TMI Tax Updates - e-Newsletter
January 27, 2021
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Highlights / Catch Notes
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Income Tax:
Depreciation on block of assets @60% - AO held that the media resource board is plant and machinery but is not a computer by holding it to be a telecom equipment and allowed depreciation at 15% as applicable to plant and machinery - Tribunal has rightly held that media resource boards cannot be treated as plant and machinery. The aforesaid finding cannot be termed as perverse. - HC
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Income Tax:
Condonation of delay in filing the returns - claim of deduction u/s 80P rejected - Since a time frame of three months from the date of receipt of the certified copy of the impugned order was granted by the learned single Judge to complete the reconsideration of the application filed by the respondent herein seeking condonation of delay in filing the returns, we now extend the said time by three months from the date of receipt of certified copy of this judgment. - HC
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Income Tax:
Revision u/s 263 - deduction of interest expenditure against the interest income - PCIT has rightly taken the view that the A.O had wrongly allowed the assessee’s claim for deduction of the interest paid on the loans against the interest received on the FDR’s- AT
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Income Tax:
Assessment u/s 153A - Validity of approval u/s 153D - It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with. - AT
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Income Tax:
Addition u/s 69A - Addition based on assessee's statement recorded u/s 132(4) - Even there is no question which has been raised to the assessee as part of his statement recorded u/s 132(4) - where the AO himself is not clear about the nature of transaction which is the very foundation for determination of taxability of such transaction, the tax liability on such transaction cannot be fastened on the assessee. At the same time, the document so found reveal some work done by the assessee and given that the assessee is in the diary business, the net savings so determined can reasonably be related to the diary business already disclosed in the return of income in absence of any finding or corroboration relating to any other source of income. - AT
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Income Tax:
Levy of late fee u/s 234E - delay in filing the above TDS statement - Fee for default in furnishing statements - interest of justice would be met if the delay in filing appeals by the Assessee before CIT(A) is condoned and the issue with regard to levy of interest u/s.234-E of the Act be remanded to the CIT(A) for fresh consideration in accordance with the observations made in this order. - AT
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IBC:
Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - the disputed invoices were rightly sent to the respondent - the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, the finding of ld. Adjudicating Authority that there is a pre-existing dispute between the parties, cannot be agreed upon. - AT
Articles
Notifications
Companies Law-
G.S.R. 44 (E) - dated
25-1-2021
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Co. Law
Companies (Incorporation) Amendment Rules, 2021
GST - States-
90/2020 –State Tax - dated
22-1-2021
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Delhi SGST
Amendment in Notification No. 12/2017 – State Tax, dated the 30th June, 2017
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78/2020 – State Tax - dated
11-1-2021
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Jharkhand SGST
Amendment in Notification S.O. No. 54 – State Tax, dated the 29th June, 2017
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77/2020 – State Tax - dated
11-1-2021
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Jharkhand SGST
Amendment in Notification No. 47/2019 – State Tax dated the 27th December, 2019
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76/2020 – State Tax - dated
11-1-2021
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Jharkhand SGST
Prescribe return in FORM GSTR-3B of JGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021
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75/2020 – State Tax - dated
11-1-2021
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Jharkhand SGST
Prescribe the due date for furnishing FORM GSTR-1 by such class of registered persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year, for each of the months from October, 2020 to March, 2021
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74/2020 – State Tax - dated
11-1-2021
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Jharkhand SGST
Prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year
News
Case Laws:
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GST
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2021 (1) TMI 925
Maintainability of application - writ applicant has preferred an Appeal under Section 107 of the Act challenging the order of the confiscation - HELD THAT:- As the appeal has already been filed and is pending before the appellate authority, there is no good or valid reason for us to entertain this writ application.
Ms. Parikh, would submit that this writ application has been filed redressing the grievance with regard to the arbitrary action taken by the respondents. We may only say that while deciding the Appeal, the Appellate Authority can always go into the question as regards the legality and validity of the action taken by the authorities. We dispose of this writ application without expressing any opinion on the merits of the case, directing the Appellate Authority to immediately take up the appeal for hearing and decide the same in accordance with law.
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Income Tax
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2021 (1) TMI 918
Addition u/s 68 - Bank statements of the lenders were not provided - HELD THAT:- Ledger account of both the creditors there are loans given to the assessee-company as well as assessee paid back the amounts to them. The debit of financial charges to the profit and loss account is not a relevant criteria to consider under section 68.
Bank statements are part of the record which also did not show if any cash have been deposited in the bank accounts of the creditors for giving loan to the assessee-company. Their bank accounts clearly show that both the creditors have sufficient funds in their bank account and all the transactions are carried-out through banking channel only. Thus, the initial burden upon the assessee-company to prove the creditworthiness of the creditors and genuineness of the transaction have been established in the matter and burden upon assessee-company have been discharged
A.O/CIT(A) did not do anything on the documentary evidences produced on record and no further enquiry have been made into the matter. Since the A.O. accepted the creditworthiness and genuineness of the transaction with the same creditors in subsequent assessment year as well, it’s stand proved on record that there were no justification for the authorities below to make any addition against the assessee-company. In view of the above discussion, we set aside the orders of the authorities below and delete the entire addition - Decided in favour of assessee.
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2021 (1) TMI 917
Disallowing u/s.43B - assessee could not explain the reasons for non-deposit before due date of filing the return of income, AO disallowed the same and added to the total income of the assessee - assessee explained that due to economic slowdown of infrastructure industry, the assessee company had suffered huge loss and as a result, all loan account from bank was declared as non-performing assets (NPA) thus could not deposit the amount before filing the return of income - HELD THAT:- In this case, the Assessing Officer disallowed the liabilities claimed by the assessee on the ground that same have not been paid before the due date of filing the return of income for the assessment year 2012-13. The assessee also could not produce any evidence regarding the payment before the lower authorities or before the Tribunal. Therefore, we do not find any infirmity in the orders of lower authorities in disallowing the liabilities. Hence, we uphold the disallowance and dismiss this ground of appeal of the assessee.
TDS u/s 40(a)(ia) - Disallowance of interest u/s.40(a)(ia) - Benefit of second proviso to Section 40(a) (ia) - HELD THAT:- In this case, the assessee has furnished Certificates from Chartered Accountant in Annexure -A to Form 26A in respect of interest payment to NBFCs and the AO has not raised any objection or doubt regarding the certificate furnished from the Chartered Accountants regarding interest payment during the financial year 2011-12 but only basis for denying the benefit of second proviso to section 40(a)(ia) of the Act. Hon’ble Delhi High Court in the case of Ansal Land Mark Townships (P) Ltd., [2015 (9) TMI 79 - DELHI HIGH COURT]has held that the second proviso to Section 40(a) (ia) of the Act is declaratory and curative and has retrospective effect from 1st April 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. Respectfully following the same, we hold that the benefit of such proviso is available to the assessment for the transactions and payment made by it during financial year 2011-12 i.e. 1.4.2011 to 31.3.2012. Hence, we allow this ground of appeal of the assessee.
