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TMI Tax Updates - e-Newsletter January 21, 2022 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Exemption form GST - Rent for locker provided in bus stand - (Rent for locker provided in bus stand by the appellant) it is held to be an activity undertaken by the Municipality as a function entrusted under 243 W of the Constitution and the service of rent or fee collection for such a facility is neither a Supply of Goods nor a supply of Service as per Notification No. 14/2017-CT (Rate) - AAAR Visit to Get Source Income Tax: Short term capital gain - capital gain arose from transfer of land to the partnership firm by way of capital contribution as the assets was converted to Fixed Capital Asset by the partnership firm - Section 45(3) seeks to determine the capital gains with reference to the value of the asset recorded in the books of account of the firm. The value so recorded is statutorily deemed to be the full value of consideration received or accruing to the partner as a result of the transfer of the capital asset to the firm. Thus, Section 45(3) does not seek to substitute by any other figure the value agreed between the partners at which the asset is transferred by a partner to the firm. - As held that there was no withdrawal by the partners from capital accounts and therefore there cannot be any income liable to tax in their hands. - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - The notice under Section 148 has been issued purely by way of change of opinion relying on the same set of primary facts which had been submitted by petitioner during the original assessment proceedings. In our view, the usage of expression in the reasons “there has been escapement of income by reason of failure on the part of the assessee to disclose fully and truly all material facts” is clearly made as an attempt to take the case out of the restrictions imposed by proviso to Section 147 of the Act. - HC Visit to Get Source Income Tax: Disallowance u/s 14A r.w.r. 8D in rectification proceedings u/s 154 - Mandation of recording satisfaction - Recording of satisfaction by the Assessing Officer under Rule 8D(2) of the Rules is mandatory. In the light of these provisions, the Assessing Officer invoking Section 154(2) to rectify the assessment order is wholly untenable for the reason that there is no mistake apparent on the face of the record to invoke the proceedings under Section 154 of the Act. - HC Visit to Get Source Income Tax: Addition u/s 68 - assessee has received share application money as unexplained - In the instant case, assessee has only established identity of the creditor, credit-worthiness and genuineness of the transaction with the assessee have come under serious cloud, and gave rise to reasonable belief in the mind of the AO that the assessee has indulged in a dubious transaction to launder its undisclosed income. Therefore, in our view, it is a fit case where provisions of section 68 of the Act should be invoked, which the ld.AO has rightly done so - Additions confirmed - AT Visit to Get Source Income Tax: Disallowance u/s 14A - Disallowing interest expense - Neither the assessee furnished the working of disallowances under section 14A, nor the lower authority made the disallowance as per the formula prescribed under Rule 8D, therefore, we restore the matter back to the file of Assessing Officer to re-compute/ rework the disallowance under section 14A read with Rule 8D. The assessee is also directed to explain the working of disallowance under section 14A before the Assessing Officer as and when called for. - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - Applicability of section 56(2)(vii)(b)(ii) has to be considered by reading the provision as a whole and in the context of various exceptions provided in the provisos to the said provision. This can be done through a proper and complete enquiry being done by the assessing officer. The assessing officer cannot act independently if he is circumscribed by various observations of learned PCIT on merits. - AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - AO framed assessment order on died company - in the absence of a valid notice, the AO has no authority to assume the jurisdiction to assess the tax liability, therefore continuation of the proceeding under the Income Tax Act, pursuant to such invalid notice, in the name of dissolved (dead) company, is without authority of law. Therefore, impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. Therefore, we quash the consequential order passed by the ld PCIT under section 263.- AT Visit to Get Source Income Tax: Revision u/s 263 by CIT - disallowance of exemption claimed in respect of accumulation of income u/s 11(2) - insofar as the impugned assessment year is concerned, there is no breach or violation of the conditions of section 11(5) r.w.s. 13(1)(d) of the Act. That being the case, the assessing officer could not have invoked the provisions of section 13(1)(d) r.w.s. 11(5) of the Act to deny assessee’s claim of exemption under section 11(2) of the Act in the impugned assessment year. - AT Visit to Get Source Income Tax: Disallowance of interest expenditure - alleging that the assessee was unable to establish that the interest expenditure was incurred for the purpose of business - The onus is entirely on the assessee to establish on record that the interest expenditure claimed as deduction was incurred for the purpose of business. The assessee having failed to do so, the claim cannot be allowed. - AT Visit to Get Source Customs: DEEC Scheme - fraudulent export - proceedings initiated, but was not completed during the 23 years - The respondents should be granted liberty to conclude the proceedings. It is the petitioners who have approached the Court to have the impugned show-cause notice set aside. Had the petitioners not invoked the writ jurisdiction of this Court, the show-cause notice would have continued to gather dust. The petitioners, in such circumstances, cannot possibly be worse off for seeking a Constitutional remedy and thereby suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them. - HC Visit to Get Source Customs: Refund of excess amount deposited - The petitioner is right in his contention that the maximum liability to deposit the disputed amount in the appeal already preferred by the petitioner, which is pending adjudication is 7.5% of the disputed amount; it follows therefrom that in view of my finding that the impugned letters / orders are illegal and arbitrary and deserve to be quashed, by also applying the principles of restitution, it is necessary to direct the respondents to refund / repay any sum in excess of 7.5% back to the petitioner pending disposal of the appeal and by issuing necessary directions in this regard - HC Visit to Get Source Customs: Seeking payment of duty drawback claim, along with interest - the Order dated 06.03.2020 passed by the appellate authority was binding upon the respondent No.1 who had no other option than to give effect and implement the same thereby disbursing the duty drawback claim in favour of the petitioner together with applicable interest as directed in the Order dated 06.03.2020 and failure on the part of the respondent No.1 to appreciate this and instead proceeding to reject the claim of the petitioner on irrelevant and extraneous grounds is clearly illegal, arbitrary and opposed to the principles of resjudicata. - HC Visit to Get Source Corporate Law: Oppression and mismanagement - the Tribunal has the power to make Interim Orders which it thinks fit for regulation of the conduct of the affairs of the Company - keeping in mind the ingredients of Section 241 and 242 of the Act, arrives at the resultant conclusion, without expressing any opinion on the merits of the matter, also not delving deep into the case, as allegations of ‘oppression and mismanagement’ consist of mixed questions of fact and law, which cannot be decided at this interim stage, directs the NCLT Kolkata Bench to take up the matter on 18.02.2022, without any further adjournments, dealing with all issues raised, in accordance with law.- AT Visit to Get Source Indian Laws: Levy of penalty of dismissal from service - Fraud by the Bank Clerk - industrial dispute - Breach of duty as a custodian of public money - The respondent was a clerk-cum-cashier. It is a post of confidence. The respondent breached that confidence. In fact, the respondent breached the trust of a widowed sister-in-law as well as of the bank, making it hardly a case for interference either on law or on moral grounds. The punishment imposed on the respondent could also hardly be said to be disproportionate. The conduct established of the respondent did not entitle him to continue in service. - SC Visit to Get Source Indian Laws: Validity of Arbitral Award - dishonor of cheque - Claim u/s 18 of the Limitation Act, 1963, a fresh period of limitation - Admittedly, in this case the respondent was granted 45 days credit period for making payment of each invoice. The claimant though urged before this Court vehemently that the respondent having issued a cheque of ₹ 50 lakhs, which was dishonored, the entire outstanding claim under various invoices stood revived on the ground that there was fresh period of limitation under section 18 of the Limitation Act, the claimant having exercised the option under section 60 of the Indian Contract Act, no such inconsistent plea can be permitted. - HC Visit to Get Source Indian Laws: Dishonor of Cheque - Suspension of order passed by the lower court - Considering the provisions of Section 148 of the N.I. Act and the Statement of Object and Reasons for the amendment, this Court finds no illegality in the direction issued by the Sessions Court in the order dated 25.02.2019 - the terminology used in the operative part of the order dated 25.02.2019 passed by the Sessions Court is modified so to be read that the conviction and sentence imposed by the trial Court shall stand suspended pending the appeal on condition that the applicant-appellant deposits 30% of the amount of “compensation” instead of the words - “cheque amount”. Rest of the directions issued in the impugned order dated 25.02.2019 remains unaltered - HC Visit to Get Source Indian Laws: Dishonor of Cheque - The actual offence should have been committed by the Company then alone the other categories of persons would become liable for the offences - in the present case though the name of the firm has been reflected in the cause title showing petitioner as partner of the firm, but the firm has not been separately, in individual capacity, made a party to the proceedings. The petitioner has been joined as a partner to the firm without impleading the firm in the criminal proceedings, which is not tenable. - HC Visit to Get Source IBC: Validity of Winding up order - Antrix, which initiated the proceedings for winding up, is neither a financial creditor nor an operational creditor nor a corporate applicant. This is why Antrix have not and could not have gone for insolvency resolution process, under the IBC, but taken recourse to Section 271(c) of the Companies Act, 2013. Hence the ratio in Jignesh Shah, as applicable to debts, whose recovery in any case should not have been time barred on the date of initiation of the proceedings for winding up/insolvency resolution process, cannot have any application to the case on hand. - SC Visit to Get Source Service Tax: 100% EOU - Refund claim of unutilised input service tax credit - the denial of refund claim in part, solely on the basis that the same was to be given in respect of closing balance of credit as declared in the return for the Month of June 2017, is not legal and proper, as substantive benefit cannot be denied on technical reasons, all the more, when there was no such condition in Notification No.8/2016-CE (NT) - AT Visit to Get Source Service Tax: Extended period of limitation - Security service - Non-payment of service tax, inspite of collection of service Tax from its clients - The fact finding authority having taken cognizance of the facts has reached at a conclusion that there was no suppression by the respondents to invoke the extended period of limitation which being purely based on the factual aspects of the matter, there are no reasons in interfere with the same. - HC Visit to Get Source Central Excise: Condonation of delay in filing appeal before the Commissioner (appeals) - It is clear that in the absence of power vested with the appellate authority to condone the delay, in the peculiar facts and circumstances of the case, the ends of the justice would be met in permitting the appellants to file an appeal instead of adjudicating the matter on merits subject to conditions imposed - HC Visit to Get Source Central Excise: CENVAT Credit - Chemicals sent to the job workers for carrying out further process - since the appellant has sent their chemicals in the water base during the process it is obvious that a certain quantity of the contaminated water shall be wasted therefore, the same is not capable of being returned by the job worker. Irrespective of the fact whether the same is liable to be returned or not there is no dispute that the non receipt of material is wastage and nothing else. It is settled that any wastage arising during the course of manufacture cenvat credit attributed to said wastage cannot be denied. - AT Visit to Get Source Central Excise: Refund of the amount Central Excise Duty - deemed exports or not - supplies made to ONGC and Oil India Limited against International Competitive Bidding - In view of the settled legal position there is no reason to deny the refund of excise duty paid by the appellant in respect of exempted goods - the appellant is entitled for the refund - AT Visit to Get Source Articles FACELESS ASSESSMENT – PERSONAL HEARING VESTED RIGHT? ASSESSMENT OF NON-FILERS OF RETURN UNDER GST Notifications GST - States G.O.MS.No.380 - dated 30-12-2021 - Andhra Pradesh SGST Amendment to Go.Ms.No.257, Revenue(CT-II)Department, dated 29.06.2017 G.O.MS.No.379 - dated 30-12-2021 - Andhra Pradesh SGST Amendment to Go.Ms.No.588, Revenue (CT-II) Department, dated 12.12.2017 G.O.MS.No.376 - dated 30-12-2021 - Andhra Pradesh SGST Amendment to Go.Ms.No.258, Revenue(CT-II)Department, dated 29.06.2017 35/2021– State Tax - dated 17-1-2022 - Delhi SGST Delhi Goods and Services Tax (Eighth Amendment) Rules, 2021. 05/GST-2 - dated 18-1-2022 - Haryana SGST Notification to amend notification no. 46/ST-2, dated 30.06.2017 under the HGST Act, 2017 04/GST-2 - dated 18-1-2022 - Haryana SGST Notification to amend notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017 18/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST Amendment in Notification No. 49 – State Tax, dated the 29th June, 2017 17/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST Amendment in Notification No. 83/2020 – State Tax, dated the 29th January, 2021 40/2021 – State Tax - dated 11-1-2022 - Maharashtra SGST Maharashtra Goods and Services Tax (Tenth Amendment) Rules, 2021. Circulars / Instructions / Orders GST - States - 120/2022-GST - dated 19-1-2022 GST on service supplied by restaurants through e-commerce operators Customs - 02/2022 - dated 19-1-2022 Alignment of AEO Circular No. 33/2016 dated 22.07.2016 and 54/2020 dated 15.12.2020 with CAROTAR, 2020 implemented vide dated 21.09.2020 News Finance Minister Smt. Nirmala Sitharaman authorises release of advance installment of tax devolution to State Governments amounting to ₹ 47,541 crore Case Laws: GST 2022 (1) TMI 799 Reopening of portal for filing of form TRAN-1 - denial of benefit of Input Tax Credit - HELD THAT:- The facts on record indicates that right from the beginning, the petitioner has been writing letters/representation to the respondents to allow the petitioner to file TRAN-1 and that the petitioner had experienced the difficulties on account of technical glitches in the GST web portal of the respondents. Since the issue is covered in favour of the petitioner, this writ petition is allowed. Decided in favor of petitioner. 