TMI Tax Updates - e-Newsletter
January 3, 2022

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Right to appeal - Order was not uploaded on the portal - When admittedly there was a failure on the part of the respondents to upload the order in the original, petitioner cannot be mulcted with the responsibility of preferring appeals within the time period stipulated. The time period stipulated in the statute for filing an appeal is part of the same transaction that exists with the uploading of an order in the original - The petitioner is entitled to have his appeals that were filed manually, to be treated as having been filed within time - HC
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• GST:

  Right to appeal - Deemed service of adjudicating order / Non-receipt of the order - As per the statutory prescription and going by the averments in the counter affidavit as well as the documents produced, it is evident that petitioner can be deemed to have been tendered with the order under Section 129(3) on 03.02.2020. The fiction that is created does not leave any room for doubt and since the tendering of notice is by registered post with acknowledgement due, there is no scope for even assuming that the order was not served on the petitioner - However, the petitioner’s right to pursue an appeal cannot be curtailed solely on account of non-receipt of an order or loss of an order - HC
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• GST:

  Grant of pre-arrest bail - case of applicant is that the applicant raised several contentions in the applications filed by them, however, all the contentions are not dealt with - principles of natural justice - It appears that learned advocate for the applicants has tried to re-argue the case by filing these applications for recalling of the order, which is not permissible. This Court is of the view that by way of filing these applications, applicants have indirectly requested this Court to review its own judgment, which is not permissible. - HC
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• GST:

  Benefit of Exemption from GST - composite supply or not - pure services - By his own admission in the application, the applicant provided accommodation services to GHMC in relation to conduction General Elections to the Legislative Assembly of Telangana State. Thus there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017. - AAR
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• Income Tax:

  Offences u/s 276CC, 276C(1) and 276C(2) - Non-filing of ITR for Second PAN number - Now the prosecution has been launched on the premise that the petitioner has not even paid tax for the Assessment year 2013-14. This Court is of the view that when the petitioner has already surrendered the PAN card bearing No. bearing number ALIPS4185M, the question of initiating prosecution for wilful and deliberate default to furnish return of income tax does not arise and the continuation of prosecution as against the petitioner is a futile exercise and the same is liable to be quashed. - HC
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• Income Tax:

  Nature of expenditure - amount paid as fee for user of know-how - capital expenditure or revenue expenditure - where an assessee who is engaged in the business of manufacturing and selling certain products had made a payment to a foreign company for merely acquiring a right to use technical know-how, whereas the ownership and intellectual property rights in the said know-how remained with the foreign company, then, the payment in question would be in the nature of a revenue expenditure - AT
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• Income Tax:

  Disallowance u/s 37(1) expenses towards fees, subscription and payment of services for various clubs such as Karnataka Golf Association, Bangalore Club, the Karnataka Cricket Association Club House - Ld.AO directed to delete the disallowance made under section 37(1) of the Act. - AT
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• Income Tax:

  Addition u/s 68 - By "right person", we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the Revenue. - AT
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• Income Tax:

  Deemed dividend addition u/s.2(22)(e) - assessee has not been able to demonstrate through any cogent or credible evidence that this transaction that he had with the M/s. Hextech Engineering Pvt. Ltd. was commercial in nature. Therefore, the Assessing Officer rightly taxed the same as deemed dividend to the extent of accumulated profit in the hands of the assessee. - AT
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• Income Tax:

  Negative working capital - It is the contention of the assessee that the negative working capital should be ignored, since the assessee is a risk free enterprise - Matter restored to the file of TPO with the direction to follow the principles laid down in the case of e4e Business solutions India P Ltd. - AT
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• Income Tax:

  Unexplained money u/s 69A - Unexplained loan - the loan creditors had deposited cash in their accounts and mostly on the very same day they had transferred the same to the assessee’s bank account - there were no significant bank transactions in the bank accounts of the loan creditors. Needless to mention that banking transaction alone will not make the transactions to be genuine. - From the above it is crystal clear that the creditworthiness of the loan creditors is not established. - AT
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• Income Tax:

  Revision u/s 263 by CIT - the impugned order passed in the present case is in gross violation of the principles of natural justice having been passed in haste without giving adequate opportunity of hearing to the assessee and without even dealing with and considering reply filed by the assessee and the order, therefore, needs to be set aside. - AT
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• Income Tax:

  Exemption u/s 11 - Rejection of application filed for registration u/s 12AA - charitable object u/s 2(15) - activity of holding conferences on new innovations - In the present scenario, now every professional person whether doctor, advocate, or CA will have to remain up to date with new technology where such knowledge is acquired/gained through web conferences which are being held on line through webinars. - Such conferences/webinars are being conducted both free and nominal charges - we approve the objects of the assessee society as charitable and it’s a genuine trust - Registration to be granted - AT
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• Customs:

  Recovery of excess due credit issued from Status Holder Incentive Scrip (SHIS) Scheme - It is contended that once the benefits of the Scheme are utilised, then the Authorities have no power to cancel or impose recovery - The Authority, who issued the demand notice, shall conduct an enquiry by affording an opportunity to the petitioners and decide the issues on merits and in accordance with law, including the legal grounds and the point of limitations raised by the parties. - HC
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• Customs:

  Revocation of customs broker license - imposition of penalty - As the relied upon documents were not given to the appellant and also the cross examination of witnesses was denied we hold that the impugned order has been passed violating principles of natural justice - the matter is remanded to the adjudicating authority for afresh adjudication - AT
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• Corporate Law:

  Validity of Investigation proceedings against the Employee by CID - Investigation was already being conducted by the SFIO - A specific procedure has been laid down under the Companies Act, 2013, for launching prosecution under the Act and how the investigation is to be carried out and SFIO has no role and scope to enquire into the offences committed by an individual under the Company. - There appears no illegality in registering the case by the CID and the provision under Section 212 (2) of the Companies Act, 2013 (which has already been mentioned above) has not denuded the investigation carried by any other agency, apart from SFIO. - HC
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• Indian Laws:

  Dishonor of cheque - mismatch of signatures or incomplete signatures - The Supreme Court in a case has came to the conclusion that criminal prosecution against the accused in such cases should be allowed to proceed and the judgment and orders passed by the High Court quashing the criminal proceedings were set aside. - Therefore, the contention of the petitioners that in the instant case offence under Section 138 of the NI Act is not constituted because the cheques were dishonoured on account of incomplete signatures and not for the reason of insufficiency of funds or exceeding the arrangement, deserves to be rejected. - HC
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• Indian Laws:

  Dishonor of Cheque - legally enforceable debt or not - compensation amount received by the Respondent is a security substituted in the place of the original mortgage property as contemplated under Section 73 of Transfer of Property Act - The substantive provision of Transfer of Property Act as the mortgage has already executed, though its validity is questioned before this Court, this Court cannot make a roving enquiry. Therefore, this Court cannot go into the merits whether there is legally enforceable debt or not, it has to be discharged only by the accused before the trial Court - HC
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• Indian Laws:

  Dishonor of Cheque - insufficient fund - preponderance of probabilities - In view of such statements made by the complainant at the time of her cross-examination, there was obvious reason for the trial court to come to a finding that the complainant has failed to establish her case that she had any business relation with the accused - it is settled proposition of law that for rebutting the fact that might lead to the presumption under Section 139 of the N.I. Act, the standard of proof is of preponderance of probabilities, which the accused in the present case has been able to rebut. - HC
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• IBC:

  Proceedings against the Suspended Directors - Failure to handover books of accounts and documents to the RP - The respondent no. 1 cannot be escaped from its liability, by shifting the responsibility solely on the respondent no. 2. Since, both the respondents were the directors of the Company prior to the initiation of the CIRP, therefore, they are supposed to hand over the documents and furnish the information as required by the RP. Since both of them have failed to furnish the information as required under the law, therefore the RP is directed to institute a criminal case against both the Suspended Board of Directors under Section 70 of the IBC along with the other relevant Sections of the law - Tri
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• Central Excise:

  Imposition of penalty under Rule 26 (2) of CER - availment of irregular CENVAT Credit - invoices without actual receipt of inputs - Though the opting of SVLDRS should not have any bearing on the other cases who are contesting before this Tribunal but it shows that the other party to whom Invoices were supplied has accepted the demand of fraudulent Cenvat Credit. - The appellant is liable for penalty under Rule 26 (2) for wrongly passing of the credit - AT
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Articles

• Deferred the decision to change the rates in textiles from 5% to 12% w.e.f. January 01, 2022
• CLOSURE OF UNIT BY MEANS OF SETTLEMENT – CLOSURE NOTICE REQUIRED?
• Certain changes in Goods Rate Notification from January 01, 2022 to align it with HS 2022
• Certain changes in the Concessional Rate Notification on specified handicraft items from January 01, 2022 to align it with HS 2022

Notifications

• Customs

• 61/2021 - dated 31-12-2021 - Cus
  Seeks to amend Notification No. 45/2021-Customs, dated the 29th September, 2021

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• 109/2021 - dated 31-12-2021 - Cus (NT)
  Sea Cargo Manifest and Transhipment (Ninth Amendment) Regulations, 2021

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• 108/2021 - dated 31-12-2021 - Cus (NT)
  Seeks to amend the Schedule for Drawback on exports of goods.

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• 107/2021 - dated 31-12-2021 - Cus (NT)
  Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

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• GST

• 22/2021 - dated 31-12-2021 - CGST Rate
  Seeks to supersede notification 15/2021- CT(R) dated 18.11.2021 and amend Notification No 11/2017- CT (Rate) dated 28.06.2017.

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• 21/2021 - dated 31-12-2021 - CGST Rate
  Seeks to supersede notification 14/2021- CT(R) dated 18.11.2021 and amend Notification No 1/2017- CT (Rate) dated 28.06.2017.

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• 22/2021 - dated 31-12-2021 - IGST Rate
  Seeks to supersede notification 15/2021- IT(R) dated 18.11.2021 and amend Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017.

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• 21/2021 - dated 31-12-2021 - IGST Rate
  Seeks to supersede notification 14/2021- IT(R) dated 18.11.2021 and amend Notification No 1/2017- Integrated Tax (Rate) dated 28.06.2017.

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• 22/2021 - dated 31-12-2021 - UTGST Rate
  Seeks to supersede notification 15/2021- UTT(R) and amend Notification No 11/2017- Union territory Tax (Rate) dated 28.06.2017.

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• 21/2021 - dated 31-12-2021 - UTGST Rate
  Seeks to supersede notification 14/2021- UTT(R) and amend Notification No 1/2017- Union territory Tax (Rate) dated 28.06.2017.