Disallowance of interest on mobilization advance paid - assessee has paid interest to railway department towards mobilization advance, therefore, the AO disallowed the entire amount - HELD THAT:- Before the ld CIT(A), the assessee could furnish a Bill No.Con/SPTR/137 dated 10.5.2011 for ₹ 11,44,366/- issued by the Railway Department. CIT(A) restricted the disallowance to ₹ 34,40,315/- as the assessee could not furnish any documentary evidence. Before us also, the assessee could not furnish any documentary evidence in support of the partly disallowed claim of interest paid on account of mobilization advance from the Railway Department. Hence, we see no reason to interfere with the order of the ld CIT(A), which is hereby confirmed.
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2021 (1) TMI 916
Exemption u/s 80IC - initial assessment year - AO has rejected claim of the assessee of claiming 100% deduction under section 80-IC and allowed deduction only to the extent of 25% as per clause (ii) of sub-section 3 of section 80-IC - whether an assessee who sets up a new industry of a kind mentioned in sub-section (2) of Section 80-IC of the Act and starts availing exemption of 100 per cent tax under sub-section (3) of Section 80-IC (which is admissible for five years) can start claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit? - assessee contended that the Act does not create distinction between the old units i.e. units established prior to 7.1.2003 and new units established thereafter, which is being specifically highlighted by the Assessing Officer
HELD THAT:- In Prl.CIT Vs. Aarham Softronics Civil [2019 (2) TMI 1285 - SUPREME COURT]the Hon’ble Supreme Court overruled its earlier decision in the case of Classic Binding Industries [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] by observing that it omitted to take note of the definition ‘initial assessment year’ contained in Section 80-IC itself and instead based its conclusion on the definition contained in Section 80-IB, which does not apply in these cases. The definitions of ‘initial assessment year’ in the two sections, viz. Sections 80-IB and 80-IC are materially different. The definition of ‘initial assessment year’ under Section 80-IC has made all the difference. The Court therefore held that judgement in the case of Classic Binding Industries (supra) does not lay down the correct law.
An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of sub-section (2) of Section 80-IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the ‘initial assessment year’. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. - in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become ‘initial assessment year’, and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6).
If the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes ‘initial assessment year’ once again. However, this 100% deduction would be for remaining three years, i.e., 8th , 9th and 10th assessment years.
In the light of the decision of the Hon’ble Supreme Court in Aarham Softronics that there is merit in this appeal by the assessee and the same is allowed.
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2021 (1) TMI 915
Revision u/s 263 - deduction of interest expenditure against the interest income was not in accord with the provisions of Sec. 57 - PCIT was of the view that allowing of the same by the A.O without verifying the records had rendered the order passed as erroneous in so far it was prejudicial to the interest of the revenue - HELD THAT:- At the first blush the claim of the assessee for setting off the interest paid on the loan raised (on security of the FDR’s) against the interest received on FDR’s appeared to be very convincing. However, we find that the issue is no more res integra and had been settled by the Hon’ble Supreme Court in CIT Vs. Dr. V.P Gopinathan [2001 (2) TMI 10 - SUPREME COURT] wherein had held, that interest on loan taken by the assessee from the bank on security of fixed deposit could not be reduced from his income by way of interest on the fixed deposit placed by him in the bank.
In our considered opinion, the view taken by the PCIT in the case before us is absolutely in conformity with the aforesaid judgment of the Hon’ble Apex Court. Accordingly, finding ourselves in agreement with the view taken by the PCIT that the A.O had wrongly allowed the assessee’s claim for deduction of the interest paid on the loans against the interest received on the FDR’s, we uphold the order passed by him under Sec. 263 of the Act. - Decided against assessee.
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2021 (1) TMI 914
Deduction under Section 80IB(10) - non completion of the housing project for claiming deduction - HELD THAT:- In the present case, the assessee made an application on 30 November 2011; therefore, on this ground also the completion date is within the five years limitation - for assessment year 2013 – 14 identically the deduction u/s 80 IB 10 was disallowed by the learned assessing officer however on appeal before the learned and CIT- A allowed the claim of the assessee wide order dated 23 January 2018 - similarly for assessment year 2014 – 15 also the learned CIT appeal allowed the claim of the assessee as per order dated 10 May 2018. However, both these orders are in challenge before the coordinate bench - reasons given therein are required to be considered. An interesting fact has been recorded by the learned CIT – A for assessment year 2013 – 14 that during the financial year 2010 – 11 five of the units got registered in favour of the customers by the appellant company and another 291 units were transferred in financial year 2011 – 12 out of the total 346 units constructed by the assessee. Thus 86% of the total units were registered in the name of the ultimate customers before the end of the financial year 2011 – 12, which is also the cut-off date for getting the completion certificate. Therefore, it was held that that the project of the assessee was completed much before the cut-off date as per the provisions of the act i.e. 31st of March 2012. In view of this, we hold that the date of completion of the project has correctly been claimed that 21st of February 2011 and it is in accordance with the provisions of Section 80 IB (10) - we allow ground number [1] of the appeal of the assessee.
Non-fulfillment of the condition laid down as per clause (f) of Section 80 IB (10) - AO has disputed the eligibility to claim deduction u/s 80 IB (10) on the ground that appellant has violated the provisions of clause (f) by allotting more than one residential unit to persons belonging to the same family - AR submitted that only proportionate disallowance could be made - HELD THAT:- This issue is now squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in Kamat Constructions Pvt. Ltd. Vs ACIT , [2020 (12) TMI 90 - BOMBAY HIGH COURT]. Accordingly, we hold that only proportionate deduction to the extent of violation of the provisions of Section 80 IB (10) (f) can be made with respect to allotment of the units to the family members/relatives of the allottees. Accordingly, ground number 2 of the appeal of the assessee is allowed
Charging of the interest u/s 234C and 234B - HELD THAT:- According to the proviso to provisions of Section 234C (1) (a) itself provides that nothing contained in the provisions of Section 234C shall apply to any shortfall in the payment of tax due on the returned income whereas such shortfall is on account of Under estimate or failure to estimate the amount of capital gain. Further, the case of the assessee is also supported by the decision of Smt. Premlata Jalani [2003 (7) TMI 62 - RAJASTHAN HIGH COURT] as well as Kumari Kumar Advani. [2016 (7) TMI 1600 - ITAT MUMBAI] assessing officer is directed to compute interest u/s 234C in accordance with the above decisions.
As the assessee has earned capital gain as on 30th of March 2012, i.e. before the close of the year, the interest is chargeable u/s 234B of the act. Further, the interest u/s 234B of the act arises only at the close of the financial year, by that time the income from capital gain arose to the assessee and interest u/s 234B is chargeable to tax in accordance with the law.
AO is directed to recompute the interest chargeable u/s 234C and 234B of the act.
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2021 (1) TMI 913
Assessment of trust - eligibility for any type of depreciation as the entire expenditure for the purchase of capital assets - HELD THAT:- This issue is covered in favour of the assessee by the judgment of Hon’ble Delhi High Court in the appeal for the Assessment Year 2008-09, wherein in the appeal preferred by the assessee in [2013 (9) TMI 451 - DELHI HIGH COURT] has allowed both the expenditure, i.e., capital expenditure and depreciation as application of income. This order of the Hon’ble High Court has been followed by the ITAT in assessee’s own case in the Assessment Yea₹ 2009-10, 2010- 11 and 2011-12.
