TMI Tax Updates - e-Newsletter
October 8, 2022

Case Laws in this Newsletter:

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

Articles

1. APPELLATE JURISDICTION OF HIGH COURT FOR INCOME TAX CASES

   By: DR.MARIAPPAN GOVINDARAJAN

2. Concerned authority should provide information under RTI even if the information is available in the public domain

   By: Bimal jain

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. Module wise new functionalities deployed on the GST Portal for taxpayers

2. Department for Promotion of Industry and Internal Trade (DPIIT) asks businesses and citizens to flag issues faced in starting and running a business

3. Artificial Intelligence to act as a catalyst in India's development journey and help realise goal of becoming a developed nation by 2047: Shri Goyal

4. Union Minister for Finance & Corporate Affairs inaugurates Western Regional Office of Competition Commission of India (CCI) in Navi Mumbai

5. Department for Promotion of Industry and Internal Trade (DPIIT) notifies establishment of Credit Guarantee Scheme for Startups (CGSS)

Notifications

Customs

1. 87/2022 - dated 6-10-2022 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 78/2022-Customs(N.T.), dated 15 September, 2022

Money Laundering

2. S.O. 4716 (E) - dated 4-10-2022 - PMLA

Notifies Aadhaar authentication service of the Unique Identification Authority of India under section 11A of the Prevention of Money-laundering Act, 2002

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137 - dated 6-10-2022

Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries / settlement obligations and pledging / re-pledging of securities - Clarification

Customs

2. Instruction No. 26/2022 - dated 6-10-2022

Requirement of Health Certificate to be accompanied with the Import of certain food consignments - modification of Board Instruction No.18/2022-Customs

Highlights / Catch Notes

GST

• Petitioner disputes assessment order; court cites Article 226 limits on factual disputes, suggests appeal under CGST Act Section 107.

  Case-Laws - HC : Validity of Assessment cum Penalty cum Interest Order - There is no denial of the fact that the petitioner is disputing correctness of the amounts that was arrived at by the 1st respondent. It is well settled under Article 226 of the Constitution of India, this Court cannot go into factual aspects. Further, there is no dispute that the petitioner has a right of Appeal under Section 107 of the CGST Act, 2017. - HC
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Income Tax

• Writ Petition Not Allowed During Interim Stage of Reassessment u/s 147, Says High Court.

  Case-Laws - HC : Reopening of assessment u/s 147 - allegation of accommodation entries and the assessee as a beneficiary A writ petition cannot be maintained to determine the disputed facts and therefore this petition is not maintainable at this interim stage of reassessment proceedings.- HC
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• Assessee Wins Deduction Claim u/s 80IC for Independent Unit; AO Directed to Approve Without Objection.

  Case-Laws - AT : Deduction u/s 80IC - independent unit v/s extension of unit - the assessee has claimed wages expenses which were subject to PF, electricity expenses. Likewise, there was huge investments in the plant and machinery. The assessee has also filed audit report in form 10 CCB, purchase details of the raw materials, the approval notification No. 283 /2006 of the eligible unit, but there was no doubt raised by the AO on these details - AO directed to allow the claim to the assessee - AT
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• CIT(A) Reviews and Corrects Section 54 Exemption Claim, Removing Additional Charges Imposed by Assessing Officer.

  Case-Laws - AT : Disallowance of exemption u/s. 54 - CIT(A) was very much in powers to consider the claim of the assessee which was left half way by the Ld. AO. Then, upon going through order of ld. CIT(A) it can be observed that Ld. CIT(A) has meticulously examined the claim of deduction u/s 54 of the Act in terms of eligibility and quantum. - CIT(A) rightly deleted the additions - AT
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• Income Tax Act: Dispute Over Unexplained Cash Credits in Share Transactions and Rejected DCF Valuation.

  Case-Laws - AT : Addition u/s 68 or 56(2) - Unexplained cash credit u/s 68 - share transactions - the valuation aspect of the shares is made on the Discounted cash flow method (DCF) and these facts are mentioned by the A.O. and it clearly indicates that the assessee has submitted the working of cash flow statement for F.Y 2014-15 to 2018-19 and the AO has not made adverse comments that the cash flow statements are false and not in accordance with the accounting principles. - the rejection of valuation of shares as per the DCF method is also without any evidence on record. - AT
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• Section 112: Tax on Long-Term Capital Gains from Depreciable Assets Remains 20% Despite Short-Term Classification u/s 50.

  Case-Laws - AT : Rate of tax on sale of depreciable assets - STCG vs LTCG - as per Section 112 of the Act, the tax on long term capital gains on transfer of a long term capital asset is @ 20% and, therefore, even if the capital gains is deemed as short term capital gains in terms of Section 50 of the Act, but for all other purposes including for the purpose of Section 112, the deeming fiction cannot be extended for rate of taxes- AT
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• Amounts from members to Surety Guarantee Fund seen as capital receipts, exempt from tax under current rules.

  Case-Laws - AT : Nature of receipt - Amounts received from its members towards Surety Guarantee Fund (SGF) - the receipts from members in the sum being amount received from members towards SGF as capital receipts not chargeable to tax - AT
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Customs

• Interest and Penalties Not Applicable Without Duty Determination Under Customs Act Section 28(2) for Mis-declared Goods.

  Case-Laws - HC : Leviability of interest and penalty in relation to amounts payable as duty other than basic customs duty - mis-declaration of goods - intent to evade customs duty or not - petitioner has paid a sum, much prior to the issuance of show cause notice. There is no determination of duty under Section 28(2) of the Customs Act, 1962 and, therefore, Section 28AB of the Customs Act, 1962 is also not applicable. - HC
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IBC

• Appellants Ordered to Pay for Fraudulent Trading; Transactions Deemed Undervalued and Intended to Siphon Funds.

  Case-Laws - AT : Fraudulent trading or wrongful trading - Direction to Appellants to jointly and severally pay to the Corporate Debtor certain amounts - The Adjudicating Authority had sufficient and valid reasons to hold that these undervalued transactions were done with the intent to siphon off the amounts on the false pretext of advance. - AT
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Service Tax

• Debate on 'Security Agency' Definition in Finance Act 1994: Impact on Service Tax for Construction Projects.

  Case-Laws - AT : Levy of Service Tax - construction of compound wall/fencing - security agents services - Taking that definition of 'security agency' into section 65(105)(w) of Finance Act, 1994 would lead to the outcome of every compound wall/fence put up by any person to be that of ‘security agency’; consequently and by extension, every civil project would be activity of ‘security agency’, thereby rendering ‘construction service’ or ‘work contract service’ in section 65 of Finance Act, 1994 to be superfluous. - AT
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• CENVAT Credit Allowed for Tour Operator Services Used in Employee Skill Enhancement for Manufacturing Activities.

  Case-Laws - AT : CENVAT Credit of service tax paid - usage in the manufacturing activity - Tour operator services - It becomes clear that the visit of the employees was purely for enhancing their skills for the better output of the final product of the appellant. Hence, those services have wrongly been alleged to have been personally consumed services - Credit allowed - AT
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Central Excise

• Appellant entitled to refund of unutilized Cenvat credit under GST; file claim u/s 11B with Section 142(5).

  Case-Laws - AT : Refund of unutilized Cenvat credit - after the introduction of GST, if the appellant could not transfer the excess debit into TRAN-I, the only option for the appellant remains is to file a refund claim under Section 11B read with Section 142(5). - the change in taxation regime should not affect the credit availment right of assessee. Hence the appellant is rightly entitled for the credit and also refund. - AT
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Case Laws:

• GST

• 2022 (10) TMI 247
  Refund claim - HELD THAT:- The Petitioner is permitted to apply for refund and direct the concerned Respondents to process and dispose of its application in accord with law as expeditiously as possible and in any case not later than eight weeks from the date of its receipt. Petition disposed off.

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• 2022 (10) TMI 246
  Validity of Assessment cum Penalty cum Interest Order - copies of the material relied on, not furnished - material alleged to have been seized from the business premises of the petitioner was not enclosed, so as to enable to file a suitable reply - violation of principles of natural justice. Whether the impugned order under challenge is liable to be set-aside on the ground that it was issued without following the principles of natural justice? HELD THAT:- On 15.02.2022 a show- cause notice was issued and thereafter personal hearing notices were issued on 21.03.2022, 05.05.2022 and 11.05.2022. There is no dispute to the fact that the petitioner submitted reply on 01.03.2022 which was received in the office of the 1st respondent on 16.04.2022. As is evident from the copy of the objections, dated 01.03.2022, submitted by the petitioner, the petitioner raised disputed questions of facts - there is no whisper or there is no request in the reply to the show-cause, dated 01.03.2022, that the petitioner is not aware of the contents of the slips that were seized from the business premises of the petitioner. It is an admitted fact that the petitioner produced other books of accounts on notice from the assessing authority as such he has knowledge about the contents of the slips. A perusal of the objections, dated 01.03.2022, would show that the petitioner has knowledge of the contents of the slips also. He never made any request to furnish copies of the material alleged to have been seized. The case of ITC LIMITED VERSUS THE ASSISTANT COMMISSIONER COMMERCIAL TAXES [ 2009 (9) TMI 1071 - ANDHRA PRADESH HIGH COURT ], was a case where the petitioner made an application for furnishing the report of the Enforcement Official but the respondent declined to furnish on the ground that the report of the Enforcement Official is communicated for internal circulation. This Court held that when a report of the Enforcement Official is relied upon in a show cause notice, the request for a copy when asked by the assessee has to be furnished - In the case on hand, the basis for issuance of show-cause notice to the petitioner was the material seized from the business premises of the petitioner and the petitioner could submit his objections to the show-cause notice without there being any further request to supply the material, which was seized from the business premises of the petitioner. So, the decision of this Court in ITC Limited, Sarapaka, Khammam District will not be of any help to the petitioner, to prove that there was violation of principles of natural justice. There is no denial of the fact that the petitioner is disputing correctness of the amounts that was arrived at by the 1st respondent. It is well settled under Article 226 of the Constitution of India, this Court cannot go into factual aspects. Further, there is no dispute that the petitioner has a right of Appeal under Section 107 of the CGST Act, 2017. As the petitioner has an alternative remedy of appeal under Section 107 of the GST Act and as the petitioner failed to succeed in establishing that there has been violation of the principles of natural justice, it is held that the Writ Petition is liable to be dismissed. It is open to the petitioner to avail the remedy available under law, in which event the period of pendency of Writ Petition before this Court be given set-off while calculating the period of limitation - Petition dismissed.

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• 2022 (10) TMI 245
  Profiteering - construction services - purchase of a flat in the Respondent s project ATS Picturesque Reprieves - allegation is that the Respondent had not passed on the commensurate benefit of input tax credit (ITC) to him by way of commensurate reduction in price - contravention of of Section 171 of the CGST Act, 2017 - HELD THAT:- In the instant case, there is no reduction of rate of tax during the relevant period and the only issue which is required to be decided by the Authority is as to whether Respondent is required to pass on the benefit of input tax credit - this Authority agrees with the methodology adopted by the DGAP in its Report to calculate the profiteered amount. Hence, this Authority determines that the Respondent has realized an additional amount of Rs. 12,78,61,818/- which includes both the profiteered amount @ 5.69% of the taxable amount (base price) and GST @ 12% on the said profiteered amount from the 535 buyers/recipients (other than the Applicant No. 1) during the period from 01.07.2017 to 30.09.2020 which was required to be passed on to home buyers/customers/recipients of supply of his impugned project. Since the Applicant No. 1, had booked his unit in the impugned project and paid the amount in pre-GST period only hence the profiteering in respect of the Applicant No.1 has not been calculated by the DGAP. Since, all the home buyers/recipients of supply are identifiable as per the documents placed on record therefore, the Respondent is directed to pass on the above said profiteered amount along with the interest @ 18% per annum (from the dates from which the said profiteered amount was collected by him from each of them till the date such amount is passed on/returned/refunded) to above said buyers/recipients, within a period of 3 months from the date of passing of this Order as per the details mentioned in Annexure- A , failing which the said amounts shall be recovered as per the provisions of the CGST Act, 2017. Penalty - HELD THAT:- The Respondent has denied the benefit of ITC to the buyers of his flats/customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017. The Authority holds that the Respondent has committed an offence by violating the provisions of Section 171 (1) and therefore, he is liable for imposition of penalty under the provisions of Section 171 (3A) of the Act. As the said provision has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019, the Respondent is liable to penalty for the amount profiteered by him from 1.01.2020 onwards. Accordingly notice be issued to the Respondent for such purpose - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017, orders that the Respondents shall reduce the prices to be realized from the home buyers/recipients of supply in the above Project commensurate with the benefit of ITC received by him. The Authority has reason to believe that since the Respondent has been found to have contravened the provisions of Section 171 of the CGST Act 2017 in respect of the subject Project ATS Picturesque Reprieves and hence there is every possibility that similar contravention may has taken place with his other projects. This Authority in terms of Rule 133 (5)(a) of the CGST Rules 2017 also directs the DGAP to investigate profiteering in relation to other Projects executed by the Respondent, if any, under the provision of section 171 of the CGST Act 2017 - the time limit of 06 months provided in Rule 133 (1) of the CGST Rule 2017, is directory in nature to determine and to pass an order by this Authority. Hence this order having been passed today under Rule 133 (1) of the CGST Rules 2017. Application disposed off.

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• 2022 (10) TMI 244
  Profiteering - benefit of ITC to the eligible home buyers/customers/recipients of supply passed or not - HELD THAT:- The concerned jurisdictional Commissioner CGST/SGST is directed to ensure that the Respondent passes on the benefit of ITC to the eligible home buyers/customers/recipients of supply as per the methodology approved by this Authority in the present case and submit his report to this Authority through the DGAP.

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• 2022 (10) TMI 243
  Profiteering - Construction Services - benefit of ITC has not been passed on by way of commensurate reduction in the price - contravention of Section 171 of the Central Goods and Service Tax Act, 2017 - Penalty - HELD THAT:- Upon perusal of Para 17 of the Report of the DGAP and the documents placed on record it is apparent that the computation of profiteering was with respect to 85 home buyers front whom construction value had been received by the Respondent during the period 01.07.2017 to 31.10.2019 (excluding the flats sold post 01.07.2017). This was on account of the fact that. the Respondent had booked 121 flats till 31.10.2019, but, the Respondent had claimed that he had sold 36 flats after 01.07.2017 at the rates agreed by the customers as all inclusive price after considering the market condition, escalations, demand - supply balance, GST benefit/ concession, development in the locality, location of the land, proximity to education institutions/hospitals/airport etc. It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations: - one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP s Report that there has been no reduction in the rate- of tax in the post UST period., hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed from the DGAP s Report that the ITC as a percentage of the turnover that was available to the Respondent during the pre-GST period (April-2016 to June-2017) was 3.36% and during the post-GST period (July-2017 to October-2019), it was 4.27%. The Authority finds that the Respondent has profiteered by an amount of Rs. 50,09,158/- during the period of investigation i.e. 01.07.2017 to 31.10.2019. The above amount of Rs. 50,09,158/-(including 18% GST) that has been profiteered by the Respondent from his home buyers/shop buyers/recipients of supply, shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the GCST Rules 2017. Penalty - HELD THAT:- Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the Act and therefore. he is liable for imposition of penalty under the provisions of the Section - Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules. 2017 should not be imposed on him is not required to be issued.

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• 2022 (10) TMI 185
  Validity of impugned order - principles of natural justice - HELD THAT:- The impugned order of the appellate authority is speaking one and there is no violation of principle of natural justice and is not contrary to any provisions of law and the contention raised by the petitioner in this writ petition challenging the impugned order is all matter of facts and evidence based on findings and this Court in exercise of constitutional writ jurisdiction under Article 226 of the Constitution of India cannot act as an appellate authority over the impugned order of the authority and re- appreciate the evidence. Petitioner could not make out a ground for invoking the constitutional writ jurisdiction under Article 226 of the Constitution of India - Petition dismissed.