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• GST - States

• S. R. O. No. 1020/2021 - dated 31-12-2021 - Kerala SGST
  Corrigendum - Notification No. 132/2021/TAXES dated 21st December, 2021

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• S. R. O. No. 1019/2021 - dated 31-12-2021 - Kerala SGST
  Seeks to bring in force of sub-section (1), sub-section (2), sub-section (6) to (14) of section 8 of the Kerala Finance Act, 2021

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• Income Tax

• 142/2021 - dated 31-12-2021 - IT
  U/s 10(46) of IT Act 1961 - Central Government notifies ‘Bureau of Indian Standards’ in respect of the specified income arising to that Bureau.

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• SEBI

• SEBI/LAD-NRO/GN/2021/61 - dated 31-12-2021 - SEBI
  Securities and Exchange Board of India (Vault Managers) Regulations, 2021

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• G.S.R. 932 (E) - dated 31-12-2021 - SEBI
  Depositories (Procedure for Holding Inquiry and Imposing Penalties) (Amendment) Rules, 2021

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• G.S.R. 931(E) - dated 31-12-2021 - SEBI
  Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties) (Amendment) Rules, 2021

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• G.S.R. 919(E) - dated 31-12-2021 - SEBI
  Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) (Amendment) Rules, 2021

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• SEZ

• S.O. 5479 (E). - dated 30-12-2021 - SEZ
  Central Government de-notifies an area of 0.75 hectare at Plot No. 21, Sector Techzone-IV, Greater Noida, District Gautam Budh Nagar in the State of Uttar Pradesh, thereby making the resultant area as 2.576754 hectares.

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News

• ₹ 1,29,780 crore gross GST Revenue collection for December 2021

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• 5.89 crore Income Tax Returns filed on new e-filing portal of the Income Tax Department as on 31st December, 2021

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• Calendar for Auction of Government of India Treasury Bills (For the Quarter ending March 2022)

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Case Laws:

• GST

• 2022 (1) TMI 51
  Violation of principles of natural justice - Stay on orders staying payment of GST for grant of mining lease/ royalty - HELD THAT:- Since the very issue as to whether GST would be chargeable on minerals on which already royalty has been paid is actively under consideration before a Nine Judges Bench of the Hon'ble Supreme Court, in the present matter, the petitioner has made out a case for interim order. There shall be stay of the show cause notice dated 25.11.2021 issued to the petitioner, which is impugned in the present writ petition.

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• 2022 (1) TMI 50
  Right to appeal - Order was not uploaded on the portal - Refund of unutilized input tax credit - grievance of the writ petitioner arises from the allegation that Ext.P1 order was never uploaded in the web portal of the respondents and hence, the petitioner could not file appeals in the electronic form - Principles of natural justice - HELD THAT:- It is the admitted case of both the petitioner and the respondents that the orders impugned in the appeals, though dated 29.03.2019, were never uploaded in the web portal to enable the petitioner to prefer the electronic filing of appeals, as prescribed. There is no quarrel that the Commissioner has not issued any notification specifying any other form of appeal. However, on the basis of receipt of a copy of the order on 10.04.2019, the petitioner preferred appeals manually only on 09.01.2020, with a delay of 184 days - Thus, after referring to the decision in DEBABRATA MISHRA VERSUS THE COMMISSIONER OF CT AND GST, ADDL. COMMISSIONER, CT AND GST, CT AND GST OFFICER [ 2020 (3) TMI 1204 - ORISSA HIGH COURT] and ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT] the Appellate Authority dismissed the appeals as time-barred. When admittedly there was a failure on the part of the respondents to upload the order in the original, petitioner cannot be mulcted with the responsibility of preferring appeals within the time period stipulated. The time period stipulated in the statute for filing an appeal is part of the same transaction that exists with the uploading of an order in the original - When the mode of appeal prescribed by Rules is only the electronic mode, the time limit of three months can start only when the assessee had the opportunity to file the appeal in the electronic mode. The assessee cannot be blamed if he waited for the order to be uploaded to the web portal, even if he had in the meantime received the physical copy of the order. The petitioner is entitled to have his appeals that were filed manually, to be treated as having been filed within time - Petition allowed.

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• 2022 (1) TMI 49
  Right to appeal - Deemed service of adjudicating order / Non-receipt of the order - whether petitioner was in receipt of the order issued by the first respondent under Section 129(3) of the Act? - HELD THAT:- Section 169 (1)(b) provides for service by registered post with acknowledgement due, while sub-clause (2) creates a deeming fiction as per which every decision or order shall be deemed to have been served on the date on which it is tendered as provided in sub-section (1). When a statute enacts that something shall be deemed to have been done, the Court has a duty to give effect to that fiction. As per the statutory prescription and going by the averments in the counter affidavit as well as the documents produced, it is evident that petitioner can be deemed to have been tendered with the order under Section 129(3) on 03.02.2020. The fiction that is created does not leave any room for doubt and since the tendering of notice is by registered post with acknowledgement due, there is no scope for even assuming that the order was not served on the petitioner - it is found that the order under Section 129(3) of the Act was served on the petitioner on 03.02.2020. Since the petitioner s right to pursue an appeal cannot be curtailed solely on account of non-receipt of an order or loss of an order, if law otherwise permits him to pursue the appeal, then certainly it is incumbent upon the first respondent to issue a certified copy to the petitioner. Petition disposed off.

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• 2022 (1) TMI 48
  Grant of pre-arrest bail - case of applicant is that the applicant raised several contentions in the applications filed by them, however, all the contentions are not dealt with - principles of natural justice - HELD THAT:- Having gone through the material placed on record, it would emerge that by way of filing the present applications, the applicants have tried to re-argue the case on merits. Learned advocate for the applicants has not disputed the fact that in view of the provision of Section 362 of the Code, Criminal Court is not having power to review its own judgment. However, by relying upon the decision rendered by the Hon ble Supreme Court in the case of VISHNU AGARWAL VERSUS STATE OF U.P. AND ORS. [ 2011 (2) TMI 1565 - SUPREME COURT] and order passed by this Court in the case of RASHIDABANU W/O MOHAMMAD ASIF MOHAMMAD HUSEN SINGWALA VERSUS STATE OF GUJARAT [ 2017 (1) TMI 1777 - GUJARAT HIGH COURT] , learned advocate for the applicants has tried to canvas that under certain circumstances, order can be recalled by the Criminal Court. Thus, this Court would first of all like to examine the aforesaid two decisions. In the case of Vishnu Agarwal, an appeal was preferred before the Hon ble Supreme Court against the judgment of Allahabad High Court passed in Criminal Revision Application. When the Criminal Revision Application was listed before the concerned High Court, no one appeared on behalf of the revisionist, though the counsel for the respondents appeared and the concerned High Court passed an order. Subsequently, application was moved for recall of the order alleging that the case was shown in the computer list and not in the main list of the High Court, hence, learned counsel of the revisionist had not noted the case and hence he did not appear. It appears that learned advocate for the applicants has tried to re-argue the case by filing these applications for recalling of the order, which is not permissible. This Court is of the view that by way of filing these applications, applicants have indirectly requested this Court to review its own judgment, which is not permissible. If the aforesaid two decisions, upon which reliance is placed by learned advocate for the applicants, are carefully examined, it is revealed that the order can be recalled under certain circumstances only. In both the aforesaid cases, the orders were passed by the concerned Court in violation of principles of natural justice and therefore on that ground the orders were recalled. In the present case, it is not the case of the applicants that while passing the common judgment dated 14.10.2021, this Court has violated the principles of natural justice - Application dismissed.

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• 2022 (1) TMI 47
  Exemption from GST - composite supply or not - pure services - business of providing accommodation and services - in the course of the business they have supplied the services of boarding and lodging facility for the officials of Greater Hyderabad Municipal Corporation - Sl.No.3 of Notification No.12/2017 - HELD THAT:- Under serial no. 3 of Notification No. 12/2017 pure services provided in relation to any function entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule - Hon ble Supreme Court of India in the case of HH. MAHARAJADHIRAJA MADHAV RAO JIWAJI RAOSCINDIA BAHADUR VERSUS UNION OF INDIA [ 1970 (12) TMI 87 - SUPREME COURT] observed that the expression relating to means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant. By his own admission in the application, the applicant provided accommodation services to GHMC in relation to conduction General Elections to the Legislative Assembly of Telangana State. Thus there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.

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• Income Tax

• 2022 (1) TMI 46
  TDS u/s 195 - disallowance u/s 40(a)(i) on account of professional and consultancy charges to non residents - HELD THAT:- As in the case of CIT vs. NGC Network (India) Pvt. Ltd. [ 2018 (5) TMI 1148 - BOMBAY HIGH COURT] and CIT vs. Western Coalfields Ltd.[ 2010 (10) TMI 1126 - BOMBAY HIGH COURT] the High Court of Bombay held that the person mentioned in Section 195 of the Act cannot be expected to do the impossible, namely, to apply the expanded definition of royalty inserted by Explanation 4 to Section 9(1)(vi) of the Act for the assessment years in question, at a time when such Explanation was not actually and factually in the statute. Therefore, question no.2 stands rejected. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Tribunal considered the correctness of the same and held that the assessing officer neither examined the assessee s account nor recorded satisfaction about the correctness of the claim and that it is incumbent upon the assessing officer to indicate reasons for rejecting the assessee s claim. An alternate contention was also raised before the Tribunal contending that investment made for acquiring controlling interest in their Group concerns and not for income. In support of such contention, the assessee placed reliance on DCIT vs. Selvel Advertising [ 2015 (5) TMI 682 - ITAT KOLKATA] . Before we examine as to whether the alternate contention was required to be considered, we are satisfied that the Tribunal rightly followed the earlier decision of the Tribunal and the disallowance was deleted. That apart, we note that identical issue was raised before this Court in the case of Commissioner of Income Tax vs. REI Agro [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT] , which was dismissed by judgment dated 23rd December, 2013. Thus, we find that the question no.5 has to be decided against the revenue and in favour of the assessee. TDS u/s 194J - HELD THAT:- Tribunal rightly held the amendment to Section 194J was with effect from 1st July, 2012 and the assessment year under consideration being 2008- 09, the same cannot be made applicable. Furthermore, the observations contained in Engineering Analysis Centre of Excellence P. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] would also come in aid of the case of the assessee. Therefore, question no.7 stands rejected. Disallowance u/s 40(a)(i) paid as commission to non residents - Tribunal holding that commissions paid to the foreign agents outside India does not accrue or arise in India had become final.