2022 (1) TMI 797 Classification of supply - supply of ggods or supply of services - lease transaction or not - pallets, crates and containers (equipment) leased by CHEP India Private Limited (CIPL) located and registered in Tamil Nadu to its other GST registrations located across India - value on which GST has to be charged - lease charges or the value of equipment - Section 15 of the CGST Act and TNGST Act read with relevant Rules? - documents that should accompany the movement of the goods from CIPL, Tamil Nadu to CIPL. Kerala - mere movement of goods not amounting to a supply or not in terms of Section 7 of the CGST Act and TNGST Act - HELD THAT:- The business model proposed is in the stage of contemplation and has not attained finality with respect to merger, disposition of the assets and the following supply, in as much as the applicant could not provide any finalized document such as MOU for the proposed transactions, list of assets proposed to be vested with the applicant for such supply requiring the ruling. When they were addressed to furnish the list of assets proposed to be consolidated, they had submitted that the proposal is still in proposal stage only and they are unable to furnish any documents to that effect also - the MOU submitted by them cannot be relied upon to understand the terms on which the different units of the applicant agree upon. The accounting part of the transactions also will not be reflected in their accounts as the entries are said to be nullified as the audited financial statement will be for the whole company. Thus the applicant has not furnished any clear terms on which the proposed business model will be operational. The proposed business model appears to be a mere plan which may or may not fructify with the assets at the disposal of the applicant for further supply. Hence the merger and consolidation of assets are merely planned and has not reached the stage with clear roadmap of how the proposal will take effect - Without knowing if assets will be consolidated in Tamil Nadu or not, facilitating the further supply of such assets, the questions on the value to be adopted for such supply, etc are pre mature and this authority is constrained to examine the issue without any substantiating legal documents. Lack of requisite details - HELD THAT:- As per Section 95 of the GST Act, Advance Ruling can be sought in respect of the proposed supplies - In the case at hand, the ruling sought on the classification of the supply, method of valuation and determination of tax liability etc, can be decided only based on the nature, features, intended purposes of the proposed business model - Without any concrete proposal, the applicant is building castles in the air. This forum is constrained to examine the issue further without even a road map of the proposed business model, essential details about the assets to be consolidated, the place where such consolidation is proposed to take place and the terms of transactions proposed to be effected within the different GSTNs of the applicant. Without all these details and substantiating documentary evidences, this authority finds the application for ruling not answerable. Application disposed off. 2022 (1) TMI 798 Exemption form GST - Slaughter house fees - Fees on pay use toilets - services rendered directly are covered under Twelfth Schedule to Article 243W of the Constitution and /or exempted under the Notfn. No mentioned against each SI No.? - HELD THAT:- The AAR has given a ruling that services by way of slaughtering of animals / fees on pay use toilets is neither a supply of goods nor a supply of service as per notfn. No. 14/2017-CT(R) as amended by notfn. No. 16/2018-CT(R) being an activity in relation to a function entrusted to a Municipality under Article 243W of the constitution, in which they are engaged as public authority. However, the appellant is not satisfied and has sought to appeal seeking another ruling from the appellate authorities that the activity is also covered under Sl no. 56 /76 of the table in notfn. No. 12/2017-CT(R) - the ruling sought by the applicant is not for the activities undertaken by him but sought for the activity in general which is not permitted under S.95, especially when for the same service done by the tender contractors of the appellant. It appears only to be a ploy and an extravagant claim without supported by any legal fiction or rule nor even equity but only done to lure the AAAR into a trap of self-contradiction while answering further questions later and is therefore, highly condemnable. In view of the above, in respect of the question sought, the appeal is not entertained. Rent for locker provided in bus stand - HELD THAT:- The activities in relation to function entrusted to a municipality under 243W of the constitution are multitudinous and unless the provisions of respective state municipality acts are also read in conjoint with the functions entrusted under the constitution, it is not easy to fathom the activities undertaken by the municipalities in a state - Providing locker facility in a bus stand for the common man for which a fee is charged is only an activity ancillary to constructing a bus stand and therefore, there is no room for doubt in our minds that locker facility for common public in bus stand is an activity undertaken by the municipality as a function entrusted under 243W of the constitution and the services of rent or fee collection for such a facility is neither a supply of goods nor a supply of service as per notfn. No.14/2017-CT(R) and hence exempt. If all services not done directly by the municipal corporation but by the tender contractors - the appellant is aggrieved of the fact that the AAR had answered in negative for exemption and hence the appeal - HELD THAT:- In the present case, there are three parties, namely the corporation, the contractor and the public/consumer. The corporation enters into a contract, with the contractor, requiring the contractor to provide to the public, a service which constitutes an activity covered under the above notification. This arrangement results in two sets of transactions, one between the Corporation and the contractor, and the other between the contractor and the public. The present application is restricted to, seeking ruling on the tax applicable for the transaction between the corporation and the contractor. The transaction between the corporation and the contractor is an activity/transaction undertaken by the local authority, engaged as public authority. The requirement explicitly stated in section 7(2)(b) are met. Further, in as much as this transaction/activity undertaken by the corporation is an activity covered under the above notification, this transaction/activity under sl. No. 1 to 9 and 13 ('except. SI.No. 5A Charges for TV advt. in Bus Stand; 5C- Flower shop in bus stand in open space SI.No. 7-Bunk Stall') listed by the AAR as neither a supply of goods nor a supply of service are available to contractors also provided the same are rendered as hack to back services to the appellant. Operation of flower shops by contractors - Bunk Stalls by contractors as well as advertisement rent through TVs installed in the bus stand - HELD THAT:- Since the same are earmarked to be kept at a particular location and at the same time ensuring prominence of location to attract buyers and further since a rent is fixed under contractual agreements, the same would fall under 'renting of immoveable property' services as defined under definitions 2(zz) under the notfn. No. 12/2017 and the exemption under sl.no. 7 of notfn no. 12/2017-CT (Rate) is available as well as charging of tax on RCM basis under sl. No. 5 of notfn. 13/2017-CT(R) subject to fulfilment, of the conditions spelt out therein. Whether the charges obtained for the service of road cutting for the purpose of laying cables by telephone companies alongside roads on contract basis is a composite supply? - Composite supply or not - HELD THAT:- The question is answered in affirmative. Though two charges are collected by the appellant for road cutting and annual rent for cables running across the road, it can be seen that unless road is cut, cables cannot bo laid and mere road cutting without laying of cables is useless. Therefore, both the services have to run in tandem with respect to the telephone companies and the methodology of collection of money is immaterial to the fact of the activities of road cutting and laying of cables, which is indeed a composite supply, it must also be noted that this is a factual question and is restricted to the particular activity of road cutting followed by laying of cables by telephone companies and therefore, the same is not to be extended to all the types of road cutting activities. Income Tax 2022 (1) TMI 796 Revision u/s 263 by CIT - deemed dividend addition u/s 2(22) - HELD THAT:- We find on facts that the relevant documentary evidence was called for by the AO during the course of assessment proceeding and the same were furnished by the assessee. The details of shareholders holding more than 10% shares in the assessee-company was also called for by the AO, which was furnished by the assessee. In the tax audit report filed by the assessee along with the return of income, the unsecured loan of ₹ 40 lakhs received by the assessee during the year under consideration from M/s. Vijayshree Industries Pvt. Ltd. and squared off in the year itself was recorded and even interest paid thereon was shown in the tax audit report in the details of payments made to related persons as specified u/s 40A(2)(b). The assessee was able to demonstrate before the Tribunal that all relevant records were available in the file of the Assessing Officer and he rightly applied the legal position and granted relief to the assessee. These aspects were examined by the Tribunal and it was found that there was no justification for invoking the power u/s 263 - Tribunal noted that the AO has taken a conscious decision bearing in mind the legal position that section 2(22)(e) was not applicable to the loan amount of ₹ 40 lakhs received by the assessee.Thus, we find that the Tribunal rightly allowed the appeal filed by the assessee and granted relief. The said decision of the Tribunal, therefore, does not call for any interference. In the result, the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue. 2022 (1) TMI 789 Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- The Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that where an assessee possessed sufficient interest free funds of its own which were generated in the course of relevant financial year, apart from substantial shareholders funds, presumption gets established that the investments in sister concerns were made by the assessee out of interest free funds and, therefore, no part of interest on borrowings can be disallowed on the basis that the investments were made out of interest bearing funds. In reaching this conclusion, the Hon ble High Court relied on the judgment of the Hon ble Supreme Court in the case of East India Pharmaceutical Works Ltd. Vs. CIT [ 1997 (3) TMI 5 - SUPREME COURT] - Similar view has been taken by the Hon'ble Dehi High Court in CIT vs. Tin Box Company [ 2002 (11) TMI 75 - DELHI HIGH COURT] holding that when the capital and interest free unsecured loan with the assessee far exceeded the interest free loan advanced to the sister concern, disallowance of part of interest out of total interest paid by the assessee to the bank was not justified. More recently, the Hon ble Supreme Court in CIT(LTU) VS. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] has reiterated the same view. 6. When we examine the amount of Investments in the extant case at ₹ 98.45 lakh as against the availability of Share Capital and Reserves at ₹ 58.16 crore, it is manifested that the amount of such Investments is much less than the amount of shareholders fund. Respectfully following the precedent, we order to delete the disallowance under Rule 8D - Decided in favour of assessee. 2022 (1) TMI 794 Exemption under Section 10B - Denial of exemption as assessee was not approved by the concerned statutory Board as Export Oriented Undertaking as is required in terms of clause IV of Explanation 2 of section 10 B - Tribunal allowed benefit holding assessee as 100% Export Oriented Undertaking - HELD THAT:- Tribunal considered the submission on behalf of the assessee that CBDT has issued a clarification dated 9.3.2009 to the effect that power to grant approval under Section 14 of the Industrial (Development Regulation) Act, 1951 has been delegated to the Development Commissioner and the approval granted by the Development Commissioner shall be considered valid for the purpose of exemption under Section 10B Whether the assessee would be entitled to relief under Section 10A? - Tribunal pointed out the similarities between Section 10A and Section 10B of the Act and held that assessee is entitled for the benefit of deduction under Section 10A that the assessee has not claimed the same under that provision on law in the return of income. Further, the Tribunal rightly took note of the judgement of the Hon ble Supreme Court in the case of CIT VS. Mahalaxmi Sugar Mills Co. Ltd. [ 1986 (7) TMI 83 - SUPREME COURT ] wherein it was held that the duty cast on the Income Tax Officer to apply relevant provisions of the Act for the purpose of determining the true figure of the assessee s taxable income and the consequential tax liability. That the assessee failed to claim the benefit of a set off cannot relieve the income tax officer of his duty to apply Section 24 in an appropriate case. As rightly pointed out by the learned Counsel appearing for the respondent/assessee powers of the CIT(A) under Section 246A are wide enough to consider as to whether the assessee was entitled for the claim of deduction under Section 10A as well. Thus we find that a thorough factual exercise has been done by the CIT(A) which has been re-examined for its correctness by the Tribunal while affirming the findings of the CIT(A) qua, the relief granted under Section 10B of the Act. That apart we find with regard to the relief granted to the assessee under Section 10A of the act, the Tribunal rightly took note of the legal position and granted relief. Hence, we are satisfied that the order passed by the Tribunal is perfectly valid and does not call for any interference. - Decided against revenue. 2022 (1) TMI 793 Reopening of assessment u/s 147 - eligibility of reason to believe - change of opinion to commence proceedings for re-assessment - claim of expenses made without establishing the nature of expenses with respect to work done and documentary evidences. ad there is no brought forward losses whereas assessee claimed set off of brought forward losses - HELD THAT:- As regards point (a) and point (b), petitioner had received notice dated 15th October 2015 under Section 142(1). Item 9 in the Annexure to the notice calls upon petitioner to furnish break-up of head-wise expenses where amount paid was above ₹ 5 lakhs in the format mentioned therein and item 11 calls upon petitioner to furnish details of brought forward losses and assessed losses, if any, along with proof, i.e., assessment orders / order giving effect to CIT(A) s order / ITAT or High Court order. Petitioner replied to this notice by a communication dated 19th November 2015 addressed through petitioner s Chartered Accountants. We have perused the said document and petitioner has provided all the details as sought for. In fact these figures also find a mention in the statement of profit and loss filed by petitioner. It is true that these points have not been discussed in the assessment order. But as held by the Division Bench of this Court in Aroni Commercials Limited. