TMI Tax Updates - e-Newsletter
January 30, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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GST:
Recovery of erroneous refund of IGST - Refund of the unutilized Input Tax Credit against Export of goods - Applicability of circular dated 4th September 2018, more particularly, the para 3.2 therein with retrospective effect - Notices issued - HC
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Income Tax:
Revision u/s 263 - in the fact situation of the case there was no bar in invoking the powers u/s 263 - The income of the assessee from staffing, which was not an income from export of computer software was also allowed by the Assessing Officer without any application of mind and without any enquiry. - HC
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Income Tax:
Capital Gain (LTCG) or Business income - the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing them into smaller sites. The dates of acquisition of the property and its conversion into sites and obtaining approval and the dates of sale by the Assessee all go to show his intention at the time of acquisition was not with a view to indulge in an adventure in the nature of trade - AT
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Income Tax:
Nature of expenditure - expenditure incurred for development of a new product including knowhow - Thus expenditure incurred by the assessee being technical consultancy charges, purchase of raw materials, advertisement charges and electricity charges are in the nature of revenue expenditure, which does not give any enduring benefit to the assessee and hence, same cannot be treated as capital expenditure. - AT
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Income Tax:
Exemption u/s 11 - AO rejected accumulation of income u/s.12AA - on perusal of facts available on record, clause 4k of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated u/s.11(2) is covered under main objects of the trust. - AO as well as learned CIT(A) has erred in denying benefit of accumulation of income u/s.11(2) of the Act. - AT
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Income Tax:
Addition u/s 68 - share premium money - the assessee has discharged the onus cast upon it by filing the necessary documents before the AO as well as CIT(A). Moreover in absence of cross examination of the persons whose statements were relied by the AO, the addition can not be made in view of the fact that specific prayers to the AO to this effect were made before the AO. - Additions to be deleted - AT
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Income Tax:
Disallowance of proportionate interest on capital advances provided by the assessee - contentions of the Ld. AR are that, the advances does not pertains to sister concerns but the balance with government authorities - the advances disclosed in the financial statements are with the statutory authorities and the action of the A.O. to disallow proportionate interest considering such advances is not acceptable. - AT
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Customs:
Levy of Penalty - retracted statement - the admissibility of the statement recorded under Section 108 of the Act from the appellant on 11.03.1998, was considered by the Tribunal and it was held that the said statement is admissible and the belated retraction was rightly rejected by the Adjudicating Authority. Furthermore, the Tribunal found, on facts, that the role of the appellant has been clearly brought out by the fact that the appellant was present in the godown, at the time of search, when the officers detected the concealment of the sandalwood along with the Mangalore Roofing Tiles. - Levy of penalty confirmed - HC
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Customs:
Entitlement of Refund without challenging the order of assessment which has attained finality - it is evident that a person is not entitled to claim refund of duty without challenging an order of assessment. In the facts of the case, there is no material placed on record to show that there is any challenge made to the assessment order. - HC
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Customs:
Inadvertent mistake in self-assessed Bills of Entry - Seeking Direction to the respondents to reassess the customs duty - Correction of Customs Tarrif Heading (CTH) - section 154 permits correction of any clerical or arithmetical mistakes in any decision or order or of errors arising therein due to any incidental slip or omission. Such correction may be made at any time. - Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. - The petitioner has made out a case for issuance of a direction to the respondents for correction of the mistake or error in classification of the goods from CTH '85176990' to '85176930' and thereby for amendment of the Bills of Entry. - HC
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IBC:
SeekingDirection to Respondent to permit the Professionals of the Corporate Debtor/ Applicant to attend the meetings of Committee of Creditors - This Tribunal is of the view that by allowing the Advocate/ CA/ Company Secretary of the Corporate Debtor no purpose will be served. The Corporate Debtor itself is sufficient to provide any of the documents/papers/details sought by the Resolution Professional during the proceedings. - Tri
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Service Tax:
CENVAT Credit - Reinsurance services obtained directly from the Indian reinsurers - even after the amendment of the definition of ‘input service’ in rule 2(l) of the CENVAT Rule w.e.f. April 01, 2011, the appellant would be eligible to avail CENVAT credit on both the aforesaid reinsurance services- AT
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Central Excise:
Recovery of erroneous Refund with interest - The argument of the department that there was delay on the part of the respondent to furnish details with regard to modvat credit and therefore the delay has occurred due to the negligence on the part of the respondent is not tenable. If there was undue delay on the part of respondent, the department could have rejected the refund claim for this reason - the respondent is eligible for interest under Section 11BB - AT
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VAT:
Validity of assessment order - recovery of arrears of tax and penalty - The pre-assessment notice was received by the dealer, the order of assessment was communicated to the dealer in the manner known to law. Further, the stand taken by the dealer that they are not carrying on business was found to be false, as could be seen from the inspection report submitted by the Assessing Officer - Writ appeal dismissed - HC
Articles
Notifications
Circulars / Instructions / Orders
News
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Text of PM Modi's remarks ahead of the Budget Session in Parliament
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Monthly Review of Accounts of Union Government of India upto the month of December, 2020 for the Financial Year 2020-21
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Summary of Economic Survey-2020-21
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Key Highlights of Economic Survey 2020-21
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India’s Response to Covid-19 based on Epidemiological and Economic research, Especially those Pertaining to the Spanish FLU : Economic Survey
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Economic Survey Strongly recommends increase in public health spending from 1% to 2.5-3% of GDP
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Key Finding of Economic Survey 2020-21 Reveals Strong Positive Impact of PMJAY on Health Outcomes
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Online Schooling has taken off in a big way during COVID-19 pandemic: Economic Survey 2020-21
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Years 2019 & 2020 are Landmark Years in History of Labour Reforms; 29 Central Labour Laws Amalgamated, Rationalized and Simplified into Four Labour Codes
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India must continue to focus on Economic Growth to Alleviate Poverty: Economic Survey 2020-21
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Combined Social Sector Expenditure by Centre and States as Per Cent of GDP has Increased in 2020-21 Compared to Previous Year
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Indian Agriculture contributes to green shoots of the Indian Economy with a Growth Rate of 3.4 Per Cent Despite COVID-19 Pandemic
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Access to “The Bare Necessities” Such as Housing, Water, Sanitation, Electricity and Clean Cooking Fuel are a Sine Qua Non to live a Decent Life: Economic Survey
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India’s Sovereign Credit Ratings do not capture its Fundamentals: Economic Survey
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Improved Monetary Policy Transmission; Repo Rate cut by 115 BPS
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Fiscal Policy response in line with Aatma Nirbhar Bharat
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Economic Survey says Going Forward, as Food Inflation Eases Further, Overall Inflation is Expected to Moderate
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India’s Merchandise Trade Deficit contracts this Fiscal
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Economic Survey Calls for A more Active, Counter-Cyclical Fiscal Policy to Boost Growth
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India needs greater thrust on innovation to become the third largest Economy, especially from the private sector
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Asset Quality Review Exercise Must be Conducted Immediately After Forbearance is with Drawn: Suggests Economic Survey
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Economic Survey calls for simplification of regulations and process reforms
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Key Service Indicators Showing a ‘V’ Shaped Recovery after a sharp decline during Lockdown
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A Strong V-Shaped Recovery of Economic Activity Confirmed in the IIP Data
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A Strong V-Shaped Recovery of Economic Activity
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Sustainable Development Core to India’s Development Strategy; Substantive Economic Stimulus and Wide Ranging Economic Reform to Drive the same: Economic Survey
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NCAVES India Forum 2021
Case Laws:
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GST
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2021 (1) TMI 1048
Recovery of erroneous refund of IGST - Refund of the unutilized Input Tax Credit against Export of goods - Applicability of circular dated 4th September 2018, more particularly, the para 3.2 therein with retrospective effect - It is the case of the writ applicant that upon export of goods against a letter of undertaking without payment of tax, it was entitled to refund of the unutilized Input Tax Credit under Section 54(3) of the Act, 2017 - HELD THAT:- Mr. Sheth, in the alternative, submitted that assuming for the moment that there is nothing wrong with the circular dated 4th September 2018, still, the show cause notice under Section 74 of the Act, could not have been issued for the purpose of taking back the refund, as such a recovery is not permissible in law. If the department is of the view that the refund was wrongly availed and sanctioned, then it should prefer an appeal and not issue a show cause notice under Section 74 of the Act. Let Notice be issued to the respondents, returnable on 2nd March 2021. Let there be an ad interim relief in terms of para 23(D) of this writ application.
