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TMI Tax Updates - e-Newsletter January 17, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Transition of Input tax credit - mistake in filing Tran 1 - The petitioner having made a mistake in filing the GST returns on 10.11.2017 was entitled to revise such declaration and submit a revised declaration in GST electronically on the common portal within a time specified in the GST Rules, 2017 namely Rules 117, 118, 119 and 120 - The petitioner cannot be found fault of Architecture of the Web Portal did not have such facility. Input Tax Credit once availed are indefeasible and cannot lapse. - HC Visit to Get Source Income Tax: Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Act - New Rule 21AJA inserted to the Income-tax Rules,1962 - Notification Visit to Get Source Income Tax: Assessment u/s 143(3) r.w.s. 144B - Prescribed procedure not followed - The relevant aspects as pointed out by the assessee cannot be said to have been looked into from a proper perspective. We don’t find any discussion in the impugned assessment order. This is the reason why we are saying that the procedure as contemplated under Section 144B cannot be said to have been duly followed in the case on hand. - Matter restored back - HC Visit to Get Source Income Tax: Hybrid system of accounting - interest accrued on investments chargeable to tax - Whether ITAT erred holding that the assessee can compute its income chargeable under the head business and profession under hybrid system of accounting when Sec.145 of the Act does not allow the assessee to follow such system of accounting - Decided in favor of assessee - HC Visit to Get Source Income Tax: Exemption u/s 54 /54F - investment made in the name of the asssessee’s wife - The right of a person, may be one half, in the residential house cannot be taken away without due process of law or it continues till there is a partition of such residential house. With great respect, this judgment would not be of any assistance to the Revenue to deny the benefit to the assessee since there is no such co-ownership or share in the property of Domlur house by the assessee. Even Section 27 of the Act could be of little assistance to the Department since the said definition contemplated is only for the purposes of Section 22 to 26 of the Act. - HC Visit to Get Source Income Tax: Capital gain computation - determination of full value of consideration - correct value of consideration - A machinery provision has been introduced by way of Section 50D of the Act. Though the said provision has come into effect from 1.4.2013, it certainly throws some light on the mode of computation under Section 48 of the Act. In the circumstances, we are of the considered opinion that the guidance value of the land or the guidance value of the building would be appropriate mode to determine the full value of consideration in the case of a transfer where consideration for the transfer of a capital asset is not attributable or determinable. Hence, guidance value adopted by the Tribunal cannot be faulted with. - HC Visit to Get Source Income Tax: Deduction u/s 54F - withdrawal of Amount Deposited with the Bank of India in terms of Capital Gains Scheme Accounts, 1988 - With all possible loopholes having been plugged cementing the same with the affidavit tendered before this Court additionally pursuant to the submissions made by the learned senior standing counsel, Ms.Maithili Mehta, the action of the Assistant Commissioner, Income Tax dated 20.10.2021 whereby he denied to issue the No Objection Certificate for the balance withdrawal of the deposit deserves and warrants interference. - HC Visit to Get Source Income Tax: TP adjustment - Adjustment made by the TPO on the value of electricity supplied by the Captive Power Plant (CPP) to its manufacturing units by benchmarking the same with rate - the Ld. CIT(A) deleted the downward adjustment and subsequent additions made by the TPO/AO holding that in case of Captive Power Plant (CPP) eligible for deduction under Section 80IA the market rate at which the receiving unit is procuring the electricity can be adopted as sale price by the CPP which in our considered opinion is just and proper so as to warrant interference. - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - deduction claimed u/s 54EC - It is mandatory to apply the principles of natural justice irrespective of the fact as to whether there is any statutory provision or not. As per facts of the present case, the assessee was not afforded opportunity much less sufficient opportunity to give the reply to the show cause notice. Therefore it is clear that the ld. Pr. CIT in a hurriedly manner without affording opportunity of hearing to the assessee, had passed impugned order by violating principles of audi alteram partem. - revisional proceedings framed U/s 263 of the Act by the ld. Pr.CIT stands quashed. - AT Visit to Get Source Income Tax: Reopening of assessment u/s 147 - assessee has submitted only confirmation, ITR and bank statement; however books of accounts were not submitted before Assessing Officer. Moreover, the reasons recorded by the Assessing Officer are in accordance with law. Therefore, assessee cannot take the benefit of first proviso to section 147 of the Act. - AT Visit to Get Source Income Tax: MAT computation - Addition made to the book profit computed u/s 115JB on disallowance computed u/s 14A in respect of exempt income - the disallowance made u/s 14A is a notional disallowance and hence the same cannot be adopted for the purpose of clause (f) of Explanation 1 to sec.115JB of Act. - AT Visit to Get Source Customs: Valuation of imported goods - Rejection of transaction value - enhancement of transaction value of imported goods by 20% instead of 77% for the years 2013-14 to 2016-17 - the Tribunal has dealt with the matter in meticulous details and has pointed out substantial basis for its findings that the transaction value shown by the respondent and that of the ASD cannot be treated as comparable at commercial level and quantitative level; and has also pointed out that the promotion activity was undertaken only by the respondent for which, it was earning higher discount. - Revenue appeal dismissed - SC Visit to Get Source Customs: Cancellation of bail granted - Smuggling of Wrist Watches - Petitioner department also failed to answer that what purpose would be served if the bail is cancelled and what further enquiry is to be done after cancellation of bail by taking them into custody - there are no reason for cancellation of Bail - petition dismissed - HC Visit to Get Source Customs: Classification of imported goods - plastic bubble toy or plastic toy - whether the imported goods are restricted/prohibited - adequate materials are available before the first respondent (Assessing Officer) to decide the correct classifications and whether the imported goods are restricted/prohibited - Considering the fact that, the impugned Bill of Entry has not assessed for a very long period, the respondents are directed to assess the goods within a period of 15 days from the date of receipt of copy of this order. - HC Visit to Get Source Customs: Seeking refund of deposit - the amount is deposit or duty? - refund of security deposit during provisional assessment - Since in view of the documentary evidence, it is established that the amount for which refund was sought for by the appellant is not a deposit but it is a duty. Therefore, the refund is clearly governed by Section 27 of the Customs Act, 1962 therefore, all the provision of limitation and unjust enrichment, etc is clearly applicable. - AT Visit to Get Source Indian Laws: Arbitration award - Validity of appointment of arbitrator - Jurisdiction of High Court while deciding the appeal under Section 37 of the Arbitration Act - The award can be set aside under Sections 34/37 of the Arbitration Act, if the award is found to be contrary to, (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. None of the aforesaid exceptions shall be applicable to the facts of the case on hand. - the High Court has exercised the jurisdiction not vested in it under Section 37 of the Arbitration Act. The impugned judgment and order passed by the High Court is hence not sustainable. - SC Visit to Get Source IBC: Initiation of CIRP Proceedings against the Personal Guarantor - Personal Guarantor has defaulted in payment of the dues within the statutory period of 14 days from the service of the demand notice - application has been filed through the Resolution Professional - The Resolution Professional is directed to exercise all the powers as enumerated under Section 99 of the Code read with Rules made thereunder - Tri Visit to Get Source SEBI: Exemption from strict enforcement of the regulations in other cases. - New Regulation 43B inserted - Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2022 - Notification Visit to Get Source SEBI: Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2022 - Notification Visit to Get Source Service Tax: Recovery of service tax - supply of tangible goods for use [STGU] service or not - supply of diesel generators to customers on hire basis - so long as the effective control over the diesel generator sets remained with the customers, the mere providing of operators who were also under the direction and control of the customers, would not mean that the transaction was not that of sale. - It is more than apparent that the supply of diesel generator sets to the customers would not amount to STGU service for the period from 01.04.2011 to 30.06.2012, or a declared service from 01.07.2012 to 2014-15. - AT Visit to Get Source Service Tax: Condonation of delay of 210 days in filing the appeal before the learned Commissioner(Appeals) - Admittedly, in this case, since there was delay of 210 days in filing the appeal before the learned Commissioner(Appeals), in our considered opinion, he has correctly rejected the appeal on the ground of limitation. Since the Tribunal is created and governed under the statute, the time limit prescribed in the statute cannot also be relaxed by it. - AT Visit to Get Source VAT: Levy of Assam VAT - Nature of activity - sale or service or both - denting and painting job on a vehicle - levy of VAT on paints by treating the nature of works as works contract - transfer of property in paints during the restoration and reconditioning work or not - the petitioner has been able to repel the opinion expressed in the impugned orders, thereby holding the use and/or application of paint in a vehicle workshop as a “sale” of paint and thus, taxable under the Assam Value Added Tax Act, 2003 - HC Visit to Get Source VAT: Validity of assessment order - input tax credit - failure to disclose the turnover in the return on the part of supplier - opportunity of personal hearing - There are no merits in these Writ Petitions. - However, in view of the circular dated 24.02.2021 to specifically deal with the situation, the case has to be examined in the light of the said Circular- HC Visit to Get Source VAT: Revision of assessment order - tax on inter-state sales transactions - denial of benefit of concession under Section 3 of the Central Sales Tax Act, 1956 - C Forms were lost - It is not open for the petitioner to shift the burden on the Assessing Officer to verify from the data from the website of the Sales Tax Department from the supplier's end. To that extent, there is no merits in the present writ petition. The petitioner is bound to obtain certificates in a manner prescribed under the aforesaid Rules. - HC Visit to Get Source Articles Is Reversal of Credit Required for Non-payment within 180 days? Delhi HC dismisses conducting of alleged parallel investigation by various jurisdictional authorities Notifications Customs 03/2022 - dated 14-1-2022 - Cus (NT) Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver Income Tax 06/2022 - dated 14-1-2022 - IT Income tax (1st Amendment), Rules, 2022 - New Rule 21AJA. Computation of exempt income of specified fund, attributable to the investment division of an offshore banking unit, for the purposes of clause (4D) of section 10 of the Act - Determination of income of a specified fund attributable to the investment division of an offshore banking unit under sub-section (1B) of section 115AD of the Act. 05/2022 - dated 13-1-2022 - IT U/s 10(46) of IT Act 1961 - Central Government notifies ‘Assam Electricity Regulatory Commission’ in respect of the specified income arising to that Commission 04/2022 - dated 13-1-2022 - IT Corrigendum - Notification No. 142/2021 in F.No.300196/4/2021-ITA-I dated 31.12.2021 SEBI SEBI/LAD-NRO/GN/2022/64 - dated 14-1-2022 - SEBI Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2022 SEBI/LAD-NRO/GN/2022/62 - dated 14-1-2022 - SEBI Securities and Exchange Board of India (Settlement Proceedings) (Amendment) Regulations, 2022 No. SEBI/LAD-NRO/GN/ 2022/63 - dated 14-1-2022 - SEBI Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2022 News Delhi Customs Officials recover smuggled gold worth over ₹ 7.5 lakh along with Fake Indian Currency Notes worth ₹ 10 lakhs at IGI Airport; 2 arrested Case Laws: GST 2022 (1) TMI 608 Levy of GST - amount of Royalty and District Mineral Fund Contribution paid by them to the State of Jharkhand in respect of minor mineral lease - reverse charge mechanism - HELD THAT:- Apex Court in M/S. LAKHWINDER SINGH VERSUS UNION OF INDIA ORS. [ 2021 (11) TMI 