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment.. It is not necessary that an assessment order should contain reference and / or discussion to disclose its satisfaction in respect of the query raised. Unexplained dividend receipts - As in the profit and loss account, break-up of other income has been provided. It indicates a total income of ₹ 15,11,01,889/- of which ₹ 13,25,26,684/- relates to dividend from foreign companies. The assessment order certainly includes income from other sources of ₹ 15,11,01,889/-. Therefore, even this issue has been a subject of consideration of the Assessing Officer while completing the assessment. Objection against reopening - Petitioner made attempt on multiple occasions to upload its objections to the notice for re-opening of assessment proceedings but on account of the portal of income tax not working properly (technical issues and glitches), it could not upload / record its objections. Thereafter petitioner finally managed to file its objections dated 14th September 2021 and an order rejecting the objections was passed on 17th September 2021, which is impugned in the Petition. This Petition has been declared on 22nd September 2021 and lodged on 23rd September 2021. Therefore, we cannot say that in the case at hand, petitioner had participated in the assessment proceedings. We have to, therefore, reject the submissions of Shri. Walve that petitioner having participated in the assessment proceedings, would disentitle the petitioner to the extra-ordinary reliefs under Article 226 of the Constitution of India. The notice under Section 148 has been issued purely by way of change of opinion relying on the same set of primary facts which had been submitted by petitioner during the original assessment proceedings. In our view, the usage of expression in the reasons there has been escapement of income by reason of failure on the part of the assessee to disclose fully and truly all material facts is clearly made as an attempt to take the case out of the restrictions imposed by proviso to Section 147 of the Act. 2022 (1) TMI 788 Disallowance of payment of Labour Charges @ 5% - AO noticed that the vouchers in support of the labour charges are self-made and unverifiable - HELD THAT:- As vouchers are duly signed by the payees. It is a trade practice in the line of business of civil constructions, the vouchers in respect of labour charges are always self-made. The identical issue dealt by the Co-ordinate Bench of this Tribunal by the same combination in the case of B.C. Biyani Project Pvt. Ltd [ 2022 (1) TMI 705 - ITAT PUNE] as held it cannot be said that the labour charges incurred are excessive or unreasonable. Therefore, the decision of the ld. CIT(A) making the ad-hoc disallowance of labour charges at 30% cannot be sustained in the eyes of law Even in the present case also, no material was brought by the Assessing Officer suggesting that the expenditure incurred on labour charges is bogus. The Assessing Officer merely disallowed payment of labour charges on the presumption and surmises. It is settled position of law that no addition can be made merely on the basis of presumption, surmises and conjectures. Hence, we do not find any justification to disallow 5% of labour charges on ad-hoc basis. Thus, the issue raised in the grounds of appeal stands allowed. 2022 (1) TMI 787 Disallowing deduction of Capital Expenditure u/Section 35(1)(iv) read with section 35(2) - disallowance of depreciation on assets purchased during the relevant previous year - CIT-A deleted the addition - HELD THAT:- CIT(A) deleted the addition made purely on the basis that the AO did incomplete enquiry. There was no material whatsoever produced by the Assessee to disprove the conclusions drawn by the AO and positively prove that it purchased machineries in question for R D and that it carried out R D activities. In such circumstances, the CIT(A) in our view fell into an error in deleting the addition made by the AO. Perusal of the order of the CIT(A) reveals that the CIT(A) has made observations that the AO could have adopted a better course than what he did, but does not go further and call upon the Assessee to produce evidence to substantiate its case. We therefore find force in the contention of the learned DR that the CIT(A) without any valid evidence that the machineries existed and that R D was carried out by the Assessee, merely allowed the claim of the Assessee on the basis of a finding that incomplete enquiries were made by the AO. As rightly submitted by him there was not a shred of evidence filed by the Assessee even before CIT(A) to establish with cogent evidence as to how the conclusions of the AO based on outcome of Survey proceedings and enquiries from the purchasers and their whereabouts were not correct. Without such evidence, the CIT(A) ought not to have deleted the addition made by the AO. The reference to invoices and description of machineries mentioned therein is of no avail because the invoices were found to be bogus and the machineries found not existing at the time of survey. The CIT(A) has wrongly placed the burden of proving that the Assessee did not carry out R D on the Revenue, when it was on the Assessee to prove its case. CIT(A) is not sustainable and the same is reversed and the order of the AO is restored on this issue. The reasoning for restoring the addition made by the AO disallowing deduction u/s.35(2)(ia) of the Act will equally apply to the disallowance of depreciation also and that addition is also restored - Decided in favour of revenue. Addition of depreciation on account of opening wdv being revised owning to findings in AY 2002-02 that purchase of fixed assets was bogus and therefore the opening written down value (wdv) of the assets on which depreciation was claimed by the Assessee in AY 2003-04 on the same item of machinery had to be reduced and as a consequence the depreciation being 25% was disallowed by the AO is also restored. CIT(A) ought not to have admitted the appeal for adjudication because the Assessee had not paid the tax due on the income admitted in the return of income and therefore in terms of Sec.249(4)(a) - HELD THAT:- As relying on case of D. Komalakshi [ 2006 (11) TMI 155 - KARNATAKA HIGH COURT ] wherein CIT(A) had admitted the appeals despite the fact admitted taxes on income returned was not paid and therefore the said appeal was not maintainable in the light of section 249(4) of the Act. We therefore quash the order of the CIT(A) and allow the appeal of the Revenue and restore the order of the AO. The other grounds of appeal does not require any adjudication in view of the decision regarding maintainability of appeal before CIT(A). Penalty u/s 271(1)(c) - HELD THAT:- Out of four additions only two additions viz., disallowance of deduction u/s.35(2)(ia) and Disallowance of depreciation survive after the order of ITAT and Hon ble High Court order in the quantum proceedings. The circumstances under which the additions were made clearly show that the Assessee had concealed particulars of income especially in the light of Explnation-1 to Sec.271(1) of the Act. The Assessee has not discharged his onus that lay on him in law. The CIT(A) is not right in holding that concealment has to be proved beyond doubt before imposing penalty u/s.271(1)(c) of the Act. In the circumstances, we restore the order imposing penalty in respect of the aforesaid two additions that survive after the quantum proceedings. 2022 (1) TMI 786 Disallowance on a/c of expenses relating to earlier years - expenses will be allowable in the year when such liability has been quantified or paid - CIT-A deleted the addition - HELD THAT:- Huge inconsistencies/anamolies in submissions of the assessee before the authorities vis-avis facts reflected in its audited books of accounts, ought to have triggered investigation and enquiry by ld. CIT(A) before allowing the aforesaid claim - CIT(A) ought to have verified whether sugarcane purchase tax was paid on the entire amount claimed to be state advised purchase price of sugarcane and the persons to whom and when such payments were made in discharge of its liability for purchase of sugarcane. The powers of ld. CIT(A) are co-terminus with powers of the AO CIT(A) also ought to have looked into the fact that the said amount of deduction which is provided in the audited accounts of financial year 1997-98, is not claimed as deduction while filing return of income for ay:1998-99 to avoid duplication of claim of deduction. All this aspects were never looked into by ld. CIT(A) before granting relief to the assessee as there are no observations whatsoever on these critical issues and merely cryptic, unreasoned and non speaking order is passed by ld. CIT(A), and hence the appellate order passed by ld. CIT(A) on this issue cannot be sustained and we are inclined to set aside and restore this issue back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order. Assessee has set up a claim of deduction of Rent in the year under consideration which was not provided in the books of accounts of the year under consideration viz. fy: 1996-97, and which was claimed to be debited in the books of accounts for subsequent year viz. fy:1997-98, and claimed as deduction for ay:1997-98 by filing revised return of income with Revenue on 29.12.1998. We have observed that there is no discussions whatsoever by ld. CIT(A) on this issue in its order and he has merely accepted the contentions of the assessee. There is no investigation of facts by ld. CIT(A) as to the premises in connection with which Rent was paid and whether the said premises was used wholly and exclusively for the purposes of business of the assessee. Further, there is no evidence whatsoever available on record on this issue to give any conclusive finding by us on this issue. There is no investigation of facts by ld. CIT(A) as to when the interest was debited by SBI, and whether the said loans were used for regular business of the assessee and whether there was compliance of Section 43B. Further, there is no evidence whatsoever available on record on this issue to give any conclusive finding by us on this issue. These aspects were never looked into by ld. CIT(A), and hence the appellate order passed by ld. CIT(A) on this issue cannot be sustained and we are inclined to set aside and restore this issue back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order. Disallowance of interest accrued and due which was reflected in the Balance-Sheet of the assessee company, by invoking provisions of Section 43B - CIT accepted the contentions of the assessee and ordered the deletion of disallowance as was made by the AO - HELD THAT:- Section 43B does not put any such restrictions so far as interest payable on loans raised from State Government or Central Government and we cannot expand the scope of Section 43B. The assessee has rightly relied upon the decisions of Delhi-tribunal in the case of Baghpat Co-operative Sugar Mills Company Limited [ 2015 (8) TMI 1267 - ITAT DELHI ] and Ramala Sahkari Chini Mills Limited [ 2016 (3) TMI 1397 - ITAT DELHI] . However, the composition/details/bifurcation/working of interest payable as also corresponding loans availed by the assessee has not been looked into by ld. CIT(A), as discussed by us as above in this order and hence, we have already set aside the matter to ld. CIT(A), but so far as ratio of law is concerned, interest payable on loans raised from State Government/Central Government are not hit by provisions of Section 43B as it stood at relevant time. Needless to say that ld. CIT(A) shall give proper opportunity of being heard to the assessee in set aside remand proceedings and evidences/explanations submitted by the assessee in its defense shall be admitted by ld. CIT(A) and adjudicated on merits in accordance with law. We order accordingly. Disallowance on account of interest payable on loans, by invoking provisions of Section 43B - unpaid liability towards interest payable on various loans - HELD THAT:- The provision of Section 43B stipulates that evidence of payment is to be enclosed with return of income in the first proviso to Section 43B. However, the assessee has not enclosed evidence of such payment along with return of income, but the factum of mention of interest paid to IIBI is found in tax audit report. In our view, to claim the extended period benefit u/s 43B, the mandatory requirement is the substantial compliance of making payment by assessee before the due date for filing of return of income u/s 139(1), while the second condition as stipulated under the first proviso to Section 43B of enclosing evidence of such payment along with return of income is directory in nature, and even if the said challan evidencing that payment is made before due date prescribed u/s 139(1) is produced at appellate stage, the assessee will be entitled for getting extended period benefit u/s 43B. The assessee is directed to produce evidence of payment of interest and working thereof in correlating with the existing loan liability before ld. CIT(A), as we are also remitting this issue to the file of ld. CIT(A). Interest payable on Sugar Development Fund - As contentions of the assessee will require verification which needs investigation and enquiries into the factual aspects to unravel the truth, as also adjudication of legal issue as to applicability of Section 43B in such a scenario as ultimately, the assessee will be claiming depreciation u/s 32 of the 1961 Act on the interest being capitalized, even though presently as claimed by assessee, the interest is capitalized by debiting to Capital Work in progress and not debited presently to P L Account(which also requires verification ). Since, all these aspects were never looked into by ld. CIT(A), and hence the appellate order passed by ld. CIT(A) on this issue cannot be sustained and we are inclined to set aside and restore this issue back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order. Addition on account of unclaimed deposits/loans and on account of interest thereon - AO observed that the assessee claim of liability on unclaimed deposit/loan is not ascertainable, which sum stood added by the AO to the income of the assessee - HELD THAT:- These loans/deposits have remained unclaimed and are more than 16-22 years old. There is no evidence brought on record even before us to establish that any of the aforesaid parties have come forward to claim these amounts after such a long gap of 16-22 years. Even law of limitation provides for a period of 3 years and beyond that the debt become time barred, if no claim is made or debt is not acknowledged. No doubt law of limitation only bars legal suit for recovery of debt through Court of law, and creditor can always voluntarily come forward and acknowledge or pay debt even beyond limitation period of 3 years and Section 41(1) will not be applicable. But, in this instant case before us, on the touchstone of preponderance of probabilities, we are of the considered view that these unclaimed deposits/loans are 16-22 years old which is a considerable period of time-gap, these loans/deposits are admittedly shown as unclaimed deposits/loans by assessee itself in its audited financial statements, the assessee has claimed albeit in earlier years benefit of deduction of interest expenses on these deposits/loans as revenue deduction while computing income chargeable to tax for those earlier years, and even before us it could not be shown that there is any claim made by any of these depositors/lenders for reviving their claim of debt/loan or assessee has acknowledged its debt towards these unclaimed deposits/loans, that the aforesaid amount as unclaimed deposit/loan and interest payable thereon on these unclaimed deposits/loans were rightly added by AO to the income of the assessee and we uphold the view of the AO and set aside the appellate order passed by ld. CIT(A) on this issue. Unpaid liabilities towards sale tax payable on molasses - assessee submitted that unpaid liability towards sales tax on molasses has been discharged by making actual payment on 17.04.1997 and the assessee claimed to have filed challan before ld. CIT(A) evidencing such payment - HELD THAT:- To claim the extended period benefit u/s 43B, the mandatory requirement is the substantial compliance of making payment by assessee before the due date for filing of return of income u/s 139(1), while the second condition as stipulated under the first proviso to Section 43B of enclosing evidence of such payment is directory in nature, and even if the said challan evidencing that payment is made before due date prescribed u/s 139(1) is produced by the tax-payer at appellate stage, the tax-payer will be entitled for getting extended period benefit u/s 43B. The assessee is directed to produce visible/legible copy of challan evidencing payment of unpaid liability of ₹ 48,172/- towards sales tax before ld. CIT(A) for verification by ld. CIT(A), as we are also remitting this issue to the file of ld. CIT(A) for verification of challans for remitting payment to Government by assessee towards unpaid sales tax liability on molasses to the tune of ₹ 48,172/- vis- -vis liability as is appearing in its audited financial statements as at 31.03.2007. The ld. CIT(A) shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice. Disallowance on account of PF, EPF of the employees of the company - assessee has deposited employees contribution to PF/EPF beyond the time stipulated under the PF/EPF Act, and additions were made by AO by invoking provisions of Section 36(1)(va) - HELD THAT:- There is no dispute between rival parties as to actual deposit of aforesaid employees contribution towards PF/ESI to the credit of employees with relevant fund, as is reflected in chart reproduced above. It could be seen from the aforesaid chart reproduced above that all the aforesaid payments were made prior to the due date of filing of return of income u/s 139(1), and in our considered view the assessee will be entitled for deduction u/s 36(1)(va) read