143(3) / 153A/153C of the I.T. Act, 1961 by their jurisdictional Assessing Officers etc. Further Shri Deepak Tyagi, Director of 06 Companies had appeared before the A.O. on 30.03.2014 in response to the summons issued by the A.O. under section 131 of the I.T. Act, 1961 and had confirmed to have made investments by his companies in the shares of the assessee-company in the statement recorded on oath. In view of the above and in view of the detailed reasoning given by the Ld. CIT(A) on this issue, we do not find any infirmity in his order in deleting the addition made by the A.O. under section 68. Addition u/s 69C - expenditure incurred for arranging the bogus accommodation entry - HELD THAT:- Since in the preceding paragraph we have already deleted the addition by quashing the re-assessment proceedings as well as the addition on merit, the order of the A.O. on this issue cannot be sustained. Disallowance u/s 14A r.w.r.8D - CIT-A deleted the addition - HELD THAT:- we find the Ld. CIT(A) had given a finding that the amount of ₹ 3,47,17,000/- invested by the assessee is towards advance against property and not towards shares. The Ld. D.R. also could not controvert the above factual finding given by the Ld. CIT(A). Therefore, although we have quashed the re-assessment proceedings, even on merit also the addition is not sustainable. Disallowance of salary expenses - CIT-A deleted the addition - HELD THAT:- CIT(A) while deleting the addition has given a finding that the assessee being a registered NBFC Company registered with Reserve Bank of India has to comply with the legal requirements and under these circumstances, the disallowance of entire salary expenses without any cogent reasons is un-called for. Although we have quashed the reassessment proceedings, even otherwise on merit also this addition is un-called for in view of the findings of the Ld. CIT(A) and in absence of any contrary material brought to our notice by the Ld. D.R. Addition of salary expenses - CIT(A) has sustained an amount of ₹ 4,03,400/- being 10% of such unpaid amount and deleted the balance amount.- HELD THAT:- Before deleting the addition the Ld. CIT(A) had directed the assessee to furnish the date wise payments which was filed before him. Further, he has given a finding that assessee is a registered NBFC Company with RBI and has to comply with all the legal requirements on this account over and above all the other non-NBFC companies - all the outstanding salaries were paid by the assessee during the month of April-May of subsequent financial year and the D.R. also could not controvert the factual findings given by the Ld. CIT(A) on this issue. In view of the detailed reasoning given by the Ld. CIT(A) on this issue while sustaining the addition of ₹ 4,03,400/- and deleting the balance amount out of the addition made by the A.O, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly the same is upheld and the grounds of appeal number.4 of the Revenue is dismissed. Addition on account of other expenses - HELD THAT:- We find the A.O. made addition being other expenses on the ground that assessee could not furnish the bills and vouchers to the satisfaction of the A.O. and amount of ₹ 7,60,000/- was payable as on 31.03.2011, out of ₹ 11,05,000/-. We find the Ld. CIT(A) deleted 80% of the addition and sustained being 20% of such expenses, which, in our opinion, is just and proper under the facts and circumstances of the case. We, therefore, uphold the order of the Ld. CIT(A) on this issue and the ground of appeal is dismissed. 2022 (1) TMI 475 Addition of compensation payable for unauthorised slum dwellers - contingent liability or as an unascertained liability - HELD THAT:- We find that in respect of compensation payable for unauthorised slum dwellers for 115 persons and compensation payable to authorised slum dwellers in respect of 261 persons were correctly provided by the assessee and based on consent terms of the Civil Court and agreement entered into with Vikasak and Sanstha Society. These provisions could not be categorised as contingent liability or as an unascertained liability. It is also a fact that assessee had been continuing to make payments by discharging the liabilities as could be seen in the aforesaid table in subsequent years. Hence, we hold that Apatra Expenses and compensation payable to various slum dwellers are genuine liabilities not warranting any disallowance thereon. TDS u/s 194I on rent expenses - As relying on M/S. SAHANA DWELLERS PVT. LTD. VERSUS INCOME TAX OFFICER WARD 8 (3) (1) , MUMBAI [ 2016 (3) TMI 591 - ITAT MUMBAI] we hold that tax is not required to be deducted on the rent component and hence, no disallowance u/s.40 (a)(ia) of the Act could be made thereon. Cost of materials consumed and cost of construction - Going by the conduct of the assessee, we find that assessee though had not received the sum of ₹ 45 Crores in full even upto 31/03/2016, but the assessee had volunteered to offer the said sum of ₹ 45 Crores in the year under consideration and had claimed the expenses that are to be incurred for the smooth execution of the project in consonance with the matching principle of income and expenditure thereon, and also considering the fact that the very same modus operandi adopted by the assessee in subsequent years i.e. in A.Y₹ 2013-14 and 2014-15 were accepted by the ld. AO in scrutiny assessment proceedings without making any additions thereon or rejecting the books of accounts of the assessee, we are not inclined to accept to the arguments of the ld. DR that atleast 5% of expenses offered by the assessee during the course of assessment proceedings need to be taxed. The ld. CIT(A) had already pointed out that the said offer was made only to buy peace and avoid protracted litigation. We also find that the alleged defects pointed out by the ld. AO had been duly addressed by the assessee and in these peculiar facts and circumstances of the case, we are not inclined to direct the ld. AO to add 5% of expenses offered by the assessee during the course of assessment proceedings. Hence, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Accordingly, the grounds raised by the Revenue are dismissed. Disallowance of loss of A.Y.2012-13 on the pretext that no loss was available in A.Y.2012-13 in view of additions made - consequential set off in subsequent years. During this year, there was a change in shareholding beyond 51% of voting power which was stated to be in violation of provision of Section 79 of the Act. Hence, in the opinion of the Revenue, the assessee is not entitled for set off of losses. But we find that the shares were only transferred from Karta to its Coparceners and hence, there was no change in shareholding at all. But from the perusal of the assessment order, we find that there is no finding recorded by the ld. AO in this regard. Hence, we are inclined to dismiss the ground No.3 raised by the assessee as not emanating from the order of the ld. AO. However, we hold that assessee would be entitled for set off of loss of A.Y.2012-13 with the profits, if any, of A.Y.2014-15. Customs 2022 (1) TMI 474 Import of Antique item - idol/statue - baggage rules - confiscation of a four headed and eight armed metal idol imported by the petitioner from Bangkok - goods declared as a non-Antique in the Baggage Declaration form - HELD THAT:- The petitioner has no objection if the said idols/statutes in question are handed over to Archaeological Survey of India free of charge for disposal in accordance with Point No.17.9 of Disposal Manual 2019 issued by the CBIC. The petitioner will neither claim ownership of the said idol/statute nor release of the same. Statement is accepted. In this backdrop, since the petitioner agreed not to claim ownership of the said idol/statute and in view of the Revenue agreeing to hand over the possession of the said statue to Archaeological Survey of India under the provisions of Disposal Manual 2019 issued by the CBIC, it is directed that the Revenue shall not precipitate the pending proceedings against the petitioner described in prayer clause (a) or to initiate any fresh proceedings in furtherance of these proceedings against the petitioner. Petition disposed off. 2022 (1) TMI 473 Jurisdiction - power to issue SCN - It is the case of the petitioner that the respondent no.5 has no jurisdiction to issue any notices of demand which are impugned in this writ petition - HELD THAT:- The respondent nos.4 and 5 and their subordinate Officers are directed not to proceed with the impugned demand notices dated 18th August, 2021 and 30th August, 2021 annexed at Exhibits O and Q respectively and not to proceed with the investigation proposed by them pursuant to the impugned demand notices against the petitioner in respect of 13 vessels which are already assessed by the respondent no.3 at Mumbai till 31st March, 2022. The respondents are at liberty to apply for vacating the order in the event of any order passed in their favour by the Hon ble Supreme Court in the review petition thereby reviewing the judgment in case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . Place the matter on board for directions on 28th March, 2022. 