Addition of space rent income on the basis of disclosure in Notes to Accounts of the assessee - Rental income has not accounted in the books - assessee is following mercantile system of accounting - HELD THAT:- Long standing dispute between the Government Departments who are in possession of the Space in Pragati Maidan and assessee made endeavours for recovery of space rent - One of the organization viz. National Science Centre (NSC) had paid space rent to the ' assessee company @ ₹ 200/- per sq. mtr. p.a. in an earlier year. Subsequently, the rate of space rent was enhanced by the assessee company on year to year basis which was contested by the NSC. Accordingly, the assessee company has accounted for income @ ₹ 200/- per sq. mtr. per year in the Income & Expenditure Account as NSC had paid @ ₹ 200/- per sq. mtr. p.a., but contested the increase in rates.
The element of enhanced space rent over ₹ 200/- per sq. mtr. p.a. (disputed amount) was kept out of books as "Contested dues not accounted for" and disclosed in the Notes to the Accounts. The assessee is essentially relying on the Accounting Standard 9 issued by the Institute of Chartered Accountants of India relating to Recognition of Income in accordance with para 10 which states that if at the time of raising any claim, it is unreasonable to expect ultimate collection, revenue recognition should be postponed.
As regards the other department viz. Crafts Museum, they have not paid any space rent to the assessee company and are maintaining that they were in possession of the space even prior to the formation of the assessee company. On the same analogy of NSC and following AS 9, the assessee company has not raised any invoice for the space rent on Craft Museum any disclosed the disputed amount of space rent relating to the Assessment Year under reference, in the Notes to Accounts. Assessee has not recognised the licence fee pertaining to these departments as income in the books in accordance with para 10 of the Accounting Standard 9
As decided in earlier years when income on account of space rent has not been accrued, as in the instant case due to dispute, there cannot be any rent even though entry in the books of account have been made on account of notional income. So, when the income would be received its taxability can be examined by the Revenue. Ld. DR for the Revenue has not brought on record any document if the dispute between the parties qua the space rent has been resolved. So, in these circumstances, we are of the considered view that there is no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition - Decided in favour of assessee.
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2021 (1) TMI 912
Eligibility of deduction u/s 80P - assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 - Denial of deduction as assessee was providing credit facilities to Non-members, namely, associate / nominal members - CIT(A) held that since nominal and associate members of assessee is more than 15% of the total membership, there has been a violation of provisions of Karnataka Co-operative Societies Act, 1959, and hence, the A.O. has correctly denied the claim of deduction u/s 80P(2)(a)(i) - HELD THAT:- In the instant case, admittedly, assessee has been accepting deposits and given loans primarily to associate / nominal members. the assessee-society is accepting deposits and also providing credit facilities to nominal / associate members far exceeding 15% of its total business. The A.O. has come to a categorical finding that regular members is less than 15%, whereas, non-members, i.e., nominal / associate members are exceeding 87% of the total members. This categorical finding of the A.O. has not been dispelled by the assessee before the Tribunal. Therefore, there is a clear violation of provisions dealing with non-members as per Karnataka Co-operative Societies Act, 1959. Therefore, the ratio of the judgment of the Hon’ble Supreme Court in the case of Citizen Co-operative Society [2017 (8) TMI 536 - SUPREME COURT] is clearly applicable to the facts of the instant case
As decided in in the case of M/s.Vikasha Vividhoddesha Sahakara Sangha Niyamitha [2019 (11) TMI 1565 - ITAT BANGALORE]assessee could not controvert the categorical finding of CIT (A) regarding violation of the provisions of Karnataka Co Operative Societies Act, 1959 as noted above - Decided against assessee.
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2021 (1) TMI 924
Deduction u/s 10 (10C) - applicant opted for Early Retirement Option (ERO), 2003 Scheme and received compensation - in the case of the writ applicant, he had not claimed such deduction - writ applicant was expected to prefer a revision application under Section 264 of the Act and not file a representation in that regard - HELD THAT:- We are of the view that, even if, the writ applicant had not claimed the exemption in his return of income for the year under consideration, he can always claim later in point of time.
So far as the second ground on which the claim came to be rejected, Mr. Darshan Patel, invited the attention of this Court to the certain averments made in the Affidavitin Rejoinder, writ applicant has tried to explain as above that it was an inadvertent mistake in labeling the application as a writ petition rather than a revision petition. We need not go into any further debate in this regard as the law has now been well settled by the Supreme Court in S. PALANIAPPAN VERSUS INCOME TAX OFFICER, CHENNAI [2015 (10) TMI 405 - SUPREME COURT]
This writ application succeeds.Writ applicant is entitled to claim exemption under Section 10 (10 C) of the Act, 1961 for the amount received from the ICICI Bank Ltd. at the time of his voluntary retirement under the scheme, in accordance with law.
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2021 (1) TMI 911
TP Adjustment - comparable selection - TPO had rejected Jindal Intellicom Pvt. Ltd. and R System International Limited as non comparable companies while determining the Arm's Length Price (ALP) - HELD THAT:- Assessee is a captive entity (i.e. risk mitigated entity) mainly engaged in providing Information Technology (IT) enabled services in the nature of call center and low end back office support to its associated enterprises (AE) and billing them at cost plus 15%.
Jindal Intellicom Private Limited company has been accepted as comparable company for assessment years 2011-12, 2012-13 and also 2014-15. That further, this company does not earn any revenue from sale of products. The only area of earning of revenue is from sale of services. This company is engaged in the call center business and hence, comparable company with that of the assessee. The TPO/AO is directed to include Jindal Intellicom Private Limited in the final list of comparables in respect of the assessee while determining the TP adjustment.
R. System International Limited having different financial year cannot be a comparable company with that of the assessee company. It has been, therefore, rightly rejected by the TPO as well as DRP and that view is, hereby, sustained. Thus, ground raised in appeal by the assessee is partly allowed.
Ninestars Information Technologies Limited company is functionally non comparable with that of the assessee company. That also, there is also non availability of reliable segmental report in respect of this company. We direct the TPO/AO to exclude this company from the final list of comparables with that of the assessee company.
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2021 (1) TMI 910
Not allowing business expenditure incurred against the business income - A.O not allowing cost of construction against the business income - appellant prays that cost of construction to be allowed against the amount received on issue of debentures - CIT(A) had refrained from adjudicating the aforesaid claim of the assessee, for the reason, that he held a conviction that now when he had vacated the treating of the proceeds received on issue of shares/debentures of ₹ 4.20 crores as the assessee’s income from business by the A.O, therefore, adjudication of the aforesaid alternative ground raised by the assessee would not be necessary.
HELD THAT:- In our considered view, the piecemeal disposal of the appeal by the first Appellate Authority cannot be accepted. As per the settled position of law, the appellate authorities are obligated to dispose off all the grounds of appeal raised by the appellant before them so that multiplicity of litigation may be avoided.