with Section 2(24)(x) if the payment is made before the due date of filing of return of income u/s 139(1). There is a recent amendment by Finance Act, 2021 in Section 36(1)(va) and 43B- several Benches of ITAT across India have already adjudicated this issue in favour of tax-payer, even after considering the recent amendments made by Finance Act, 2021 in Section 36(1)(va) and 43B. Presently, we are concerned with ay:1997-98. This issue is adjudicated in favour of the assessee. Addition on account of payment to Dinners Club - CIT - A deleted addition - HELD THAT:- there is no evidence on record, which could justify that these expenses were incurred by assessee for business purposes. There is no evidence on record as to whom name this Dinners Club Membership was taken, who all are authorized to use the facilities granted by Dinners Club and actual usage of facilities for business activities or business promotion. In the absence of any evidence on record, we are afraid these expenses cannot be allowed as business/revenue expenses. Even, before us no evidence is filed or brought to our notice to justify that these expenses are business expenses incurred wholly and exclusively for the purposes of business of the assessee. Thus, we reverse the appellate order passed by ld. CIT(A) and uphold the addition as was made by AO. Addition to the income of the assessee on account of short credit of income in the P L Account - HELD THAT:- Instead of giving reasons for acceptance or rejection of assessee s contention, ld.CIT(A) simply accepted the assessee s contentions without giving its own reasons or results of verification conducted by him. The powers of ld.CIT(A) are co-terminus with powers of the AO. The claim submitted by assessee that the differential amount was refund of insurance premium which was included in the sum of ₹ 9,30,576.28 already credited in other income under the head Sundry Receipts, requires verification and investigation into facts to unravel truth, and hence we are inclined to set aside and restore this issue to file of ld.CIT(A) for fresh adjudication on merits in accordance with law, and ld. CIT(A) is directed to pass reasoned and speaking order. Addition on account of entertainment expenses - HELD THAT:- We have observed that the assessee has claimed that employees of the assessee company accompanied the customers of the assessee and 25% of the total expenses incurred under the head Entertainment Expenses were attributable to employees of the assessee. CIT(A) has simply accepted the contentions of the assessee and granted relief to the assessee by passing a cryptic, non speaking and unreasoned order, wherein no independent finding of fact is recorded by ld. CIT(A) based on evidences Order is clearly not sustainable in the eyes of law being non-speaking, cryptic and unreasoned order passed by ld. CIT(A), wherein no independent verifications were done and no finding of fact on the employees accompanying customers based on evidence is recorded by ld. CIT(A), and we are inclined to set aside the appellate order passed by ld. CIT(A) and restore the issue back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law. The ld. CIT(A) is directed to pass speaking and reasoned order, wherein finding of fact based on evidence be recorded on the issue under consideration. Appeal filed by the Revenue stands partly allowed for statistical purposes. 2022 (1) TMI 792 Computation of deduction u/s 80HHC - HELD THAT:- The first question of law raised in this appeal has already been considered and decided by the Supreme Court in favour of the Assessee in the case of ACG Associated Capsules (P) Ltd. [ 2012 (2) TMI 101 - SUPREME COURT] wherein Ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads PGBP is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business Decided in favour of assessee 2022 (1) TMI 791 Order passed by invoking Section 144 read with Section 69A - as submitted that the petitioner has an alternate remedy by way of an appeal under Section 246A - HELD THAT:- The impugned order has not discussed the records furnished by the petitioner to distance himself from the entire liability. Therefore, to that extent, the impugned order can be interfered by remitting the case back to the respondent to pass a proper assessment order. However, it is noticed that the petitioner has himself offered to pay the tax under Section 44AD of the Income Tax Act, 1961 on the undiscussed income. Considering the above, the impugned order is set aside subject to the petitioner paying tax as per the computation under Section 44AD of the Income Tax Act, 1961 within a period of six weeks from the date of receipt of a copy of this order. After the petitioner deposits the admitted tax under Section 144AD of the Income Tax Act, 1961, the respondent shall pass a fresh assessment order on merits and in accordance with law within a period of four weeks thereafter. 2022 (1) TMI 785 Disallowance of interest expenses u/s 36(1)(iii) borrowed funds were utilized by the assessee for purposes other than its business activity, having been invested in the form of zero percent debentures in a sister concern - Whether the CIT(A), in restricting the disallowance of interest expenses has erred in ignoring the findings of the AO that on the one hand the assessee has claimed huge interest expenses and on the other hand substantial amount have been placed at the disposal of the sister concern on interest-free basis - HELD THAT:- Nowhere AO has analyzed as to when assessee had been advancing loan right from AY 2006-07 from out of any interest bearing funds or during the relevant year any further interest bearing funds have been diverted. Converting of debentures on 30.04.2011 out of debit balance with the said party cannot be treated as diversion of funds to the sister concern out of interest bearing funds for the year under consideration. As stated by the assessee, the long term borrowings were reduced to ₹ 6.12 crores during the year. Thus, we do not find any reason as to why disallowance can be made on such a premise. Without going into the merit, whether interest free funds were available or not, we hold no disallowance can be made. Accordingly, entire disallowance made by the AO is deleted - Decided in favour of assessee. 2022 (1) TMI 784 Addition u/s 68 - assessee has received share application money as unexplained - HELD THAT:- AO has demonstrated that all the capital introduced in the capital account of share applicants are of non-verifiable nature; credit-worthiness of Shri Sanjay Gupta is very much doubtful; most of the amounts were from unknown sources. AO has rightly assumed that the transaction is not genuine rather rooted through unsecured loans etc. whose confirmation could not be filed. We find that though the assessee had provided identity of the giver of the funds, but onus to prove creditworthiness and genuineness of transaction beyond doubt have not been discharged by the assessee. Law on this issue on this point is clear. It is necessary for the assessee to prove prima facie, three aspects of the transaction which generated funds in the form of share application money. Section 68 provides three aspects to prove the case of cash credit such as proof of the identity of this creditor, the capacity of such creditor to advance the money and, genuineness of the transaction, and if these aspects are proved by the assessee, then burden shifts to the Department to prove otherwise. In the instant case, assessee has only established identity of the creditor, credit-worthiness and genuineness of the transaction with the assessee have come under serious cloud, and gave rise to reasonable belief in the mind of the AO that the assessee has indulged in a dubious transaction to launder its undisclosed income. Therefore, in our view, it is a fit case where provisions of section 68 of the Act should be invoked, which the ld.AO has rightly done so - No infirmity in the impugned order of the AO, more so, in view of the reasoning given in the remand report submitted by the assessee before the ld.CIT(A). Accordingly, action of the ld.AO in invoking provisions of section 68 is upheld, and the addition deleted by the ld.CIT(A) is set aside, and order of the AO on this issue restored. Accordingly, this ground of Revenue is allowed. Disallowance of sundry creditors - CIT(A) has restricted the impugned addition on the basis of the remand report filed by the AO and also based confirmations and other details filed during the remand proceedings as well as before the appellate proceedings - HELD THAT:- We find that the ld.CIT(A) has examined this issue in detail, such as details submitted by the assessee and remand report by the AO, and after giving well reasoned findings restricted the impugned addition. Therefore no interference from our side is called for on this issue, which we uphold, and reject the ground of appeal of the Revenue. 2022 (1) TMI 783 Disallowance u/s 14A - Disallowing interest expense - the said proportionate expense claimed by the Appellant was for earning exempted income i.e. share in profit - HELD THAT:- We find that the Assessing Officer while passing the assessment order identified the issue of disallowance under section 14A, by examining the fact that assessee had earned exempt income and invested interest bearing fund for making investment for earning exempt income. However, the Assessing Officer instead of following the formula prescribed under Rule 8D made proportionate disallowance and worked out the disallowance @ 58.36% . CIT(A) confirmed the action of Assessing Officer. We find that during the year AY 2014-15 the provision of under section 14A r.w.s. Rule 8D is applicable. The Assessing Officer has not followed the formula prescribed under Rule 8D. Neither the assessee furnished the working of disallowances under section 14A, nor the lower authority made the disallowance as per the formula prescribed under Rule 8D, therefore, we restore the matter back to the file of Assessing Officer to re-compute/ rework the disallowance under section 14A read with Rule 8D. The assessee is also directed to explain the working of disallowance under section 14A before the Assessing Officer as and when called for. The Assessing Officer shall consider the working so provide by assessee and pass the order in accordance with law. Appeal of the assessee is allowed for statistical purposes 2022 (1) TMI 782 Revision u/s 263 by CIT - AO has failed to add the difference between the declared sale consideration and stamp duty value under section 56(2)(vii)(b)(ii) - HELD THAT:- The value adopted by PCIT is not backed by any evidence. Secondly, while adopting his own value learned PCIT has completely ignored the Government approved valuer s report furnished by the assessee. Thirdly, he has not considered various submissions of the assessee regarding non-applicability of section 56(2)(vii)(b)(ii) of the Act. Once learned PCIT held that the assessing officer has failed to enquire into the applicability of section 56(2)(vii)(b)(ii), he should have left the issue at that and no further. Whether section 56(2)(vii)(b)(ii) would be applicable to the transaction or not should have been left to the result of enquiry to be conducted by the assessing officer and his decision after proper application of mind. However learned PCIT himself has assumed the role of, both, the assessing officer as well as DVO. This, in our view, is impermissible. Applicability of section 56(2)(vii)(b)(ii) has to be considered by reading the provision as a whole and in the context of various exceptions provided in the provisos to the said provision. This can be done through a proper and complete enquiry being done by the assessing officer. The assessing officer cannot act independently if he is circumscribed by various observations of learned PCIT on merits. We modify the order of Learned PCIT by directing the AO to examine the applicability of section 56(2)(vii)(b)(ii) to the subject transaction relating to purchase of Flat No.B-5102, Trump Tower, Worli without being influenced by any of the observations of learned PCIT on merits. While doing so, he must allow fair and reasonable opportunity to the assessee to establish its case on merits and must decide the issue dealing with all the submissions of the assessee and in the light of relevant case laws to be cited by the assessee. Appeal is partly allowed for statistical purpose. 2022 (1) TMI 781 Revision u/s 263 by CIT - AO framed assessment order on died company - DR vehemently pleads that the information to the effect that assessee company has died/ dissolved, was not submitted by the assessee either during the assessment stage or during the 263 revision proceedings, therefore, at this stage, the plea of the assessee should not be entertained and order passed by PCIT may be upheld - HELD THAT:- It is clear that name of assessee company was strike off from the record of the registrar of companies, with effect from 15.07.2008. The assessing officer framed original assessment order u/s 143(3) of the Act dated 30.12.2009, which is after the assessee company had dissolved/ name removed by ROC. AO has also framed the assessment order under section 143(3) r.w.s.254 of the Act, dated 31.03.2016, in pursuance of the direction given by the Tribunal. All statutory notices were issued by the Department after the company has dissolved. Notice issued on a dissolved/died company is not valid in the eye of law, as discussed above - in the absence of a valid notice, the AO has no authority to assume the jurisdiction to assess the tax liability, therefore continuation of the proceeding under the Income Tax Act, pursuant to such invalid notice, in the name of dissolved (dead) company, is without authority of law. Therefore, impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. Therefore, we quash the consequential order passed by the ld PCIT under section 263. Revision u/s 263 - Ad hoc disallowance of 10% of the land development expenses - HELD THAT:- Hon ble Supreme Court in the case of Alagendran Finance Ltd. [ 2007 (7) TMI 304 - SUPREME COURT ] held that in respect of an issue which was not subject-matter of reassessment, the limitation under section 263(2) would run from the date of original assessment and revisional proceedings initiated in respect of such issue beyond the period of two years from the date of original assessment were barred by limitation. However, in assessee s case the issue of land development expenses is there in the order framed by Assessing Officer u/s 143(3) r.w.s. 254 of the Act; which is subject to revision proceedings u/s 263 of the Act. Therefore, doctrine of merger would apply in a case of this nature. Hence, we reject the plea taken by Ld Counsel of the assessee. On merits, we note that while framing the assessment order u/s 143 (3) r.w.s 254 of the Act, dated 31.03.2016, the assessing officer made adequate enquiry. The assessee appeared before the assessing officer and submitted letter dated 19.01.2016 and sought adjournment. Thereafter, assessing officer, based on the material available on record adjudicated the issue by making ad-hoc disallowance @ 10% of land development expenses of ₹ 3,30,89,500/- which comes to ₹ 33,08,950/-. AO has applied his mind and made the disallowance @ 10% of land development expenses, hence, order passed by the assessing officer should not be erroneous. Therefore, in the assessee`s case under consideration, it is the appraisal of the same records which are already with the A.O. and the Ld. Pr. C.I.T. took a different view than adopted by the A.O. on the same set of facts, which is not permissible u/s 263 of the Act. In the above circumstances, the view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. There is difference between Lack of enquiry and inadequate enquiry . It was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT ] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263. Certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. It is a settled position in law that provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Based on the above discussion on assessee`s facts as well as on various precedents applicable to assessee s facts, we are of the view that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. A.O. and verified by him and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed. Therefore, we quash the order of the ld. PCIT u/s 263 - Decided in favour of assessee. 