TMI Tax Updates - e-Newsletter
January 3, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeks to bring into force certain provisions of the Finance (No. 2) Act, 2019 to amend the CGST Act, 2017
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GST:
Central Goods and Services Tax (Amendment) Rules, 2020
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GST:
Seeks to bring into force certain provisions of the Finance (No. 2) Act, 2019 to amend the IGST Act, 2017
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GST:
Classification of goods - rate of GST - Pooja Oil - Pooja Oil is classifiable under sub-heading 1518 00 40 of the Customs Tariff as inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included.
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GST:
Input tax credit (ITC) - lease of Cranes, to distinct person for sub-lease to the ultimate customer - settlement of dues / account between the customers and HO directly - there are no reason to restrict the eligibility of ITC credit under Section 16 (2) of the Act, in the case at hand.
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GST:
Valuation - supply to distinct persons - the law provides the taxpayer an option to adopt 90% of the price charged as value to be adopted initially (i.e., supply between distinct persons) and in the alternative, in case of full Input tax being available to the recipient as credit, the invoice value is declared as ‘Open market value’. - the appellants may adopt the value for supply to distinct person as provided under Proviso 2 to Rule 28 of the CGST/TNGST Rules 2017
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GST:
Bail application - huge amount of tax / GST evasion - Though, matter involves huge amount of tax evasion as mentioned by court below but fixing extraordinary amount in sureties or imposing any onerous condition is virtually against the spirit of bail order and it may amount denial of bail.
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Income Tax:
Exemption u/s 54F - appellant was entitled to withdraw the amount deposited in the Capital Gains Account subject to deduction of tax applicable (TDS) to the case in hand
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Income Tax:
Prosecution u/s 276-B - failure to remit the tax deducted at source - the order was passed only against petitioner-Company and not against all the Companies as contended by the petitioners. - the sanction order does not reflect any errors warranting interference by this Court
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Income Tax:
Addition u/s 69A - The undisputed fact is that cash was found from the bedroom of the appellant and, therefore, it can be safely presumed that it was in joint possession of the assessee and his wife - The possession of cash as Stridhan cannot be ruled out in the light of the customs prevailing in the society.
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Income Tax:
MAT Computation u/s 115JB - once assessee has reduced amount shown by it as a provision for diminution of investment from its total value of investment, it no longer remained a provision. Effectively it was a write off - the claim of assessee with regard to diminution in value of investment has to succeed
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Income Tax:
Due taxes were not paid before filing of an appeal u/s 249(4)(b) - payment of Tax as per ITR filed - The case of the assessee falls within the provisions of section 249(4)(a) of the Act, hence it was incumbent upon the CIT(A) to decide the issue on merits and not dismiss the appeal in limine.
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Income Tax:
Penalty imposed u/s 271G - failure to furnish the information/documents required u/s 92D(1) r/w rule 10D - when the TPO has accepted the benchmarking of the assessee, the imposition of penalty under section 271G of the Act is unsustainable
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Income Tax:
Exemption u/s 11 - corpus contribution of ₹ 150 Crores - the mere fact that the assessee credited the receipts as corpus contribution, in our considered opinion, would not make much difference and would not alter the true nature of the stated receipts. The said funds / receipts, as stated earlier, were more in the nature of specific grants and represent liability for the assessee and liable to be refunded in case of non-utilization. Therefore, the same being capital in nature, could not be even otherwise brought to tax.
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Income Tax:
Admission of additional ground - Addition u/s 43CA - retrospective applicability of tolerance band of 5% - it is not a case where as a result of any amendment in the statue or any judicial decision given while the appeal of the assessee is pending before the Tribunal, the assessee couldn’t take the additional ground of appeal and which explains the delay so happened in taking such additional ground of appeal.
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Income Tax:
Reopening of assessment u/s 147 - Reassessment was completed without issuing a notice under section 143(2), then the reassessment order is not sustainable in law and the same is invalid. - The provisions of section 292BB are not applicable.
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DGFT:
Amendment in Standard Input Output Norms (SION) of Product group : Food products
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DGFT:
Amendments in the Ad-hoc Norms fixed under Para 4.06 of HBP for export of Cashew Kernels Whole & Cashew Kernels pieces against import of Shelled Cashew Kernels
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Corporate Law:
Relaxation of additional fees and extension of last date of filing of Form No.BEN-2 and BEN-I under the Companies Act 2013
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Indian Laws:
Bribery Case - Court rejects CBI prayer for CBI Custody - sends all accused to JC
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Service Tax:
Re-assessment u/s 73(1) - there was no assessment order as such, there could not be a notice for re-assessment inasmuch as the question of re-assessment would arise only when there has been assessment for the first instance. The proceedings under section 73(1) of the Act 1994 not being merely the re-assessment proceedings, the arguments of the learned counsel for the petitioner stands negated.
TMI Short Notes
Articles
Notifications
DGFT-
38/2015-2020 - dated
1-1-2020
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FTP
Notification of ITC (HS), 2017 — Schedule-I (Import Policy)
GST-
03/2020 - dated
1-1-2020
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CGST
Seeks to amend the notification No. 62/2019-CT dt. 26.11.2019 to amend the transition plan for the UTs of J&K and Ladakh
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02/2020 - dated
1-1-2020
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CGST
Central Goods and Services Tax (Amendment) Rules, 2020
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01/2020 - dated
1-1-2020
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CGST
Seeks to bring into force certain provisions of the Finance (No. 2) Act, 2019 to amend the CGST Act, 2017
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01/2020 - dated
1-1-2020
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IGST
Seeks to bring into force certain provisions of the Finance (No. 2) Act, 2019 to amend the IGST Act, 2017
GST - States-
S.O. 410 - dated
31-12-2019
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Bihar SGST
Amendment in Notification No. S.O. No. 124, dated the 23rd January, 2018
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Removal of Difficulty Order No. 10/2019- State Tax - dated
31-12-2019
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Bihar SGST
Bihar Goods and Services Tax (Tenth Removal of Difficulties) Order, 2019
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29/2019- State Tax (Rate) - dated
31-12-2019
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Bihar SGST
Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017
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28/2019- State Tax (Rate) - dated
31-12-2019
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Bihar SGST
Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017
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27/2019- State Tax (Rate) - dated
31-12-2019
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Bihar SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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111/GST-2 - dated
31-12-2019
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Haryana SGST
Amendment of notification no. 35/ST-2, dated 30.06.2017 under the HGST Act, 2017
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110/GST-2 - dated
31-12-2019
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Haryana SGST
Notification under rule 46 of HGST Rules, 2017 to notify the class of registered person required to issue invoice having QR Code under the HGST Act, 2017
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109/GST-2 - dated
31-12-2019
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Haryana SGST
Notification under section 164 to give effect to the provisions of rule 46 of the HGST Rules, 2017 under the HGST Act, 2017.