336 - SC ORDER ], that the petitioners herein, lessee of minor mineral, also raised similar issues of levy of GST on royalty and District Mineral Fund Contribution, we deem it proper to grant similar interim relief (s) to the petitioners herein. Learned counsel for the Respondent CGST and State of Jharkhand are allowed three weeks' time to file counter affidavit in the matter. One week time thereafter is allowed to the learned counsel for the petitioners to file reply, if so advised. Petition disposed off. 2022 (1) TMI 607 Transition of Input tax credit - mistake in filing Tran 1 - It is the case of the petitioner that instead of making a proper entry against 7(a) of Tran 1, the petitioner has made an entry in 7(d) - HELD THAT:- In this case, the petitioner had filed the Tran 1 in time with certain mistakes and the petitioner had also made an another attempt to rectify the mistake on 27.12.2017. Thereafter, the petitioner had also filed a writ petition before this Court but withdraw the same under bonafide relief with the issue would be resolved before the IT Grievance Redressal Committee (IT-GRC) constituted by the GST Counsil and pursuant to an interim order of this Court dated 26.03.2019. The petitioner having made a mistake in filing the GST returns on 10.11.2017 was entitled to revise such declaration and submit a revised declaration in GST electronically on the common portal within a time specified in the GST Rules, 2017 namely Rules 117, 118, 119 and 120 - The technical problem arose at the time of initial implementations of GST which resulted in difficulties both for the Assessee and the for the Department. Ultimately, the amounts which were available as input tax credit under the erstwhile Central Excise Rules, 2002 read with Cenvat Credit Rules were to be transited as their equivalent to cash to the extent and that they are available for being used for discharging the tax liability. The procedure prescribed under the provisions of Central Goods and Service Tax Act, 2017 and the respective State Enactments and the Rules made there under should not come in the legitimate way of transitional credits as such credits were already available for being utilized for discharging the tax liability. These amounts cannot lapse. The difficulty in amending the Tran-1 is on account of the Architecture of the Web Portal which did not permitted the petitioner to make such amendments. The petitioner cannot be found fault of Architecture of the Web Portal did not have such facility. Input Tax Credit once availed are indefeasible and cannot lapse. This writ petition is disposed off by directing the second respondent to take an independent decision by deputing a suitable officer from the Department to verify the petitioner indeed had un-utitlized accumulated credit for a sum of ₹ 33,28,709.60 - petition disposed off. Income Tax 2022 (1) TMI 606 Levy of interest under Section 234A - Extension of due date of filing of Tax Audit Report and the Income Tax Returns - technical glitches in the portal - filing of the TAR / ITR in the physical form - HELD THAT:- Although the time period has been extended upto 15th February 2022, yet the Clarification 1 in the circular would indicate that the extension would not apply to Explanation 1 to Section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-Section (1) of Section 234A if it exceeds one lakh rupees. As Senior Counsel made one further request that having regard to the technical glitches in the portal, the assessee may be permitted to file TAR / ITR in the physical form to the jurisdictional authority. According to Mr. Hemani, it should not happen that although the time period has been extended upto 15th February 2022, yet on account of the technical glitches in the portal, the assessee are not able to make good the extended period. We request Additional Solicitor General of India to speak to the highest authority concerned and try to ascertain whether the department would be agreeable to accept the filing of the TAR / ITR in the physical form. We request the authority concerned to take a practical view of the problems which the assessees are facing as on date on account of the technical glitches in the portal. The authority should not overlook this fact and try to solve the problems or rather ease the difficulties which the assessees are facing. We appreciate the decision taken by the CBDT to extend the time period upto 15th February 2022, but the assessees should be in a position to make the best of this extended time period. Mr. Hemani is right to a certain extent that if the technical glitches are going to continue, then even ex tension of further three months would not solve the problems. Let Notice be issued to the respondents, returnable on 17th January 2022. 2022 (1) TMI 605 Assessment u/s 143(3) r.w.s. 144B - Prescribed procedure not followed - Addition u/s 68 - partnership firm received a particular amount in its capital through its partners - whether the present writ application should be entertained? - HELD THAT:- When the legislature has thought fit to use the word non-est, it would mean a nullity. If it is to be treated as a nullity, then the argument of alternative remedy of an appeal should fail. The Writ Court should not be hesitant to quash and set aside an order which could be termed as non-est . Why do we say that the impugned assessment order in the present case could be termed as non-est? . We have read and re-read the draft assessment order and also the impugned assessment order. Mr. Shah is right in his submission that the impugned assessment order is nothing but an exact reproduction of the draft assessment order. Nothing as pointed out by the assessee has been taken into consideration. All that has been done by the Assessing Officer is to express doubts as regards the genuineness of the entries. We fail to understand what the Assessing Officer has tried to convey. When a partnership firm says that it received a particular amount in its capital through its partners and the identity of such partners with necessary details is disclosed, any further information in that regard would be asking the assessee to disclose source of the source. Even this part has been taken care of by the firm. In other words, the source of the source has also been disclosed. The relevant aspects as pointed out by the assessee cannot be said to have been looked into from a proper perspective. We don t find any discussion in the impugned assessment order. This is the reason why we are saying that the procedure as contemplated under Section 144B cannot be said to have been duly followed in the case on hand. It is open to the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount. So far as the responsibility of the assessee-firm is concerned, it is satisfactorily discharged. Whether that individual person is an income tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income tax. It is open to the Assessing Officer to take appropriate action under Section 69 of the Act against the person who has not been able to explain the investment. In view of the aforesaid, we are left with no other option but to quash and set aside the impugned assessment order and remit the entire matter to the Assessing Officer for de novo consideration. On remand, we expect the Assessing Officer to meaningfully look into all the relevant aspects as highlighted by the assessee including the observations made by this Court in this order and even if the Assessing Officer still deems fit to reject the stance of the assessee, he shall to do so by assigning cogent reasons. Writ application succeeds in part. The impugned assessment order is quashed and set aside. The matter is remitted for de novo consideration to the Assessing Officer. 2022 (1) TMI 604 Hybrid system of accounting - interest accrued on investments chargeable to tax - Whether ITAT erred holding that the assessee can compute its income chargeable under the head business and profession under hybrid system of accounting when Sec.145 of the Act does not allow the assessee to follow such system of accounting - HELD THAT:-The issues involved herein are no more res integra in view of the ruling of the coordinate bench of this Court in the case of COMMISSIONER OF INCOME TAX VS CANFIN HOMES LTD. [ 2011 (8) TMI 178 - KARNATAKA HIGH COURT] , whereby identical questions have been considered and answered in favour of the assessee and against the revenue. It has been categorically observed that the contention of the revenue that in respect of nonperforming assets even though it does not yield any income as the assessee has adopted mercantile system of accounting, he has to pay tax on the revenue which has accrued notionally is without any basis. Therefore, substantial questions of law nos.1 2 requires to be answered in favour of the assessee and against the revenue. Also see DAVANGERE VERSUS M/S. DAVANGERE DISTRICT CENTRAL CO-OPERATIVE BANK LIMITED [ 2020 (11) TMI 654 - KARNATAKA HIGH COURT] and M/S. VASISTH CHAY VYAPAR LTD. [ 2018 (3) TMI 56 - SUPREME COURT] Expenditure incurred by trust - Allowable revenue expenditure u/s 37(1) or not? - assessee has incurred the expenditure made towards M/s. Navodaya Grama Vikasa Charitable Trust with a description NGVCT Animator salary as per the directions of their controlling authority i.e., NABARD. - HELD THAT:- On extensive analysis of the factual aspects, the Tribunal has arrived at a conclusion that though the assessee is promoting the formation of self help groups in the Districts of Dakshina Kannada and Udupi, and the loans are given to such self help groups for home industries like candle making, soap making and such other activities, the income generated by such self help groups come back to the assessee as deposits. The commercial exigency being established under the provisions of Section 37(1) of the Act, the same has been considered in the light of the judgment of the Hon'ble Rajasthan High Court in RAJASTHAN SPINNING AND WEAVING MILLS LTD.[ 2003 (10) TMI 10 - RAJASTHAN HIGH COURT] , which has been rendered following the decision of the Hon'ble Apex Court in the case of SASOON J. DAVID CO. P. LTD. [ 1979 (5) TMI 3 - SUPREME COURT] Having regard to the legally settled principles with reference to the expression 'wholly or exclusively' used in Section 37(1) of the Act, the Tribunal has dismissed the appeal filed by the revenue The expenses incurred by the assessee cannot be held to be not allowable expenses under Section 37 of the Act. The CIT (Appeals) as well as the Tribunal has analyzed the factual aspects in the background of the legal principles, which by any stretch of imagination cannot be held to be perverse or arbitrary. More over, these factual aspects recorded by the fact finding authorities cannot be interfered. Accordingly, the substantial question of law no.3 is answered in favour of the assessee and against the revenue. Amortization premium paid for acquisition of Government securities - Tribunal held as long term investment that are in the nature of capital investment is allowable as revenue expenditure? - HELD THAT:- It is not in dispute that these substantial question of law raised by the revenue are squarely covered by the ruling of the coordinate bench decision of this Court in the case of COMMISSIONER OF INCOME-TAX, HUBLI VS KARNATAKA VIKAS GRAMEEN BANK [ 2015 (12) TMI 1420 - KARNATAKA HIGH COURT] and in the case of COMMISSONER OF INCOME TAX, BANGALORE VS ING VYSYA BANK LTD. [ 2020 (1) TMI 1116 - KARNATAKA HIGH COURT] wherein the substantial question of law being answered in favour of the assessee and against the revenue. 2022 (1) TMI 603 Addition of LTCG - determination of cost of construction - Ignorance of documents furnished by the appellant in support of his claim with regard to the agreement to sell - authority considered the value of the construction based on the available material - HELD THAT:- AO has determined the cost of construction said to have been incurred based on the information collected but the same is not disclosed in the order. Even assuming the said cost of construction and the cost of acquisition determined is on the basis of the material available on record, the same ought to have been reflected in the assessment order, to clarify that the authority has applied the mind in the right perspective. It is discernable that the CIT (Appeals) though has issued notice, the same having been returned without due service of summons, as there was no other option, proceeded to pass ex-parte order. In such circumstances, in the interest of justice and equity, keeping in mind the principles of natural justice and in view of the CIT (Appeals) dismissing the appeal merely recording the observations made in paragraph No.6 of the assessment order sans independent application of mind, we are of the considered opinion that the said order calls for interference by this Court. Further, the finding of the Tribunal based on ex-parte order of the CIT (Appeals) also warrants interference. We deem it appropriate to set aside the orders passed by the Tribunal as well as the CIT (Appeals) in order to provide one more opportunity to the assessee to putforth the material evidence inasmuch as the cost of construction and the valuation report as well as the additional expenses said to have been incurred towards new house, before the CIT (Appeals). 