2022 (1) TMI 780 Revision u/s 263 by CIT - disallowance of exemption claimed in respect of accumulation of income under section 11(2) - Whether for not investing in the equity shares in the investments prescribed under section 11(5) of the Act, whether assessee s claim of exemption under section 11(2) of the Act can be denied in the impugned assessment year? - HELD THAT:- A plain reading of clause (iia) of proviso to section 13(1)(d) would make it clear that an outer limit of one year from the end of the financial year in which the income is received has been provided for making investment in the mode and manner prescribed under section 11(5) of the Act. In the facts of the present case, admittedly, the equity shares of Asian Paints Ltd were received by the assessee in the financial year 2014-15. Therefore, as per clause (iia) of proviso to section 13(1)(d) of the Act, the provisions of section 13(1)(d) of the Act would come into play after the expiry of one year from the end of the financial year 2014-15. In other words, the prohibitory conditions of section 13(1)(d) of the Act would be applicable from 01-04-2016, falling in financial year 2016-17 relevant to assessment year 2017-18. Thus, insofar as the impugned assessment year is concerned, there is no breach or violation of the conditions of section 11(5) r.w.s. 13(1)(d) of the Act. That being the case, the assessing officer could not have invoked the provisions of section 13(1)(d) r.w.s. 11(5) of the Act to deny assessee s claim of exemption under section 11(2) of the Act in the impugned assessment year. Therefore, for this particular reason, the assessment order cannot be considered to be erroneous - one of the vital conditions of section 263 remains unfulfilled. That being the case, the revisionary authority cannot clothe him with the power to revise the assessment order under section 263 of the Act. Therefore, as a natural corollary, the order passed under section 263 of the Act has to be set aside and the assessment order is to be restored. - Decided in favour of assessee. 2022 (1) TMI 779 Income from House Property - as per the lease and licence agreement the property was let out for a monthly rent and the assessee has received interest free refundable security deposit - whether the departmental authorities can substitute the actual rent received by the assessee by computing notional rent? - HELD THAT:- In case of J.K. Investors (Bom) Ltd [ 1999 (7) TMI 675 - ITAT MUMBAI] the Tribunal has held that the benefit of the security deposit does not accrue to the lessor at the time of receipt, but only on utilization of the same. The Bench observed, when the income derived on utilization of the security deposit is otherwise taxable, there is no justification to hold that the assessee received the security deposit anticipating that certain benefit would be received. See case of CIT vs Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT] . In case of Shri Owais Hussain vs ITO [ 2018 (5) TMI 1817 - ITAT MUMBAI] has followed the decision of Hon ble High Court in case of Tip Top Typography (supra) and has directed the assessing officer to compute the deemed rent as per municipal rateable value. The Hon ble Court has held that based on cogent material the assessing officer must come to a definite conclusion that parties have concealed the real position. The Hon ble Court has further held that Municipal rateable value cannot be discarded straightaway, unless, there is cogent and reliable material to do so. Thus, the ratio that follows from the aforesaid decisions is: the assessing officer cannot determine notional rent based on estimation / guess work. In the facts of the present appeal, the assessee has furnished the municipal rateable value which is much less than the rental income offered - AO has not brought any concrete evidence on record to demonstrate that parties have concealed the real position. That being the case, no further addition can be made to the rental income by computing notional rent based on the interest free security deposit. In view of the aforesaid, we delete the addition made by the assessing officer. - Decided in favour of assessee. Disallowance u/s 14A - HELD THAT:- As emerging from record reveals that during the year under consideration, the assessee has not earned any exempt income. Therefore, in absence of any exempt income earned by the assessee, no disallowance under section 14A r.w.r.8D can be made. This is a fairly well settled legal principle enunciated in a number of judicial precedents including the decision of the Hon ble jurisdictional High Court in case of Principal Commissioner of Income-tax vs M/s Ballarpur Industries Ltd [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] . Disallowance of interest expenditure - from the material on record as found that the entire borrowings were from related parties and the assessee was used as a conduit for availing the loan from Mercator Ltd and lending to AHM Investments Pvt Ltd thus, alleging that the assessee was unable to establish that the interest expenditure was incurred for the purpose of business - HELD THAT:- The factual matrix clearly reveal that before the departmental authorities, the assessee failed to furnish any evidence to demonstrate that the interest expenditure claimed as deduction was incurred for the purpose of business. This the factual position remains unaltered even before us. The onus is entirely on the assessee to establish on record that the interest expenditure claimed as deduction was incurred for the purpose of business. The assessee having failed to do so, the claim cannot be allowed. Accordingly, we do not find any reason to differ with the view expressed by the learned first appellate authority. This ground is dismissed. 2022 (1) TMI 778 Additions in respect of employees contribution towards ESI/PF - assessee s failure to pay the employee s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - Scope of amendment - HELD THAT:- Admittedly and undisputedly, the employees contribution to ESI and PF co llected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. Thus addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted.- Decided in favour of assessee. 2022 (1) TMI 790 Disallowance u/s 14A r.w.r. 8D in rectification proceedings under Section 154 - Mandation of recording satisfaction - expenditure incurred for earning income exempt - HELD THAT:- Assessee has to make a claim with regard to expenditure incurred for earning income which is not chargeable to tax, which requires to be examined by the AO and satisfaction has to be recorded, more particularly, when the Assessing Officer has not agreed with the disallowance claim under Section 14A of the Act. For disagreeing with such disallowance, deduction of the expenditure is not to be allowed which has been incurred by the assessee in relation to the income which does not form part of the total income under the Act as per Section 14A(1) of the Act. Such expenditure which has been incurred in respect of other income which has to be treated as part of the total income has to be considered under Section 14A(2) of the Act read with Rule 8D of the Rules, but suo moto disallowance under Section 14A of the Act made by the Assessing Officer is unwarranted. Recording of satisfaction by the Assessing Officer under Rule 8D(2) of the Rules is mandatory. In the light of these provisions, the Assessing Officer invoking Section 154(2) to rectify the assessment order is wholly untenable for the reason that there is no mistake apparent on the face of the record to invoke the proceedings under Section 154 of the Act. On the other hand, the matter requires adjudication upon the issue which is a debatable issue as pointed out by the Tribunal. In such circumstances, the order passed by the Assessing Officer under Section 154 of the Act and confirmed by the CIT(A) is unsustainable. On these material aspects, the Tribunal has rightly applied its mind and has reversed the finding of the authorities which cannot be faulted with. - Decided in favour of assessee. Customs 2022 (1) TMI 777 DEEC Scheme - fraudulent export of polyester fabrics and duty-free import of Polyester Filament Yarn and other items - proceedings initiated, but was not completed during the 23 years - pendency of proceedings for such a long period can be construes as reasonable period or not - HELD THAT:- There are no justification to hold that the respondents have acted in the manner law requires them to act. It is not in dispute that after the show-cause notice was issued on 30th April 1997, the petitioners were called upon for a hearing in the year 2006. At least, till 2006, it can be inferred that the issue was live. However, why no final order was passed immediately after the hearing was granted to the petitioners is not disclosed in the affidavit-in-reply. The respondents seem to have slipped into deep slumber thereafter. While the respondents right in law to initiate proceedings for violation of the provisions of the Act can never be disputed, at the same time they do not have the unfettered right to choose a time for its termination and conclude proceedings as per their convenience - Indeed, the words reasonable period call for a flexible rather than a rigid construction having regard to the facts of each case, but the period in excess of two decades without the respondents sufficiently explaining as to what prevented them to conclude the proceedings has to be seen as unreasonable and the reasons assigned in the affidavit-in-reply as mere excuses for not adjudicating the show-cause notice according to law. The respondents should be granted liberty to conclude the proceedings. It is the petitioners who have approached the Court to have the impugned show-cause notice set aside. Had the petitioners not invoked the writ jurisdiction of this Court, the show-cause notice would have continued to gather dust. The petitioners, in such circumstances, cannot possibly be worse off for seeking a Constitutional remedy and thereby suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them. The sum of ₹ 2 crore which the petitioners were required to deposit in course of investigation shall be returned with interest @ 12% per annum. Let such return be effected with interest within two months of receipt of a certified copy of this order by the respondents - Petition allowed - decided in favor of petitioner. 2022 (1) TMI 776 Refund of excess amount deposited - Mandatory pre-deposit - Seeking closure of bonds and return of Bank Guarantee - Import of oxygen sensors and loud speakers for use and inputs in the manufacture of ICU ventilators without payment of customs duty - benefit of exemption Notification No.20/2020-CUS dated 09.04.2020 read with Customs (Import of goods at Concession rate of duty) Rules, 2017 availed - HELD THAT:- In the light of the undisputed fact that the Order-in-Original dated 10.03.2021 itself states that the petitioner had a period of 60 days to prefer an appeal under Section 128 of the said Act of 1962 coupled with the Circular dated 16.09.2014 and the decision of this Court in M/S ORACLE INDIA PVT. LTD. VERSUS UNION OF INDIA, NEW DELHI OTHS. [ 2013 (7) TMI 720 - KARNATAKA HIGH COURT] , the impugned letters dated 11.03.2021 and 16.03.2021, whereby the respondents have encashed the bank guarantee and invoked the continuity bonds in respect of the entire disputed amount as directed in the impugned order is not only contrary to law and the facts and probabilities of the case but also opposed to the principles of natural justice, in that no opportunity, much less reasonable or sufficient opportunity was provided to the petitioner to prefer an appeal within the statutory period of 60 days and the respondents have hastily and hurriedly proceeded to issue the impugned letters which cannot be countenanced under any circumstances whatsoever and the same deserve to be quashed. The petitioner is right in his contention that the maximum liability to deposit the disputed amount in the appeal already preferred by the petitioner, which is pending adjudication is 7.5% of the disputed amount out of the total sum of ₹ 34,09,343/- as directed in the Order-in-Original; it follows therefrom that in view of my finding that the impugned letters / orders are illegal and arbitrary and deserve to be quashed, by also applying the principles of restitution, it is necessary to direct the respondents to refund / repay any sum in excess of ₹ 34,09,343/- back to the petitioner pending disposal of the appeal and by issuing necessary directions in this regard - Petition allowed. 2022 (1) TMI 775 Seeking payment of duty drawback claim, along with interest - HELD THAT:- The material on record indicates that it is an undisputed fact that vide Order dated 06.07.2019, the respondent No.1 had rejected the claim of the petitioner for duty drawback. However, by Order dated 06.03.2020, the Appellate Authority not only set aside the said order dated 06.07.2019 passed by respondent No.1, but has also come to the categorical conclusion that the petitioner is entitled to the duty drawback claim made by him as well as interest on the same under Section 27A of the Customs Act - the said Order dated 06.03.2020 was binding upon the respondent No.1 who had no other option than to give effect and implement the same thereby disbursing the duty drawback claim in favour of the petitioner together with applicable interest as directed in the Order dated 06.03.2020 and failure on the part of the respondent No.1 to appreciate this and instead proceeding to reject the claim of the petitioner on irrelevant and extraneous grounds is clearly illegal, arbitrary and opposed to the principles of resjudicata. The respondent No.1 has proceeded to revisit / review the Order dated 06.03.2020 passed by the Appellate Authority which is clearly impermissible in law particularly when the Order dated 06.03.2020 passed by the higher Authority / Appellate Authority setting aside the earlier Order dated 06.07.2019 passed by respondent No.1 had attained finality and become conclusive and binding upon respondent No.1, who was neither entitled nor empowered to either interpret / re-examine / review / revisit or go behind / beyond the said Order dated 06.03.2020 and the only option available to the respondent No.1 was to give effect to and implement the Order dated 06.03.2020. Petition allowed. Corporate Laws 2022 (1) TMI 772 Oppression and mismanagement - seeking inter alia injunction against the Respondent from proceeding with the Rights Issue as it was being issued with a motive to dilute the shareholding of the Appellant in the Respondent Company - section 241 and 242 of Companies Act - HELD THAT:- It is seen that the matter was listed on 04.01.2022 and it is pertinent to mention that NCLT has recorded that the Petitioner was heard in full‟. It is significant to mention that in all the aforenoted Orders passed by NCLT both sides were present and heard. The matter was listed for 06.12.2021 as a specially ordered matter‟. There are force in the contention of the Learned Counsel for the Respondent that it could not be heard on 14.01.2022 on account of the pandemic and was hence posted to 18.02.2022 - Section 242(4) of the Act empowers the Tribunal to pass any Interim Order on an Application made by any party to the proceeding, which it thinks fit for regulating the conduct of the Companies affairs upon such terms and conditions as appear to it to be just and equitable. There is an Order of Status Quo in a Petition filed by the Appellant in the absence of any Prayer to that effect/issue, we observe that NCLT has not passed any Order on the merits of the case on hand. From the bare perusal of the Impugned Order, the Tribunal has the power to make Interim Orders which it thinks fit for regulation of the conduct of the affairs of the Company - keeping in mind the ingredients of Section 241 and 242 of the Act, arrives at the resultant conclusion, without expressing any opinion on the merits of the matter, also not delving deep into the case, as allegations of oppression and mismanagement consist of mixed questions of fact and law, which cannot be decided at this interim stage, directs the NCLT Kolkata Bench to take up the matter on 18.02.2022, without any further adjournments, dealing with all issues raised, in accordance with law. Appeal disposed off. Insolvency & Bankruptcy 2022 (1) TMI 773 Validity of distribution made by the Appellant as per the provision of Insolvency and Bankruptcy Code 2016 - revival of Corporate Debtor - HELD THAT:- In the present case, there is an order of attachment under Prevention of Money Laundering Act . Though the Adjudicating Authority vide its order dated 22.07.2020 has allowed the Liquidator to proceed with the sale of the assets; but the operation of the said order has been stayed by the Hon ble Calcutta