TMI Tax Updates - e-Newsletter
January 28, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Highlights / Catch Notes

• GST:

  Release of detained goods alongwith the vehicle - condition of furnishing the Bank Guarantee with bond - It is quite clear that second option of furnishing the security for tax, interest and penalty, there will be no requirement for giving the bond in a case where the person has already made payment of tax, penalty and interest. The petitioner has already made payment of tax and penalty as well as furnished the bond and since the petitioner is unable to insist on the Bank Guarantee, when the requirement is of execution of the bond, to insist on the furnishing the security is something undesirable. - HC
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• GST:

  Utilisation of Input Tax Credit - outward supply of Gold & Silver bullion - The applicant/appellant can use the Input Tax Credit Balance available in its Electronic Credit Ledger, which has been legitimately earned on the inputs / inward supplies (meant for outward supply of Bullions) for payment of ‘output tax’ (GST) on its outward supply of Castor Oil Seeds. - In other words, we hold that payment of output tax on Castor Oil Seeds through utilization of Input Tax Credit taken on Gold & Silver Dore Bars etc. cannot be denied merely on the ground that the inputs have no nexus with outward supply. - AAAR
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• GST:

  Levy of GST - sale of plot of land - farmer having a vacant land outside the municipal area of town - The transaction/activity of the appellant is not covered under Entry No.5 of Schedule-III of the CGST Act, 2017 as it is a sale of developed plots and is a supply of taxable service falling under the head ‘Construction services’ appearing at Sr.No.3 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) issued under the CGST Act, 2017 and is liable to GST at 18% - AAAR
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• Income Tax:

  Computation of capital gains - Slump sale u/s 2(42C) - transfer of capital assets u/s 2(47) - we took note of the submissions of the learned Senior Counsel for the respondent/assessee that the definition of slump sale as defined under Section 2(42C) was amended with effect from 1st April, 2021. The unamended provision defined slump sale to mean transfer of one or more undertaking as a result of sale. By Finance Act, 2021 the amendment made was by defining slump sale to mean the transfer of one or more undertaking by any means. This significant change by way of amendment would also aid the case of the assessee and would convince us to uphold the finding of the Tribunal. - HC
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• Income Tax:

  Addition u/s 40A (3) - expenses incurred by the assessee for the purchase of raw hides and skins in cash - Notices to sellers sent u/s 133(6) of the Act have returned with postal endorsement ‘not known’. - the tribunal has noted the fact and also taken a note of the contemporaneous documents produced by the assessee, namely, the sales tax bills, transport permits and other Government records to prove the genuineness of the transaction. Apart from that, the day-to-day stock register were also maintained which is noted in the tax audit report. Furthermore, the payments were made to the suppliers of the hides and skins and considering the nature of the trade, the [CIT(A)] and the tribunal agreed with stand taken by the assessee. - Addtions were rightly deleted - HC
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• Income Tax:

  Rectification order passed u/s.154 - Period of limitation - In the present case before us there is no controversy about first order or second order but order under rectification is only the order passed by CPC, Bengaluru u/s.143(1) i.e., intimation or processing of return of income vide letter dated 05.03.2012. The rectification order by the AO u/s.154 of the Act was passed only on 20.06.2016. It means, that the rectification order u/s.154 of the Act in the present case can be passed upto 31.03.2016 and not beyond that. In the given facts and circumstances and above legal position discussed, we are of the view that the rectification order passed u/s.154 of the Act is clearly barred by limitation and hence, on this sole ground, the order is quashed. - AT
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• Income Tax:

  Disallowance of interest expense - interest expense not attributable to the business shown u/s 44AD - claiming separate deduction under section 57(iii) - As abundantly clear that expenditure incurred by the assessee for the purpose of earning the income, under the head “income from other sources” should be allowed as a deduction under section 57(iii) - Additions confirmed by the CIT(A) deleted - AT
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• Income Tax:

  Disallowing the claim of exemption u/s 54-F - Belated filing of ITR - capital gain was not deposited by assessee before due date of filing return of income under section 139(1) - When the assessee has deposited ₹ 15 lakhs of capital gain in purchasing the Bond of NHAI before due date of filing of return of income under section 139(4), his claim for exemption under section 54 –F was not to be disallowed. - AT
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• Income Tax:

  Bogus LTCG - While allowing relief to the assessee, CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions - the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. - Order of CIT(A) sustained - AT
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• Income Tax:

  Validity of proceedings u/s. 92CA(3) passed after expiry of limitation period - period of limitation - In the present facts, the Ld. CIT.DR has in the written submission mentioned that the order of the Ld. TPO is passed on 29.01.2014 or 30.01.2014 but dated 31.01.2014. Then, the order of the Ld. TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. - AT
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• Income Tax:

  Income accrues or arises in India - services to MTR foods Private Limited who is located outside India - Secondment charges paid in respect of the professional services rendered - classification as FTS - Nothing is made available by non resident Assessee to MTR Foods in India. Accordingly the services rendered by the non resident assessee to MTR Foods are not taxable as per India Singapore DTAA. Since the non resident assessee do not have a permanent establishment in India, the income so arising cannot be taxed under Article 7 as 'business profits' either. - AT
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• Income Tax:

  Revisions u/s 263 by CIT - Whether the assessee has claimed VAT input on the deemed import as an expense in the profit and loss account? - This fact, to our understanding, has not been verified by the AO. At the time of hearing the learned AR has also not brought anything on record suggesting that the assessee has not claimed VAT input on the deemed import as an expense in the profit and loss account - Revision proceedings upheld - AT
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• Income Tax:

  Revision u/s 263 by CIT - difference in guidelines value for plots purchase - Find no merit in this contention of assessee because books of account are not maintained, no such details were ever filed during the course of assessment proceedings. Assessee has himself declared the income on estimated basis. Even AO has also estimated the income on estimated basis so all expenditures if any incurred for the business are deemed to have been allowed. - AT
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• Customs:

  Seeking release of export consignments covered under the three shipping bills - Period of six months from the date of seizure expired - The person from whose possession the goods have been seized is entitled to notice of the proposal before the authority for the extension of the original period of 6 months mentioned in Section 110 (2) of the Act and he is also entitled to heard upon such proposal, subject to the restrictions that he is not entitled to information as to the investigation which is in process, because there can be no right in any person to be informed midway, during an investigation of the materials collected in the case against him and moreover there is a need for maintaining confidentiality of the investigation proceedings. - HC
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• Customs:

  Claim of foreign exporter to India as owner of goods seeking to re-export - seizure of cargo currently lying in a warehouse at Gandhidham - Mere filing of the ex-bond bill of entry, by itself, would not vest the title of the goods into the importer if ultimately such goods are not cleared by the importer, or in other words, if such goods are abandoned. In such circumstances also, the title over the imported goods would remain with the exporter and the exporter may, in peculiar facts and circumstances of the case like the one on hand, request the Commissioner to permit him to reexport the goods as an unpaid seller - Undoubtedly, the writ-applicant herein is the unpaid seller and he has been suffering for no fault on his part. - This writ-application permitted to file an application addressed to the Commissioner seeking re-export of the goods. - HC
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• Customs:

  Levy of penalty on Customs Broker - As per Regulation 10 (d) the appellant has another statutory duty of informing with diligence his client to comply with the provisions of the CBLR and in case of non-compliance to bring the matter to the notice of Dy. Commr. Of Customs all Asstt. Commr of Customs. The duty burdened upon the appellant vide these regulations cannot be set aside on the mere plea of ignorance by the CB/CHA - AT
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• Indian Laws:

  Dishonor of Cheque - acquittal of the accused - if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. In this case, the factual situation pointed out by the appellant contains several discrepancies mentioned above which is sufficient to raise a probable defence so as to create doubts as to the existence of legally enforceable debt or liability. - HC
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• Indian Laws:

  Dishonor of Cheque - The receipt loan amount is unequivocally, unambiguously and indisputably admitted by the respondent. The obligation of the respondent to pay interest @15% per annum is also admitted, indisputable and uncontroverted. - the respondent has already dealt with the security furnished to the petitioner in terms of the Memorandum of Understanding, liberty is granted to the petitioner to take appropriate steps for securing its claim, in accordance with law, if so advised. - this is a classic commercial dispute which falls within the ambit of Section 2(c)(i) of the Commercial Courts Act, 2015 - HC
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• Wealth-tax:

  Validity of Reassessment proceedings initiated u/s 17 of the Wealth Tax Act, 1957 - As regards the plea of alternative remedy, this court is of the opinion that when the condition precedent for the invocation of reassessment proceedings does not exist, the assessee is entitled to approach this court under Article 226 of the Constitution of India and hence, the question of invoking the alternative remedy available to the assessee, does not arise. - HC
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• Service Tax:

  Classification of services - The services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under “supply of tangible goods for use” service - the demand of service tax under the said category along with interest thereon is upheld. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed - AT
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• Service Tax:

  Effect of negative regime on Construction of Complex Services - tri-partite agreement - providing free of cost flats to all the existing members of the Society in lieu of the development rights - In the present case the respondent has discharged the complete service tax liability on the gross amount received by him for providing the taxable services. Once he have discharged the tax liability on the gross consideration received by him by the sale of flats to new buyers, the demand of service tax for the flats handed over to the existing members of the societies without any consideration cannot be sustained. - AT
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• Central Excise:

  Valuation - clearance of HTS wire to their sister concern for pressed concrete slippers by the said sister concern - The adjudicating authority below has failed to consider the CAS-4 certificate issued by the authorised auditors proving the excess payments of duty made by the appellant in terms of Rule 9 read with Rule 8 of the valuation rules. The certain short payments in terms of all these rules have wrongly been denied to be set off against the said excess - Appeal allowed - AT
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• VAT:

  Levy of VAT - goods replaced being covered under warranty of the product sold by the petitioner - time limitation - exemption form VAT/Tax sought on the ground that no sale of such goods has taken place and the same has been given to the customer by way of replacement being covered under warranty - the Appellate Joint Commissioner (CT), Tirupathi, is the forum before which the petitioner is required to agitate the matter by producing all documentary evidence available with him in support of his contention. - HC
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• VAT:

  Seeking direction to the respondents to allow the petitioner's application for waiver of penalty - Karasamadhana Scheme, 2021 - in view of the undisputed fact that the petitioner did not have any arrears of tax but only arrears of penalty relating to reassessment, which was already completed on 28.04.2021, much before the cut off date dated 31.07.2021, the petitioner would clearly be entitled to the benefit of waiver of 100% penalty - HC
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• VAT:

  Treatment given to the amount deposited by the dealer - stand of Department is that the amount deposited by the dealer on 30.03.2007 is firstly credited to the interest due from dealer but not to tax due - the dealer resisted the adjustment, firstly, in interest account as illegal for the reason that the respective assessment orders do not stipulate interest for non-payment or delayed payment of tax - Interest the Act is automatic, becomes payable on the date on which return is filed, and hence no separate order demanding interest is necessary. - HC
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Articles

• PLACE OF SUPPLY OF SERVICE BY GTA
• Officers must act reasonably and legally and not harass taxpayers Cost imposed on GST officer by High Court further increased by the Supreme Court. To put effective check on harassing attitude of officers , effective way can be suspension and debarring from government services.
• RECENT DEVELOPMENTS IN GST
• Summons cannot be issued where the assessee is cooperating during the inquiry

Notifications

• GST - States

• EXN-F(10)-22/2017 - dated 20-1-2022 - Himachal Pradesh SGST
  Re-constitute the Himachal Pradesh Authority for Advance Ruling

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• EXN-F(10)-22/2017 - dated 20-1-2022 - Himachal Pradesh SGST
  Re-constitute the Himachal Pradesh Appellate Authority for Advance Ruling

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• 16/2021 – State Tax - dated 24-12-2021 - Jharkhand SGST
  Seeks to bring in force provisions of section 6 of the Jharkhand Goods and Services Tax (Amendment) Act, 2021

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• S.O. 06/P.A.5/2017/S.9/Amd./2022 - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 158/P.A.5/2017/S.9/2018, dated the 14 December, 2018

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• S.O. 05 /P.A.5/2017/S.9/Amd./2022. - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 28/P.A.5/ 2017/S.9/2017, dated the 30th June, 2017

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• S.O. 04/P.A.5/2017/S.11/Amd./2022 - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 18/P.A.5/ 2017/S.11/2017, dated the 30th June, 2017,

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• S.O. 02/P.A.5/2017/Ss.9, 11, 15 and 148/Amd./2022 - dated 28-12-2021 - Punjab SGST
  Amendment in Notification No. S.O 37/P.A.5/2017/S.11/2017, dated the 30th June, 2017

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• Income Tax

• 11/2022 - S.O. 345 (E) - dated 25-1-2022 - IT
  Seeks to amend Notification No. 89/2020 dated 02 November 2020

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• SEBI

• SEBI/LAD-NRO/GN/2022/71 - dated 25-1-2022 - SEBI
  Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) (Amendment) Regulations, 2022

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• SEBI/LAD-NRO/GN/2022/70 - dated 25-1-2022 - SEBI
  Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2022

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News

• Deployment of Interest Calculator in GSTR-3B

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• Union Budget 2022-23 to be presented on 1st February, 2022 in Paperless form

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• Electronic Goods Exports register a whopping growth of 49% in April-December 2021 by clocking USD 11.0 Billion (Provisional) over USD 7.4 Billion during same period in the year 2020

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• Air India strategic disinvestment completed

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• I-T refunds worth ₹ 1.62 lakh cr issued so far this fiscal

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Case Laws:

• GST

• 2022 (1) TMI 1057
  Release of detained goods alongwith the vehicle - condition of furnishing the Bank Guarantee with bond - non-availability of E-way bill - registration of the recipient was being shown as suspended and that the goods had been undervalued - HELD THAT:- The goods seized can be released under Sub-section (2) of Section 67 of the GST Act on a provisional basis upon execution of the bond and furnishing of the security and on payment of applicable tax, interest and penalty as the case may be. Section 129(2) of the GST Act provides for adopting of provision of Section 67(6) of the GST Act which says that the provision of Sub-section (6) of Section 67 shall mutatis mutandis apply for detention and seizure of goods and conveyance - The Court itself made it clear that there is a difference between Bond Bank Guarantee. It being a vital distinction between the bond and the Bank Guarantee, once the writ applicant executes a bond to the satisfaction of the authority, the authority concerned cannot insist for the Bank Guarantee. Since there is binding decision in this regard, the authority concerned instead of asking for the Bank Guarantee has insisted on furnishing of the security - It is quite clear that second option of furnishing the security for tax, interest and penalty, there will be no requirement for giving the bond in a case where the person has already made payment of tax, penalty and interest. The petitioner has already made payment of tax and penalty as well as furnished the bond and since the petitioner is unable to insist on the Bank Guarantee, when the requirement is of execution of the bond, to insist on the furnishing the security is something undesirable. The respondent is directed to release the goods and conveyance being No.KA-17-C-1451 since the bond has already been furnished as is required under the Rule - Petition allowed.