2022 (1) TMI 472 Service of SCN - It is the case of the petitioner that the notice itself was received at the first date fixed for personal hearing - Violation of principles of natural justice - Board Circular dated 10.03.2017 bearing Circular No.1053/2/2017-CX (F.No.96/1/2017-CX.I) - HELD THAT:- The procedure adopted in fixing the personal hearing immediately after issuance of the show cause notice without giving adequate time to the petitioner to reply, itself shows that the respondent was in a hurry to pass orders mechanically. Indeed the order passed by the respondent is mechanical as there is no discussion - the procedure adopted by the respondent is clearly contrary to the circular issued by Central Board of Excise Customs vide Circular No.1053/2/2017-CX, dated 10.03.2017. The case is remitted back to the respondent to pass speaking order within a period of four week from the date of receipt of a copy of this order - Petition allowed by way of remand. 2022 (1) TMI 471 Intermediate products - staple fibers - expansion of meaning of the term staple fiber at Sl.No.10 of Notification No.30/2004 dated 09.07.2004 to include tow in total disregard to meaning of staple fibers as is understood in the trade parlance - benefit of captive consumption in notification no.67/95 dated 16.03.1995 - rule 6 of CENVAT Credit Rules 2004 - Staple Fiber at Sl.No.10 of the Notification No.30/2004 dated 09.07.2004 is applicable in respect of the polyester top falling under the head 5506/5507 or not - interpretation of notification no.30/2004 CE dated 09.07.2004 which clearly provides at Sl.No.10 exemption is available if goods falling under the tariff hearing 5506/5507 are manufactured from staple fibers procured from outside subjected to carding, combing or any other process required for spinning by the manufacturer who does not have the facility in his factory including (plant and equipment while producing goods under heading Nos.56501 5502 5504 5505. HELD THAT:- There is considerable force in the submissions made by the learned counsel for the respondent, that the appellant having not raised a claim before the Liquidator, no approval of the adjudicating authority having been obtained, filing of an appeal under Section 130 of the Act is wholly untenable, more particularly, when the distribution of the assets is already made. As per Section 238 of the Code, the provisions of the Code overrides other laws that are inconsistent with the Code. Moreover, the questions raised relates to classification of goods and interpretation of exemption notification. In COMMISSIONER OF CUSTOMS, BANGALORE-1 VERSUS M/S MOTOROLA INDIA LTD. [ 2019 (9) TMI 229 - SUPREME COURT] the Hon ble Apex Court has held that determination of a question relating to the classification of goods under the Tariff and whether or not they are covered by an exemption notification would not be amenable to the jurisdiction under Section 130 of the Act. The appeal stands dismissed as not maintainable with liberty to seek redressal of the grievances before the appropriate forum, in accordance with law. 2022 (1) TMI 470 100% EOU - Inter-unit transfer of goods - main ground urged by the Revenue that the condition of the notification for not using the capital goods on inter unit transfer was not complied with, cannot be countenanced since the said imported goods were undisputedly used by the importer M/s Verifone India Pvt. Ltd., from 1990-2001 till the merger of the respondent company with M/s Verifone India Pvt. Ltd. - time limitation - HELD THAT:- It is well settled that all notifications are prospective in nature, in the absence of giving any retrospective effect specifically, no retrospective effect could be given to the exemption notifications - Secondly, the assertion of the department that no warehousing period was extended for the goods in consideration is also held to be unjustifiable, warehousing licence granted to the respondent is examined by the CESTAT and is held to be in accordance with Circular No.7/2005-Cus, dated 14.2.2005. Time limitation - HELD THAT:- The demand made by the revenue is not tenable. Having regard to these factors which, more or less relates to the factual aspects of the matter, the finding given by the fact finding authority CESTAT cannot be held to be perverse or arbitrary. Appeal dismissed. 2022 (1) TMI 469 Levy of Anti-Dumping Duty - Dumped Articles imported by the petitioner - case of the petitioner is that prior to the issue of the impugned Notification No.48 /2014 dated 11.12.2014, the petitioner had contracted with the overseas supplier for the import of the goods from Saudi Arabia - HELD THAT:- Anti Dumping Duty was sought to be imposed on Clear Float Glass imported from Saudi Arabia, UAL Pakistan. The petitioner approached this Court after filing the Bill of Entry when the 2nd respondent insisted that the petitioner should pay Anti Dumping Duty in terms of the above notification. The goods were allowed to be cleared after an interim order came to be passed by this Court on 09.01.2015. It is the case of the petitioner that the petitioner is not liable to pay Anti Dumping Duty in terms of Notification No.48/2014 -Customs (ADD) dated 11.12.2014 as the import had taken place much prior to issue of the impugned Notification as per the common law. Whether the imports had taken place before or after issuing of the impugned Notification is to be decided by a proper officer by issuing a notice to the petitioner under Section 28 of the Customs Act, 1962 after proper assessment in the Bill of Entries filed by the petitioner. It is for the petitioner to give a reply. Since the import pertains to the year 2014-15, the second respondent is directed to finalise the assessment in the respective Bill of Entries, if they have not yet been already finalised, in accordance with law. In case, the respective Bill of Entries have been already finalised, liberty is given to the petitioner to file a statutory appeal and the respective Bill of Entries under Section 128 of the Customs Act, 1962 before the Appellate Commissioner, within a period of 30 days from the date of receipt of a copy of this order - Petition disposed off. 2022 (1) TMI 468 Classification of imported goods - Polyester Bed Cover or Polyester Fabric - classifiable under Custom Tariff Heading 63041930 as declared by the Appellant or under Custom Tariff Heading 54075490 as claimed by revenue? - discharge of burden of prove or not - HELD THAT:- The department to classify the goods as polyester woven fabric under CTH 54075490 and to prove that the goods are polyester woven fabric has relied on three textile committee reports reproduced in the impugned order. By perusing the reports dated 28.02.2017 it is clearly mentioned in the column of correct description Classification of the sample that appropriate HS Code could not be provided due to rupture of yarn in weft while untwisting - Even if we accept the corrected report and all other reports they are all inconclusive and instead of relying upon them they should have been sent for retesting which the commissioner categorically denied stating that he does not find any cogent reason to grant resampling and retesting at this stage as samples were tested at two different recognised institutions and expert committee. Secondly to decide the correct classification of goods the commissioner held the Subheading 540751 to 540754 cover other woven fabric, containing 85% or more weight of textured polyester filaments. For that the authority has relied upon report of ATIRA stating the fabric is made entirely of texturised yarn to be covered under the above heading the fabric should contain 85% or more weight of texturised polyester filaments, now as per the report of ATIRA as well as report of Textile committee, that could not be ascertained as the weft ruptured, therefore the basic condition of 85 % percent could not be fulfilled and could not be ascertained whether weft is texturised yarn or not - the only conclusion that could be drawn from the above facts is department has not discharged their burden of proof and the classification of the department should be rejected. In view of the settled law, irrespective whether the classification claimed by the appellant is correct or not since the classification proposed by the Revenue is absolutely incorrect, the entire case of the Revenue will not sustain - Since the revenue has not been able to discharge their burden of proof. Hence the classification of goods declared by the appellants cannot be disturbed. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 467 Goods imported from Myanmar - teak sliced veneer - exemption from whole customs duty as per Notification No. 46/2011-Cus dated 01.06.2011, as per the entry at S.No. 545 thereof - non-submission of Certificate of origin along with the aforesaid Bill of Entry - HELD THAT:- It is observed that important condition of the Notification No. 46/2011 dated 1.6.2011 of in case the certificate of origin along with Bill of Entry was not fulfilled by the appellant at the relevant time. It is observed that the said certificate was produced by the appellant before the Original Adjudicating Authority itself i.e., on 26.2.2019. The Original Authority , despite acknowledging the receipt has failed to give the benefit of said certificate in its order dated 22.8.2019. The request of appellant for re-assessment of duty was pending before the department since 2018. The findings of the Original Adjudicating Authority who were aware of order upheld by the Commissioner (Appeals) vide his order under challenge have failed to appreciate the pendency of said request of re- assessment. Keeping in view the mandate directed by the Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , (where Apex Court has made the reassessment as a mandatory pre requisite for considering the request of the refund of duty paid which was not otherwise liable to be paid) and the No Objection endorsed by the department, the original adjudicating authority is directed to first consider the request of re-assessment of the appellant as was made on 6.9.2018 and then to decide the refund claim afresh. The present appeal stand allowed by way of remand. 2022 (1) TMI 466 Smuggling - goods /gold is classified under chapter heading 71081300 - import of baggage by a passenger coming from abroad - applicable rate of tax is 12.5% or 35%? - HELD THAT:- It is a case of town seizure, and further there is no evidence of the appellant having entered into India from a foreign country; admittedly, appellant was travelling from Bahraich to Barabanki by bus; thus, it is a case of town seizure; accordingly, it is held that the rate of duty for import of baggage is not applicable, and the duty is payable @ 12.5% for gold, falling under CTH 71081300. The appellant is entitled to refund of the excess amount of duty deposited, alongwith applicable interest, from the date of deposit till the date of refund - appeal allowed - decided in favor of appellant. 2022 (1) TMI 440 Seeking grant of interim relief - jurisdiction - power to issue SCN - HELD THAT:- It is informed by learned advocate for the respondents that an application for review of the decision in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] is pending before the Supreme Court and that a policy decision has been taken to carry all orders of the High Courts in appeal where show-cause notices have been or are being interdicted based on the decision in Canon India Pvt. Ltd. and COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS [ 2021 (9) TMI 316 - SUPREME COURT] . It is informed that till date no interim order has been passed in the review application. The petitioner has set up a strong case for grant of interim relief - Application disposed off. Corporate Laws 2022 (1) TMI 465 Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 - HELD THAT:- The Scheme contemplated between the petitioner companies, appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of the Companies Act, 2013. In the absence of any objections before us and since all the requisite statutory compliance have been fulfilled, this Tribunal sanctions the scheme of amalgamation appended as Annexure-A1 with the company petition. Notwithstanding the submission that no investigation is pending against the petitioner companies, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. The scheme is approved - application allowed. 2022 (1) TMI 464 Seeking the convening of a general meeting of the Respondent Company - Seeking to appoint an Independent Chairman for the meeting so ordered to conduct the meeting in a professional and impartial manner - HELD THAT:- The Board Meeting and AGM may not proceed without creation of hurdles by either side and therefore it is directed that an independent Chairperson shall chair the aforesaid Board Meeting and AGM, supported by a Scrutinizer, assisting in Secretarial tasks inter-alia for attendance, proxy, polling, etc., and they shall jointly file a report before this Bench on the proceedings of the Board Meeting and AGM. Though the Scrutinizer shall mainly assist the Chairperson in the AGM, he shall also assist in the Board meeting for contextual continuity. The Agenda for AGM shall be limited to the presentation/finalisation of the accounts for the relevant financial years and the appointment of auditor and his/their fees. The Agenda shall be finalised immediately by the Chairperson and sent to counsels of the parties for onward communication to their clients. If for any reason the Agenda cannot be circulated as directed, it shall be deemed to be the Agenda - The Chairperson and the Scrutinizer shall be paid an honorarium of ₹ 65,000/- ₹ 45,000/- respectively which will be shared equally by the SG HPS groups, besides equal sharing of out-of-pocket and incidental expenses, or alternately paid by the Respondent company. The report of the Chairperson Scrutinizer shall be filed before the Tribunal within a week after conclusion of the AGM and a copy of the same shall be provided to the counsels for the parties. No motion seeking change or removal or suspension of the Chairperson or the Scrutinizer shall be moved by any party prior to or at the AGM. In the event of any objections or issues whatsoever, by whomsoever, the same shall be decided by the Chairperson summarily, whose decision shall be final and who shall strive to complete the proceedings in an orderly manner. Any such issues shall be included in the report to be filed by the Chairperson and Scrutinizer. The Chairperson shall be empowered to regulate/restrict entry to the Board Meeting/AGM to only concerned and authorized persons. Any report of unruly conduct or obstruction of proceedings shall be viewed seriously. The Chairperson shall be entitled to summarily disconnect from VC any obstructive person or require him to leave the venue of the Board Meeting/AGM, if present physically - All directors and shareholders of the Respondent company shall provide required assistance to the Chairperson and make available all information needed. List the matter together with pending IAs on 27.01.2022. - Application disposed off. 2022 (1) TMI 463 Seeking removal from the Director Board of Kerala Chamber of Commerce and Industry - seeking direction for continuation as Director even after knowing the office of director held by them is vacant - validity of resignation of director - supersession of Board of Directors of the R1 Company by the NCLT appointed Chairman - HELD THAT:- If the office of any Director appointed by the Company in General Meeting is vacated before his term of office expires in the normal course, the resulting vacancy may, in default of and subject to any regulations in the Articles of the company, be filled by the Board of Directors at a meeting of the Board which shall be subsequently approved by members in the immediate next General Meeting. Any person so appointed shall hold office only up to the date up to which the Director in whose place he is appointed would have held office if it had not been vacated - As per Section 149(1) of Companies Act, 2013, every company shall have a Board of Directors consisting of individuals as directors and shall have a minimum number of three directors in the case of a public company. However, there may be instances where the