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108/GST-2. - dated
31-12-2019
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Haryana SGST
Notification under rule 48 of HGST Rules to notify the class of registered person required to issue e-invoice under the HGST Act, 2017
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107/GST-2 - dated
31-12-2019
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Haryana SGST
Notification under section 146 of notify the common portal for the purpose of e-invoice under the HGST Act, 2017
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29/2019 - No. FD 48 CSL 2017 - dated
31-12-2019
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Karnataka SGST
Amendment in Notification No. (13/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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28/2019 - No. FD 48 CSL 2017 - dated
31-12-2019
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Karnataka SGST
Amendment in Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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27/2019 - FD 48 CSL 2017 - dated
31-12-2019
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Karnataka SGST
Amendment in Notification No. (1/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
Income Tax-
109/2019 - dated
31-12-2019
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IT
Corrigendum - Notification No. 71/2019 dated 20/09/2019
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2020 (1) TMI 65
Classification of goods - rate of GST - Pooja Oil - whether it is at 5% as per entry Sl.No 90 of Schedule I to Notification No 01/2017 CT (R)/IT (R) dt 28.06.2017 or at 12% as per entry Sl.No 27 of Schedule II of the said Notifications? - HELD THAT:- Pooja Oil which is a mixture of 5 different vegetable oils will not be covered under Chapter headings 15.01 to 15.15 as the said headings pertain to either animal fats and oils or vegetable oils and its fractions obtained from a single plant source. Further. Pooja Oil manufactured by the Appellant does not undergo any chemical modification processes such as hydrogenation, inter-esterification, re-esterification or elaidinization and therefore, the Pooja Oil is not classifiable under Heading 15.16. The Heading 15.17 is also not applicable to Pooja Oil as it covers margarine and other edible mixtures of vegetable oils and fats and their fractions other than those which have been obtained by the processes mentioned in Heading 15.16. The first part of Heading 15.18 pertains to products which are obtained by subjecting them to processes which modify their chemical structure or other properties but at the same time retain their original fundamental character. It is the claim of the Appellant that the Pooja Oil is classifiable under Chapter sub-heading 1518 00 39. The said sub-heading pertains to other than edible grade vegetable oils and fats (other than linseed oil and dehydrated castor oil) which have been obtained by any of the processes mentioned in the heading i.e., boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified. The Appellant has not come forth with any evidence to prove that the Pooja Oil manufactured by them by mixing five different vegetable oils and blending with fragrance, brings about a modification in the chemical structure or any other properties of the oils while retaining the original fundamental structure - the manufacture of Pooja Oil does not involve subjecting the five different vegetable oils to any of the processes mentioned above. The five vegetable oils (i.e. rice bran oil. sesame oil (gingelly oil), coconut oil. castor oil and mahua oil) are merely mixed in an agreed percentage, in a large tank and later blended with fragrance to form the resultant product i.e Pooja Oil. Therefore, the Pooja Oil cannot be classified under the sub-heading 1518 00 39. The second category in Heading 15.18 covers inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included - thus, Pooja Oil being an inedible mixture of five different vegetable oils which is blended with a fragrance and not included anywhere else in Chapter 15, is more appropriately classifiable under the subheading 1518 00 40 of the Customs Tariff. Thus, Pooja Oil is classifiable under sub-heading 1518 00 40 of the Customs Tariff as inedible mixtures or preparations of vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included. The Appellant has drawn our attention to the advance ruling given by Andhra Pradesh Advance Ruling Authority in the case of IN RE : AGARWAL INDUSTRIES PVT. LTD. [ 2018 (9) TMI 973 - AUTHORITY FOR ADVANCE RULING - ANDHRA PRADESH] to buttress their argument that the Pooja Oil is covered under entry Sl.No 90 of Schedule I - We have gone through the said ruling dated 08.06.2018. However, we are not inclined to consider the same for the reason that primarily, the advance ruling orders are binding only on the applicant who has sought the advance ruling and on the concerned officer or the jurisdictional officer in respect of the applicant - the ruling does not have any persuasive weightage. The order passed by Advance Ruling authority upheld - appeal dismissed.
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2020 (1) TMI 64
Input tax credit - lease of Cranes, to distinct person for sub-lease to the ultimate customer - settlement of dues / account between the customers and HO directly - supplies received from M/s. Sanghvi Movers Ltd., Maharashtra, the applicant M/s. Sanghvi Movers Ltd., Tamil Nadu - restrictions as per second proviso Section 16(2) of CGST Act and Rule 37 of CGST Rules read with Section 20(iv) of IGST Act, subject to fulfillment of all other conditions under section 16 of CGST Act, read with Section 20(iv) of IGST Act - challenge to AAR decision. Whether GST paid by the SML Maharashtra on the lease of Cranes, to their distinct person, the appellant, for sub-lease to the ultimate customer is eligible as credit in the hands of the appellant? HELD THAT:- The implementation of GST and the Act providing the supply between the distinct persons of the same PAN but in different states as a Supply under Section 7 read with Schedule I of the CGST/TNGST Act 2017, the appellant has entered into an MOU with the Head Office of the appellant drawing the modus for the transactions between them and compliance of GST provisions. The HO of the appellant is the title holder of all the cranes, which they lease to the appellant, for further sub-lease by the distinct person. Whether the appellant is eligible for the ITC of the entire tax paid by SML HO in the stated transactions? HELD THAT:- This is a case which is covered by Schedule I of the CGST Act. The transaction is between distinct persons. The appellant in the tax invoice raised on their customers mentions that the payment to be made either by Cheque/DD in the name of SANGHVI MOVERS LIMITED or directly to the account of SML HO at Pune. The appellant has represented that the receipts and payables are accounted at the entity level only. The HO being distinct person in the eyes of law and the transaction is in the course of furtherance of business, the supply is taxable supply for which SML HO has adopted a value agreed under the Pricing clause of the MOU and paid the tax on the value declared in the Invoice. The proviso to Rule 37, provides for deemed payment of value in such transactions. Even considering that the proviso to Rule 37 does not have application in the case at hand as there is a value stated in the Tax Invoice as held by the Lower Authority, we find no reason to restrict the Input Tax Credit of the tax paid by the SML HO, in the hands of the appellant as it has been substantially brought out that the consideration stands paid to the SML HO either by the customer of the Appellant or by setting off against the payables of the appellant to SML HO, in respect of lease/ hire of Cranes, etc which is as per the established accounting principles. Therefore there are no reason to restrict the eligibility of ITC credit under Section 16 (2) of the Act, in the case at hand. Thus, the appellant is eligible to avail full Input tax credit of tax paid by SML HO on the lease/ hire of cranes to them for furtherance of business, subject to other conditions of eligibility to such credit as per Section 16 of CGST/TNGST Act 2017.