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• 2022 (1) TMI 45
  Offences u/s 276CC, 276C(1) and 276C(2) - Non-filing of ITR for Second PAN number - main contention of the petitioner is that the prosecution itself has been launched under the wrong premise that the petitioner has not filed his return - HELD THAT:- Admittedly, the issuances of two PAN cards bearing numbers AKKPS7295P and ALIPS4185M is not disputed. Though apply for two PAN cards many not be correct, the fact remains that it is the duty of the Department to verify and issue PAN cards, which has not been done in this case. Be that as it may, a perusal of the records available on record reveals that the petitioner has been repeatedly making request for surrender of second PAN card and finally surrendered the same and also obtained acknowledgment vide letter dated 10.02.2012. Now the prosecution has been launched on the premise that the petitioner has not even paid tax for the Assessment year 2013-14. This Court is of the view that when the petitioner has already surrendered the PAN card bearing No. bearing number ALIPS4185M, the question of initiating prosecution for wilful and deliberate default to furnish return of income tax does not arise and the continuation of prosecution as against the petitioner is a futile exercise and the same is liable to be quashed.

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• 2022 (1) TMI 44
  Disallowance u/s 14A - HELD THAT:- As the facts of the issues involved qua the issue in question remain the same, therefore, in our considered view, going by the principle of of consistency the matter in all fairness requires to be restored to the file of the AO, on the same terms, with direction to redetermine the disallowance u/s 14A of the Act after considering the judgment of the Hon ble Supreme Court in the case of Maxopp Investmnts Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] Before parting, we may however observe that the disallowance determined by the A.O in the course of the set-aside proceedings shall in no way exceed 10% of the amount of dividend income. The Ground of appeal no. 1 is allowed for statistical purpose in terms of our aforesaid observation. Addition of interest on ICD - HELD THAT:- CIT(A) had consistently while disposing off the appeals in the case of the assessee for assessment years 2007-08 and 2013-14, had followed the view that was taken by their predecessor in assessment year 2006-07 and had vacated the additions of the interest income that were made by the A.O on an accrual basis qua the ICD s in question whose recovery had become doubtful. At this stage, we may herein observe, that as stated by the ld. AR, the aforesaid view taken by the CIT(A) in the abovementioned years i.e. A.Y 2006-07 and A.Y 2013-14 had not been assailed any further in appeal by the department, and thus, had attained finality. In the backdrop of the aforesaid facts, we are of the considered view, that now when the department itself had accepted that no addition qua the interest income on accrual basis with respect to the ICD s in question could be made, therefore, we have no hesitation in vacating the addition made by the AO. Addition of Excise Duty Refund - claim of the assessee that as the refund of excise duty was received by it subject to furnishing of bank guarantee for the said sum from a nationalized bank, which was to be kept alive and in full force till the main appeal before the Hon ble Apex Court was finally disposed off, therefore, the receipt of the said refund would not fall within the domain of section 41(1) of the Act, and thus, would not be exigible to tax during the year under consideration - HELD THAT:- The issue in question i.e. receipt of excise duty refund against providing of bank guarantee by the assessee is squarely covered by the judgment of Hon ble High Court of Delhi in the case of CIT vs Bharatpur Nutritional Products Ltd.[ 2012 (3) TMI 319 - DELHI HIGH COURT] wherein involving identical facts, we find, that the Hon ble High Court had observed that furnishing of bank guarantee when the excise duty refund had been received will not make any difference as per clearly worded Section 41(1) - Thus we uphold the order of the CIT(A), who had rightly concluded that the refund of the excise duty was liable to tax during the year under consideration CIT-A Jurisdiction and enhancing the income of the assessee company u/s 94(7) - HELD THAT:- We find that the aforesaid issue in hand is squarely covered by the order of the Hon ble Jurisdictional High Court in the case of Gurinder Mohan Singh Nindrajog [ 2011 (9) TMI 755 - DELHI HIGH COURT] as observed that the CIT(A) has a power of enhancement in respect of such items or items of income which has been dealt with in the body of the order of the assessment, and arose for his consideration as per the grounds of appeal raised before him, being the subject matter of appeal. In sum and substance, it was therein observed that the power of the CIT(A) to enhance the income of the assessee could be validly exercised only qua such item or items of income which had been dealt with by the A.O while framing the assessment and arose for the consideration of the first appellate authority as per the grounds of appeal raised before him. We are of a strong conviction that as the enhancement carried out by the CIT(A) qua the issue of dividend striping u/s 94(7) of the Act was never considered by the AO in the course of assessment, therefore, the CIT (A) was not vested with any jurisdiction to have enhanced the income of the assessee company in exercise of the powers vested with him u/s 251(1)(a) of the Act. We, thus, not being able to persuade ourselves to uphold the enhancement carried out by the CIT(A) qua the issue of dividend striping u/s 94(7). Nature of expenditure - amount paid by the assessee to M/s Vilter Manufacturing Corporation, USA as fee for user of know-how - capital expenditure or revenue expenditure - HELD THAT:- Payment made by the assessee company to M/s Vilter Manufacturing Corporation, USA was for the technical know-how services provided by the latter for facilitating carrying out the ongoing/existing business of manufacturing of refrigeration products by the assessee in a more technically viable and profitable manner, therefore, the same was rightly claimed by the assessee as a revenue expenditure for computing its income for the year under consideration and had wrongly been dubbed as a capital expenditure by the lower authorities. Our aforesaid view i.e where an assessee who is engaged in the business of manufacturing and selling certain products had made a payment to a foreign company for merely acquiring a right to use technical know-how, whereas the ownership and intellectual property rights in the said know-how remained with the foreign company, then, the payment in question would be in the nature of a revenue expenditure, is supported by in the case of CIT Vs. Hero Honda Motors Ltd., [ 2015 (2) TMI 368 - DELHI HIGH COURT] - We, thus, in the backdrop of our aforesaid observations not finding favour with the view taken by the lower authorities wherein they had rejected the assessee s claim for deduction of the payment made for the technical know-how to M/s Vilter Manufacturing Corporation, USA as a revenue expenditure, and had dubbed the same as a capital expenditure, set-aside the order of the CIT(A) and direct the A.O to allow the assessee s claim for deduction of the aforesaid amount of payment as a revenue expenditure.

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• 2022 (1) TMI 43
  Levy of fee u/s 234E - late filing of TDS statements - orders passed u/s 200A - HELD THAT:- The levy of late fee u/s 234E of the Act through an intimation u/s 200A of the Act for the period prior to 01.06.2015 has been decided in favour of the assessee by the judgment of the Hon ble Karnataka High Court in the case of Sri Fatheraj Singhvi v. Union of India Ors.[ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] AO cannot make any adjustment other than one prescribed in section 200A of the Act. Prior to 01.06.2015, there was no enabling provision in section 200A of the Act for making adjustment in respect of statement filed by the assessee with regard to tax deducted at source by levying fees u/s 234E - Parliament for the first time enabled the AO to make adjustment by levying fees u/s 234E of the Act with effect from 01.06.2015. The Hon ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. (supra), has held that adjustment cannot be made by the A.O. for the respective assessment year prior to 01.06.2015. Therefore, for the relevant assessment years, namely, A.Ys 2013-2014, 2014- 2015 and 2015-2016, the levy of tax u/s 234E of the Act is impermissible going by the dictum laid down by the Hon ble jurisdictional High Court in the case of Sri Fateharaj Singhvi v. Union of India Ors. (supra).We deem it appropriate to remit the issue of levy of fee u/s 234E of the Act through intimation u/s 200A of the Act to the file of the CIT(A) (since the CIT(A) has not decided the issue on merits). Appeals filed by the assessee are allowed for statistical purposes.

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• 2022 (1) TMI 42
  Penalty u/s 271(1)(c) - HELD THAT:- As additions on the basis of which penalty has been levied, have already been set aside and issues related to the additions remanded to the file of Ld. CIT(A) for decision afresh, by the Co-ordinate Bench of the Tribunal in Assessee s own quantum Appeal [ 2019 (12) TMI 487 - ITAT DELHI] the penalty under challenge imposed by impugned order, does not survive, consequently impugned order is set aside and the Assessee s appeal is allowed.

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• 2022 (1) TMI 41
  Revision u/s 263 by CIT - applicability of TDS in case of payments of Lorry, charges people different lorry owners - rectification proceedings u/s 154 - HELD THAT:- We note that the Ld.AO made enquiries and accepted the documents filed during the course of scrutiny assessment. The reply dated 23/05/2016 filed by assessee pleased reveals that assessee was called upon to file the payment details and applicability of TDS provisions on such payments made. We find that assessee filed ledger accounts of the lorry owners to whom payments were made along with their PAN numbers and the amount paid. On careful perusal of the amendment carried out from time to time, we note that from 1.10.2009 up to 31.5.2015, TDS was not be deducted from the payments made to the goods transport contractor, if PAN is furnished to the person paying or crediting such sum. It is pertinent to note that the statute does not provide any restriction on the number of goods carriages to be owned by the payee and also there is no condition that the payee should be individual . Before us the year under consideration is assessment year 2014-15, hence the provision as amended by Finance (No.2) Act, 2009 shall apply. Hence position explained hereinabove shall apply. The payer is required to obtain Permanent Account Number only from the payee for paying the charges without deduction of TDS. In the present facts of the case the assessee being an individual had furnished copies of RC card extract of the vehicles owned by such lorry owners and affidavit from all the deductee s mentioning that the total income did not exceed the limit on which TDS is to be deducted for the year under consideration before the Ld.AO. AR had submitted that the errors pointed in the PAN extracted in the notice u/s 263, is mere typing mistake and that the assessee had submitted that the photocopy of the PAN before the Ld.AO as well as Ld.Pr.CIT. Thus by furnishing the PAN details, assessee met with the requirement of the law, in so far as the during assessment. In our view it is a possible view taken by the Ld.AO which cannot be found fault with. The proceedings under section 154 are deemed to be dropped can be founded with the above amendments. The action of Ld.AO cannot be termed as lack of enquiry in the present facts of the case. Thus we quash the impugned order passed under section 263 of the Act. - Decided in favour of assessee.