company during the course of business fails to meet the statutory limit. This also shall amount to casual vacancy in the office of director. There are no records showing that the office of Director who was appointed by an AGM is vacated either due to unforeseen reasons or due to any reasons by which the company fails to meet the statutory obligation. It is clear that the appointment of 4 Additional Directors in the Board Meeting dated 13.12.2017 was beyond the powers of the Board as provided in the Articles of Association of the Company and hence it is to be declared as ultra vires and illegal. Clause 51 of the Articles give power to the Board only to fill casual vacancies in the Board. Therefore, the appointment of these four Additional Directors under the pretext to fill casual vacancies as caretakers is against the cardinal principle of corporate law in as much as there were no casual vacancies at all on the date of appointment - in the letter of resignation it should be clearly mentioned the date from which the resignation takes effect. Otherwise the date of receipt of letter will be considered as date of resignation. The Companies Act, 2013 through Section 168 clearly lays down requirement for resignation, by virtue of Section 6 of the Companies Act, 2013, which provides that the provisions of the Act, 2013 shall override MOA and AOA, any provisions of AOA to the extent that it is repugnant to provisions of the Act would become void. The applicants have also made out a case that R10 is disqualified under Section 167 of the Companies Act, 2013. From the records, it is seen that the Registrar of Companies initiated an inquiry against the Company and the said inquiry report is pending with the Ministry of Corporate Affairs for approval. As no concrete evidence is produced with this application to prove the above aspect, we cannot consider the allegation in the present IA and that will be dealt with, when the main Company Petition is taken up for hearing, provided the report is produced before this Tribunal. Application disposed off. 2022 (1) TMI 462 Seeking direction to 1st Respondent to furnish the copies of the Minutes Book of the Annual General Meetings held since incorporation - denial of the representation twice as per Section 119 (3) of the Company's Act, 2013 - Petitioner's claim is that to the request made by him, no reply is received - HELD THAT:- The minutes book has to be maintained by the Company at their registered office and it shall be made available for inspection to the members on their request. The petitioner itself stated that he made a request through post but the same was returned by the postal authorities - The Respondent is a public Company incorporated on 15.03.1937. The company is required to admit the request made by a shareholder by way of an application to the company specifically stating the reason for refusal of the request within the stipulated time of 7 working days as prescribed under Rule 26 of the Companies Management and Administration) Rules 2014. However, the Respondent Company failed to do so. Thus, the minutes have to be maintained either in physical form or in electronic form. It is not mandatory that minutes has to be maintained in both the modes. The company itself stated that the records/minutes pertaining to the financial year 2018 onwards is available with them. The Respondents contention is that the petitioner has never made any request for inspection or make documents available to him and that the petitioner has never attended any of the AGM held by the Company. There is a dispute whether the petitioner sent any request and whether respondents received the same. This Tribunal cannot make a rowing inquiry into these matters. With regard to the minutes/records of the Financial Years 2015-2016 from the date of incorporation, an investigation is still with police authorities - it cannot be directed that the Respondents to provide these documents to the petitioner now, as the supply of the same will be subject to the outcome of the investigation of the police. There is no mismanagement alleged in this application. This application is disposed off with a direction to the Respondents to provide the documents sought for in this application from the Financial Year 2016-2017 onwards to the petitioner, provided he pays the appropriate fee to the Respondents Insolvency & Bankruptcy 2022 (1) TMI 461 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - it is alleged that Appellant failed to produce proper authorisation for initiation of CIRP and has filed the Petition with false and fabricated documents - HELD THAT:- Keeping in view the definition of Financial Debt as defined under Section 5(8) of the Code; the nature of transactions entered into between both the parties; that there are several transactions some executed on the same day, between Satra Realty and Builders Limited and Satra Properties Development Limited together with the admitted fact that the Respondent Company was a part of the Satra Group ; that the Directorship is common in all the Satra Companies ; it was only on 09.04.2018 that the name of the Respondent Company was changed to Centrio Lifespaces Limited with the new management stepping in; that the statement of account appended to the Petition is signed by Mr. Praful Satra, the erstwhile Director of the Respondent Company; the entries of debit and credit dated 07.11.2015, 10.11.2015, 24.11.2015 (Exhibit K) establish several internal transactions between the Satra Group Companies ; the Auditor s Report detailing the Related Party transactions which figures the names of common Directors and the corresponding transactions; therefore the Appellant has failed to satisfy that the transaction in question is a Financial Debt as defined in the Code and a default has occurred. The scope and objective of the IBC is to be cautious in admitting an Application and not encourage recovery proceedings. Appeal dismissed. 2022 (1) TMI 460 Approval of the Sale as a Going Concern - Whether sale of Corporate Debtor as a Going Concern, in Liquidation Proceedings includes its liabilities - Whether the Appellant herein can withdraw from the Bid after payment of the EMD and seek for refund of the amount paid on the ground that the offer made by the Bidder was a conditional offer - HELD THAT:- Regulation 32 A of the IBBI (Liquidation Process) Regulations, 2016 states that Sale as a Going Concern means sale of assets as well as liabilities and not assets sans liabilities. Paragraphs 3.2.1 and 4.2.1 of the afore-noted discussion paper amply specified that all assets and liabilities, which constitute an integral business of the Corporate Debtor Company would be transferred together and the consideration paid must be for the business of the Corporate Debtor. It is concluded that Sale of a Company as a Going Concern means sale of both assets and liabilities, if it is stated on as is where is basis . It is the main case of the Appellant having communicated to the Liquidator prior to the e-Auction date; they had participated in the Bid process with the bona fide intention to comply the sale process as the second Respondent/SBI had accepted the payment terms. Since the liquidator did not assist the Appellant in clarifying the liabilities of the Corporate Debtor, the Appellant informed the Liquidator that if their Bid is not accepted with its terms they would seek to withdraw from the Bid. Applicant has accepted all the terms and conditions and cannot revise the same. The Bid Document also specifies under the heading Costs, Expenses and Tax Implications that payment of all statutory and non-statutory dues, taxes, rates, assessments, charges, fees, owed by the Corporate Debtor to anybody in respect of the subject property shall be the sole responsibility of the Successful Bidder. It is also significant to note that an email dated 06.09.2019; the Liquidator has clearly mentioned that legal issues pertaining to e-Auction cannot be changed after public notification . By paying the EMD amount and accepting the Bid, the Successful Bidder cannot now say that it was not a concluded contract. The Bidder-Appellant is bound by the terms and conditions of the Bid document and no communication to the Liquidator stating that it is a conditional offer, is sustainable. If the Appellant had any apprehensions and conditions about the liabilities the Appellant could have exercised their choice of not participating in the Bid. Having participated, the Appellant cannot