There can also be no escape on the part of the CIT(A) from discharging the statutory obligation cast upon him to deal with and dispose off all the grounds of appeal on the basis of which the impugned order has been contested by the assessee before him. We, thus, in all fairness and in the interest of justice, and in order to avoid multiplicity of litigation are of the considered view that the matter requires to be revisited by the CIT(A) for adjudicating the aforesaid alternative ground of appeal which was raised by the assessee in unequivocal terms before him, but had not been adjudicated by him - matter requires to be restored to the file of the CIT(A), with a direction to dispose off the aforesaid alternative ground of appeal that was raised by the assessee before him.
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2021 (1) TMI 909
Assessment u/s 153A - Validity of approval u/s 153D - order passed by the JCIT/Addl. CIT in the case u/s. 153D in determining the validity of the assessments framed under section 153A - Assessee submitted that approval under section 153D is based on non-application of mind and without any independent enquiry and overlooking/ ignoring important/significant aspect of earlier assessments being made in the hands of M/s. JIL etc - HELD THAT:- Assessments under section 153A have been framed by ACIT, Central Circle, New Delhi, therefore, prior approval of the JCIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by the A.O. in the present cases in respect of each assessment years under section 153A/153B except with the prior approval of the Joint Commissioner
Approval under section 153D have been granted by the JCIT without going through the seized material, appraisal report and other material on record. Thus, the approval is granted in a most mechanical manner and without application of mind. Therefore, same is invalid, bad in Law and void abinitio and as such all assessments under section 153A got vitiated and as such A.O. was not having jurisdiction to pass the assessment orders under section 153A.
Granting approval under section 153D of the I.T. Act is not a mere formality, but, it is a supervisory act which requires proper application of administrative and judicial skill by the JCIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D of the I.T. Act.
While granting approval under section 153D, the JCIT shall have to peruse all the incriminating material and other seized material on record and proper procedure if have been adopted by the A.O. and appraisal report as well. The JCIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in Law.
AO passed the draft assessment order on 30.03.2015 and submitted the same for approval before the Addl.CIT who is stationed at a place 250 Kms away from Dehradun on 30.03.2015, the Addl. CIT gave the approval subject to certain modifications/amendments on 30.03.2015 and the AO passed the order on the same date i.e., 30th March, 2015. On a pointed query raised by the Bench as to whether any movement register is available to verify as to whether the files were sent to the Addl.CIT at Meerut, the Ld.CIT-DR submitted that there is no separate movement register for the purpose of sending for approval of the draft assessment orders by the AO to the JCIT/Addl.CIT, Central Range, Meerut. Thus the approval was given in a mechanical manner by the Addl.CIT to the draft assessment orders passed by the AO.
It is not possible on the part of the Addl.CIT to go through the orders in about more than 100 cases on the very same day and give approval. Even if such approval has been given, it can be said that the same is nothing but a technical formality without application of mind. Further, as mentioned earlier, there is nothing on record to suggest that the files have in fact moved from Dehradun to Meerut for obtaining approval. Therefore, in our opinion, the mandatory provisions as required u/s 153D has not been complied with.
When the approval given by the JCIT, Meerut is juxtaposed against the directions and provisions of the Income Tax Act pertaining to completion to assessment u/s 153B(1) of the Act, it can be said that the approval given by the JCIT is invalid. The Act envisages that the JCIT’s approval before passing of the final order. There is no provision to alter, change, modify, adjust, amend or rework the order once the approval has been accorded.
We hold that there is no proper approval given u/s 153D in the instant case for which the assessment orders passed by the AO are not in accordance with law. We, therefore, have no hesitation in holding that the assessments completed by the DCIT do not stand in the eyes of law and, therefore, these orders are treated as null and void. - Decided in favour of assessee.
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2021 (1) TMI 923
Deduction u/s 35D - claim of the assessee with regard to stamp duty disallowed on the ground that the expenditure is capital in nature and not revenue expenditure - HELD THAT:- The expression 'in connection with issue for public subscription of shares in or debentures of the company' is an expression of wide import. The Supreme Court in 'INDIA CEMENTS LTD. Vs. CIT'[1965 (12) TMI 22 - SUPREME COURT] has held that expenditure on account of stamp duty even after introduction of 35D, is an admissible expenditure in connection with issue of public subscription. The aforesaid decision was relied upon in MAHINDRA UGINE AND STEEL CO. LTD [2000 (2) TMI 26 - BOMBAY HIGH COURT] and it was held that the aforesaid expression would improve stamp duty payable by the assessee on the debenture issue. In view of aforesaid enunciation of law, the expenses incurred by the assessee towards stamp duty in connection with issue for public subscription of shares in or debentures of the company is an allowable expenditure under Section 35D - Decided in favour of assessee.
Deduction u/s 10A - assessee is engaged in the business of mobile added value services, which involve content development in its STP unit - HELD THAT:- Tribunal held that assessee has a dedicated studio in this STP unit where music related content is developed. The assessee procures music and other contents on the third parties. The assessee also uses its studios for content development - assessee is engaged in the activity of developing content and conversion of procured content into mobile readable format and the same would qualify to be classified as content development or data processing and the same would be covered under the notification dated 26.09.2000 issued by the Central Board of Direct Taxes.
The High Court of Delhi in ML OUTSOURCING P. LTD [2014 (9) TMI 396 - DELHI HIGH COURT] and MCKINSEY [2015 (3) TMI 1226 - DELHI HIGH COURT] has interpreted the notification and has held that intention of the legislature is not to constrain or restrict but to enable the Board to include several services of products of similar nature in the ambit of Section 10A - notification covers within its ambit even the services which cannot be sent abroad. Thus, the Tribunal has rightly held that the assessee is entitled to benefit of deduction under Section 10A .
Nature of expenditure - Expenditure incurred as legal and professional charges - AO held the same to be in the nature of capital expenditure - Tribunal, by following the decision of its co-ordinate Benches, has held that expenditure incurred by the assessee for conducting due diligence in report of a company which was to be acquired by the assessee is revenue in nature and has treated the same to be deductible expenditure under Section 37(1) - HELD THAT:- The aforesaid finding of the Tribunal is based on meticulous appreciation of material on record and does not call for any interference. In the result, the fourth substantial question of law is also answered against the revenue and in favour of the assessee.
Depreciation on block of assets @60% - AO held that the media resource board is plant and machinery but is not a computer by holding it to be a telecom equipment and allowed depreciation at 15% as applicable to plant and machinery - HELD THAT:- The media resource boards work in conjunction and as part of computer servers and cannot be served as telecom equipment. In support of aforesaid finding, the Tribunal has relied the decision of special bench of Mumbai Tribunal in DCIT Vs. DATA CRAFT INDIA LTD. [2010 (7) TMI 642 - ITAT, MUMBAI] - Therefore, the Tribunal has rightly held that media resource boards cannot be treated as plant and machinery. The aforesaid finding cannot be termed as perverse. Thus, the fifth substantial question of law is also answered against the revenue and in favour of the assessee.