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• Income Tax

• 2022 (10) TMI 242
  Review petition - Computing value of perquisites under Section 17(2) - assessee is a Trust constituted under Charitable Endowment Act, 1890 - whether petitioner to be considered as a State instrumentality within the definition of Article 12 of the Constitution of India - finding recorded by the High Court that even if the petitioner may be considered as a State instrumentality within the definition of Article 12 of the Constitution of India, the same cannot be treated at par with the Central/State Government employees under Table-I of Rule 3 of the Income Tax Rules, 1962 and that the rules applicable to the government employees for the purpose of computing the value of perquisites under Section 17(2) of the Act would be applicable in the case of the petitioner - HELD THAT:- Rules applicable to the government employees for the purpose of computing the value of perquisites u/s 17(2) of the Act would be applicable in the case of the petitioner is concerned, we are in complete agreement with the view taken by the High Court. Merely because the petitioner might have adopted the Central Government Rules and/or the pay-scales etc., by that itself, it cannot be said that the petitioner is a Central/State Government. No interference of this Court is called for. Insofar as the merits of the claim is concerned, according to Shri Datar, learned Senior Advocate, some of the crucial aspects have not been considered on merits by the High Court and, therefore, the petitioner proposes to file a review application before the High Court pointing out certain aspects on merits. Without expressing anything on the same, we simply permit the petitioner to file a review application on the aforesaid only. As and when such a review application is filed, the same be considered in accordance with law and on its own merits for which this Court has not expressed anything in favour of either of the parties. It is made clear that the petitioner is not permitted to file the review on the aspect which is concluded as above, namely, that whether the petitioner can be treated at par with the Central/State Government employees or not for the purpose of Section 17. Special Leave Petitions stand dismissed

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• 2022 (10) TMI 241
  Reopening of assessment u/s 147 - Necessity to consider the Petitioner s objections and pass a speaking order - HELD THAT:- In terms of GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] the Respondents are required to dispose of the objections which an assessee may file to the reopening of the assessment, by passing a speaking order. Now that the Respondents are ready to consider the Petitioner s objections and pass a speaking order, there is no necessity to entertain this petition. This is more so because until such speaking order is made, there is no question of the Respondents proceeding with the proposed reassessment for the Assessment Year 2015-16. Accordingly, the Respondents are at liberty to consider the objections raised by the Petitioner and dispose of the same in accord with law and on their own merits by passing a speaking order. This speaking order will have to be communicated to the assessee. If the Petitioner s objections are to be overruled or rejected, then, the Respondents will refrain from proceeding with the reassessment for a period of four weeks from the date of communication of the speaking order.

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• 2022 (10) TMI 240
  Bogus purchases - unexplained expenditure u/s 69C - Tribunal has arrived at concurrent findings with ones arrived at by the Commissioner of Income Tax, to the effect that the purchases made by the assessee could not be doubted on the basis of production of purchase bills as well as invoices, challan-cum tax invoices in respect of purchases and extracts of stock ledgers showing entry/exit of materials - HELD THAT:- CIT as well as ITAT have concurrently concluded, on a matter of fact that the transactions entered into by the assessee were genuine, supported by material such as stock entries and payments made through cheques through proper banking channels. Both these authorities have concurrently concluded that the assessee had made purchases materials and reflected the same materials to various authorities in a Stock Register. No reason to conclude otherwise and accordingly find no infirmity with findings and conclusions arrived at by the CIT or with the concurrent view taken by the Tribunal on this matter. The judgment rendered in VAMAN INTERNATIONAL PVT. LTD. [ 2020 (2) TMI 464 - BOMBAY HIGH COURT] applies in all vigor to the facts of the present case. No substantial question of law as envisaged under section 260 (A) of the Act arises in the present matter. Accordingly, we dismiss the appeal.

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• 2022 (10) TMI 239
  Reopening of assessment u/s 147 - notice under section 148A(b) - scrip of Mahanivesh is a penny scrip is also stated in the notice dated u/s 148A(b) - HELD THAT:- The petitioner sufficiently informed that the initiation of reassessment proceeding was due to the fact that the AO had reasons to believe that the petitioner has earned bogus LTCG by trading in the penny scrip of Mahanivesh. Pertinently, in her reply dated 31st May, 2022, the petitioner has not responded to the allegation in the notice that Mahanivesh is a penny scrip. The report sets out detailed facts leading to the conclusion that Mahanivesh is a penny scrip and the trade was undertaken between limited persons at pre-determined prices. It has come on record that the detailed report of the Investigation Wing on the suspicious trading activity of Mahanivesh was not provided to the petitioner. AO should have provided this Report in the first instance with the notice issued under section 148A(b), especially when the assessee had requested for this information in her reply dated 31st May, 2022. We, therefore, find merit in the submission of the petitioner that the assessee has been denied an effective opportunity to answer the findings made in the Report with respect to the transactions undertaken by the assessee with Allied Nippon Limited and Lawrence Cold Storage Pvt. Ltd. We set aside the order dated 30th June, 2022 issued u/s 148A(d) and notice issued u/s 148 with a direction to the petitioner to file its additional reply, responding to the findings of the Report within two weeks. AO shall after considering the reply of the petitioner pass an order under Section 148A(b) within a period of eight weeks thereafter, in accordance with law.

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• 2022 (10) TMI 238
  Attachment order issued u/s 226(3) with respect to the fixed deposits held - Petitioner herein used her personal savings for opening fixed deposits with the Bank - Petitioner is an 88 year old senior citizen and her explanation that her son was joined as a second holder in the FDRs as an abundant caution to facilitate encashment in case of any unforeseen event appears plausible - HELD THAT:- No particulars of the FDRs have been enlisted in the said notice in contradistinction to the bank account numbers, which were enlisted. This fortifies the submission of the Petitioner that the FDRs are only disclosed in her ITR as her assets. There is no dispute that the said attachment order is not intended to operate against the Petitioner s assets. Whereas the notice dated 27th December, 2019, directed the Bank to remit all amounts standing to the name Sh. Ravi Chopra to his AO, admittedly, the Bank had not remitted the amounts of the FDR standing in the name of the Petitioner herein to the AO, as possibly even the Bank does not consider the said FDRs as the asset of Sh. Ravi Chopra. Bank out of abundant caution has held back on the Petitioner s FDRs and this further borne out from the letter dated 31stMarch, 2020, issued by the Bank to the AO seeking clarification with respect to the application of the attachment order to the Petitioner s FDRs. AO did not respond to the said letter of the Bank seeking clarification, which shows apathy of the AO towards the plight of the Petitioner. Department has not shown any cause against the Petitioner. The counsel for the Bank has also clarified that the only reason for not allowing the Petitioner to encash her FDRs is due to the notice dated 27th December, 2019. The contentions of the Petitioner in the writ petition have remained undisputed. The counsel for the Department and the Bank have not disputed the contentions of the writ petition or made any submission which would disentitle the Petitioner to the reliefs sought in the writ petition. Attachment order does not operate against the FDRs of the Petitioner held with the Bank and direct the Bank to permit the Petitioner to encash her fixed deposits forthwith, without any further delay. The present writ petition is accordingly disposed of.

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• 2022 (10) TMI 237
  Validity of reopening of assessment - Section 148 notice sent through speed post, which bears the DIN Notice No which does not exist on the ITBA Portal - as stated no record of the said DIN is available on the ITBA portal and no explanation for this has been offered in the counter affidavit, giving rise to the apprehension that it is not genuine - HELD THAT:- In view of the explanation provided by ADIT, ITBA, in its e-mail it is evident that the Section 148 notice sent to the petitioner by speed post as well as the Section 148 notice available on the ITBA portal and sent by email, though bearing distinct DINs are genuine. Pertinently, the contents of the said notices are also identical. The print of the emails comprising of seven (7) pages are taken on record. No cause for initiating any action arises in the present application and the same is disposed of. Period of limitation to issue notice - whether date of issuance of the impugned notices should be considered for the purpose of determining limitation and not the date of preparation or generation? - HELD THAT:- This Court finds that there is a disputed question of fact, while the petitioner has produced record indicating that the impugned notice was sent for despatch through speed post on the 2nd of April, 2022, the Department has produced record wherein it is indicated that the notice was sent for despatch through speed post on the 31st of March 2021 itself. Therefore, the matter is disposed of with the direction to the Assessing Officer to verify the records produced by both the parties and determine the date of issuance on the basis of the law laid down in RK Upadhyay [ 1987 (4) TMI 5 - SUPREME COURT] If the AO upon verification finds that the notice under Section 148 was handed over for to the postal office on 31st of March, 2021, for dispatch then the reassessment proceedings would be initiated under the old regime of Section 148 proceedings, i.e., as it stood before the amendment of Finance Act, 2021. Accordingly, the AO is directed to determine the aforesaid date of despatch within four (04) weeks and if such date of issuance is determined to be 31stMarch 2021, thereafter, complete the reassessment proceedings within twelve (12) weeks as per the procedure as its existed prior to amendment. If upon verification, it is determined by the AO that the impugned notice was handed over to the postal office on or after 1st of April, 2021, for despatch the said notice will be construed as notice under Section 148A(b) and the directions of the Honorable Supreme Court in the matter of Union of India v. Ashish Aggarwal, [ 2022 (5) TMI 240 - SUPREME COURT] would apply mutatis mutandis.

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• 2022 (10) TMI 236
  Reopening of assessment u/s 147 - allegation of accommodation entries and the assessee as a beneficiary - HELD THAT:- We have perused reply filed by the petitioner in response to the SCN - In the said reply, the assessee had not adverted to its replies - The reason for not adverting to its earlier replies is curious, considering this allegation was specifically recorded by AO in the SCN. The said reply dated 3rd June, 2022, also does not deal with the merits of the allegations contained in the statutory SCN as regards the nature of transactions between assessee and the third party. In its reply the assessee admitted that it had carried out a single transaction of Rs.1,50,00,000/- with M/s Surya Trading Company in the relevant year and clarified that it had no transaction with the entity M/s Mahamaya Trading Company. In the reply furnished on 16 th April, 2021, the assessee annexed its ledger and bank statement which reflects a single transaction with M/s Surya Trading Company during the FY 2012-13. The assessee has not furnished any explanation in the said reply with respect to the purpose of the transaction with the said entity, though, the Department, in its notice dated 13th April, 2021, issued under Section 133(6) of the Act had specifically called upon the assessee to furnish the purpose of the transaction. No documents were filed with the said reply to evidence that the said transaction was carried out in ordinary course of business. Revenue s contention that assessee is a beneficiary of an accommodation entry from M/s Surya Trading Company and the assessee s contention that it was done in course of business are rival pleas and its determination is a pure question of fact, which will have to be determined by the statutory authorities after appreciation of evidence. A writ petition cannot be maintained to determine the disputed facts and therefore this petition is not maintainable at this interim stage of reassessment proceedings. Supreme Court in Commissioner of Income Tax and Ors. v. Chhabil Das Agarwal [ 2013 (8) TMI 458 - SUPREME COURT] has held that as the Act of 1961 provides a complete machinery for assessment/reassessment of tax, the assessee is not permitted to abandon that machinery and invoke writ jurisdiction of High Court under Article 226. The present case does not fall under the exceptional grounds on which a writ jurisdiction of the Court can be invoked. The present writ petition and pending applications are dismissed.

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• 2022 (10) TMI 235
  Reopening of assessment u/s 147 - validity of order passed u/s 148A(d) and the notice issued under Section 148 - as alleging that Petitioner had sold immovable property - as stated in the impugned order passed u/s148A(d) the Respondents while admitting the factual mistake stated that since the Petitioner already knew about the issue, he should have explained the source of the purchase of the property in its reply - HELD THAT:- Revenue reiterates that though there was factual mistake in the notice issued u/s 148A(b) of the Act, yet as the petitioner knew the factual issue, he should have explained the source of purchase of property. After hearing learned counsel for the parties, this Court is of the view that there has been clear violation of principles of natural justice, inasmuch as, the respondent never asked the petitioner to explain the source of purchase of the property and passed the impugned order on the basis that petitioner did not explain the source of the purchase. Consequently, the impugned order passed u/s 148A(d) and notice issued under Section 148 dated 17th and 18th July, 2022 of the Act are set aside and the respondent is given liberty to issue a corrigendum and a supplementary show cause notice under Section 148A(b) within two weeks. Thereafter, the petitioner is given liberty to file a reply to the notice issued under Section 148A treating the transaction of sale as a transaction of purchase within four weeks. The petitioner in its reply shall also explain the source of fund for purchase of property. The Assessing Officer shall pass the order under Section 148A(d) of the Act in accordance with law.

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• 2022 (10) TMI 234
  Application for early hearing - petitioner s appeal stands transferred to respondent No. 2 - National Faceless Appeal Centre - petitioner seeks a direction to the respondents to list, hear and decide the first appeal filed by the petitioner against the assessment order and freezing proceeding issued against her by the concerned Assessing Officer within a period of one month - HELD THAT:- Respondents states that if the petitioner files an application for early hearing, the same shall be considered expeditiously. Accordingly, the present writ petition along with pending application is disposed of with a direction to the petitioner to file an early hearing application before the appellate authority, i. e., National Faceless Appeal Centre. In the event, such an application is filed within two weeks, respondent No. 2 is directed to decide the same in accordance with law within four weeks thereafter.

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• 2022 (10) TMI 233
  Validity of Reopening of assessment - initiation of proceedings u/s 148A - As argued even though a prayer for short adjournment was made to file response to notices u/s 148A despite having been duly acknowledged, no time was granted and the orders were passed which has resulted in miscarriage of justice because according to the petitioners one single transaction of alleged cash deposit of Rs.34,01,000/- has been taken into consideration as two different cash deposits to make it Rs.68,02,000/- only to surpass the bar under Section 149 - HELD THAT:- We find that though notices under Section 148A of the I.T. Act were given to the petitioners to file their response within the statutory period of seven days, the petitioners applied for adjournment. The orders passed under clause (d) of Section 148A do not refer to such prayer for adjournment. Taking into consideration that the material placed before us does not show any extraordinary grounds for seeking such adjournment, only on that ground we are not inclined to interfere with the orders which have been passed under clause (d) of Section 148A - However, at the same time taking into consideration the very substantial point which has been raised by the petitioners that one single cash deposit has been taken as two different transactions, which according to the petitioners is factually incorrect and not borne out from any of the record including transactions made as entered in the accounts of the bank, we are of the view that this objection should be taken into consideration by the authority concerned in proceedings under Section 148 which have now been initiated. The authority would be obliged under the law to decide this very objection with reference to the relevant material, which has been placed before it by the petitioners as also by collecting other material including the bank transactions, slips, statements and specific record and clear reasons on the objection raised by the petitioners that the alleged income chargeable to tax is less than Rs.50,00,000/- as there is only single alleged transaction of Rs.34,01,000/- and not two transactions as stated in the proceedings drawn u/s 148A. These petitions, at this stage, are disposed off with liberty to the petitioners to revive their cases, if eventuality so arises.

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• 2022 (10) TMI 232
  Delhi High court territorial jurisdiction to entertain and decide this appeal - HELD THAT:- The initial registered office of the Assessee was Noida (U.P) and the assessment order as well as remand report and order in appeal have been passed by the Assessing Officer and CIT(A) based in Noida. After amalgamation, the Appellant s registered office is now situated in Bangalore. Even the appeal has been preferred by the Principal CIT, Bangalore. Accordingly, present appeal is dismissed on the ground of lack of territorial jurisdiction. However, the Appellant is given liberty to file the appeal in a Court having territorial jurisdiction. The Appellant is also given liberty to file an application seeking condonation of delay along with the appeal, if any, to be filed. Needless to state that the same shall be considered on its own merits.