High Court vide order dated 20.11.2020 in WP No. 7962/2020 filed by the ED. In view of the same, the sale of the assets of the CD is not possible at this stage and due to legal intricacies, it is absolutely uncertain as to when the Liquidator will be able to realise the assets of the CD by disposing the same as a going concern. In these circumstances, if the impugned order passed by the Adjudicating Authority is upheld then the realisation of the dues of Financial Creditors will be postponed indefinitely which is contrary to the declared objects of Code. Even otherwise in the case of a going concern, Even the account of the borrower is regular, the dues of the Financial Creditors are repaid out of the profits made by the CD. As per Section 53(1)(b) of the Code, the Workmen s dues for the period of 24 months preceding the liquidation commencement date and the dues owed to the Secured Creditors rank pari passu. In the present case, no workmen s dues are outstanding and therefore, there will be no need to set apart any amount for payment towards workmen s dues. The Adjudicating Authority in its impugned order dated 26.06.2020 has reviewed its own order dated 14.01.2020 in C.A(IB) No.1546/KB/2019 in CP (IB) No.543/KB/2017. The Adjudicating Authority (NCLT) has only power to rectify any mistake apparent from the record in accordance with Section 420 of the Companies Act, 2013 R/w Rule 154 of NCLT Rules, 2016. The Code also provides for appeals and Appellate Authority vide section 61 of the Code - the appeal is partially allowed by setting aside the impugned order of Adjudicating Authority dated 26.06.2020 as stated at clause a of the relief sought. Application disposed off. 2022 (1) TMI 771 Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Operational Creditors - time limitation - HELD THAT:- The present is a case where Corporate Debtor in spite of several notices issued by the Adjudicating Authority did not appear to contest the Application. The date of default having been specifically mentioned in the Demand Notice as well as in the Section 9 Application as 26.11.2018, there was no material with the Adjudicating Authority to take any contrary view regarding the date of default. The observations of the Adjudicating Authority that last invoice dated 08.07.2017 which does not appear to be correct which is in altogether different format as compared to other 9 invoices. The mere fact that the invoice dated 08.07.2017 was sent in different format was not any factor on which the invoice could have been ignored. The 10 invoices have been referred to in the Demand Notice as well as in the Section 9 Application - When Operational Creditor was accepting the payment of amount in Cash and there was nothing to suggest to the contrary there was no occasion for Adjudicating Authority to disbelieve the said payments. The last payment having been made on 26.11.2018 and the Application filed on 12.12.2019 was well within time and we are thus of the view that Adjudicating Authority without any basis rejected the Application of the Operational Creditor as barred by time - matter remanded to the Adjudicating Authority to pass an appropriate Order of admission of the Application after 30 days from today giving liberty to the parties to settle, if they so desire in between. 2022 (1) TMI 774 Validity of Winding up order - breach of the mandatory requirement of advertisement before ordering winding up - bar of time limitation - estoppel from pleading fraud - violation of the principles of natural justice due to the denial of permission for cross examination - erroneous findings of fact - application of incorrect standard of proof on the question of fraud - erroneous conclusions regarding the consequences of fraud, assuming that fraud was established - winding up under clause (c) of Section 271 (directly on the ground of fraud) by any person authorised by the Central Government by notification or winding up under clause (e) of Section 271 (on the ground that it is just and equitable to wind up) in terms of Section 224(2)(a) on the basis of a report of investigation under Section 213(b). Applicability of provisions of IBC - HELD THAT:- Antrix, which initiated the proceedings for winding up, is neither a financial creditor nor an operational creditor nor a corporate applicant. This is why Antrix have not and could not have gone for insolvency resolution process, under the IBC, but taken recourse to Section 271(c) of the Companies Act, 2013. Hence the ratio in Jignesh Shah, as applicable to debts, whose recovery in any case should not have been time barred on the date of initiation of the proceedings for winding up/insolvency resolution process, cannot have any application to the case on hand. Acknowledge of Debt on the basis of the entries made in the balance sheets of a corporate debtor - Period of limitation - HELD THAT:- limitation is not always akin to a lighted matchstick to a train of gun powder. The date of commencement of the period need not necessarily be static. The date of commencement may keep changing depending upon the acts of omission and commission on the part of the party against whom the action is initiated. These acts of omission and commission constitute the bundle of facts, which determine the question whether an action is barred by limitation or not. - The termination of the Contract on 25.02.2011, was not triggered by an allegation of fraud and corruption. Fraud and corruption were discovered only later and by the time the discovery was made, the attempts to reap the fruits of fraud had reached the pinnacle. These attempts continue even till date and this falls squarely within Section 271(c). Therefore, the contention that the petition was barred by limitation was rightly rejected by the Tribunal and we have no reason to take a different view. Advertisement of the Company Petition - HELD THAT:- The requirement to advertise a petition for winding up does not flow out of the statute, but flows out of the Rules. Since the requirement to advertise a petition for winding up is stipulated in Rules 5 and 7 of the Companies (Winding up) Rules, 2020, what is prescribed in Rule 35 would cover even petitions for winding up. Though technically the Tribunal may not be correct in invoking useless formality theory in cases of this nature, we can certainly apply the test of prejudice, especially in the light of the serious nature of the allegations of fraud, on the basis of which the company is sought to be wound up. This is not a case where the company is sought to be wound up on the ground of inability to pay debts or on just and equitable ground. This is a case of fraud and all stakeholders are fully aware of the proceedings and they have even shown extreme urgency in enforcing an ICC Arbitration award and 2 BIT awards, before the conclusion of the winding up proceedings. Therefore, we are unable to sustain the argument that the failure of the Tribunal to order the publication of an advertisement rendered the entire proceedings unlawful. Estoppel - HELD THAT:- The question is as to whether all the above would lead to an inference of estoppel against Antrix. The fact that the Agreement dated 28.01.2005 was not terminated on the ground of fraud, through the letter dated 25.02.2011, cannot take the appellants anywhere. The earliest First Information Report for the offences under Section 420 read with Section 120B of the IPC was filed by the CBI only on 16.03.2015. The officers of Antrix as well as officials of the Government were also implicated in the FIR for offences under the Prevention of Corruption act, 1988. Therefore, the appellants cannot set up a plea of estoppel on the ground that the termination of the Agreement in the year 2011 was not on the ground of fraud, when the discovery of fraud itself was many years later - For the very same reason, the failure of Antrix to plead fraud in the ICC arbitration proceedings, cannot also operate as estoppel. The arbitral proceedings commenced in the year 2013 and the award itself was passed on 14.09.2015. Antrix cannot be expected to plead fraud in the arbitral proceedings, even before the discovery of fraud. In the case on hand, the fraud alleged by Antrix is not solely on the ground that their consent to the Agreement dated 28.01.2005 was vitiated by fraud. What is alleged in the petition for winding up are, (i) formation of the company for fraudulent or unlawful purpose; (ii) fraud in the conduct of the affairs of the company; and (iii) fraud on the part of the persons who were involved in the formation and/or in the management of affairs of the company. The fraud relatable to the agreement, is only one facet of the whole scheme of things. Therefore, we have to go beyond section 19 of the Contract Act - Explanation (i) under Section 447 of the companies Act, 2013 also defines fraud, but for the purposes of Section 447. What is covered by Section 271(c) of the Companies Act, 2013 is a fraud that goes beyond what lies in the realm of contract or in the realm of the penal provisions of the Companies Act, 2013. Hence the contention that Antrix was estopped from pleading fraud, was rightly rejected by the Tribunal and we see no reason to taken a different view. Refusal to permit cross-examination - HELD THAT:- In the case on hand, Antrix asserted that Devas offered services which were nonexistent, through a device which was not available and that even the socalled intellectual property rights over the device were not available. Therefore, obviously Antrix cannot lead evidence to show the nonexistence or nonavailability of those things, either by oral evidence or by subjecting their officials to crossexamination by Devas. Devas never produced before the Tribunals any device nor did they demonstrate the availability to Devas services. All that Devas wanted was, the crossexamination of the officials of Antrix. Any amount of crossexamination of the officials of Antrix could not have established the existence of something that was disputed by Antrix - It is clear from the timeline of events that the application for crossexamination was moved by Devas after conclusion of the arguments on the side of Antrix in the main petition itself, and that too after the unsuccessful attempt made by one of its shareholders to assail the constitutional validity of the statutory provisions. Therefore, the Tribunal was right in rejecting the request for crossexamination. Locus standi of shareholders - HELD THAT:- It is true that the petition for winding up was filed under Section 271(c) alleging (i) that the affairs of the company have been conducted in a fraudulent manner; (ii) that the company was formed for fraudulent and unlawful purpose; and (iii) that the persons concerned in the formation or management of its affairs have been guilty of fraud. But there is no scope either in the Act or in the Rules for the impleadment of any shareholder as a respondent to the petition for winding up. Rule 3(1) of Companies (Winding Up) Rules 2020 requires a petition for winding up to be in Form WIN 1 or Form WIN 2. A look at these forms would indicate that there is no provision for making any one, as the respondent in the petition. Therefore, the question of impleading any shareholder at the time when the petition for winding up was filed, did not arise - NCLT did not have to go through the formality of ordering notice before admission, as a battery of counsel appeared for Devas, raised preliminary objections and also sought time to file response. The Tribunal passed a detailed order dated 19.01.2021 admitting the company petition and appointing a provisional liquidator even while granting time to the company to file its reply. In paragraph 5 of the detailed order dated 19.01.2021, the preliminary submissions made by the company in liquidation against the admission of the company petition, are recorded. The persons who are ducking/ avoiding summons in the criminal prosecution, cannot be heard to contend that they must have been heard in the petition for winding up. Taking advantage of their citizenship/residence abroad, these shareholders are prosecuting proceedings for the enforcement of (i) ICC Arbitral Tribunal Award in India; and (ii) BIT Awards overseas, even while making it impossible for CBI to serve summons on them for the past five years. It is not open to such persons to raise the bogey of failure to afford an opportunity. Findings erroneous and perverse and the standard of proof applied incorrect - HELD THAT:- The appeal before us which is under Section 423 of the Companies Act, 2013, is only on a question of law. When two forums namely NCLT and NCLAT have recorded concurrent findings on facts, it is not open to this Court to reappreciate evidence. Realising this constraint, the learned Senior Counsel for the Appellant sought to project the case as one of perversity of findings. But we do not find any perversity in the findings recorded by both the Tribunals. These findings are actually borne out by documents, none of which is challenged as fabricated or inadmissible. Though it is sufficient for us to stop at this, let us go a little deeper to find out whether there was any perversity in the findings recorded by the Tribunals and whether such findings could not have been reached by any reasonable standards. The detailed findings recorded by the Tribunal show that they are final and not prima facie. Merely because NCLAT used an erroneous expression those findings cannot become prima facie. All the grounds of attack to the concurrent orders of the NCLT and NCLAT are unsustainable - appeal dismissed. 2022 (1) TMI 770 Approval of the Resolution Plan along with the Scheme of Amalgamation - Section 30(6) read with Section 31 of Insolvency Bankruptcy Code, 2016 (IBC, 2016) read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- It is noted that Form H has been filed by Resolution Professional wherein all information/details as regard to conduct of CIRP as well as process adopted for Resolution Plan has been given. The Resolution Applicant has proposed to pay the financial creditor ₹ 77,10,00,000/- against its total admitted claim of ₹ 95,03,71,082/-. The amount of ₹ 12,32,44,348/- has been proposed in the Resolution Plan to pay to the Operational Creditor against the total admitted claim of ₹ 12,32,44,348/- including the Statutory Dues and Employees/Workmen which is 100% of the total admitted amount - in respect to CIRP cost, the resolution applicant has proposed to pay the CIRP cost from the cash from of the business of the Corporate Debtor, but is also proposed that in case of short fall of CIRP cost from the operational cash flow, it shall be additionally infused by the Resolution Applicant. The resolution applicant is providing ₹ 89,47,44,348/- plus equity or preference shares under the Resolution Plan against the liquidation value of ₹ 8300.75 lakhs - as regard to the eligibility of resolution applicant under Section 29A along with an undertaking of the resolution applicant to this effect has been filed. Also Regulation 36 to 39 of CIRP Regulations, 2016 has been complied with. The resolution plan addresses the cause for failure and also contains measures to run the Corporate Debtor in future and that the resolution plan is both feasible and viable as held by CoC and it also contains provisions for its effective implementation - the resolution plan is approved. Application allowed. 2022 (1) TMI 769 Seeking direction to Resolution Professional of Afcan Impex Private Limited and member of CoC to allow submission of the Resolution Plan by the applicant in the matter of Afcan Impex Private Limited - Section 60(5) read with Section 30 of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The respondent No. 1 published Form-G on 09.06.2021 inviting expression of interest for which the last date was 07.07.2021 and the last date for submission of the resolution plan was 16.08.2021 However, the applicant expressed its willingness to submit the resolution plan on 30.09.2021 which is much beyond the last date for submission of the resolution plan - It is further noted that the CoC approved the resolution plan with 100% voting on 01.10.2021 and the application before this Adjudicating Authority for approval of the resolution plan as approved by the CoC is pending. The object of IBC is maximization of the value of Corporate Debtor in a time bound manner and commercial wisdom of CoC is the central point under the IB Code - We are not inclined to interfere in the matter where the CoC has already passed the resolution plan and moreover the extension of 90 days granted vide order dated 31.08.2021 expired on 14.11.2021. Application rejected. 