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• 2022 (1) TMI 1056
  Utilisation of Input Tax Credit - outward supply of Gold Silver bullion - payment of output tax on Castor Oil Seeds - Whether the Input Tax Credit (ITC) legitimately earned by the appellant and lying as balance in Electronic Credit Ledger can be utilised for payment of GST on an outward supply, which has no nexus with the inputs on which the ITC has been taken? - time limit for filing appeal - HELD THAT:- The appellant has shown the date of communication of the Advance Ruling as 30.01.2021 . Thus, it is observed that the present appeal filed on 19.02.2021 has been filed within the prescribed time limit of 30 days from the date of communication of Ruling, as prescribed under Section 100(2) of the CGST Act, 2017 - Even otherwise, the last date for filing appeal stands extended w.e.f. 15.03.2020 Whether Input Tax Credit validly taken on any input can be utilized for payment of output tax (GST) on any outward supply, which has no nexus with the inputs on which ITC was taken? - HELD THAT:- Section 16(1) of the CGST Act only states the eligibility and conditions for taking ITC. It does not impose any restriction on utilisation of the legitimately earned ITC. It does not prescribe that ITC available in electronic credit ledger to be utilized only for the specific outward supply, on whose inputs such ITC was availed - Section 16(1) nowhere mandates to prove one-to-one correlation of particular inputs with particular outward supply. In other words, Section 16(1) does not require that payment of outward tax on particular outward supply can be made only from the ITC taken on particular inputs, which have nexus or connection with that outward supply. The requirement of Section 16(1) is that the inward supply should be used or intended to be used in the course or furtherance of the business of taxpayer. In this case, it is undisputed that the inward supply of Gold and Dore bars are intended to be used in the course of business of the appellant, i.e. outward supply of Bullion etc. This undisputed fact entitled the appellant to take input tax credit on such inputs. Once such input tax credit is validly taken, it can be utilised for payment of output tax [GST] on any taxable or zero rated outward supply of the appellant - the amount of input tax credit lying in electronic credit ledger can be utilised by appellant for making any payment of output tax payable by him. Needless to say that all provisions regarding determination, restriction and reversal of input tax credit and payment of tax, as prescribed Chapters V and X of the CGST Act and Chapters V and X of the CGST Rules, would be applicable, which are not under covered under the question raised in the application for Advance Ruling in present case. The payment of output tax on Castor Oil Seeds through utilization of Input Tax Credit taken on Gold Silver Dore Bars etc. cannot be denied merely on the ground that the inputs have no nexus with outward supply.

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• 2022 (1) TMI 1055
  Levy of GST - sale of plot of land - farmer having a vacant land outside the municipal area of town - as per the requirement of approval by the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant - HELD THAT:- Although the appellant has time and again referred to the plan approval obtained by them from the plan approving authority i.e. the Jilla Panchayat as well as to the various pages of the sale deed which they have made with the individual buyers of their plots of land, they have submitted neither the copy of the approved plan from the plan approval authority i.e. the Jilla Panchayat, nor the sale deed/agreement/contract which they have made or are proposing to make with the individual buyers of their plots of land. In fact, on going through the copy of sale deed (marked as Annexure-VII) which the appellant has submitted along with their additional submission dated 10.11.2020 (received in this office on 12.11.2020), it is found that the said sale deed does not pertain to the appellant but pertains to sale of developed land between Shri Manishbhai Bhavaniprasad Agrawal and Shri Denishbhai Dhanrajbhai Shah, both partners of Swami Developers(the sellers) and Shri Nevil Bharatbhai Doctor(the purchaser) which is not in any way related to the appellant - the said documents/papers submitted by the appellant as well as those parts of the submissions of the appellant that are based on the clauses of the attached sale deed, cannot be relied upon in the present case. When the transaction involves mere sale of land, the said transaction will be out of the scope of supply and will be squarely covered under Entry No.5 of Schedule-III which covers activities or transactions which shall be treated neither as a supply of goods nor supply of services. However, in view of the common facilities being developed/being got developed by the appellant, this activity will be squarely covered under the scope of taxable service i.e. construction of civil structure or a part thereof, intended for sale to a buyer. under clause(b) of paragraph 5 of Schedule-II of the CGST Act, 2017 - the sale of developed land by the appellant will not fall under Entry No.5 of Schedule-III of the CGST Act, 2017. The seller is collecting charges towards the land as well as the common amenities, roads, water tank and other infrastructure on a proportionate basis and all these are an intrinsic part of the plot allotted to the buyer. The facts clearly indicate that sale of developed plot is not equivalent to sale of land but is a different transaction. Sale of such plotted development tantamount to supply/rendering of service. In the present case, the appellant is the owner of the land, who develops the land/gets the land developed with an infrastructure such as Drainage line, Water line, Electricity line, Land leveling etc. as per the requirement of the approved Plan Passing Authority (Jilla Panchayat) and thereafter, sells such developed land as plots. The appellant s sales price includes the cost of the land as well as the cost of common amenities as mentioned above, on a proportionate basis. Schedule II of the CGST Act, 2017 pertains to activities or transactions to be treated as supply of goods or supply of services - the said activity is not covered under Entry No.5 of Schedule-III of the CGST Act, 2017 as contended by the appellant, but it is a supply of taxable service involving construction of civil structure or a part thereof, intended for sale to a buyer falling under the head Construction services appearing at Sr.No.3 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and GST at the rate of 18% is payable on the sale of developed plots in terms of CGST Act, 2017 and Rules thereunder.

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• Income Tax

• 2022 (1) TMI 1060
  Allowability of deduction u/s 36(1)(va) read with Section 2(24)(x) - delayed deposit of employee contribution towards PF/ESI - Deposits beyond the time provided under the relevant statute governing PF/ESI but deposited before the due date for filing of return of income as prescribed u/s 139(1) - Scope of amendment by Finance Act , 2021 in Section 36(1)(va) and 43B of the 1961 Act - HELD THAT:- Amendment made by Finance Act, 2021 in Section 36(1)(va) and 43B are prospective in nature and shall be applicable from ay:2021- 22 and subsequent assessment years, and consequently shall not have any retrospective effect. Hon'ble Jurisdictional High Court in the case of Sagun Foundry Private Limited [ 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT ] has held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act. It is also to be noted that while deciding this issue in Sagun Foundry(supra) in favour of the tax-payer , the Hon ble Allahabad has duly discussed Hon ble Supreme Court decision in Alom Extrusion [ 2009 (11) TMI 27 - SUPREME COURT ] and then decided this issue in favour of the tax-payer. Respectfully following the aforesaid decision in assessee s own case for ay:2018-19 [ 2022 (1) TMI 1000 - ITAT ALLAHABAD] in which both of us were part of the Division Bench who pronounced the order, we hold that in the instant appeal for ay: 2019-20 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned(page 66/pb), but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. While passing the above order, we also note that several Division Benches of ITAT across Country have now passed appellate orders even after considering the amendments made to Section 36(1)(va) and 43B of the 1961 Act by Finance Act, 2021, holding that if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the tax-payer shall be entitled for deduction u/s 36(1)(va) - thus assessee succeeds in this appeal

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• 2022 (1) TMI 1059
  Disallowance of interest u/s. 244A - whether CIT(A) erred in confirming the order of the learned AO in not allowing the interest u/s. 244A upto the date of issue of refund cheque in terms of binding CBDT circular No. 20D (XXII-22) dated 20.08.1968 wherein instructions have been given for calculating interest upto the date of issue of refund voucher - HELD THAT:- When we examine the provisions contained under section 244A of the Act, it has a categoric mandate that where refund of any amount becomes due to the assessee, he shall be entitled to receive, in addition to the refund amount, simple interest calculated in the manner prescribed in section 244A of the Act itself. Since the provisions contained under section 244A of the Act has no ambiguity whatsoever the assessee is entitled for the interest on its refund upto the date of issuance of the refund voucher. This issue has already been examined and decided by the coordinate Benches of the Tribunal in favour of the assessee that assessee is entitled for interest on its refund upto the date of issuance of refund voucher in cases cited as Indo Gulf Corporation Ltd [ 2017 (1) TMI 1779 - ITAT MUMBAI] , [ 2011 (7) TMI 1322 - ITAT LUCKNOW] and [ 2019 (9) TMI 1626 - ITAT MUMBAI] and and Grasim Industries Ltd[ 2022 (1) TMI 955 - ITAT MUMBAI] We are of the considered view that Ld. CIT(A) has erred in not granting the interest to the assessee on its refund upto the date of issuance of the refund voucher otherwise admissible as under section 244A of the Act and as such impugned orders under appeals are not sustainable in the eyes of law, hence set aside. AO is directed to compute and grant the interest on the tax refund due to the assessee for A.Y. 2012-13 2013-14 upto the date of issuance of refund voucher in accordance with the provisions contained under section 244A of the Act. Resultantly, both the appeals filed by the assessee are allowed.

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• 2022 (1) TMI 1053
  Deduction u/s.80IA - whether Assessee operating a multipurpose berth and not developing and/or operating and maintaining a port as required under the act? - HELD THAT:- What is important is the substance of the letter and the agreement and not the form. It may be true that the port has issued Circular No. 10 of 2005 stating that the concerned port authorities have to issue a certificate since the definition of port stood amended and it was made as an inclusive definition to mean structures at the port for storage, loading and unloading etc. If AO had applied his mind and read the letter and the agreement in conjunction he should have arrived at a conclusion that the right granted to the assessee was an exclusive right to maintain the facility and undoubtedly the facility is meant for storage, loading and unloading and would fall within the definition of port . CIT(A) for the earlier assessment year 2003-2004 which is the first year when deduction under Section 80-IA was claimed has done a thorough factual examination and granted relief to the assessee. Thus the order passed by the CIT(A) was challenged before the Tribunal and the Tribunal by order dated 30th October, 2007 dismissed the appeal of the revenue and the assessing officer has also given effect to the order and allowed deduction under Section 80-IA for which is the first year in the period of ten years. It goes without saying if the assessee has been granted the benefit for the first year the assessing officer should take a consistent stand in the subsequent years unless there are any other change in circumstances warranting a different decision. In the case on hand, there is nothing on record that there was any change in the situation. We are of the considered view that the letter and the agreement which were produced by the assessee is undoubtedly a certificate issued by the port authorities and would satisfy the requirement in Circular No. 10 of 2005. The Tribunal on its part also re-examined the factual position and noted the decision in assessee s own case for the assessment year 2003-2004 while grating relief to the assessee. From the above factual position it is evidently clear that the Tribunal rightly rejected the revenue s appeal and confirmed the order passed by the CIT(A) granting relief to the assessee. - Decided in favour of assessee.

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• 2022 (1) TMI 1052
  Computation of capital gains - Slump sale u/s 2(42C) - transfer of capital assets u/s 2(47) - Whether surplus amount is covered an exchange under section 2(47) as against long term capital gains under section 50B and section 2(42C) of the Income Tax Act? - HELD THAT:- Tribunal took note of the argument of the assessee with regard to computation of capital gains and found that there cannot be any controversy that each of the specified hotels is an undertaking and, therefore, constituted a long term capital asset. Further, the Tribunal took note that it is not in dispute that the transfer of the business undertaking as a going concern constitutes transfer of capital asset. The Tribunal proceeded to take note of the decision of the High Court of Bombay in the case of CIT Vs. Bharat Bijlee Limited, [ 2014 (5) TMI 512 - BOMBAY HIGH COURT] and granted relief to the assessee by observing that two specified hotels of the assessee were transferred to EIH Associated Limited for consideration to be settled by issuance of preference shares and debentures were a transfer of capital by way of exchange and, therefore, the provisions of Section 50B of the Act cannot be made applicable to the facts of the case on hand. We find that the finding recorded by the Tribunal to be perfectly right. In fact, the Tribunal rightly took note of the decision in the case of R.R. Ramakrishna Pillai [ 1967 (5) TMI 7 - SUPREME COURT] That apart, we took note of the submissions of the learned Senior Counsel for the respondent/assessee that the definition of slump sale as defined under Section 2(42C) was amended with effect from 1st April, 2021. The unamended provision defined slump sale to mean transfer of one or more undertaking as a result of sale. By Finance Act, 2021 the amendment made was by defining slump sale to mean the transfer of one or more undertaking by any means. This significant change by way of amendment would also aid the case of the assessee and would convince us to uphold the finding of the Tribunal. - Decided against revenue.