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2020 (1) TMI 63
Valuation - determination of value to be adopted in respect of supply to distinct persons of the appellant in the course of business - supply of goods i.e. Lenses, Frames, Sun Glasses, Contact Lenses as well as Reading Glasses, Complete spectacles by the applicant to distinct persons being branches outside the state of Tamil Nadu shall be the open market value of such supplies - HELD THAT:- In the case at hand, it is accepted by the appellant and the Lower Authority, that the sub-rule (b) and (c) cannot be used for the reason that Open market value is available. The claim of the appellant is that when the recipient is eligible for the credit, as per the second proviso to the Rule 28, the invoice value shall be the Open Market Value and they need not apply the Open Market Value as per the Explanation or to adopt an amount equivalent to ninety percent of the price charged by the recipient to the unrelated buyer as ruled by the Lower Authority. The appellant s view is that both the provisos are independent catering to different situations. It is also stated by the appellant that with the intention to avoid blocking of capital / funds, the legislature has provided a situation, where when the distinct person is eligible to take full input tax credit and is going to make further supply, then, in respect of initial supply, it is not necessary to adopt only open market value and pay higher tax and block such tax amounts. There is no specific regulation in the said Rules, that the rules are to be applied seriatim. Further looking at the construction of the said rule, it is evident that when an Open Market Value is available, sub-rule (b) and (c) may not be applicable but the same is not the case in respect of the provisos. Proviso 1 entitles the appellant to value at 90% of the ultimate sale value to the unrelated customer at the initial supply at his option in cases of as such supply - Considering the constructions of the rule as above, we find that the law provides the taxpayer an option to adopt 90% of the price charged as value to be adopted initially (i.e., supply between distinct persons) and in the alternative, in case of full Input tax being available to the recipient as credit, the invoice value is declared as Open market value . There is nothing to show that the second proviso is subordinate to the first. It independently deals with a scenario where the recipient is eligible for full input tax credit. When the supply is to the distinct person of the appellant and the recipient is eligible for full Input tax credit, the second proviso provides the value declared in the invoice to be the open market value for such transaction. Also the second proviso does not restrict its application as in the first proviso, which is to be applied for cases of as such supply only - Therefore, the appellants may adopt the value for supply to distinct person as provided under Proviso 2 to Rule 28 of the CGST/TNGST Rules 2017. The appellant is eligible to adopt the value as per Second Proviso to Rule 28 of the CGST/TNGST Rules 2017, at the time of supply of goods from the State of Tamilnadu in the terms of the scenario discussed, in as much as the recipient distinct person is eligible for full Input Tax credit as required under the said proviso.
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2020 (1) TMI 61
Reopening of portal and accepting application for refund of input tax credit - Refund of Input tax credit - benefit of Circular No.94/13/2019-GST dated March 28, 2019 - HELD THAT:- In view of the Circular No.125/44/2019 GST dated 18/11/2019, issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, whereby it is instructed that the provisions of the Circular dated 28/03/2019 shall continue to apply for refund applications filed in common portal before 26/09/2019 and the said applications shall continue to be processed manually as prior to the deployment of new system, the reliefs claimed in the writ petition are redressed. The writ petition stands disposed of directing the respondent No.2 to consider the application of the petitioner for refund of input tax credits in terms of the circular.
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2020 (1) TMI 60
Bail application - Modification of condition of security bonds - case of applicant is that he is the businessman but at present his accounts etc have been seized. Fixing sureties bonds of ₹ 2 Crores each is nothing but denial to release the applicant on bail because such sureties cannot be furnished by the applicant as the amount is too exorbitant - HELD THAT:- Though, matter involves huge amount of tax evasion as mentioned by court below but fixing extraordinary amount in sureties or imposing any onerous condition is virtually against the spirit of bail order and it may amount denial of bail. The application of the applicant is allowed and sureties amount or ₹ 2 Crores each as imposed is modified to ₹ 50 Lacs each to the satisfaction of the Magistrate concerned - application allowed.
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2020 (1) TMI 33
Grant of Bail - compoundable offence - case of Revenue is that applicant is not entitled to be enlarged on bail since there are documentary evidences against him which prove his involvement in the alleged offence - HELD THAT:- Considering the larger mandate of Article 21 of the Constitution of India and the material brought on record and without expressing any opinion on the merits of the case and considering the facts and circumstances of the case, I am of the opinion that the applicant is entitled to be released on bail. Let the applicant Mohit Gupta, be released on bail under Section 132(1)(b) of the Central Goods and Services Tax, 2017, Police Station- C.G.S.T., Noida, be released on bail on his furnishing a personal bond with two sureties each in the like amount to the satisfaction of the court concerned with certain conditions imposed.
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Income Tax
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2020 (1) TMI 59
Scrutiny assessment - claim of waiver of principal component of deposit and debentures - taxable revenue receipt as against the assessee's claim of principal part of deposit and debentures as capital receipt - HELD THAT:- Special leave petitions are dismissed leaving questions of pending application(s), if any, stands disposed of.
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2020 (1) TMI 58
Stay application - HELD THAT:- Upon perusal of the documents, it is clear that a sum of ₹ 14 lakh had already been paid by the petitioner in light of the order passed under Section 220(6) of the Income Tax Act, 1961 by the ACIT, Circle 51(1), Kolkata. A further payment of ₹ 14 lakh is still pending. Petitioner has submitted that he is unable to make any further payment since his bank account is lying seized and attached. In light of the above submission, it would be just and fair to direct the Commissioner of Income Tax (Appeals), XV being the respondent no.2 to dispose of the stay application and appeal filed by the petitioner under Section 246 of the Income Tax Act, 1961 within a period of three weeks from date. In the meantime, no coercive steps should be taken by the Income Tax Authority against the petitioner till the passing of the reasoned order by the Appellate Authority.
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2020 (1) TMI 57
Reopening of assessment u/s 147 - Tribunal and the Commissioner have recorded a finding that no reasons in support of notice for reopening were supplied to Assessee inspite of they being asked by - HELD THAT:- Tribunal has confirmed the factual finding recorded by the Commissioner that copy of the reasons were not supplied to the Respondent - Assessee inspite of being asked by the Respondent - Assessee. Nothing is pointed out how this position is incorrect. Even on merits, the Tribunal found that the reasons were incorrect as they were not pertaining to the year under consideration. Once it is established from the record and concurrently held by both Commissioner and the Tribunal that copy of the reasons was given to the Respondent Assessee in support of the notice for reopening, the view taken that the reopening of assessment was without jurisdiction, cannot be faulted with. Learned Counsel for the Respondent - Assessee has placed on record decision of the Division Bench of this Court in case of Commissioner of Income-Tax Vs. Videsh Sanchar Nigam Ltd [2011 (7) TMI 715 - BOMBAY HIGH COURT] as held that if the reasons for reopening of the assessment, though repeatedly asked, are not supplied and supplied only after completion of assessment, the order of reassessment cannot be upheld. This dicta directly applies to the present case.- Decided against revenue
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2020 (1) TMI 56
Reasons for reopening of the assessment u/s 147 - EDC paid to HUDA was subject to TDS under Section 194 - HELD THAT:- On perusal of the Scrutiny questionnaires issued by the AO and the information furnished in response thereto by the Assessee that there has been no failure on the part of the Assessee in furnishing the information. On the other hand, there appears to be non application of mind on such material on the part of the AO to make an appropriate determination in accordance with law. Thus, the AO cannot now review its decision, having failed to perform its statutory duty and therefore the impugned action of reopening is nothing but a change of opinion. Mr. Kaushik s another submission also merits consideration. He argues that the AO has not cared to analyse the applicability of the proviso to Section 40 (a) (ia) on the facts and circumstances of the case. The assessee shall be deemed to have deducted and deposited tax, if the recipient of income pays tax on payments received, even though the Assessee has not deducted TDS for such payment. In such a situation, there can be no disallowance under Section 40 (a) (ia) in the hands of the Assessee. This ignorance cannot escape our judicial notice, as the assessment is sought to be reopened after a period of four years from the end of the relevant assessment year. The notice does not state that the EDC charges collected by HUDA have not been subjected to tax as income in the hands of HUDA. This also shows non-application of mind that warrants our interference. - Decided in favour of assessee.