Deduction under Section 80JJAA - assessee is providing telecom services and therefore, the assessee cannot be termed as an industrial undertaking - HELD THAT:- Tribunal by placing reliance on the decision of the TEXAS INSTRUMENTS (INDIA) P. LTD. allowed the claim of the assessee but it is pertinent to note that the decision of TEXAS INSTRUMENTS (INDIA) P. LTD. supra was challenged before this Court [2014 (3) TMI 150 - KARNATAKA HIGH COURT] and the matter was remitted to decide the matter afresh. However, we find that the Tribunal in paragraph 6.5.4 has rather recorded the conclusions and has failed to assign any reasons. Therefore, the matter insofar as it pertains to claim of the assessee for deduction under Section 80JJAA of the Act requires reconsideration by the Tribunal. Accordingly, the second substantial question of law is answered.
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2021 (1) TMI 922
Disallowance u/s 14A - larger disallowance proposed by the Assessee himself in the computation of disallowance under Rule 8D - HELD THAT:- As relying on M/S. MARG LIMITED VERSUS COMMISSIONER OF INCOME TAX CHENNAI [2020 (10) TMI 102 - MADRAS HIGH COURT] we dispose of the present appeal by answering question of law in favour of the Assessee and against the Revenue and by holding that the disallowance under rule 8D of the IT Rules read with Section 14A of the Act can never exceed the exempted income earned by the Assessee during the particular assessment year and further, without recording the satisfaction by the Assessing Authority that the apportionment of such disallowable expenditure made by the Assessee with respect to the exempted income is not acceptable for reasons to be assigned the Assessing Authority, he cannot resort to the computation method under Rule 8D of the Income-tax Rules, 1962.
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2021 (1) TMI 908
TP Adjustment - comparable selection - Software Development services - HELD THAT:- Kals Information Technology System Ltd - Revenue from sale of products and development of software is concerned, the same has been combined under the segment "Application Software". The above discussion deciphers that this company is engaged in software products as well as Software Development services, income from both of which streams has been clubbed under the segment of "Application Software". Since the assessee in the instant case is involved only in rendering Software Development services to its AEs and is not into any software products, we hold that this company cannot be considered as a comparable. We, therefore, direct to exclude it from the list of comparables.
Acropetal (Segmental) - It goes without saying that on-site services business model entails its own risks and rewards, which are incomparable to the services rendered from the business model of rendering services from own premises. One cannot construe both as one and the same. The assessee under consideration is not rendering on-site services - this company is also into Products, which is borne out from its balance sheet showing value of "Inventories and work in progress" at ₹ 3.37 crore. - This company has clubbed both the Product Development services and on-site services in one overall segment of "Information Technology services". Thus, it is overt that the IT services segment of this company, which has been construed by the TPO as comparable, cannot be so held as the assessee is neither rendering on-site services nor engaged in software products. We, therefore, direct to exclude this company from the list of comparables.
Thirdware Solution Ltd. - this company, apart from rendering software services, is also engaged in software products. Segmental information has been given on the basis of geographical segments. Thus, it becomes crystal clear that no information regarding revenue from software services distinct from other activities is available on record. As the assessee is engaged only in rendering software development services, this company on the basis of figures available on record, cannot be considered as comparable. We, therefore, direct to exclude it from the list of comparables.
Persistent Systems Private Ltd - Since the assessee has abandoned before the Tribunal the basis of turnover filter as was originally taken and harped on a new base of functional differences for exclusion of this company for the first time, we, being an appellate authority, cannot straight away accept or reject such contention unless the authorities below apply their mind to the functional differences as has been sought by the assessee. Without going into the merits, we set aside the impugned order and remit the matter to the file of AO/TPO with a direction to examine the assessee's contention on functional dissimilarities and then decide the question of its inclusion.
Maveric Systems Ltd. - The assessee has placed on record a copy of the Annual report of the company for the year under consideration by claiming that the same is now available in the public domain. As regards the TPO's contention that the foreign exchange earnings of this company were less than 75%, we find from the Schedule 9 that it earned revenues from overseas at ₹ 34.86 crore as against Domestic revenue at ₹ 11.61 crore. Thus, it is evident that foreign exchange revenue of this company is more than 75%. Since the comparability or otherwise of this company has not been examined on merits because of the non-availability of the Annual report for the year under consideration, which has now been placed on record, we direct the AO/TPO to examine whether this company is comparable on merits.
Quintegra Solutions Ltd.- except for incurring expenses in foreign currency, there is no mention of rendering on-site services. This company has also branches in certain countries outside India and the expenses in foreign currency were incurred by such branches. The Ld. DR also could not point out from the Annual report of this company that it rendered any on-site services. In such circumstances, we direct to include this company in the list of comparables.
Silverline Technologies Ltd. - Since the expenses in foreign currency constitute a substantial percentage of its revenue and there is no reference to any foreign branch, it becomes evident that this company is engaged in rendering on-site services and the major component of its revenue is from such on-site services only. That being the position, this company loses its comparability tag with the assessee company. We, therefore, reverse the view of the DRP and direct to exclude it from the list of comparables.
Thinksoft Global Services Pvt. Ltd. be excluded from the list of comparables and consequently reverse the view taken by the DRP on this issue.
Accentia Technologies Ltd directed to exclude this company from the list of comparables.
Coral Hubs Ltd. (Vishal Technologies Ltd.) this company is mainly engaged in outsourcing its business activities which is further proved from the fact that the Personnel cost is only ₹ 1.89 crore as against outsourcing cost of ₹ 54.47 crore. It goes without saying that outsourcing services is an altogether different business model vis-a-vis rendering services by engaging one's own employees and facilities - we direct to exclude this company from the list of comparables.
Jeevan Softech (BPO segment) - The view point of the assessee that ITES segment is not comparable because of the inclusion of ERP revenue is, therefore, not sustainable because the figures of revenue and profit from the BPO segment is separately available and the nature of work admittedly matches with that of the assessee.
The Directors' report unequivocally divulges that the nature of work under the ERP division is all in all different. It has been mentioned that: 'Your ERP division has also successfully completed the project implementation for various clients. For the current financial year, ERP division has chalked out new marketing strategies with a focused approach developing specialized vertical solutions for the prospects across India, standard horizontal markets and foray into the professional services segment for overseas clients'. Thus, it is palpable that the ERP division is not engaged in rendering any ITES. The same, therefore, cannot be clubbed with the BPO revenues of this company, for which separate figures are available in the "Segmental reporting'. We, therefore, countenance the inclusion of the BPO segment of this company with Revenue of ₹ 141.10 lakh and income of ₹ 52.99 lakh.
Informed Technologies Ltd - assessee has challenged the inclusion of this company with the help of an additional ground - Several orders have been passed by various Benches of the Tribunal holding that an assessee is entitled to challenge a comparable for the first time before the Tribunal notwithstanding the fact that it remained uncontested before the TPO or the DPO. In view of the fact that the comparability of this company has not been examined by the authorities below, we direct the AO/TPO to scrutinize the comparability of Informed Technology and then decide on its inclusion or otherwise in the final tally of comparables.