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• 2022 (1) TMI 1051
  Addition u/s 40A (3) - expenses incurred by the assessee for the purchase of raw hides and skins by non-account payee cheques - Whether Tribunal was correct in holding that the assessee was entitled to deduction in respect of raw hide purchases made in cash exceeding ₹ 20,000/- u/s 40A(3)? - HELD THAT:- Provisions of Section 40A(3) of the Act read with Rule 6DD of the Rules are intended to regulate business transaction and to prevent the use of unaccounted money - it is always open to the assessee to furnish documents to prove that the payment in the manner prescribed under Section 40A (3) of the Act was not practicable or would have caused genuine difficulty to the payee. In the case on hand, the tribunal has noted the fact and also taken a note of the contemporaneous documents produced by the assessee, namely, the sales tax bills, transport permits and other Government records to prove the genuineness of the transaction. Apart from that, the day-to-day stock register were also maintained which is noted in the tax audit report. Furthermore, the payments were made to the suppliers of the hides and skins and considering the nature of the trade, the [CIT(A)] and the tribunal agreed with stand taken by the assessee. Assessee placed reliance on the decision of this Court in Commissioner of Income Tax, Kolkata-XI versus- CPL Tannery. [ 2008 (8) TMI 356 - CALCUTTA HIGH COURT ] In the said decision, an identical case arose for consideration and relief was granted to the assessee. Thus, we find that the tribunal was right in affirming the order passed by the [CIT(A)] and dismiss the appeal filed by the Revenue. - Decided against revenue.

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• 2022 (1) TMI 1050
  Disallowance of the expenditure pertaining to assessees Dummugudam project involving varying sums on account of the fact that the same had been incurred on cash basis only - It s case therefore, is that the CIT (A) has erred in law and on facts in restricting the same to the extent of 12.5% - HELD THAT:- Revenue is fair enough in not pinpointing any distinction on facts or law in all these assessment years as the project concerned is Dummagudum only. We thus adopt judicial consistency to affirm the CIT (A) s findings deleting the impugned disallowance. Revenue fails in its identical former substantive grievance in all these appeals therefore. Deduction u/s 80IA(4) - Disallowance of deduction claimed by the appellant u/s 80IA(4), on the ground that the profits under reference were pertaining to the projects executed by the assessee-company as a constituent of the JV on which the assessee is not eligible for deduction u/s.80IA(4) - HELD THAT:- Assessee has filed a letter before the hon'ble President of the tribunal seeking to constitute a Special Bench u/s 255(3) of the Act and therefore, we ought not to proceed further with the instant appeal till a final decision is taken therein. We note from a perusal of section 255(3) of the Act that there is no such pre-condition of keeping the issue in abeyance so as to await the foregoing representation. We accordingly adopt judicial consistency qua the instant letter as well as in absence of any distinction on the relevant facts involved and restore the impugned section 80IA disallowance in all these three assessment years in Revenue s favour.

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• 2022 (1) TMI 1049
  Validity of Reopening of assessment u/s 147 - assessee bank has reduced the interest credited from the interest on securities for the assessment year 1989-90 as interest accrued but not received - HELD THAT:- Assessment was framed by the AO u/s.143(3) of the Act and all these details were available before the AO during the original assessment proceedings. The AR particularly took us through the Memo of income adjusted for income tax purposes and drew our attention to Page 57 of assessee s paperbook, where depreciation (loss on revaluation) of investments and interest on investments on Government and other securities accrued but not received is disclosed. Even, depreciation (loss on revaluation) of investments as on 31.03.1990 is disclosed - The assessee has also computed Interest on securities on due and realisation basis and computed the entire amount which is enclosed in assessee s paperbook -We noted that these are sufficient details and sufficient disclosure for framing of assessment because these details were available before AO during original assessment proceedings. Once assessment is framed u/s.143(3) of the Act originally for assessment year 1990-91 and reopening notice dated 04.03.1997, which is beyond 4 years and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment, the reopening cannot be held to be valid As per Hon ble Supreme Court in the case of M/s. Foramer France and Jurisdictional High Court in the case of M/s. RPG Transmissions Ltd [ 2003 (1) TMI 101 - SC ORDER ] we are of the view that there is no whisper in the reasons recorded that there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment and the assessment was framed u/s.143(3) of the Act and reopening beyond 4 years which is against the provisions of the Act. Accordingly, we quash the reassessment proceedings and allow the appeal of the assessee.

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• 2022 (1) TMI 1048
  Addition of expenditure incurred on foreign travel - Allowable business expenditure or not? - HELD THAT:- As seen from the records that the assessee failed to substantiate the expenditure made by him on the foreign travel. Even before this Tribunal, no evidence is furnished regarding his foreign travel. Under these facts, we do not see any reason to interfere in the finding of Ld.CIT(A), the same is hereby affirmed. Thus, Ground No.1 raised by the assessee is dismissed. Addition of expenditure incurred on occasion of marriage - HELD THAT:- A.R. could not file or show a single piece of details regarding marriage of the appellant. This act of Id. A.R. self explains the fact that all notings on above said incriminating document is related to expenses incurred on marriage of appellant. Thus, after above detailed discussion, it is very clearly that this is not a rough paper as claimed by the appellant. It is an incriminating document which has been from the premises of the appellant. This paper has undisclosed details of marriage expenses incurred by the appellant which were not recorded in the books of account. It is established preposition of law u/s 132(4A) 292C of the Act that incriminating document found during search belongs to the person from whose custody it was found and the details of entries mentioned therein are true/correct. Appellant has not brought out any materials to rebut this presumption of law. Therefore, undersigned is of the view that AO has rightly addition on this account - Decided against assessee. Addition on account of credit entries in the bank account of the assessee - assessee failed to give any explanation regarding the credit entries - undisclosed income on account of entries - HELD THAT:- We find that Ld.CIT(A) has not given any finding on these additions. In the absence of any finding by the Ld.CIT(A) on the merit of these additions and any submissions by the assessee, we hereby dismiss the grounds of assessee s appeal.

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• 2022 (1) TMI 1047
  Rectification order passed u/s.154 - Period of limitation - HELD THAT:- When an order is rectified by an order of rectification u/s.154 of the Act, the time limit is to be reckoned as per the provisions of Section 154(7) of the Act. The provisions of section 154(7) of the Act makes it clear that except orders u/s.155 or 186(4) of the Act, no rectification order can be passed after the expiry of 4 years from the date of order sought to be rectified. Thus, the date of original order is the commencing point of limitation even if that order is in between these 4 years being subjected to a rectification on a later date, the commencing point of limitation remains the same date of the original order and not the later date of its subsequent rectification or subsequent application. In the present case before us there is no controversy about first order or second order but order under rectification is only the order passed by CPC, Bengaluru u/s.143(1) i.e., intimation or processing of return of income vide letter dated 05.03.2012. The rectification order by the AO u/s.154 of the Act was passed only on 20.06.2016. It means, that the rectification order u/s.154 of the Act in the present case can be passed upto 31.03.2016 and not beyond that. In the given facts and circumstances and above legal position discussed, we are of the view that the rectification order passed u/s.154 of the Act is clearly barred by limitation and hence, on this sole ground, the order is quashed. Credit of TDS - We are convinced that in term of the above CBDT Circular No.73(F.No.245/13/71-A PAC) dated 07.01.1972, the AO has to allow the credit of TDS as per law after verifying the TDS certificates. AO is ordered accordingly.

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• 2022 (1) TMI 1046
  Disallowance of interest expense - interest expense not attributable to the business shown u/s 44AD - claiming separate deduction under section 57(iii) - whether interest expense is not attributable to the business shown u/s 44AD? - HELD THAT:- If the assessee has shown the income under the head income from other sources (in addition to the income declared u/s 44AD then the assessee is entitled to claim the deduction of interest expenses or other expenses which the assessee has incurred to earn said income shown by him under the head income from other sources . As abundantly clear that expenditure incurred by the assessee for the purpose of earning the income, under the head income from other sources should be allowed as a deduction under section 57(iii). The disallowance sustained by ld CIT(A) is in fact, the expenditure incurred by the assessee for earning income under the head income from other sources , hence respectfully following Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT] we delete the disallowance sustained by ld CIT(A) - Decided in favour of assessee.

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• 2022 (1) TMI 1045
  TP Adjustment - Comparable selection - HELD THAT:- Axis Integrated System Ltd. be excluded from the list of comparables as not functionally similar, engaged in addressing regulatory and licensing requirements and acts as a liaison between all related Government and regulatory agencies and providing specialized consultancy services. Excludability of HSCC (India) Ltd. - On a careful consideration of the orders of the authorities below in the light of the material available on record, we are of the considered opinion that the provision of the professional consultancy services in healthcare and other social sector has to be compared with the functions performed by the assessee, and that aspect needs proper verification as the data before us cannot convey as to how this comparable has to be excluded or included. Therefore, it will be appropriate to remand the issue relating to its comparability to the file of the Ld. TPO/learned Assessing Officer for thorough verification and if found to have been performing different functions, the same should be excluded from the list of comparables, after hearing the assessee. Computation of the working capital adjustment - As computation of the working capital adjustment was not properly done and the same has to be done in accordance with the ALP margins, and accordingly directed the TPO/learned Assessing to re-compute the working capital adjustment as per the ALP margins, after affording an opportunity to the assessee of being heard. Both the counsel submitted that the same course may be adopted for this year also. Recording the same, we restore this issue to the file of the Ld. TPO/learned Assessing Officer to re-compute the working capital adjustment as per the ALP margins, after hearing the assessee.

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• 2022 (1) TMI 1044
  Disallowing the claim of exemption u/s 54-F - Belated filing of ITR - investment in NHAI Bonds - AO disallowed the exemption by taking view that held that capital gain was not deposited by assessee before due date of filing return of income under section 139(1) - HELD THAT:- We find that there is no dispute that the assessee sold his asset on 26.02.2010 and purchased of NHAI Bonds of ₹ 10 lakh on 26.03.2010 and ₹ 15 lakh on 11.08.2010, the assessee filed return of income under section 139(4) on 31.03.2011. Further, the assessee purchased of new residential house on 22.09.2011 and appropriated entire capital gain. As in CIT Vs Rajesh Kumar Jalan [ 2006 (8) TMI 126 - GAUHATI HIGH COURT ] in the context of section 54 held that a plain reading of sub-section (2) of section 54, it is clear that only section 139 is mentioned in section 54(2) in the context that the unutilised portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the income-tax under section 139. Section 139 cannot mean only section 139(1) but it means all sub-sections of section 139. Under subsection (4) of section 139, any person who has not furnished a return within the time allowed to him under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Such being the situation, it was the case of the assessee that he could fulfil the requirement under section 54 for exemption of the capital gain from being charged to income-tax on the sale of property used for residence, could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier, under sub-section (4) of section 139. When the assessee has deposited ₹ 15 lakhs of capital gain in purchasing the Bond of NHAI before due date of filing of return of income under section 139(4), his claim for exemption under section 54 F was not to be disallowed. Hence, we direct the AO to allow the entire capital gain earned by the assessee as exempted under section 54F. - Decided in favour of assessee.

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• 2022 (1) TMI 1043
  Disallowance u/s. 36(1)(iii) - AO has not accepted the assessee's contention of having advanced money to UBPL, its sister concern, for business purposes - HELD THAT:- Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. [ 2019 (1) TMI 757 - SUPREME 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 relied on the judgment in the case of East India Pharmaceutical Works Ltd. [ 1997 (3) TMI 5 - SUPREME COURT] - Similar view has been taken 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. When we examine the amount of Investmentsas against the a vailability of Share Capital and Reserves it becomes evident 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 of interest. - Decided in favour of assessee.

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• 2022 (1) TMI 1042
  Reopening of assessment u/s 147 - Capital gain computation - HELD THAT:- As perused the material available on record and gone through the orders of the authorities below. The assessee has not placed any material on record, suggesting that he duly disclosed the capital gain arising out of the sale transaction of the property admeasuring 250 sq. mtrs. at D-213, G-8, Sector-39, Noida and registered sale price was ₹ 22 Lakhs. However, as per the stamp duty valuation, the value was adopted at ₹ 29,02,000/-. Therefore, there is no merit in the grounds raised by the assessee hence, Ground Nos. 1 to 3 raised by the assessee are dismissed. Adopting fair market value of the property - HELD THAT:- AO in the assessment order has stated that as per the Sale Deed, the value of property estimated by Stamp Valuation Authority at ₹ 47,25,000/- and computed long term capital gain at ₹ 27,25,000/-. But Ld. CIT(A) adopted the value at ₹ 38,95,000/-. As find that there is a discrepancy in the value stated in the reasons and adopted while framing the assessment, Ld. CIT(A) has not addressed this issue - we set aside the impugned order and restore the issue of valuation of the property to the file of Ld. CIT(A) to decide the same after adverting to the issue regarding discrepancy in the reasons recorded by the Assessing Officer and finally value adopted by him u/s. 50C of the Act since there is no whisper by the authorities below in this regard. Thus, Ground Nos. 4 5 raised by the assessee are partly allowed for statistical purposes.