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Income Tax
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2021 (1) TMI 1049
Disallowance of interest expenses u/s 14A read with Rule 8D(ii) - Tribunal deleted addition - HELD THAT:- Findings recorded is that, the interest income received during the year was more than interest paid by the assessee for all three assessment years. The Tribunal has concurred with the CIT(A) on the question of deletion of disallowance for interest under Rule 8(2)(ii) of the Rules. This appeal stands dismissed so far as the first question of law as proposed by the Revenue is concerned.
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2021 (1) TMI 1047
Proportionate deduction u/s 80IB(10) - Deduction to the extent of profits attributable to the units where the built up area is below 1500 Sq. Ft. - Whether Tribunal erred in holding that the project completion method is a recognized method of accounting without properly examining as to whether the assessee is entitled to project completion method in the absence of assessee placing regular books of accounts ? - HELD THAT:- As decided in own case [ 2021 (1) TMI 789 - KARNATAKA HIGH COURT] on close scrutiny of the judgment rendered by this Court in BRIGADE ENTERPRISES LTD. [2020 (9) TMI 1137 - KARNATAKA HIGH COURT] it is evident that the first substantial question of law involved in this appeal is no longer res integra. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee.
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2021 (1) TMI 1046
Addition u/s 14A read with Rule 8D - Appellant has not made any claim that it has not incurred any expenditure for earning the exempt income - as argued assessing officer has not arrived at the mandatory satisfaction as required under section 14A and hence no disallowance is possible - HELD THAT:- AO has not determined the amounts of the expenditure and has not recorded any reasons with regard to correctness of the claim made by the assessee in respect of such expenditure, in relation to the income which does not form part of the total income of the assessee. AO before embarking upon determination of the amount of expenditure incurred in the light of the exempted income, has to record a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. The aforesaid mandatory requirement has not been fulfilled by the Assessing Officer before disallowing the assessee under Section 14A - Decided in favour of assessee.
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2021 (1) TMI 1045
Capital gain - transfer of property u/s 2(47) - assessee had sold certain properties and had not paid capital gains - proceedings under Section 153C of the Act read with Section 143(3) were initiated - HELD THAT:- Perusal of relevant clauses of the Power of Attorney which was executed on the same day, it is evident that all rights in the property including the possession constructively infact has been handed over by the assessee to the purchaser. Therefore, we have no hesitation in holding that the aforesaid transaction is the same within the meaning of Section 2(47) of the Act and the Assessing Officer as well as the Commissioner of Income Tax (Appeals) has rightly treated the same to be a transaction of sale. However, the Tribunal, without taking into account the incriminating material on record, merely on the basis of the fact that the possession of the property under the agreement was not delivered, has held the same to be not sale. - Decided in favour of the assessee.
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2021 (1) TMI 1043
Exemption u/s 11 - activities of the assessee in the nature of commerce / trade or not? - Tribunal justified considering the activity of the assessee as engaged in the development of urban area which is in the nature of advancement of general public utility not hit by the newly introduced first and second proviso to section 2(15) of the Act without considering the merit of the issue? - HELD THAT:- The questions of law, as proposed by the Revenue are no longer res-intigra in view of the decision of this Court in case of Ahmedabad Urban Development Authority Vs. ACIT [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT] all the questions of law as proposed stand squarely covered by the decision of this Court in case of AUDA (supra).
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2021 (1) TMI 1041
Revision u/s 263 - Eligibility of benefit of deduction under Section 10A - HELD THAT:- In the instant case, the period of 10 consecutive years would start from Assessment Year l995-96 and would end with Assessment Year 2008-09 - period of 10 year commences from 1995-96 irrespective of the fact that whether or not the assessee has claimed benefit in between the Assessment Years and the period of 10 consecutive years therefore, in view of the plain language of the enactment cannot be extended. AO without examining the aforesaid aspect of the matter granted the benefit of deduction Section 10A of the Act to the assessee. The view taken by the AO cannot but be said to be erroneous and prejudicial to the interest of the revenue. The view taken by the Assessing Officer cannot be said to be a plausible view. No reasons have been assigned by the Assessing Officer for holding the assessee eligible for benefit of deduction under Section 10A - Since, the issue with regard to eligibility of the assessee for deduction under Section 10A of the Act for Assessment Year 2008-09 beyond a period of 10 consecutive years was not subject matter of order of assessment itself. Therefore, the same could not have been the subject matter of the appeal before the CIT (Appeals) and thus, in the fact situation of the case there was no bar in invoking the powers under Section 263 - The income of the assessee from staffing, which was not an income from export of computer software was also allowed by the Assessing Officer without any application of mind and without any enquiry. Therefore, the Commissioner of Income Tax has rightly invoked the powers under Section 263 - Decided against assessee.
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2021 (1) TMI 1040
Disallowance u/s. 14A read with Rule 8D - HELD THAT:- We find that the Hon'ble Delhi High Court in the case Cheminvest Ltd. vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT ] has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT ]. The net effect of these decisions is that the disallowance u/s 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted. - Decided against revenue.