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2020 (1) TMI 55
Addition as income from outside sources in the books of account - additions made by the AO during a search and seizure operation at the business and residential premises of the assessee - HELD THAT:- Tribunal held that figures which were written in a diary which was seized from the house of the assessee would have to be explained to some extent at least, and the assessee could not get away merely by asserting that even though those diaries were recovered from him yet since the handwriting was not proved to be his, he had no duty at all to explain about all those figures. The Tribunal also noticed that the assessee had initially owned these entries and had stated that they were of subsequent years i.e. 1990-91 and he would explain them in that year's return but he did not explain them. The reasoning adopted by the Tribunal is correct while that adopted by the Commissioner was perverse. Once the assessee accepted the documents which were seized from his premises, and once he had owned the entries and undertaken to explain them in the next financial year and had not offered any explanation whatsoever the amount representing were rightly added to other income of the assess. Application of Gross Profit (GP) rate on the difference of the stock which was physical present in stock register - Finding of the Tribunal is a pure finding of fact and no sufficient cause has been shown to us to reverse the same.
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2020 (1) TMI 54
Exemption u/s 54F - Single Judge held that the appellant was entitled to withdraw the amount deposited in the Capital Gains Account subject to deduction of tax applicable to the case in hand - HELD THAT:- The proviso to sub-section (4) of Section 54F carves out an exception to sub-section (4) of Section 54F of the said Act which deals with two contingencies - (i) where the amount deposited in Capital Gain Scheme Account is wholly utilized for the purchase or construction of a new asset within the period specified in sub-section (1) of Section 54F of the said Act; and (ii) where only a part of the said amount is utilized for the purchase or construction of a new asset. The next part of the proviso itself lays down that when the amount deposited in the Scheme is utilized only partly for the purchase or construction of a new asset, the amount by which the amount of Capital Gains arising from the transfer of the original asset not charged under Section 45 on the basis of the cost of the new asset as provided in clause (a), or as the case may be, of clause (b) of sub-section (1), exceeds the amount that would not have been so charged, had the amount been actually utilized by the assessee for the purchase or construction of a new asset within the period specified in sub-section (1) of Section 54F been the cost of the new asset, shall be chargeable under Section 45 as income of the previous year in which the period of three years from the date of transfer of the original asset expires. If only a part of the amount deposited in the Capital Gains Account Scheme is utilized for the construction or purchase of a new asset within the specified time, income tax is chargeable on the unutilized amount. That is why the learned Single Judge, by the impugned order, has directed that the appellant is entitled for withdrawal of the amount deposited under sub-section (4) of Section 54F of the said Act subject to deduction of tax applicable. No error in the view taken by the learned Single Judge as, on its plain reading, the interpretation of the proviso to sub-section (4) of Section 54F of the said Act made by the learned Single Judge is correct.
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2020 (1) TMI 53
Prosecution u/s 276-B - failure to remit the tax deducted at source during the financial year 2010-2011 and 2011-2012 - as per petitioner show-cause notice is issued in respect of nine companies whereas the prosecution is launched only against the petitioners which is legally untenable - HELD THAT:- After narrating the circumstances of notice, it is stated therein that the said notice was issued to convey the intention of the Department to treat him as the Principal Officer of the above companies. It is not a show cause notice. On the other hand, in the complaint, it is specifically stated that show cause notice was issued to accused on 14.08.2013. Petitioner has not referred to the said document. Therefore, the argument of learned counsel for petitioners based on Annexure-'B' is totally misconceived and cannot be a ground to quash the proceedings. Show cause notice was issued only to petitioner No.1 namely Managing Director and not to the Company - petitioner No.2 and in that view also, the prosecution launched against the petitioners are defective and contrary to section 276 - Second contention urged by petitioners is also misconceived for the reason that the said argument is also built upon Annexure-'B'. Learned counsel has based his argument on the impression that under the said intimation, a joint notice was issued to all the Companies; but it is not so. On the other hand, order passed under section 201(1) and 201(1A) (Annexure-'E') makes it evident that the order was passed only against petitioner - Company and not against all the Companies as contended by learned counsel for petitioners. Therefore, even this plea is liable to be rejected. Tax deducted at source by the petitioners was remitted much earlier to the issuance of sanction order, which fact is not reflected in the sanction order indicating that the sanction order has been issued without application of mind - Coming to the next contention that the sanction order issued for prosecution of petitioners does not reflect application of mind is concerned, I have gone through the said sanction order wherein the Commissioner of Income Tax/ Sanctioning Authority has narrated the facts of the case, referred to provisions of law applicable to the facts and has observed that an opportunity was given to the assessee in default to make the payment. If any amount was paid pursuant to the said show cause notice, the proof thereof could have been produced by petitioners so as to avoid criminal prosecution. There is nothing on record to show that the remittances made by petitioners have been brought to the notice of the Central Government. Petitioners has produced the copies of the communication obtained from the Office of Assistant Commissioner of Income Tax (TDS), Circle-I(1), Bangalore along with challan details report for making payments. It reflects that on 10.09.2014 a sum of ₹ 1,52,675/- and another sum of Rs,1,69,974/- was remitted not by the petitioners herein, but by Avestha Gengraine Technologies Private Limited. The said remittances do not relate to the case in hand. As a result, even the sanction order does not reflect any errors warranting interference by this Court. Hence, this argument is also rejected. Section provides for mandatory term of imprisonment coupled with fine in respect of the offences committed by a company - The last contention, urged by learned counsel for petitioners is no more res integra in view of the Constitution Bench decision of the Hon'ble Supreme Court in Standard Chartered Bank v. Directorate of Enforcement [2005 (5) TMI 327 - SUPREME COURT] we hold that there is no immunity to the companies from prosecution merely because the prosecution is in respect of offences for which the punishment prescribed is mandatory imprisonment
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2020 (1) TMI 52
Addition u/s 41(1) treating the outstanding as cessation of liability - HELD THAT:- It is not in dispute that the creditors were outstanding for more than three years. In our considered opinion, merely because the period of limitation prescribed under the Limitation Act has expired, would not extinguish the debt. As the liability still exists in the balance of the assessee, additions made u/s 41(1) are unwarranted and deserve to be deleted to be deleted in the light of ratio laid down SUGAULI SUGAR WORKS PVT. LIMITED [ 1999 (2) TMI 5 - SUPREME COURT] . Assessing Officer is directed to delete the addition. Addition of total advertisement and marketing expenses - HELD THAT:- It is true that there is no violation of provisions of section 40A(3) of the Act. Merely because some payments were made in cash would not justify the impugned addition. It is equally true that some of the expenses were supported by internal vouchers. In our considered opinion, an addition of ₹ 1 lakh would meet the ends of justice. We, accordingly, direct the AO to restrict the disallowance to ₹ 1 lakhs. The assessee will get relief of ₹ 2 lakhs.