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• 2022 (1) TMI 39
  Exemption u/s 11 denied - assessee herein has used the registration granted u/s 12AA of the Act to another entity - Two PAN numbers - HELD THAT:- In the present appeal has also been filed by the revenue under new PAN number only. However, it is the case of the assessee that it has surrendered new PAN number before the completion of assessment. Since the AO did not accept the explanations that both PAN numbers belong to same entity (Church), he has passed the assessment order under new PAN number and the present appeal has also been filed under new PAN number. Under these facts, we are of the view that the following action needs to be carried out in order to resolve this controversy. Since the explanations offered by the assessee before Ld CIT(A) as to the necessity of obtaining new PAN number has been accepted by the first appellate authority after carrying out field verification and since the AO has not brought any material on record to controvert the said findings, we are of the view that the AO should accept the fact that both PAN numbers belong to the same assessee. The assessee has claimed that it has surrendered new PAN number. The AO should verify this fact and ensure that the new PAN number is cancelled in the system also. Since the assessee has been granted registration u/s 12AA of the Act under the old PAN number and since the new PAN number has been claimed to have been surrendered, it is appropriate to pass the assessment order under Old PAN number only. Accordingly, the AO may regularize the return filed under new PAN number substituting old PAN number in accordance with the procedure prescribed for dealing with such kind of situation. As noticed earlier that the assessee has filed three returns of income under Old PAN number also. It has filed two returns of income under New PAN number also. Thus, there are five returns in total for the same assessee for the same assessment year. Since all income belonging to the assessee and arising for the same year has to be assessed in a single assessment order, it is necessary for the AO to take cognizance of returns of income filed under Old PAN number also and accordingly pass a single assessment order incorporating income declared in all the returns of income. Assessee has explained that it was constrained to file returns of income under old PAN number in order to get refund of TDS amount. It was also submitted that the relevant interest income has already been offered in the return of income filed under new PAN number. Accordingly, while combining the income declared in all the returns, it has to be ensured that the double assessment of same income should be avoided. The assessee has made adhoc deduction of ₹ 11,50,000/- in the return of income filed to rectify the defect u/s 139(9) of the Act. This adhoc deduction cannot be allowed, since the same is not backed by any material. With regard to building fund, it is the claim of the assessee that it has maintained separate receipts and payments account. In the normal course, it is advisable to incorporate building fund also in the common Balance Sheet. In any case, it is imperative for the assessee to furnish Income and expenditure account and Balance sheet for Building fund along with the return of income, if it has been decided to keep this account in separate books of account. Accordingly, we direct the assessee to furnish the I E a/c and Balance Sheet of Building Fund books to the AO along with audit report relating to the same. We direct the assessee and the AO to carry out above said exercise in order to settle the disputes of the year under consideration. Appeal filed by the revenue is treated as allowed for statistical purposes.

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• 2022 (1) TMI 38
  Disallowance u/s 37(1) expenses towards fees, subscription and payment of services for various clubs such as Karnataka Golf Association, Bangalore Club, the Karnataka Cricket Association Club House - assessee stated that those expenses were incurred for entertaining the guest of the assessee to promote its business - AO did not accept the explanation of the assessee and made the disallowance u/s 37(1) by treating it to be personal in nature - HELD THAT:- In the present case also the assessee has incurred the expenses on account of club membership fees for the employees and to entertain customers. An identical issue the Hon ble Madras High Court in the case of CIT Vs. Sundaram Industries Ltd [ 1999 (4) TMI 50 - MADRAS HIGH COURT] wherein as held that assessee-company had incurred the expenditure wholly and exclusively for the purpose of its business and therefore the expenditure incurred by way of subscription to the club was an allowable expenditure. Also see UNITED GLASS MFG CO. LTD. [ 2012 (9) TMI 914 - SUPREME COURT] wherein held that club membership fees for employees incurred by the assessee is business expense under Section 37 - Decided in favour of assessee.

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• 2022 (1) TMI 37
  Depreciation on assets for which the actual cost as per section 43(1) - Depreciation on demerger - AO has disallowed depreciation on the ground that the assessee had received assets free of cost from the Government of UP - HELD THAT:- As decided in own case [ 2021 (12) TMI 1267 - ITAT DEHRADUN] assets have been transferred from Uttar Pradesh Government (UPJVNL) to Uttaranchal Government (UJVNL). There is no claim of the depreciation twice by both the Governments - demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. Hence, we decline to interfere with the reasoned order of the Ld. CIT (A). - Decided against revenue. Capacity charges, deemed generation charges and capacity index incentive - As decided in assessee's own case [ 2021 (6) TMI 881 - ITAT DEHRADUN] assessee has produced the copy of the Hon ble UERC order dated 27.04.2015 alongwith its revised year wise income of capacity charge, deemed generation charge and capacity index incentive duly agreed by UPCL and UJVNL. A copy of the agreed reconciliation statement between UPCL and UJVNL is also furnished alongwith the copy of bank statement in which the above amount of installment have been received by the UJVNL, in support of its claim, a written explanations have been submitted by the assessee on the issue of capacity charges, capacity index incentive and deemed generation charges is given as mentioned in the body of the order. The assessee has agreed to offer the income earned for the period from F.Y.2004-05 to F.Y.2012-13 under the head capacity charges, deemed generation charge and capacity index incentive to be taxed in F.Y.2015-16 i.e., on receipt basis and has also paid two installments of advance tax after including the capacity charges in the income of the company - we find no merit in the addition made by the AO in the present order of assessment - Decided against revenue.

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• 2022 (1) TMI 36
  Addition u/s 68 - Cash withdrawals made by employees by Bearer Cheque has not been considered for working of peak credit - Assessee had submitted that the cash withdrawn by employees should also be considered as these persons have withdrawn the cash on behalf of the family members and handed over to the concerned member - submission of Ld.AR that the property belongs to the HUF and that assessee proceeded to complete the sale proceeds being a member of HUF - HELD THAT:- Taxability of capital gain on sale of such property has been considered on protective basis in the assessment carried out in case of HUF - deduction has also been claimed u/s. 54 by the HUF. In sofaras the interest income added in the hands of the assessee is concerned, it has been stated that the bank account no. 5023 at Karnataka State Co-operative Apex Bank was mistakenly declared by assessee in the return filed on 27.10.2014. Tax is to be computed in the hands of the right person and in the present facts of the case, the capital gains and interest is to be computed in the hands of the HUF and not hands of the individual as held by the authorities below. As decided in case of ITO vs. Ch. Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT ] under the present Act, the Income Tax Officer has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By right person , we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression wrong person is obviously used as the opposite of the expression right person . Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the Revenue. Accordingly, we remand these issues to the Ld.CIT(A) to be dealt with in accordance with law, without being prejudiced with the view already taken by the authorities below. Accordingly, all the grounds raised by all the assessee in the appeals filed before us stands allowed for statistical purposes.

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• 2022 (1) TMI 35
  Reopening of assessment u/s 147 - deemed dividend addition u/s.2(22)(e) - HELD THAT:- When we peruse the reasons recorded for reopening of assessment in the present case of the assessee as recorded by the Assessing Officer, we find that there is no scope for any hypothetical or any contingency in the given reasoning. The entire reasons have been specifically spelled out by the Assessing Officer and reasons have been recorded without any room for any guess work or surmises. This is not at all the case of any hypothetical situation or the case of any future contingency. In that respect, the decision of the Hon‟ble Jurisdictional High Court is factually not applicable in the present facts and circumstances of the case of the assessee. Therefore, the additional ground raised in appeal by the assessee is dismissed. Even in grounds relating to merits also, as evident from the findings of the Ld. CIT(Appeals), the assessee has not at any stage neither before the Assessing Officer nor before the CIT(Appeals) has explained the commercial expediency of the transaction that as specifically brought out by the findings of the Ld. CIT(Appeals) of her order that assessee has not been able to demonstrate through any cogent or credible evidence that this transaction that he had with the M/s. Hextech Engineering Pvt. Ltd. was commercial in nature. Therefore, the Assessing Officer rightly taxed the same as deemed dividend to the extent of accumulated profit in the hands of the assessee. Even before us also, the assessee was unable to demonstrate through any materials/evidences on record to substantiate the commercial nature of the transaction or expediency involved in the same. In view thereof, we do not find any infirmity with the findings of the Ld. CIT(Appeals) and the same is therefore, upheld. Thus, grounds on merits raised in appeal memo by the assessee are dismissed.

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• 2022 (1) TMI 34
  Disallowance made u/s 80IB - Claim of the assessee was rejected by the A.O. on two reasons as return filled beyond due date of filing of return of income and assessee failed to submit the completion certificate - HELD THAT:- Although there was delay of 27 days on the part of assessee for filing the return of income but audit report was filed by the assessee in time and this fact has not been disputed by the ld. DR. We have further noticed that delayed filing of return of income was within the time limit prescribed u/s 139(4) of the Act which according to us is a sufficient compliance for the purpose of Section 80AC of the Act - See case of Trustee of Tulsidas Gopalji Charitable and Chaleshwar Temple Trust [ 1993 (9) TMI 75 - BOMBAY HIGH COURT ]. The submission of return within time as specified under sub-section (4) of Section 139 has to be taken as sufficient compliance in the provisions of the Act as it was expounded that sub-section (1) and sub-section (4) of Section 139 have to be read together. Thus, keeping in view the above settled provisions of law, we reach to an inevitable conclusion that the return of income so filed by the assessee in the present case within the time specified in sub-section (4) of Section 139 of the Act has to be considered as filed within the time prescribed in sub-section (1) of Section 139 of the Act. Thus, on this ground, no disallowance U/s 80IB of the Act was warranted. Thus, the assessee succeeds on this account. Non-submissions of completion certificate - We found from the record that the approval of the construction of the said project was granted in favour of the assessee on 31/01/2006 i.e. in A.Y. 2006-07 and thus, in this way, the construction ought to have been completed till A.Y. 2011-12. Since the assessee could not place on record the completion certificate, therefore, in absence of the said completion certificate, the claim of the assessee was denied u/s 80IB We found that the ld. CIT(A) under the identical facts and circumstances on the basis of completion certificate of the architect and other circumstantial evidences, allowed the appeal of the assessee by relying upon the decision of case of New High Rise Construction 2017 (3) TMI 1329 - ITAT NAGPUR]. Thus, in our view, as far as the completion of projection is concerned, the issue is no more resintgra as the Revenue in the subsequent assessment year have thus admitted that the project of the assessee in question was completed in 2011 and the assessee had complied with all the conditions of Section 80IB. Thus, considering the totality of facts and circumstances of the case, we restore this issue back to the file of the A.O. with direction to consider architect s certificate and other circumstantial and indirect evidences put forth by the assessee and in case, the assessee fulfills the conditions as laid down by the Coordinate Bench of the Tribunal in the case of New High Rise Construction Vs. ITO (supra) then the A.O. is directed to allow deduction U/s 80IB(10) of the Act. We direct accordingly.