propose certain conditions subsequent to their participation and putting in their Bid. The Liquidator will carry on the business of the Corporate Debtor for its beneficial Liquidation as prescribed under Section 35 of the Code. The Liquidator will only act and cannot modify/revise the terms of the contract. The Liquidator shall endeavour to sell the Corporate Debtor Company as a Going Concern only in accordance with the law. If the Bidder is allowed to withdraw from the Bid at this stage and seek refund on the ground that their conditional offer has not been accepted, then the liquidation process would be a never ending one, defeating the scope and objective of the Code - The acceptance was conveyed to the Bidder on 25.09.2019. Clearly noting the terms and conditions that the Company was being sold as a Going Concern in an as is very basis , the Bidder cannot now be permitted to turn around and plead that their offer was conditional. Keeping in view the ratio laid down by Hon ble Supreme Court of India in a catena of Judgments that the Bidder cannot wriggle out of the contractual obligations arising out of acceptance of his Bid and also having regard to Regulations 32A and the scope and objective of the Code together with the Principle laid down by this Tribunal in Mohan Gems and Jewels [ 2021 (8) TMI 1000 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] it can be opined that the Appellant cannot be entitled to the EMD amount and the amount paid towards the Bid Purchase document, if he does not comply with the terms of the contract. There are no illegality or infirmity in the well-reasoned order of the Adjudicating Authority - appeal dismissed. 2022 (1) TMI 459 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - Service of demand notice - HELD THAT:- The demand notice was received back undelivered. The same is delivered via e-mail and attached in the main petition at Page Nos. 38-40. Also the service has been done through publication. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It could be seen that the corporate debtor has chosen not to file reply to the petition despite being granted three weeks to do so nor has corporate debtor entered into appearance. It is pleaded by the operational creditor that no reply has been received to the demand notice dated 15.02.2019 from the corporate debtor. It is also pleaded that there is no dispute of unpaid operational debt pending between the parties in any court of law or any other authority. It implies that there is no dispute in relation to the debt claimed as per Part IV of Form 5. Whether this application is filed within limitation? - HELD THAT:- The period of limitation would begin from the date of default mentioned in Part IV, Form V i.e. 08.02.2018. This application was filed on 21.05.2019 vide Diary No. 2573. Therefore, this Adjudicating Authority finds that this application was filed within limitation. It is noted that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. Thus, the conditions under Section 9 of the Code stand satisfied. It is evident that from the facts that the liability of the corporate debtor is undisputed. Accordingly, the petitioner proved the debt and the default, which is above threshold limit. It is seen that the petition preferred by petitioner is complete in all respect. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition for initiation of the CIR Process in the case of the Corporate Debtor, is admitted - moratorium declared. 2022 (1) TMI 458 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor and the Corporate Debtor were the Partners of the Firm - joint and several liability with the other partners or with the Firm - existence of debt and dispute or not - HELD THAT:- It is observed by the Bench that the Operational Creditor and the Corporate Debtor were the Partners of the Firm. This Bench is well aware about the relationship between the Partners with its Partnership Firm and also accepts the contentions of the Operational Creditor with respect to the joint and several liability with the other partners or with the Firm. However, the Bench is of considered view that even the liability of the Corporate Debtor is proved in all aspect, the IBC does not protect the interest or claim of the Partner against another Partner or the Firm. The claim and the cause of action arose on the transaction between the Partners. Therefore, the Petition itself is not maintainable in the eye of law. The Operational Creditor may be liable to the claims against the Corporate Debtor not under the IBC but under the any other law which provides the remedy to the Operational Creditor. The Retired Partner has no right under the IBC to file claim against the Partner or the Firm. This Bench rejects the Application filed by Operational Creditor under section 9 of the Code - Petition dismissed. 2022 (1) TMI 457 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - application is barred by time limitation or not - HELD THAT:- The prescribed period of limitation for filing the Application for recovery of amount due being 3 years which period is to be reckoned from 30.03.2017 the argument that the present application is barred by limitation becomes wholly unsustainable and unacceptable. That apart, it is to be noted that soon after filing the present application, the Corporate Debtor made payment of ₹ 1.49 lacs on 23.10.2019, as is evident from the counter filed by the Corporate Debtor. This payment undoubtedly amounts to acknowledgment of liability by the corporate debtor herein - the sum claimed as due and payable by the Corporate Debtor is well within the period of limitation as on the date of filing this application. There are no force in the contention of the learned Senior Counsel for the Corporate Debtor that the debt claimed as due and payable by the Corporate Debtor in this application is barred by limitation. Whether the Operational Creditor has made out a case for ordering initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor? - HELD THAT:- It is trite to say that establishment of legally enforceable debt and default in payment of the said debt by the corporate debtor is the sine qua non, for setting the corporate insolvency resolution process in motion against the corporate debtor. The applicant in this case has convincingly established the same. Therefore, the petition deserves to be allowed and Corporate Insolvency Resolution Process against the respondent corporate debtor shall be ordered. Application admitted - moratorium declared. 2022 (1) TMI 456 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The petitioner filed present petition under Section 9 of IBC, 2016 and served the copy of this petition however, the same was returned back with remarks refused . The notice along with the paper book was sent on the registered e-mail id of Corporate Debtor available on master data on 02.07.2019 and the same did not bounce back as per the affidavit of service filed by the petitioner - The petitioner has filed its bank statement (Annexure-5) that the amount claimed or any part thereof, the petitioner has neither received nor had any person, on its behalf who received in any manner the amount due towards Corporate Debtor as required under Section 9(3)(c) of I B Code nor received any notice of dispute raised by the corporate debtor under Section 9(3)(b) of the IBC, 2016. Territorial Jurisdiction - HELD THAT:- The registered office of corporate debtor is situated in Ludhiana, Punjab and therefore, this Tribunal has jurisdiction to entertain and try this petition. Time Limitation - HELD THAT:- The default occurred from 25.05.2017 and the petition is filed on 01.03.2019, hence the debt is not time barred and the petition is filed within the period of limitation. The present petition is complete and the petitioner is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. In the backdrop of above facts and records, the present petition is liable to admitted, in terms of Section 9(5) of IBC, 2016. - Petition admitted - moratorium declared. 2022 (1) TMI 455 Seeking dissolution of the Corporate Person through voluntary liquidation - voluntarily winding up under Section 59 of I B Code, read with Rules and Regulations - HELD THAT:- On the Petition filed by the Liquidator under sub-section 7 of Section 59 of the Code for dissolution of this Corporate Person, it is noticed that the affairs of the Corporate Person have been completely wound up and its assets are liquidated. This Corporate Person, through its Liquidator, voluntarily liquidated itself so as to get dissolved, therefore, this Corporate Person is dissolved directing the Liquidator to file this order with concerned Registrar of Companies and IBBI within 14 days thereof. (Compliance of Section 59 (7-9) of the Code). Petition allowed. 