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2020 (1) TMI 51
Addition u/s 69A on account of cash found during the search - CIT(A) was of the opinion that the total Stridhan of the wife of the assessee, as claimed, cannot be accepted and explanation was accepted to the extent of ₹ 1 lakhs on account of Stridhan rest addition sustained - HELD THAT:- The undisputed facts are that during the course of search proceedings itself, the assessee has explained the break-up of cash in the name of his family members. Such break-up is exhibited elsewhere. The undisputed fact is that cash was found from the bedroom of the appellant and, therefore, it can be safely presumed that it was in joint possession of the assessee and his wife Smt. Gomati Devi. The possession of cash as Stridhan by Smt. Gomati Devi cannot be ruled out in the light of the customs prevailing in the society. FAA completely ignored the fact that there were cash withdrawals from the banks on two occasions amounting to ₹ 3 lakhs. Added to this, Stridhan of Smt. Gomati Devi at ₹ 4,28,391/- would suffice to explain the cash of ₹ 4,71,000/- Considering the afore-stated facts in totality, we do not find any merit in the additions made by the AO. We, accordingly, direct the Assessing Officer to delete the impugned additions - Decided in favour of assessee.
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2020 (1) TMI 50
Disallowance u/s 14A - assessee in this case has made a suo moto disallowance of expenditure - HELD THAT:- Assessing Officer has recorded that he is not satisfied with the explanation given by the assessee on the suo moto disallowance. The assessee has also not given any working to justify the suo moto disallowance. He made certain claims without supporting the same with figures. Under these circumstances, we are of the considered opinion that the Assessing Officer has recorded satisfaction, that he is unable to accept the suo moto disallowance made by the assessee u/s 14A of the Act, prior to invoking Rule 8D of the Rules. Hence this argument of the assessee is hereby dismissed. Coming to the finding of the ld. CIT(A), relying on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Rajiv Lochan Kanoria [ 1994 (2) TMI 42 - CALCUTTA HIGH COURT] , we hold that this is no more good law, in view of the judgment of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [ 1994 (2) TMI 42 - CALCUTTA HIGH COURT] . Hence, this part of the order of the ld. CIT(A), is hereby reversed and the ground of the revenue is allowed. Disallowance under Rule 8D(2)(iii) - This issue is no more res integra in view of the decision of this Bench of the Tribunal in the case of Kolkata Bench of the ITAT in the case of REI Agro Ltd. v. Dy. CIT [ 2013 (9) TMI 156 - ITAT KOLKATA] and ACIT vs. Vireet Investments (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - Consistent with the view taken therein we dismiss this ground of the revenue. MAT Computation u/s 115JB - HELD THAT:- We find that the assessee has recorded to its profit and loss account, diminution in the value of investments. It was submitted that that net costs of investments was reflected in the profit and loss account and under those circumstances, this figure cannot be adjusted once again while computing book profits assessed u/s 115JB - See PHILIPS CARBON BLACK LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-10, KOLKATA, [ 2014 (1) TMI 1765 - ITAT KOLKATA] held that once assessee has reduced amount shown by it as a provision for diminution of investment from its total value of investment, it no longer remained a provision. Effectively it was a write off. This view is supported by the decision of the Hon'ble Apex Court in the case of Vijaya Bank -vs.- CIT [ 2010 (4) TMI 46 - SUPREME COURT] . Therefore, the claim of assessee with regard to diminution in value of investment has to succeed. - Decided in favour of assessee.
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2020 (1) TMI 49
Unexplained cash credit u/s 68 - assessee failed to substantiate the credit worthiness of M/s Ram Alloy Casting Pvt. Ltd., who has advanced an amount of ₹ 27 lacs to the assessee - HELD THAT:- It is the allegation of the AO that despite summons issued, the said party did not appear and the reply given by the said party in response to notice u/s 133(6) raises certain doubts. CIT(A) upheld the action of the AO. It is the submission of the ld. Counsel for the assessee that given an opportunity, the assessee is in a position to produce the said party along with necessary documents to substantiate their credit worthiness. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate its case by producing the said party before him. The AO shall decide the issue as per fact and law. AO, while deciding the issue, shall keep in mind the various decisions relied on by the DR. We hold and direct accordingly. The first ground raised by the assessee is accordingly allowed for statistical purposes.
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2020 (1) TMI 48
Revision u/s 263 - AO has not conducted enquiries on various issues in respect of incentives to its employees, trade incentives given to its dealers for which the assessee is liable to deduct the tax at source as per the provisions of section 194H - HELD THAT:- In the instant case the assessee has passed on the discounts given by the manufacturer to the distributors/ retailers. The department did not place any material to controvert the submissions of the assessee. Similarly the incentives were paid to the employees of the assessee which comes under the head salaries. As decided in own case [2018 (3) TMI 736 - ITAT VISAKHAPATNAM] since the incentives paid to dealers are covered by the decision of this Tribunal and the AO has verified this issue with regard to deduction of tax liability on the part of the deductor and decided the assessment proceedings. Hence the assessment order passed by the AO is neither erroneous nor prejudicial to the department. Similarly, the incentives paid to the employees take the character of salaries u/s 192 and no disallowance is warranted u/s 40(a)(ia) for the payment of salaries. Thus the order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue. Therefore, we set aside the order of the Ld.Pr.CIT and restore the assessment order. - Decided in favour of assessee.
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2020 (1) TMI 47
Reopening of assessment u/s 147 - no notice issued u/s 143(2) - HELD THAT:- There was no notice issued u/s 143(2) of the Act subsequent to filing the return of income. Even in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] held that section 292BB comes to the rescue of the department only after issue of notice u/s 143(2). In the instant case, there is no notice issued u/s 143(2) by the AO subsequent to filing the valid return of income. Therefore, we hold that the case of the assessee is squarely covered by the decision of Hon ble Supreme Court in the case of Hotel Blue Moon (supra) against the assessee. Therefore, we hold that the Ld.CIT(A) has rightly cancelled the assessment made u/s 143(3), in the absence of notice issued u/s 143(2). Accordingly, we decline to interfere with the order of the Ld.CIT(A) and uphold the same.
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2020 (1) TMI 46
Due taxes were not paid before filing of an appeal u/s 249(4)(b) - payment of Tax as per ITR filed - reopening of assessment - HELD THAT:- Acknowledgment reflects payment of taxes at ₹ 550/- only. Further, the assessee sought certain information under RTI, copy of the application is placed at page 12 with regard to the proceedings u/s 148, service of notice u/s 148 and also under section 142(1) of the Act. The assessee received certain information vide reply dated 26/02/2018, placed at paper book page 13, against which appeal was filed before the Addl. CIT and then appeal was also filed before the Chief Information Officer. We are not entering into field of whether notice under section148/142(1) of the Act was issued to the assessee, at present. We are deciding the preliminary issue that where the assessee had furnished the return of income and paid taxes due thereon, then the order of the CIT(A) suffers from infirmity in applying the provisions of section 249(4)(b) of the Act. The case of the assessee falls within the provisions of section 249(4)(a) of the Act, hence it was incumbent upon the CIT(A) to decide the issue on merits and not dismiss the appeal in limine . Accordingly, it is deem fit to remit the issue back to the CIT(A) to decide the issue raised on merits after allowing reasonable opportunity of hearing to the assessee. The assessee is also directed to comply with the notices issued by the CIT(A). We decide the present appeal on preliminary issue itself and remit the matter back to the file of CIT(A) with our directions. - Decided in favour of assessee.