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• 2022 (1) TMI 33
  TDS u/s 195 - disallowance of commission expenses u/s.40(a)(i) for non-deduction of tax at source - HELD THAT:- We hold that the payments made by the assessee to foreign agents are mainly towards marketing services only. Other services rendered by them are in the nature of support services only, which are incidental to the main marketing support services - we hold that these services do not fall under the category of Fee for technical services. Following the decision rendered by the co-ordinate bench in the assessee's own case AY 2010-11 and 2011-12 [ 2019 (7) TMI 865 - ITAT BANGALORE] and also the decision rendered in AY 2013-14 [ 2021 (6) TMI 1081 - KARNATAKA HIGH COURT] in assessee's own case, we hold that no income chargeable in India has accrued in the hands of the foreign agents. Accordingly, we hold that the assessee is not liable to deduct tax at source from the payments made to the foreign agents. Accordingly, we set aside the orders passed by Ld CIT(A) on this issue in all the three years under consideration and direct the AO to delete the disallowance made u/s. 40(a)(i). TP adjustment - transfer pricing adjustment in respect of transactions relating to provision of software services - HELD THAT:- We notice that the co-ordinate bench has directed exclusion of Infosys Ltd., Larsen and Toubro Infotech Ltd. and Persistent Systems Ltd. in the case of SAP Labs India P Ltd [ 2021 (7) TMI 1301 - ITAT BANGALORE] wherein it has followed the decision rendered by another co-ordinate bench in the case of NXP India P Ltd. [ 2020 (5) TMI 86 - ITAT BANGALORE] . Negative working capital - It is the contention of the assessee that the negative working capital should be ignored, since the assessee is a risk free enterprise - A.R placed his reliance on the decision rendered in the case of ACIT vs. e4e Business Solutions India P Ltd. [ 2020 (12) TMI 1255 - ITAT BANGALORE] wherein it has been held that the negative working capital should be ignored, since it artificially increases Arms Length Price. Accordingly, we restore this issue to the file of TPO with the direction to follow the principles laid down in the case of e4e Business solutions India P Ltd. (supra).

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• 2022 (1) TMI 32
  Late payments towards EPF and ESI under section 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT:- Issue decided in favour of assessee as relying on RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [ 2021 (11) TMI 370 - ITAT CHANDIGARH] .

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• 2022 (1) TMI 31
  Assessment against amalgamating company - HELD THAT:- We find the Hon ble Supreme Court in the case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] by following its own order in batch of Civil Appeals, the lead appeal being Spice Infotainment [ 2011 (8) TMI 544 - DELHI HIGH COURT] has held that the assessment in the name of a company which has been amalgamated and dissolved is null and void. Hon ble Supreme Court held the passing of assessment order against the amalgamating company is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B of the Act. In this case, final assessment order has been passed dated 27.03.2021 in the name of Trizetto Services India Private Limited which has ceased to exist as per Scheme of amalgamation w.e.f. 01 April, 2018 and as has been certified by Confirmation order of Scheme of Amalgamation by Regional Director (SR) dated 06.09.2019, Chennai. All these information was intimated by the assessee to the Department vide letter (supra.) at various offices i.e. the office of Assistant Commissioner of Income Tax, Circle-7, Pune dated 1st November, 2019 and also filed at the office of Pr. Commissioner of Income Tax, IT, Pune dated 4th November, 2019. In spite of these efforts by the assessee for properly intimating the department about the amalgamation and regarding the fact that Trizetto Services has been amalgamated with CTS India and has ceased to exist, still the Department had passed the final assessment order in the name of Trizetto Services. Therefore, as held by the Hon ble Supreme Court (supra.), the assessment in the name of a company which has been amalgamated and dissolved has to be declared null and void.

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• 2022 (1) TMI 30
  Unexplained money u/s 69A - assessee had not filed her wealth tax return to substantiate possession of gold jewellery - HELD THAT:- AR could not produce any materials to prove the genuineness of the transaction other than reiterating the submissions made before the Ld. Revenue Authorities. It is apparent from the admission of the seller of jewellery that there was no sale transaction with the assessee. The assessee had also not declared the jewellery before the Revenue earlier by filing wealth tax return. Therefore, we do not find it necessary to interfere with the order of Revenue authorities on this issue. Hence, the ground No.1 raised by the assessee is devoid of merits. Bogus LTCG - disallowance u/s 10(38) - HELD THAT:- The alleged shares were dematerialized in the Demat account of the assessee after eleven months of the purchase which appears to be abnormal. The sale consideration received from sale of share was also after a substantial delay which also raises doubt about the bonafide of the transaction, because as per norms of the Stock Exchange the stockbroker it is required to deliver the security and make payment within 48 hours of settlement of trade by the stock exchange. It was informed by RoC, Mumbai vide letter dated 13/1/2015 that no such transaction had taken place. The purchaser of share from the assessee did not have good credentials and appears to be bogus. The assessee has not furnished any convincing evidence to dispute these findings of the Ld. Revenue Authorities - AR also could not present any cogent materials before us other than the manipulated documents to establish the transaction to be genuine or to counter the theory of preponderances of human probability as enlightened by the Hon ble Supreme Court in the case relied upon by the learned AO (supra). Further it is apparent from the orders of the Ld. Revenue Authorities that the assessee is in the habit of introducing unexplained funds. In this situation, we do not find it necessary to interfere with the order of learned Revenue authorities on this issue Unexplained loan - HELD THAT:- As the facts of the case, it also appears that all the loan creditors were persons of meagre income. It is also apparent that the loan creditors had deposited cash in their accounts and mostly on the very same day they had transferred the same to the assessee s bank account - there were no significant bank transactions in the bank accounts of the loan creditors. Needless to mention that banking transaction alone will not make the transactions to be genuine. From the above it is crystal clear that the creditworthiness of the loan creditors is not established. Further, the proximity between the loan creditors and the assessee is also not established for extending loan to the assessee. On perusing the orders cited by the Ld. AR in page no. 1 to 98 of the paper book, we do not find the facts to be identical to the facts in the case of the assessee and on the other hand the decision cited by the Ld. Revenue Authorities support the case of the Revenue. Therefore, we do not find it necessary to interfere with the orders of the learned Revenue authorities. Appeal of the assessee is dismissed.

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• 2022 (1) TMI 29
  Revision u/s 263 by CIT - assessee denied opportunity of hearing in the present case and that order was passed without considering the reply filed by the assessee - HELD THAT:- Undoubtedly the present proceedings were initiated just 15 days before the expiry of limitation to pass the order u/s. 263 of the Act and the two notices given to the assessee for hearing afforded very short period of time to reply. That the first one given only two days time to reply and the second one four days time - despite the inadequate time given to the assessee to respond, we find that the assessee still managed to file a reply to the Ld. PCIT and even pointed out the reason for not complying with the first notice. But apparently for no reason, his reply was not even considered by the Ld. PCIT when the facts before us clearly demonstrate that they were filed on the ITBA Portal on the specified date and even the PCIT was intimated of the reply filed on the said date. The Revenue has not controverted these facts before us. So for some apparent reason, the PCIT simply chose to ignore the reply filed by the assessee and went ahead to pass the order u/s. 263 of the Act on the very same date, i.e. 23/03/2021. The impugned order, we hold, has not only has been passed in gross violation of the principles of natural justice but is also in violation of the procedure laid down u/s. 263 of the Act which specifically requires the authorities to pass the order u/s. 263 after affording due opportunity of hearing to the assessee and after making such enquiry as is deemed necessary. In the present case, the Ld. PCIT has neither afforded adequate opportunity of hearing to the assessee but by not taking note of the reply, he has not even made necessary enquiries in the present case before passing the impugned order. The order passed, therefore, is in gross violation of the principles of natural justice and in view of the various decisions cited by the ld. counsel for the assessee before us, the only recourse is to set aside the same. We have no hesitation, therefore, in holding that the impugned order passed in the present case is in gross violation of the principles of natural justice having been passed in haste without giving adequate opportunity of hearing to the assessee and without even dealing with and considering reply filed by the assessee and the order, therefore, needs to be set aside.

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• 2022 (1) TMI 28
  Delayed payments of employees contribution to ESI and PF by invoking by the provisions of section 36(1)(va) - Scope of amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(1)(va) of the Act by insertion of Explanation-2, by the Finance Act 2021 - HELD THAT:- This issue has been dealt with and adjudicated by the ITAT in a number of cases, consistently ruling in favour of the assessee, holding that the amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(1)(va) of the Act by insertion of Explanation-2, by the Finance Act 2021 is prospective and the issue otherwise stands decided by the jurisdictional high court in favour of the assessee. See M/S JUPITER AQUA LINES PVT. LTD. VERSUS THE D.C.I.T., CIRCLE-6 (1) , MOHALI. [ 2021 (11) TMI 761 - ITAT CHANDIGARH] . In view of the aforestated decisions of the ITAT, therefore the contention of the Ld. DR before us that the amendment to section 36(1)(va) of the Act is retrospective is dismissed. Also since no facts distinguishing the present cases from those decided by the ITAT have been pointed out by the Ld. DR before us and admittedly the amounts of employees' contribution to ESI and PF stood paid before the due date of filing of return of income, the issue of disallowance on account of delayed payments of employees' contribution to ESI and PF is squarely covered by the aforesaid decisions, following which the disallowance made of ESI/PF employees' contribution u/s. 36(1)(va). - Decided in favour of assessee.

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• 2022 (1) TMI 27
  Delayed payment of ESI and PF by invoking the provisions of section 36 (1) (v) - Revenue disallowed the same in the impugned year by applying the amendment made by Finance Act 2021 to section 36 (1) (va) and 43 B of the Act allowing the claim of such deduction only when paid by due dates specified in their respective Acts, holding the amendment to be applicable on all pending cases post the amendment - HELD THAT:- M/S CRESCENT ROADWAYS PRIVATE LIMITED. [ 2021 (7) TMI 1265 - ITAT HYDERABAD] and INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN LATH VERSUS ADDL. CIT, SPECIAL RANGE-4, NEW DELHI [ 2021 (8) TMI 1235 - ITAT DELHI] consistently holding that the amendment to section 36 (1) (va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively, reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, specifically stating the amendment being applicable in relation to assessment year 2021 - 22 and subsequent years. Therefore the addition, we hold, cannot be made on the strength of the amendment effected by Finance Act 2021 to section 36 (1) (va)/43 B of the Act. Moreover it is an admitted position that the jurisdictional High Court has in various decisions held that employees contribution to ESI PF is allowable if paid by the due date of filing return of income u/s 139 (1) We hold that the claim of employees contribution to ESI and PF as per section 36 (1) (va) of the Act cannot be denied in the impugned year, i. e. 2019 - 20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld. CIT(A) upholding the said disallowance is therefore set aside and the AO is directed to allow the claim of the assessee.

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• 2022 (1) TMI 26
  Exemption u/s 11 - Rejection of application filed for registration u/s 12AA - charitable object u/s 2(15) - activity of holding conferences on new innovations / developments in professional field - HELD THAT:- The main Objects of the applicant trust are to pursuing the medical education to its members and holding free medical camps in various schools in the city for students of these schools with the help and coordination of management - the assessee is pursuing the objects namely medical education and medical relief to the medical students and medical doctors in Malwa Region.The members get the benefit of latest technique, medicines and machinery in the medical world by attending over various conferences on new innovations in the medical field. In the present scenario, now every professional person whether doctor, advocate, or CA will have to remain up to date with new technology where such knowledge is acquired/gained through web conferences which are being held on line through webinars. The submitted that such conferences/webinars are being conducted both free and nominal charges. In our view, the contention of the Ld. AR that the activities of the association of holding conferences etc. amount to charitable activities has merits and therefore, the Ld. CIT(E) was justified inassuming that the assessee society was to be guided by the principles of mutuality and does not bestow upon the society the characters inherent in Charitable Purpose . The Coordinate Bench in the case of Seth Vinod Kumar Somani Charitable Trust, Bathinda [ 2016 (8) TMI 1557 - ITAT AMRITSAR] held that at the time of registration, the Commissioner has to satisfy himself about the objects of trust and genuineness of its activities - we approve the objects of the assessee society as charitable and it s a genuine trust and accordingly, the order under appeal is unsustainable and thus reversed. CIT(E) is directed to grant registration to the appellant forthwith, preferably within one month time of furnishing copy of this order.