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2021 (1) TMI 1038
Capital Gain (LTCG) or Business income - Exemption u/s 54F - AO took the view that the assessee was engaged in an adventure of the nature of trade and therefore the income declared under the head capital gains is to be taxed under the head Income from Business - HELD THAT:- Intention at the time of purchase was to construct a house for self occupation and that intention was given up due to the fact that the land was outside Mysore city and due to financial crunch. Therefore the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing them into smaller sites. The dates of acquisition of the property and its conversion into sites and obtaining approval and the dates of sale by the Assessee all go to show his intention at the time of acquisition was not with a view to indulge in an adventure in the nature of trade. The case of B.Narasimha Reddy [ 1984 (7) TMI 72 - KARNATAKA HIGH COURT ] Thus gain on sale of land is to be regarded as income under the head capital gain . Consequently, the Assessee should be entitled to all the deductions permissible while computing income under the head Capital Gain .is a decision on facts of that case.- Decided in favour of assessee.
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2021 (1) TMI 1037
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As the entire investments have been made out of own funds and no borrowed funds have been used. However, we are of the considered view that for earning exempt income, some expenditure needs to be disallowed. Considering the facts of the case in totality, we are of the opinion that a disallowance of ₹ 2 lakhs should meet the ends of justice. We, accordingly, direct the Assessing Officer to restore the disallowance u/s 14A to ₹ 2 lakhs. Ground taken in Memorandum of appeal is partly allowed.
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2021 (1) TMI 1036
Disallowance of interest - HELD THAT:- We agree with the contention of the Ld. Counsel for assessee that there was no case for disallowance of the amount on account of interest expenses. We direct the AO to delete this amount. Accordingly, first ground of appeal is allowed. Disallowance of rent paid - HELD THAT:- The assessee has also made a reference to Section 38 of I.T. Act for apportionment of expenses U/s 38 of I.T. Act. Under Section 38 of I.T. Act, a portion of the expenses is allowable to the assessee as deduction, having regard to use of the premises / building for the purposes of assessee s business. We find that the lower authorities the AO as well as the Ld. CIT(A) - have not considered the applicability of Section 38 of I.T. Act; and further, that the relevant facts are not available on the records on the basis of which fair apportionment can be made. Moreover, neither the assessee has furnished details for such apportionment; nor the lower authorities - the AO as well as the Ld. CIT(A)-have considered apportionment of expenses U/s 38(1) - We are of the view that the relevant facts for deciding this ground of appeal are not available on records of the Tribunal; and that these relevant facts are needed to be brought on record. Therefore, we set aside this issue to the file of the AO with the direction to pass a fresh order as per law for deciding the issue regarding allowability of rent paid after providing the assessee a reasonable opportunity. Disallowance towards director remuneration - HELD THAT:- Whether the assessee has deducted tax at source under Section 192 of I.T. Act in respect of the disputed amount of enhanced remuneration paid to the Director, is also not available on our record. We find that the lower authorities, AO as well as Ld. CIT(A), have also not examined these aspects; and have not brought relevant facts on record. We find that for the purposes of Section 40A(2) relevant facts pertaining to enhanced remuneration paid to the Director, such as free market value, legitimate needs of assessee s business and benefit derived by / accruing to the assessee are not available on the records. For deciding this ground of appeal are not available on records of the Tribunal; and that these relevant facts are needed to be brought on record. Therefore, we set aside this issue to the file of the AO with the direction to pass a fresh order as per law on the dispute under second ground of appeal.
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2021 (1) TMI 1034
Penalty u/s 271(1)(c) - bogus purchases disallowed - HELD THAT:- Assessee is unable to produce the actual delivery/physical delivery of goods but it is a fact that the AO has not doubted the sales made by assessee or even the payments were made by account payee cheques. Once this is a fact that once sales are not doubted, the entire purchases cannot be considered as bogus and that is also a presumption. Mere on presumption, penalty cannot be levied. Hence, we confirmed the order of CIT(A) deleting the penalty and dismissed this appeal of revenue.
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2021 (1) TMI 1033
Levying the penalty u/s 271(1)(c) - Bogus purchases - HELD THAT:- AO has initiated the penalty proceedings in both the charges that means he is not sure about which charges, the assessee has committed the default. Hence, this issue is squarely covered by the decision in case of CIT vs. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] . Hence, on this count, we deleted the penalty. As regards to merits of the case, we noted that the assessee has filed complete ledger account, purchase bills, delivery challans in respect of purchase transactions made with Nimesh Steel Pvt. Ltd for purchase value of ₹ 5,75,536/- and also payment made by account payee cheque. The assessee could not produce only the purchase party for examination of the Assessing Officer and the Assessing Officer levied penalty only on this count. We noted that this cannot be the reason for levy of penalty under section 271(1)(c) because the Assessing Officer is unable to prove the concealment of income in this case. Hence, we delete the penalty and allowed the appeal of assessee.
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2021 (1) TMI 1032
Nature of expenditure - expenditure as license fee payment to M/s. Remfry and Sagar Consultants Pvt. Ltd. (RSCPL) for use of goodwill of Remfry Sagar and to practice in this name - revenue or capital expenditure - HELD THAT:- We are of the considered view that amount of deduction claimed by the assessee on the amount of licence fee paid to RSCPL is allowable as expenditure u/s 37 of the Income-tax Act, 1961. So, ground no.1 is determined against the Revenue. Travelling expenses and entertainment expenses - ad hoc disallowance of 5% - HELD THAT:- We are of the considered view that none of the expenditure can be disallowed merely on the basis of surmises. Perusal of the impugned order passed by the ld. CIT (A) shows that he has followed the earlier year s order passed by the ld. CIT (A) allowing the identical expenditure. When undisputedly entries in the books of account qua the claimed expenditure have not been questioned in any manner whatsoever ad hoc disallowance made by the AO to the extent of 5% of the expenditure of travelling expenses and entertainment expenses is not sustainable in the eyes of law. So, we find no scope to interfere into the findings returned by the ld. CIT (A), hence ground no.2 is determined against the Revenue.
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2021 (1) TMI 1030
Nature of expenditure - expenditure incurred for development of a new product including knowhow - assessee manufacturing auto electrical parts incurred expenditure for setting up separate cell for developing import substitute parts - revenue or capital expenditure - HELD THAT:- In this case, the facts are identical to the facts considered in the case of CIT Vs Denso India Ltd [ 2009 (7) TMI 144 - DELHI HIGH COURT ] where the assessee is engaged in the business of manufacturing LED lights, was purchasing certain raw materials till assessment year 2010-11, but from the assessment year 2013-14, it started manufacturing substitute of purchases for which certain expenditure have been incurred for development of the product which are purely revenue in nature. Although, the assessee has considered said expenditure as deferred revenue expenditure, pending amortization in the financial statement, but because of nature of expenditure the same has been claimed as deduction u/s.37(1) in the statement of total income. Thus expenditure incurred by the assessee being technical consultancy charges, purchase of raw materials, advertisement charges and electricity charges are in the nature of revenue expenditure, which does not give any enduring benefit to the assessee and hence, same cannot be treated as capital expenditure. Hence we, direct the Assessing Officer to allow deduction towards expenditure as claimed by the assessee in the statement of total income. - Decided in favour of assessee.