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2020 (1) TMI 45
Penalty u/s 271(1)(c) - no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income - HELD THAT:- Merely stating that 271(1)(c) penalty has to be initiated does not amount to satisfaction. The notice u/s 271(1)(c) is also silent on the particular limb under which the penalty order was passed. First of all, in the notice issued u/s 274 r.w.s 271(1)(c) of the Income Tax Act, 1961, there was no specific charges as relates to concealment of income or furnishing of inaccurate particulars of income. From the notice dated 13.12.2016 and 08.05.2017 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee s case. Therefore we are taking up the contention of the assessee that there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274. Since in the instant case also the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) of the Act has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) of the Act is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, SSA S Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] - when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case. Thus, notice under Section 271(1)(c) r.w.s. 274 of the Act itself is bad in law. We, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to delete the penalty so levied. - Decided in favour of assessee.
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2020 (1) TMI 44
Penalty imposed u/s 271G - assessee has not maintained information/documents required under section 92D(1) r/w rule 10D for enabling him to determine the ALP - HELD THAT:- In the present case, it is not a fact that the assessee has not maintained any information as required under section 92D(1) r/w rule 10D(1). The facts on record clearly indicate that the assessee, indeed, has maintained a number of information/documents as required under the statutory provisions. In fact, the assessee has furnished segmental profitability at gross level. No specific discrepancy has been pointed out by the TPO with regard to the information furnished by the assessee including segmental profitability. Further, the assessee has also explained why it is not possible to furnish certain information sought by the TPO qua applicability of internal CUP method. In this regard, detailed written submission has been filed by the assessee before the TPO which has been properly evaluated by learned Commissioner (Appeals) and the difficulty in maintaining the information sought by the TPO has been well explained and analysed. Ultimately the TPO has accepted the benchmarking done by the assessee under TNMM and no variation/adjustment was made by him to the ALP. Even, assuming that the assessee has not maintained documents as required or was unable to support the benchmarking done by it under TNMM, nothing prevented the TPO in discarding the benchmarking done by the assessee and determining the ALP of the international transaction with the AE independently by applying any one of the prescribed method. When the statutory provisions confer enough power on the TPO to benchmark the international transaction as per the provisions of the Act, the allegation of the TPO that due non furnishing of documents by the assessee he was prevented from determining the arm's length price under CUP or PS method is unacceptable. Therefore, when the TPO has accepted the benchmarking of the assessee, the imposition of penalty under section 271G of the Act is unsustainable. See M/S. LEO SCHACHTER DIAMONDS INDIA PVT. LTD. [ 2019 (3) TMI 690 - ITAT MUMBAI] - Decided in favour of assessee.
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2020 (1) TMI 43
Taxability of Inland Haulage Charges (IHC) in India - HELD THAT:- Respectfully following the decision of the Co ordinate Bench rendered in assessee s own case in the preceding assessment years, we hold that IHC, since, forms part of income from operation of ships in International Traffic, is covered under Article 9 of the India France Tax Treaty, accordingly, not taxable in India. These grounds are decided allowed. Taxability of service tax collected on IHC - HELD THAT:- In assessee s own case, we hold that service tax cannot form part of the gross receipts for computing income for taxation purpose as per section 44B r/w section 172. Taxability of freight charges received from transportation of Cargo through Feeder Vessels - HELD THAT:- Respectfully following the aforesaid decision of the Co ordinate Bench rendered in assessee s own case, we hold that freight charges received from transportation of cargo through feeder vessels being part of shipping income in International Traffic is covered under Article 9(1) of the India France Tax Treaty, hence, not taxable in India. In fact, the aforesaid view of the Tribunal was upheld by the Hon ble Jurisdictional High Court while dismissing Revenue s appeal in assessee s own case in Assessment Year 2002 03 Agency PE in India - Tribunal has held that if the Indian agent has been remunerated at arm s length, it cannot be considered as agency PE of the assessee. It is further relevant to observe, in the advance pricing agreement between the CMA CGM Agencies India Pvt. Ltd. and CBDT entered on 24th November 2015, it has been agreed that remuneration @ 18% between the assessee and its Indian agent has to be considered to be at arm s length. In the facts of the present case, it has been factually demonstrated before us that the payment made by the assessee to its Indian agent is at the arm s length price of 18%. That being the case, following the aforesaid decision of the Co ordinate Bench, we hold that the Indian Agent of the assessee cannot be considered as an agency PE. Thus, grounds are decided in favour of the assessee. Error in calculating tax on interest on External Commercial Borrowing (ECB) - as per section 115A of the Act, the applicable interest rate is 5% - assessee has raised the issue of non grant of TDS credit as appearing in Form no.26AS - assessee has challenged levy of interest under section 234A - HELD THAT:- As could be seen, in respect of the issues raised in the aforesaid grounds, the assessee has already moved an application for rectification under section 154 of the Act before the Assessing Officer which, as stated before us, is still pending. Considering the nature of dispute, we direct the Assessing Officer to verify assessee s claim with regard to grounds no.18 to 21 along with the rectification application pending before him and decided as per law after providing reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
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2020 (1) TMI 42
Exemption u/s 11 - whether objects of the appellant are Charitable Purpose as defined in Section 2(15) keeping in view the definition of Charitable Purpose in said sub-section being Inclusive and accordingly the provisions of Section 11 of the Act, have to be applied in assessment of its income? - HELD THAT:- The prime objects of the trust are to implement the NEIA scheme through ECGC for the benefit of medium and long-term exports. The assessee endeavor to promote exports from India and to protect the payment risks for transactions for which ECGC is unable to provide cover owing to lack of capacity or commercial consideration. In other words, the assessee is to provide insurance cover to promote exports from India and to protect payments risks. The assessee also aim at meeting the cost of insurance which ECGC would levy for project exports in certain circumstances. The assessee is required to implement such other schemes and programs as the Government of India may frame in this regard and undertake its activities as per the directions of Government of India. Since the dominant and prime object of the assessee is not to earn the profit in relation to trade, commerce and business, therefore, the exemption u/s.11 12 is not liable to be declined. Accordingly, we set aside the finding of the CIT(A) in this issue and allowed the claim of the assessee. Corpus contribution received by the assessee - HELD THAT:- Upon perusal of stated terms conditions, it could not be said that the funds received by the assessee were not in the nature of voluntary contributions rather they were more in the nature of specific grants on certain terms and conditions and liable to be refunded, in case the same were not utilized for specific purposes. It is trite law that entries in the books of accounts would not be determinative of the true nature / character of the transactions and the same could not be held to be conclusive. Therefore, the mere fact that the assessee credited the receipts as corpus contribution, in our considered opinion, would not make much difference and would not alter the true nature of the stated receipts. The said funds / receipts, as stated earlier, were more in the nature of specific grants and represent liability for the assessee and liable to be refunded in case of non-utilization. Therefore, the same being capital in nature, could not be even otherwise brought to tax. For the said proposition, strength could be drawn from the decision in Pr.CIT V/s State Fisheries Development Corporation Ltd. [ 2019 (1) TMI 482 - SC ORDER] wherein similar receipts were held to be capital in nature and could not be brought to tax as income of the assessee - Decided in favour of assessee.