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• 2022 (10) TMI 231
  Lack of territorial jurisdiction - this Court territorial jurisdiction to entertain and decide this appeal - HELD THAT:- The initial registered office of the Assessee was Noida (U.P) and the assessment order as well as remand report and order in appeal have been passed by the AO and CIT(A) based in Noida. After amalgamation, the Petitioner s registered office is now situated in Bangalore. Even the appeal has been preferred by the Principal CIT, Bangalore. Accordingly, present appeal is dismissed on the ground of lack of territorial jurisdiction. However, the Appellant is given liberty to file the appeal in a Court having territorial jurisdiction. Appellant is also given liberty to file an application seeking condonation of delay along with the appeal, if any, to be filed. Needless to state that the same shall be considered on its own merits.

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• 2022 (10) TMI 230
  Revision u/s 263 by CIT - Addition u/s 68 - share capital unsecured loan introduced/raised during the year and the claim of depreciation and additional depreciation - case of the assessee was selected through CASS selection for Complete Scrutiny, where the purpose of assessment was to scrutinize the substantial increase in share capital including creditor in the captioned year - HELD THAT:- Assessee was selected through CASS selection for Complete Scrutiny, where the purpose of assessment was to scrutinize the substantial increase in share capital including creditor in the captioned year. During the course of assessment proceedings, the Ld. AO made detailed enquiries on this issue on the issue of claim of depreciation on addition of fixed assets and after consideration of time-to-time written submissions filed by the assessee and documents / evidence placed on record, the Ld. AO accepted the submission and explanation of the assessee. CIT initiated 263 proceedings on the ground that the AO has not made enquiries or verification which should have been made in respect of share capital introduced, unsecured loan raised during the year under consideration and claim of depreciation investment allowances under section 32AC of the Act. It is not the case of the Pr. CIT that the Ld. AO did not apply his mind to the issue on hand or he had omitted to make enquiries altogether. In the instant set of facts, AO had made detailed enquiries and after consideration of material placed on record, accepted the claim of the assessee. We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings by the Ld. Pr. CIT. Ground of appeal raised by the assessee is thus allowed.

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• 2022 (10) TMI 229
  Deduction u/s 80IC - independent unit v/s extension of unit - whether a new industrial undertaking can function independently of the existing industrial undertaking? - assessee is partnership firm and engaged in the business of manufacturing of Auto Parts - assessee has two different manufacturing units based in Rajkot and Rudrapur Uttaranchal - AO concluded that the Rudrapur Uttaranchal unit is not independent unit but the extension of Rajkot unit only thus the deduction claimed by the assessee u/s 80IC was disallowed and added to the total income of the assessee - HELD THAT:- Assuming for the moment that the new unit is not capable of independently producing the goods without taking the assistance of the existing plant and machinery of the old unit is no ground to reject the claim u/s 80-I - It all depends upon the mechanism and technology. As held by the Supreme Court in Textile Machinery Corporation [ 1977 (1) TMI 3 - SUPREME COURT] , such a new industrially recognizable unit of an assessee cannot be said to be reconstruction of his old business since there is no transfer of any assets of the old business to the new undertaking which takes place when there is reconstruction of the old business. A doubt was also raised by the AO whether the eligible unit of the assessee was carrying out any work or it was merely acting as the selling out let of the non-eligible unit which is actually carrying out the manufacturing activity. We note that the assessee has claimed wages expenses which were subject to PF, electricity expenses. Likewise, there was huge investments in the plant and machinery. The assessee has also filed audit report in form 10 CCB, purchase details of the raw materials, the approval notification No. 283 /2006 of the eligible unit, but there was no doubt raised by the AO on these details. After considering the necessary details, we do not find any reason to interfere in the finding of CIT-A and thus, we direct the AO allow the claim to the assessee under the provisions of section 80 IC of the Act. Hence the ground of appeal of the revenue is hereby dismissed. Expenses apportioned by the AO to the non-eligible unit - HELD THAT:- We find that the AO was supplied with the audited financial statements of the eligible units pertaining to different financial years which are placed for the purpose of the comparison of the gross profit ratio but there was no adverse comment by the AO. Meaning thereby, the revenue has accepted the profit of the eligible unit in the earlier years. Therefore the same cannot be disturbed in the year under consideration keeping in view of the principles of consistency. AO was supplied with the computation of cost per unit with respect to the products manufactured at eligible unit - But no defect was pointed out by the AO during the assessment proceedings. With respect to the remuneration to the partners, we find that as per the deed of partnership, the partners were entitled for the remuneration only with respect to the profit of non-eligible unit subject to the maximum of Rs.6 crores. The available profit of the non-eligible unit and the allowable remuneration was worked out at Rs.16.08 crores but it was limited to the maximum of Rs.6 crores only. Furthermore, it was also explained that none of the partner was taking active participation in the affairs of eligible unit. Moreover, there was no loss to the revenue for the reason that the amount of remuneration received by the partners is taxable in their hands subject to the provisions of section 40(b) of the Act. Allocation of factory overhead, transportation expenses, admin and selling expenses of Rs. 11,11,38,030.00 it was contended by the assessee before the AO that all the expenses pertaining to different units were booked respectively. The assessee to buttress its argument has also filed the chart of manufacturing expenses. Likewise, there was not much outward freight expenses in respect of eligible unit for the reason that goods were supplied within Rudrapur Unit but it was not so in case of Rajkot unit. It was also submitted by the assessee that except audit expenses which were born by the non-eligible unit in the entirety, there was no other expense which was shifted from eligible unit to non-eligible unit. There were term loans taken by both the units for acquiring the machineries and the corresponding interest and depreciation was accounted for in the respective units. All these submissions were made available during the assessment proceedings which can be verified from the paper book. However the AO has not pointed out any defect in the submission filed by the assessee. DR has not pointed out any infirmity in the finding of the learned CIT-A. Thus in view of the above and after considering the facts in totality, we do not find any reason to interfere the finding of the learned CIT-A. Accordingly, we uphold the same. Hence, the ground of appeal of the revenue is hereby dismissed.

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• 2022 (10) TMI 228
  Short term capital gain on sale of agricultural land - Nature of land sold - Addition by treating the land as capital asset - whether land in fact is not an agricultural land and as such is not a capital asset as defined u/s.2(14) of IT Act - HELD THAT:- As in the present case apart from the purchase and sale deeds of conveyance and 7/12 extracts from land revenue records, no other evidence has been brought on record by the assessee of having cultivated the land or carrying any agricultural activity during the period when land was held by the assessee or period prior thereto or subsequent to its sale. Thus, respectfully following the aforesaid decision of coordinate bench of the Tribunal in Abhijit Subash Gaikwad [ 2015 (5) TMI 971 - ITAT PUNE ] we find no infirmity in the impugned order passed by the learned CIT(A). Accordingly, grounds raised by the assessee are dismissed.

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• 2022 (10) TMI 227
  Reopening of assessment u/s 147 - Unexplained cash credit u/s 68 - transaction of unsecured loan - case of assessee was reopened on the basis of information of DDIT (Inv.), Surat that the assessee is a beneficiary of cheque discounting transaction - HELD THAT:- Validity of reopening or invalidity of notice are mixed question of fact and which cannot be raised at this stage in absence of any cogent material or evidence which make clearly suggest that the reopening of validity of notice is not in accordance with law, therefore, we are of the view that the necessary fact and law are not emanating from the order of ld. CIT(A). Therefore, additional ground of appeal raised by assessee is dismissed. Addition u/s 68 - As both the lenders in the present case categorically stated before assessing officer that the transactions with the assessee is paper transaction and merely accommodation entry. Thus, in view of the aforesaid discussion, we do not find any merit in the submissions of the ld AR for the assessee that the transaction of unsecured loan was genuine transaction. In the present case, the assessing officer allowed cross examination of entry provider, who remained stand on their examination in chief. Hence, we affirm the order of ld CIT(A), which is assailed in ground No.2 of this appeal. In the result, ground No. 2 of the appeal is dismissed.

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• 2022 (10) TMI 226
  Disallowance of exemption u/s. 54 - Fresh claim before CIT(A) - before the AO the assessee could not make a claim for deduction otherwise than by filing a revised return - CIT-A deleted the addition - whether CIT(A) has erred in ignoring that the fact that, the intention of section 54 has always been to provide exemption if the assessee constructs one residential house in India in the event of capital gains arising from transfer of residential house and the amendment brought in Finance Act, 2014 is only a clarifying amendment and did not change the position of law? HELD THAT:- As case of assessee was picked up for limited scrutiny and one of the issues involved was sale consideration of property in ITR is less than sale consideration in Form 26QV. Para 3 of the assessment order specifically mentions that on 05.12.2016. Assessee was directed to show cause why sale consideration as shown in 26AS was not shown in ITR and why no income was offered as capital gain. Once the assessing officer had taken into consideration Form 26QV and the report under 26AS, which have to considered to be part of the returns of an assessee and the assessee has replied in detail to the query putting forth all the information about the transaction along with documents as to how no capital gain had arisen then it can not be a case that assessee had made claim beyond his return. Assessment is not only of the income but also involves considering claim of the exemption or deduction which flow with the assessee s income. CIT(A) was very much in powers to consider the claim of the assessee which was left half way by the Ld. AO. Then, upon going through order of ld. CIT(A) it can be observed that Ld. CIT(A) has meticulously examined the claim of deduction u/s 54 of the Act in terms of eligibility and quantum. He specifically dealt with question if the sale proceeds can be used for purchasing property in Dubai and has rightly relied the judgment quoted by Ld. Sr. Counsel before this Bench wherein it was held that prior to amendment brought by Finance Act No. 2, 2014 the benefit of exemption is available even if the house is purchased / constructed outside India. As examined the evidence on record which established that assessee purchased the residential plot in the name of himself and his wife and constructed residential house within the prescribed period. As with regard to the contention of Ld. DR that this aspect was required to be examined by ld. AO and he had no material before him then going by the grounds raised there is no ground of the appeal of the revenue that assessee had failed to prove construction of the house on the plot within prescribed period. Rather, Ld. CIT(A) has relied completion certificate bearing consultants signature dated 15.12.2017. There is no substance in the arguments raised on behalf of the Revenue and the Ld. CIT(A) had not fallen in error in extending benefit of deduction u/s 54 of the Act to the assessee. There is no substance in the grounds raised. The appeal of Revenue is dismissed.

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• 2022 (10) TMI 225
  Unexplained cash deposit in Banks - assessee stated that primary pleadings and arguments against the additions made was that it tantamounted to duplicate addition since cash deposited related to only one bank account ,each in HDFC Bank and Dena Bank, jointly held in the names of both the assessees while the Revenue had held that there was separate bank accounts in relation to which addition of cash found deposited had been made in the hands of both the assessee - HELD THAT:- As noted from the submissions of the assessee before the Ld.CIT(A), that they had offered to submit any further evidences which was required to prove his case. But the Ld.CIT(A) simply dismissed this contention of the assessee stating that copies of the other alleged bank accounts had been obtained from the banks by the Revenue u/s 133(6) of the Act. The assessee was neither provided copy of these bank accounts nor given any further opportunity to prove that these Bank accounts never belonged to the assessee - CIT(A) simply relied on this information obtained and dismissed assesses arguments completely. Now before us the assessee has produced certificates from the Bank denying existence of any such Bank accounts. This is a very crucial piece of information for adjudicating the issue at hand. And as noted above the assessee was barely provided any opportunity to produce it before the Ld.CIT(A).These evidences now filed by the assessee before us are therefore being admitted by us for adjudicating the issue. Assessee has explained source of cash deposited in their bank accounts, as has being related to the moneys which they had earlier lent to friends and relatives in India by transferring to them through Western Union and had substantiated the explanation by producing documents evidencing transfer of money by the assessees through Western Union. Even these evidences have not been properly appreciated by the authorities below. The assessees had stated to the authorities below that both of them were senior citiziens and had moved to USA way back in 1997-98. That they used to come to India only for brief visits. That on requests from relatives they had on several occasions transferred money to them through Western Union. And when they visited India briefly in the impugned year, in January February 2011, these relatives returned back some of the money earlier lent to them in cash which was deposited in their bank accounts. The Revenue has not controverted the fact that the assesses are NRI s and senior citizens. Copies of documents of Western Union evidencing money transfer by the assesses to India was filed to the Revenue authorities. There is no finding of any source of income of the assesses in India, by the Revenue. The veracity of the assesses explanation ought to have been considered by the Revenue in this backdrop of facts. But they chose to apply strict standards of proving genuineness of cash credits by filing confirmations and other documents from the purported depositors. Since the basic issue of existence of actual bank accounts of the assesses, in our considered view needs reconsideration, we restore both the cases back to the AO to first establish this basic fact and thereafter proceed to determine the issue of cash deposits whether explained or not, in accordance with law - Appeals of the assesseeare allowed for statistical purpose.