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• 2022 (1) TMI 1041
  Income from house property OR business income - Addition towards deemed rent on unsold vacant flats and shops held by the assessee as stock-in-trade - HELD THAT:- As decided in M/S. COSMOPOLIS CONSTRUCTION, SHAH KHANDELWAL JAIN ASSOCIATES [ 2018 (9) TMI 1621 - ITAT PUNE] House property can result in respect of unsold flats held by a builder as stock in trade at the year-end. While disposing off the above referred case, the Tribunal observed that income from unsold flats could be considered only under the head Profits and Gains from business or profession and not Income from House Property . CIT(A) considered these observations of the Tribunal qua the inclusion of income, if any, under the head Business Income and directed to include deemed annual value as business income in the impugned order. He however, did not appreciate that the Tribunal nowhere held for the inclusion of the deemed rental income under the head Profits and Gains from business or profession . It simply directed that income, if any, from unsold flats held as stock in trade can be considered only as Business Income . In the ultimate analysis, the Tribunal eventually deleted the addition. It is but natural that if a particular income is to be taxed under a specific head, the computational mechanism governing that head only can come into play. There is no provision under the head Profits and Gains from business or profession which deems the rental income from unsold flats held as stock as 'Business income'. Considering the above factual and legal position, we are of the considered opinion that the addition made by the AO and as sustained in the first appeal, is not called for - Decided in favour of assessee.

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• 2022 (1) TMI 1040
  Disallowance under the head 'Labour charges' - HELD THAT:- An admitted position that the AO made a reference to 5 vouchers which have been reproduced as such in the assessment order by noting that the assessee did not maintain vouchers serially. It can be seen that these vouchers pertained to an altogether different assessee, namely, M/s. Shilpi Engineering Pvt. Ltd., who has no link with the assessee in appeal. Entire case made out by the AO for disallowing 15% of the Labour charge is ill-founded, we cannot sustain the disallowance so made by the AO. It is worth noting that the CIT(A) took note of the fact that the assessee had incurred some expenses without verifiable vouchers. Considering the entirety of the facts and circumstances of the instant case, we are of the considered opinion that it would be in the fitness of the things if the disallowance out of Labour charges is reduced to ₹ 1.00 lakh, as against sustained in the first appeal - Decided partly in favour of assessee.

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• 2022 (1) TMI 1039
  Disallowing the partners remuneration u/s. 40(b) - rejecting the explanation and evidences brought on record by the assessee to prove the genuineness of the partner remuneration - HELD THAT:- In the present case, admittedly the AO has reproduced the clause into the Partnership Deed as per that clause it was envisaged that either of the partners will be entitled to draw monthly remuneration, if decided by both the partners or the amounts shall be decided from time to time in writing. The assessee has not placed any material suggesting that the partners had decided in writing about the remuneration paid to the partners. In the absence of such writing, we do not see any reason to interfere in the decision of the authorities below. Therefore, ground raised by the assessee is dismissed.

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• 2022 (1) TMI 1038
  Delayed contribution of employees towards the Provident fund/ESI - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. As in case Bharat Hotels [ 2018 (9) TMI 798 - DELHI HIGH COURT] has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee.

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• 2022 (1) TMI 1037
  Bogus LTCG - sale of shares in this case is not a natural phenomenon but an arrangement of dubious design of providing accommodation entry - As per DR when the claim of the assessee was rejected u/s. 10(38) of the Act the amount represented by the sale of shares has been rightly added u/s. 69A - additions made by AO on the basis of an investigation conducted by DDIT whereby a racket involving thousands of crores of rupees was unearthed and wherein on the basis of statements recorded by investigation department of certain operators and stock brokers the Revenue had come to the conclusion that various persons were engaged in arranging long term capital gains through the medium of manipulating stock prices - CIT-A deleted the addition on the basis that the stock brokers and the persons from whom the assessee had purchased and sold shares has not been examined by the Assessing Officer and Assessing Officer had made the additions on the basis of general statement of certain persons - HELD THAT:- CIT(A) has held that the Assessing Officer has ignored the various documentary evidences which were in favour of the assessee. As findings recorded by ld. CIT(A) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions. While allowing relief to the assessee, CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions - the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. Thus find no adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others [ 2021 (1) TMI 1008 - DELHI HIGH COURT] had allowed relief to various assessee - Decided against revenue.

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• 2022 (1) TMI 1036
  Disallowance of deduction u/s. 36(1)(iii) - HELD THAT:- The investment in this entity was for business purposes only. The other entity was also engaged in similar line of business i.e. civil construction and sale of flats. Therefore, in our considered opinion, these investments were out of commercial expediency and the ratio of decision in the case of S.A. Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] was applicable wherein it was held that once it was established that there was nexus between the expenditure and purposes of business, which need not be the business of the assessee, deduction u/s. 36(1)(iii) was to be allowed. The ratio of decision in CIT Vs. Hotel Savera [ 1997 (11) TMI 37 - MADRAS HIGH COURT] is applicable to the facts of the case wherein it was held that in case own funds and borrowed funds were inextricably mixed up in such a way that it was impossible to delineate which funds were advanced to group concern, no interference could be made in the Tribunal's finding that no disallowance u/s. 36(1)(iii) would be called for. Deriving strength from these decisions, we delete the impugned disallowance as sustained by learned first appellate authority. - Decided in favour of assessee.

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• 2022 (1) TMI 1035
  Maintainability of appeal - low tax effect - HELD THAT:- We find that the tax effect involves in the appeal of the Revenue is below ₹ 50 lakhs. There is no dispute that the Board s instructions or directions issued to the Income-tax authorities are binding on those authorities, therefore, the Department should have withdrawn/not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of ₹ 50 lakhs. The issue of applicability of the above circular to pending appeals has been decided by the coordinate bench in Dinesh Madhavlal Patel [ 2019 (8) TMI 752 - ITAT AHMEDABAD] . In view of the above, Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore, it is held that the appeal is not maintainable in the instant case as the tax effect is less than ₹ 50 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable - Appeal filed by the department is dismissed

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• 2022 (1) TMI 1034
  TP Adjustment u/s 92 - Addition to provision of clinical study management and monitoring sport services - HELD THAT:- We are of the considered view when issue as to removing the pass-through cost from the cost base for computing operating margin has already been decided by the Coordinate Bench of Tribunal in assessee s own case in its favour no adjustment in the given circumstances, even by taking comparables chosen by the TPO as correct one is warranted - AO is directed to verify the facts as to the claim of the assessee qua pass-through cost , if correct to allow the same. Consequently, we are of the considered view that Ld. CIT(A) has legally and validly decided the issue in favour of the assessee, hence ground no. 1 2 are determined against revenue. Transfer price adjustment qua international transaction pertaining to import of Finished Drugs Formulations (FDF) i.e. Minipress for trading purposes - HELD THAT:- When the identical expenses claimed by the assessee have already been allowed by the Tribunal in AY 2002-03 and revenue while accepting the decision of the Tribunal deleted the identical expenses in AY 2000-01 which has been accepted, we find no reason to interfare into the findings returned by CIT(A) while following the rule of consistency - market expenses are incredible part of the business in the pharmaceutical field and it is not the case of the revenue that any new product has been introduced by the assessee during the year under consideration. So, the findings rendered by CIT(A) are hereby upheld. Depreciation claimed by the assessee on plant and machinery of Ankleshware Plant - HELD THAT:- We are of the considered view that this contention of the Ld. DR is not tenable because once the asset is purchased and enters into a particular block of assets, the same is not individually identifiable as depreciation is available on the entire block of assets in view of section 32 of the Act. Moreover, this issue has been successively decided in favour of the assessee from AY 2001-02 to 2003-04 [ 2010 (3) TMI 1268 - ITAT MUMBAI] . Correct head of income - Rental income received from subleasing of commercial properties as income from business as against claim of the assessee being income from house property on the ground that renting out of premises amounts to commercial exploitation for business purpose by the assessee - HELD THAT:- As perused the order passed by Ld. CIT(A) who has duly thrashed the facts that when the period of lease exceeds 12 years (including renewal period), it could be considered as the deemed owner of the property‟ within the meaning of section 27(iiib) r.w.s. 269UA(f) of the Act. So, we find no scope to interfare into the findings rendered by Ld. CIT(A).Ground No. 8 is determined against revenue.

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• 2022 (1) TMI 1033
  Validity of proceedings u/s. 92CA(3) passed after expiry of limitation period - period of limitation - Time limit for completion of assessments - HELD THAT: - As in case of Honda Trading Corporation [ 2015 (9) TMI 846 - ITAT DELHI] wherein, it was held that the time limit specified u/s. 92CA(3A) is mandatory and not directory and therefore the Ld. TPO is bound by the time limit for passing of the order u/s. 92CA (3) of the Act. Accordingly, in that case time limit as per section 153(1) of the Act was up to 7.06.2014 and the Ld. TPO passed his order on 31.05.2014 instead of on or before 08.04.2014, hence order passed by the Ld. TPO therein was held to be time barred. Hon'ble Delhi Tribunal further held that in such circumstances the final assessment order would be same but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transaction by the TPO emanating from his time barred order passed u/s. 92CA(3) is unsustainable In the present facts, the Ld. CIT.DR has in the written submission mentioned that the order of the Ld. TPO is passed on 29.01.2014 or 30.01.2014 but dated 31.01.2014. Then, the order of the Ld. TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. In view of above and following judicial precedent cited before us by the ld. AR being decision of the coordinate bench we hold that the order of the ld. TPO passed on 31.01.2014 is barred by limitation and liable to be quashed. Therefore, consequently, the proposed addition on account of transfer pricing adjustment amounting to does not survive. - Decided in favour of assessee.

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• 2022 (1) TMI 1032
  Income accrues or arises in India - services to MTR foods Private Limited who is located outside India - Secondment charges paid in respect of the professional services rendered - classification as FTS - made available by non resident Assessee to MTR Foods in India - India Singapore DTAA - Taxability of receipts received by assessee from M/s. MTR Foods Pvt. Ltd., as FTS under section 9(1)(vii) - HELD THAT:- Only technical and consultancy services are covered by Article 12(4) as either (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information referred to in Article 12(3), or (b) 'make available' technical knowledge, experience, skill know-how etc. In the present case, only clause 12(4)(b) is applicable because there was no right, property or information that was transferred. The case of the Revenue therefore hinges on the applicability of Article 12(4)(b) which applies to rendering of only such technical or consultancy services as 'make available' technical knowledge, experience, skill or know-how etc. Taxability of an income under Article 12(4)(b), not only the payment should be in consideration for rendering of technical or consultancy services, but in addition to the payment being consideration for rendering of technical services., the services so rendered should also be such that 'make available' technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. Hon'ble Mumbai Tribunal in Raymond's case [ 2002 (4) TMI 891 - ITAT MUMBAI] also held that rendering of technical services cannot be equated with making available the technical services. We are of the view that, nothing is made available by non resident Assessee to MTR Foods in India. Accordingly the services rendered by the non resident assessee to MTR Foods are not taxable as per India Singapore DTAA. Since the non resident assessee do not have a permanent establishment in India, the income so arising cannot be taxed under Article 7 as 'business profits' either. - Decided in favour of assessee.

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• 2022 (1) TMI 1031
  Revisions u/s 263 by CIT - availability of VAT credit on deemed import and claim of the same as expense - HELD THAT:- There is no dispute to the fact that the assessee has shown purchases from Reliance Industries Ltd. SEZ which is the deemed import. The assessee on such purchases has claimed to have paid custom duty only which was shown along with the purchases. Principal CIT was of the view that in case of deemed import, there is no VAT liability and therefore the question of claiming the VAT input on such purchases does not arise. However, the assessee in the VAT return has claimed input VAT on such purchases which is not possible. As per the learned Principal CIT, this fact has not been verified during the assessment proceedings. Thus the order passed by the AO is erroneous insofar prejudicial to the interest of revenue. Assessee has claimed the benefit of input VAT in the VAT return on the deemed import. The copies of the invoices on sample basis are placed on record. On perusal of the details filed by the assessee, we note that the assessee has incurred VAT expenses on the deemed import which are eligible to be set off against the VAT output. Thus the finding of the learned principal CIT that there was no VAT input available to the assessee on the deemed import appears to be incorrect. Whether the assessee has claimed VAT input on the deemed import as an expense in the profit and loss account ? - This fact, to our understanding, has not been verified by the AO. At the time of hearing the learned AR has also not brought anything on record suggesting that the assessee has not claimed VAT input on the deemed import as an expense in the profit and loss account. For this limited purpose, we hold that the order passed by the AO is erroneous insofar prejudicial to the interest of revenue. Accordingly, we do not find any reason to interfere in the finding of the learned Principal CIT and therefore we uphold the same. Hence the ground of appeal of the assessee is dismissed.

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• 2022 (1) TMI 1030
  TP Adjustment towards brand development services - adopting Spearman s Rank Correlation method HELD THAT:- An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] held that learned TPO as well as learned DRP were erred in making transfer pricing adjustments towards brand services by adopting Spearman s Rank Correlation method and concluded that there is positive accretion between brand value and market capitalization of HMC Korea and hence, directed the AO/TPO to delete transfer pricing adjustment made towards brand development services. Therefore, consistent with the view taken by the coordinate Bench, we direct the AO to delete addition made towards brand fee adjustment. Disallowances u/s.14A r.w.r 8D - HELD THAT:- An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] directed the AO to restrict disallowances u/s.14A of the Act, to the extent of exempt income earned for the impugned assessment year. Disallowance of depreciation on capital subsidy - HELD THAT:- An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] has allowed claim of the assessee and the AO has accepted decision of the CIT(A) and deleted additions, while passing order giving effect to the order of the CIT(A). Therefore, consistent with the view taken by the coordinate Bench, we direct the AO to delete addition made towards disallowance of depreciation on capital subsidy received from SIPCOT. Disallowance u/s.43B(c) in respect of performance incentive paid to employees - HELD THAT:- An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI ] held that payment made to an employee which is in the nature of bonus or commission for services rendered is covered u/s. 36(1)(ii) of the Act, and thus, if such payment is not made on or before due date of filing of return of income u/s.139(1) of the Act, then same cannot be allowed as deduction, as per section 43B(c) of the Act. Deduction towards education and secondary education cess u/s.37(1) - HELD THAT:- In assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI ] where the issue has been remanded back to the file of AO to consider the issue denovo on merits in accordance with law, set aside issue to the file of Assessing Officer. Facts being identical for the year under consideration, by following the decision of Tribunal in assessee s own case for assessment year 2015-16, we set-aside the issue to file of the AO to re-examine the issue as per the directions given by the Tribunal. Addition towards VAT incentive received from Government of Tamil - HELD THAT:- In assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] issue has been remanded back to the file of AO to consider the issue denovo on merits in accordance with law, has set aside issue to the file of Assessing Officer. Facts being identical for the year under consideration, by following the decision of Tribunal in assessee s own case for assessment year 2015-16, we set aside the issue to file of the AO and direct him to reconsider the issue in accordance with law. Amount received from Focus Market Scheme to be treated as capital in nature and exclude from total - HELD THAT:- In assessee s own case for the assessment year 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI ] held that duty credit scrips received from Govt. of India under Focus Market Scheme is revenue in nature. Thus we are of the considered view that subsidy received from Govt. of India under Focus Market scheme cannot be considered as capital in nature and hence, we reject ground taken by the assessee.