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2021 (1) TMI 1029
Exemption u/s 11 - AO rejected accumulation of income u/s.12AA on the ground that the assessee has accumulated its income not for specific purpose, but merely to defer taxation of surplus of amount which has not been applied towards its objects in the corresponding accounting period - HELD THAT:- Once assessee has accumulated income with a specific purpose and such purpose is specified in the main objects of the trust, then the Assessing Officer cannot deny such accumulation of income merely for the reason that purpose specified in Form No.10 is vague and general in nature. As long as objects of the trust provide for such purpose, then the assessee can accumulates funds for the purpose which is specified in trust deed. This view is fortified by the decision of Hon ble Gujarat High Court in the case of CIT (Exemption) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust reported in [ 2018 (10) TMI 995 - GUJARAT HIGH COURT where it was held that lack of declaration in Form No.10 regarding specific purpose for which funds were being accumulated by the assessee trust would not be fatal to the exemption claimed u/s.11(2) of the Act. The Hon ble Supreme Court [ 2019 (3) TMI 1405 - SC ORDER ] has dismissed SLP filed by the Department in the above case and has upheld the findings of the Hon ble Gujarat High Court. In this case, on perusal of facts available on record, clause 4k of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated u/s.11(2) is covered under main objects of the trust. AO as well as learned CIT(A) has erred in denying benefit of accumulation of income u/s.11(2) of the Act. Hence, we direct the Assessing Officer to delete the additions made towards denial of accumulation of income u/s.11 (2) of the Act and direct him to allow benefit of accumulation as claimed by the assessee. - Decided in favour of assessee.
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2021 (1) TMI 1022
Stay of demand - exemption u/s.11 denied - assessee has violated provisions of section 13(3) r.w.s. 13(2)(a) for the reason that return required to be filed u/s.139(1) was not filed within the due date for filing return of income, accordingly, entire income has been brought to tax - HELD THAT: - We find that assessee has not paid any amount towards outstanding demand created by Assessing Officer . As per the amended provisions of section 254 (2A) of the Act, before granting any stay, assessee is required to deposit at least 20% of disputed tax. When this provision is apprised to learned AR for the assessee , he pleaded that assessee s financial condition is very weak and it cannot service disputed demand. We, therefore, considering fact that assessee is not willing to pay any amount towards disputed demand, reject the stay application filed by assessee. However, in order to give early hearing to assessee, appeal filed by assessee is posted for out of turn hearing on 09.02.2021.
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2021 (1) TMI 1020
Reopening of assessment u/s 147 - Addition u/s 68 - treating the share premium money received by the assessee as unexplained cash credit - HELD THAT:- We find that assessee has filed the necessary evidences in support of its claim before the AO as well as before the Ld. CIT(A). The evidences filed comprised of copies of ITR, annual accounts, bank statements, PAN numbers, application from share applicants, copies of board resolutions etc and even in response to summons issued under section 131, these investors filed their audited statements, ITRs and bank statement before the AO. AO has also proceeded on the basis of the statement of Shri Pravin Kumar Jain and others recorded during the course of search to doubt these transactions and has not brought on record any substantive material to prove these investments as non genuine whereas the assessee has filed all the evidences. The director Shri Dipak Singhvi has presented himself before the AO in order to examine Shri Pravin Kumar Jain and others, however, the same did not attend before the AO and cross examination could not be performed. Besides, the amendment to section 56(2)(vii)(b) of the Act is applicable from A.Y. 2013-14 and not to the year under consideration and therefore the question of issuing shares at a premium can not be examined in this year and also addition can not be made. We find that on the date of issue of shares, the intrinsic value of the share as on 31.03.2007 was 411.80 and therefore the observation of the AO that shares were issued at a very high price is wrong and against the facts of the case. We have also perused the decisions referred to and relied by the ld. AR of the assessee in support of his arguments and found them to be squarely applicable to the assessee's case. In this case, the assessee has discharged the onus cast upon it by filing the necessary documents before the AO as well as CIT(A). Moreover in absence of cross examination of the persons whose statements were relied by the AO, the addition can not be made in view of the fact that specific prayers to the AO to this effect were made before the AO. In view of the above discussion and facts of the case, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee.
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2021 (1) TMI 1019
Disallowance of proportionate interest on capital advances provided by the assessee - contentions of the Ld. AR are that, the advances does not pertains to sister concerns but the balance with government authorities - HELD THAT:- We find, out of total amount of ₹ 50,64,880/- disclosed under short term loans and advances in the note to financial accounts, the amount of ₹ 47,11,874/- pertains to VAT, service tax, TDS and income tax refund receivables. Whereas the A.O. is of the opinion that these are the advances provided to sister concerns. Thus the advances disclosed in the financial statements are with the statutory authorities and the action of the A.O. to disallow proportionate interest considering such advances is not acceptable. Accordingly, we set aside the order of the CIT(A) and direct the Assessing officer to delete the addition and allow the grounds of appeal in favour of the assessee.
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2021 (1) TMI 1018
Reopening of assessment u/s 147 - assessment of the assessee was reopened after the expiry of 4 years - HELD THAT:- In the instant case all the material fact has already been disclosed by assessee. Moreover, after the issuance of notice dated 30.12.2012, the assessee has furnished the reply also and after the satisfaction the matter of controversy has been decided. Since the assessee was not failure to for the disclosure of all the material facts necessary for assessment, therefore, the reopening is also bad in view of the decision in the case of (i) Phool Chand Bajrang Lal Vs. ITO [ 1993 (7) TMI 1 - SUPREME COURT ] (ii) ALA Firm Vs. CIT [ 1991 (2) TMI 1 - SUPREME COURT] (iii) Indian and Eastern Newspaper Society Vs. CIT [ 1979 (8) TMI 1 - SUPREME COURT] ITO Vs. Lakhmani Mewal Das[ 1976 (3) TMI 1 - SUPREME COURT] . On appraisal of the above said finding, it is apparent that the assessment could only be reopened on account of disclosure of new matter of knowledge of fresh facts which were not present at the time of original assessment. It may constitute reason to believe that the income of escaped assessment within the meaning of Section 147 We are of the view that the notice u/s. 147/148 of the Act is wrong against law and facts, hence, is hereby ordered to be set aside. Accordingly, we decide these issues in favour of the assessee
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2021 (1) TMI 1017
Bogus purchases - CIT-A restricted disallowance by the CIT(A) to 4% of the aggregate value of the impugned purchases HELD THAT:- CIT(A) while relying on the order passed by his predecessor for A.Y 2010-11 had lost sight of the aforesaid material fact - we are unable to persuade ourselves to subscribe to the scaling down of the disallowance of the entire value of the impugned purchases made by the A.O to 4% of the value of such purchases by the CIT(A). We also cannot remain oblivious of the fact that the assessee had failed to prove that the impugned purchases were either accounted for in its sales or formed part of its closing stock for the year under consideration, for the reason, that the relevant documentary evidence had been impounded by the Sales tax department in the course of an action conducted on the assessee, and thus, were not available with the assessee. Mater in all fairness requires to be revisited by the A.O with an opportunity to the assessee to demonstrate before him that the impugned purchases had either found its way as a part of the accounted sales or formed part of its closing stock for the year under consideration. In case the assessee is able to demonstrate before the A.O that the impugned purchases were either accounted for in its sales or formed part of its closing stock for the year under consideration, then, the scaling down of the disallowance by the CIT(A) to 4% of the aggregate value of the impugned purchases would be in order. Appeal filed by the revenue is allowed for statistical purposes.