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• 2022 (10) TMI 224
  Validity of the proceedings u/s 153A - Warrant issued in name of assessee - HELD THAT:- A perusal of the warrant of authorization clearly shows the name of the assessee. Similarly, the copy of the Panchnama also clearly mentions the name of the assessee. Therefore, once the name of the assessee is mentioned in the copy of the search warrant and in the copy of the Panchnama, the argument for the assessee that the CIT (A) is not justified in confirming the action of the AO in initiating proceedings u/s 153A of the Act is misconceived and therefore, the same is liable to be dismissed. We accordingly dismiss the ground raised by the assessee on this issue. Addition on account of cash receipts - HELD THAT:- We find in appeal, CIT (A) sustained the addition on the ground that despite a period of 2 years from the date of search till the date of completion of assessment proceedings, the assessee could not offer any satisfactory explanation and the assessee during the course of search had himself declared additional income of Rs.15.00 crores. As the submission of the learned Counsel for the assessee that it is not an un-accounted receipt but the same is on account of sale of land and the assessee has claimed such receipt as exempt income. Further, in absence of maintenance of any books of account by the assessee no addition u/s 68 can be made. It is also his submission that although admission is an important piece of evidence but the same is not conclusive. Hon ble Supreme Court in the case of Pullangode Rubber Produce Co. vs State Of Kerala And Anr. [ 1971 (9) TMI 64 - SUPREME COURT ] has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It has been held that it is open to the person who made the admission to show that it is incorrect. We find the assessee in the instant case in the return of income filed by him, has claimed an amount as exempt on account of sale of agricultural land. Therefore, we find some force in the argument of the learned Counsel for the assessee that the same cannot be treated as unexplained cash receipts, However, the alternate contention of the learned Counsel for the assessee that the same can be treated as capital gain and due indexation benefit be allowed is acceptable. We, therefore, deem it proper to restore the issue to the file of the Assessing Officer with a direction to consider the amount of receipt by the assessee as sale proceeds of a capital asset and allow consequential indexation benefit of the cost of the asset and determine the long-term capital gain after verifying the details. Needless to say, that the Assessing Officer while deciding the issue shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The ground raised by the assessee is allowed for statistical purposes. Unexplained cash receipts - HELD THAT:- A perusal of the seized document placed clearly shows that this is the a/c of Shri Pujala Mahesh Babu as on 31.5.2011 with Shri T. Jangaiah. The total of the first three entries i.e., Rs.15,90,000/-, Rs.30,00,000 and Rs.5,00,000/-comes to Rs.51,86,000). The first amount is again received by cheque, whereas the subsequent entries are received in cash. Further, the fourth entry shows that an amount of Rs.15,00,000 was returned by cheque and other amounts were returned by cash. Thus, the account is squared up during the year itself. Further, the assessee does not maintain any books of account. Therefore, the addition of the same u/s 68 in our opinion, is not called for. However, when the assessee is undertaking certain transactions with one Shri T. Jangaiah and he was engaged in the business of real estate therefore, he must have earned some income. Since the total amount of receipts including the cheque receipt is amounting to Rs.51,80,000/- therefore, profit @ 10% of the addition of Rs.51,80,000/- as against Rs.51,80,000/- made by the Assessing Officer and sustained by the learned CIT (A), in our opinion, will meet the ends of justice. We hold and direct accordingly. Ground of appeal No.5 raised by the assessee is accordingly partly allowed. Unexplained investment in lands at Indrakaran Village on the ground that the assessee was unable to explain the source of the above investments - HELD THAT:- No infirmity in the order of the learned CIT (A) on this issue. Admittedly, the assessee could not explain the source of such investment. Further, as mentioned earlier, this land was purchased during the year itself and the onus was on the assessee to explain the source of such investment. Merely stating that the assessee has sufficient funds will not absolve the assessee from his responsibilities especially when no cash flow statement was filed to explain the availability of funds and the assessee is also not maintaining any books of account. In this view of the matter and in view of the detailed reason given by the CIT (A) while sustaining the addition made by the Assessing Officer, we do not find any infirmity in the order of the learned CIT (A) on this issue. Accordingly, ground of appeal No.6 is dismissed. Addition u/s 68 - undisclosed income in absence of satisfactory explanation - HELD THAT:- As entire amount cannot be added to the total income of the assessee. Since the assessee is involved in the real estate business and the entries in the books of account do not indicate whether it is in the nature of money received for purchase of land or loan etc., and the assessee has not declared any income from business, therefore, considering the totality of the facts of the case, we are of the considered opinion that the adoption of profit rate at 10% on the amount of Rs.21.00 lakhs will meet the ends of justice. We hold and direct accordingly. The ground raised by the assessee is accordingly partly allowed. Unaccounted receipts - assessee has received under the head Tulsi Bhavani Nagar, Chengicherla during the Financial Year 2012-13 but when confronted, the assessee had no reply - HELD THAT:- Assessing Officer cannot make the addition of both the receipts and payments. If the amount of Rs.81,25,000/- is considered as expenditure and Rs.56.00 lakhs as receipts, then the difference comes to Rs.25,25,000/-. Since the assessee has already disclosed an amount of Rs.22,07,990/- as profit from the said project, therefore, in our opinion, the addition of the difference amount being Rs.3,17,010/- under the fact and circumstances of the case can only be made which will meet the ends of justice. We, therefore, modify the order of the learned CIT (A) on this issue and direct the Assessing Officer to restrict the addition to Rs.3,17,010/- as against addition of Rs.81,25,000/- plus Rs.56,00,000/-. The ground raised by the assessee is accordingly partly allowed. Unaccounted expenditure - HELD THAT:- CIT (A) without verifying the fact has sustained the addition. Since the entry in the seized document clearly mentions the date as 20.07.2013 which pertains to A.Y 2014-15, therefore, the learned CIT (A) in our opinion, is not justified in sustaining the addition of Rs.12.00 lakhs in the A.Y 2013-14. Accordingly, the same is directed to be deleted. For remaining amount accept the alternate contention of the assessee that out of the remaining amount of Rs.42,80,000/-, only 30% of the same being the share of the assessee as mentioned can be added which comes to Rs.12,84,000/-. So far as the addition of Rs.10,00,000/- is concerned, the learned Counsel for the assessee could not give any satisfactory explanation for which the same has to be sustained. We, therefore, set aside the order of the learned CIT (A) and direct the Assessing Officer to restrict the addition to Rs.22,84,000/- (i.e. Rs.12,84,000 + Rs.10,00,000) as against Rs.12,10,000, Rs.10,00,000/- and Rs.49,90,000/- respectively. The ground raised by the assessee is accordingly partly allowed. Disallowance of agricultural income - HELD THAT:- Since the assessee in the instant case failed to substantiate with evidence to the satisfaction of the revenue authorities and to our satisfaction that the income so derived is on account of the agricultural land which was used for agricultural activity, therefore, the order of the learned CIT (A) in our opinion is fully justified. Accordingly, ground raised by the assessee is dismissed. Recomputation of capital gain - HELD THAT:- We do not find any infirmity in the order of the CIT (A) in directing the Assessing Officer to recompute the capital gain after reducing the cost of acquisition from the sale proceeds - DR could not point out any error in the order of the learned CIT (A) on this issue. We, therefore, uphold the order of the learned CIT (A) and direct the Assessing Officer to recompute the capital gain after reducing the cost of acquisition from the sale proceeds after due verification. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee while deciding the issue. We hold and direct accordingly. Ground of appeal No.9 by the assessee and ground of appeal by the Revenue are accordingly allowed for statistical purposes. Addition u/s 68 - HELD THAT:- We find the AO in the instant case made addition being the cash deposit in the Bank A/c maintained with Kotak Mahindra Bank on the ground that the assessee could not substantiate with evidence to his satisfaction that these cash deposits were business receipts. We find the CIT (A) deleted the addition the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the learned CIT (A) on this issue. Since the assessee in the original return of income had declared business income and since all the receipts and the business income have already been taxed, therefore, we do not find any infirmity in the order of the CIT (A) in deleting the addition in absence of any contrary material brought to our notice. Accordingly, the order of the learned CIT (A) is upheld and the ground raised by the revenue is dismissed. Unexplained cash credits - HELD THAT:- Since the Assessing Officer has accepted the cheque amount received from Shri Brahmanna for the Bodupal venture, where his share is mentioned at 20% in the seized documents itself, therefore we find force in the argument of assessee that the balance amount also received in cash from Shri Brahmanna towards his 20% share could not be added as income of the assessee. We therefore, set aside the order of the learned CIT (A) and direct the Assessing Officer to delete the addition. Unaccounted expenditure - HELD THAT:- First addition we find the same is based on the seized document which is a cash receipt dated 20.01.2014 and it is received from one Mr. Sudhakar S/o Late Shri N. Venkatesh. The receipt is also towards sale of agricultural land situated at Bodupal in Ghatkeswar Mandal in Ranga Reddy District. It is the submission of the learned Counsel for the assessee that the said amount is received by one Mr. N. Sudhakar from one Mr. R. Brahmanna Goud for purchase of agricultural land and therefore, this cannot be added to the total income of the assessee. However, the assessee has not explained who is Mr. N. Sudhakar and as to whether he is an employee or agent. It is also not known as to why this receipt was found from the premises of the assessee. Therefore, the submission of the learned Counsel for the assessee that since it was issued by Mr. N.Sudhakar, the addition cannot be made in the hands of the assessee cannot be accepted. The order of the learned CIT (A) sustaining this addition is accordingly upheld. For second addition submission of assessee that it represents only the working and no information is available that the assessee has received the amount of Rs.25.00 lakhs from Sri Sudhakar or from anyone. However, we do not find any merit in the above argument of the learned Counsel for the assessee in absence of any satisfactory explanation. Therefore, the order of the CIT (A) sustaining the addition made by him so is upheld. Undisclosed receipts - HELD THAT:- A perusal of the copy of the return of income filed by the assessee shows that the assessee has declared sale considerationbeing 1/5th in the sale of land at Marepally, Ghatkesar Mandal, Hyderabad. After deducting the purchase cost of Rs.75.00 lakhs, the assessee has declared profit of Rs.21,30,654/- which is not disputed by the Assessing Officer in the assessment order. Since the Assessing Officer himself has accepted capital gain therefore, again making the addition for the same seized document, in our opinion, is not justified. Therefore, we set aside the order of the learned CIT (A) and direct the Assessing Officer to delete the addition. Accordingly, this ground raised by the assessee is allowed.

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• 2022 (10) TMI 223
  Revision u/s 263 by CIT - Deduction u/s 80P - Allowability of deduction towards interest income received from Co-operative banks claimed u/s 80P(2)(a)(i) of the Act - HELD THAT:- It is pertinent to note that ld. AO adjudicated the issue of claim made by the assessee u/s 80P by passing a detailed order and more importantly making an addition in this respect of Rs. 1,95,605/- towards net income received by the assessee from HDCCB. Therefore, present case cannot be termed as a case of lack of enquiry by the ld. AO as alleged by the ld. PCIT. As dealt with Explanation 2 as inserted by the Finance Act, 2015 in the case of Narayan Tatu RaneI [ 2016 (5) TMI 1162 - ITAT MUMBAI] to hold that the said Explanation cannot be said to have overridden the law as interpreted by the Hon ble Delhi High Court, according to which the ld. PCIT has to conduct an enquiry and verification to establish and show that the assessment order is unsustainable in law - intention of the legislature could not have been to enable the ld. PCIT to find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law, since such an interpretation will lead to unending litigation and there would not be any point of finality in the legal proceedings. The opinion of the ld. PCIT referred to in section 263 of the Act has to be understood as legal and judicious opinion and not arbitrary opinion. AO after undertaking requisite enquiries, had taken one of the plausible views on the claim of the assessee u/s 80P of the Act and has made the disallowance in this respect while completing the assessment for which assessee did not go into appeal. Accordingly, the impugned revision order passed by ld. PCIT u/s 263 holding the assessment order as erroneous in so far as it is prejudicial to the interest of revenue is not sustainable and is therefore, quashed. Thus, the grounds of appeal by the assessee are allowed.

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• 2022 (10) TMI 222
  Income accrued in India - Addition of profit of the assessee from providing technical services to other airlines - Whether profit of the assessee from providing technical services to other airlines is covered by Article 8(1) and 8(4) of the DTAA between India and Germany, and by Article 8(1) and 8(3) of the DTAA between India and Netherlands? - HELD THAT:- As observed, taxability of income received from technical and ground handling services provided to other airlines is a recurring issue between assessee and the Revenue since assessment years 2004-05 onwards. While deciding the issue for the first time in assessment years 2004-05 to 2008-09, the Hon ble jurisdictional High Court, in judgment [ 2017 (2) TMI 157 - DELHI HIGH COURT] has held that the income derived by assessee from provision of technical and ground handling services to other airlines in India is covered under Article 8(3) of the Tax Treaty, hence, not taxable. Identical view was expressed by the Hon ble jurisdictional High Court in assessee s own case in assessment years 2009-10 to 2012-13. In the latest order passed by the co-ordinate Bench in assessee s own case in assessment year 2015-16 and 2016-17 [ 2022 (6) TMI 1313 - ITAT DELHI] issue decided in favour of assessee as profits of the assessee from providing technical services to other airlines is covered by Article 8(1) and 8(4) of the Double Taxation Avoidance Agreement between India and Germany and by Article 8(1) and 8(3) of Double Taxation Avoidance Agreement between India and Netherland - Decided against revenue.

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• 2022 (10) TMI 221
  Deduction u/s 80P - disallowance in respect of proportionate interest under Section 80P of the Act claimed by the assessee - HELD THAT:- Jurisdictional High Court in the case of State bank of India Employees Co-operative Credit Supplies Limited [ 2016 (7) TMI 516 - GUJARAT HIGH COURT ] has clearly held that income by way of interest earned by society or investment of idle or surplus does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank and thus clause (d) of Section 80P(2) of the Act would not apply in the facts and the circumstances of the present case. The assessee is engaged in the business of providing credit facilities to its members and no other income accrues to the Society in the form of interest from investment and surplus fund to the co-operative bank. The Hon ble High Court directed the Assessing Officer to allow primary expenses in respect of interest on deposit held with Nationalised Bank to the assessee for computing deduction under Section 80P after examining/verification and affording adequate opportunity to the assessee. The present assessee s case before us also is identical to that of the issues dealt by the Hon ble Jurisdictional High Court and, therefore, we direct the Assessing Officer to allow proportionate expenses in respect of interest from deposit held with Nationalised Bank and co-operative bank for computing deduction under Section 80P of the Act after examining/verification and affording adequate opportunity to the assessee. Appeal of assessee is partly allowed for statistical purpose.

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• 2022 (10) TMI 220
  Disallowance u/s.14A r.w.r. 8D - HELD THAT:- As has been held by the Hon ble Supreme Court in the case of Godrej Boyce Manufacturing Co. Ltd [ 2017 (5) TMI 403 - SUPREME COURT ] in the assessment year 2010-2011 as the provisions of rule 8D had not been made workable, no disallowance to be made under Section 14A r.w.r.8D as a computation machinery was not available. Thus, the addition made by the AO and as confirmed by the CIT(A) under Section 14A r.w.r.8D stands deleted. Disallowance under Deduction on Audit Fees - HELD THAT:- As it is noticed that the assessee has paid the audit fees before the due date of filing of the return and it has also been recognised by the AO in the assessment order, we are of view that the addition made on the ground that it is a provision, is not called for. In the circumstances, the addition made by the AO and as confirmed by the CIT(A) under the head Deduction on Audit Fees stands deleted. Disallowance on contribution to the recognised Gratuity Fund - HELD THAT:- As it is noticed that the issue is now squarely covered by the decision of the Hon ble Supreme Court in the case of Textool Co. Ltd. [ 2009 (9) TMI 66 - SUPREME COURT ] respectfully following the provisions laid down by the Hon ble Supreme Court, the addition as made by the AO and as confirmed by the CIT(A) in respect of contribution to LIC master policy in respect of the gratuity fund stands deleted. Disallowance under other provisions being Pay Arrears - HELD THAT:- As noticed that the computation of the revision of pay has been made by the assessee for 31 months and the same has been accepted by the AO for a period of 27 months, obviously the computation is on scientific basis, it is not an unascertained liability. The liability has crystalised. In these circumstances, in line with the principle laid down in the case of Bharat Earth Movers Ltd. [ 2000 (8) TMI 4 - SUPREME COURT ] disallowance of the provisions for pay arrears as made by the AO and as confirmed by the CIT(A) stands deleted. Addition under the head other provisions - this amount consisted of two figures, one is ex-gratia to the deceased employee and the second is provision for fraud - CIT(A) has enhanced the assessment by making the disallowance on the ground that these were only provisions - HELD THAT:- For issue of ex-gratia to the deceased employee, admittedly, the employee had expired during the relevant assessment year. On the demise of an employee, the ex-gratia due to him is automatically computed. The amount is crystalised immediately on the demise of an employee. In fact, on the demise of an employee attempt is made to mitigate the financial loss to the family of employee at the earliest. This is but a social responsibility. Therefore, it cannot be said that this amount has not been crystalised nor can it be said that it is liable to be allowed only in the year of payment. In view of the provision of the Hon ble Supreme Court in the case of Bharat Earth Movers Ltd. [ 2000 (8) TMI 4 - SUPREME COURT ] as the amount has been crystalised, we are of the view that the said amount is an allowable expenses. Thus, the addition as made by the ld. CIT(A) for enhancement of provision with regard to ex-gratia to the deceased employee for the relevant assessment year stands deleted. For issue of provision for fraud as noticed that the said amount is not crystalised in any manner whatsoever. The provision is made on the basis of allegation. This allegations needs to be verified. It needs to be proved. An attempt for recovery must be made from the persons, who have committed the fraud. Where the fraud amount is recovered is not known. Obviously, it cannot be said that the liability is crystalised - we find strength in the submission of the ld. CIT-DR that the same is allowable in the year in which the amount has been written off from the books of accounts on account of fraud - disallowance as made by the CIT(A) under the head provision for fraud would have to be verified and consequently, it is restored to the file of AO for verification as to the amount that is liable to be allowed on actual determination on account of fraud. Accordingly, ground No.6 is partly allowed for statistical purposes. Denial of claim of deduction u/s.80P - As submitted assessee is a cooperative society doing business of retail banking and is entitled to deduction u/s.80P - HELD THAT:- As it is noticed that the issue in respect of claim of deduction u/s.80P is squarely covered by the decision of the coordinate bench of the Tribunal in assessee s own case for A.Y.2012-2013 [ 2018 (3) TMI 955 - ITAT CUTTACK ] respectfully following the findings recorded therein by the Tribunal, the denial of claim of deduction u/s.80P of the Act by the AO and the confirmation of the same by the ld. CIT(A) stands upheld. This ground of assessee is dismissed.