2022 (1) TMI 768 Seeking sale as a going concern - Section 35(1) (f) 60(5) of the Insolvency Bankruptcy Code, 2016 r/w Reg. 32(f) and 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations Rule 11 of the NCLT Rules, 2016 - HELD THAT:- Since the interests of all the stakeholders have been taken care of and the Secured Financial Creditor (Erstwhile CoC) has also approved, it was submitted that this Tribunal may be pleased to pass necessary orders for sale of the corporate debtor as going concern. IA/463/C HE/2021 is the amendment Application seeking modification in the prayers in IA/199/CHE/2021 and the same is hereby allowed. The Liquidator is permitted to sell the assets of the Corporate Debtor as a going concern to the Respondent as per Regulation 32A of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016. The Liquidation period in respect of the Corporate Debtor is extended for a period of 6 months from the date of this order - Application disposed off. Service Tax 2022 (1) TMI 765 100% EOU - Refund claim of unutilised input service tax credit - Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) dated 18.06.2012 - quarter April, 2017 to June, 2017 - HELD THAT:- A perusal of clause (g) of Notification No.27/2017 shows that it speaks of closing balance of credit available with assessee, and nowhere in entire notification, there is any mention that the closing balance is to be considered as the amount shown as closing balance in ER2 Return. The objection of department is solely on the basis of closing balance declared in ER2 Return. The stand of department that since the appellant did not opt for filing revised return within the given time, they could claim refund of the amount as declared in ER2 Return only. But, there has been no objection to the submissions made by the appellant from the very beginning - the denial of refund claim in part, solely on the basis that the same was to be given in respect of closing balance of credit as declared in the return for the Month of June 2017, is not legal and proper, as substantive benefit cannot be denied on technical reasons, all the more, when there was no such condition in Notification No.8/2016-CE (NT) dated 01.03.2016. The original authority is directed to sanction the balance refund claim of ₹ 30,19,866/- along with interest from three months after the date of filing of refund claim, till the date of sanction of refund, within 45 days from the date of receipt or service of this order - Appeal allowed - decided in favor of appellant. 2022 (1) TMI 766 Levy of service tax - works contract services - taxable services or not - It is the case of the petitioner that the work carried out by the petitioner was not liable to tax during the period in dispute as the work involved works contract and was liable to service tax for the first time with effect from 01.07.2007 with the insertion of Section 65(105) (zzza) of the Finance Act, 1994 - HELD THAT:- The Tribunal, being the final fact finding authority, will determine the question of facts and arrive at a conclusion on law. In case the petitioner is aggrieved by any such order of the Tribunal, the petitioner has an alternate remedy before the High Courts and the Hon'ble Supreme Court under the provisions of the Finance Act, 1994 read with Central Excise Act, 1944. The authorities under the Acts overburdened with litigation and it may not be fair to hold that the orders passed long after issuance of Show Cause Notice would be in Violation of Principles of Natural Justice. Nothing precluded the petitioner from knocking the doors of the Court under Article 226 of the Constitution of India for a Mandamus to direct the respondents to complete the assessment or bring a closure to the issue - Petition dismissed. 2022 (1) TMI 762 Security service - Non-payment of service tax, inspite of collection of service Tax from its clients - suppression of facts - extended period of limitation - HELD THAT:- It is beyond comprehension as to what prevented the department to investigate in the year 2004 itself in contacting the end users on the service base so as to verify the authenticity of these invoice copies. It is trite that the deficiencies in the investigation or incorrect demand in the first show cause notice cannot be made good in the second show cause notice and subsequent show cause notice alleging suppression of facts again is not reasonable since repeated issuance of notices would result in revisiting the concluded proceedings and reopening of the proceedings at any point of time. The fact finding authority having taken cognizance of the facts has reached at a conclusion that there was no suppression by the respondents to invoke the extended period of limitation which being purely based on the factual aspects of the matter, there are no reasons in interfere with the same. The substantial questions of law are answered in favour of the assessee and against the Revenue - appeal dismissed. 2022 (1) TMI 767 Maintainability of appeal - monetary amount involved in the appeal - Mutuality of interest - donations/contributions by non-members would be less than rupees two crores - HELD THAT:- Appeal is disposed of in terms of Circular No. 17/2019 (F. No. 279/Misc.142/2007-ITJ(Pt.), dated 8th August, 2019 issued by the Department of Revenue, Ministry of Finance, leaving all questions of law open. Central Excise 2022 (1) TMI 764 CENVAT Credit - goods which are not in the nature of Capital Goods - inputs having been used in the fabrication of storage tanks - eligibility of Explanation 2 of Rule 2(k) of the Cenvat Credit Rules, 2004 - requirement of perusal of certificate of Chartered Accountants or not - corroborative evidence or not - argument of the assessee is that the items on which the credit was availed had been used for commissioning and fabrication of the storage tanks would get covered under sub clause (iii) of clause (a) of the definition of capital goods and these are necessarily required for the activities in the factory and for manufacture of the final products. HELD THAT:- Whether the assessee had produced supportive documents based on which the Chartered Accountant had certified in their favour. On going through the order passed by the tribunal as well as the other materials which were on record, it is found that the Chartered Accountant certificate does not specifically state that it has been issued upon verification of all the details. It is argued by the Learned Counsel for the assessee that it may not be required for the Chartered Accountant to spell out the said details. However, it is the duty on the part of the assessee to produce documents to show that the certificate has been issued upon verification of all the details. This has not been done by the assessee as there is no record referred to or relied on by the tribunal which corroborates the certificate issued by the Chartered Accountant. Thus, it is clear that the Chartered Accountant certificate was referred to and relied upon for the first time before the tribunal. In such circumstances, the appropriate course that the tribunal could have been adopted was to remand the matter to the adjudicating authority to call upon the assessee to substantiate the Chartered Accountant certificate by producing relevant documents. However, the tribunal accepted the certificate in toto without noting the fact that there were no corroborative documents produced by the assessee to substantiate the contents of the certificate which admittedly did not certify that the Chartered Accountant had verified the details and there after issued the certificate. Certificate which was produced before the tribunal, appears to have been produced for the first time before the tribunal - There is nothing on record to indicate that the assessee had produced supportive documents to substantiate the Chartered Accountant certificate. Even assuming, the assessee was in possession of the documents, the endeavour of the tribunal should have been to either verify the documents, call for a remand report or remit the matter to the adjudicating authority to verify the correctness of the certificate issued by the Chartered Accountant. This exercise having not been done, a question of law arises for consideration in this appeal. The verification is required to be made as to the correctness of the contents of the Chartered Accountant certificate, as the certificate appears to have been produced for the first time before the tribunal and does not indicate that the same has been issued after due verifications of the details - matter has to be remanded to the adjudicating authority for fresh consideration. Appeal allowed by way of remand. 2022 (1) TMI 760 CENVAT Credit - inputs - inputs were received between November 1997 and December 1998 - denial of credit on the ground that under rule 3(1) of the 2004 Credit Rules, credit could be availed only in respect of the central excise duty paid on inputs received in the factory of the manufacturer on or after 10.09.2004 - eligibility of the appellant to avail credit under rule3(2) of 2004 Credit Rules - failure on the part of appellant to produce documentary evidence in the form of relevant invoices/records showing receipt, issuance, consumption and proper accounts of inputs on which credit was availed - violation of rule 9(5) of the 2004 Credit Rules - interest - penalty - HELD THAT:- In the present case, it is seen that the appellant has explained as to why it could not immediately avail CENVAT credits on Tanks fabricated in the year 2007. It has been stated that the process of collating and mapping the actual quantity of steel plates issued and consumed in the fabrication of Storage Tanks took some time as the goods were received between 1997-1998 and the fabrication work of Storage Tanks was completed only in the year 2007. It needs to be noted that under rule 4(1) of the 2004 Credit Rules, it was only in September 2014 that a time limit of 6 months/1 year was prescribed for availing CENVAT credit. The observations made by the Commissioner in the impugned order that declaration was required to be filed under rule 57(G) of the 1944 Excise Rules, is also not relevant as the eligibility of inputs received by the appellant in the factory was to tested in terms of the 2004 Credit Rules and not the rule prevalent earlier, namely rule 57(G) of the 1944 Excise Rules. Even otherwise, the receipt of the HR sheets and Steel Plates were covered under the declarations submitted by the appellant under the erstwhile rule 57(T) of the 1944 Excise Rules. Copies of these declarations have been filed and from the same it is clear that the HR sheets under Steel Plates had been declared to the Department. The Commissioner, on his own, examined as to whether the appellant was eligible to avail and utilize CENVAT credit under rule 11 or rule 3(2) of the 2004 Credit Rules. It needs to be noted that the appellant had not made any such claim for availing the credit. Appeal dismissed - decided against Revenue. 2022 (1) TMI 759 CENVAT Credit - Chemicals sent to the job workers for carrying out further process - inputs which were not received within 180 days - rule 4 (5)(a) Central Excise Rules,2004 - suppression of facts or not - time limitation - HELD THAT:- Admittedly the appellant has sent the inputs chemicals for job work in the water base. The entire processed goods have been returned within 180 days. The remaining quantity was subsequently returned back though after 180 days but the same was in the form of wastage. In fact the job worker is not required to return the wastage material which is predominantly the contaminated water therefore, it cannot be said that the appellant has not received back the processed goods within 180 days. In this fact the appellant has received back the processed goods within 180 days therefore, the demand on the ground that the appellant has not received the goods within 180 days is not sustainable. Moreover, even if it is assumed that the subsequently received material after 180 days is part of the processed goods even then only due to delay in receipt Cenvat credit cannot be denied as the appellant was entitled for Cenvat credit as and when the input / processed goods received after 180 days therefore on both the count the cenvat credit could not have been denied or demanded by the Revenue. There is a short receipt of 2% material - since the appellant has sent their chemicals in the water base during the process it is obvious that a certain quantity of the contaminated water shall be wasted therefore, the same is not capable of being returned by the job worker. Irrespective of the fact whether the same is liable to be returned or not there is no dispute that the non receipt of material is wastage and nothing else. It is settled that any wastage arising during the course of manufacture cenvat credit attributed to said wastage cannot be denied. Time limitation - HELD THAT:- Since the appellant has followed the procedure as prescribed in Rule 4(5)(a) for movement of goods for job work. No suppression of fact can be attributed to the appellant. Therefore, the demand is not sustainable on the time limitation also. Appeal allowed - decided in favor of appellant. 2022 (1) TMI 758 Refund of the amount Central Excise Duty - deemed exports or not - supplies made to ONGC and Oil India Limited against International Competitive Bidding - exemption under Serial No 336 of Notification No 12/2012-CE dated 17.03.2012 - when the goods are exempted and cleared on payment of duty whether subsequently refund can be claimed? - HELD THAT:- In the present case there is no dispute that the goods cleared by the appellant were indeed exempted in terms of Notification No. 12/2012-CE dated 17.03.2012. Therefore, the excise duty was not payable since the appellant has paid the excise duty which was otherwise not payable the same is refundable to the appellant. In the case of COMMISSIONER VERSUS SUNCITY ALLOYS PVT. LTD. [ 2007 (2) TMI 137 - HIGH COURT, RAJASTHAN] , the Hon'ble Rajasthan High court held that if in respect of the goods exported under claim for rebate of duty undisputedly duty was not payable and still the manufacturer paid the duty the same has to necessarily refund to the manufacturer - In the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SURESH C. NAYI [ 2010 (7) TMI 747 - CESTAT, AHMEDABAD] it was held that the benefit of exemption notification can be claimed at any stage. In the present case also even if the appellant has claimed the benefit subsequent to clearance of goods or payment of duty the benefit of exemption needs to be extended to the appellant. In view of the settled legal position there is no reason to deny the refund of excise duty paid by the appellant in respect of exempted goods - the appellant is entitled for the refund - appeal allowed. 2022 (1) TMI 763 Condonation of delay of 376 days in filing appeal - sufficient cause for delay was shown or not - HELD THAT:- It is trite that there is no straight jacket formula for exercising the discretionary power in condoning the delay which necessarily depends on the facts and circumstances of the case. It is true that the explanation offered by the appellant for condoning the inordinate delay was not substantiated by the material evidence but in the interest of justice and equity, we deem it appropriate to provide an opportunity to the appellant to satisfactorily explain the cause for the delay in filing the appeal. The ends of justice would be sub-served in setting aside the order and remanding the matter to the CESTAT whereby an opportunity may be provided to the appellant to file a better affidavit for explaining the cause for the delay satisfactorily - matter is remanded to the CESTAT to re-consider the same in accordance with law after providing an opportunity to the appellant to file a better affidavit for explaining the reasons satisfactorily inasmuch as the delay caused in filing the appeal. 