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• 2022 (1) TMI 1029
  Addition towards contribution received by the assessee as income u/s.56(2)(vii) r.w.s 2(24)(xv) - Private Discretionary Trusts (PDTs) is not to be treated as an individual, but as AOP for purpose of taxation - HELD THAT:- We find that the Hon ble Madras High Court had considered an identical issue in assessee s own case [ 2020 (12) TMI 736 - MADRAS HIGH COURT ]for assessment year 2014-15 and after considering relevant facts has very categorically held that the assessee is representative assessee as defined u/s.160(1)(iv) of the Act, and benefit derived by the assessee on behalf of beneficiaries is to be taxed as an individual and hence, any contribution received by the trust is taxable as income from other sources u/s.56(2)(vii) r.w.s. 2(24)(xv) of the Income Tax Act, 1961. We reverse order of the learned CIT(A) and sustain additions made by AO towards contribution received by the Trust as income liable to be taxed u/s.56(2)(vii) of the Income Tax Act, 1961. Accordingly, ground no.2 3 are decided in favour of the Revenue. Addition u/s.14A r.w.s. 8D - CIT-A remitting back the issue of disallowance under section 14A for fresh consideration - HELD THAT:- It is well settled principle of law by the decisions of various courts, including decision of the Hon ble Delhi High Court in the case of Joint Investments Pvt.Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT ] where it was categorically held that disallowances contemplated u/s.14A shall not exceed exempt income earned for relevant assessment year. In this case, the assessee has earned dividend income of ₹ 6,10,506/-, whereas the Assessing Officer has determined disallowance to the extent of ₹ 2,41,61,838/-. Therefore, we are of the considered view that the Assessing Officer has erred in disallowance of expenses in excess of exempt income earned for the year. Hence, we direct the Assessing Officer to restrict disallowance of expenses to the extent of exempt income earned by the assessee for relevant assessment year, while deciding the issue as per directions of the learned CIT(A). Contention of the Revenue with regard to powers of the learned CIT(A) in light of provisions of section 251(1)(a) - We find that at first stage, the learned CIT(A) had given relief to the assessee in light of decision of the Hon ble Delhi High Court in the case of Joint Investments Pvt.Ltd.(supra) and thus, we are of the considered view that there is no error in the reasons given by the learned CIT(A) to remit the issue back to file of the Assessing Officer to recompute disallowance u/s.14A of the Income Tax Act, 1961. Hence, the grounds taken by the Revenue are rejected.

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• 2022 (1) TMI 1028
  Capital gains earned on sale of residential plot of Gurgaon - Long term or short term capital gain - period of holding of asset - HELD THAT:- There is no dispute that on 31.5.2002, the said plot was allotted to the assessee. It is also not in the dispute that the certificate of possession was given on 08.05.2006. In our considered view, the date of allotment is relevant for the purpose of computing holding period and not the date of registration of conveyance deed as held by the Hon'ble Jurisdictional High Court of Delhi in the case of K. Ramakrishnan [ 2014 (3) TMI 812 - DELHI HIGH COURT] - we direct the AO to treat the gain as long-term capital gain. Exemption under section 54 - Since we have held that capital gain arising out of sale of the said plot of land is long-term capital gain, we now remit the matter to the file of the AO to examine the claim of exemption under section 54 of the Act. The assessee is directed to furnish necessary evidence in support of his claim.

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• 2022 (1) TMI 1027
  Deduction u/s 80P(2)(a)(i) - interest/dividend income received by the assessee on the deposits made with the co-operative bank - whether the learned CIT (A) has power to set aside the issue to the file of the AO for verification? - HELD THAT:- CIT (A) has no power to remit the issue back to the AO for fresh adjudication. In fact, if the learned CIT (A) requires some clarification, then the option available to the learned CIT (A) is to call for the remand report from the AO and decide the issue thereafter. However the facts of the case on hand are different in the sense that the learned CIT (A) has given very specific direction to verify whether interest income includes the income from the nationalized bank which is not eligible for deduction under the provisions of section 80P(2)(a)(i) of the Act. If such interest income is included in the interest income shown by the assessee, then to that extent the assessee will not be eligible for the deduction under the provisions of section 80P(2)(a)(i) of the Act. The direction of the learned CIT(A) was unambiguous and clear. Therefore we do not find any merit in the ground of appeal raised by the assessee. Interest expenses incurred against income of the other sources - As provisions of section 57 of the Act provides for the deduction of the expenses which have been incurred in generating the income i.e. income from other sources. In the present case if there is income on the deposits made with the nationalized bank, then the corresponding expenses in the nature of interest which has been incurred by the assessee in generating such income shall be allowed. In other words, the only net of interest income from the deposits made with the banks will only be excluded while calculating the amount eligible for deduction under section 80P(2)(a)(i) of the Act. With this observation, we modify the order of the learned CIT (A) to this limited extent i.e. by allowing the interest expenses incurred against such income of the other sources. Whether the assessee was eligible for deduction of the interest/dividend income received from the co-operative bank? - As relying on NARSANDA MERCANTILE CO. OP. CREDIT SOCIETY LTD [ 2018 (8) TMI 1844 - ITAT AHMEDABAD] the assessee is eligible to claim the deduction for the expenditures incurred by it against the earning of interest/dividend income from the co-operative banks. Hence, ground of appeal of the assessee is partly allowed.

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• 2022 (1) TMI 1026
  TP Adjustment - addition in Software development transactions under Mutual Agreement Proceedings (MAP) under Article 27 of DTAA entered between India and USA - correctness of granting risk adjustment to the assessee by Ld DRP - HELD THAT:- Since the entire transfer pricing dispute has been resolved under MAP proceedings, this ground of the revenue does not require to be adjudicated. Accordingly, we reject the same. Deduction allowed u/s 10A - whether the Ld CIT(A) was justified in holding that the expenses incurred in foreign currency is required to be reduced from both export turnover and total turnover while computing deduction u/s 10A ? - HELD THAT:- D.R fairly agreed that this issue has since been decided in the case of HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT] holding that the expenses should be excluded both from export turnover and turnover for the purpose of computing deduction u/s 10A of the Act. We also notice that the CBDT has issued a Circular No.4/2018 dated 14th August, 2018 directing the department not to file appeals in respect of the above said issue. Accordingly, this ground of revenue is liable to be rejected.

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• 2022 (1) TMI 1025
  Revision u/s 263 by CIT - difference in guidelines value for plots purchase - in absence of books of account AO estimated the income from civil construction business @ 10% - HELD THAT:- Assessee has claimed that he has to make Bank FDR for providing Bank Guarantee and security deposit to the Government Department. It is also claimed by the assessee that CC Limit used for business purpose and interest of ₹ 10,08,020/- was paid to Bank of India on the CC limit. It is also claimed that interest on FDs as the nature of business income. Find no merit in this contention of assessee because books of account are not maintained, no such details were ever filed during the course of assessment proceedings. Assessee has himself declared the income on estimated basis. Even AO has also estimated the income on estimated basis so all expenditures if any incurred for the business are deemed to have been allowed. The fixed deposit on which interest was received at ₹ 9,97,465/- and interest on Shri Lokesh Narang at ₹ 45,970/- are in the nature of business income or income from other sources remained to be examined by the ld. Assessing Officer. Therefore in our considered view this issue was rightly remitted to the Ld. Assessing Officer for examination so as to compute the correct income of the assessee. Assessee has purchased 51 residential plots on 12.09.2014 out of which six plots were sold during the year on which the assessee has claimed capital loss - Firstly the assessee has not furnished complete details of plots purchased, and secondly there was no information about the source of investment. Even AO has not raised any query about the details of plots purchased, purchase consideration paid, fair market value of the property/valuation as per stamp valuation authority, whether they are part of business transaction and most importantly source of investment to purchase these properties. The information called by the AO as well as the assessment order are silent on this issue. It is also noteworthy that in the computation of income assessee has shown income from house property, profit and gain of business, income from sale and profit of firm, income from capital gain and income from other source and after claiming the deduction u/s 80C of the Act total income has been shown at ₹ 49,15,731/- whereas surprisingly on looking to the assessment order dated 30.12.2017 we find that the assessment has been completed only by estimating the income @10% on the turnover disclosed by the assessee at ₹ 8,08,21,143/-. Ld. Assessing Officer has not made any reference of various other incomes shown by the assessee in its computation of income. This fact in itself shows that there is no application of mind by AO in framing the assessment order for A.Y. 2015-16 in the case of assessee and there is complete lack of enquiry by him on the issues raised in the impugned order. We, therefore, under the given facts and circumstances of the case and our discussions made herein above, are of the considered view that assessment order framed by the Ld. AO is erroneous as well as prejudicial to the interest of revenue and Ld. Pr. CIT has rightly set aside the same. - Decided against assessee.

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• 2022 (1) TMI 1024
  Addition u/s 68 - genuineness, creditworthiness and identity of investors not proved - HELD THAT:- The appellant company has sufficiently and reasonably discharged its primary onus under Section 68 of the Act by producing all relevant required documents as asked for by the Revenue. It also appears that the Ld. AO completely relied upon the loose papers and documents found and seized from the premises of third party i.e. SCS which even do not contain any noting of receiving or paying cash which could at all lead to the allegation of accommodation entries by the Ld. AO. Finally considering factors inter alia the status of all three companies in question as active as per the Ministry of Corporate Affairs ought not to have been treated as paper/sale companies. All the above facts and flaws have been carefully considered by the Ld. First Appellate Authority in its proper perspective. No ambiguity in the order passed by the First Appellate Authority in deleting the addition made by the Ld. AO so as to warrant interference. Hence, the appeal preferred by Revenue dismissed.

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• 2022 (1) TMI 1023
  Delayed employees contribution to PF and ESI - payment made prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT ( 2021 (10) TMI 1196 - ITAT BANGALORE ) by following the dictum laid down by the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration - employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee.

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• 2022 (1) TMI 1022
  Disallowance u/s 14A while computing book profit u/s 115JB - MAT computation - HELD THAT:- The Hon ble jurisdictional High Court in the case of CITv. Gokaldas Images Pvt. Ltd. [ 2020 (11) TMI 345 - KARNATAKA HIGH COURT ] had held that while computing the book profits, the disallowance u/s 14A of the I.T.Act cannot be added. It was held by the Hon ble High Court that any disallowance computed u/s 14A of the I.T.Act pertain to the computation of income under the normal provisions of the Act and it cannot be read into the provisions of section 115JB - Thus we hold that the CIT(A) is justified in deleting the addition while computing the book profit u/s 115JB of the I.T.Act. It is ordered accordingly. Provision for NPA in the profit and loss account added u/s 115JB to arrive at the book profit - CIT(A) directed the A.O. to verify and delete the addition made to the book profits u/s 115JB of the I.T.Act to the extent the same is reduced from the gross advances in the balance sheet on the assets side - HELD THAT:- The assessee bank had debited an amount towards provision for Non Performing Advances and reduced the same from the gross advances (assets side) while preparing the balance sheet. Therefore, it has been treated as write off and not as provision for diminution in value of asset. The assessee bank had furnished the working in support of its claim that the provision for bad doubtful debts to the extent of provisions debited in the profit and loss account was reduced from the gross advances in the balance sheet on assets side. The CIT(A) has only directed the A.O. to verify and delete the addition made to the book profit to the extent the same is reduced from the gross advances in the balance sheet on the assets side. Therefore, we see no infirmity in the order of the CIT(A) and we uphold the same. It is ordered accordingly. Recomputation of book profit u/s 115JB - HELD THAT:- A.O. u/s 143(3) r.w.s. 250 of the I.T.Act, the A.O. has recomputed the book profit u/s 115JB of the I.T.Act by making various additions, which were not part of either the original assessment order nor the first appellate order dated 26.03.2018. Therefore, the assessee had challenged the action of the Assessing Officer before the CIT(A), stating that the A.O. had exceeded his jurisdiction while giving effect to the order of the CIT(A). The assessee has also raised grounds on merits with regard to addition of net depreciation on investments amounting - We noticed that these grounds taken by the assessee before the CIT(A) has not been adjudicated in the impugned order dated 11.03.2019. Therefore, we restore these issues to the files of the CIT(A). The CIT(A) is directed to adjudicate the issues raised in grounds 2 and 3 before the Tribunal [ground 2, 2.1 and 3.5 before the CIT(A)]. The CIT(A) is directed to afford reasonable opportunity of hearing to the assessee.