2022 (1) TMI 602 Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- Considering the law enunciated by the Hon'ble Apex Court in GKN Driveshafts (India) Ltd.,[ 2002 (11) TMI 7 - SUPREME COURT ] Tribunal has observed that the Assessing Officer has provided the reasons and also disposed of the objections though not by way of separate order but in the body of the assessment order, hence dismissed the Miscellaneous Petitions. The assessee has suppressed these material facts before this Court. It was obligatory on the part of the assessee to bring it to the notice of this Court at the time of hearing inasmuch as the disposal of the Miscellaneous Petitions in the manner as aforesaid. In the absence of challenge to the order passed in Miscellaneous Petitions, the arguments now advanced by the learned counsel for the assessee is wholly untenable - no prejudice is caused to the assessee in restoring the matter back to the file of Assessing Officer to pass a speaking order on the objections and then to conclude the assessment. With great respect, the judgments relied upon by the learned counsel for the appellant - assessee are distinguishable and not applicable to the facts and circumstances of the case. In GKN Driveshafts (India) Ltd., supra, the Hon'ble Apex Court has held that the assessee can seek reasons recorded by the Assessing Officer only after filing of the return of income. Objections could be raised thereafter which requires to be disposed of by Assessing Officer. But the assessee herein has not filed the return subsequent to issuance of notice under Section 148 of the Act nor adopted the return filed earlier. Hence, alleging non-disposal of the objections by a speaking order has been rightly considered by the Tribunal and the matter has been restored back to the file of the Assessing Officer. Hence, we find no perversity or infirmity in the order impugned. - Decided against assessee. 2022 (1) TMI 601 Exemption u/s 54 in respect of repayment of housing loan - investment made in the name of the asssessee s wife - Whether, the finding of the Tribunal that exemption under section 54F is not allowable if the assessee is in possession of a residential house on the date of transfer of the original asset is irrelevant and contrary to the provisions of section 54F and hence perverse and contrary to law? - HELD THAT:- As regards the claim made under Section 54 of the Act, relating to the investment made by the assessee in a new asset purchased in the name of his wife is concerned, the Tribunal has extended the relief placing reliance on the Coordinate Bench decision of this Court in the case of DIT v. Mrs.Jennifer Bhide, [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] We have no reason to differ from the same. Payments said to have been made by the assessee towards stamp duty by way of Demand Drafts, no adequate material being available to identify to whom these accounts belong to, the Tribunal has remanded the matter to the Assessing Officer to ascertain the payments, hence, no exception can be found with this finding of the Tribunal. Accordingly, we confirm the same. As regards Section 54F assessee claimed deduction under Section 54 and 54F in respect of long term capital gain arising from the said sale of land. The Authorities observed that the assessees [therein] had two residential houses having one half share each therein on the date of sale of the land, thereby rejected assesses claim. Tribunal held that on date of sale of long term assets meant complete residential house and would not include shared interest in a residential house. On appeal by the Revenue before this Court, it was held that co-owner is the owner of a house in which he has share and that his right, title and interest is exclusive to that extent of his share and that he is the owner of the entire undivided house till it is partitioned. The right of a person, may be one half, in the residential house cannot be taken away without due process of law or it continues till there is a partition of such residential house. With great respect, this judgment would not be of any assistance to the Revenue to deny the benefit to the assessee since there is no such co-ownership or share in the property of Domlur house by the assessee. Even Section 27 of the Act could be of little assistance to the Department since the said definition contemplated is only for the purposes of Section 22 to 26 of the Act. Thus, we cannot subscribe to the findings of the Tribunal confirming the order of the Authorities on this point. 2022 (1) TMI 600 Disallowance u/s 40[a][ia] - income from the sale of property under consideration - to be taxed as capital gains or as income from business - HELD THAT:- It is ex-facie apparent that based on a letter said to have been written by the assessee who is no more to Sri.Rami Reddy which is said to have been found in possession of one Sri.Purushotham Reddy, AO has arrived at a conclusion that the transaction in question was taxable as business income and not capital gains. It is significant to note that the said property was held by the assessee as long term capital asset. Tribunal being the last fact finding authority, has recorded a finding that the contents of the letter alleged to have been written by the assessee to his partner do not clearly establish as to whether the assessee was really carrying on the activity of adventure in the nature of trade or that these properties were considered as trading assets by the assessee. Similarly, as regards the sale consideration of the property in question, addition has been made by the Assessing Officer merely based on the statement of Sri.Purushotham Reddy which is not substantiated by any other material evidence. Disallowance under Section 40[a][ia] of the Act by the Assessing Officer cannot be sustained in view of the income from the sale of property under consideration is now held to be taxed as capital gains and not as income from business. Even the other ground of challenge inasmuch as the Tribunal remitting the matter to the Assessing officer with a direction to examine and verify whether the compound wall was actually constructed around the schedule land and the expenditure allegedly incurred towards the construction of the compound wall, paid to GK Associates, has no merit. Indeed, the factual aspects have to be examined at the ground level by the Assessing Officer. The judgment relied upon by the Revenue is not applicable in the present facts and circumstances of the case. Moreover, the Hon'ble Apex Court has observed that in reaching the conclusion that the transaction is an adventure in the nature of trade, the Tribunal has to find primary evidentiary facts and then apply legal principles. It is evident that the Tribunal has rightly considered the factual aspects and then applied the legal principles. There being no perversity or arbitrariness in the order of the Tribunal impugned, the same requires to be confirmed. The issues involved relates to pure questions of facts, no substantial questions of law arises for our consideration. 2022 (1) TMI 599 Capital gain computation - determination of full value of consideration - correct value of consideration - computation as prescribed u/s 48 - As per tribunal guidance value is the sale consideration for computing capital gain - HELD THAT:- In the present case, Assessing Officer has adopted the rate of ₹ 1600/- per square feet merely based on the letter given by the developer which is not supported with any particulars. It cannot be ruled out the possibility of the developer giving an inflated figure to suit his requirements in order to gain minimum tax on his profits by inflating his costs. As such, the basis for determination of full value of consideration by the Assessing Officer based on the letter of the developer cannot be appropriate. No doubt at the relevant period, no provision was available in cases where the consideration received or accruing as a result of transfer of a capital asset by an assessee is not ascertainable. Section 50D inserted by Finance Act, 2012 with effect from 01.04.2013 would throw some light on the said issue. A machinery provision has been introduced by way of Section 50D of the Act. Though the said provision has come into effect from 1.4.2013, it certainly throws some light on the mode of computation under Section 48 of the Act. In the circumstances, we are of the considered opinion that the guidance value of the land or the guidance value of the building would be appropriate mode to determine the full value of consideration in the case of a transfer where consideration for the transfer of a capital asset is not attributable or determinable. Hence, guidance value adopted by the Tribunal cannot be faulted with. Having regard to the facts and circumstances of the case, the Tribunal having exercised its discretionary power adopted the guidance value of the land as the mode for determination of full value of consideration, the same being not perverse or arbitrary, we are not inclined to interfere with the impugned order - no substantial question of law arises for our consideration. 2022 (1) TMI 598 Deduction u/s 54F - Withdrawal of Amount Deposited with the Bank of India in terms of Capital Gains Scheme Accounts, 1988 - rejecting the request of issuance of no objection certificate to the petitioner, who has already paid the advance tax which is more than the amount of Capital Gain tax that may be required to pay - HELD THAT:- If a depositor other than the eligible company when desires to close its account an application needs to be made with the approval of the AO having jurisdiction over the depositor to the deposit office. The deposit office shall pay the amount of balance including interest accrued, to the credit in the account of the depositor by means of crediting such amount to any Bank account of the depositor. Here is a case where it is not on account of the depositor having fulfilled the requirement of Section 54 F of the Act is choosing to close the account, but he has instead shown his inability to purchase any residential house and therefore, on payment of tax he has sought to close the account and permit the withdrawal of the remaining amount for the same to be utilised as may be legally permissible. However, for so doing he would be requiring not only the payment of the tax as provided u/s 54 F of the Act in the proviso clearly while reading the said provision and Section 45 of the Act. With no mechanism or modality provided for the withdrawal of the amount which at one point of time had been contemplated for the purchase of the residential premises from the amount of Capital Gains under the said scheme, the request had been made to the respondent for issuance of the No Objection Certificate to which for the apprehension ventilated before this Court, it has chosen not to issue the same. We see no reason for the authority concerned not to allow this. More particularly, on the entire amount the advance tax of ₹ 1.25 crore is already paid. It is given to understand that ordinarily the tax which is being offered from the professional income is over the period of time being regularly paid and at no stage the petitioner has defaulted. The said amount of ₹ 1.25 Crore is not to be adjusted against any possible loss which is quite unlikely and the same has been stated by way of an affidavit. It has been undertaken further that while filing of the return, physical copy shall be also given to the AO having the jurisdiction. With all possible loopholes having been plugged cementing the same with the affidavit tendered before this Court additionally pursuant to the submissions made by the learned senior standing counsel, Ms.Maithili Mehta, the action of the Assistant Commissioner, Income Tax dated 20.10.2021 whereby he denied to issue the No Objection Certificate for the balance withdrawal of the deposit deserves and warrants interference. From the robust facts which have been set out coupled with the circumstances which exist in the instant case and being convinced with the credibility of the petitioner as the assessee of income tax department over the years, the Court is of the opinion that this petition deserves to be permitted. We accordingly allow the present petition and direct the respondent authority concerned that from the part of the amount deposited in the Capital Gain Account Scheme, the amount which remains shall be permitted to be withdrawn. Let No Objection Certificate in respect of Account No.200116810000015 be issued within a period of one week from the date of receipt of a copy of this order.The petitioner, over and above the additional affidavit dated 01.12.2021 tendered before this Court, shall file an undertaking before the concerned Assessing Officer along the same line. 2022 (1) TMI 597 Validity of assessment passed u/s. 143(3) r.w.s. 144A r.w.s. 147- Period of limitation - HELD THAT:- On perusal of sub-section (2) of section 153 of the Act explains that no order of assessment, reassessment or recomputation shall be made u/s. 147 of the Act after the expiry of one year from the end of the financial year in which the notice u/s. 148 of the Act was served. In the present case, we note that the notice u/s. 148 of the Act was served on the assessee on 30- 03-2014 i.e. F.Y. 2013-14, thus, the time limit for reassessment is available with the AO is upto 31-03-2015. The AO passed pre-dated order on 30-03-2015 incorporating the directions dated 31-03-2015 issued by the Addl. CIT, directions of which are subsequent to the assessment order. DR submits that is a mistake the date was mentioned as 30-03- 2015 in place of 31-03-2015 and argued that the date of order may be treated as passed on 31-03-2015 as it is a rectifiable mistake. We are not convinced with the argument. In the ordinary circumstances, it is not possible that the direction of the Addl. CIT u/s. 144A, having been signed by him on 31-03-2015 which the AO on the same date; he dictated the order on same date after considering everything; it got typed on that date; and got signed by the AO also on 31-03-2015. This shows that the order was passed by the AO somewhere in April, 2015 and signed by pre-dating it as 30-03-2015. The order was actually passed after 31-03-2015, it was barred by limitation. We therefore, set aside the assessment order as time barred and the consequential first appellate proceedings. - Decided in favour of assessee. 