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2020 (1) TMI 41
Addition u/s 68 - unexplained cash credit - non-appearance by creditor - HELD THAT:- Transaction with Mr S L Solanki, the assessee has filed the necessary information in terms of name and address, PAN Number, ITR, bank statement and confirmation of Mr S L Solanki - the notice issued u/s 133(6) and u/s 131 have been duly served on him, however, he has explained his non- appearance due to health problem. In absence of any adverse finding of the AO on the documents so submitted, merely on account of non-appearance for which reasonable cause has been explained, no addition is called for in hands of the assessee. Transaction with M/s Mewad Infrastructure (P) Ltd - As gone through the financial statements of M/s Mewad Infrastructure (P) Ltd and find that it has reported operating revenues from sale of flats of ₹ 1,53,46,000 and net profits from operations amounting to ₹ 525,645 with cumulative reserves of ₹ 65,14,045 and therefore, the finding of the AO that it is a paper company is not borne out of the records and cannot be accepted. Further, we find that the assessee has submitted the necessary documentation in discharge of his primary onus and the addition so made u/s 68 cannot be sustained. In absence of any adverse finding of the Assessing officer on the documents so submitted, no addition is called for in hands of the assessee and the same is directed to be deleted. Transaction with Mr Arvind - as submitted that by the ld AR that inadvertently, the assessee categorized the said transaction under the head unsecured loan instead of the head advance received from customers and the identity of Mr. Arvind stood established as notice u/s 131 of the Act was duly served upon him, however, there is nothing on record in terms of basic documentation to support the said contention that the transaction was in nature of advance from customers in regular business dealings of the assessee and whether the same has been adjusted and offered to tax as income either in the year under consideration or in the subsequent years. Therefore, the amount so found credited in the books of accounts is hereby confirmed as unexplained credit u/s 68 of the Act and the addition to this extent is confirmed. Admission of additional ground - Addition u/s 43CA - retrospective applicability of tolerance band of 5% introduced by the Finance Act, 2018 - HELD THAT:- No doubt, the matter is emerging from the impugned order so passed by the ld CIT(A). At the same time, when the same was raised before the ld CIT(A) and the assessee has given up its claim before the ld CIT(A) by specifically stating that he doesn t wishes to press the same and following the said submission of the assessee, the ld CIT(A) has dismissed the said ground, we do not see any infirmity in the said order of the ld CIT(A). Further, once the assessee has given up its claim and the same has been accepted by the ld CIT(A), there is no prejudice and cause of action which lies with the assessee to raise the said ground again before the Tribunal against the said order of the ld CIT(A). In the instance case, there is nothing which has been stated by the ld AR as to the reasons for delay in filing the additional ground of appeal. The amendments brought in by Finance Act, 2018, to which recourse has been taken, were very much on statue book at the time of filing the memorandum of appeal. Similarly, the decisions of Coordinate Benches relied upon by the ld AR namely, Sita Bai Khetan vs ITO [ 2016 (11) TMI 955 - ITAT JAIPUR ] were pronounced and were in public domain at the time of filing the memorandum of appeal. Therefore, it is not a case where as a result of any amendment in the statue or any judicial decision given while the appeal of the assessee is pending before the Tribunal, the assessee couldn t take the additional ground of appeal and which explains the delay so happened in taking such additional ground of appeal. Therefore, on this account as well, the additional ground of appeal cannot be admitted.
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2020 (1) TMI 40
Reopening of assessment u/s 147 - no notice issued by the AO u/s 143(2) in the case of the assessee - HELD THAT:- The provisions of section 292BB can be invoked only in case where notice is duly issued by the AO under section 143(2) but the service of the said notice is disputed by the assessee after completion of the assessment and after participation in the assessment proceedings. Therefore, in such cases where the assessee has participated in the assessment proceedings in response to notice under section 143(2), the assessee is not allowed to take objection of service of the notice issued under section 143(2) after completion of assessment. It is a case of non issuance of notice under section 143(2), therefore, the initiation of proceedings itself was without jurisdiction conferred by the provisions of section 143 Reassessment was completed without issuing a notice under section 143(2), then the reassessment order is not sustainable in law and the same is invalid. Hence we quash the impugned reassessment order passed by the AO. - Decided in favour of assessee.
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Customs
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2020 (1) TMI 62
Smuggling - Indian Currency - only issue pressed by the Revenue, before the Commissioner (Appeals), was that the AC ought not to have allowed release of the Indian currency to the petitioners on payment of redemption fine and penalty - HELD THAT:- The owner of the currency being Surender Gupta (Petitioner No. 2), there could, undisputedly, be no question of releasing the currency to Petitioner No. 1. We are, however, completely at a loss as to how, on this ground, the Revisionary Authority could allow the Revision Application of the Revenue. Both the petitioners were before him. A reading of the Order-in-Original of the AC does not indicate that option to redeem the currency had been granted, by the AC, to Petitioner No. 1. The Order-in-Appeal of the Commissioner (Appeals) makes the matter clear by observing that, as the owner, i.e., Petitioner No. 2, was known, redemption of the currency could be granted to Petitioner No. 2. In this backdrop, it is impossible to understand how the Revisionary Authority set aside the said order, by holding that redemption of the currency could not be granted to Petitioner No. 1. Both the petitioners were before the Revisionary Authority. Even if, for a moment, it were to be assumed that the Revisionary Authority read the orders of the authorities below as allowing the redemption of the currency to Petitioner No. 1, all that he was required to do to remedy the situation, was to substitute the said direction by permitting redemption of the currency to Petitioner No. 2. There was no occasion, whatsoever, for the Revisionary Authority to set aside the Order-in-Appeal, wholesale, thereby rendering the seized currency irredeemable, even by Petitioner No. 2. Exercise of discretion, by judicial, or quasi-judicial authorities, merits interference only where the exercise is perverse or tainted by patent illegality, or is tainted by oblique motives Mangalam Organics Ltd. v. UOI [2017 (4) TMI 1223 - SUPREME COURT] . No illegality, much less perversity, is discernible in the decision, of the AC, to allow redemption of the seized currency on payment of redemption fine of ₹ 50,000/-. The Commissioner (Appeals) rightly refused to interfere with the said decision, and the Revisionary Authority, in an order which reflects total non-application of mind, chose to reverse the said decision. The decision of the Commissioner (Appeals) as well as the order of the AC stands affirmed - The seized currency shall, therefore, forthwith be returned to Petitioner No. 2 - petition allowed.
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Insolvency & Bankruptcy
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2020 (1) TMI 39
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - One of the objections raised by the respondent is that the applicant is not a 'financial creditor', nor the debt claimed in the application come within the purview of financial debt as defined under the Code and therefore the present application is not maintainable - HELD THAT:- The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code and precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money. In the present case applicant has placed statements including bank transactions to show that loan was disbursed to the respondent. Respondent in their reply, although disputed the entire claim of the applicant but admitted that the loan was a long-term borrowing. Respondent therefore has accepted that the debt amount received from the applicant was in the nature of a loan - Once it is accepted that the debt was received as a long-term borrowing, it is evident that the said loan amount was clearly disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest. It is seen that not only the present claim comes within the purview of 'Financial Debt' in terms of Section 5(8) of the Code but also the applicant can clearly be termed as 'Financial Creditor' of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. There is a declaration made by him that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere. In addition, further necessary disclosures have been made by Mr. Sameer Rastogi as per the requirement of the IBBI Regulations. Accordingly, it is seen that the requirement of Section 7 (3) (b) of the Code has been satisfied - It is thus seen that the requirement of sub-section 5 (a) of Section 7 of the code stands satisfied as default has occurred, the present application filed under Section 7 is complete, and as no disciplinary proceeding against the proposed IRP is pending. It is seen that the applicant clearly comes within the definition of Financial Creditor. The material placed on record further confirms that the applicant financial creditor had disbursed loan to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt despite demand notice. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP - in terms of Section 7 (5) (a) of the Code, the present application is admitted. Application admitted - moratorium declared.