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• 2022 (10) TMI 219
  Royalty receipt - Quantification of royalty adjustment - HELD THAT:- We find that on the same agreement, ITAT in earlier years have given a finding and has directed the rates at which royalty should be charged. Now, ld. DR for the Revenue is finding fault in the aforesaid order and arguing that the same need not to be followed. However, we are of the considered opinion that order of the ITAT in assessee s own case in earlier years need to be followed for the principles of judicial discipline. It is also not the case that Hon ble Delhi High Court has reversed the orders of ITAT We direct that in case of Dabur Nepal (P) Ltd., royalty is quantified at nil, the case of Dabur International UAE, royalty is quantified at 0.75% of FOB sales and in case of Asian Consumer Care Ltd., Bangladesh, royalty is quantified at 0.75% of FOB sales. Corporate guarantee charges - TPO determined arm s length price of providing corporate guarantee @ 75% of interest - HELD THAT:- We find that in assessee s own case, ITAT has for three successive years given orders which have not been reversed by the Hon ble jurisdictional High Court, hence we are not convinced with the reasoning of ld. DR for the Revenue to depart from the aforesaid order of ITAT in assessee s own case - Since the above order of ITAT is in assessee s own case and we are not convinced with the reasoning of the ld. DR to depart from the same, we follow the order of aforesaid coordinate Bench of the Tribunal and direct accordingly. Interest on loan to AE - TPO adopted PLR + 3% and imputed rate of interest @ 14.88% - HELD THAT:- We find that in assessee s own case, ITAT has upheld the deletion by the ld. CIT (A). ITAT has duly found that the same was in accordance with the Hon ble Delhi High Court decision in the case of CIT vs. Cotton Naturals (I) Pvt. Ltd. [ 2015 (3) TMI 1031 - DELHI HIGH COURT ] ITAT has also referred to other decisions. In this view of the matter, we are not convinced with the reasoning given by the ld. DR for the Revenue to distinguish the ITAT decision in assessee s own case. Accordingly, we uphold the order of ld. CIT (A) on this issue and deletion of the addition. Interest on receivables - TPO held that interest rate of 14.88% would be the arm s length interest for the receivables form the AE - CIT (A) gave relief to the assessee on a finding that assessee does not charge interest from its unrelated parties also and that the net margin of the assessee in these transactions with AEs is significantly higher - HELD THAT:- Upon careful consideration, we are not in agreement with the submission of ld. DR. It is no doubt that after the amendment, receivables are an international transaction which needs to be benchmarked separately but as rightly pointed out by the ld. CIT (A) above that the margin of the assessee both in FMCG and non-FMCG segment is much higher than the comparables. Hence, since benchmarking under both the segments has been accepted in the transfer pricing, we do not find any infirmity in the order of ld. CIT (A) that there is no reason to separately benchmark receivables. Deduction u/s 80IB and 80IC by further allocation of Head Office expenses to eligible units - HELD THAT:- As decided in own case [ 2021 (2) TMI 1250 - ITAT DELHI ] units are eligible for the deduction u/s 80IB/80IC which is identical to that of earlier years i.e. 2007-08 and 2009-10. Hence, the CIT(A) has rightly allowed this deduction. It is pertinent to note that similar allocation of expenses and depreciation made by the Assessing Officer in A.Y. 2008-09 was also deleted by the Tribunal. Belated payment of employees contribution of ESI under section 36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- This issue is now covered in favour of the assessee even after the amendment as held by ITAT Delhi Benches. ITAT, Delhi in the case of M/s. Express Roadway [ 2021 (10) TMI 514 - ITAT DELHI ] has followed Hon ble Delhi High Court decision in the case of CIT vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT ] and SPL Industries [ 2010 (7) TMI 81 - DELHI HIGH COURT ] for the proposition that such additions are not sustainable if the impugned payments are done upto the date of filing of return of income for the concerned assessment year. Hence, we uphold the order of ld. CIT (A). Disallowance u/s 14A read with Rule 8D - HELD THAT:- We find that the facts in the present case are also not in dispute that assessee has not earned any exempt income. In this view of the matter, disallowance u/s 14A read with Rule 8D is not permissible hence this ground of Revenue s appeal stands dismissed. Additional claim of the assessee on account of refund of excise duty on capital subsidy and claim of expenses on stock option scheme on the reasoning that the same was not claimed by filing revised return of income - HELD THAT:- We note that ITAT in assessee s own case for AYs 2006-07 [ 2017 (4) TMI 1521 - ITAT DELHI ] AY 2007-08-2008-09 [ 2021 (2) TMI 1250 - ITAT DELHI ] to 2009-10 [ 2022 (1) TMI 1145 - ITAT DELHI ] had admitted the claim and remanded the matter to the file of AO for adjudication. Moreover, in Goetze India Ltd. case [ 2006 (3) TMI 75 - SUPREME COURT ] has expounded that decision in that case would not impinge upon the power of the ITAT in admitting the claims otherwise than by revising the return of income. Since consistently ITAT in assessee s own case had admitted such claims and remanded the file to AO to adjudicate the same as per law, we follow the same and admit these two claims - Accordingly, this issue is remitted to the file of AO to adjudicate as per law.

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• 2022 (10) TMI 218
  Delayed deposit of the employee s share of contributions towards Provident fund (PF) and Employees State Insurance (ESI) by the assessee - HELD THAT:- As relying on case of Ind Synergy Lyd. [ 2022 (4) TMI 36 - ITAT RAIPUR ] as the employees contributions to PF and ESI was deposited by the assessee before the due date of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O. We, thus, in the backdrop of our aforesaid deliberations setaside the order of the CIT(A) and vacate the disallowance made by the A.O -Appeal of the assessee is allowed.

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• 2022 (10) TMI 217
  Addition u/s 68 or 56(2) - Unexplained cash credit u/s 68 - Bogus share transactions - genuineness and creditworthiness of the transactions were not proved - CIT(A) has considered the facts of the share valuation u/s 56(2)(viib) and came to a conclusion that the addition of the fair market value is correct - HELD THAT:- Both the revenue authorities have has different opinion one being addition u/s 68 and other U/sec 56(2)(viib) - AO has called for various details and assessee has substantiated with the material information and judicial decisions which cannot be disputed and the A.O. was satisfied with the applicability of section 56(2)(viib) - CIT(A) has not upheld the addition u/s 68 but u/s 56(2)(viib) of the Act that shows that there is no doubt on the investors as well as genuineness of the transaction and the shares were issued at a premium considering the fair market value(FMV). We find that the valuation aspect of the shares is made on the Discounted cash flow method (DCF) and these facts are mentioned by the A.O. and it clearly indicates that the assessee has submitted the working of cash flow statement for F.Y 2014-15 to 2018-19 and the AO has not made adverse comments that the cash flow statements are false and not in accordance with the accounting principles. The cash flow statements are estimates of business and also it is not the case of the revenue that future results of the assessee is wayward compared to the projections. At this stage, there is no point in referring back to the old track record and to examine the future projections of the company. There cannot be a direct relation of assets base of the assessee company with financial future cash flows from business operations as the assessee is engaged in the business of trading in shares and derivatives transactions. The projected future financials are prepared by the management persons, who understands the business operations and the duty of the valuer is to perform due diligence of such estimates and apply the relevant criteria based on the business of the assessee. Therefore we are of the considered view that the rejection of valuation of shares as per the DCF method is also without any evidence on record. 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.

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• 2022 (10) TMI 216
  Assessment u/s 153A - Proof of incriminating material found during the course of search or not? - scope of unabated assessment year - HELD THAT:- As decided in SINHGAD TECHNICAL EDUCATION SOCIETY [ 2017 (8) TMI 1298 - SUPREME COURT] AO has nowhere made reference to any seized material in the assessment order. The Assessing Officer has been examining the matter as if he is passing a regular assessment order u/s 143(3) or 147 of the Act - addition can only be made if some incriminating material regarding receipt of bogus share application money was found during the course of search. AO did not make reference to this effect. CIT(A) is on the same line. CIT(A) has discussed the issue on merits but did not address whether the issue can be examined in an assessment framed u/s 153A of the Act or not. The judgment of the Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] is very specific which has been discussed above. The time limit to issue notice u/s 143(2) of the Act has expired long back. Hence, it is an unabated assessment year and this assessment can be tinkered with only if incriminating material pertaining to this year has been found during the course of search - we allow the preliminary ground of the appeal and delete the additions made in the assessment passed u/s 153A r.w.s. 143(3) - Decided in favour of assessee.

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• 2022 (10) TMI 215
  Disallowance being custom duty paid towards Yacht - whether the liability to pay the Customs Duty was of assessee or not and in which year assessee could claim the expenses? - HELD THAT:- Customs and Excise Settlement Commission has categorically held that the liability to pay Customs Duty was on the assessee because the yacht was used in India and, therefore, the assessee alone should pay the Customs Duty. The payment of Customs Duty by the assessee was a statutory liability of the assessee company which has been dispensed with and accordingly, assessee has rightly claimed the payment of Customs Duty as expenses. As the year of claim of expenses is concerned, though the assessee had paid the Customs Duty in the year 2009, it was only to release the yacht attached with the Customs authorities and same was done under protest as it was contesting the levy of Customs Duty on the ground that since it is a foreign flag vessel , there was no liability to pay the Customs Duty. When the Customs and Excise Settlement Commission had fixed the liability and determined the liability in the financial year 2012-13 relevant to Assessment Year 2013-14, the liability has definitely crystallised in this year only and, therefore, the same has rightly been claimed in this year. Accordingly, the order of the ld. CIT (A) is confirmed and the grounds raised by the Revenue is dismissed. Rate of tax on sale of depreciable assets - Long term capital gains on sale of helicopter - AO noted that the helicopter was part of block of assets and was a depreciable asset and why it should not be treated as Short term capital gains - Applicability of section 50 - whether sale of a depreciable asset (i.e. helicopter), which was part of block of assets and held for more than 3 years, is taxable u/s 50 as Short term capital gains, then whether the rate of tax would be of Long term capital gains treating it to be a long term capital asset or rate of short term capital gain? - HELD THAT:- As per Section 2(42A) of the Act, short term capital asset means capital asset held by the assessee for not more than 36 months immediately preceding the date of transfer. Section 50 is a special provision for computing the capital gains in case of a depreciable asset and is not only restricted to provisions of Section 48 and 49 of the Act. It is a deeming fiction carved out for treatment of depreciable asset which has limited application for the purpose of mode of computation of capital gains contained in Section 48 and 49 - Ergo, it deals with capital asset which forms part of block of assets in which depreciation has been allowed under this Act and, therefore, the mode of computation of profit u/s 48 and 49 of the Act are applied with certain modifications. In other words, the fiction created in Section 50 of the Act is only restricted to the mode of computation u/s 48 and 49 of the Act which cannot be extended beyond that. This issue had come up for consideration before case of CIT vs Ace Builders [ 2005 (3) TMI 36 - BOMBAY HIGH COURT] wherein the Hon ble High Court in the context of claim of deduction under Section 54E of the Act in respect of capital gain arising on transfer of a capital asset on which depreciation has been allowed, which is deemed to be Short term capital gains under Section 50. Applicability of section 50 is for the limited purpose of working out the cost of acquisition u/s.48 and 49 of the depreciable asset sold and the applicability of section 50 is restricted for that purpose only and for the purpose of other provisions of the Act, the capital gain has to be treated as long term capital gain if the period of holding is more than 3 years. The ratio and the principle as culled out from the aforesaid judgments are that, the legal fiction created in Section 50 of the Act deems capital gains as short term capital gains but does not deem the asset as short term capital asset and, therefore, it cannot be said that Section 50 of the Act converts long term capital asset into short term capital asset. Thus, if we apply the same ratio and principle here then, as per Section 112 of the Act, the tax on long term capital gains on transfer of a long term capital asset is @ 20% and, therefore, even if the capital gains is deemed as short term capital gains in terms of Section 50 of the Act, but for all other purposes including for the purpose of Section 112, the deeming fiction cannot be extended for rate of taxes and, therefore, the rate of tax has to be as per Section 112 of the Act, i.e. 20%. Accordingly, the order of ld. CIT (A) is confirmed and ground no. 2 is dismissed.

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• 2022 (10) TMI 214
  Weighted deduction u/s 35(2AB) - deduction at the rate of 200% for Clinical Trial Expenses and Quality Control/Testing Expenses - Disallowance of claim as expenditure not approved by the DSIR and incurred by the assessee on clinical trials and on quality control/testing conducted outside the R D facility - CIT-A allowed deduction - HELD THAT:- CIT(A) concluded that for the relevant assessment year for allowing weighted deduction under Section 35(2AB) of the Act the requirement was that the in-house R D facility should be approved by DSIR. As held by the Tribunal, prior to 01.07.2016 there was no requirement that the quantum of expenditure should also be approved by DSIR. We note that the decision of CIT(A) is in conformity with the order of the Tribunal in the case of Nirmal Industries Control Private Limited [ 2021 (8) TMI 655 - ITAT MUMBAI] Therefore, the contention raised by the Revenue that weighted deduction for R D Expenses should not be allowed under Section 35(2AB) of the Act since the expenses are not approved by DSIR is rejected. We do not find any infirmity in the order passed by the CIT(A) in allowing weighted deduction at the rate of 200% in respect of Quality Control/Testing Expenses. As regards Clinical Trial Expenses CIT(A) had allowed the claim of the Assessee holding that since the R D Facilities were approved there was no requirement of expenditure being approved following the decision of the Tribunal in the case of Crompton Greaves Ltd. [ 2019 (10) TMI 134 - ITAT MUMBAI] and therefore, in view of our findings in paragraph 11 above, we do not find any infirmity in the order passed by the CIT(A) on this count. On the issue of Clinical Trial Expenses having been incurred outside the R D Facilities, the CIT(A) concluded that the weighted deduction for Clinical Trial Expenses is to be allowed under Section 35(2AB) of the Act even if the same have been incurred outside the R D Facility by following the decision of the Tribunal in the case of the Assessee for the Assessment Year 2008-09 and 2009-10 [ 2015 (2) TMI 1348 - ITAT MUMBAI] wherein the Tribunal had allowed weighted deduction for Clinical Trial Expenses incurred outside R D Facilities under Section 35(2AB) of the Act by following the judgment of Cadila Healthcare Ltd. [ 2013 (3) TMI 539 - GUJARAT HIGH COURT] - we refrain to interfere with the order passed by CIT(A) allowing weighted deduction at the rate of 200% in respect of Clinical Trial Expenses. AO restricted the deduction u/s 35(2AB) to 100% of expenses in respect of Consultancy Fee Expenses - HELD THAT:- As respectfully following the decision of the Tribunal in the case of the Assessee for the preceding assessment years, we refrain to interfere with the order passed by the CIT(A) allowing weighted deduction at the rate of 200% in respect of Consultancy Fee Expenses Deduction of R D Expenses on gross basis without netting off the income from sale of R D products and assets - HELD THAT:- As it is admitted position sale proceeds of INR 9,22,898/- arising from sale of R D products and sale proceeds arising from sale of R D assets have been realized during the relevant previous year. Accordingly, we hold that CIT(A) was justified in holding that sale proceeds pertaining to sale of R D products would not be reduced from R D expenses while computing weighted deduction under Section 35(2AB) of the Act. However, in view of the decision of the Tribunal in the case of Microlab [ 2015 (3) TMI 982 - ITAT BANGALORE] the sale proceeds arising from sale of assets would have to be reduced from research and development expenses while computing weighted deduction under Section 35(2AB) - Also see case of M/s. Centaur Pharmaceuticals Pvt. [ 2022 (8) TMI 1127 - ITAT MUMBAI] Deduction for Education Cess under Section 37(1) - HELD THAT:- We note that by way of Finance Act 2022 Explanation 3 has been inserted in Section 40(a)(ii) of the Act with retrospective effect from 01.04.2005 which clearly provides that the term tax includes and shall be deemed to have always included any surcharge or cess, by whatever name called, on such tax. Therefore, in view of the same no deduction is allowable in respect of Education Cess for the Assessment Year 2014-15 in terms of Section 40(a)(ii) of the Act read with Explanation 3 thereto. Accordingly, Ground No. 8 raised by the Revenue is allowed. Surcharge and cess for MAT credit computation - HELD THAT:- Surcharge and education cess are to be included for determination of the amount of MAT credit in terms of Section 115JAA of the Act. Accordingly, respectfully following the above decisions Tata Motors Limited [ 2021 (7) TMI 207 - ITAT MUMBAI] AND Richa Global Exports Pvt. Ltd [ 2012 (9) TMI 99 - ITAT DELHI] we refrain to interfere with the order passed by the CIT(A) on this issue. Ground No. 8 raised by the Revenue is, therefore, dismissed.