Not allowing working capital adjustment - not allowing working capital adjustment - HELD THAT:- We find from directions given by the DRP that the AO was directed to examine the computation of working capital adjustment worked out by the assessee - while giving effect to the directions of the DRP, this direction remained to be complied with. We, therefore, direct the AO/TPO to give effect to the direction given by the DRP .
Risk adjustment - We remit the matter to the file of AO/TPO for computing the risk adjustment in the light of the directions given for earlier years.
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2021 (1) TMI 907
LTCG - Disallowance of the claim of deduction u/s. 54F - construction of another residential house - non-furnishing of completion certificate from municipal authorities - assessee has failed to comply with the condition mandated under the provisions of Section 54F(4) for availing the benefit of deduction u/s. 54F(1), i.e., depositing of unutilized amount in the Capital Gains Accounts Scheme, on or before the due date of filing the Return of Income u/s. 139(1) of the Act - HELD THAT:- AO erred in coming to the conclusion that building construction was not completed before May, 2017 only on the basis of non-furnishing of completion certificate from municipal authorities. No doubt, completion certificate is one evidence for having completed construction of building, but it is not material evidence to draw adverse inference against assessee, when assessee has placed all other evidences which indicate completion of construction of building. The learned CIT(A) after considering relevant facts has rightly held that construction of building was completed within three years from the date of transfer of original asset and hence, we are inclined to uphold the findings of learned CIT(A) and reject grounds taken by the Revenue.
Investment of balance sale consideration in capital gain account deposit scheme on or before due date for furnishing of return of income - The law is very clear as per which if an assessee invests full consideration from sale of original asset for purchasing or constructing another residential house, then assessee is entitled for 100% exemption from capital gain tax. In case, where assessee has invested part sale consideration for purchase or construction of another residential house, then proportionate deduction is allowed commensurate with investment made in new asset. In this case, on perusal of details filed by assessee, we find that assessee has made investment of ₹ 1,20,00,000/- in capital gain account deposit scheme on or before due date of furnishing of return of income and said deposit account has been utilized for construction of building within three years from the date of transfer of original asset. Assessing Officer has erred in rejecting the claim of assessee on the ground that assessee ought to have invested balance consideration in capital gain account deposit scheme, more particularly, when assessee has claimed that she has paid tax on remaining sale consideration in accordance with law.
Facts with regard to amount of exemption claimed u/s. 54F of the Act and the amount of capital gain which was subjected to tax was not forthcoming from the orders of lower authorities. The assessee claims that it has claimed exemption u/s. 54F for ₹ 3,72,81,393/- and for balance capital gain she has paid tax, whereas Assessing Officer held that assessee has claimed exemption of ₹ 3,70,75,929/-. For the limited purpose of ascertaining facts with regard to computation of capital gain from sale of shares and amount of sale consideration invested in purchase/construction of new asset and amount of capital gain included in return and payment of taxes, we set aside the issue to file of Assessing Officer and direct him to verify facts in light of claim of assessee that she had paid tax for balance amount of capital gains - Appeal filed by Revenue is treated as allowed for statistical purposes.
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2021 (1) TMI 906
Addition on account of own money received on the basis of information received from the Central Excise Department - addition duty determined by Central Excise Department has been confirmed by the CESTAT, New Delhi - CIT-A deleted the addition - HELD THAT:- CIT(A) has duly considered the directions of the Coordinate Bench in the first round, the findings of the CESTAT as limited to a specified period and not pertaining to period under consideration, confirmation from Central Excise department that there is no material or evidence for undervaluation for period under consideration and the fact that the AO has merely relied on past years findings and in absence of any material or evidence and only on presumptions, conjectures and surmises has made the additions. The Revenue has failed to controvert the said findings of the ld CIT(A) before us. We therefore affirm the findings of the ld CIT(A) wherein he has rightly deleted the addition
Interest received on margin money at lower rate than it had to pay the borrowers - HELD THAT:- In the first round, the Tribunal has set-aside the matter to the file of the AO to examine the contention of the assessee that there is no fresh ICD placed during the period under consideration and where the same is found to be correct, allow the relief to the assessee following the Tribunal’s order for assessment year 1996-97 wherein similar addition was deleted.
During the set-aside proceedings, we find that the assessee has submitted the details which show that there is no increase in Unsecured Loans and Inter-Corporate Deposits during the period under consideration. Therefore, following the earlier decision, the matter is decided in favour of the assessee .
We find that the Tribunal decision for A.Y 1996-97 has since been confirmed by the Hon’ble Rajasthan[2017 (11) TMI 1673 - RAJASTHAN HIGH COURT]- In the result, the appeal of the Revenue is dismissed.
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2021 (1) TMI 905
Addition on account of alleged cash payment out of undisclosed income - Addition based on entries in the diary found in search - HELD THAT:- No question was asked from the assessee regarding these transactions as part of his statement recorded u/s 132(4) - During the assessment proceedings, the assessee was asked to explain the said entries and the assessee explained that the said entries were not in his handwriting and were made by his son, Shri Jitendra Yadav and an affidavit of Shri Jitendra Yadav was also filed where he has owned up the entries and the transactions so reflected therein as made by him relating to family transaction and expenses.
Revenue has not brought any evidence or finding disputing the contents of the said affidavit and the same thus remain unrebutted before us - where Shri Jitendra Yadav has owned up the entries and the transactions, the assessee has successfully discharged the onus cast on him and the presumption u/s 132(4A) cannot be drawn against him. In the result, there is no basis for impugned addition in the hands of the assessee and the same is hereby directed to be deleted. In the result, the appeal of the assessee is allowed.
Addition u/s 69A - Addition based on assessee's statement recorded u/s 132(4) - THAT:- Except at one place where savings have been written against the amount of ₹ 876,197, there is no mention of any particulars in terms of nature of transactions, parties with whom the transactions were undertaken, the date of such transactions, etc. Even the AO in the assessment order at para 5 of his order has stated that “it appears to be payment received in cash by the assessee”. Even there is no question which has been raised to the assessee as part of his statement recorded u/s 132(4) - where the AO himself is not clear about the nature of transaction which is the very foundation for determination of taxability of such transaction, the tax liability on such transaction cannot be fastened on the assessee. At the same time, the document so found reveal some work done by the assessee and given that the assessee is in the diary business, the net savings so determined can reasonably be related to the diary business already disclosed in the return of income in absence of any finding or corroboration relating to any other source of income. In the result, there is no basis for impugned addition in the hands of the assessee and the same is hereby directed to be deleted. In the result, the appeal of the assessee is allowed.