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• Customs

• 2022 (1) TMI 25
  Recovery of excess due credit issued from Status Holder Incentive Scrip (SHIS) Scheme - It is contended that once the benefits of the Scheme are utilised, then the Authorities have no power to cancel or impose recovery - application of time limitation - HELD THAT:- The contemplation of limitation is to ensure that the actions must be initiated within a reasonable period of time at all circumstances and prolonged initiation would cause prejudice to the parties. Further limitation is essential to avoid excess exercise of powers and also to minimise unnecessary administrative delay. However, the point of limitation is to be considered by adopting a purposive interpretation of the Statutes and such interpretation must be not only constructive but must ensure the purpose and objects sought to be achieved under the particular Act or Rules. The law expects the offenders/delinquents are prosecuted under law - Limitations contemplated in Statutes are directory on many occasions. Thus, several factual aspects are also to be considered for the purpose of deciding the case on the ground of limitation. Therefore, the Courts cannot adopt an arithmetic procedure of comparing the dates and to quash the orders on the ground of limitation. When it is not a final order, this Court is of an opinion that the Authorities must adjudicate the issues on merits. When the point of adjudication comes, then it is to be placed before the Competent Authorities for effective adjudication and to take a final decision by conducting an enquiry and by affording opportunities to the parties concerned. In view of the fact that the order impugned is passed merely based on the audit objection without conducting any adjudication, this Court is not inclined to made any finding with reference to the merits as well as the other grounds raised with reference to the facts and circumstances of the case. All such facts and circumstances on merits are to be adjudicated based on the original documents, audit objections and other evidences made available by the parties - the order impugned though stated as the recovery order, it is the demand requesting the petitioners to repay the entire duty credit amount availed from the SHIS Scheme. In the order it has been stated that the petitioners are requested to repay their entire due credits availed. Therefore, such a requisition order is to be treated as a demand alone and cannot be construed as final recovery order. The Authority, who issued the demand notice, shall conduct an enquiry by affording an opportunity to the petitioners and decide the issues on merits and in accordance with law, including the legal grounds and the point of limitations raised by the parties. After passing final order by the Original Authority, namely, Additional Director General of Foreign Trade, if at all the petitioners are further aggrieved, then they are at liberty to prefer an appeal to the Director General of Foreign Trade, who is an Appellate Authority for adjudication of the issues. Only after exhausting the line of statutory remedies contemplated, the petitioners have to approach the Court of Law, if any grievance thereafter exist, but not otherwise. The writ petitions stand disposed of.

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• 2022 (1) TMI 24
  Revocation of customs broker license - imposition of penalty - MFDD s are restricted as per DGFT Notification No.35 (RE-2012)/2009-2014 dated 28.02.2013 or ot - It was alleged that the appellant had failed to produce various Authorization letter appointing him as Customs Broker from each import enumerated in the offence notice - opportunity of hearing not provided - cross-examination not done - relied upon documents were not given to the appellant - failure to follow principles of natural justice - HELD THAT:- The appellant had sought cross examination of witnesses of Inquiry Report but the same was not allowed. It was argued that the principles of natural justice has been violated in so far as the relied upon documents have not been given to the appellant moreover, despite repeated request of cross examination of witness, the same was not allowed - It was also argued that charges based on the offence note from Chennai Customs are misplaced as the said matter is sub-judice and is pending before the Tribunal at Chennai. Another ground raised by the appellant is failure of revenue to observe the time limit prescribed under Regulation 17 of the CBLR, 2018. The appellant has particularly relied on the alleged violation of Regulation 17(1), 17(5) 17(7) of CBLR, 2018. It is seen that there are decisions of Tribunal as well as High Courts which hold opposite view. There are decisions of Tribunal as well as High Courts which say that the time limit prescribed under Regulation 17 are mandatory in nature whereas, there are also decisions which hold that the time limit prescribed under Regulation 17 are directory in nature. As the relied upon documents were not given to the appellant and also the cross examination of witnesses was denied we hold that the impugned order has been passed violating principles of natural justice - the matter is remanded to the adjudicating authority for afresh adjudication after providing all relied upon documents as well as cross examination of witness that adjudicating authority wishes to rely upon - Appeal allowed by way of remand

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• Corporate Laws

• 2022 (1) TMI 23
  Validity of Investigation proceedings against the Employee by CID - Investigation was already being conducted by the SFIO - Legality and validity of the criminal proceedings - appropriate forum - prime contention raised in the present petition is whether the investigation can be carried out by the CID, in respect of the offences, alleged to have been committed by the accused petitioner, whereas, she is an employee under the group of companies and whether the investigation of such offences can only be conducted by Serious Fraud Investigation Office (SFIO)? HELD THAT:- Undisputedly, the petitioner, herein, was working as an employee under the informant/Company and her personal conduct as an employee, has been challenged and the prime allegation is that while performing her duty, she has falsified the accounts by forging the documents, misappropriated the money of the informant/ Company and forged large number of documents of the Company, while withdrawing money from the Company s bank account and also received cash amount totaling ₹ 1,14,05,419 etc. etc. The offence alleged to have been committed by the petitioner with conspiracy with other co-employee(s) and accordingly, a case was registered under Sections 120(B)/408/420/467/477AIPC, and all such offences alleged to have been done in personal capacity and none of the offence will come under the purview of Section 447 (fraud) as defined under the Companies Act, 2013. The SFIO undertook the investigation of serious fraud under the Companies Act, 2013 into the affairs of the company as entrusted by the Central Government, not at the behest of a private person. A specific procedure has been laid down under the Companies Act, 2013, for launching prosecution under the Act and how the investigation is to be carried out and SFIO has no role and scope to enquire into the offences committed by an individual under the Company. The object of establishment of SFIO clearly indicates its functions, scope and ambit, which is much broader than inquiry of a private individual. There appears no illegality in registering the case by the CID and the provision under Section 212 (2) of the Companies Act, 2013 (which has already been mentioned above) has not denuded the investigation carried by any other agency, apart from SFIO. As has been contended in the present petition that there being alternative recourse to investigate into the affairs of the Company by the SFIO, the CID has no jurisdiction to try the offence, will hold no good - petition dismissed.

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• 2022 (1) TMI 22
  Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and the National Company Law Tribunal Rules, 2016 - HELD THAT:- The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme, of which sanction is sought under Section 230-232 of the Companies Act of 2013, will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors - upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the report of official liquidator, there appears to be no impediment in sanctioning the present Scheme. Application allowed.

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• 2022 (1) TMI 21
  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:- Taking into consideration the provisions of Section 252(3) of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register and in the interest of all the stakeholders including members of the Company, its employees as well as the revenue and the Applicant itself who seeks restoration of the name of the Company in the register being maintained by Roc. The Registrar of Companies, Chennai is ordered to restore the original status of the Applicant Company viz. M/S. X-Factor (India) Private Limited as if the name of the Company has not been struck off from the Register of Companies with resultant and consequential actions like changing the status of Company from strike off to Active - application allowed.

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• 2022 (1) TMI 20
  Sanction of Scheme of Amalgamation - section 230-232 and Section 61 and 66 of the Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Statutory Auditors of the Transferee Company have examined the Scheme in terms of provisions of Sec. 232 of Companies Act, 2013 and the rules made thereunder and certified that the Accounting treatment is in compliance with the Accounting Standards pertaining to Amalgamation read with Section 133 of the Companies Act, 2013. The Certificate of the Statutory Auditors issued in this regard is filed separately along with the typed set of Application. The scheme is approved - application allowed.

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• 2022 (1) TMI 19
  Seeking restoration of the name of the company in the register maintained by the Registrar of Companies - section 252(3) of the Companies Act, 2013 - HELD THAT:- The appellant-company is in possession of an immovable asset in terms of land registered in its name basing on which it is seeking restoration of its name in the register of the Registrar of Companies - reliance placed in the judgment of the hon'ble High Court of Guwahati in the matter of FELPACT PRIVATE LIMITED, ANANDA CHANDRA SHARMA VERSUS THE REGISTRAR OF COMPANIES, SHRI BHUPENDRA NATH, SMTI. SUCHITRA CHAKRABORTY, SMTI. HIRAMOTI DEVI, SMTI. SUKRITY BHAGWATI, SMTI. PRABHATY SARMA, SHRI SATYA NATH SARMA, SRI SAMBHU CHARAN BARMAN [ 2017 (6) TMI 1338 - GAUHATI HIGH COURT ] where it was held that The ownership of such a big estate is indicative of the fact that if there is no owner of any land, there is every likelihood of the said land will waste away by encroachment or otherwise or it will become a den for anti-social activities. It would be just and fair to allow restoration of the name of the appellant-company in the register of the Registrar of Companies - the appeal is allowed subject to payment of costs of ₹ 25,000 only to the Prime Minister's Relief Fund as ₹ 25,000 as to the Ministry of Corporate Affairs (MCA), the proof of which will be furnished by the appellant with the Court Officer/Registry of this Tribunal within 7 days.

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• 2022 (1) TMI 18
  Sanction of scheme of arrangement and amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the scheme appears to be fair and reasonable and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, petition is made absolute in terms of prayer clause of the company petition. The transferor companies are ordered to be dissolved without winding up. Application allowed.

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• Insolvency & Bankruptcy

• 2022 (1) TMI 17
  Seeking for relinquishment of security interest and making the assets part of the Liquidation Estate - non-compliance of Regulation 21A(2) of IBBI (Liquidation Process) Regulation, 2016 - HELD THAT:- From the reading of the provisions contained in regulation 21A(2) of Liquidation Process Regulations, it is very clear that the secured Creditor is required to realize the security interest within stipulated time as prescribed in the regulation and in case, the secured creditor fails to comply with the sub-regulation (2) then as per sub-regulation (3) of 21A of liquidation process regulation the asset, which is subject to security interest, shall become the part of the liquidation estate. In the present case, the respondent has failed to comply with the sub-regulation (2), therefore, as per sub-regulation 3 of regulation 21 A, the asset shall become the part of the liquidation estate. Hence, the respondent is directed to immediately handover the possession of the aforesaid asset to the liquidator - Application allowed.