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• 2022 (1) TMI 1000
  Delayed PF/ESI contribution as beyond the due date prescribed for depositing the said amount under - Scope of amendment made by Parliament to Section 36(1)(va) and 43B - HELD THAT:- As following decision in the case of Bharat Pumps and Compressors Limited [ 2021 (10) TMI 496 - ITAT ALLAHABAD ] we hold that in the instant appeal for ay: 2018-19 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va). The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned, but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. Appeal filed by the assessee is allowed accordingly

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• Customs

• 2022 (1) TMI 1021
  Seeking release of export consignments covered under the three shipping bills - Period of six months from the date of seizure expired - whether different authorities can proceed with respect to the same transaction if liabilities arising from one transaction are in respect of different legislations under which the authorities operate and there is no bar and/or impediment in doing so? - interpretation of amended proviso to Section 110 (2) of Customs Act. HELD THAT:- The proviso to Section 110 (2) as it originally stood, that is prior to 29.03.2018 conferred power on the authority to extend the period of issuance of Show Cause Notice under section 124 (a) of the Act by further period not extending 6 months on sufficient cause being shown. The important change that has been brought about by the amendment with effect from 29.03.2018 is that the authority can extend the period of issuance of Show Cause Notice for a further period of 6 months by recording reasons in writing and inform the person from whom such goods were seized before the expiry of the period so specified. The question would be whether in terms of the amended proviso the person from whom the goods were seized is entitled to be heard before the time for issuance of Show Cause Notice is extended by the authority. The Hon ble Supreme Court in the celebrated decision in the case of Tulsiram Patel while answering the question as to whether the principle of natural justice be modified or in exceptional cases can it even be excluded to be read that the rule of audi alteram partem is a subject to the doctrine of necessity and yields to it as pointed out by the Hon ble Supreme Court in J. MOHAPATRA CO. VERSUS STATE OF ORISSA [1984 (8) TMI 350 - SUPREME COURT]. It was held that where a right to prior notice and an opportunity to be heard before the order is passed would obstruct taking of prompt action such a right can be excluded. Such a right can also be excluded where action is to be taken its object and purpose and the scheme of the relevant statutory provisions warrants its exclusion nor can the audi alteram partem rule to be invoked, if importing it would have the effect of paralyzing the administrative process or where the need for promptitude or urgency of taking action so demands. The person from whose possession the goods have been seized is entitled to notice of the proposal before the authority for the extension of the original period of 6 months mentioned in Section 110 (2) of the Act and he is also entitled to heard upon such proposal, subject to the restrictions that he is not entitled to information as to the investigation which is in process, because there can be no right in any person to be informed midway, during an investigation of the materials collected in the case against him and moreover there is a need for maintaining confidentiality of the investigation proceedings. While on the issue, it will be relevant to take note of the decision of Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] wherein it was held that when words in statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences and it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act - The other tools of interpretation namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting materials especially in taxation statutes where equity has no place. Petition dismissed.

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• 2022 (1) TMI 1020
  Claim of foreign exporter to India as owner of goods seeking to re-export - Period of completion of export obligation in respect of advance license expired - Actual User condition - request for extension of time was declined - petition to re-export the cargo as is - seizure of cargo currently lying in a warehouse at Gandhidham or demanding and/or enforcing customs duty in respect of the subject cargo against the petitioner - whether the respondents are justified in demanding the customs duty on the goods in question for the purpose of re-export at the instance of the writ-applicant? HELD THAT:- The condition of re-export of the raw sugar, after being processed within six months, not being complied with and the request for extension declined by the proper officer, the goods are liable to be confiscated. Under the Customs Act, 1962, the person who files a bill of entry under Section 46 of the Act is the importer of the goods covered under the bill of entry . Such bill of entry may be for home consumption (i.e. for clearing the goods from the customs station to any other place in India) or a bill of entry for warehousing (i.e. for depositing the imported goods in a warehouse for a certain period of time). In any case, the person who files the bill of entry is the importer and, therefore, in the present case, the respondent no.5 is the importer of the goods in India. The stance of the respondents, that it is the respondent no.5 who has imported the goods in India and the respondent no.5 is the importer, appears to be correct and justified - the stance of the department that the respondent no.5, as an importer, availed or claimed exemption of a notification that prescribes or lays down a condition of utilization of the imported materials and export of the resultant products for the fulfillment of the export obligation in respect of the authorization also appears to be correct. The fact that the exporter, i.e. the writ-applicant, has not been paid the price of the goods and that his goods are liable to be confiscated because of a lapse or any irregularity on the part of the respondent no.5, the same would have no impact on the legal position as regards the goods being liable to be confiscated under Section 111(o) of the Act, 1962. The license was granted on the condition that the raw silk imported would be utilized for manufacturing and exporting garments. The purchaser later received three consignments but did not fulfill the stipulated condition. Subsequently, the supplier, an Indian national residing and doing business abroad, sent certain quantities of raw silk in four lots, deliverable to the purchaser. The necessary documents were sent to the first supplier's bankers with instructions to deliver them to it on receiving payment. When the four consignments arrived in India, the overseas supplier appeared before the Customs authorities and claimed the right to take delivery of the goods. The authorities, who had come to know by then of the non-compliance of the stipulated condition with respect to the three earlier consignments and also of the alleged misrepresentation made by the buyer, while obtaining the advance import license, initiated proceedings against her and two other persons - In view of the proceedings, the purchaser failed to make the payment and receive the documents; and also did not take any steps to clear the goods, in effect abandoning them. The foreign supplier appeared in the proceedings, and contended that the title to the goods had not passed to the purchaser, and that it continued as owner; the goods could not, therefore, be confiscated or proceeded against for the purchaser's transgression of the law and that since the supplier was in the dark on this aspect, he ought to be permitted to reexport the goods. The Revenue had rejected this request; the High Court granted the relief. When proceedings were pending the licenses were cancelled. Mere filing of the ex-bond bill of entry, by itself, would not vest the title of the goods into the importer if ultimately such goods are not cleared by the importer, or in other words, if such goods are abandoned. In such circumstances also, the title over the imported goods would remain with the exporter and the exporter may, in peculiar facts and circumstances of the case like the one on hand, request the Commissioner to permit him to reexport the goods as an unpaid seller - Undoubtedly, the writ-applicant herein is the unpaid seller and he has been suffering for no fault on his part. However, all these is a part of a business risk because sellers in the international trade ordinarily insist on irrevocable letter of credit of the prospective buyers for safeguarding their interest, which appears to have not been done in the present case. This writ-application is disposed off reserving the liberty in favour of the writ-applicant to file an application addressed to the Commissioner seeking re-export of the goods.

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• 2022 (1) TMI 1019
  Levy of penalty on Customs Broker - exporter was not possessing Export inspection Agency (EIA) Certificate as was mandatorily required by a milk product exporter in terms of Section 7 of Export (Quality Control inspection) Act, 1963 - violation of regulation 10(d), 10 (e) and 10 (n) of Customs Broker Licenses Regulation 2013 - HELD THAT:- The perusal of the regulations makes it abundantly clear that the said Regulation burden the Customs Broker with the mandatory duty of exercising utmost due diligence with respect to the correctness of the information which he imparts to a client with reference to any work related to clearance of cargo or baggage and to advise his client to comply with requisite statutory provisions and to verify the correctness of antecedents and documents of his client. The appellant herein was the agent for the exporter who was exporting the products as per export quality control and inspection Act, 1963 section 7 thereof. There is no denial either of the appellant or even of the exporter that the said EIA certificate was not annexed with the Shipping Bills. There is a clear admission that the Certificate was not issued to the exporter at the time of filing of the impugned shipping bill. This is otherwise apparent from the record that the said certificate was obtained on 23.12.2019 i.e. after filing of the shipping bills and even after the initiation of the impugned investigation. The said observation is sufficient to hold the non-compliance of Regulation 10 (e) by the appellant - As per Regulation 10 (d) the appellant has another statutory duty of informing with diligence his client to comply with the provisions of the CBLR and in case of non-compliance to bring the matter to the notice of Dy. Commr. Of Customs all Asstt. Commr of Customs. The duty burdened upon the appellant vide these regulations cannot be set aside on the mere plea of ignorance by the CB/CHA There are no infirmity in the order where the reasonable benefit of the given facts and circumstances has already been extended in favour of the appellant by the adjudicating authority below by not revoking the license and by not forfeiting the security deposit - Imposition of penalty is accordingly, held to be justified - appeal dismissed.

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• Corporate Laws

• 2022 (1) TMI 1018
  Seeking to restore the name of the Company in the Register maintained by the Respondent/RoC - Section 252 of the Companies Act, 2013 - HELD THAT:- It is seen from the balance sheet and invoices and more particularly the bank statement posits the fact that the Company has been active for the period two years preceding the date of strike off and carrying on its business for the purpose of which it was incorporated. As observed from the records produced before this Tribunal, that in order to carry the future business operations, the existence of the Company becomes crucial which also fortifies the 'just' ground being a factor to be considered by this Tribunal in the process of deciding an Application/Appeal under Section 252(3) of the Companies Act, 2013. Taking into consideration the provisions of Section 252 of the Companies Act, 2013 and more particularly the 'just' ground as envisaged under sub-section (3) of Section 252 of the Companies Act, the name of the Petitioner Company in the register maintained by the Respondent is restored, subject to the directions imposed. Application allowed.

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• Insolvency & Bankruptcy

• 2022 (1) TMI 1017
  Correctness of admitting of the application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - validity of assignment agreement - it is alleged that Adjudicating Authority failed to consider the fact that Assignment Agreement does not permit severance/ bifurcation of the Facility - HELD THAT:- In the present case, it is noticed that there were three financial transactions, which were assigned by Agreement dated 23.03.2019. Even if, one transaction that is Facility Agreement dated 14.05.2018 was under cloud due to interim order passed by the Delhi High Court dated 12.10.2018, there was no cloud on other financial transactions, which were much before of passing of the interim order. There can be no illegality with regard to assignment of debt in favour of Respondent No.2 with regard to above two transactions and there being default with regard to above two transactions, which is an admitted fact, no exception can be taken to the admission of Application under Section 7 of the Code. The three loans which were assigned by Altico in favour of Respondent No.2 were severable and even if the Facility Agreement dated 14th May, 2018, which was sought to be given effect to be excluded from consideration, the assignment cannot be held to be illegal with regard to other two transactions that is Debenture Trust Deeds dated 04.12.2015 and 24.11.2016. There being default under the above two transactions being INR 111,55,88,511 + INR 2,73,76,59,666 as mentioned in Column 2 of Part-IV of the Section 7 Application and default being more than ₹ 1 crore, the Application has rightly been admitted by the Adjudicating Authority. No error has been committed by the Adjudicating Authority in admitting the Section 7 Application - appeal dismissed.

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• Service Tax

• 2022 (1) TMI 1058
  Levy of penalties on the employee of the company - main case against the company has been withdrawn - mens rea on the part of employees or not - HELD THAT:- The issue decided in the case of A/86667-86668/2021 [ 2021 (7) TMI 1307 - CESTAT MUMBAI] where it was held that once the issue of the main company against whom the demand for duty was made under Section 11A of Central Excise Act, 1944, has been settled under SVLDRS, case for imposition of penalty under Rule 26 on the employees will fail. The penalties which otherwise would be waived off in terms of SVLDRS, is set aside as the case of the main appellant has been settled under the said scheme - appeal disposed off.

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• 2022 (1) TMI 1016
  Classification of services - business of imparting training and coaching to individuals in the field of flying aircrafts for obtaining commercial licenses and private licenses from the Director General of Civil Aviation - transportation of passengers by air which became taxable w.e.f. 01.07.2010 or would be taxable under supply of tangible goods (STG) w.e.f 16.05.2008? - HELD THAT:- The provisions of section 65A would not come to the aid of the appellant for the simple reason that it is only when a taxable service is prima facie, found to be classifiable under two or more sub-clauses of section 65(105) that classification has to be effected in the manner provided. In the present case, as noticed above, there is no manner of doubt that the services provided by the appellant would fall only under section 65 (105) (zzzzj), which became taxable w.e.f. 16.05.2008. Likewise, section 66F(2), on which reliance has been placed by learned counsel for the appellant, would not come to the aid for the appellant as it is only where a service is capable of differential treatment for any purpose based on its description that the most specific description shall be preferred over a more general description. In any view of the matter, the most specific description of the service rendered by the appellant is STG. The services rendered by the appellant in charter hire of helicopters to various corporates for offshore operations is classifiable under supply of tangible goods for use service - the demand of service tax under the said category along with interest thereon is upheld. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed - the imposition of penalties on the appellant under Sections 76 77 of the Finance Act, 1994 for the default in payment of service tax and for non-compliance of statutory provisions relating to the service tax is upheld - the penalties imposed under Section 78 of the Finance Act, 1994 is set aside. Appeal allowed in part.

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• 2022 (1) TMI 1015
  Effect of negative regime on Construction of Complex Services - tri-partite agreement - providing free of cost flats (FOC) to all the existing members of the Society in lieu of the development rights - whether with effect from 01.07.2012, when the scheme of taxation of services was changed from the positive definition of the taxable services to the negative list of taxable services, was there any material change in the provisions relating to services chargeable to tax under the category of Construction of Complex Services? - applicability of clarifications as given by the par 6.2.1 of the Education Guide 2012 - clarification dated 10.02.2012 rejected - HELD THAT:- The instruction referred to in para 4.5, is only for the period post 01.07.2012, and holds in favour of applicability of the Circular dated 10.02.2012, in respect of the transactions, activities undertaken post 01.07.2012. Thus there are no error in the approach of adjudicating authority in placing reliance on the said circular for dropping the proceedings initiated. In the present case the respondent has discharged the complete service tax liability on the gross amount received by him for providing the taxable services. Once he have discharged the tax liability on the gross consideration received by him by the sale of flats to new buyers, the demand of service tax for the flats handed over to the existing members of the societies without any consideration cannot be sustained. There are no merits in the appeal filed by the revenue - appeal dismissed.