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• 2022 (10) TMI 213
  Nature of receipt - Amounts received from its members towards Surety Guarantee Fund (SGF) - whether the amounts received during the year towards SGF could be brought to tax? - HELD THAT:- Tabulation is very evident that the very same receipt from members towards SGF account has been accepted as capital receipts by the AO in earlier as well as in subsequent assessment years. There is no reason to take a divergent stand by the AO during the year under consideration. The principle of consistency is required to be maintained by the Revenue. Reliance in this regard is placed on the decision of the Hon ble Supreme Court in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] . The facts prevailing in earlier years and subsequent years are exactly identical to the facts in the year under consideration. Hence, we have no hesitation to hold that the receipts from members in the sum being amount received from members towards SGF as capital receipts not chargeable to tax. Accordingly, the original grounds raised by the assessee on merits are allowed. Since the relief is granted to the assessee on merits, the legal ground raised by the assessee challenging the validity of reopening need not be adjudicated and is hereby left open. Accordingly, the appeal of the assessee is allowed.

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• 2022 (10) TMI 183
  Income accrued in India - Addition of profit of the assessee from providing technical services to other airlines - Whether profit of the assessee from providing technical services to other airlines is covered by Articles 8(1) and 8(4) of the DTAA between India and Germany, and by Articles 8(1) and 8(3) of the DTAA between India and Netherlands? - HELD THAT:- We find that the Co-ordinate Bench of this Tribunal in assessee s own case [ 2022 (6) TMI 1313 - ITAT DELHI] for the Assessment Years 2015-16 2016-17 has decided the issue in favour of the assessee.

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• 2022 (10) TMI 182
  Transfer Pricing Adjustment of notional interest on advances - HELD THAT:- We direct Ld. AO to compute interest at LIBOR+2% on such transactions. The fact that the assessee has acquired trademarks during the year would not materially change the adjudication since in this year, the assessee has merely recovered the loans as granted by the assessee to the AEs in earlier years. The grounds thus raised stand partly allowed. Transfer Pricing Addition of Royalty on Sales - HELD THAT:- We find that the assessee is acting as manufacturer and in this year, it has owned the brand also. TPO has alleged that the assessee should received royalty from AEs as well as from non-AEs also. Similar royalty was being paid by other AEs in the past to the erstwhile brand owners. We are of the considered opinion that simpliciter sale transactions with non-AEs could not be held to be international transactions for the simple reason that Transfer Pricing (TP) provisions would not apply under such circumstances provided it could be shown that the case fall under clauses of s. 92A(2) or the entities become AE in terms of s.92B(2). We find that the additional evidence as furnished by the assessee would have material bearing in deciding this issue. Therefore, we admit the additional evidence and restore the matter of royalty on sales to AEs as well as non-AEs back to the file of TPO / Ld. AO. The lower authorities are directed to appreciate the additional evidences and re-adjudicate the issue of royalty on sale afresh after- 8 - affording reasonable opportunity of hearing to the assessee. The assessee, in turn, is directed to substantiate its stand. The ground thus raised stand allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- We find that in this year, Rule 8D is not applicable. Therefore, as held by Tribunal in AY 2006-07 [ 2017 (4) TMI 1597 - ITAT CHENNAI] .we direct Ld. AO to restrict the disallowance to the extent of 2% of exempt income. This ground stand partly allowed. Apportionment of Expenses to compute deduction u/s 80-IC - HELD THAT:- We substantially confirm the stand of lower authorities in this regard except the issue of allocation of depreciation on trademark. In the paper-book, the assessee has filed an application u/r 29 of Income Tax Appellate Tribunal Rules, 1963 for admission of additional evidences which is supported by the affidavit of Managing Director of assessee company. By way of this application, the assessee seeks production of additional evidences which are in the form of summary of break-up of export sales, details of export sales, sample invoices, annual report etc. It is the submission of the assessee that the units which are eligible to claim deduction u/s 80-IC caters only to the domestic markets and therefore, depreciation on trademark could not be allocated to the said units as the trademark is put to use only in respect of watches exported. Admitting the same, we direct AO to examine the issue of allocation of depreciation and re-adjudicate the same in the light of submissions made in the application. The corresponding grounds stand partly allowed for statistical purposes. Nature of Application Software expenditure - Revenue or capital expenditure - HELD THAT:- Though the software so purchased by the assessee may bring enduring benefit spreading over various years, however, the assessee acquires limited license to use the software. These are application software which are accessible to the assessee for a limited period of time. It could not be said that the capital base of the assessee has widened by acquiring such software. Rather the softwares are part of its trading operations only. Our view is fortified by the decision Hon ble Delhi High Court in CIT V/s Asahi India Safety Glass Ltd. [ 2011 (11) TMI 2 - DELHI HIGH COURT] . - we would hold that the expenditure so incurred by the assessee would be revenue expenditure - AO is directed to allow the expenditure as revenue expenditure and reverse the depreciation granted on the same. The ground stand allowed. TDS Credit - HELD THAT:- AO is directed to verify the TDS claim and grant TDS credit in accordance with law.

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• Customs

• 2022 (10) TMI 212
  Leviability of interest and penalty in relation to amounts payable as duty other than basic customs duty - mis-declaration of goods - intent to evade customs duty or not - HELD THAT:- When a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute - Section 28AB of the Customs Act, 1962 is a taxing provision which creates and fastens the liability on a party. The provision has to be strictly construed and will be governed by the language employed in the section. In the present case, it is not disputed that petitioner has paid a sum of Rs.11.84 Crores much prior to the issuance of show cause notice. There is no determination of duty under Section 28(2) of the Customs Act, 1962 and, therefore, Section 28AB of the Customs Act, 1962 is also not applicable. Petitioner has also paid the difference between the admitted duty liability and the amount settled by respondent no.2 - respondent no.2 contention that CVD, SAD and surcharge are being recovered under Section 28 of the Customs Act, 1962, cannot be agreed upon. Consequently Section 28AB of the Customs Act, 1962 also will also not be applicable. In the absence of specific provision relating to levy of interest in the respective legislation, interest cannot be recovered by taking recourse to machinery relating to recovery of duty. The finding of respondent no.2 that it has the inherent authority or power to determine the terms of settlement covering not only the amount of duty but also interest and penalty as well is ex-facie untenable. Reliance by respondent no.2 upon Section 127C of the Customs Act, 1962 to direct payment of interest is totally misplaced in the case at hand. Section 127C of the Customs Act, 1962 itself provides that the order of the Settlement Commission has to be in accordance with the provisions of the Customs Act, 1962. Respondent no.2 certainly cannot pass an order beyond the provisions of the Customs Act, 1962 - Respondent no.2 cannot include interest in the settlement arrived at by it on the ground that petitioner has derived financial benefits by not paying the correct rate of duty when it was due. Deriving financial benefits itself cannot be a ground to order payment of interest in the absence of any statutory provisions for payment of interest. The order of the Commission to the extent of requiring petitioner s to pay interest at the rate of 10% against the four show cause notices and penalty (Rs.1,00,000/- in the case of first show cause notice, Rs.10,00,000/- in the case of second show cause notice and Rs.5,00,000/- in the case of third show cause notice) is liable to be and are hereby quashed and set aside - Respondents to refund the amount of Rs.16,00,000/- being penalty deposited by petitioner together with interest, if any, within four weeks of receiving an application. The bank guarantee furnished on behalf of petitioner for a sum of Rs.74,67,790/- together with the renewals to be cancelled and returned to petitioner by the Registry of this Court within four weeks of receiving an application. Petition disposed off.

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• 2022 (10) TMI 211
  Penalty under Section 112(b)(i) of the Customs Act 1962 - Smuggling - Gold activity - entire case has been booked based on the worksheet /documents retrieved from the pen-drive recovered from the residential premises of Ms. Nita Parmar - reliance placed upon the documents retrieved from the third party - burden to prove - reasons to believe - mens rea - levy of penalty - HELD THAT:- The role of the Appellant in the whole episode has been derived only from the printout sheet/emails retrieved from the pen-drive seized from the residential premise of Ms. Nita Parmar. The said pen drive containing worksheet title Vipul Joshi which was allegedly found in folder named Rajubhai . The foremost point raised by the appellant is that they have not been supplied said worksheet. It is seen that the department has not given copies of the said relied upon documents to Appellant. This is clear from the letter dtd. 12.10.2021, 11.11.2021 and 30.11.2021 submitted by the Appellant. Clearly, relied upon documents have not been supplied by department. When the show cause notice is issued proposing to impose such huge penalties, the department ought to have taken sufficient care to supply all relied upon documents to the appellant. The adjudication conducted without supply of relied upon documents is against principles of natural justice and vitiated. The Adjudication Authority held that the appellant was issued summons dated 10.09.2019 and 12.09.2012 to appear before investigating authority. It is observed that the appellant had sought time and requested for another date of his appearance. However, the Adjudicating Authority held that act of none appearance of the appellant, hence mensrea on part of the appellant - From the statement of Shri Milan Raythatha, it reveals that appellant used to make payment in occasional cases under instruction of Shri Rutugna Trivedi, since he is brother in law of the appellant.Merely because the appellant made payment in some occasions that itself does not mean that the appellant has financed to Shri Rutugna Trivedi for smuggling of Gold. The statements of Ms. Nita Chunilal and others persons remain uncorroborated during the investigation. Of course, no offence should be established merely based on the statement of thirdparty and without corroborative evidence and without granting cross examination of person whose statement alone is relied upon.The evidence on record is not sufficient to hold that the appellant involved in alleged activity of smuggling of gold. It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence. The statement of co-accused cannot be relied upon, particularly when appellant has denied his involvement in respect of the goods in question. The Adjudication Authority held that the appellant was issued summons dated 10.09.2019 and 12.09.2012 to appear before investigating authority. It is observed that the appellant had sought time and requested for another date of his appearance. However, the Adjudicating Authority held that act of none appearance of the appellant, hence mensrea on part of the appellant - From the statement of Shri Milan Raythatha, it reveals that appellant used to make payment in occasional cases under instruction of Shri Rutugna Trivedi, since he is brother in law of the appellant. Merely because the appellant made payment in some occasions that itself does not mean that the appellant has financed to Shri Rutugna Trivedi for smuggling of Gold. Penalty - HELD THAT:- The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him. It is now well established that mensrea is an important ingredient for imposing a penalty on the persons enumerated in Section112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellants were aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable for imposition of penalty under Section 112(b) of the Customs Act, 1962 - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (10) TMI 210
  Validity of Look Out Circulars [LOC] issued and extended by respondent No.2 - territorial jurisdiction to entertain this Writ Petition - Indian entities of the Bank of Baroda and the State Bank of India can make a request for issuance of LOC to respondent No.2 in respect of dues owed to their sister entities incorporated in the UAE or not - Whether this Court has territorial jurisdiction to entertain this Writ Petition? - HELD THAT:- It is the case of the respondents that money decree granted by by the Dubai court (Annexure R-9) against petitioners and M/s AIF, UAE will be enforced in India invoking Sec.44A of the CPC and the notification dt.17.1.2020 issued by the Govt. of India declaring the UAE to be a reciprocating country for purposes of Sec.44A CPC. So the decree holders intend to proceed against the properties of the petitioners located in the State of Haryana and also against the petitioners stated to be resident of Faridabad, State of Haryana - though the respondents may be based outside Haryana, part cause of action arises within the jurisdiction of this Court and this Court has territorial jurisdiction to entertain this Writ Petition under Clause (2) of Article 226 of the Constitution of India - thus, order is answered accordingly in favour of the petitioners and against the respondents. Whether respondents No.7 and 8, which are Indian entities of the Bank of Baroda and the State Bank of India can make a request for issuance of LOC to respondent No.2 in respect of dues owed to their sister entities incorporated in the UAE as per the Office Memorandums issued by the Ministry of Home Affairs from time to time? - HELD THAT:- LOCs were permitted to be opened essentially against persons involved in cognizable offences and who were evading arrest and not appearing in the trial Court despite NBWs or other coercive measures and there was a likelihood that they would leave the country to evade trial/arrest. It was intended as a coercive measure to make a person surrender to the investigating agency or Court of law - The originating agency can only request that they be informed about the arrival/departure of the subject in such cases. The Office Memorandum stated that the LOC would be valid for a period of one year from the date of issue. The respondents No.7 and 8, which are Indian entities of the Bank of Baroda and the State Bank of India, cannot make a request for issuance of LOC to respondent No.2 in respect of dues owed to their sister entities incorporated in the UAE as per the Office Memorandums issued by the Ministry of Home Affairs from time to time - issue decided in favour of the petitioners and against the respondents. Whether respondents No.5 and 6 are entitled to seek LOC against the petitioners? - HELD THAT:- No provision of any Office Memorandum issued by the Ministry of Home Affairs empowering the SFIO to seek a LOC on the pretext of such investigation under Section 212(1) (c) of the Companies Act, 2013 - it has to be held that neither respondent No.5 nor respondent No.6 were entitled to approach the respondent No.2 for issuance of an LOC or its extension in the facts and circumstances of the case. Whether the petitioners are entitled to any relief? - HELD THAT:- The LOCs issued against the petitioners at the instance of respondents No.3 to 8 by respondent No.2 and which are said to have been extended at their request and are said to be subsisting as on date are all set aside; respondents No.3 to 8 shall communicate this order to respondent No.2; and officials/employees of respondents No. 1 2 are restrained from preventing the petitioners from travelling abroad. Petition allowed.

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• 2022 (10) TMI 209
  Oppression and Mismanagement - Enforceability and validity of family settlement agreement entered upon - existence of concluded agreement capable for specific performance - powers of the NCLT in a Petition for Oppression and Mismanagement - Section 242 of Companies Act - HELD THAT:- Under Section 424, the NCLT has all the powers of a civil court under the CPC, while not being strictly bound by it. Read together, this meant that the MOD could be recorded as a compromise by - and only by - the NCLT; assuming that both sides saw it as capable of being recorded as a compromise. If the Sanghvis repudiated it, by word or deed, then what remained was the undoubted power of the NCLT in the O M proceeding, one that the civil court did not have. Merely demanding specific performance did not give the MOD a colour or a character it did not possess, nor did it vest the civil court with a jurisdiction that stood most emphatically ousted. This is not a question of a specific performance being granted by the NCLT but whether the MOD was meant only to compromise the NCLT O M proceedings or whether the compromise was an incident or a consequence of a larger overall settlement. He maintains that the MOD was only to compromise the NCLT proceedings. If that be so, then surely one would expect to find a reference to the NCLT proceedings in the MOD. Other than the last seven words of the MOD, i.e., the withdrawal of the Company Petition, there is no mention in the MOD of the O M Petition. But there is a more telling or important clue that the settlement proposed in the MOD was well beyond the Oppression and Mismanagement Petition. The tabulation of the settlement amount payable to the Kamdars clearly includes amounts that are outside even AMPL, the company itself. They include personal obligations of the Sanghvi families. This could never, therefore, have been a proposal only to settle the Oppression and Mismanagement Petition. It is no answer to say that other matters were also being settled but all that was being compromised was the NCLT Petition. The MOD attempted to put a quietus to all disputes by separating out the Kamdar family. The settlement of the NCLT is only one part - and perhaps not even a significant part - of what was decided in the MOD. The MOD contains internal evidence that the settlement was overall and was of an independent valuation agreed by the parties, by which the Kamdars were to be separated for an agreed valuation of their share at Rs. 245 crores. On a fair assessment of the record, we find that it was the Kamdars who attempted to resile from this position. Appeal dismissed.