2022 (1) TMI 454 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - assignment of debt - existence of debt and dispute or not - HELD THAT:- The Operational Creditor has established that as per Section 5(20) of the Insolvency and Bankruptcy Code, 2016, an Operational Creditor means a person whom an operational debt is owned and includes any person to whom such debt has been legally assigned or transferred - In this matter, Samsung C T Corporation (Insured) had legally assigned Operational Debt, that is due and payable by Corporate Debtor, to Korea Trade Insurance Corporation i.e., Operational Creditor, vide letter of Assignment dated 08.09.2020. Therefore, Korea Trade Insurance Corporation is deemed to be Operational Creditor by virtue of a valid Assignment. The claim of the Corporate Debtor that the materials supplied are of inferior quality and could not be used by Corporate Debtor was not supported by any documentary evidence. The Corporate Debtor was not able to produce any evidence to show that there is a pre-existing dispute in the instant case - the nature of the Debt is an 'Operational Debt' as defined under Section 5(21) of the Definitions under the Code. There is a Default as defined under Section 3(12) of the Code on the part of the Corporate Debtor. The application made by the Operational Creditor is complete in all respects as required by law, and it clearly shows that the operational debt has not been paid by the Corporate Debtor - application admitted - moratorium declared. 2022 (1) TMI 453 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT:- The demand notice dated 05.11.2019 was sent through a registered post at the registered office of the Respondent. The postal receipt and tracking report are found to be attached on Page 251 of the Application. Whether the operational debt was disputed by the Respondent? - HELD THAT:- The Respondent Corporate Debtor has not filed a reply to the Demand Notice nor the instant Application. Moreover, despite service, there is no representation for the Respondent. Thus, there is no dispute as to the liability of the Respondent Corporate Debtor towards the Applicant Operational Creditor - The Applicant has filed an affidavit under Section 9(3)(b) of the Code to the effect that there is no notice given by the Respondent relating to the dispute of the unpaid operational debt. This Adjudicating Authority has held above that the demand notice in Form No. 3 was properly delivered by the Operational Creditor and no pre-existing dispute is proved. It has been shown that the Corporate Debtor has failed to make payment of the aforesaid amount as mentioned in the statutory notice to date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Hence, this Adjudicating Authority is inclined to initiate CIRP against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Application admitted - moratorium declared. 2022 (1) TMI 452 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- It is seen from the records that this Tribunal had given sufficient chances to the Corporate Debtor to file its Reply. However, the Corporate Debtor failed to appear and did not file its Reply. This act itself shows that the amount is due and payable to the Operational Creditor - the Operational Creditor filed an Affidavit of Service dated 17.08.2021. This bench observes that the Operational Creditor has served and intimated the date of hearings to the Corporate Debtor on several occasions and finally the Corporate Debtor was set to be ex-parte vide Order dated 01.11.2021. The Operational Creditor has successfully demonstrated and proved the debt and default in this case and has also proved that there is absolutely no reason for the Corporate Debtor to hold on to the payment of the invoices - this Bench is left with no option except to admit the above Company Petition, since the Company Petition in hand satisfies all necessary legal ingredients for admission under Section 9 of the Code. Petition admitted - moratorium declared. Service Tax 2022 (1) TMI 451 Seeking direction to Respondents to accept the application Form SVLDRS-1 filed by the Petitioner and to issue discharge certificate - Petitioner also seeks an opportunity to put forth his case/submissions and for a direction that, a reasoned Order be passed thereafter - requirement of opportunity of personal hearing - principles of natural justice - HELD THAT:- The question, as to, whether the tax liabilities are already quantified or not as on 30th June 2019 itself is a matter of dispute raised by the Petitioner in Writ Petition and also in the application/declaration filed under the said Scheme by the Petitioner before the Authorities. If according to the Respondents the tax liabilities were not quantified and the Petitioner was not eligible, the Respondents ought to have given an opportunity of being heard to the Petitioner before passing such Order rejecting the application made by the Petitioner on the ground of ineligibility. If the Petitioner would have been given an opportunity, the Petitioner would have pointed out the quantification of tax liability during the course of the hearing. In our view, personal hearing was necessary in this situation. 2022 (1) TMI 450 CENVAT Credit - Works contract service or Commercial or Industrial Construction Services - claim of the appellant is that period prior to 01.06.2007 the works contract services was not chargeable to service tax - HELD THAT:- CBEC in letter DOF No. 334/1/2008- TRU dated 29.02.2008, is of the view that if VAT is paid under the category of Works Contract then the service should be classified as works contract services. In the instant case while the appellant has submitted the challans under which VAT has been paid but it cannot be ascertained from the said challans if the VAT has been paid under category of Works Contract . While the registration document shows the appellant was registered under works contract with Sale tax authorities. The learned counsel could not establish from the said records that the sales tax or VAT was paid under the head of works contract service though prima facie is claim appears to be correct. The matter is remanded to the Original Adjudicating Authority to ascertain if the VAT/Sales tax has been paid for all the contracts under the category of works contract. If the appellant has paid VAT/Sales Tax under the head of Works contract then the service would fall under the category of Works Contract Service. No demand under the category of Commercial Industrial Construction Service can be confirmed - appeal allowed by way of remand. 2022 (1) TMI 449 Seeking reversal of CENVAT Credit - amount written off as bad debts - advertisement sales promotion services - appellant has written off certain amounts for consideration of services, they have not received - period April 2009 to March 2012 - Rule 3(5C) of Cenvat Credit Rules - HELD THAT:- Prior to 01.04.2011, the appellant was required to pay service tax on receipt of consideration for the service provided, which means that if the appellant is failed to received consideration qua service provided, the appellant is not required to pay service tax; which does not mean that the appellant has provided exempted/non-taxable service. Rule 3 of the Centvat Credit Rules, 2004 deals with the situation for entitlement of the cenvat credit, which prescribes that a provider of the output service shall be allowed to take cenvat credit of any input service received by the provider of output service on or after 10th day of September, 2004 - Admittedly, the services on which the appellant has taken cenvat credit are input services in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 and is a provider of output service. Therefore, in terms of Rule 3 of the Cenvat Credit Rules, 2004, we hold that the appellant is entitled to avail cenvat credit on input services in question. Further, there is no such provision in the Cenvat Credit Rules, 2004 or in the Finance Act, 1994 for reversal of cenvat credit for the services provided for which no consideration for service provided is received by an assessee. The appellant has correctly availed the cenvat credit on input services although the amount of non-recoverable