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• Central Excise

• 2022 (1) TMI 1014
  Valuation - clearance of HTS wire to their sister concern for pressed concrete slippers by the said sister concern - non-compliance of Rule 8 and Rule 9 of Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 - rejection of declared value on the ground that Department has been of the opinion that in the given scenario the duty should have been paid by the appellant on the value of goods at 110% of the cost of production of such goods and would have provided CAS- 4 - whether excess payment made during a particular period can be adjusted towards the short payment of another period? - HELD THAT:- Tribunal Ahmedabad in case of M/S SUZLON ENERGY LTD VERSUS COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-I [ 2015 (10) TMI 1242 - CESTAT AHMEDABAD] has held that in a case of inter-unit transfer of goods by the appellant s own company and that where the appellant had paid excess duty as well as some short payment of duty amount of CAS-4 since there was no sale of goods involved the adjustment of excess against the short payment is permissible. Decision of Tribunal Mumbai in the case of BAJAJ TEMPO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2004 (7) TMI 145 - CESTAT, MUMBAI] was followed. In the appellant s own case in the appeals as mentioned by the appellant in the same facts and circumstances in M/S. PATIL RAIL INFRASTRUCTURE PVT. LTD. VERSUS C.C.E. S.T. JAIPUR-I [ 2019 (3) TMI 851 - CESTAT NEW DELHI] , the setting off of the excess payments against the short payment of duty during a subsequent period has already been allowed there are no reason to differ from the adjudications. The adjudicating authority below has failed to consider the CAS-4 certificate issued by the authorised auditors proving the excess payments of duty made by the appellant in terms of Rule 9 read with Rule 8 of the valuation rules. The certain short payments in terms of all these rules have wrongly been denied to be set off against the said excess - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (1) TMI 1013
  Exemption from payment of amount of purchase tax - Applicability of original Entry No.255(2) vide F.D. s Notification dated 05.03.1992, which was issued under Section 49(2) of the Gujarat Sales Tax Act, 1969 - subsequent amended Entry No.255(2) issued vide Notifications dated 14.11.2000 and 16.01.2002 in any way alters or amends the basic requirements/conditions stipulated as per the first notification dated 05.03.1992 - subsequent amended Entry vide Government Notifications dated 14.11.2000 and 16.01.2002 in any way takes away the right of the respondent to avail the exemption under the first/parent Entry No.255(2) issued vide Notification dated 05.03.1992 or not - breach of the declaration filed by the respondent as per Form No.26 - demand of the purchase tax on and after 14.11.2000 was hit by the principle of promissory estoppel - non-application of mind or adjudication - HELD THAT:- Only in a case where the raw materials, processing materials or consumable stores are used by the eligible unit and the eligible unit actually uses the goods purchased within the State of Gujarat as raw materials, processing materials or consumable stores in the manufacture of goods, there shall be exemption from payment of purchase tax/sales tax to the extent provided in the said Entry. In the present case, it is an admitted position that after furnishing a declaration in Form No.26, the goods - raw materials, processing materials or consumable stores so purchased were to be used by ESL, but the respondent - ESL after purchase of raw materials Naphtha and Natural Gas and after availing the benefit of exemption from the payment of purchase tax did not himself/itself used the same, but, instead, sold the same to another entity EPL and the said another entity EPL used the said raw materials for generating the electricity, which thereafter came to be sold to the respondent - ESL pursuant to the power purchase agreement - the submission on behalf of the respondent that as Naphtha and Natural Gas were transferred to EPL for generating the electricity, which in turn came to be used by the respondent ESL for manufacture of HRC, and it cannot be said that there is a breach of conditions of original Entry No.255(2) dated 05.03.1992, cannot be accepted. The original Entry No.255(2) dated 05.03.1992 does not provide that the eligible unit after purchase of the raw materials instead of using the same by itself or himself can transfer/sold to another unit and the another unit can use the said raw materials - the original notification does not at all permit such transfer and use of the raw materials after availing the exemption for use of another unit, who, as such is otherwise not entitled to any exemption as per the incentive policy. The High Court has committed an error in holding that the respondent did not commit any breach of any of the conditions mentioned in the original Entry No.255(2) dated 05.03.1992 and that the respondent fulfilled all the conditions provided in the said Entry and that there was no breach of any of the conditions provided in the original Entry No.255(2) dated 05.03.1992 - While the exemption notification should be liberally construed, beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise. In the present case, the intention of the State to provide the incentive under the incentive policy was to give benefit of exemption from payment of purchase tax was to the specific class of industries and, more particularly, as per the list of eligible industries . Exemption was not available to the industries listed in the ineligible industries. It was never the intension of the State Government while framing the incentive policy to grant the benefit of exemption to ineligible industries like the power producing industries like the EPL, which as such was put in the list of ineligible industries - Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand the scope deviating from the language. There is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification. Whether the subsequent amended Entries vide notifications dated 14.11.2000 and 16.01.2002 can be said to be clarificatory and/or take away any of the rights under the original Entry No.255(2) dated 05.03.1992 and/or the subsequent notifications modifies/amends the basic conditions for availing the exemption under the original Entry No.255(2) dated 05.03.1992? - HELD THAT:- The eligibility criteria/condition that the eligible unit shall actually use the goods remain the same even in the said amended Entry No.255(2) dated 16.01.2002. Therefore, the subsequent notifications/amended Entries cannot be said to be in any way in conflict with the first/parent notification/Entry No.255(2) - Even as per Form No. 26 (Entry No.255), as per the declaration filed by the respondent, being eligible unit while purchasing goods for use in manufacturing goods, it was declared that the raw materials so purchased will be used by it in the manufacture of goods for sale. Thus, by not using the raw materials so purchased by it, the respondent eligible unit ESL has violated the declaration given in Form No.26. Therefore, the respondent was not entitled to the exemption even under the first/parent notification. Even the reasoning given by the Tribunal and the High Court that the demand of purchase tax is hit by the principle of promissory estoppel also cannot be accepted. In the present case, first of all, the principle of promissory estoppel to the exemption sought ought not to have been applied at all. Each assessment year/period is independent. Even otherwise, in the facts and circumstances of the case, the principle of promissory estoppel shall not be applicable. In the present case, the respondent eligible unit as such was not entitled to the exemption even under the first notification as it violated the declaration given in Form No.26 as well as did not comply with and/or fulfilled the eligibility criteria/conditions required to be fulfilled while availing benefit of exemption - the respondent did not actually use the raw materials purchased by him/it and availed the exemption and after availing the exemption sold the said raw materials to ineligible unit - EPL and the EPL used the same for manufacture of its goods generating the electricity, which subsequently again sold to the ESL eligible unit on payment of sale consideration. The principle of promissory estoppel shall not be applicable. ESL had furnished wrong and false declarations. In the original notification/entry, it was not provided that even if the raw materials so purchased is not used by itself after availing the exemption, the same can be sold to another entity, which is ineligible industry. It did not provide that in such a situation also and despite the fact that raw material is not actually used by the eligible unit, which was required to be used even as per the declaration in Form No.26, such eligible unit shall be entitled to the exemption. No such promise was given - when there was no such promise and/or representation, the demand cannot be said to be hit by the principle of promissory estoppel as observed and held by the Tribunal as well as the High Court in the impugned judgment and order. The doctrine of promissory estoppel is an equitable remedy and has to be moulded depending on the facts of each case and not straitjacketed into pigeonholes. In other words, there cannot be any hard and fast rule for applying the doctrine of promissory estoppel but the doctrine has to evolve and expand itself so as to do justice between the parties and ensure equity between the parties. In the present case, the principle of promissory estoppel shall not be applicable - the principle of promissory estoppel shall not be applicable contrary to the Statute. Merely because erroneously and/or on misinterpretation, some benefits in the earlier assessment years were wrongly given, cannot be a ground to continue the wrong and to grant the benefit of exemption though not eligible under the exemption notification. It is held that the respondent -Essar Steel Ltd. the eligible unit was not entitled to the exemption from payment of purchase tax under the original Entry No.255(2) dated 05.03.1992, firstly, on the ground that it did not fulfill the eligibility criteria/conditions mentioned in the original Entry No.255(2) dated 05.03.1992 and secondly that there was a breach of declaration in Form No.26 furnished by the respondent eligible unit Essar Steel Ltd. The orders setting aside the penalty imposed by the Assessing Officer are also hereby quashed and set aside. The order passed by the Assessing Officer levying the demand of purchase tax and imposing the penalty is hereby restored. Appeal allowed - decided in favor of Revenue.

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• 2022 (1) TMI 1012
  Levy of VAT - goods replaced being covered under warranty of the product sold by the petitioner - time limitation - exemption form VAT/Tax sought on the ground that no sale of such goods has taken place and the same has been given to the customer by way of replacement being covered under warranty - HELD THAT:- The Court is not inclined to interfere with the order impugned. As far as the issue of legality of the order on the ground of limitation is concerned, we agree with the submissions of the learned counsel for the respondents that the present proceeding, being a statutory proceeding, is covered by limitation and as it is a proceeding under Section 37 of the Act, a period of three (3) years has been prescribed from the date of receipt of the order, which in the present case is 26.10.2018. The Court finds substance in the submission of the learned counsel for the respondents that the matter has to be appreciated only after going through the records and other material documents and evidence, which may have been produced by the petitioner or may be in his possession. Thus, the Appellate Joint Commissioner (CT), Tirupathi, is the forum before which the petitioner is required to agitate the matter by producing all documentary evidence available with him in support of his contention. Writ petition disposed off.

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• 2022 (1) TMI 1011
  Seeking direction to the respondents to allow the petitioner's application for waiver of penalty - Karasamadhana Scheme, 2021 - HELD THAT:- In the instant case, it is an undisputed fact that no penalty is sought to be levied against the petitioner under Section 72 (1)(a), 72(1)(b), 74(4) or 72(3-B) of the KVAT Act and consequently, clause No.3 would have no application to the facts of the instant case in so far as the petitioner is concerned - On the other hand, as rightly contended by the learned Senior counsel for the petitioner, it is Clause No.2 of the Scheme that would be applicable to the facts of the instant case and in the light of the undisputed fact that the reassessment was completed on 28.04.2021 as can be seen from the reassessment order, which is clearly much prior to 31.07.2021, the cut off date under the scheme, the petitioner would be entitled to the benefit of 100% waiver of penalty sought to be levied upon him under Section 70(2) R/w Section 39 of the KVAT Act as per the reassessment order dated 28.04.2021. It is also significant to note that the material on record also indicates that the petitioner is not charged with any arrears of tax, which was liable to be paid on or before 31.10.2021 so as to attract Clause No.5.1 of the Scheme; on the other hand, in view of the undisputed fact that the petitioner did not have any arrears of tax but only arrears of penalty relating to reassessment, which was already completed on 28.04.2021, much before the cut off date dated 31.07.2021, the petitioner would clearly be entitled to the benefit of waiver of 100% penalty - the impugned endorsement passed by respondent No.2 is illegal, arbitrary and contrary to the letter and spirit of the scheme and the same deserves to be quashed and necessary directions are to be issued to the respondents to grant waiver of 100% of penalty demanded in the reassessment order dated 28.04.2021 passed by respondent No.2. Petition allowed - decided in favor of petitioner.

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• 2022 (1) TMI 1010
  Classification of goods sold - packing materials - taxable at 5% under Sl.No.13-A(v), Part-C, First Schedule of the TNVAT Act, 2006 or taxable at 14.5% by treating the petitioner having sold pre-recorded/recorded DVDs and CDs. - HELD THAT:- The petitioner has already opted to resolve the dispute arising out of the impugned Assessment Orders dated 27.09.2019 for the Assessment Years 2016-2017 under the TNVAT Act, 2006 and the order passed by the respondent for the same Assessment Year 2016-2017 under the CST Act, 1959 on 31.03.2021 under Section 84 of the TNVAT Act, 2006 as made applicable for both enactments. As such, there is no merits in the present writ petitions - It is also noticed that the petitioner had failed to respond to the notice dated 31.07.2019 issued by the respondent asking the petitioner to file objection before the respondent. Therefore, these writ petitions are liable to be dismissed. Since the petitioner's petitions under Section 84 of the TNVAT Act, 2006 are pending before the respondent, while dismissing these Writ Petitions, the respondent is directed to pass appropriate orders on the objections filed under Section 84 of the TNVAT Act, 2006 within a period of six weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2022 (1) TMI 1009
  Treatment given to the amount deposited by the dealer - stand of Department is that the amount deposited by the dealer on 30.03.2007 is firstly credited to the interest due from dealer but not to tax due - the dealer resisted the adjustment, firstly, in interest account as illegal for the reason that the respective assessment orders do not stipulate interest for non-payment or delayed payment of tax - HELD THAT:- It may be noted that in the order dated 20.04.2007 the Assessing Officer, did not take note of ₹ 10 lakhs deposited on 30.03.2007 by the dealer. For the first time, it is considered only in the order dated 15.09.2008, adjusting against the interest due and payable by the dealer as on 30.03.2007. The principle involved in giving credit to the amount deposited by the dealer is that it is first adjusted against interest due or payable by the dealer and balance amount, if any, is credited to tax arrears. It is an undisputed circumstance that the original assessment order is dated 05.01.2007, the legality of the said order has been considered and decided by this Court along with connected matters in W.A. No.1035/2006 vide judgment dated 05.12.2017. The revisions filed by the dealer were allowed and the revision filed by the State was dismissed, confirming the order of the Tribunal. Interest under the provisions of the KGST Act is automatic, becomes payable on the date on which return is filed, and hence no separate order demanding interest is necessary. Revision allowed.