2022 (1) TMI 596 Revision u/s 263 by CIT - deduction u/s. 80P on interest income - HELD THAT:- Admittedly, the assessee is a Co-operative Society and not a Co-operative Bank. It deposited certain amounts with other Co-operative Societies on which interest income was earned. Deduction u/s.80P was claimed on such interest income, which was allowed by the AO, but questioned by the ld. CIT in the extant proceedings. We are dealing with a case in which the ld. Pr. CIT has invoked his power u/s.263 of the Act. It is trite that the exercise of such a power is ousted in case of a debatable issue. An assessment order can be termed as erroneous and prejudicial to the interest of the Revenue, if the AO has taken a view which is not legally tenable. Per contra , if two views are available on a particular issue and the AO adopts one of such views, the case goes outside the purview of revisional power exercisable by the Pr.CIT u/s.263 of the Act. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to the interest income in the circumstances as are obtaining in this case. We, therefore, set-aside the same. - Appeal of assessee allowed. 2022 (1) TMI 595 Rectification of mistake u/s 154 - Delayed Employees contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] Any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. Decided in favour of assessee. 2022 (1) TMI 594 Exemption u/s 11 - eligible for deemed utilization of the income received as per provisions of section 11(1)(a) on the Gross Income - HELD THAT:- The accumulation of income to the extent of 15% of the income is to be calculated on the gross receipts. We therefore see no reason to interfere in the order passed by the Ld. CIT(A) holding so. The decision referred to by the Ld.DR in the case of Escorts Ltd. [ 1992 (10) TMI 1 - SUPREME COURT] we find has been dealt with by the Ld.CIT(A) pointing out that it pertained to a different issue relating to deduction u/s 35(2)(iv) of the Act. Ld.DR did not controvert this finding of the Ld.CIT(A) before us. Therefore the case law relied upon by the Ld.DR merits no consideration. - Decided against revenue. 2022 (1) TMI 593 Revision u/s 263 by CIT - genuine Capital gain/loss - case was selected for scrutiny under CASS and notice u/s. 143(2) and 142(1) - assessee also claimed deduction u/s. 54EC - HELD THAT:- We noticed from the record that the case of the assessee is selected for scrutiny for limited purpose in order to verify only the transactions relating to long term capital gain and accordingly, Assessing Officer issued notices and questionnaire to collect information from the assessee and from the record we noticed that assessee has submitted all the relevant information relating to long term capital gain and has submitted that same transactions were carried in A.Y.2015-16. Assessing Officer has verified the same and allowed the claim of the assessee. The informations submitted before us clearly indicate that AO has collected all the relevant information and the same Assessing Officer who has assessed the income of the assessee in the A.Y. 2015-16 wherein assessee has sold same shares and made investment and accordingly Assessing Officer has accepted the submissions of the assessee and taken one of the possible view that transactions are in order. Various courts have held that in order to invoke provisions of section 263 of the Act twin conditions has to be fulfilled i.e., not only erroneous but also has to be prejudicial to the interest of the Revenue. In the given case Ld. Pr.CIT has never found/quantified the prejudicial to the interest of the Revenue. In our considered view, he cannot invoke the provisions of section 263(1) when the Assessing Officer has made the enquiry and formed an opinion. The facts on record indicate that the issue involved are similar to the facts in the previous assessment year and also in the case of other family members. Ld. Pr.CIT has not brought nothing on record to show that Assessing Officer actually has passed the order without making any enquiry or verification. As found from the record that Assessing Officer has verified the transactions in the present assessment year as well as in the previous assessment year i.e. A.Y.2015-16. He reached the conclusion based on the verification he carried on in the previous assessment year and case of the other family members. Therefore Pr.CIT cannot invoke provisions of section 263 of the Act as well as Explanation 2 to section 263 of the Act in the present case when the Assessing Officer has made verification and also formed his opinion - Decided in favour of assessee. 2022 (1) TMI 592 Revision u/s 263 by CIT - As per CIT Purchase of commercial property at Andheri vide agreement dated 31st March 2015 registered on 4th April 2015 cannot be added to the block of asset and therefore u/s 50, the sale of office premises at Bandra which forms part of the block would result into capital gain - HELD THAT:- No doubt Assessing Officer verified the additions made in the block of asset and not discussed anything on applicability of section 50 of the Act in the present case. From the records submitted before us clearly indicates that Assessing Officer has carried out verification on the aspect of additions/deletions and allowability of depreciation on the fixed assets scheduled. The issue raised by the Ld. Pr.CIT with regard to applicability of the section 50 considering the fact that Registration date as per document is on 04.04.2015 whereas execution of the agreement is dated 31.03.2015. From the records submitted before us shows that assessee has made substantial payments of sale consideration before 31.03.2015 and executed the agreement as on 31.03.2015. Only the registration was completed on 04.04.2015. We noticed that assessee has already paid substantial payments and the seller by written submission has already confirmed the passing of ownership to the assessee when the substantial payments were made When there is reasonable certainty, and the transferee has performed part performance and taken possession in part performance, has done some Act in furtherance of the contract then the mere registration process in next few days does not alter the legal rights of the parties involved. We observe that assessee added the property in the block of asset and claimed depreciation as well. However, Assessing Officer denied the depreciation considering the fact that assets were not put to use. As relying on M/S. INDOGEM VERSUS ITO-19 (1) (5) , MUMBAI [ 2016 (8) TMI 1095 - ITAT MUMBAI] when the entire sale consideration was paid, the terms of agreement reduced into to writing and purchaser proceeded to take over the building, the rights of both the parties are crystalized as on the date of allotment letter or taking over the possession of the property, for the legal formalities like execution of a proper covenant and issuance of occupation certificate by the authorities. It is only a regular formality, it is a settled principle of law that the transaction relates back to the date original agreement itself, as such, formal execution of the covenant would only evidence and reinforce the rights accrued. As discussed in the above Para that even the Section 53A of the Transfer of Property Act, comes into play and subsequent execution and registration of the property is merely a formality and the rights have already accrued to the assessee. It is presumed that Assessing Officer has considered those aspects on which he has called the information and it is fact on record that he has taken one of the possible views. In our considered view, Assessing Officer has examined the issues of addition to the block of asset as well as deletion / depreciation and taken one of the possible view in accordance with binding provisions and decisions submitted before him. In such case provisions of section 263 cannot be invoked Income received on which no TDS is deducted - applicability of TDS provision on professional fee received by the assessee - In the given case assessee has declared all the professional fee received by it and offered the same to tax. Ld. Pr.CIT has directed the Assessing Officer to verify the receipt from foreign source, which does not come under the provisions of withholding tax. Particularly where assessee has declared all the receipts for taxation and paid the applicable tax on its income. We further noticed that Ld. Pr.CIT has only given a direction to the Assessing Officer to verify the same. Even if the Assessing Officer finds that TDS is applicable, the consequence will be absolutely nothing. Therefore, mere giving direction to the Assessing Officer without quantifying loss to the interest of the revenue the Ld. Pr.CIT cannot invoke provisions of section 263 Genuineness of business promotion expenses - We observe from the record that during the assessment proceedings Assessing Officer has collected all the information relating to business promotion expenses by issuing notice u/s. 142(1) of the Act. Assessee also submitted the detailed submissions in this regard before the Assessing Officer and it is brought to our notice at Page No. 94 of the Paper Book wherein assessee has submitted all the information relating to business promotions incurred by the assessee to the extent of ₹.19,04,585/-. Even in this case Ld. Pr.CIT has directed the Assessing Officer to verify the genuineness of the expenses claimed by the assessee without really quantifying what is the loss to the revenue. Thus CIT has invoked provisions of section 263 of the Act in the present case where he has differed from the view which Assessing Officer has taken which is one of the possible view and further he has directed the Assessing Officer to verify the professional fee received by the assessee and business promotion expenses without really quantifying what is the loss to the revenue, it clearly indicates that he has invoked provisions of section 263 of the Act to redo the assessment or to implement his point of view in the assessment which is already completed. Therefore, we set aside the order passed u/s. 263 of the Act with the above observations. - Decided in favour of assessee. 2022 (1) TMI 591 Addition u/s. 40A(3) - HELD THAT:- On the basis of the aforesaid exceptional circumstance the assessee had pleaded to be exempt from the rigors of section 40A(3) of the Act relying on Rule 6DD(g) of the Income Tax Rules, 1962. The findings of the Ld. CIT(A), upholding the disallowance, are to the effect that the assessee had not substantiated its claim of exemption from the provision of Section 40A as per Rule 6DD(g) of the Act. He has pointed out that neither the name nor address of the sellers of the land was submitted nor it was shown whether the area where the land was located was served with banking facilities or not. The Ld. CIT(A) has also pointed out that the land purchased was stock-in-trade of the assessee and has further relied on a decision of ITAT Indore Bench in the case of Kunjika Construction [ 2013 (4) TMI 783 - ITAT INDORE] which he stated was passed on identical facts. the addition was upheld. In view of the above categorical findings of the Ld. CIT(A) demonstrating ineligibility of the assessee from exemption from the rigors of section 40A(3) of the Act, we see no reason to interfere in the order of the Ld. CIT(A) - In view of the above the order of the Ld. CIT(A) confirming the addition made u/s 40A is upheld Addition on account of preliminary expenses - HELD THAT:- This claim has been disallowed not on account of it being preliminary expenses but on account of the fact that it resulted in loss of equivalent amount of the assessee and since the return was filed belatedly the assessee was debarred in law from carrying forward the said loss. In substance it is the carry forward of loss of ₹ 6,44,785/- which has been denied to the assessee. Since the Ld. CIT(A) has upheld the same applying the statutory provisions of law we see no reason to disagree with the Ld. CIT(A). The order of the Ld. CIT(A) upholding the denial of carry forward of loss of ₹ 6,44,785/- is, therefore, upheld. Ground No. 3 raised by the assessee is dismissed. 2022 (1) TMI 590 Penalty u/s. 271(1)(b) - non-compliance for notice under Section 142(1) - HELD THAT:- We agree with the contention of the Ld. Authorised Representative that the impugned penalty has been wrongly imposed as there was no fault on the part of the assessee for the simple reason that assessee did not get adequate time to respond to the queries raised by the Department. In such a situation, we are unable to uphold the penalty so imposed. We set aside the order of the Ld. First Appellate Authority and direct the Assessing officer to delete the penalty - Decided in favour of assessee. 