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2020 (1) TMI 38
Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and dispute or not - section 7 of the I B Code - HELD THAT:- This Applicant/Financial Creditor has proved existence of debt and default. Moreover, no dispute has been raised by the Corporate Debtor before the receipt of Section 8 Notice - Application deserves to be admitted. Application admitted - moratorium declared.
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2020 (1) TMI 37
Permission for withdrawal of petition - Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - Section 9 of the IBC, 2016 R/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - the learned PCS for the Petitioner urged the Tribunal that the Petitioner may be permitted to withdraw the instant Company Petition subject to compliance of the terms and conditions as mentioned in the said Joint Memo of Settlement - HELD THAT:- Since the issue raised in the Company Petition was resolved between the parties before the case is admitted, we are inclined to permit the Petitioner to withdraw the main Company Petition in the interest of Justice. Petition is disposed of as withdrawn by directing the Respondent to strictly adhere to the terms and conditions as mentioned in the said Joint Memo of Settlement dated 30.08.2019 without any deviation, failing which, the Petitioner will have right to file a fresh Company Petition in accordance with law.
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Service Tax
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2020 (1) TMI 36
Re-assessment - Validity of order passed u/s 73(1) of the Act, passed by the Assistant Commissioner - vires of Rule 3 of the Service Tax Rules, 1994 - primary contention of the learned counsel for the petitioner that the order in original passed under Section 73(1) of the Act, dated 17/03/2016 is the re-assessment order. The said approach of the petitioner is wholly misconceived. Section 72 deals with the Best judgment assessment - HELD THAT:- The language employed in the provisions of Section 73 as it stood during the relevant period does not contemplate for an order of assessment, a condition precedent to invoke Section 73, as contended by the learned counsel for the petitioner. In other words, Best judgment assessment order passed under Section 72 of the Act, is not sine qua non for initiating proceedings under Section 73 of the Act. There was no assessment order as such, there could not be a notice for re-assessment inasmuch as the question of re-assessment would arise only when there has been assessment for the first instance. The proceedings under section 73(1) of the Act 1994 not being merely the re-assessment proceedings, the arguments of the learned counsel for the petitioner stands negated. The proceedings under section 73(1) of the Act 1994 not being merely the re-assessment proceedings, the arguments of the learned counsel for the petitioner stands negated. As regards the jurisdiction aspect is concerned, the Appellate Authority in the order impugned at Annexure-E dated 05/11/2018 has categorically given a finding in para-6 of the order - If the petitioner is aggrieved by the said findings of the Appellate Authority including the merits of the case, it is open to the petitioner to challenge the same before the Appellate Tribunal under Section 86 of the Act, 1994. Petition dismissed.
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CST, VAT & Sales Tax
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2020 (1) TMI 35
Principles of Natural Justice - Validity of reassessment order - ex-parte order - exparte re-assessment order was passed without providing an opportunity of hearing to the petitioner - rectification application was filed seeking rectification of the order, which was rejected - HELD THAT:- This Court is of the considered opinion that before passing of the exparte assessment order, the petitioner ought to have been heard in the matter albeit no objections filed to the proposals made in the notice dated 28.10.2019. Keeping in mind the principles of natural justice, this Court deems it appropriate to set aside the impugned ex-parte re-assessment order, rectification order and the demand notice and remand the matter to the respondent No.3 Assessing Authority to re-do the assessment after providing an opportunity of hearing to the petitioner - petition allowed by way of remand.
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Indian Laws
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2020 (1) TMI 34
Attachment of Bank Accounts - Classification of account under which category it falls as NPA - validity of proceedings under Section 13(2) of the the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - statement of objections - invocation of Section 13(2) of the SARFEASI Act - the main grievance of the learned Senior Counsel for the petitioners is that before the due date i.e., on 31.1.2019, the cash credit facility was stopped from 10.1.21019 and it was not a case of NPA. It is the voluntary act of the Bank in stopping the loan facility and the bank had no power to declare as NPA and it is contrary to prudential norms issued by the Reserve Bank of India from time to time. Therefore, impugned actions of the respondents cannot be sustained. Whether the petitioners have made out any case to interfere with the impugned notices issued by the respondent-Bank both under Sections 13(2) and 13(4) of the SARFAEASI Act and any relief as sought for can be granted in the facts and circumstances of the present case? HELD THAT:- The material on record clearly depicts that ever since January, 2019 the petitioners had been interacting with the respondent-Bank, several meetings were held and they also participated in the Consortium Bank Meetings as invitees, but they have not paid any amount due especially after January, 2019, when the default started. The petitioners have admitted in their reply dated 10.7.2019 that they have neither made any payment of loan due nor made any effort to regularize the defaulted account in view of the enforcement action taken for recovery of GST dues by the GST Authorities - It is also not in dispute that the petitioners that as on the date of NPA i.e., 29.5.2019, the amount due to the bank was ₹ 142,73,29,479.23 ps. Inclusive of the principal amount not paid to the respondent-Bank. On that ground also the writ petition is liable to be dismissed as not maintainable. It is also not in dispute that the petitioners have not made any efforts to pay the amount due to the Bank subsequent to declaration of NPA on 30th April, 2019 till today. Therefore, the contention of the learned Senior Counsel for the petitioners that the provisions of the SARFAESI Act is not applicable to the present case, cannot be accepted as the petitioners, who are borrowers have availed and utilized the total sanctioned loan amount of ₹ 137,50,00,000/- and committed default in not paying any interest as well as the principal amount as on 30.4.2019. The petitioners were liable to pay more than 100% of the principal amount and interest. Therefore, the provisions of Section 31(j) of the SARFAESI Act is not applicable to the petitioners as rightly contended by the learned Senior Counsel for the respondents. Accordingly, the contention of the petitioners that the provisions of the SARFAESI Act is applicable cannot be accepted. Admittedly in the present case, the respondent-Bank has issued notice under Sections 13(2) and 13(4) of the SARFAESI Act and therefore, the very writ petition filed for the reliefs sought for is not maintainable. There are disputed facts that arise for consideration with regard to the allegations made by the petitioners that the respondents have not complied with the RBI Guidelines, but the same is disputed by the respondents contending that they have followed the procedure as contemplated under the provisions of the SARFAESI Act and as per the Guidelines issued by the Reserve Bank of India. Therefore, this Court cannot decide the same in exercise of powers under Article 226 of the Constitution of India. The point raised in the present writ petition has to be answered in the negative holding that the petitioners have not made out any ground to interfere with the impugned notice issued by the respondents-Banks under the provisions of Section 13(2) and 13(4) of the SARFAESI Act and the petitioners are not entitled to any relief as sought for in the present writ petition in exercise of powers under Article 226 of the Constitution of India - petition dismissed.
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