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2021 (1) TMI 1016
Reopening of assessment - HELD THAT:- The assessee has assailed the reopening before the CIT(A). No contrary material is available on record to rebut the findings of CIT(A). We find no reason to interfere with the order of CIT(A) on this issues. Accordingly, ground No.1 of the appeal is dismissed being devoid of any merit. Estimation of income - bogus purchases - CIT-A estimating GP at 12.5% - HELD THAT:- The assessee is in the business of trading of ferrous and nonferrous metals. The estimation of GP by CIT(A) is on the higher side. The GP in the trade of ferrous and non-ferrous metals is generally around 4% to 6%. In our considered view the ends of justice would meet if the GP on bogus purchases be estimated at 6%. We hold and direct accordingly. The ground No.2 of the appeal is partly allowed in the terms aforesaid. Disallowance on interest under section 36(1) (iii) - HELD THAT:- It is not emanating from records whether the assessee was having own sufficient funds for advancing of loans to its sister concern. The assessee has submitted that the advances have been given in connection with business. However, we find that there is no reference to the material by authorities below that have been placed on record by the assessee to substantiate that the advances were in respect of business transactions. In the absence of complete facts and reference to material brought on record by assessee, we deem it appropriate to restore this issue back to the file of Assessing Officer for fresh adjudication. While deciding this issue, the Assessing Officer shall also consider the applicability of decision rendered in the case of CIT vs. Reliance Utility Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ].
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Customs
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2021 (1) TMI 1050
Levy of Penalty - levy on the basis of the retracted statement without any independent corroborative - acquitting the appellant from all charges, valid or not - Whether on the facts and in the circumstances of the case the honourable Tribunal was right in sustaining the penalty on the appellant and the co-accused were discharged from all charges and in the adjudication proceedings? - HELD THAT:- Upon examination of the evidence, the Adjudicating Authority found that the confessional statement is true. Furthermore, the appellant could not establish that the statement recorded from him on 11.03.1998 was obtained by threat, duress or promise. The burden of proof to show that the statement was recorded under threat, duress was on the appellant, which he had failed to discharge. Therefore, the Adjudicating Authority, having done a proper exercise in examining the statements and all other evidences, which were available before him, adjudicated the case and held the appellant's statement dated 11.03.1998 to be true. Furthermore, the appellant was present when the search and seizure operations were conducted. The statement of the other two persons, who were employed by the appellant clearly implicate the appellant with regard to the attempt to export prohibited items. Furthermore, it has been established that the appellant was aware of the fact that sandalwood is a prohibited item for export - there is no procedural error committed by the Adjudicating Authority and the Adjudicating Authority, after analysing the statement recorded from the independent witnesses, has rightly held that the appellant is guilty. Considering the facts and circumstances of the present case, more particularly, when the present case arises under the provisions of the Act, the appellant cannot place reliance on the decision in the case of CAPT. M. PAUL ANTHONY VERSUS BHARAT GOLD MINES LTD. ANR. [ 1999 (3) TMI 625 - SUPREME COURT] which was the matter concerning the service condition of the appellant therein. The said decision is wholly inapplicable to the case on hand. The Tribunal, which is the last fact finding forum, has re-appreciated the factual matrix and rendered a finding that on the date when the officers of the Department conducted search operations in the godown at Tuticorin, the appellant was present and the cartons, which were lying in the godown, when opened, were found to contain sandalwood concealed along with Mangalore Roofing Tiles. Further, the admissibility of the statement recorded under Section 108 of the Act from the appellant on 11.03.1998, was considered by the Tribunal and it was held that the said statement is admissible and the belated retraction was rightly rejected by the Adjudicating Authority. Furthermore, the Tribunal found, on facts, that the role of the appellant has been clearly brought out by the fact that the appellant was present in the godown, at the time of search, when the officers detected the concealment of the sandalwood along with the Mangalore Roofing Tiles. There are no hesitation to hold that there is no question of law, much less any substantial question of law arising for consideration in this appeal - appeal dismissed.
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2021 (1) TMI 1044
Entitlement of Refund without challenging the order of assessment which has attained finality - Applicability of N/N. 10 of 2006 - HELD THAT:- The Supreme Court in PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [ 2004 (9) TMI 105 - SUPREME COURT] has held that under Section 27 of the Customs Act, 1962, a claim for refund can be made by any person who had (a) paid duty in pursuance of an order of assessment or (b) a person who had borne the duty. It has further been held that unless the order of assessment can be reviewed under Section 28 of the Act and / or modified in an appeal, that order of assessment stands. The duty would be payable as per the order of assessment. It has also been held that refund claim is not an appeal proceeding and an officer considering a refund claim cannot sit in the appeal over an assessment made by a competent officer and cannot review an order of assessment - In view of the aforesaid enunciation of law, it is evident that a person is not entitled to claim refund of duty without challenging an order of assessment. In the facts of the case, there is no material placed on record to show that there is any challenge made to the assessment order. Applicability of N/N. 10/2006 dated 01.03.2006 - HELD THAT:- In the factual situation of the case and in view of the fact that even though under Entry No.4 of the Tariff Notification, the items mentioned therein are exempted for payment of customs duty, however, until and unless the respondent challenges the order of assessment, he is bound to pay the customs duty as assessed. He is not entitled to the benefit of refund - the substantial question of law is answered in the affirmative and in favour of the revenue. Appeal allowed - decided in favor of appellant.