2022 (1) TMI 589 Penalty order u/s. 271(1)(b) - non-compliance of the notices issued by the A.O. u/s 142(1) - assessee has shifted from Jaipur to Guwahati - HELD THAT:- When the assessee has shifted from Jaipur to Guwahati and this fact is also substantiated by filing the return of income with ITO, Ward 3(3), Guwahati, then the assessee has proved that there was a reasonable cause for the failure and non-compliance of the notice U/s 142(1) of the Act as provided in Section 273B of the Act. Hence, the penalty levied U/s 271(1)(b) of the Act is deleted. Appeal of assessee allowed. 2022 (1) TMI 588 TP adjustment - Adjustment made by the TPO on the value of electricity supplied by the Captive Power Plant (CPP) to its manufacturing units by benchmarking the same with rate at M/s. Torrent Power - case of the assessee is this that as per the provision of Section 80IA (4) the market value in relation to any goods or services are to be taken as the price that such goods or services would ordinarily fetch in the open market or the Arms Length Price as defined u/s 92F of the Act. Further adopting the market rate for sale by CPP to the processing house was already accepted by the Ld. AO in the earlier assessment year - HELD THAT:- We have considered the judgment passed by the Hon'ble Gujarat High Court in the case of Principal Commissioner of Income-tax - Vadodara-1 vs. Gujarat Alkalies Chemicals Ltd. [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] wherein it has been held that deduction under Section 80IA (4) is allowable to the assessee for generation of power for captive consumption and the steam was to be computed considering rate of power on which the electricity buyer supplied power to its consumer. Thus we find that the judgment particularly passed in the matter of Gujarat Fluorochemicals Ltd. [ 2018 (8) TMI 857 - ITAT AHMEDABAD] passed by the Coordinate Bench on the similar issue, the judgment passed by the Hon'ble Jurisdictional High Court in the case of CIT-Vadodara-1 vs. Gujarat Alkalies Chemicals Ltd. (Supra), the Ld. CIT(A) deleted the downward adjustment and subsequent additions made by the TPO/AO holding that in case of Captive Power Plant (CPP) eligible for deduction under Section 80IA the market rate at which the receiving unit is procuring the electricity can be adopted as sale price by the CPP which in our considered opinion is just and proper so as to warrant interference. Thus, the ground of appeal preferred by the Revenue is found to be devoid of any merit and found to be dismissed. Adjustment towards Sale of steam by CPP to Power House - case made out by the assessee is this the claim of the assessee is not the first year of claim made under Section 80IA of the Act rather the assessee is claiming the deduction since A.Y. 2006-07 which was allowed by the First Appellate Authority and in turn confirmed by the Hon'ble Benches - HELD THAT:- Since the issue is identical to that the issue as already discussed hereinabove in assessee's own case for A.Y. 2012-13 2013-14 we find no reason to deviate from the stand taken by the Coordinate Bench in upholding the order passed by the Ld. CIT(A) in deleting the order of upward adjustment - The ground of appeal preferred by the Revenue is found to be devoid of any merit and, thus, dismissed. 2022 (1) TMI 587 Disallowances on related to commission of income not reflected in assessees P L account - disallowance 10% of the expenses - HELD THAT:- As emanating that assessee has submitted that it was an error in accounting. The said receipt was actually entered as adjustment to the purchase, instead of separate credit receipt. It is submitted that there is no effect on the profit reflected. This submission need factual verification. If the submission is found to be correct, the contention can be accepted that there is no effect on profit shown and addition again would result in double taxation. Hence, in the interest of justice, we remit the issue to the file of the AO. The AO shall examine the issue afresh after giving the assessee proper opportunity of being heard. In the result, this appeal by the assessee is allowed for statistical purpose. 2022 (1) TMI 586 Revision u/s 263 by CIT - deduction claimed u/s 54EC - denial of natural justice - no documentary evidence was placed on record by the assessee to establish the genuineness of the fact of claiming deduction u/s 54EC - HELD THAT:- All documents, notices and replies coupled with documents goes to show that the A.O. during the course of assessment had raised queries/enquiries and sought information from the assessee on the issues and the assessee had also replied to the said queries and filed supportive documents. After selecting the case of the assessee for limited scrutiny, the A.O. issued detailed query letter to the assessee and asked to produce the details and evidences for verification and in response thereof, the assessee had furnished all the details vide reply to the AO - on perusal of the assessment order, the A.O. himself has clearly admitted in the said order that the assessee through his representative had submitted electronic response through e-filling portal/ITBA and necessary details on various queries were also submitted by the ld. AR and after examining the said details, the A.O. had categorically mentioned that during the course of assessment proceedings, the assessee had submitted reasonable details and documents related to the limited scrutiny issue which were examined by the A.O. and after considering the submission and supporting details filed by the assessee on the limited issue, the A.O. had accepted the returned income. Although, it is an admitted case by the ld. Pr.CIT that he had called for the record and gone through and examined the assessment records of the preset case which was selected for limited scrutiny through CASS but he was of the view that the AO has not made proper detailed i.e deep inquiry on the issue. The ld. Pr.CIT has not looked into details called for by the A.O. and the replies submitted by the assessee to the A.O. during the assessment proceedings. However, the ld. Pr.CIT has only stated that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Hence the conclusion of the ld. Pr. CIT that the order is prejudicial to the interest of the Revenue is not a matter of subjective satisfaction of the ld. Pr. CIT. He, therefore, ought to have found out this on the basis of objective material after assessing the contention raised by the assessee. He, however, failed to do so and reached a conclusion that the order was prejudicial with a view that the present AO shall undertake that exercise after the assessment has been set aside for his consideration. Thus, according to us, such a view or action is not well founded in the law as has already been held by the various Hon ble High courts. It is mandatory to apply the principles of natural justice irrespective of the fact as to whether there is any statutory provision or not. As per facts of the present case, the assessee was not afforded opportunity much less sufficient opportunity to give the reply to the show cause notice. Therefore it is clear that the ld. Pr. CIT in a hurriedly manner without affording opportunity of hearing to the assessee, had passed impugned order by violating principles of audi alteram partem. Thus, keeping in view the principles laid down by the Coordinate Bench of Cuttak ITAT in the case of Jaidurga Minerals [ 2020 (8) TMI 272 - ITAT CUTTACK] and in the case of Jagnnath Prasad Bhargva [ 1942 (7) TMI 23 - ALLAHABAD HIGH COURT] and in view of the above factual position, the ld. Pr.CIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the order. Accordingly, the revisional proceedings framed u/s 263 stands quashed - Decided in favour of assessee. 2022 (1) TMI 585 Reopening of assessment u/s 147 - estimation of income for bogus purchases - disallowing purchases by sustaining addition to the extent of 5% of unverifiable purchases - HELD THAT:- There is no infirmity in the reasons recorded by the assessing officer, the assessing officer after getting the information from the Investigation Wing, Mumbai has applied his mind and recorded the reasons. Section 147 of the Act authorizes and permits an Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that the said income for any assessment year has escaped assessment. The expression 'escaped assessment' clearly connotes a very basic postulate that the income for a particular assessment year went unnoticed by the Assessing Officer and because of it not being noticed by him for any reason, it escaped assessment. The words 'reason to believe cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes or from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he has reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under section 147, may ultimately stand altered after the hearing and while reaching the conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter. Therefore, we find merit in the submission of the Ld. D.R. that there is no any infirmity in the reasons recorded by the Assessing Officer. In assessee s case, the reassessment proceedings under section 147 of the Act were initiated after four years from the end of the assessment year 2007-08; and the assessee has disclosed fully and truly all material facts during the original assessment proceedings, therefore reassessment proceedings should not be initiated against the assessee. The said argument of the Ld. Counsel cannot be accepted because the case of the assessee firm was not scrutinized in assessment year 2007-08, therefore Assessing Officer did not get opportunity to verify books of accounts, documents and evidences. For assessee year 2008-09, the assessee did not submit books of accounts and other documents. We have gone through the paper book submitted by Ld. Counsel and observed that assessee has submitted only confirmation, ITR and bank statement; however books of accounts were not submitted before Assessing Officer. Moreover, the reasons recorded by the Assessing Officer are in accordance with law. Therefore, assessee cannot take the benefit of first proviso to section 147 of the Act. Hence, we dismiss the grounds raised by the assessee challenging the reopening of assessment under section 147. Bogus purchases - The issue is squarely covered by the judgment of Pankaj K. Choudhary [ 2021 (10) TMI 653 - ITAT SURAT] it is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage As the issue is squarely covered by the decision of the coordinate bench, and there is no change in facts and law and the Ld. Counsel is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench, we dismiss all appeals of the assessee and we allow the appeal of the Revenue to the extent indicated above. - Decided against assessee. 2022 (1) TMI 584 Validity of proceedings u/s 153C - unaccounted capital deployed by the assessee - transactions found on cloud data - name of Mohanji Sukhani in the accounts of N. Trading Company - Whether mere mention of name in the ledger of N. Trading Company is not sufficient to prove that it is appellant s name and therefore, the ld. CIT(A) held that the assessee succeeds in first legal ground that initiation of proceedings U/s 153C are void ab-initio and the transaction in the cloud data in the name of Mohanji Sukhani cannot be attributed to the appellant? - HELD THAT:- As decided in Shri Jugal Kishore Garg [ 2021 (5) TMI 814 - ITAT JAIPUR] has recorded a categorical finding that M/s Manglam Builder Developer Ltd had owned up all the N Trading Company data found in cloud as belonging to them. On the basis of the same, it filed settlement petition before Settlement Commission on 28.03.2018 and the `peak deposit' of unaccounted Capital introduced, loans and advances and interest paid and received was considered for computing its income and income of ₹ 15.10 cr. was offered on the basis of cloud data of N. Trading Company which was finally accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where the amounts have been subjected to tax in the hands of MBDL and related entities, there is no infirmity in action of the ld CIT(A) in deleting the same in the hands of the assessee and appeals of the Revenue for all the three years were dismissed. In the instant case as well, we find 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 crown square project of the Manglam Group - as recorded by the Coordinate Benches in the aforesaid decision, 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 `peak deposit' of unaccounted Capital introduced, loans and advances and interest paid and received was considered for computing its income and income of ₹ 15.10 cr. was offered on the basis of cloud data of N. Trading Company which was finally accepted by the Settlement Commission in its order dated 16.05.2019 and accordingly, where the amounts have been subjected to tax in the hands of MBDL and related entities, the AO was directed to delete the additions in the hands of the assessee. 