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• 2022 (10) TMI 208
  Oppression and Mismanagement - Attempt to illegally and unjustly sideline Appellant No.1 from his role as Head of the Digital Division - Illegal transfer of 20% shares by the Respondent No.10 to the Respondent No.2 without offering the same to the Appellants - failure to afford an opportunity to Appellant to file counter or reply - suppression of material facts. Whether failure to afford an opportunity to Appellant to file counter or reply to IA No. 86/KB/2022 is an legality which vitiates the impugned order? - HELD THAT:- The grievance of the appellant is that no opportunity was given to Appellant to file counter/reply to rebut those allegations. Admittedly the Application was filed heard and reserved for order the same day without affording any opportunity to file the counter. Failure of settlement talks is not disputed on the other hand informed to the Tribunal by supplementary affidavit filed in the month of Feb, 2021, but so far as other allegations of misuse of undertaking by 1st Appellant and prejudice caused to the Respondent No. 1 by the acts of the appellant No. 1 are subsequent events which form part of grounds to vacate or modify the order dated 28th June 2019 but no opportunity was given to deny or admit any of the allegations; such denial of opportunity to file counter, is violation of principal of natural justice. Denial of an opportunity to file counter to vacate stay petition amount to depriving the Appellant of their valuable right to file counter to rebut the allegation of serious in nature and it is also amount to violation of principle of natural justice. Whether the order impugned in the Appeal is in consonance with the requirements of an order? if not whether the order be sustained, legally? - HELD THAT:- Though, the Tribunal is under obligation to decide the petition on merits without leaving any stone unturned, the Tribunal specifically held that the order was not passed on merits. This itself sufficient to conclude that the order was passed by the Tribunal not on merits - The counsel for the Respondents contended that the order cannot be reversed unless the order is totally against the law are perversed, merely because the Tribunal did not record reason, the order cannot be set aside. Therefore, the order under challenge is unreasoned and without focused consideration of various contentions raised by both Appellants and Respondents before the Tribunal. Consequently, the order is bad and liable to be set aside. Accordingly, the point is answered against the Respondents and in favour of the Appellants - there are no substance in the contention, the same is hereby rejected. Whether the Appellant No.1 acted prejudicial to the interest of the Company? - HELD THAT:- When the Tribunal did not record any finding on this alleged prejudiced or if any finding is recorded without affording an opportunity, such finding is illegal and violates of principle of natural justice. Since, the Appellant was deprived of valuable right to file his pleadings and thereby denuded to raise any plea with regard to the grounds urged in the application - such findings even if recorded, cannot be sustained in law. Accordingly, the point is answered. Whether the Appellants suppressed any material and whether this Tribunal while exercising Appellate jurisdiction is entitled to interfere with interim order of NCLT? - HELD THAT:- In the instant order, the Tribunal did not record any prima facie finding as to allegation of oppression or mismanagement of the company that apart the Tribunal did not record any findings as to prerequisite for grant of an interim order. The Tribunal did not advert to the basic principles, passed the order in nonchalant manner which will not stand to the legal scrutiny by this Appellate Tribunal. Therefore, the findings recorded by the Tribunal for vacating the interim order on the ground that the settlement was failed, without deciding the claim of the appellant for interim relief is an erroneous approach. Where the Tribunal did not record such findings, this Appellate Tribunal cannot undertake the exercise of recording any reason or findings as to the oppression of minority shareholders or mismanagement of the Company which are mandatory to claim relief under Section 241 242 of the Act - the contention of the Respondent No.4 needs no further consideration by this Appellate Tribunal and such contentions has to be considered by the Tribunal itself. There are no merit in the contention of learned counsel of the Respondents. Consequently, the point is held in favour of the Appellant and against the Respondents - appeal allowed.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 207
  Fraudulent trading or wrongful trading - Direction to Appellants to jointly and severally pay to the Corporate Debtor certain amounts on account of having indulged in fraudulent and under-valued transactions - Applicability of time limitation - Section 66 of the IBC - HELD THAT:- The Adjudicating Authority in the present case took a view that the time-line mentioned in Regulation 35-A of CIRP Regulations is directory in nature because no consequential effect is mentioned therein for non-compliance of time limit and has relied on Madras High Court Judgement in Shahji Purushutom Vs. UOI [ 2020 (4) TMI 418 - MADRAS HIGH COURT] . Adjudicating Authority has therefore held that the Appellants themselves took time to provide accounts and gained time on the pretext of OTS proposal which led to the delay and hence the Appellants should not be allowed to take advantage of their own wrong-doing. The delay has therefore been condoned by the Adjudicating Authority on the ground that the delay is properly and satisfactorily explained by the Resolution Professional even though there is no formal application for delay condonation. There are no reason to interfere with the delay condonation allowed by the Adjudicating Authority in filing of the application beyond 135 days by the Resolution Professional. We hold that Regulation 35-A is directory and in the present case the application filed by the Resolution Professional cannot be rejected only on the ground of delay in filing beyond 135 days of ICD in view of explanation offered before the Adjudicating Authority justifying the delay. Whether the Appellants had indulged in fraudulent trade transactions and certain avoidance transactions and in the light of the findings thereon whether the Adjudicating Authority had committed any error while passing the impugned order dated 26.04.2022? - HELD THAT:- The defence taken by the Appellants cannot detract from the plain truth that the Appellants had wrongfully diverted funds which in turn had aggravated the financial liability of the Corporate Debtor and thus an unethical act to defraud creditor tantamounting to fraudulent trade practice - the TAR raised suspicion about the write-offs on the ground that the damaged stock was not shown separately in stock register and that the write-off started all of a sudden coinciding with the beginning of CIRP. Moreover, it has been noted that the carry over the damaged stocks/inventory have not been done across the years which was warranted by the accounting standards. Hence, the write-off was held to be unusual in nature. The Adjudicating Authority had sufficient and valid reasons to hold that these undervalued transactions were done with the intent to siphon off the amounts on the false pretext of advance. Thus, CIRP Regulations 35-A is not mandatory and the requirement for approaching the Adjudicating Authority for appropriate relief on or before 135th day of the ICD is only directory. Keeping in view the facts of this case, it is held that there were sufficient and genuine reasons, for the application under Section 66 to be considered by the Adjudicating Authority, even though it was filed beyond 135th day of ICD - the Resolution Professional having appraised the TAR, through his detailed and specific pleadings before the Adjudicating Authority has made out a proper case substantiating that the appellants have carried out certain fraudulent and under-valued transactions for fraudulent purposes and to defraud the creditors of the corporate debtor. In such circumstances, the IBC empowers the Adjudicating Authority to take decisions to maximise the assets of the Corporate debtor and in the present case, the Adjudicating Authority having been satisfied that the assets of the Corporate Debtor have been subjected to undervalued transactions/fraudulent transactions/ transactions to defraud the creditors, it has rightly issued directions for recovery of amounts from the Appellants jointly and severally for the benefit of the corporate debtor. Appeal dismissed.

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• 2022 (10) TMI 206
  Seeking liquidation of Kotak Urja Private Limited - Section 33(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Mr. Amir Arsiwala, Ld. Counsel appeared on behalf CoC and stated that the CoC has resolved for change of RP as the Liquidator in the matter with 88.64% voting. This Bench is of view that there are no specific provisions for the change of RP as the Liquidator nor the CoC has given any reason for change of RP as Liquidator in the matter. Hence, the resolution for change of RP as Liquidator cannot be considered by this Bench and the prayer of the CoC for change of RP as Liquidator is hereby rejected. Mr. Devarajan Raman, Resolution Professional is appointed as the Liquidator to conduct Liquidation process of Kotak Urja Private Limited as provided under Section 34(1) of the Code - the application filed under section 33(1) by the Applicant is hereby Allowed and Disposed of.

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• 2022 (10) TMI 205
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor has granted vide various Sanction Letters, Financial Facilities from time to time to the Corporate Debtor. For this purpose, various Loan Agreements were entered into between the Financial Creditor and the Corporate Debtor - It is observed by the Bench that despite sufficient service upon the Corporate Debtor, the Corporate Debtor has not appeared in the matter. Further, the Corporate Debtor has admitted its liability in its reply dated 11.11.2019 to the Loan Recall Notice issued by the Financial Creditor. The said reply is attached as Exhibit JJ at p.253 of the Petition. considering this date of 11.11.2019, the limitation criteria is fulfilled. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, we do not have any objection on record against the application filed for initiation of CIRP against the Corporate Debtor - this Bench is of view that the Corporate Debtor failed to make payment to the Financial Creditor and the debt is due and payable to the Financial Creditor by the Corporate Debtor. The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established and the application deserves to be admitted - Application admitted - moratorium declared.

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• 2022 (10) TMI 204
  Liquidation of the Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Since the COC in its commercial wisdom has resolved to take the Corporate Debtor in liquidation, it is opined that the decision of the COC should not be interfered with. The present application seeking liquidation of the Corporate Debtor M/s. Platino Classic Motors (India) Pvt. Ltd., in the manner laid down in Chapter III of Part II of the Code is allowed. Application allowed - Moratorium declared.

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• 2022 (10) TMI 203
  Seeking directions upon the CoC and the RP to forthwith allow the applicant to make EMD of Rs. One Crore and to consider the resolution plan submitted by the applicant - freezing of bank accounts of applicant - HELD THAT:- The present situation has arisen mainly because of the plan being submitted without the requisite EMD. Even though the plan has been submitted and even considered by the CoC but was termed as non-compliant primarily due to lack of deposition of the EMD as required. Noting the fact that after initial contentions of exemption, the applicant had offered to deposit the necessary EMD, the present case essentially can be seen as the one seeking for condoning of delay in depositing the Earnest Money. When the CoC had decided not to entertain the plan submitted by the applicant, it is not understood as to why the same was considered and commented on in an off handed manner by the CoC in the 7th meeting. Keeping in mind the main objective of the Code which is the maximization of the value of the Corporate Debtor vis- -vis the facts and circumstances of the case - matter remanded back to CoC and RP to consider the resolution plan submitted by the applicant subject to depositing of required EMD of Rs.One Crore within two days from the date of order. Appeal allowed by way of remand.

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• 2022 (10) TMI 202
  Determination of Preferential Transactions, Undervalued Transactions, Extortionate Credit Transactions, Fraudulent Transactions and Fraudulent Trading - Section 43 to 50 of the insolvency and Bankruptcy code, 2016 - HELD THAT:- It is seen that the CIRP process of the CD commences as early as on 18.09.2019 and till date the CIRP is still pending meaning the statutory period of 330 days have very well been crossed. Hence, the purpose of IBC and the substance of the Code has failed to have been achieved. Further, the major part of the COC is made up of 6547 number of NCD Holders forming 99.93%. The present application filed by financial creditors forms only a miniscule 0.24% of the COC. The provisions of IBC, 2016 are clear that the communications during CIRP be made electronically. It was further learned that this case of CD involves huge amount of money which are part of crime and the matter is being contested at different levels of various judicial forums including SEBI which has taken up the matter extensively considering the grievances of the high number of NCD holders. There has been confiscation of the records of the CD by the Crime Branch of Police Kerala wherein proceedings are pending before criminal courts - The AR as well as the RP has also submitted that the NCD holders forming CoC has presently lost hope on the CIRP and the COC has resolved not to proceed with the CIRP and only to pursue the recovery proceedings before SEBI. The applicants can proceed before SEBI or its appellate authority to address their grievances. We further note that the liquidation application of the CD is pending to be heard before this Tribunal and at this stage it is not equitable to allow the prayers of the applicants who only form a miniscule percentage in the COC themselves. The applicants could have very well raised and sorted their concerns before the RP and AR themselves rather than approach this Tribunal at this stage. The present exercise of the applicants to seek such remedies at this stage is frivolous and is only going to delay the process envisaged under IBC further and shall cause detriment to the CIRP and the parties themselves. Application dismissed.

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• 2022 (10) TMI 201
  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:- It is evident from the Ledger records annexed to this Petition that an aggregate operational debt of Rs. 4,05,44,443/- exists and remains unpaid till date. It is noted that there is no pre-existing dispute between the parties. In fact, the Corporate Debtor states that they are unable to make any further payments and admit their liability in clear terms. The date of default is recorded as 20th March 2019 which was the due date of the last invoice raised by the Operational Creditor. The Operational Creditor has thus successfully demonstrated and proved the debt and default in this case and has also proved that there is no credible reason for the Corporate Debtor to put the payment of the invoices on hold indefinitely - this Petition satisfies all the necessary requirements for admission under Section 9 of the Code. Petition admitted - moratorium declared.

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• 2022 (10) TMI 200
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of the balance confirmation letter dated 10.09.2020 acknowledging the debt of an unsecured loan Rs. 21,412,338/- with an interest payable @12% i.e. 66,08,242/- together of Rs. 2,80,20,580 payable thereon, the Annual Tax Return FORM 26AS for the financial year 2019-20 also discloses lending by the Financial creditor and the tax deducted on the amount credited to the account of the corporate debtor from the financial creditors account - it is convincing that financial debt of sum over one crore was due and payable by the corporate debtor stands established and as there is no material placed by the corporate debtor discharging the debt we hold that existence of a Financial debt and its default by the corporate debtor has been established. Application admitted - moratorium declared.

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• 2022 (10) TMI 199
  Direction to consider, accept and include Form B in the list of operational creditors along with the amount of interest - condonation of late submission of the claim - HELD THAT:- It is an established position that the Resolution process is a time-bound one, and any action resulting in delay of the process, and consequent loss in value of the assets of the CD, is against the objectives of the Code. In the present case, the delay in filing of the claims have been way beyond the approval of the resolution plan by the COC. Any acceptance of such delay will violate the basic tenets of IBC, and, hence, the prayer of the applicant can t be acceded to - The prayer of the applicant is not acceded to - Application dismissed. Seeking cancellation/modification of the resolution plan of C Mohan International - Section 36(4)(iii) of the IBC, 2016 - HELD THAT:- The SRA has filed a compliance affidavit by Spl. Diary No. 268 dated 30.08.2022 - In view of the compliance affidavit by SRA, the present application IA No. 519/2021 is rendered infructuous and disposed of accordingly.

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• PMLA

• 2022 (10) TMI 198
  Seeking grant of bail - money laundering - proceeds of crime - creation of various assets in the name of his family members out of unaccounted money - twin conditions under Section 45 of the PMLA - HELD THAT:- As the starting point of the alleged demand to collect money from the bars and restaurants was allegedly in the meeting in the month of October 2020 in which Mr. Karunakar Shetty had given the list of 1750 bars and restaurants, during the course of hearing, the Court inquired as to whether the statement of Mr. Karunakar Shetty was recorded. Mr. Anil Singh fairly tendered a copy of the statement of Mr. Karunakar Shetty which was recorded on 8th November, 2021. It would be suffice to note that Mr. Karunakar Shetty had a different tale to tell. He claimed to have met Mr. Sachin Waze once and, in the said meeting, the latter demanded Rs.10 lakhs for unhindered functioning of his restaurants and bar till late hours - In the confession before the learned Magistrate, Mr. Sachin Waze stated that he received call from Mr. Kundan Shinde and, thereupon, went to the designated places and delivered the cash. No call was thus attributed to the Applicant before the delivery of the cash amount. This omission, prima facie, cannot be said to be innocuous. In a sense this runs against the claim of Mr. Sachin Waze of direct instructions by the Applicant to Mr. Sachin Waze, immediately before the alleged delivery of cash to Mr. Kundan Shinde. Without delving into the aspect of the alleged inconsistent statements made by Mr Sachin Waze before the other forums including Justice Chandiwal Commission of Enquiry, where Mr. Sachin Waze, allegedly disowned everything, in my view, the aforesaid material, prima facie, renders it unsafe to place reliance on the statement of Mr. Sachin Waze, a co-accused, that cash amount was collected and delivered to Mr. Kundan Shinde at the instructions of the Applicant. The material on record does indicate that the Applicant has been suffering from multiple ailments. He is 73 years of age. Few of the ailments may classified as de-generative. The medical reports/certificates also show that the Applicant is suffering from chronic ailments, as well. In the light of the material on record, it would be audacious to observe that the Applicant is not a sick person - Evidently, the exercise of discretion on medical ground is rooted in facts of a given case. In the case at hand, the Court has considered the entitlement of the Applicant for bail on merits as well, and found a prima facie case for exercise of discretion is made out. As the proviso empowers the Court to exercise the discretion in favour of an accused who is otherwise sick or infirm, the Court has considered the material on record and finds, in the totality of the circumstances, a case for exercise of the discretion under the proviso as well. The Applicant appears to have roots in society. The possibility of fleeing away from justice seems remote. The apprehension on the part of the prosecution of tampering with evidence and threatening the witnesses can be taken care of by imposing appropriate conditions - Application allowed.