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2021 (1) TMI 1042
Inadvertent mistake in self-assessed Bills of Entry - Seeking Direction to the respondents to reassess the customs duty - 8 Slot Single Chassis (Cisco Routers) - Correction of Customs Tarrif Heading (CTH) from 85176990 to 85176930 - Stand taken in the affidavit is that petitioner had imported goods declared as routers under five Bills of Entry bearing Nos.2434172, 2436049, 2522910, 2805152 and 2968920 - whether request of the petitioner for correction of inadvertent mistake or error in the self-assessed Bills of Entry and consequential passing of orders for re-assessment is legal and valid? - availability of remedy of appeal. HELD THAT:- The scheme of section 17 from the perspective of the importer (since in this case we are dealing with imports) is that an importer upon entering his imported goods is required to self assess the duty leviable on such imported goods. This is subject to verification and examination by the proper officer. If upon verification or examination etc. the proper officer fnds that the self assessment is not done correctly, he may re-assess the duty leviable on such goods. In a case where re-assessment is contrary to self assessment and where the importer does not confirm his acceptance of such re-assessment, the proper officer shall pass a speaking order on the reassessment - therefore, it is quite evident that though duty is cast upon an importer to self assess the customs duty leviable on the imported goods, a corresponding duty is also cast upon the proper officer to verify and examine such self assessment. Such verification and examination has to be done in good faith and in the process of verification or examination if the proper officer finds that there is mis-classification of tariff head or wrong classification of tariff head of the imported goods leading to lesser levy of customs duty or excess levy of customs duty, he has the power and authority under sub-section (4) to make re-assessment and re-assess the duty leviable on such goods. From a conjoint reading of the aforesaid provisions of the Customs Act, it is evident that customs authorities have the power and jurisdiction to make corrections of any clerical or arithmetical mistakes or errors arising in any decision or order due to any accidental slip or omission at any time which would include an order of self-assessment post out of charge. In the instant case, petitioner has not sought for any refund on the basis of the self-assessment. It has sought re-assessment upon amendment of the Bills of Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. This distinction though subtle is crucial to distinguish the case of the petitioner from the one which was adjudicated by the Supreme Court and by this Court - Grievance of the petitioner is not on the merit of the self-assessment as the petitioner is aggrieved by the failure on the part of the respondents to carry out amendment in the Bills of Entry by replacing the incorrect CTH by the correct one namely by replacing CTH '85176990' with '85176930' which was declared inadvertently by the petitioner at the time of fling the Bills of Entry. This request of the petitioner, falls squarely within the domain of section 149 read with section 154 of the Customs Act. Upon amendment in the Bills of Entry by correcting the CTH, consequential re-assessment order under section 17(4) of the Customs Act would be in order. Madras High Court in M/S. HEWLETT PACKARD ENTERPRISE INDIA PRIVATE LIMITED VERSUS JOINT COMMISSIONER OF CUSTOMS, DEPUTY COMMISSIONER OF CUSTOMS, THE PRINCIPAL COMMISSIONER OF CUSTOMS, UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2020 (10) TMI 970 - MADRAS HIGH COURT] correctly held that in a case of correction of inadvertent error, the appropriate remedy would be seeking an amendment to the Bills of Entry and not fling of appeal because there is no legal flaw in the order of self-assessment amenable to appeal but only a factual mistake which can be rectified by way of amendment or correction. The petitioner has made out a case for issuance of a direction to the respondents for correction of the mistake or error in classification of the goods from CTH '85176990' to '85176930' and thereby for amendment of the Bills of Entry. Refusal of the respondents to look into the aforesaid grievance of the respondents is therefore not justified - Direction issued. Petition disposed off.
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2021 (1) TMI 1025
Maintainability of appeal - appeal dismissed observing that appeal is premature since the order challenged is a provisional assessment - no speaking order was issued - Provisional assessment of goods - classification of goods imported - HELD THAT:- The rejection of appeal by the Commissioner (Appeals) is upheld, holding that it is an appeal against provisional assessment is against the settled positions of law. Hence the impugned order is set aside - Appeal is allowed and the matter is remanded to the adjudicating authority for finalising the assessment.
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Corporate Laws
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2021 (1) TMI 1028
Scheme of Amalgamation - seeking directions of this Tribunal to dispense with the requirement of convening meetings of Shareholders, Secured Creditors and Un-secured Creditors of the Transferor Companies No. 1 2 and the Transferee Company - HELD THAT:- The Board of Directors of all the Applicant Companies in the meeting held on 25 th November, 2020, considered and unanimously approved the proposed Scheme of Amalgamation - The Applicant Companies have filed the Audited Financial Statements for the financial year ended 31st March, 2020 and the Unaudited Financial Statements (Provisional) for the financial period ended 30th September, 2020. It is stated that no proceeding for inspection, inquiry or investigation under the provisions of the Companies Act, 2013, or under the provisions of the Companies Act, 1956 is pending against the Applicant Companies - t is stated by the Applicant Companies that the proposed Scheme of Amalgamation does not envisage any buy back of shares, There is no proposal for reduction of share capital except to the extent of cancellation of any cross holding of shares between Transferor Companies; and between the Transferor Companies and the Transferee Company, as the case may be - The Applicants has stated that the accounting treatment proposed in the Scheme of Amalgamation is in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013. Certificates from the respective Statutory Auditors of all the Companies have been filed along with the Application. This Tribunal directs that, in view of the consent affidavits given by the Shareholders of the Transferor Company No. 1 2 and The Transferee Company, the requirement of convening meeting of the Shareholders of the Transferor Company No. 1 2 and The Transferee Company, for the purpose of considering and if thought fit approving the proposed Scheme of Amalgamation, are dispensed with - there is no Secured Creditors in the Transferor Company No, 1 2 and the Transferee Company, accordingly, the requirement of convening meeting of the Secured Creditors of the Transferor Company No, 1 2 and the Transferee Company, for the purpose of considering and if thought fit approving the proposed Scheme of Amalgamation, is dispensed with - This Tribunal directs that, In view of consent affidavits given by the Un-secured Creditors of the Transferor Company No. I 2 and The Transferee Company, the requirement of convening meetings of the Unsecured Creditors of Transferor Company No, 1 2 and the Transferee Company, for the purpose of considering and if thought fit approving the proposed Scheme of Amalgamation, are dispensed with. The Applicant Companies are directed to serve the notice along with a copy of the Scheme upon; (a) the Central Government through the office of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi', (b) the Registrar of Companies, Uttar Pradesh, Kanpur; and (c) The Official Liquidator, Uttar Pradesh, Allahabad; and (d) the Income Tax Department, with a direction that they may submit their representation(s), if any, within a period of 30 (thirty) days from the date of receipt of such notice to the Tribunal and a copyies Of such representation(s) shall simultaneously be served upon the Applicant Companies, failing which, it shall be presumed that the authorities have no representation(s) to make on the Scheme of Amalgamation as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Application disposed.
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2021 (1) TMI 1027
Approval of Scheme of Merger by Absorption - Sections 230-232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. In view of the foregoing, 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, Ministry of Corporate Affairs, the reports of the official Liquidator etc., there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under Sections 230 to 232 of the Companies Act, 2013. The Petitioners shall however, remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. The Transferor Companies stand dissolved from the date of this Order without following the process of winding-up - That all the property, rights and powers of the Transferor Companies be transferred without further act or deed, to the Transferee Company and accordingly the same shall pursuant to Section 232 of the Act, be transferred to and vest in the Transferee Company for all the estates and interests of the Transferor Companies therein but subject nevertheless to all the charges not affecting the same.