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 - we see no justifiable reason to deviate and take a different view in the matter and following the same, 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 583 Deduction of bad debts claimed u/s 36(1)(vii) - AO noticed that the above said amount was included in Provisions and Contingencies account debited to the Profit and Loss account - adjustment of bad debts against provision allowed u/s 36(1)(viia) - AO noticed that the above said amount was included in Provisions and Contingencies account debited to the Profit and Loss account - HELD THAT:- We hold that the view expressed by Ld CIT(A) is not legally correct. Accordingly, we set aside the order passed by Ld CIT(A) with regard to his alternative decision, i.e., the view that the proviso to sec. 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also. Accordingly, we direct the AO to delete the disallowance. Disallowance of payments made to VISA International u/s 40(a)(ia) - HELD THAT:- We confirm the deletion of payments made to NPCI and Cash tree Network. We also set aside the order passed by Ld CIT(A) in respect of VISA charges and direct the AO to delete the disallowance of the same. MAT computation - Addition made to the book profit computed u/s 115JB on disallowance computed u/s 14A in respect of exempt income - HELD THAT:- This issue is covered by the decision rendered by jurisdictional Hon ble High Court of Karnataka in the case of Shobha Developers Ltd vs. DCIT [ 2021 (1) TMI 378 - KARNATAKA HIGH COURT ] wherein it was held that the disallowance made u/s 14A is a notional disallowance and hence the same cannot be adopted for the purpose of clause (f) of Explanation 1 to sec.115JB of Act. Accordingly we restore this issue to the file of AO for computing disallowance for the purpose of clause (f) from the profit and loss account. Deduction of education cess and Secondary Higher education cess paid during the year as deduction - HELD THAT:- The assessee has raised this claim by way of additional ground. The Ld A.R submitted that the claim of the assessee is allowable as per the decision rendered by Hon ble Rajasthan High Court in the case of Chambal Fertilisers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] - A.R also submitted that the Hon ble Bombay High Court has expressed the view in the case of Sesa Goa Ltd [ 2016 (2) TMI 308 - BOMBAY HIGH COURT] that the education cess, secondary and higher education cess is allowable as deduction.Accordingly, following the above said decision, we restore this issue to the file of AO to examine the claim of the assessee in accordance with the decision rendered in the cases cited supra. Disallowance of claim made u/s 36(1)(viia) - HELD THAT:- What has to be seen by the AO is as to whether PBDD is created (irrespective of whether it is in respect of rural or non-rural advances by debiting the Profit Loss a/c. To the extent PBDD is created, the assessee is entitled to deduction subject to upper limit of deduction laid down in Sec.36(1)(viia) of the Act - As relying on case of Corporation Bank [ 2015 (3) TMI 1360 - ITAT BANGALORE] CIT(A) held that the assessee is entitled for deduction u/s 36(1)(viia) of the Act and accordingly directed the AO to allow deduction as per the decision of ITAT. 2022 (1) TMI 582 TDS u/s 194A - assessee had paid interest to Tata Capital Ltd., which was an NBFC, without deduction of tax at source - Demand u/s 201(1) - HELD THAT:- It is indeed the mandate of the provisions of the first proviso to section 201(1) of the Act, that in case a certificate as above is furnished, the person is not to be considered to be an assessee in default. In such case, no disallowance u/s 40(a)(ia) can be attracted, in terms of the second proviso to section 40(a)(i)(ia). Accordingly, we remit this matter to the file of the AO, to examine and verify the above certificate. If the same is found to be in order, the AO shall delete the disallowance. Treatment of interest expense as revenue expenditure - CIT(A) confirmed the disallowance, observing that even during the appellate proceedings before her, no details regarding Capital Work In Progress and interest paid on account of cash credit/buyer credit had been filed by the assessee - HELD THAT:- Assessee has stated that details regarding the Capital Work In Progress were filed before the Ld. CIT(A). Our attention has been drawn to APB 6, i.e. the details of Capital Work In Progress. Here also, the details of Capital Work In Progress required verification at the hands of the AO. For this purpose, this issue is also remitted to the AO. If the details are found to be in order, the AO shall delete the disallowance accordingly. 2022 (1) TMI 581 Exemption u/s 11 and 12A - addition on account of the corpus donation - CIT-A deleted the addition - HELD THAT:- It is clear that Ld.CIT(A) has passed a detailed and a well reasoned order. AO did not point out any specific defects in the account of the assessee. Merely because the accounts were audited post grant of registration u/s 12AA of the Act under the peculiarity of the present case, would not ipso facts vitiate the authenticity of the accounts so furnished before the AO. Moreover, the AO failed to make enquiry regarding accounts of the assessee. Under these undisputed facts, we do not see any reason to interfere in the finding of Ld.CIT(A), the same is hereby affirmed. Thus, grounds raised by the Revenue are rejected. 2022 (1) TMI 580 Revision u/s 154 - AO allowed the deduction under section 80IC on the eligible profit of the industrial undertaking - AO invoked the provisions of section 154 and reduced the deduction under section 80IC by observing that the assessee did not charge interest on the opening balance of the capital contributed by the partners - HELD THAT:- As in the preceding as well as succeeding years no such action was taken by the A.O. and the claim of the assessee was accepted for deduction under section 80IC of the Act, as such this issue pertaining to the charging of interest on the credit balances of the capital of the partners was highly debatable, therefore, the rectification made by the A.O. under section 154 of the Act was not justified and the Ld. CIT(A) wrongly upheld the action of the A.O. On merit also the A.O. accepted the profit of the assessee eligible for deduction under section 80IC of the Act. He himself computed the profit at ₹ 15,21,957/- which was allowable as deduction under section 80IC of the Act. Therefore in the present case the whole of the profit worked out by the A.O. at ₹ 15,21,957/- was to be allowed as deduction under section 80IC of the Act and no addition was called for. As regards to the case law relied by the Ld. CIT(A) in the case of Plastiblends India Ltd.[ 2017 (10) TMI 423 - SUPREME COURT] is concerned, it was distinguishable on facts. Since in the said case the assessee manipulated the profit by not charging the depreciation under section 32 of the Act and carry forwarded the said depreciation to be adjusted in the subsequent years. However in the present case the interest on the capital of the partners, if any, was not allowed to be carry forward in the subsequent years, if not charged in the year under consideration. Therefore the said case law relied by the Ld. CIT(A) was on different fact. A.O. wrongly treated the income as taxable in the hands of the assessee and the Ld. CIT(A) was not justified in upholding the action of the A.O. Appeal of the assessee is allowed. 2022 (1) TMI 579 Exemption u/s 11 - rejection of application seeking registration u/s 12AA as well as u/s 80G - appellant is a company incorporated under the provisions of section 25 of the Companies Act, 1956 - main object of the appellant company is to promote commerce, art, culture, social development, social upliftment by way of bringing the tourism industry and craft based retailers together by organizing various type of festivals, workshops, events, dustkar programmes, design mart shows for rural craftspeople and to facilitate improved access to the folk arts and music of the region - what would be the situation where the trust/society is in existence for quite some time prior to seeking registration and is not a newly registered trust/society and at the same time, has claimed to have not undertaken any activities in pursuance of its objects in the past? - HELD THAT:- We are of the view that ratio decidendi of the aforesaid decision of the M/S. ANANDA SOCIAL AND EDUCATIONAL TRUST VERSUS THE COMMISSIONER OF INCOME TAX ANOTHER [ 2020 (2) TMI 1293 - SUPREME COURT] can be applied equally in the instant case where though the assessee company has been in existence for quite some time and is clearly not a newly registered company but at the same time, since no activities are carried on by it since its inception as so claimed by it, it can still apply for registration. However, in this case, where the assessee company is in existence for more than a decade, the ld CIT(E) is well within his jurisdiction to examine such claim of no-activity by the assessee company and where it is found that some activities were actually been carried on by the assessee company, he is bound to record his satisfaction as to whether the activities so carried on are genuine and in accordance with its stated objectives or not. Secondly, the ld CIT(E) is well within his jurisdiction u/s 12AA(1)(a)(ii) to examine whether the assessee company is compliant under the extant laws as applicable and whether there are any changes in the memorandum and articles of association, the objects clause and constitution etc. since its incorporation and at the time of seeking registration. And thirdly, what are the proposed activities of the assessee company and whether they are genuine in the sense that they are in line with the objects of the assessee company or not again needs to be examined and a finding has to be recorded by the ld CIT(E) before he actually accepts or reject the application seeking registration u/s 12AA of the Act. We therefore set-aside the matter to the file of the CIT(E) to examine the matter afresh in light of aforesaid discussions after providing reasonable opportunity to the assessee company. Application seeking registration u/s 80G on account of the fact that it has been denied registration u/s 12AA of the Act. Since we have set-aside the matter pertaining to registration u/s 12AA to the file of the ld CIT(E), this matter is also set-aside to the file of the ld CIT(E) to be decided afresh after providing reasonable opportunity to the assessee company. Appeals of the assessee are allowed for statistical purposes. Customs 2022 (1) TMI 578 Valuation of imported goods - Rejection of transaction value - enhancement of transaction value of imported goods by 20% instead of 77% for the years 2013-14 to 2016-17 - re-determination of adjustment, in the transaction value on the basis of deductive value and computed value of the goods imported by the respondent-dealer - HELD THAT:- The contentions remain untenable because the Tribunal has dealt with the matter in meticulous details and has pointed out substantial basis for its findings that the transaction value shown by the respondent and that of the ASD cannot be treated as comparable at commercial level and quantitative level; and has also pointed out that the promotion activity was undertaken only by the respondent for which, it was earning higher discount. The Tribunal has also found that the difference gradually decreased from the year 2014-15 and came at par in the year 2017-18. It is apparent that there had been want of application of mind on the part of the Deputy Commissioner to the material circumstances and the relevant factors; and the Tribunal has disapproved his order on relevant considerations and after examining the entire record. Moreover, when the matter essentially proceeds in its own facts and the view taken by the Tribunal does not appear to be an impermissible one, there are no reason to consider interference in appeal. Appeal dismissed. 2022 (1) TMI 577 Cancellation of bail granted - Smuggling of Wrist Watches - burden to prove under Section 123 of the Customs Act, 1962 - offences under sections 132 and 135 of Customs Act, 1962 - HELD THAT:- It is settled that once bail granted should not be cancelled in a mechanical manner without there being any supervening circumstances which are not conducive to fair trial. It cannot be cancelled on a request from the side of the complainant/investigating agency unless and until it is established that the same is being misused and it is no longer conducive in the interest of justice to allow the accused any further to remain on bail. No doubt, the bail can be cancelled only in those discerning few cases where it is established that a person to whom the concession of bail has been granted is misusing the same. In the instant case, there are no allegations of any tampering with the evidences. There are also no allegations that the respondents are at flight risk or there is any likelihood of absconding. The petitioner department has not been able to make out a case of supervening circumstances on the basis of which the bail granted to the respondents should be cancelled and nothing has been brought on record to show that the respondents have towering personalities that their mere presence out on bail would in any manner thwart the further investigation (if any) of the case or that they are in any manner threat to the fair trial of this case. Nothing has been brought on record that the respondents in any manner have violated the terms and condition of the order granting them bail. Petitioner department also failed to answer that what purpose would be served if the bail is cancelled and what further enquiry is to be done after cancellation of bail by taking them into custody - there are no reason for cancellation of Bail - petition dismissed - decided against Revenue. 