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2021 (1) TMI 921
TP Adjustment - Comparable selection - Tribunal excluding M/s Vishal Information Technologies Ltd as comparable company of ITES segment in holding that M/s VITL outsources majority of its work ignoring the fact that outsourcing entails higher cost resulting in lower operating profit - Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding M/s Nucleus Netsoft & GIS (India) ltd., is not a comparable brushing aside the fact that it was taken as a comparable by the assessee on its own TP study and the fact that ITES is the primary business of the company? - HELD THAT:- From perusal of the relevant extract of the order passed by the tribunal, it is evident that the tribunal has neither considered evidence brought on record by the Transfer Pricing Officer and has neither considered the findings of the Transfer Pricing Officer as well as the dispute resolution panel and in a cryptic and cavalier manner has recorded a finding in favour of the assessee. No cogent reasons worth the name have been assigned by the tribunal for recording the findings. Therefore the order passed by the tribunal dated 23.06.2015 is hereby quashed. The substantial questions of law are answered accordingly. The matter is remitted to the tribunal for decision afresh in accordance with law by a speaking order.
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2021 (1) TMI 904
Difference in the opening stock - CIT(A) allowing the appeal of the assessee on the ground that the discrepancies pointed out by the AO are only typographical errors - Rejection of books of accounts - estimation of income - GP rate determination - HELD THAT:- All the discrepancies pointed out were only typographical errors and do not have any impact in any manner whatsoever on the computation of total income of the assessee for the year under consideration.
There is mistake in reflecting the quantity figures in the tax audit report for A.Y.2011-12. However, right quantity details have been duly reflected together with the values thereon for the A.Y.2012-13 and there is absolutely no difference in value between the closing stock as on 31/03/2011 and opening stock as on 01/04/2011. Hence, there is absolutely no impact in the computation of profits as per books and computation of total income as per the Act for the year under consideration. Hence, there cannot be any grievance for the revenue at all in the instant case.
AO grossly erred in not crediting the export benefits in the recasted trading account prepared while working out the gross loss. Assessee had earned only gross profit during the year under consideration. It is a fact that assessee had made only export sales during the year and no local sales were made. Export benefits needs to be considered as trading receipt for the purpose of working out the gross profit of the assessee for the year under consideration. We find the GP disclosed by the assessee for the A.Y.2012-13 was 2.92% and GP of A.Y.2011-12 was 3.02%. Hence, there is absolutely not much variation in the gross profit disclosed by the assessee also
This is not a fit case for rejection of books of accounts u/s.145(3) of the Act by the ld. AO. We hold that the ld. CIT(A) had duly appreciated all the contentions of the assessee and rightly granted relief to the assessee in the instant case - Decided against revenue.
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2021 (1) TMI 903
Assessment of income - whether only commission income could be assessed in the hands of the assessee being an accommodation entry provider? - Additional ground raised - HELD THAT:- We are inclined to entertain the additional ground raised by the assessee in the present proceedings before us for all the assessment years under consideration. From the perusal of the various Tribunal and Hon’ble Jurisdictional High Court orders and more so in the case of certain sister concerns of the assessee which was also covered as an offshoot of the same search operation of JIK Industries Ltd., as in the case of assessee herein, we hold that only commission income @0.15% could be added in the hands of the assessee on the total accommodation entries provided by it on the total credits available in the bank account being the accommodation entries for the respective assessment years.
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2021 (1) TMI 920
Condonation of delay in filing the returns - claim of deduction u/s 80P rejected - Appellant No.1 herein rejected the application filed under Section 119(2)(b) but the learned single Judge has set aside the said order and has remanded the matter to respondent No.3 for re-examination of the said application pertaining to condonation of delay in filing the returns for the assessment year 2018-19 - HELD THAT:- On perusal of the impugned order of the learned single Judge as well as the order of appellant No.1/respondent No.1 in the writ petition passed under Section 119(2)(b) of the Act, we find that the learned single Judge was right in setting aside the said order and remanding the matter - while remanding the matter, the same ought to have been remanded to respondent No.1 in the writ petition i.e., appellant No.1 herein. Therefore, with the aforesaid modification of the impugned order, the appeal stands disposed.
Since a time frame of three months from the date of receipt of the certified copy of the impugned order was granted by the learned single Judge to complete the reconsideration of the application filed by the respondent herein seeking condonation of delay in filing the returns, we now extend the said time by three months from the date of receipt of certified copy of this judgment.
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2021 (1) TMI 919
Condonation of delay in filing the returns - claim of deduction u/s 80P rejected - Appellant No.1 herein rejected the application filed under Section 119(2)(b) but the learned single Judge has set aside the said order and has remanded the matter to respondent No.3 for re-examination of the said application pertaining to condonation of delay in filing the returns for the assessment year 2018-19 - HELD THAT:- On perusal of the impugned order of the learned single Judge as well as the order of appellant No.1/respondent No.1 in the writ petition passed under Section 119(2)(b) of the Act, we find that the learned single Judge was right in setting aside the said order and remanding the matter - while remanding the matter, the same ought to have been remanded to respondent No.1 in the writ petition i.e., appellant No.1 herein. Therefore, with the aforesaid modification of the impugned order, the appeal stands disposed.
Since a time frame of three months from the date of receipt of the certified copy of the impugned order was granted by the learned single Judge to complete the reconsideration of the application filed by the respondent herein seeking condonation of delay in filing the returns, we now extend the said time by three months from the date of receipt of certified copy of this judgment.
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2021 (1) TMI 896
Addition u/s 69 - denial of exemption of long term capital gain - penny stock purchases - HELD THAT:- The present case is fully covered by the decision of Hon'ble Delhi Tribunal in Reeshu Goel [2019 (10) TMI 1387 - ITAT DELHI] wherein the same script from which the assessee had obtained Long Term Capital Gain has been held to be genuine. Therefore, following the same, we hold that the scrip of CCL International Ltd. is genuine and not a penny stock and paper entity. - Decided in favour of assessee.
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2021 (1) TMI 902
Levy of late fee u/s 234E - delay in filing the above TDS statement - Fee for default in furnishing statements - statement processed u/s 200A - assessee contended that AO could levy fee u/s.234E of the Act while processing a return of TDS filed u/s.200(3) of the Act only by virtue of the provisions of Sec.200A(1)(c), (d) & (f) of the Act and those provisions came into force only from 1.6.2015 and therefore the authority issuing intimation u/s. 200A of the Act while processing return of TDS filed u/s.200(3) of the Act, could not levy fee u/s. 234E of the Act in respect of statement of TDS filed prior to 1.6.2015 - HELD THAT:- Keeping in mind that technicalities should not stand in the way of rendering substantive justice, as laid down by the Hon’ble Supreme Court in the case of Land Acquisition Vs. Mst. Katiji and Others [2016 (9) TMI 964 - KARNATAKA HIGH COURT] we are of the view that interest of justice would be met if the delay in filing appeals by the Assessee before CIT(A) is condoned and the issue with regard to levy of interest u/s.234-E of the Act be remanded to the CIT(A) for fresh consideration in accordance with the observations made in this order.
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Corporate Laws
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2021 (1) TMI 898
Restoration of name of Company in the Register of Companies, maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- Having gone through the report received on 18.12.2020 from the Registrar of Companies in the instant appeal as also all the annexures appended to the Appeal including the latest Balance Sheets and Financial Statements of the Company for the year ending 31st March 2019 and the Income Tax Return Acknowledgment for the Assessment Year 2019-2020 - Appellant sought leniency while ordering costs, for the reason that the Company is facing financial problems due to COVID-19 pandemic.
This Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies - The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company, as if the name of the Company has not been struck off from the Register of Companies and take all consequential actions like change of company’s status from ‘Strike off’ to ‘Active’ (for e-filing) and to intimate the bankers about the restoration of the name of the company so as to defreeze its accounts - Application allowed.
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Insolvency & Bankruptcy
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2021 (1) TMI 901
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority who was required to pass the order of admission or rejection of the application being satisfied about the completion of the application and proof of debt and default as mandated under Section 9(5) has failed to provide opportunity of rectifying the defect as noticed and allowing the applicant to bring it in conformity with the requirements of law. Dismissal of application as being non-maintainable for such technical defect is not warranted.
The impugned order is set aside and matter remanded back to the Adjudicating Authority to allow the Appellant/Applicant opportunity of rectifying the defect, if any, in the application and thereafter pass order of admission or rejection in regard to initiation of Corporate Insolvency Resolution Process on merit.
Appeal disposed off.
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2021 (1) TMI 900
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - pre-existing dispute or not - time limitation - Whether there is an operational debt exceeding ₹ 1 lac as defined under Section 4 of the I&B Code? - HELD THAT:- In the application under Section 9 of the I&B Code, it is mentioned that appellant has supplied ready-mix concrete material to respondent for their various construction sites from 30/09/2012 to 20/10/2014 for which various invoices were issued from time to time as against the total outstanding payment of ₹ 02,29,94,288/-. The respondent (Corporate Debtor) has paid a sum of ₹ 02,09,30,948/- and balance of ₹ 20,63,340/- is outstanding as on 11/11/2015 - The respondent denied this fact and according to him as per the ledger, the outstanding amount is only ₹ 70,165/-. In support of this contention, the respondent filed ledger account of appellant maintained by the respondent for period of 01/04/2012 to 20/03/2018. (See Page 97-102 of Appeal Paper Book) The respondent has produced its statement of accounts which clearly shows that the total amount outstanding against the appellant is ₹ 70,165/- which is less than ₹ 1 lac. The appellant has not pointed out any error in the statement of account filed by the respondent.
Also, it is established that as on 31/03/2017, operational debt ₹ 19,89,130/- was due and payable and has not yet been paid - Hon’ble Supreme Court, in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT] held that what is the scope of ascertaining the existence of a dispute at the time of admitting the Application, which is as follows:- “it is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence.”
Pre-existing dispute or not - HELD THAT:- As per the respondent, the appellant has delivered goods to Mayfair Corporate Park but erroneously sent invoices dated 15/07/2013 and 18/10/2013 bearing nos. 661 and 360 amounting to ₹ 05,33,120/- and 05,16,460/-. The respondent has no connection with Mayfair Corporate Park, therefore they have returned the invoices to the appellant. According to the appellant, the Mayfair Corporate Park is a construction project developed by Mayfair Spaces Ltd. (respondent) and thus they are associated entities. Therefore, the disputed invoices were rightly sent to the respondent - the appellant is relying on the ledger account maintained by the respondent. In this ledger account the amount of disputed invoices are not shown. Therefore, we hold that there is no dispute between the parties in regard to the aforesaid invoices. Thus, the finding of ld. Adjudicating Authority that there is a pre-existing dispute between the parties, cannot be agreed upon.
Time Limitation - HELD THAT:- The ledger account is a running account which shows that on 05/11/2015, the respondent has made payment of ₹ 12 lacs to appellant and from this date of acknowledgment within three years, that is on 15/01/2018 the application is filed. Thus, the application is within period of limitation. We agree with the finding of the Adjudicating Authority that the application is filed within the period of limitation.
As the respondent has failed to pay more than ₹ 1 lac and in absence of any pre-existing dispute and the record being complete, we hold that the application under section 9 of I&B Code preferred by the appellant was fit to be admitted - the impugned order is set aside and the case remitted to the Adjudicating Authority for admitting the application under Section 9 of I&B Code after notice to the Corporate Debtor to enable the Corporate Debtor to settle the matter prior to admission - appeal allowed by way of remand.
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2021 (1) TMI 899
Seeking extension of time period of Corporate Insolvency Resolution Process - seeking Audit and close the Accounts of the Corporate Debtor for the Financial Year 2015-2016 to 2019-2020 with the available records - avoiding examination of transactions covered under Sections 43, 45, 50 and 66 of I&B Code, 2016 - approval of eligibility of Resolution Applicant [Celestial Garden Owners Association] and participation of Resolution Applicant in voting of Resolution Plan - HELD THAT:- Considering Section 30(4) of the I&B Code, instead of going for liquidation of the Corporate Debtor, accepting the Resolution submitted by the Resolution Applicant is more viable. Section 31 of the IBC only bestowed the NCLT with the power to reject a Resolution Plan when the conditions in Section 30(2) have not been adequately met. Hence this Tribunal is only having a “hands off” role in the entire process of Corporate Insolvency Resolution Process - The proviso to the aforesaid Section mandates that Resolution Applicant does not have the voting right at the CoC while considering the Resolution Plan. The Resolution Applicant herein is the Home Buyers (52 Numbers) who are Financial Creditors with 3.91% voting rights in the CoC formed an association called ‘Celestial Garden Owners Association’.
This Tribunal extend the period of CIR Process for a further period of 90 days from 11.12.2020 with a direction to the Resolution Professional to meticulously adhere to the Rules and Regulations issued by IBBI in this regard from time to time - application allowed.
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2021 (1) TMI 897
Seeking declaration that the letter issued by Collector of Usmanabad and the withdrawal of ₹ 76,75,000/- done by Respondent as illegal / non-est in law - seeking direction to Respondent (GST Department, Nashik) to forthwith refund the amount of ₹ 76,75000/- along with an interest @18% p.a. to the Bank Account of the Corporate Debtor - HELD THAT:- This bench is of the view that the liability towards Sales Tax due is not towards the Corporate Debtor but it is the due payable by M/s Sheelaatul Sugar Tech Private Limited. Even assuming that the Corporate Debtor is liable to pay that amount, the collection of due by the Respondent during CIRP is prohibited by moratorium under Section 14 of the Code. The Judgments referred by the Respondents is not relating to the issue involved in this Application and will not come to the aid of the Respondent.
The submission of the counsel for the Respondent that previously the Corporate Debtors agreed to pay the Sales Tax due of M/s Sheelaatul Sugar Tech Private Limited, from and out of the Sales Tax refund receivable by the Corporate Debtor is unenforceable during CIRP. Hence, the submission of the Counsel for the Respondent that the Corporate Debtor has received refund of ₹ 80,00,000/- from the sales tax department and from the said amount only this recovery is made cannot be accepted.
In view of the fact that the amount has been debited when the CIRP is in progress and the same is hit by the provisions of Section 14 of the Code. The Respondent is liable to repay the amount to the Corporate Debtor and accordingly the Respondent is directed to refund the amount of ₹ 76,75,000/- to the Applicant within 30 days of this order - application allowed.
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