taxable service has been written off by the appellant for the period prior to 01.04.2011. The appellant has admitted at bar that they have paid service tax on all the taxable services provided by them after 01.04.2011 at the time of provision of service. Therefore, if it is so, the appellant cannot be liable for reversal of cenvat credit for the services provided after 01.04.2011 on which the appellant has paid service tax. Advertisement sales promotion services - HELD THAT:- On going through the said invoice, it is found that the description of the service provided by IRCTC is SBI co-brand registered as SBI . The said invoice does not prescribe that IRCTC has provided any catering service to the appellant. In fact, the lower authority has fell in error holding that IRCTC is providing only catering service and the denial of cenvat credit is only on the basis of assumption and presumption - the appellant is entitled for cenvat credit on the services provided by IRCTC as advertisement services. Appeal allowed - decided in favor of appellant. Central Excise 2022 (1) TMI 448 Process amounting to manufacture or not - re-packing from the bulk of imported chemical to a smaller packing and re-labeling thereof - whether the process amounts to manufacture or is merely a trading activity? - extended period of limitation - HELD THAT:- It is observed that sub-clause (5) of Rule 3 of Cenvat Credit Rules, 2004, which has been relied upon by the adjudicating authority below while confirming the demand against the appellant, comes into picture only when the inputs on which Cenvat Credit has been taken, are removed, as such‟, from the premises of the importer/ manufacturer. As already discussed above, the imported inputs have undergone such changes at the end of the appellant that may be called as manufacture prior those inputs were cleared by the appellant. It becomes abundantly clear that clearance of inputs as such‟, is an absolute wrong finding of the adjudicating authority and hence rule 3 (5) of CCR, 2004 does not apply. The authority has totally ignored the amendment which has come into effect in Chapter Note 10 of Chapter 29 post 1st of March, 2008. Even the case law as relied upon by the adjudicating authority also pertains to the period when the activity both of re-packing from bulk to retail containers and re-labeling thereof was manufacture but post amendment either of these activity being done with respect to the imports that the clearance of said inputs post said activity will be manufacture. The findings of adjudicating authority on this aspect are therefore liable to be set aside. Extended period of limitation - HELD THAT:- There is also no denial that show cause notices were issued to the appellant for the same reason as in the present appeal for the immediately prior period (2005- 2011). It does not lie in the mouth of the Department to still allege suppression. Otherwise also the entire dispute appears to be revenue neutral - there appear no revenue consequences. No reasons appear to be available with the appellant to have mala fide intent to evade duty. No evasion is otherwise apparent on part of the appellant. Thus, extended period is held to have wrongly been invoked by the Department. Show Cause Notice itself gets hit by period of limitation. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 447 Seeking refund of excess duty paid - Section 3A of the Central Excise Act, 1944 - HELD THAT:- Section 3 A(4) of of the Central Excise Act, 1944 is followed as the commissioner has decided the issue in principle and remanded the matter simply, only for the purposes of calculation of the duty payable. He exercised the quasi-judicial powers in terms of Section 3 A (4) and administratively, directed his subordinate to calculate the duty. In the circumstances, it is found that there is no infirmity in the order passed and directions given by the Commissioner. It is found that the interest of justice is not in jeopardy if the directions of the learned Commissioner are sustained. However, since the matter pertains to the period September, 1997 to March, 2000 and redetermination of duty has been directed, vide M/S RHL PROFILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2017 (8) TMI 1092 - CESTAT ALLAHABAD] , and such finalisation has not taken place till date. Accordingly, the jurisdictional Deputy/ Assistant Commissioner sre directed to comply with the directions of this Tribunal as contained in Final Order M/S RHL PROFILES LTD. and to determine the duty payable on actual production basis, at the rates specified under Section 3A (3) of the Central Excise Act, 1944, within a period of 12 weeks, from the date of service/ receipt of this order - the appellants would be entitled for refund of excess duty paid, if any, along with applicable interest, as per law. The Adjudicating Authority Deputy/ Assistant Commissioner are directed to refund the duty excess paid, within 4 weeks of quantification of the duty payable, as above, along with interest, as per law - appeal disposed off. CST, VAT & Sales Tax 2022 (1) TMI 446 Seeking restoration of cancelled registration of petitioner - blocking of input tax credit - except the show-cause notice, nothing else was furnished or nothing was attached to such show-cause notice. - HELD THAT:- The whole object of issuing a show-cause notice is to make the recipient of the notice understand what the authority is trying to convey and what are the nature of the allegations. In the case on hand, when there are allegations of bogus billing, it was expected of the authority to at least furnish some information about such bogus billing. At this stage, Mr. Sharma submitted that along with the show-cause notice, there is always few documents attached which would indicate what the authority wants to convey about the bogus billing. It has been stated on oath not only in the memorandum of the writ application but even in the reply to the show-cause notice that except the show-cause notice, nothing else was furnished or nothing was attached to such show-cause notice. A show cause notice has great significance in the adjudication proceedings for the mandatory compliance of the principles of natural justice . Show cause notice is a mandatory requirement for raising any demand under the Act, 2017 except payment of interest u/s 50 and assessment of non filer of returns u/s 62 of the act. The SCN is the foundation on which the adjudicating authority has to build up its case. It is the document served on the taxable person asking him to explain with reason as to why a particular course of action should not be taken against him. It must be a speaking and well reasoned document - The allegations and findings in the SCN should be supported by some documentary evidences. The impugned order, cancelling the registration is hereby quashed and set aside - as the order, cancelling the registration on the ground of vague show-cause notice bereft of any material particulars, is set aside, it is left open to the authority to issue a fresh show-cause notice, if it intends to - Application allowed. 2022 (1) TMI 445 Levy of penalty under Section 53(12) of Karnataka Value Added Tax Act, 2003 for breach of Section 53(2) of the Act - transporter has carried the scrap of Copper, Aluminium and Brass in vehicle bearing No. HR-61-A-4041 which was alleged to be robbed and the police had found the same in vehicle Nos.KA-05-AC-7002 and KA-13-8671 before a godown at Madanayakanahalli, Bengaluru, intercepted the vehicle - HELD THAT:- The appellate authority came to a conclusion that the original documents tendered at the HRCP (in), Attibele, which is the border entry check post of Karnataka were not traceable on account of theft and since the enforcement authority had only an access to verify the duplicate set of documents, could not have arrived at a conclusion that the consignor M/s Bhagawathi Enterprises is from Salem, Tamil Nadu, and the Cosignee being at New Delhi, in transit, no penalty could have been levied by the check post officer. The revisional authority having found the same being erroneous and prejudicial to the interest of the Revenue, has rightly initiated the suo moto revisional proceedings, more particularly, when the check post officer and ACCT (Enforcement) had conducted thorough investigation into the genuineness of the consignment, the goods and had come to a conclusion that the goods have been loaded in Karnataka by M/s Bhagawathi Enterprises, the movement of goods not being established with the relevant documents, in the background of non existing address of the consignee M/s Metal Traders, Delhi, has held that the order of the first appellate authority was unjustifiable. The check post officer has categorically given a finding that the documents have not been tendered for examination at the inward check post of the Karnataka State and no seal of the check post in the State was found in invoices in addition to the transit pass required for inter-State transit. The said discrepancies would certainly come within the ambit of Section 53(2) of the Act and thus, imposition of penalty under Section 53(12) for violation of the provisions of Section 53(2) of the Act cannot be found fault with. The proceedings initiated by the Additional Commissioner of Commercial taxes to set aside the order of the first appellate authority cannot be held to be unjustifiable - Appeal dismissed. 