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• 2022 (1) TMI 16
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- As per Form V, Part IV, the Corporate Debtor is liable to pay an outstanding sum of ₹ 11,51,154/-. The date of default is 01.07.2019 and the present application was filed on 26.12.2019, hence the debt is not time barred and the application is filed within the period of limitation - The Applicant has filed an affidavit under section 9(3)(b) dated 18.12.2019 affirming that no notice of dispute has been given by the corporate debtor relating to dispute of the unpaid operational debt. The present application is complete and the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. The present application is admitted, in terms of section 9 (5) of IBC, 2016 - Applicationa dmitted - moratorium declared.

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• 2022 (1) TMI 15
  Proceedings against the Suspended Directors - Failure to handover books of accounts and documents to the RP - Seeking permission to withdraw the application with a liberty to file a separate application under Section 43 66 of IBC - HELD THAT:- The present application is filed under Section 19(2) by the Resolution Professional, admittedly, the respondent nos. 1 and 2 are the Suspended Directors of the Corporate Debtors and who had been managing the affairs of the Company before the CIRP was initiated. The respondent no. 1 cannot be escaped from its liability, by shifting the responsibility solely on the respondent no. 2. Since, both the respondents were the directors of the Company prior to the initiation of the CIRP, therefore, they are supposed to hand over the documents and furnish the information as required by the RP. Since both of them have failed to furnish the information as required under the law, therefore the RP is directed to institute a criminal case against both the Suspended Board of Directors under Section 70 of the IBC along with the other relevant Sections of the law - Application disposed off.

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• 2022 (1) TMI 14
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - amount claimed to be in default in relation to 9,870 secured non-convertible debentures (NCDs) - existence of debt and dispute or not - HELD THAT:- Total amount of debt is ₹ 1417,80,51,298 and default occurred on 13.10.2019. This petition has proved the existence of debt and default to meet the requirements of section 7 of the Code. The total amount in default is in excess of limit prescribed under section 4 of the Code, which at present is Rupees one crore. This petition is filed on 02.12.2021 Thus, the present petition is not hit by limitation. This is a fit case for initiation proceedings under section 227 read with section 239(2)(zk) of the Insolvency and Bankruptcy Code, 2016 read with Rule 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 and the debt in question qualifies as financial debt under section 5(8)(c) read with section 3(11) of the Code - The Petition filed by the Reserve Bank of India is thus complete in all respects as required by law. It clearly shows that the Respondent/FSP is in default of a debt due and payable and the default is more than the minimum amount as stipulated under section 4(1) of the Code. The default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.

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• PMLA

• 2022 (1) TMI 13
  Money Laundering - Provisional Attachment order - approval of a Resolution Plan with an order approving liquidation under Section 33 when the plain language of Section 32A(2) of the IBC - HELD THAT:- List on 24th January, 2022 for hearing.

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• 2022 (1) TMI 12
  Seeking grant of bail - money laundering - proceeds of crime - bail sought on the ground that wife of accused was slipped in bathroom and was seriously injured - HELD THAT:- It has to be noted that the temporary bail is prayed on humane ground. Situation mentioned in the application indicates that, applicant is in jail since 23.01.2021. His bail application was rejected. He has two children, son and daughter. Son is aged 16 year and daughter is aged 11 year. There is no to look after them as their mother is admitted in the hospital. Acquaintances, who shifted her to the hospital have certain limitations and this fact cannot be ignored. Apart from this, it has to be noted that, in other offences for example offence against human body, family members of accused involved in offences against human body know well the background, conduct of the person accused and consequences of his act. However, economic offences are product of wise brains and accused persons involved therein are generally highly educated and qualified. The situation mentioned in the application has to be considered with humane approach. There is no one except two children, in the family of the accused, to look after their mother. Whatever medical papers forwarded by Dr. Umesh Shetty have no history like issuing fake medical certificates to the accused and their families for getting bail from the Court. When there is no history as such and Dr. Umesh Shetty is well known Orthopedic Surgeon in Mumbai, his opinion cannot be discarded by completely disbelieving him. Therefore, the impact on the children and genuine need of their father to cope up with the same is an ardent need which is reflecting from the application and medical papers. Application is allowed as a first and last chance that, no further application on such ground or other, will be entertained or even for continuation of temporary liberty will be entertained after the lapse of period directed in this order.

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• Central Excise

• 2022 (1) TMI 11
  Imposition of penalty under Rule 26 (2) of CER - availment of irregular CENVAT Credit - invoices without actual receipt of inputs - HELD THAT:- The entire case was made out on the basis of the vehicles which were shown to have transported the goods were not capable to transport such bulky goods. The appellant s defense on this is that there is a clerical error in mentioning the vehicle no.; that instead of GJ 2V 5889, dispatch clerk wrote the vehicle no. as GJ 2Y 5889. Similarly instead of GJ 18U 1999, it should be GJ 8U 1999. There is no corroboration to this submission of the appellant that whether the goods were transported through the vehicle claimed by them. Therefore, this defense of the appellant is of no help to them. It is also a fact on record that M/s Nisha Industries who had availed the Cenvat Credit against the demand of Cenvat Credit amount, they had opted for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Though the opting of SVLDRS should not have any bearing on the other cases who are contesting before this Tribunal but it shows that M/s Nisha Industries has accepted the demand of fraudulent Cenvat Credit. The appellant is liable for penalty under Rule 26 (2) for wrongly passing of the credit - penalty imposed is maximum amount which is provided in the Rule 26 (2) (ii) - the appellant deserve some leniency on the quantum of penalty - penalty reduced from ₹ 12,94,547/- to ₹ 5,00,000/-. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2022 (1) TMI 10
  Forfeiture of excess TDS - Section 22(3-A) read with Rule 18 (3) (b) of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT:- The Court, for the present, is not inclined to interfere, primarily on account of the factual aspects which, in the considered opinion of the Court, Appellate the Deputy Commissioner (CT), Tirupathi is more equipped to go into as it would require going through documents and even taking of evidence. Moreover, since the statute itself provides for an appellate forum, the same is meant for giving opportunity to the aggrieved person to have departmental remedy before invoking jurisdiction of the Court and the Court would, thus, not short circuit such statutory forums. The writ petition is disposed of observing that the petitioner, if so advised, may avail the remedy available to it by filing an appeal before the Appellate Deputy Commissioner (CT), Tirupathi.

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• Indian Laws

• 2022 (1) TMI 9
  Dishonor of cheque - incomplete signatures - primary ground that has been urged by the petitioners is that the complaint and the order of issuing process is not legally tenable as the dishonor of cheque due to mismatch of signatures or incomplete signatures does not constitute an offence under Section 138 of the NI Act - HELD THAT:- It is clear that an offence under Section 138 of the NI Act is constituted when a cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge of any debt, is returned by the bank unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank. At first blush, it appears that it is only in two situations that Section 138 of the NI Act is attracted, firstly when there are insufficient funds available in the bank account of the person who is drawing the cheque and secondly where it exceeds the arrangement. In VINOD TANNA ANR. VERSUS ZAHEER SIDDIQUI ORS. [ 2001 (9) TMI 1078 - SUPREME COURT] , the Supreme Court, while dealing with a case where the cheque drawn by the accused was not been honoured by the bank on account of drawer s signatures being incomplete, held that dishonour of cheque for the aforesaid reason would not constitute an offence under Section 138 of the NI Act and, accordingly, the criminal proceedings against the accused were quashed. The aforesaid decision of the Supreme Court came up for consideration before the same Court in the case of Laxmi Dyechem vs. State of Gujarat and others, [ 2012 (12) TMI 106 - SUPREME COURT] . The Supreme Court in the aforesaid decision did not follow the ratio laid down in Vinod Tanna s case [ 2001 (9) TMI 1078 - SUPREME COURT] ,. - The Supreme Court on the basis of the aforesaid observations and the ratio, while dealing with a case in which the cheques were dishonoured by the bank on the ground that drawer s signatures were incomplete and that no image was found or that the signatures did not match, came to the conclusion that criminal prosecution against the accused in such cases should be allowed to proceed and the judgment and orders passed by the High Court quashing the criminal proceedings were set aside. Both the judgments of the Supreme Court in Vinod Tanna s case as well as in Laxmi Dyechem s case (supra) have been rendered by the Benches of co-equivalent strength. The judgment rendered in Laxmi Dyechem s case is latest in point of time, wherein the ratio laid down in Vinod Tanna s case has been termed as per incuriam. Therefore, as per law of precedents, the ratio laid down in Laxmi Dyechem s case has to be followed. Accordingly, as per the ratio laid down in Laxmi Dyechem s case, the contention of the petitioners that in the instant case offence under Section 138 of the NI Act is not constituted because the cheques were dishonoured on account of incomplete signatures and not for the reason of insufficiency of funds or exceeding the arrangement, deserves to be rejected. The trial court is directed to proceed further in the matter in accordance with law. - The petition (of the accused) is found to be devoid of merit and the same is dismissed.

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• 2022 (1) TMI 8
  Dishonor of Cheque - rebuttal of presumption under Section 118 of the Negotiable Instruments Act - appellant had pleaded and proved that there was material alteration in the suit pronote - failure to note that a materially altered Negotiable Instrument was void under Section 87 of the Negotiable Instruments Act - HELD THAT:- Here, it is the case of the plaintiff that the defendant himself written the word '₹ 40,000/-' in the pro-note. Further in respect of the same, while at the time the defendant gave evidence as D.W.1, he himself admitted that the word '4' was written by him in the pro-note. After admitting, now without any substantial evidence, arguing before this Court that the suit pro-note was materially altered, cannot be accepted. During the time of transaction the defendant was a contractor in Municipality, so, naturally he would have the wide knowledge in respect of the instrument and also he knows the value of his signature - Hence, being the reason that the defendant admits the signature found in the pro-note is his signature under Section 20 of the Negotiable Instruments Act, it was understand that the defendant gave authority to the plaintiff to fill up the same as a complete Negotiable Instrument. Before the trial Court the factum of material alteration is not proved and accordingly, in order to rebut the presumption raised under Section 118 of the Negotiable Instruments Act, the defendant has not produced any relevant evidence to show that the suit pro-note is not upon due consideration. Though it was contended on the side of the defendant that the alleged transaction is a loan transaction, in order to prove the same he has not produced the substantial evidence. Therefore, the substantial Questions of Law raised are answered in favour of the respondent. Appeal dismissed.