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2021 (1) TMI 1026
Approval of scheme of Amalgamation - section 230 to 232 of the Companies Act 2013 - HELD THAT:- 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, North Western Region, ROC, Chhattisgarh, the reports of the official Liquidator, Chhattisgarh etc., there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under Sections 230 to 232 of the Companies Act, 2013. The Petitioner shall however, remain bound to comply with the statutory requirements in accordance with law. While approving the Scheme, it is clarified that this order should not be construed as an order in any granting exemption from payment of stamp duty, taxes including income tax, GST etc. or any other charges, if any, and payment accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law - Notwithstanding the above, if there is any deficiency found, or violation committed of any enactment, statutory rules or regulation, the sanction granted by this Tribunal to the scheme will not come in the way of action being taken in accordance with law, against the concerned persons, directors and official of the petitioners. The scheme of Amalgamation be sanctioned by this National Company Law Tribunal, Cuttack Bench to be binding with effect from appointed date on the Transferee Company, the Transferor Companies, their shareholders, and all concerned - the said Transferor Companies with all their respective assets, properties, rights, powers, titles, and interest thereof be transferred to and vested without any further act or deed in the Transferee Company and accordingly the same shall pursuant to section 230 to 232 of the Companies Act 2013 be Transferred to and vested in the Transferee company for all the estates and interests of the said Transferor Companies therein but subject nevertheless to all charges, now affecting the same.
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2021 (1) TMI 1021
Restoration of name of Company in the Register of Companies - Section 252 (3) of the Companies Act, 2013 - HELD THAT:- Section 252 (3) of the Companies Act, 2013 confers on this Tribunal powers to order to restore the name of the Company in the Register maintained, provided such application is filed by (i) the Company or (ii) by any Member or (iii) any creditor or (iv) any workmen of the Company within 20 years from the date of publication of the notices under Section 248 (5) in Official Gazette about striking off of the name of such Company provided further that it is seen from the material on record that at the time of its name being struck off, the Company was doing its business or carrying its operation. In this case, the applicant produced on record the copy of Audited Annual Accounts for the year ended on March 31, 2015 to March 31, 2018. Perusal of the documents available on record Prima facie, suggest that the Company was not carrying out its business during the relevant time when its name was stuck off. It has not generated any revenues from its operations since the financial year ended on March 31, 2014. Available details do not suggest that during the said period it had anybody in its employment. It has not furnished its PAN or GST details or copy of any filed copy of Income Tax Returns. Annual Accounts do not suggest any business transaction. It has not provided any bank account details of the Company - the details mentioned, indicate that during the relevant time when the Company was Struck Off, it had not been a going concern and was not having any business operations. The same has also been admitted in the Application. Appeal dismissed.
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Insolvency & Bankruptcy
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2021 (1) TMI 1031
Direction to Respondent to permit the Advocate, Chartered Accountant, Company Secretary of the Corporate Debtor/ Applicant to attend the meetings of Committee of Creditors - Direction to Respondent to provide the copies of all documents in connection with the CIRP process to the mentioned professionals - HELD THAT:- From Regulation 24 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, it is clear that the Resolution Professional has the power and responsibility to monitor and manage the operations and assets of the enterprise. The professional will manage the resolution process of negotiation to ensure balance of power between the creditors and debtor, in order to protect the rights of all creditors. The professional has to ensure the reduction of asymmetry of information between creditors and debtor in the resolution process. Section 24 of the Insolvency and Bankruptcy Code, 2016 provides that if there are Financial Creditors to Corporate Debtor, only Financial Creditor can attend and vote in the meeting. Directors and partners can only attend the meeting of Committee but shall not have any right of voting and their absence does not invalidate any of the proceedings, which means that even if they are allowed to attend the meeting of Committee of Creditors, they will be only silent spectators and they have no say on any of the transactions in the proceedings - This Tribunal is of the view that by allowing the Advocate/ CA/ Company Secretary of the Corporate Debtor no purpose will be served. The Corporate Debtor itself is sufficient to provide any of the documents/papers/details sought by the Resolution Professional during the proceedings. Providing of copies of all documents in connection with the CIRP process to the Corporate Debtor - HELD THAT:- As rightly stated by the Resolution Professional it is the discretion of the Resolution Professional to appoint Accountants, legal and other professionals following the due process as specified by the IBBI under Section 25(2)(d) of Insolvency and Bankruptcy Code, 2016 and that Resolution Professional is not permitted to disclose any information pertaining to the CIRP to any third parties including Advocate/ CA/ Company Secretary this prayer also cannot be granted. This Tribunal cannot travel beyond the IBC Regulations and pass orders contrary to the Regulations - Application dismissed.
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PMLA
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2021 (1) TMI 1035
Acquisition of foreign exchange - not bringing into India the goods of the value, quantity and quality for which foreign exchange was acquired by the parties through the appellant bank by seeking remittance on the basis of import documents which are allegedly later found to be not genuine - contravention of Section 8(1) of Foreign Exchange Regulation Act, (FERA) 1973 and Section 8(2) and 8(4) of FERA, 1973 - delay of more than two years in passing the impugned order - HELD THAT:- Without going into the merit of the case and without opining on merit, on the short question of delay in delivering the order, the appeal filed by M/s. South Indian Bank Ltd. is allowed - The impugned order dated 09.03.2009 passed on Show Cause Notice bearing no. T-4/1-B/SDE/AKB/2002-SCN-I dated 04.01.2002 read with corrigendum dated 13.02.2002, limited to the present appellant, is set-aside and the case is remanded to the Adjudicating Authority for deciding it afresh in accordance with law, preferably within a period of six months from the date of appearance of the parties before the Adjudicating Authority. The Adjudicating Authority shall decide the case relating to the present appellant on all legal and factual issues after affording opportunities to both the parties i.e. M/s. South Indian Bank Ltd. and the Enforcement Directorate. Appeal allowed by way of remand.