2022 (1) TMI 576 Smuggling - illegal export through Saurashtra coastal area - silver - scooter - car - HELD THAT:- Adjudication proceedings undertaken for attempted export has ended in favour of the applicant and silver is ordered to be returned back to the applicant by the appellate authority against the order of adjudicating authority - These proceedings remained pending for about 31 years from the date of filing of the aforesaid revision application as also for nearly about 38 years from the date of commission of an offence. Much water might have flown thereafter and the applicant might have settled in his life, no useful purpose would be served asking him to undergo further sentence of nearly 19 months, if at all, he has to undergo the same - Though adjudication proceedings were initiated for an attempted export which was not believed because goods were not found within the specified area for the purpose of export. The sentence imposed by the trial Court and confirmed by the Appellate Court is modified to the period already undergone, as aforesaid, enhancing the fine of ₹ 5,000/- to that of ₹ 5,00,000/- to be paid by the applicant within a period of 12 weeks from today - the present revision application is allowed. 2022 (1) TMI 575 Classification of imported goods - plastic bubble toy or plastic toy - Request for waiver of demurrage/storage/warehouse charges - HELD THAT:- The Bill of Entry is pending assessment since 19.10.2021. Whether the imported goods are parts of plastic bubble toy or plastic toy, is to be determined by the Assessing Officer. In fact, the nature of product which has been described in the Bill of Entry does not require a certificate of the Chartered Engineer. However, a sample was referred by the second respondent to a Chartered Engineer who has given a report on 02.12.2021. Thus, adequate materials are available before the first respondent (Assessing Officer) to decide the correct classifications and whether the imported goods are restricted/prohibited - Considering the fact that, the impugned Bill of Entry has not assessed for a very long period, the respondents are directed to assess the goods within a period of 15 days from the date of receipt of copy of this order. This writ petition stands disposed of. 2022 (1) TMI 574 Seeking refund of deposit - the amount is deposit or duty? - provisional assessment as a security to the bond executed by the appellant - time limitation - unjust enrichment - Section 27 of Customs Act, 1962 - HELD THAT:- Under the Head of Account it is a customs duty which was paid under account heading No.0037 and also in the description coloumn it is clearly mentioned that the deposit of amount is equal to 20% of provisional duty therefore, the amount of ₹ 16,39,458/- has been paid as customs duty only therefore it is not a deposit as has been claimed by the appellant but it is a custom duty. Since in view of the documentary evidence, it is established that the amount for which refund was sought for by the appellant is not a deposit but it is a duty. Therefore, the refund is clearly governed by Section 27 of the Customs Act, 1962 therefore, all the provision of limitation and unjust enrichment, etc is clearly applicable. Appeal is dismissed. Corporate Laws 2022 (1) TMI 573 Winding up of the respondent-Company - failure to pay the debt of the petitioner under sections 433, 434 and 439 of the Companies Act, 1956 - Transfer of winding up petitions from the Company Court to be tried by the NCLT - HELD THAT:- It appears that after the order of admission and advertisement of the petition, no further orders are passed by the Court with regard to order of winding up of the company nor the Court has appointed the provisional Liquidator. In view of the following observations of the Apex Court in case of ACTION ISPAT AND POWER PVT. LTD. VERSUS SHYAM METALICS AND ENERGY LTD. [ 2020 (12) TMI 535 - SUPREME COURT ], this petition is required to be transferred to the NCLT, Ahmedabad. The Company Petition No. 102 of 2006 is accordingly transferred to the National Company Law Tribunal, Ahmedabad Bench. Registry to forward the papers to the Tribunal within a period of Eight weeks from today along with order - Application allowed. 2022 (1) TMI 572 Revival of petition - wilful breach - settlement of disputes between the parties - HELD THAT:- It is seen from the records that the present Application for revival of the main Company Petition was filed before this Tribunal on 10.07.2018 and from thereon the Corporate Debtor has sought numerous adjournments by paying a paltry sum towards the dues of the Operational Creditor in each and every hearing. Further, it is seen from the Order of this Tribunal dated 17.09.2020, a last opportunity was given to the Corporate Debtor to pay a sum of 17.5 million Japanese Yen to the Operational Creditor within a period of four weeks thereof. However, it is seen that the Corporate Debtor was also not able to adhere to the said timeline even after expiry of a period of one year. All these facts would go on to show that the Corporate Debtor has violated the terms of the Settlement Agreement as entered into between the parties dated 25.07.2017. In the circumstances, this Tribunal deem it fit to restore the main Company Petition viz. TCP/141/2017 on the file of this Tribunal. Accordingly, TCP/141/2017 stands revived and being listed for hearing on 08.02.2022. Let the same be listed along with TCP/141/2017 on 08.02.2022. Insolvency & Bankruptcy 2022 (1) TMI 571 Preferential transaction - Maintainability of the Avoidance Application - Corporate Debtor constitute preferential transaction as per Section 43 of the I B Code or not - no contention can be raised that the shares are an asset of the Corporate Debtor and that they were taken over by the Resolution Plan - HELD THAT:- This Tribunal opines that there shall be no interim order and that the contentious factual and legal issues/controversies (centring around the Appeals), require a detailed final hearing, of course, after providing due opportunities to all the parties (including unserved Respondents) to complete the pleadings, in the instant Appeals, like filing of Replies, Rejoinders , etc. Let notice be issued to Respondent No.4 to 11 in Comp Appeal (AT)((CH)(Ins) No.1/2022 and Respondent No.3 to 9 in Company Appeal (AT)(CH)(Ins) No.9/2022 through speed post returnable on 29.2.2022. Requisites alongwith process fee be paid within three days from today. If the Appellant provides the Emails ID of the Respondents, let notice be issued through Email also. The Office of the Registry is directed to List the matter on 28.02.2022. 2022 (1) TMI 570 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:- Since the Corporate Debtor has not responded to the said notice and has not given any proof of existence of any dispute or payment made to the Operational Creditor within 10 days, the Corporate Debtor has lost the golden opportunity provided to the Corporate Debtor under the Code. The Corporate Debtor, however, filed reply to the petition and in the reply also all the vague grounds and averments have been mentioned in its defence. None of the grounds mentioned in the application or submitted by the Ld. Counsel appearing for the Corporate Debtor satisfies to grant any relief to the Corporate Debtor. Corporate Debtor has failed to make the payment of the outstanding dues to the Operational Creditor. On the other side, the Operational Creditor has filed all the requisite documents, which prompt our conscience to admit the petition. This is a fit case for admission of the present petition and initiation of CIRP against the Corporate Debtor - application admitted - moratorium declared. 2022 (1) TMI 569 Seeking liquidation of the Corporate Debtor - CIRP period has expired and no resolution plan was received by the Committee of Creditors - HELD THAT:- Section 33(1) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process the Adjudicating Authority does not receive a resolution plan under sub-section (6) of section 30. The Corporate Debtor is allowed to be liquidated - application allowed. 2022 (1) TMI 568 Liquidation of the Corporate Debtor - non-receipt of resolution plan - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It would appear that despite all possible steps as required under the Code taken during the CIRP. The CoC in its wisdom has resolved in favour of the liquidation of the Company. This Authority has no reason before it to take a contrary view in terms of Section 33(2) of the Code. Therefore, there are no option than to pass an order of liquidation of the Company in the manner laid down in Chapter-Ill of the Code. The Corporate Debtor i.e., M/s. Tejaswini Engineering Private limited shall be liquidated in the manner laid down in Chapter-Ill of the Code - Application allowed. 2022 (1) TMI 567 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:- In the instant case there is no dispute that the Corporate Debtor had initially made part-payment of ₹ 6,79,680/- towards the goods purchased. The Corporate Debtor could not pay the remainder amount of ₹ 24,42,203/-. However, the said outstanding amount of ₹ 24,42,203/- has been paid by the Corporate Debtor, the details of which were furnished by the Corporate Debtor in its Memo dated 08.11.2021. Such payment has been confirmed by the Operational Creditor. The Corporate Debtor could not substantiate its claim of interest with any documentary proof, it is satidfying that before admission of an application under Section 9 of the I B Code, 2016, the Corporate Debtor paid the total debt - application dismissed. 2022 (1) TMI 566 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:- A pre-existing dispute regarding the material supplied by the operational creditor has been in existence, even before the reply to the demand notice has been issued remain unsubstantiated. Further we also observed from the record before us that even though the representatives of operational creditor and the corporate debtor have participated with Sintex in the triparty meeting the record does not show any dispute being raised by corporate debtor in any of the meetings. In fact for the first time a dispute has been raised in reply to the demand notice. Hence we find no force at all in the plea of the corporate debtor that there was a pre-existing dispute. The corporate debtor has categorically acknowledged the outstanding debt on two separate occasion's i.e. on 27.04.2019 and on 25.11.2019. This admitted debt remain undischarged despite notice of demand. There exists an operational debt and the same despite being acknowledged by the corporate debtor on various occasions and failed in discharging the same that there is no pre-existing dispute - Application admitted - moratorium declared. 2022 (1) TMI 565 Initiation of CIRP Proceedings against the Personal Guarantor - Personal Guarantor has defaulted in payment of the dues within the statutory period of 14 days from the service of the demand notice - application has been filed through the Resolution Professional - HELD THAT:- It is clear that from the date of filing of this application i.e., 23.09.2021 by the Applicant, Interim Moratorium commences as stipulated under Section 96(1) of the Code in relation to all the debts of the Personal Guarantor. During the Interim Moratorium period: (i) any pending legal action or proceedings in respect of any debt shall be deemed to have been stayed; and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. As per Section 96(3) of the Code, the provisions of sub-section 96(1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. The Applicant is directed to serve the copy of this order along with copy of the Application and documents immediately on the Resolution Professional and the Insolvency and Bankruptcy Board of India and file proof of service including dispatch and delivery thereof. Also, a copy of this Order and Application shall be served on the Personal Guarantor for limited purpose of presence on the next date of hearing and to be informed about the commencement of moratorium. The Personal Guarantor is directed to cooperate with the Resolution Professional appointed hereunder and provide all relevant information to the concerned Resolution Professional. The Resolution Professional is directed to exercise all the powers as enumerated under Section 99 of the Code read with Rules made thereunder - List the matter for further proceedings in this case on 31.01.2022. Service Tax 2022 (1) TMI 564 Recovery of service tax - supply of tangible goods for use [STGU] service or not - supply of diesel generators to customers on hire basis - period 01.04.2011 to 30.06.2012 - declared service involving transfer of goods by way of hiring, leasing, licensing, or in any such manner without transfer of right to use such goods under section 66E(f) of the Finance Act for the period 01.07.2012 to 31.03.2015 - whether the transaction between the Appellant and its customers would involve the transfer of right of possession and effective control or a transfer of right to use? - extended period of limitation - HELD THAT:- It can safely be said that under Sales Tax, there is transfer of possession and effective control in goods, while there is no such transfer of possession and effective control under service tax - the transaction between the Appellant and the customers would qualify as a transfer of right to use goods with the control and possession over the diesel generator sets passing on to the customers. The transportation and installation of diesel generator sets at the site of the customers cannot lead to a conclusion that the Appellant was rendering STGU service. The Agreement itself provides that the Appellant would be responsible for providing diesel generator sets to the customers. It was, therefore, imperative for the Appellant to ensure that the diesel generator sets were transported and installed at the site of the customer - Though, the Appellant may be providing operators to the customer, but these operators were working entirely under the direction and control of the customers and the Appellant had no control over them. Thus, so long as the effective control over the diesel generator sets remained with the customers, the mere providing of operators who were also under the direction and control of the customers, would not mean that the transaction was not that of sale. It is more than apparent that the supply of diesel generator sets to the customers would not amount to STGU service for the period from 01.04.2011 to 30.06.2012, or a declared service from 01.07.2012 to 2014-15. The orders passed by the Commissioner (Appeals), therefore, cannot be sustained. Extended period of limitation - HELD THAT:- It would not be necessary to examine the contention raised by the Appellant that the extended period of limitation could not have been invoked. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 563 Condonation of delay of 210 days in filing the appeal before the learned Commissioner(Appeals) - time limitation as per sub-section (3) of Section 85 of the Finance Act, 1994 - HELD THAT:- On a conjoint reading of sub-section (3) of Section 85 and the proviso appended thereto, it transpires that beyond the period of 6 months, the Commissioner(Appeals) is not empowered under the statute to condone the delay in filing the appeal. Admittedly, in this case, since there was delay of 210 days in filing the appeal before the learned Commissioner(Appeals), in our considered opinion, he has correctly rejected the appeal on the ground of limitation. Since the Tribunal is created and governed under the statute, the time limit prescribed in the statute cannot also be relaxed by it. Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] has held that time limit prescribed in the statute should strictly be adhered to and the authorities created under it are not competent to interpret the provisions in a different manner. The appeal filed by the appellant is dismissed on the ground of limitation. Central Excise 2022 (1) TMI 562 Clandestine removal - M.S. Ingot - Confiscation of excess found stock - quantum of redemption fine and penalty - HELD THAT:- The excess stock found during the physical stock taking for which a panchnama was drawn in the presence of authorised signatory Shri D K Shrivastava. No objection was raised at the time of drawing the panchnama by Shri D K Shrivastava however, in the panchnama he submitted that the excess stock accumulated over a period of time therefore, in my view, there is no dispute about the excess stock found. However, no mala fide intention can be attributed to the appellant such has any attempt to clear the goods clandestinely but in terms of Rule 10 of Central Excise Rules, 2002 it is the bounden duty of the assessee to record stock of finished goods. In the present case, it is admitted fact that the excess stock was not accounted for by the appellant therefore, the goods are liable for confiscation. However, since there is no attempt to clear the goods clandestinely and the offence at the most is only of non accounting of finished goods, I am of the view that the lenient view can be taken. The redemption fine of ₹ 2 Lacs is reduced to ₹ 1 Lacs. However, the penalty imposed on the appellant factory i.e. ₹ 10,000/- is reasonable hence the same is upheld - appeal allowed in part. CST, VAT & Sales Tax 2022 (1) TMI 561 Levy of Assam VAT - Nature of activity - sale or service or both - denting and painting job on a vehicle - levy of VAT on paints by treating the nature of works as works contract - transfer of property in paints during the restoration and reconditioning work or not - HELD THAT:- If a new vehicle is considered, a vehicle is made of thousands of components, each having its unique character. Nonetheless, though a vehicle is a composition of numerous unique components, it is impermissible for the taxing authority to tax individual item of the vehicle. Similarly, in the composite work of denting and painting contract, the combination would be a composite contract of labour and service and as in the present case, the petitioner is liable for and is paying service tax as imposed on the work of denting and painting, being a service provided by a authorised service station which is covered by the provisions of Section 65(9) of the Finance Tax Act, 1994 (as amended). Therefore, it would not be permissible for the State Taxing Authority to impose VAT on paint separately. There is no dispute that an item taxable by the State under Article 366(29-A) is exempted from being levied with Service Tax and vice-versa. The petitioner, has referred to the provisions of Section 65(9) and Section 65(105)(zo) of the Finance Act, 1994, as amended, and it is submitted that service, repair, reconditioning or restoration of motor vehicle is treated as a taxable service under Finance Act, 1994 (as amended). The learned counsel for the petitioner has also referred to the Circular No. 699/15/2003-CX dated 05.03.2003 (Annexrure-9 of the writ petition), wherein it has been clarified that items such as paints used in painting body, etc., during the course of providing service form intrinsic part and parcel of service in so much as that these are not distinctly and separately identifiable from the services rendered and therefore value of such items, which form intrinsic part of service is included in the value of taxable service. The Court is of the considered opinion that the petitioner has been able to repel the opinion expressed in the impugned orders, thereby holding the use and/or application of paint in a vehicle workshop as a sale of paint and thus, taxable under the Assam Value Added Tax Act, 2003 - Application allowed. 2022 (1) TMI 560 Validity of assessment order - input tax credit - failure to disclose the turnover in the return on the part of supplier - opportunity of personal hearing - case remitted back to the Assessing Officer to re-do the assessment once again after giving an opportunity of hearing to the petitioner - HELD THAT:- It is noticed that Principal Secretary / Commissioner of Commercial Taxes has now issued the Circular No.5/2021, dated 24.02.2021. Ultimately, the purpose of remanding the case back to the respondent was to pass appropriate orders after ascertaining whether the petitioner was indeed entitled to Input Tax Credit or whether the respondent was justified in demanding the tax. There cannot be any embargo on the respondent from passing orders even though the time specified had lapsed and merely because the respondent either failed to approach the Court order by explaining the delay. Be that as it may, the case of the petitioner has to be considered on merits. If the petitioner had availed input tax credit validly based on the invoice issued by the supplier, question of demanding tax from the petitioner will not arise if other conditions stipulated under the Rules were complied by the petitioner. Merely because the supplier failed to disclose the turnover in the return would not mean the input tax credit would be required to be recovered from the respondent. There are no merits in these Writ Petitions. However, since the Principal Secretary / Commissioner of Commercial Taxes has now issued the Circular No.5/2021, dated 24.02.2021 to specifically deal with the situation, the case has to be examined in the light of the said Circular. - The respondent is directed to pass a speaking order on merits within a period of the four weeks from the date of receipt of a copy of this order - Petition disposed off. 2022 (1) TMI 559 Revision of assessment order - tax on inter-state sales transactions - denial of benefit of concession under Section 3 of the Central Sales Tax Act, 1956 - C Forms were lost - petitioner had filed the xerox/photo copies of C-forms - Section 84 of the TNVAT Act, 2006 - HELD THAT:- As far as the production of C Forms is concerned, Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 makes it very clear that it is for the petitioner to approach the selling dealer and obtain appropriate Forms from the Sales Tax Department from the other states. It is not open for the petitioner to shift the burden on the Assessing Officer to verify from the data from the website of the Sales Tax Department from the supplier's end. To that extent, there is no merits in the present writ petition. The petitioner is bound to obtain certificates in a manner prescribed under the aforesaid Rules. As far as rate of tax whether the goods are liable to tax at 12.5% or 4% in terms of the Sl.No.1, Part B of the 1st Schedule of the TNVAT Act, 2006 would require a re-consideration by the respondent as there is no discussion on the same in the impugned order. To that extent, the impugned order is set aside and the case remitted back to the respondents to pass appropriate orders on merits and in accordance with law by considering the representation of the petitioner. This writ petition stands partly allowed. Indian Laws 2022 (1) TMI 558 Arbitration award - Validity of appointment of sole arbitrator - Termination of contract - Jurisdiction of High Court while deciding the appeal under Section 37 of the Arbitration Act - HELD THAT:- As per settled position of law laid down by this Court in a catena of decisions, an award can be set aside only if the award is against the public policy of India. The award can be set aside under Sections 34/37 of the Arbitration Act, if the award is found to be contrary to, (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. None of the aforesaid exceptions shall be applicable to the facts of the case on hand. The High Court has entered into the merits of the claim and has decided the appeal under Section 37 of the Arbitration Act as if the High Court was deciding the appeal against the judgment and decree passed by the learned trial Court. The High Court has exercised the jurisdiction not vested in it under Section 37 of the Arbitration Act. The impugned judgment and order passed by the High Court is hence not sustainable. The impugned judgment and order passed by the High Court is hereby quashed and set aside - Appeal allowed. 2022 (1) TMI 557 Dishonor of Cheque - discharge of legal enforcement debt or not - rebuttal of presumption - section 138 of NI Act - HELD THAT:- This Court sees no reason to interfere with the well reasoned judgments passed by the courts below, which otherwise appear to be based upon the correct appreciation of evidence and as such, same need to be upheld. Moreover, this Court has a very limited jurisdiction under Section 397 of the Cr.PC, to re-appreciate the evidence, especially, in view of the concurrent findings of fact and law recorded by the courts below. In the present case, this Court is unable to find any error of law as well as fact, if any, committed by the courts below while passing impugned judgments, and as such, there is no occasion, whatsoever, to exercise the revisional power - Having scanned entire evidence available on record, this court is convinced and satisfied that complainant has successfully proved by leading cogent and convincing evidence that the accused issued cheque in question in discharge of his lawful liability, but the same came to be dishonored. Since despite issuance of legal notice, accused failed to make good the payment, learned court below, in the totality of evidence led on record by the complainant, rightly held accused guilty of having committed offence punishable under S.138 of act and as such, no interference in the impugned judgment/order of conviction and sentence is called for. The present revision petition is dismissed being devoid of any merit. 2022 (1) TMI 556 Dishonor of Cheque - discharge of lawful liability - rebuttal of presumption - Section 138 of NI Act - HELD THAT:- This Court sees no reason to interfere with the well reasoned judgments passed by the courts below, which otherwise appear to be based upon the correct appreciation of evidence and as such, same need to be upheld. Moreover, this Court has a very limited jurisdiction under Section 397 of the Cr.PC, to re-appreciate the evidence, especially, in view of the concurrent findings of fact and law recorded by the courts below. Since after having carefully examined the evidence in the present case, this Court is unable to find any error of law as well as fact, if any, committed by the courts below while passing impugned judgments, and as such, there is no occasion, whatsoever, to exercise the revisional power. This Court finds no illegality and infirmity in the impugned judgment of conviction and order of sentence passed by learned trial Court and further upheld by learned Appellate Court and as such, same are upheld - Petition dismissed.
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