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• 2022 (1) TMI 7
  Dishonor of Cheque - Compromise entered into between parties - Sections 138/142 of the Negotiable Instruments Act, 1881 - HELD THAT:- The petitioner was convicted vide judgment dated 02.06.2017 under Section 138 of the Act of 1881 and was sentenced to under rigorous imprisonment for a period of one year and had also been directed to pay compensation to the tune of ₹ 75,000/-. An appeal against the same was dismissed for want of prosecution by the Additional Sessions Judge, Karnal. In the present Criminal Revision, an application has been moved for compounding of offence under Section 320 read with Section 482 of Cr.P.C. and affidavit of respondent No.1 has also been annexed. A perusal of the said affidavit would show that the complainant had submitted that the matter has been compromised and she has no objection in case, the petitioner is granted bail and the matter is closed. Both the counsels have jointly submitted that the said compromise is genuine and bona fide. Keeping in view the facts and circumstances, judgment of conviction dated 02.06.2017 and order on quantum of sentence dated 03.06.2017 passed by the Judicial Magistrate Ist Class, Assandh, as well as the judgment dated 03.03.2020 passed by the Additional Sessions Judge, Karnal are set aside and the present criminal revision petition is allowed in terms of the compromise and the same would be subject to the petitioner depositing an amount of ₹ 11,250/- within a period of one month from today with the High Court Lawyers' Welfare Fund. The criminal revision is dismissed.

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• 2022 (1) TMI 6
  Dishonor of Cheque - legally enforceable debt or not - compensation amount received by the Respondent is a security substituted in the place of the original mortgage property as contemplated under Section 73 of Transfer of Property Act - HELD THAT:- The borrowal of the loan of ₹ 2,00,95,000/- is not in dispute. Similarly, prior to the Notification under Section 6 of the Land Acquisition Act, the property has been mortgaged in favour of the Respondent is also not in dispute. The fact remains that the property has been acquired, acquisition also put in challenge in a writ petition, which is also not disputed. The Respondent being a secured creditor was paid a compensation amount of ₹ 56,14,840/-. Much emphasis have been made by the learned counsel for the Petitioner that as the acquired property Compensation has already been paid and cheque issued towards the such loan is not enforceable and there is no legal enforceable debt. In SUNDARAM FINANCE LTD. VERSUS THE STATE OF KERALA AND ANOTHER [ 1965 (11) TMI 123 - SUPREME COURT] the Apex Court has held that the intention of the appellants in obtaining the hire-purchase and the allied agreement was to secure the return of loans advanced to their customers, and no real sale of the vehicle was intended by the customer to the appellants. The transactions were merely financing transactions. The mortgagee certainly recover for remaining amount also other then the compensation amount. Therefore, merely because compensation withdrawn and challenge has not made to refer the matter to the Land Acquisition Tribunal, it cannot be said that the entire proceeding has been discharged. The substantive provision of Transfer of Property Act as the mortgage has already executed, though its validity is questioned before this Court, this Court cannot make a roving enquiry. Therefore, this Court cannot go into the merits whether there is legally enforceable debt or not, it has to be discharged only by the accused before the trial Court - petition dismissed.

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• 2022 (1) TMI 5
  Dishonor of Cheque - insufficient fund - preponderance of probabilities - failure to substantiate that the demand notice was served upon the accused within statutory period of 30 days - complainant also had failed to establish that she had any enforceable debt to the accused - acquittal of the accused - HELD THAT:- Firstly, after going through the demand notice dated 02.03.2015, it transpires that learned Advocate on instruction of the complainant had written that she submitted the cheque on 12.01.2015 for encashment, but, on the same date, the banker of the accused had issued a returned Memo stating inter alia that as the fund was insufficient, the cheque was returned back. In the said demand notice, the complainant did not state that she was out of station at the relevant point of time. The complainant is found to be very categorical in her statement that on the same date i.e. on 12.01.2015 when she deposited the cheque to her banker, on the same day, she came to learn about the dishonour of the said cheque. In such circumstance, in my opinion, the complainant ought to have established the fact that she was out of station at the relevant point of time and she returned back on 31.01.2015. But, it is noticed that she has not adduced any such evidence in order to prove her absence during that period and staying her at a place other than that of her permanent residence at Agartala and she received the information about the dishonour of cheque only on 31.01.2015. One more striking point is that, usually, after receipt of the returned Memo intimating the dishonour of cheque, the banker would intimate the person who deposits the cheque for encashment, but, the complainant has not brought on record the said intimation given by her banker i.e. SBI, the reason best known to her. It is also surfaced in her cross-examination that she has categorically stated that it is a fact that I have no business relation with the accused. In view of such statements made by the complainant at the time of her cross-examination, there was obvious reason for the trial court to come to a finding that the complainant has failed to establish her case that she had any business relation with the accused - it is settled proposition of law that for rebutting the fact that might lead to the presumption under Section 139 of the N.I. Act, the standard of proof is of preponderance of probabilities, which the accused in the present case has been able to rebut. The instant appeal stands dismissed.

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• 2022 (1) TMI 4
  Dishonor of Cheque - whether the provisions of Section 143-A of the Act are prospective in operation and same can be applied to the proceedings, which were pending adjudication prior to introduction of the aforesaid provision in the statute books? - HELD THAT:- It is quite apparent that if any, in terms of Section 143-A can only be granted in the cases, which came to be instituted after introduction of Section 143 in the Statute Book - Since in the case at hand, complainant instituted complaint under Section 138 of the Act, prior to 1.9.2018, by which time, amended Act had come into operation, order passed by the learned trial court, directing the accused to pay interim compensation, cannot be held to be valid. Petition allowed.

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• 2022 (1) TMI 3
  Dishonor of Cheque - quantum of conviction - payment of compensation to victim - HELD THAT:- Section 148 of the NI Act has been introduced through an amendment w.e.f. 01.09.2018 wherein it is stipulated that the Appellate Court may order the appellant to deposit such amount which shall be a minimum of 20% of the fine or compensation awarded by the trial Court. It is further provided that the amount payable under this Section would be in addition to any interim compensation paid by the appellant under Section 143A of the NI Act. The petitioner had preferred an appeal against the quantum of conviction and the Appellate Court in the order dated 24.02.2020, while suspending the sentence of the appellant, did not direct the petitioner (appellant therein) to pay any amount in terms of Section 148 of the NI Act by misreading the judgment of the trial Court convicting the petitioner and directing him to pay the cheque amount. The direction issued by the trial Court to pay the cheque amount, could not in any manner be construed that no compensation had been awarded. The Supreme Court in the case of SURINDER SINGH DESWAL @ COL. S.S. DESWAL AND OTHERS VERSUS VIRENDER GANDHI [ 2019 (5) TMI 1626 - SUPREME COURT] as well as in the case of G.J. RAJA VERSUS TEJRAJ SURANA [ 2019 (8) TMI 91 - SUPREME COURT] had granted four weeks' further time to the appellants therein to make the payment. There are no infirmity in the order passed by the Appellate Court directing the petitioner to pay 25% of the compensation amount and therefore, the petition stands dismissed.

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• 2022 (1) TMI 2
  Dishonor of Cheque - rebuttal of presumption - Recovery of money from the defendant - It is alleged that suit pronotes have been fabricated in the name of the defendant - HELD THAT:- Admittedly, in the written statement the defendant nowhere averred that the signature in the suit promissory note is not that of her. It is impliedly admitted that the suit promissory notes were executed by the defendant, but as blank promissory notes. Since the defendant admitted the execution of promissory notes, it give raise to presumption that consideration has been passed to the defendant as written in the suit pronote, as per Section 118 of the Negotiable Instruments Act. It is clear that P.W.1 had not admitted that he had no means to lend money. Further, there is no pleading regarding the means of the plaintiff to lend money and further suggestion was also not put to the plaintiff whether he had no means to lend money. The question regarding why 3 pronotes executed on the same date and the suit was filed at the fag end of the limitation were ever suggested during cross examination on P.W.1 and that aspect was also not pleaded in the written statement. Further the defendant had not attempted to produce and mark the complaint given by the Muthuveerapan against the defendant and her husband - as per Section 118 of the Negotiable Instruments Act, it has not been satisfactorily rebutted by the defendant proved that the pronotes have been executed by the defendant for the consideration mentioned in the pronotes. Therefore, this Court is of the considered view that execution of Ex.A1 to Ex.A3 promissory notes by the defendant had also been proved by the plaintiff and hence, the same has been executed by the defendant. This Court, after careful perusal of the materials available on record, especially, evidence led on record by the plaintiff, finds no error in the Judgments and Decrees passed by the Courts below and as such, there is no occasion for this Court to interfere in the well reasoned Judgment. The present appeal fails and is dismissed.

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• 2022 (1) TMI 1
  Commission of unfair labour practice within the meaning of Item 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 - HELD THAT:- It has been found by the learned Single Judge that the settlements from 24.01.1962 to 27.07.1999 which are at Exhibits 53 to 59 were entered into between the Federation and the Management under Section 2(p) read with Section 18(1) of the Act of 1947. Under these settlements a need was expressed by the Management for restructuring and re-organization of its activities in a phased manner. Initially the sales depots were closed and the sales system was replaced by the system of acquiring and forwarding agents and re-distribution of stockists. The number of Area Sales Offices/Branch Offices were reduced to five. Nagpur Area Sales Office was also closed down and the entire accounting work was agreed to be carried out from the Regional/Branch Office at Mumbai. As a result of re-organization of Company s activities option was given to the employees to either opt for voluntary retirement or to agree for re-deployment. There was no evidence found on record to hold that the Regional Accounts Office, Nagpur formed part and parcel of the manufacturing process undertaken by various factories. It is on this basis that it was concluded that there was no material on record to satisfy the test of functional integrality, interdependence and componential relationship between the Regional Accounts Office and the various factories. On this basis it has been held that the provisions of Section 25-O(1) of the Act of 1947 were not attracted. The closure was governed by the provisions of Section 25FFF and that course had been duly followed. Once it is found that the closure of the Regional Accounts Office at Nagpur was pursuant to the settlements between the Federation and the Management the proviso to Section 9A would stand attracted. As per the said proviso, no notice of change would be required to be given if such change is effected pursuant to any settlement or award - On the factum of closure being established there would be no occasion to hold that such closure amounted to alteration of the conditions of service. Admittedly, the provisions of Item I of Schedule IV to the Act of 1971 had not been invoked and thus the Industrial Court was competent to entertain the same. The substantive claim made in the complaint was with regard to the illegal closure of the RAO at Nagpur on the premise that it was in breach of the settlements between the parties and hence the provisions of Item 9 of Schedule IV to the Act of 1971 were rightly invoked by the Union. On a re-consideration of the material on record in the context of the findings arrived at by the learned Single Judge that the learned Single Judge was legally justified in setting aside the judgment passed by the Industrial Court. The closure of the Regional Accounts Office at Nagpur being pursuant to various settlements, the notice dated 05.01.2001 given to that effect did not result in constituting an unfair labour practice - the interim orders as passed have resulted in meeting the ends of justice especially when the Management as a policy matter has decided not to agitate this aspect. Petition allowed.

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