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Service Tax
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2021 (1) TMI 1039
CENVAT Credit - Reinsurance services obtained directly from the Indian reinsurers - Reinsurance service obtained under Indian Motor Third Party Insurance Pool - recovery of credit under Rule 14 of the CENVAT Credit Rules, 2004 read with proviso to Section 73(1) and Section 73(4) of the Finance Act, 1994 - interest under Section 75 of the Finance Act, 1994 - penalty imposed under rule 15(4) effective up to 26.02.2010 or 15(3) effective from 27.02.2010 of the CENVAT Credit Rules, 2004 read with section 78 of the Finance Act, 1994 - period subsequent April 01, 2011, when the definition of input service was amended by adding an exclusion clause in rule 2(l) of the CENVAT Rules - HELD THAT:- A perusal of the exclusion clause shows that its scope is limited to those general insurance services, which relate to a motor vehicle. Use of the word a assumes significance here, also considering the exception drawn in the exclusion clause. In the instant case, the reinsurance services availed by the Appellant are for insuring its business risks and not in respect of any particular motor vehicle. Reinsurance, by its nature, pertains to the insurance of business of the Appellant. Reinsurance services have never been availed by the Appellant in respect of a particular motor vehicle. In such a case, the above exclusion clause has no applicability to the present case and denial of CENVAT credit on basis of such a clause is not sustainable. Thus, even after the amendment of the definition of input service in rule 2(l) of the CENVAT Rule w.e.f. April 01, 2011, the appellant would be eligible to avail CENVAT credit on both the aforesaid reinsurance services - It would, therefore, not be necessary to examine the contentions raised by the learned counsel for the appellant that by confirming the demand for the period w.e.f. April 01, 2011, the order has gone beyond the scope of the allegation made in the show cause notice or that extended period of limitation could not have been invoked in the facts and circumstances of the case. It is not possible to sustain that part of the order of the Commissioner that confirms the demand of CENVAT Credit of ₹ 196,46,97,360/- with interest and penalty - Appeal allowed.
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2021 (1) TMI 1023
CENVAT Credit - Service Tax paid for the services provided by the Insurance Corporation for insuring the deposits of public with the banks - HELD THAT:- This very same issue was referred to Larger Bench and vide order in the case of M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [ 2020 (6) TMI 278 - CESTAT BANGALORE] , the Larger Bench of the Tribunal had held that credit is eligible on the service tax paid on such premiums. The learned AR has relied upon the decision of CESTAT Bench at Mumbai in the case of M/S. BANK OF AMERICA VERSUS PRINCIPAL COMMISSIONER, MUMBAI EAST [ 2020 (11) TMI 582 - CESTAT MUMBAI] . The very same issue has again been referred to the Hon ble President to resolve the issue by constituting a Larger Bench. The reason for such reference and doubting of the order rendered by the Larger Bench is that the decision rendered by the Hon ble Apex Court in COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] was not considered by the Larger Bench and therefore the Larger Bench decision is per incuriam. When the issue has been decided by Larger Bench, judicial discipline binds us to follow the same. Further, the judgement in Dilip Kumar Co. is with regard to interpretation of exemption notifications and would not be relevant for application to the issue under consideration which is the eligibility of Cenvat Credit. Application of judicial discipline is necessary to give uniformity and certainty decisions. The impugned order cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (1) TMI 1024
Interest on ineligible modvat credit - Recovery of erroneous Refund - disallowance of credit and recovery of same - Department has not issued any SCN proposing to disallow the credit or recover the same - payment of interest to the respondent on the delayed refund amount - delay caused by the respondent in furnishing the details to the department - HELD THAT:- As admitted by both sides, the department has not issued any SCN proposing to disallow the credit or recover the same. In the case of erroneous refund, the department could have issued a show cause notice proposing to recover the amount erroneously refunded to the assessee. In a litigation arising out of a refund claim filed by the assessee, the department cannot claim any relief. The demand of interest on the ineligible modvat credit cannot therefore sustain. Further, as per Rule 57I which stood at the relevant period, it is seen that the liability to pay interest will start only after expiry of three months from the date of receipt of demand notice. Since the amount has been appropriated at the time of order of refund itself, as correctly pointed out by counsel for respondent there is no liability to pay interest - the finding rendered by the Commissioner (Appeals) in this regard is legal and proper. Interest on the sanctioned amount - respondent has submitted that they have already received the sanctioned refund - HELD THAT:- As per Section 11BB of Central Excise Act, 1944, the assessee is eligible for interest on the amount from three months from the date of filing the refund claim. In the present case, the date of filing refund claim is on 05.11.2007. The argument of the department that there was delay on the part of the respondent to furnish details with regard to modvat credit and therefore the delay has occurred due to the negligence on the part of the respondent is not tenable. If there was undue delay on the part of respondent, the department could have rejected the refund claim for this reason - the respondent is eligible for interest under Section 11BB - there are no error in the order passed by Commissioner (Appeals) with regard to this issue also. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2021 (1) TMI 1051
Service of notice - Validity of assessment order - recovery of arrears of tax and penalty - also, order of assessment dated 10.09.2015, which was impugned in the writ petition, has been returned with a postal endorsement returned - HELD THAT:- Taking note of the fact that the order of assessment was refused to be received, the learned Writ Court rightly held that the service of the notice was complete. Since the appellant had insisted that the business was not functioning, the Writ Court had directed the Revenue to make a visit to the business premises and file a report. Pursuant to such direction, the Assessing Officer, viz., the first respondent had made a visit to the business premises and filed a report through e-mail dated 07.10.2020, annexing photographs, which showed that the entity was functioning and carrying on business in the same address. Therefore, the learned Writ Court held that there is no jurisdiction whatsoever to entertain the writ petition, as the delay between 2015 and the date of passing the order in the writ petition remained unexplained. That apart, the learned Writ Court found that the explanation, given by the appellant with regard to the delay, was factually incorrect. The order of assessment, which was impugned in the writ petition, was sent to two addresses and in respect of one of the addresses, the order of assessment was returned with the endorsement refused , which would mean that the order of assessment has been served in accordance with law and the Department cannot be faulted. That apart, due to the insistence of the appellant contending that the business was not carried on any longer ever since 2015, the learned Writ Court issued direction to the Assessing Officer to inspect the business premises and file a report. This direction was complied with by the Assessing Officer and an inspection was conducted and a report dated 07.10.2020, was filed before the learned Writ Court duly supported by photographs. The report clearly showed that the appellant was carrying on business in the very same premises. Therefore, the stand taken by the appellant that he has nothing to do with the business was found to be a false submission. Even before us, the delay from the year 2015 has not been explained - the Department was not intimated about the alleged closure of business by the appellant's father. The Registration Certificate, granted to the dealer, continued to remain valid and part payment was made by the dealer, which was given credit to in the assessment order. As could be seen from the computation given in the assessment order dated 10.09.2015, as against the total tax demand of ₹ 10,54,509/-, a sum of ₹ 1,53,943/- has been paid and the balance amount payable is ₹ 9,00,566/-. The penalty was calculated at ₹ 15,81,763/- at 150% of the tax due of which, a sum of ₹ 2,30,915/- was paid and the balance payable is ₹ 13,50,848/-. Therefore, the case, as projected by the appellant, having been found to be false by the learned Writ Court, after directing an inspection to be conducted, we find there is no justifiable ground made out by the appellant to interfere with the order passed by the learned Writ Court. The pre-assessment notice was received by the dealer, the order of assessment was communicated to the dealer in the manner known to law. Further, the stand taken by the dealer that they are not carrying on business was found to be false, as could be seen from the inspection report submitted by the Assessing Officer pursuant to the interim direction granted by the learned Writ Court - there are absolutely no ground made out by the appellant to interfere with the order passed in the writ petition. Appeal dismissed.
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