2022 (1) TMI 444 Validity of re-assessment order - denial of input tax credit claimed on the basis of tax invoices issued by such selling dealers, who did not furnish tax compliance - burden of prove - fake/bogus transaction - HELD THAT:- The burden of proof certainly lies on the appellant assessee to prove the transaction whether is genuine or not. Merely for the reason that the selling dealers have not filed the return and failed to discharge the tax liability by remitting the tax collected, could not be a ground to disallow the input tax credit claimed by the assessee unless such transaction is found to be not genuine and is a fictitious document/invoice created to claim input tax credit i.e., a bogus transaction. In the absence of such analysis made by the authorities, merely for the reasons as aforesaid, input tax credit could not be denied. It is also pertinent to mention that the first appellate authority ought to have examined the details of selling dealers in the background of not filing the return or the tax payment collected being made by such selling dealers. It is needless to observe that if such selling dealers are not existing dealers or deregistered dealers, there is absolutely no bar to deny the input tax credit claimed by the assessee, but such reason has to be clearly recorded for extending the benefit of input tax credit which was denied by the assessing authority - In the absence of such reasons forthcoming in the order of the authorities and in the light of the material now placed by the Revenue before this Court, which remains a finding of fact, it is deemed appropriate to set aside the orders of the revisional authority and first appellate authority and restore the matter to the file of the first appellate authority to reconsider the matter. Appeal allowed by way of remand. 2022 (1) TMI 443 Levy of Entertainment tax - Valuation - consideration towards the services excluding the service tax component or on both - entertainment tax can be levied on the transaction of service which is so characterized under the Finance Act, 1994 or not? - legislative competence of State of Karnataka to levy tax under KET Act, 1958 on the transaction which is exclusively reserve for Union Parliament for the purposes of service tax under Entry 92C of the List I of Schedule VII of the Constitution of India - prohibition under constitutional discipline of Article 246 to adopt the sources of revenue which are exclusive received for the Union Parliament - applicability of judgement of ANAND SWARUP MAHESH KUMAR VERSUS THE COMMISSIONER OF SALES TAX [ 1980 (9) TMI 238 - SUPREME COURT] - validity to proceed with the appeals while the question of legislative competence of State of Karnataka are pending consideration before this Hon'ble Court? HELD THAT:- The Tribunal referring to various provisions of the Finance Act, 1994, as well as the Service Tax Rules, 1994, has observed that it is not possible or permissible to segregate the service tax component for the purpose of levy of entertainment tax in the case of the appellant as the service tax component is not indicated separately in the bills or invoices issued to the customers. No proof is available on records to show that service tax has been separately collected. It was further observed that the charging Section 4-G of the Act uses the expression 'on the amounts received or receivable' is liable for entertainment tax at 6%, and therefore, the assessing authority is correct in levying entertainment tax on service tax component, and the appellate authority is correct in confirming the same. The Hon'ble Supreme Court in ALL INDIA FEDERATION OF TAX PRACTITIONERS ORS VERSUS UNION OF INDIA ORS [ 2007 (8) TMI 1 - SUPREME COURT] , has held that service tax is levied on the service and not on the service provider. It has been held in the said case that service tax is a value added tax which in turn is both a general tax as well as destination based consumption tax, in the sense, it is levied on commercial activities and is not a charge on the business, but on the consumer and it would, logically, be levied only on the service provided. It would meet the ends of justice if the order passed by the Tribunal is set aside and the matter is remitted to the Tribunal to consider the appeals afresh after giving an opportunity to the petitioner to produce all the relevant documents in support of his case including the invoices raised by it as against the subscribers, and thereafter, the appeals shall be heard and disposed of - Petition allowed in part. 2022 (1) TMI 442 Levy of CST - inter-state sales effected without C-Form declarations - amount claimed as deduction by the petitioner to be in the nature of discount requiring compliance of Rule 3(2)(c) of the Karnataka Value Added Tax Rules, 2005 or not - levy of CST on the notional value adopted in compliance of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - HELD THAT:- It is not in dispute that the tax invoices were raised by the petitioner and subsequently credit notes were issued, whereby in the credit note, value is shown as ₹ 3/-, whereas ₹ 6/- is shown in the invoice. The authorities referring to Rule 3(2)(c) of the Rules and Section 30 of the Act as it stood during the relevant period proceeded to reject the claim of the assessee i.e., the value of goods sold to any related parties in terms of Rule 9 of the Central Excise Valuation (Determination of price of Goods) Rules, 2000. The Tribunal rejected the appeal on the premise that the petitioner cannot claim reduction in the notional value, much less the discount not being reflected in the invoice. In view of the ruling of the Hon ble Apex Court in the case of M/S. SOUTHERN MOTORS VERSUS STATE OF KARNATAKA AND OTHERS [ 2017 (1) TMI 958 - SUPREME COURT] , to deny the benefit of deduction only on the ground of omission to reflect the trade discount though actually granted in future, in the tax invoice/bill of sale at the time of the original transaction would be to ignore the contemporaneous actuality and be unrealistic and held that the view of the authorities runs counter to the avowed objective of the correct determination of the taxable turnover considering Section 30 of the Act, which stood during the relevant period and Rule 3(2)(c) and the proviso thereof. Though the petitioner has contended before the Tribunal that issuing of credit note to the purchasing dealers could not be construed as discount, even assuming that it is discount not reflected in the books of accounts, the principles enunciated by the Hon ble Apex Court in Southern Motors, would certainly apply to the facts of the case on hand. Revision petition allowed. 2022 (1) TMI 441 Erroneous exercise of Jurisdiction - issue raised in these writ petitions is that the Assessing Officer has erroneously applied the provisions of the TNVAT Act and passed the assessment orders which resulted exercise of jurisdiction erroneously - violation of principles of natural justice - HELD THAT:- 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 higher authorities of the Department are expected to be watchful and review the orders passed by the subordinate authorities and in the event of any negligence, dereliction of duty, collusion or corrupt activities, such officials are liable to be prosecuted apart from initiation of departmental disciplinary proceedings. 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. The 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. 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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