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• Wealth tax

• 2022 (1) TMI 1054
  Validity of Reassessment proceedings initiated u/s 17 of the Wealth Tax Act, 1957 - sale consideration of the property at Mugappair owned by the assessee that took place after the assessment years under consideration - HELD THAT:- Reopening the assessment by the assessing officer, based on the event of sale, which had taken place subsequently, to redetermine the value of the property for the assessment years in question, is not legally sustainable. Accordingly, the learned single judge rightly held so in the writ petitions filed by the assessee challenging the reassessment proceedings. In the present case, admittedly, the assessee had filed her returns of wealth along with supportive documents; and there was no allegation that she had withheld the material facts or that the facts placed before the Officer are not truly and fully disclosed for assessment. Further, in the notice issued under Section 17, there was no mention about the additional material or document unearthed by the Assessing Officer, which the assessee failed to disclose; and the sub section, under which assessment was reopened. Thus, one of the basic requirements to initiate the reassessment proceedings under Section 17 of the Act, has not been satisfied by the Assessing Officer. In such circumstances, we do not find any justification on the part of the assessing officer to reopen the assessment and pass the reassessment orders dated 26.03.2002. In Commissioner of Income-Tax and another v. Foramer France [ 2003 (1) TMI 101 - SC ORDER] arising under Income Tax Act relating to Sections 147 and 148 of the Income Tax Act, the supreme court pointed out that 'when there was no failure on the part of the assessee to disclose fully and truly all material facts for assessment, the assessment could not be reopened on the basis of change of opinion'. Placing reliance on the same, the learned single Judge has concluded that on a mere change of opinion on the part of assessing officer, there cannot be reopening of the assessment. We are in full agreement with such a conclusion reached by the learned single Judge. As regards the plea of alternative remedy, this court is of the opinion that when the condition precedent for the invocation of reassessment proceedings does not exist, the assessee is entitled to approach this court under Article 226 of the Constitution of India and hence, the question of invoking the alternative remedy available to the assessee, does not arise. The learned single Judge has also rightly rejected the said plea of the Revenue, besides considering the fact of long pendency of the writ petitions.

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• Indian Laws

• 2022 (1) TMI 1008
  Dishonor of Cheque - existence of legally enforceable debt or not - contradictions between the pleadings in the complaint and statement of the complainant before the trial Court - HELD THAT:- This Court finds no substance in the defence raised by the petitioner that the cheque in question was in fact stolen by someone and misused by the complainant as no any report or complaint was made by the petitioner to the police regarding commission of theft of the said cheque or against the complainant for misuse of the cheque. Further, there is no contradiction in the pleadings of the complainant and his evidence before the trial Court as in the complaint he has clearly stated that the petitioner obtained a sum of ₹ 7,00,000/- from him in lieu of sale of his residential plot in favour of the complainant as he was in need of money for commercial purposes and that he issued the said cheque of ₹ 4,50,000/- in his favour. Before the trial Court, he has reiterated the same facts and proved the same by leading documentary evidence. This Court is of the opinion that the Courts below were justified in holding the petitioner guilty under Section 138 of the N.I. Act. As looking to the age of the petitioner and the fact that he has no criminal antecedent, the Appellate Court has already taken a lenient view by reducing his imprisonment from three months to till rising of the Court by directing him to pay compensation of ₹ 5,50,000/- to the complainant in place of payment of fine ₹ 4,70,000/-, no interference is required with the sentence part as well. Revision petition dismissed.

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• 2022 (1) TMI 1007
  Dishonor of Cheque - challenge to deposit of 20% of the compensation awarded by the Appellate Court - power of the appellate Court to order payment pending the appeal against conviction - HELD THAT:- As per Section 148 of Negotiable Instruments Act, it is within the power of the appellate Court to order payment pending the appeal against conviction and also to order deposit of such sum and deposit a sum which is minimum of 20% of the fine of the compensation awarded by the trial court - reliance also placed in the case of SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [ 2019 (5) TMI 1626 - SUPREME COURT] where it was held that there are no reason to interfere with the impugned common judgment and order passed by the High Court dismissing the revision application/s, confirming the order passed by the first appellate court directing the appellants to deposit 25% of the amount of fine/compensation pending appeals. There are no illegality in the impugned order, as such the petition stands dismissed and all interim orders are vacated.

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• 2022 (1) TMI 1006
  Seeking grant of anticipatory bail - Dishonor of Cheque - seeking extension of time to deposit penalty - HELD THAT:- From a perusal of the zimni orders annexed with the present petition, it is apparent that on 06.02.2021, notice was issued to the petitioner for 18.02.2021 and vide order dated 23.09.2021, the petitioner was served but had not appeared and thus, non-bailable warrants were again issued. The Medical Certificate relied upon by the learned counsel for the petitioner is from a private Doctor. At any rate, the petitioner had been granted the concession of anticipatory bail and amount of ₹ 50,000/- had been imposed as penalty which keeping in view the facts and circumstances of the present case, is appropriate and in accordance with law. Nothing has been shown by the learned counsel for the petitioner that the said amount of penalty cannot be imposed by the Court. Petition dismissed.

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• 2022 (1) TMI 1005
  Dishonor of Cheque - acquittal of the accused - presumption both under sections 118 and 139 of the Negotiable Instruments Act - rebuttal of presumption - burden upon the appellant to establish the offence without taking into consideration of the impact of presumption, or not - HELD THAT:- It is true that in the decision the Hon'ble Supreme Court in RANGAPPA VERSUS SRI MOHAN [ 2010 (5) TMI 391 - SUPREME COURT] observed about the existence of a reverse onus under Section 139 of the Act once execution of the cheque is proved. However, the said presumption comes into play only when the execution of the cheque is proved. In this case, the execution of cheque is specifically denied by the 1st respondent. He has a case that the cheque was lost by him in the year 2007 while he was working at FCI, Kozhikode. It is an admitted fact that, at the relevant time, the appellant was also working there. The evidence of DW1 coupled with Ext. C2 document would reveal that as early as on 24.5.2010, the 1st respondent had issued a stop memo in respect of a cheque in question. The issuance of cheque even according to the appellant is almost a year after the said date. When all these aspects are taken into consideration, the execution of the cheque itself is in doubt. Even if it is assumed for argument for the sake that, the aforesaid cheque was indeed issued by the 1st respondent, even then the evidence adduced by the appellant would indicate a probable case which will have the impact of rebutting the presumption available under Section 139 of the Negotiable Instruments Act - if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. In this case, the factual situation pointed out by the appellant contains several discrepancies mentioned above which is sufficient to raise a probable defence so as to create doubts as to the existence of legally enforceable debt or liability. The discrepancies mentioned, cannot be treated as immaterial or insignificant. Even if the evidence as a whole is taken into consideration, it contains several loop-holes or lacuna in the case advanced by the appellant - It is evident from the deposition of PW1 that the cheque was issued by the 1st respondent when the 1st respondent came to the office of FCI, West Hill all of a sudden. It is also stated by the appellant that, when the 1st respondent came to the office, he was sitting in the security room of the office and the 1st respondent handed over a cheque for ₹ 3 lakhs. The said cheque is claimed to have been issued by the 1st respondent all of a sudden when the 1st respondent voluntarily came to the FCI, West Hill office and handed over the same to the appellant. None of the persons who were claimed to have interfered for persuading the 1st respondent to arrive at a settlement are not seen examined. When all these aspects are taken into consideration, the case of the appellant is highly improbable and hence the interference in the findings of the learned Magistrate is unwarranted. No circumstances are in existence for interfering in the impugned judgment passed by the trial court - Appeal dismissed.

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• 2022 (1) TMI 1004
  Dishonor of Cheque - Suit for recovery of money - insufficiency of funds - commercial dispute or not - Order 13A and Order 37 of the Code of Civil Procedure, 1908 - HELD THAT:- I do not find merit in the argument of the respondent, that this is not a commercial dispute within the meaning of the Commercial Courts Act, 2015. On the contrary, I am of the view that this is a classic commercial dispute which falls within the ambit of Section 2(c)(i) of the Commercial Courts Act, 2015 read with Explanation (a) of Section 2(c) of the Act. It is pertinent to mention that, the post-dated cheques furnished by the respondent were repeatedly dishonoured by the bankers of the respondent on the ground that the funds were insufficient in the account of the respondent. The respondent also provided a letter dated 13 June, 2016, as an undertaking for the post-dated cheques furnished by the petitioner to the respondent - the respondent has unequivocally, unambiguously and categorically admitted its liability to the petitioner. The facts of the instant case, pertain to an ordinary transaction for realisation of monies and that there are mercantile documents which have been executed by and between the parties. The negotiations and documents which merchants undertake ought not to depend on the subtleties and niceties of law but are best left to their commercial wisdom. The receipt of ₹ 4 crores is unequivocally, unambiguously and indisputably admitted by the respondent. The obligation of the respondent to pay interest @15% per annum is also admitted, indisputable and uncontroverted. In view of the demand notice dated 15 April 2019, the obligation of the respondent to repay the principal sum including interest has also arisen - in view of the fact that the respondent has already dealt with the security furnished to the petitioner in terms of the Memorandum of Understanding, liberty is granted to the petitioner to take appropriate steps for securing its claim, in accordance with law, if so advised. There shall be a decree on admission in favour of the petitioner and against the respondent for a sum of ₹ 6,27,72,055/- (particulars whereof appear from paragraph 24 of the petition). The respondent shall also pay to the petitioner costs of this application assessed at ₹ 1,00,000/- - Application disposed off.

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• 2022 (1) TMI 1003
  Dishonor of Cheque - compromise has been arrived at amicably between the parties - HELD THAT:- This Court has considered the fact that nature of the offence is private and do not have a serious impact from the society. Considering the nature of the offence and settlement arrived at between the parties including the complainant/first informant, this Court is of the view to consider the prayer made by the accused. Considering the facts that dispute is settled between the parties, as respondent No. 1 has received cheque amount of ₹ 1,60,000/- from the applicant and respondent no. 1 has no objections if the impugned orders are quashed and set aside by this Court. Hence, present application stands allowed and accordingly, stands disposed of.

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• 2022 (1) TMI 1002
  Suit for recovery of amount - suit promissory note supported by consideration or not - suit is bad for non-joinder of necessary parties and mis-joinder of the parties? - entitlement for suit amount or not - rebuttal of presumption or not - execution of the promissory note - HELD THAT:- The nature of defence of the appellant and second respondent coupled with the evidence adduced on behalf of the first respondent established the execution of Ex.A1 suit promissory note on 01.02.2004 with such recitals therein. D.W. 1 and D.W. 3 gave out their version at the trialin consonance with the contents of Ex.A1. Further, the testimony of P.W. 1, P.W. 2 and intrinsic worth of Ex.A1 are that the appellant and second respondent had received ₹ 2.00 lakhs in cash from the first respondent on 01.02.2004 and executed the same. Admittedly, the wife of the appellant and the second respondent are partners in M/s. Uma Shankar Syndicate. This firm of which the second respondent is the managing partner and all the concerns, referred to above, which are either belonged to the first respondent or his family members and alleged associates are in the business purchasing cotton kappas from the farmers, ginning activity of the same, separating lint and seed and selling away the product to others - The material on record is also establishing that the appellant has been attending to all the trade transactions of his wife. It is also undisputed that there were several trade transactions between the appellant and the business concerns of the first respondent and that are associated with him. Exchange of money in such course of activities cannot be deemed unusual. The very defence of the appellant and the second respondent vouches this fact. Observations of both the Courts below are also to the effect that this alleged settlement is not evidenced by any document and that it was not reduced to writing. It is a right approach. If at all there were such transactions leading to the settlement, arriving at the liability of M/s. Uma Shankar Syndicate, it would have been reduced into writing, by all the parties concerned. Therefore, the question of securing different promissory notes either by P.W. 1 or in the name of others cannot arise in such circumstances - the effect of Section 118 of Negotiable Instruments Act that raises a presumption that a negotiable instrument is made or drawn for consideration is not diluted nor vanished. The transactions relied on by the appellant and the second respondent in this context are distinct and separate among the trading concerns of these parties. They do not in any manner indicate that Ex.A1 promissory note and the promissory notes concerned to other suits admittedly executed by the appellant and the second respondent had the genesis from such mediation on 01.02.2004. The identify of these transactions is distinct, different and quite discernable. The conclusion to draw is that the presumption under Section 118 of Negotiable Instruments Act is all pervasive in its effect, in this case. The testimony of P.W. 1 is thus supported by this presumption. Thus, sufficient proof is offered at the trial that under Ex.A1 the appellant and the second respondent have borrowed from the first respondent agreeing to such terms stated therein and made themselves liable - both the Courts below rightly rejected such defence and are justified in decreeing the suit. This Court is satisfied that this is not an instance where application of Section 100 CPC is invited. There are no such questions, much less substantial questions of law sought to be raised by the appellant in this second appeal to consider and determine - Appeal dismissed.

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• 2022 (1) TMI 1001
  Dishonor of Cheque - parties entered into a compromise - compounding of offences - HELD THAT:- In view of the observations laid down by the Hon'ble Apex Court, in Gian Singh Vs. State of Punjab and Another [ 2012 (9) TMI 1112 - SUPREME COURT] , with regard to the inherent power of the High Court under section 482 of Cr.P.C. in relation to non-compoundable offences, and having carefully considered the facts and circumstances of the case, and in view of the joint memo filed by the parties, permission is granted to compound the offence and compromise is recorded. The Criminal revision is allowed

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