2022 (1) TMI 761 Condonation of delay in filing appeal before the Commissioner (appeals) - Levy of excise duty - manufacture of concrete mix at project site for the purpose of construction - applicability of N/N. 4/1997-CE, dated 1.3.1997 - Applicability of similar Notification No.12/2012-CE, dated 17.3.2012 to the subject tax period - applicability of CBIC Circular bearing No.368/1/98, dated 6.1.1998 - HELD THAT:- It is not in dispute that the order in original was passed by the adjudicating authority on 14.6.2019 and the writ petition was filed by the appellants before this Court in the month of September 2020. The statute prescribes the limitation period of 60 days with the next 30 days as per the proviso i.e., totally 90 days in filing the appeal before the Commissioner of Central Excise (Appeals) against the order in original under Section 35 of the Act. The appellants having not availed the said statutory remedy, challenged the order in original impugned contending that they have manufactured the concrete mix at the project site which is exempt under Circular dated 6.1.1998 and no RMC was manufactured. It is true that the appellants have not availed the alternative remedy of statutory appeal available under the Act and have filed the writ petition challenging the order in original, but the Writ Court not merely dismissed the writ petition as not maintainable but further proceeded to decide the matter on the merits of the case, thereby concluded that the concrete mix manufactured by the appellants at the project site classified by the adjudicating authority as RMC is justifiable. It would be appropriate in the interest of justice and equity to permit the appellants to prefer an appeal before the first appellate authority i.e., Commissioner of Central Excise (Appeals) to consider the matter on merits without going into the issue of limitation subject to imposing costs and the petitioner depositing the amount as required, for preferring an appeal - In the usual course if the assessee knocks the doors of the Writ Court without exhausting the alternative remedy of appeal available under the Act, no exception can be found with the Writ Court in rejecting the writ petition as not maintainable, but having regard to the peculiar facts and circumstances of the case, as in the present case when the appellants have approached the Writ Court with an alternative relief of seeking permission to file an appeal before the appellate authority, any finding recorded on the merits of the case which indeed relates to facts warrants interference. It is clear that in the absence of power vested with the appellate authority to condone the delay, in the peculiar facts and circumstances of the case, the ends of the justice would be met in permitting the appellants to file an appeal instead of adjudicating the matter on merits subject to conditions imposed - appeal allowed in part. 2022 (1) TMI 757 Liability to pay interest on differential duty - goods cleared from depot - HELD THAT:- There is no dispute that differential duty and interest is payable in principal. However, the appellant have raised dispute about calculation of duty. It is their submission that if the cum-duty price is considered the duty amount will come to ₹ 12,95,181/- instead of total differential duty paid amounting to ₹ 15,01,214/-. This amount is sufficient to meet the differential duty of ₹ 12,95,181/- and ₹ 2,06,033/- towards interest. Accordingly, the duty of ₹ 15,01,214/- paid by them may be considered as interest and duty and there is no further interest liability. The cum-duty benefit is legally available to the assessee. Statue provides that whenever duty is calculated, it should be calculated considering cum-duty price. However, there is no findings on the facts that whether price claimed by the appellant is cum-duty or otherwise. Therefore, only for the purpose of recalculation of value and verifying related documents, the matter needs to be remanded. Appeal allowed by way of remand. Indian Laws 2022 (1) TMI 756 Levy of penalty of dismissal from service - Fraud by the Bank Clerk - industrial dispute - Breach of duty as a custodian of public money - dishonesty, fraud or manipulation of documents - standards of proof of criminal proceedings to disciplinary proceedings as the misconduct by an employee in disciplinary proceedings - probabilities and preponderance of evidence - HELD THAT:- The High Court has fallen into an error in coming to the conclusion in the impugned judgment and directing, once again, the matter to be remitted to the Industrial Tribunal to now seek opinion of a hand writing expert. There are certain inherent legal limitations to the scrutiny of an award of a Tribunal by the High Court while exercising jurisdiction under Article 226 of the Constitution of India. If there is no jurisdictional error or violation of natural justice or error of law apparent on the face of the record, there is no occasion for the High Court to get into the merits of the controversy as an appellate court. That too, on the aspect of an opinion formed in respect of two sets of signatures where the inquiry was held by an officer of the bank who came to an opinion on a bare comparison of the signatures that there is a difference in the same. It has been looked at from the perspective of a banker s eye . This is, of course, apart from the testimony of the sister-in- law of the respondent. The High Court appears to have applied the test of criminal proceedings to departmental proceedings while traversing the path of requirement of a hand writing expert to be called for the said purpose - even the aspect of the other charges could not have been brushed aside in the manner it purports to. On the matter being remitted back, two witnesses deposed as to these aspects, being MW-3 and MW-4. The respondent was a clerk-cum-cashier. It is a post of confidence. The respondent breached that confidence. In fact, the respondent breached the trust of a widowed sister-in-law as well as of the bank, making it hardly a case for interference either on law or on moral grounds. The punishment imposed on the respondent could also hardly be said to be disproportionate. The conduct established of the respondent did not entitle him to continue in service. The challenge to the award of the Industrial Tribunal is repelled - Appeal allowed - decided in favor of appellant. 2022 (1) TMI 755 Validity of Arbitral Award - dishonor of cheque - legally enforceable debt or not - claimant having exercised the option under section 60 of the Indian Contract Act by adjusting the payment of ₹ 50 lakhs towards four earlier invoices, three invoices fully adjusted and one invoice partly adjusted - claimant not having made the claim in respect of those three fully paid invoices is estopped from raising the plea that the cheque of ₹ 50 lakhs issued by the respondent towards part payment having been dishonored - acknowledgment of liability in respect of all the outstanding invoices on the date of commencement of the arbitral proceedings or not. HELD THAT:- A perusal of the statement of claim indicates that the only averment regarding period of limitation is found in paragraph 26 of the statement of claim alleging that the cause of action arose to file the statement of claim. The respondent made last payment of ₹ 16 lakhs. Even according to the claimant, the claimant was entitled to interest at the rate of 21% monthly compoundable interest on principle amount from 20th January, 2011 to 20th December, 2016. It is thus clear that even according to the claimant the cause of action arose for payment of interest as well as principle amount after expiry of 45 days from the date of each invoice. The last invoice is dated 2nd June, 2011, the alleged part payment of ₹ 16 lakhs on 28th July, 2015 thus would not extend the period of limitation. It is clear that the entire claim had already become barred by law of limitation prior to 28th July, 2015 and was not a legally enforceable debt as on 28th July, 2015. Learned single Judge in the impugned judgment dated 5th September, 2019 considered the issue of limitation in detail and has rightly held that the supplies were payable respectively at the expiry of 45 days of each individual notice. The arbitration agreement was arrived at between the parties on 22nd November, 2016 and accordingly the terminus ad quem in respect of the claim in the arbitration was 22nd November, 2016. It is with reference to that date the bar of limitation has to be construed - the arbitral proceedings in this case commenced when both the parties agreed to refer their disputes to arbitration on 22nd November, 2016 in the company petition. The cause of action has to be within the period of three years prior to the date of commencement of the arbitral proceedings. A perusal of the record clearly indicates that the cause of action in this case was much prior to three years prior to the date of commencement of the arbitral proceedings i.e. 22nd November, 2016. Under section 18 of the Limitation Act, 1963, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed only where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability - Admittedly in this case, the claim was for recovery of the price of the goods sold and delivered to be paid after expiry of the period of credit. Article 15 of Part-II of the Limitation Act is applicable which provides for the period of three years when the period of credit expires. Admittedly, in this case the respondent was granted 45 days credit period for making payment of each invoice. The claimant though urged before this Court vehemently that the respondent having issued a cheque of ₹ 50 lakhs, which was dishonored, the entire outstanding claim under various invoices stood revived on the ground that there was fresh period of limitation under section 18 of the Limitation Act, the claimant having exercised the option under section 60 of the Indian Contract Act, no such inconsistent plea can be permitted. The power under Section 37 are narrower than the powers under Section 34 of the Arbitration Act which are already narrow. Learned Arbitrator has rendered various findings of facts on the issue of limitation after considering the pleadings, documents and oral evidence. Neither there was any perversity in the impugned award nor any patent illegality therein. Learned Single Judge rightly did not interfere with the impugned award - the appeal is totally devoid of merit and is accordingly dismissed. 2022 (1) TMI 754 Dishonor of Cheque - Suspension of order passed by the lower court - right ot appeal - insufficient funds - Section 148 of the N.I. Act, having retrospective effect or not - HELD THAT:- It is true that the right to appeal is an absolute right. However, in a case where a judgment and order of conviction and sentence is passed, the Court may order release of the accused on bail having regard to the nature of offence as also to other relevant factors, including its effect on society. In the present case, the cheques in question were issued in November December 2013 and there is no quarrel on the issue that the amounts involved are the legal dues payable by the applicant-accused to the respondent-complainant. While allowing the application (Exhibit-5) filed under Section 389 of Cr.P.C., the Sessions Court has directed the applicant-appellant to deposit 30% of the cheque amount as one of the conditions for suspending the judgment and order of conviction and sentence passed by the trial Court. Applicability of the amended provision of Section 148 of the N.I. Act - HELD THAT:- It has to be followed stricto sensu with purposive interpretation. Section 148 of the N.I. Act provides for the deposit of a minimum of 20% of the fine amount or compensation by the appellant-accused in an appeal preferred against conviction under Section 138 of the N.I. Act - In this case, the applicant-accused has been ordered to pay compensation of ₹ 19 Lacs by the trial Court, which, of course, is equivalent to the cheque amount and thus, to that effect, the provisions of Section 357(2) of Cr.P.C. would not apply to the present case. However, there is an error in the nomenclature adopted by the Sessions Court while passing the order dated 25.02.2019 inasmuch as the applicant-appellant has been directed to deposit 30% of the cheque amount instead of the amount of fine or compensation , which is the term used in the provision of Section 148 of the N.I. Act. Hence, the terminology used by the Sessions Courts in the operative part of the impugned order deserves to be modified to that extent. Considering the provisions of Section 148 of the N.I. Act and the Statement of Object and Reasons for the amendment, this Court finds no illegality in the direction issued by the Sessions Court in the order dated 25.02.2019 - the terminology used in the operative part of the order dated 25.02.2019 passed by the Sessions Court is modified so to be read that the conviction and sentence imposed by the trial Court shall stand suspended pending the appeal on condition that the applicant-appellant deposits 30% of the amount of compensation instead of the words - cheque amount . Rest of the directions issued in the impugned order dated 25.02.2019 remains unaltered - Application disposed off. 2022 (1) TMI 753 Dishonor of Cheque - insufficient funds - Compounding of offences - seeking preponing the date of hearing of main case from 10.01.2022 to today itself - HELD THAT:- It is apparent that both the contesting parties are ad idem that the compromise has been duly effected between the parties without any pressure, threat or undue influence and the terms of the said compromise have been duly complied with. The compromise would go a long way in maintaining peace and harmony between the parties and thus, a prayer has been made before this Court for compounding the offence in terms of Section 147 of the Negotiable Instruments Act, 1881 read with Section 320 (6) Cr.P.C. Since the offence relating to dishonour of cheque has a compensatory profile and is required to have precedence over punitive mechanism, therefore, the present revision petition deserves to be allowed. The petitioner is directed to deposit an amount of ₹ 30,000/- being 15% of the cheque amount with the High Court Lawyers' Welfare Fund within a period of 6 weeks from today. However, it is made clear that in case the petitioner does not deposit the said amount of ₹ 30,000/- within the aforesaid period then the present criminal revision would be deemed to have been dismissed. Since, the main case has been decided, application bearing CRM-36741-2021 for suspension of sentence of applicant-petitioner is rendered infructuous and is disposed of. 2022 (1) TMI 752 Dishonor of Cheque - initiation of proceedings under Section 138 of the N.I. Act against petitioner, without joining the Partnership Firm - whether partnership firm has to be made a party to the proceedings, in view the provisions of Section 141 of the Act? - HELD THAT:- Undisputed facts are that the cheques were issued by the partnership firm, the present petitioner is the signatory to the cheque as an authorized partner and the transaction of purchase of land was for the firm. Section 141 of the N.I. Act provides for the constructive liability on the person responsible for the conduct of the business of the company or partnership firm. Section 141 describes about the offences by the Company. The explanation to Section 141 giving the meaning to Company means any body corporate and includes a firm or other association of individuals, further director , in relation to a firm, means a partner in the firm. The petitioner is before this Court challenging the proceedings against him under Section 138 of the N.I. Act contending that the firm has not been joined in the criminal proceedings. The deeming provision under Section 141 of the Act applies to the Company and person responsible for the acts of the Company. Section 141 clarifies that the company would mean any body corporate and would include a firm and directors , in relation to firm, would also means a partners in the firm. Section 141 clearly stipulates that the person which is a Company commits offence then certain categories of person as provided therein, as well as the Company would be deemed to be liable for the offences under Section 138 of the N.I. Act. Explanation to Section 141 thus makes deeming fiction applicable in the case of partnership firm too, which gets included in the meaning of the Company for the purpose of Section 141 of the N.I. Act. The effect of the Section 141 is that Company is principal offender under Section 138 of the Act and remaining persons are made offender by virtue of legal fiction created by the legislature as per the Section. Thus actual offence should have been committed by the Company then alone the other categories of persons would become liable for the offences - in the present case though the name of the firm has been reflected in the cause title showing petitioner as partner of the firm, but the firm has not been separately, in individual capacity, made a party to the proceedings. The petitioner has been joined as a partner to the firm without impleading the firm in the criminal proceedings, which is not tenable. The petition deserves to be allowed and stands allowed.
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