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• 2022 (10) TMI 197
  Seeking grant of anticipatory bail - Money Laundering - proceeds of crime - siphoning off of funds of partnership firm - HELD THAT:- In view of the statement of applicant under Section 50 of the Act, 2002, it cannot be denied that he was not involved in the alleged offence. The applicant was not the dormant partner of the firm, rather he had actively participated on behalf of the firm in commission of the alleged offence being in direct contact with another partner Sanjay Kumar Tiwary. In view of the Section 25 of the Indian Partnership Act, 1932 every partner of a firm is jointly along with other partners and also severally liable for all acts of the firm done, while he is a partner. Therefore, even if the charge-sheet was not filed against the applicant in the scheduled offence in individual capacity; but substantially and materially the allegations are against M/s. Bhanu Construction firm and the authorized signatory Sanjay Kumar Tiwary against whom the charge-sheet was filed in the scheduled offence being in individual capacity also. But for the act of the firm both partners are liable and it cannot be accepted that the applicant Suresh Kumar was not involved in the alleged offence. In the case in hand, though the charge-sheet was not filed in individual capacity against the applicant but all the allegations are against the M/s. Bhanu Construction, a partnership firm and the applicant is the partner of the said firm and he is jointly and severally liable for the act of the said firm. The anticipatory bail is nothing; but a bail granted in anticipation of arrest, hence it has been held in various judgments by Hon ble Apex Court that the principles governing the grant of bail in both cases are more or less on same footing. Thus ordinarily anticipatory bail is granted in the exceptional cases where the accused has been falsely implicated in an offence with a view to harass and humiliate him. Therefore it would not be logical to disregard the limitation imposed on granting bail under Section 45 of the 2002 Act, in case of anticipatory as well. Thus, the plea raised by the learned counsel for the applicant is not accepted that the applicant was not involved in commission of the alleged offence, rather in capacity of a partner of M/s. Bhanu Construction his involvement is prima facie made out and there are reasonable grounds for believing that he has committed the aforesaid offence and is likely to commit offence, if enlarged on bail. The applicant s prayer for anticipatory bail is, hereby, rejected.

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• Service Tax

• 2022 (10) TMI 196
  Levy of Service Tax - construction of compound wall/fencing as well as development and maintenance of green belt around water tank mains and adjoining reservoir and pumping station lands as security agents services - sub-contracting - HELD THAT:- It is on record that the appellant, having provided certain services that are clearly recognizable as security agency services , has discharged tax liability on the consideration received from the sub-contractor next, and above, in hierarchy of such delegation. As far as the invoices raised by appellant on the same recipient of services, and which are in dispute here, are concerned, we have already rendered a finding that the nature of the service has not been identified. In the absence of such identification, the inclusion thereof in a composite service and, the applicability of the judicial decisions led by either side or the resort to section 65A of Finance Act, 1994 is not only academic but also a non-starter. The adjudicating authority has not paid careful attention to the two relevant definitions in section 65(105)(w) and section 65(94) of Finance Act, 1994; both , with reference to security, are qualified by the expression in any manner which, by such concatenated existence and circular consequence, has to be read in the restricted context of that which in common parlance is associated with security agency - Taking that definition of security agency into section 65(105)(w) of Finance Act, 1994 would lead to the outcome of every compound wall/fence put up by any person to be that of security agency ; consequently and by extension, every civil project would be activity of security agency , thereby rendering construction service or work contract service in section 65 of Finance Act, 1994 to be superfluous. Fencing/compound wall are, after all, intended as safeguard against encroachment by neighbour, taken over by squatters or ingress by thieves. That, surely, cannot be the intent of section 65 of Finance Act, 1994. It is found that the hierarchical assumptions on which the demand has been established has collapsed on itself. The demand cannot sustain and, consequently, the impugned order also does not - appeal allowed.

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• 2022 (10) TMI 195
  CENVAT Credit of service tax paid not used by the appellant in manufacture of excisable goods - invoces were issued to other units and not to the appellant s unit - suppression of facts - wilful misstatement in contravention of rules with the intent to evade payment of service tax - time limitation - HELD THAT:- From admitted facts, it becomes clear that the appellants have availed the input services at their captive mines. Though the captive mines have separate registration but at the same PAN No. as that of the appellants and as such both are so associated that they have interest, directly or indirectly in the business of each other. Also for the reason that coal extracted in these Mines is the raw material for appellants to manufacture their final product. Moreover the captive use of coal has no where been denied - The invoices are mentioning all the details as are required as per rule 9 (1)(f) of Cenvat Credit Rules. The case of appellant squarely gets covered under the purview of Rule 2 (l) of Cenvat Credit Rules and also under proviso to Rule 9(2) of CCR, 2004. Hence the findings that appellants case is not covered under 2 (l) of CCR are absolutely wrong. The findings of Commissioner (Appeals) are accordingly, held as being liable to be set aside. Tour operator services - Department has alleged those services to have been personally consumed by the employees of the appellant, hence, were ineligible for Cenvat credit - HELD THAT:- It becomes clear that the visit of the employees was purely for enhancing their skills for the better output of the final product of the appellant. Hence, those services have wrongly been alleged to have been personally consumed services. Those services also to be eligible input service for availment of Cenvat credit. With these observations all the findings of commissioner (Appeals) qua the merits of the impugned aforementioned (a) (b) issue are held as liable to be set aside. Suppression of facts - wilful misstatement in contravention of rules with the intent to evade payment of service tax or not - HELD THAT:- The Show Cause Notice has been issued based upon the scrutiny of appellant s own document maintained by them in their regular course of business (the documents were in the form of invoices duly entered in appellants record). There is also no denial for the regular filing of the returns by the appellant. It becomes clear that there is no suppression of facts as is alleged by the Department - the Show Cause Notice has not specified any commission or omission which may reveal intention to evade the payment of duty. The only allegation is that had the Department not conducted audit, the appellant would have succeeded to defraud the Government Exchequer. Time Limitation - HELD THAT:- Show Cause Notice being barred by time were raised before original adjudication authority also as is apparent from para E of the reply given to Show Cause Notice but the authority has not given any speaking finding identifying and specifying the acts of omission and commission with supporting evidence warranting invocation of extended period of limitation. The adjudication has failed on merits as well as on point of limitation The findings are therefore hereby set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (10) TMI 194
  Maintainability of appeal - appeal can be dismissed for want of non-appearance or non contest by the appellant/his counsel or not - Whether the Tribunal can dismiss the appeal without considering the merits of the case? - Section 35C of the Act and Rule 20 of the Rules - HELD THAT:- On perusal of the said rules and upon placing reliance on Hon ble Apex Court judgment of BALAJI STEEL RE-ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS [ 2014 (11) TMI 531 - SUPREME COURT] , it is absolutely clear that no exparte order of dismissal for non-prosecution can be passed by the Tribunal and the appeal cannot be dismissed for absence of appellant. The CESTAT is duty bound to decide the appeal on merits as Section 35C of the Act only enables CESTAT, which is a Statutory Appellate Authority, to pass the order on appeal either confirming, modifying or annulling the decision or order appealed against or it may remand the matter. The provision of Rule 20 of the CESTAT Rules gives the power to the Tribunal to set aside the dismissal and to restore the appeal, if sufficient cause for non-appearance is shown. The use of the work shall in the proviso to Rule 20 even casts an obligation on the Tribunal to restore the appeal. In the case in hand, it was the Tribunal which had taken up the appeal after six years of registration of the same. Counsel for the appellant was situated in Jaipur, the seat of the Tribunal was situated in Delhi and the impugned orders were passed after six years, only for his non-appearance. The matter was dismissed in default without any genuine reasons and opportunity. In the case in hand, the direct judgment of the Hon ble Apex Court referred in Balaji Steel Re-rolling Mills, was not considered and overlooked inspite of specific reference in the applications - Appeal allowed.

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• 2022 (10) TMI 193
  Refund of CENVAT Credit - erroneous utilisation of cenvat credit for discharge of duty - maintenance of separate account with respect to clearances under N/N. 1/2011 - Time Limitation - Revenue Neutrality - HELD THAT:- The limitation under Section 11A(1)(a) was one year, which was substituted for two years w.e.f. 14.05.2016. The appellant have filed their returns (form ER-1) from time to time and have made proper disclosure of their clearances and mode of payment of duty. It is further found that admittedly appellant have not taken cenvat credit on inputs utilised for clearance of finished product under Notification No. 01/2011-CE. As GST regime have been implemented w.e.f. 01.07.2017, the accumulated cenvat credit with the appellant assessee was available for transmission to GST regime as on 30.06.2017. In the facts of the present case, the duty have been demanded vide show cause notice dated 01.05.2018 i.e. after implementation of GST regime. It is found that there is only a venial breach of law by utilisation of cenvat credit for payment of duty for goods cleared under concessional rate during the period under dispute. It is also found that the situation is Revenue neutral as on payment of duty again in cash as demanded by the impugned order, the appellant shall be entitled to refund of equal amount being the duty discharged earlier through cenvat credit. The appellant have not contravened the provisions of law or the rules made thereunder with intent to evade payment of duty - Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 192
  Clandestine Removal - MS Angles - Channels - Bars - clearance of finished goods without issuance of invoices - corroborative evidences or not - HELD THAT:- The amount of Rs. 3,01,69,127/- (Rs.2,99,35,000/- + Rs.2,34,127/-) have been accepted by the Income Tax Authority, as income from other sources (property dealing). Thus, there is no reason to treat this amount as attributable to clandestine sales of finished goods. Thus, the duty demand along with penalty of Rs. 37,28,904/- is set aside. Demand of Rs. 7,19,477/- - shortage of stock - HELD THAT:- This is corroborated by the documents resumed vide panchnama dated 10.06.2014 (being weighment slips, despatch summary dated 9/10.06.2014). Clandestine removal of shortage in stock (found in verification) is also admitted by the Accountant Mr. R. G. Choudhary, the Despatch Clerk Mr. Anuj Agarwal and the Director Mr. Rajesh Garg. Accordingly, this demand is confirmed with penalty. Appeal allowed in part.

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• 2022 (10) TMI 191
  Refund of unutilized Cenvat credit - time limitation as per Section 11B (2) (c) of the Central Excise Act, 1944 - Section 174(2) read with Section 142 of the CGST Act - HELD THAT:- At the time of implementation of GST Regime, the legislature had perceived as to what would happen to the credit of tax lying in stock as on the date of the introduction of GST, or to the credit balance lying unutilized. Therefore, in order to avoid the double taxation on the goods lying with the business person the Central govt under its wisdom, to pass on the benefit of the unutilized credit whether in inputs or otherwise as closing balance as appeared in ER-I Return filled by the assesses, has introduced above mentioned Transitional Provisions under Chapter XX in GST Act, 2017. The appellant has filed the present refund claim under Section 11B and not under Rule 5 of CCR read with Notification No. 27/2012. Further, it is also found that after the introduction of GST, if the appellant could not transfer the excess debit into TRAN-I, the only option for the appellant remains is to file a refund claim under Section 11B read with Section 142(5). Further, it is found that the impugned order has not disputed the eligibility of credit debited in excess - the appellant is opined to have rightly filed the refund of the amount debited Cenvat credit lying unutilized in his account on the last day of erstwhile Central Excise Act regime i.e. on 30.06.2017 under Section 11B of Central Excise Act, 1944. Further, as per Section 174(2)(c) of CGST Act, the appellant cannot be affected of its right, privilege, in availing credit merely in respect of refund rejected on account of limitation being passed after 27.12.2017. Further, the change in taxation regime should not affect the credit availment right of assessee. Hence the appellant is rightly entitled for the credit and also refund. The refund of said amount in cash remains the only possibility under transitional provisions of GST Act. Those provisions are to protect the claim under Section 11B of erstwhile Act - the appellant is held entitled for refund of amount in question. Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 190
  Reversal of CENVAT Credit - input services - service of outward transportation availed from their factory/depot to the buyer s premises - penalty - HELD THAT:- The demand of reversal of cenvat credit on outward transportation is set aside. Cenvat credit in respect of which the appellant could not produce the evidence of payment of duty in the shape of invoice - HELD THAT:- The demand was confirmed by the tribunal and the matter was remanded solely for the purpose of quantification. The appellant in this appeal has not challenged the quantification in so far as amount of Rs. 2,72,072/- is concerned, the said demand is confirmed. Penalty - HELD THAT:- It is seen that Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11(AC) of the Central Excise Act, 1944 prescribes the penalty for availment of inadmissible or wrongful credit. In this case, the appellant admittedly taken credit without having the documents consequently, the penalty imposed under Rule 15 is revised from Rs.23,52,037/- to Rs.2,72,072/-. Appeal allowed in part.

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• 2022 (10) TMI 189
  Refund of Interest (paid) on reversal of CENVAT Credit - quantification of interest amount - whether the balance of service tax credit should be taken for requantifying the interest or the total credit should be taken? - Rule 3 of Cenvat Credit Rules, 2004 - HELD THAT:- The credit of all the three account is taken i.e. input, inputs service and capital goods the credit balance was maintained much more than the credit reversed by the appellant on which the interest was paid. It is found that under Cenvat Credit Rules, 2004 in terms of Rule 3 all the credits such as credit of input, input service and capital goods is under one pool and no credit can be reversed on that, credit. Therefore, the adjudicating authority has erred in only considering the credit balance of service tax. The total credit of input, input service, and capital goods should be taken to ascertain the unutilized cenvat credit. If the consolidated cenvat credit balance has been maintained more than the cenvat credit reversed, in such case the appellant is not liable to interest post 17.3.2012 accordingly, the claim of the appellant appears to be legal and correct however, the same has to be re-quantified considering the total credit of input, input service and capital goods. The matter is remanded to the adjudicating authority to re-quantify the interest and sanction the same to the appellant - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2022 (10) TMI 188
  E-auction - arbitrable dispute or not - appellant was virtually seeking the enforcement of a contract through a writ petition for raising a claim for refund - seeking acceptance of Form C and issue Form E-1 to the petitioner for the goods distained from one State to another - grant of benefit of concessional rate of tax to the petitioner after accepting Form C on record - HELD THAT:- The High Court was in error. The appellant is not asserting a contractual claim in pursuance of the e-auction. Undoubtedly, a contractual dispute would be amenable to be resolved by arbitration. However, in the present case, as the reliefs which have been extracted above indicate, the dispute was not of that nature. Hence, we are inclined to set aside the impugned judgment and order dated 15 March 2018 and remand the proceedings back to the High Court for consideration on merits. The appeal is allowed. The impugned judgment and order dated 15 March 2018 is set aside. Since the writ petition was filed in 2016, the High Court requested to endeavour an expeditious disposal preferably within a period of four months from the date of receipt of a certified copy of this order. The respondents shall file their reply within four weeks. Application disposed off.

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• 2022 (10) TMI 184
  Principles of natural justice - whether appeal was barred by limitation - impugned order passed without providing any opportunity to the petitioner - HELD THAT:- The order impugned in the present petition has been passed without considering or appreciating the said aspects and by proceeding on the erroneous premise that the appeal was filed by the petitioner beyond the period of limitation which is factually incorrect and contrary to the material on record warranting interference by this Court in the present petition particularly when neither sufficient nor reasonable opportunity was provided by the respondent No.2 / Appellate Authority before passing the impugned order which is violative of principles of natural justice also and deserves to be quashed and the matter remitted back to respondent No.2 / Appellate Authority for reconsideration afresh in accordance with law. As held by the High Courts of Andhra Pradesh and Orissa in M/S. SHREE JAGANNATH TRADERS VERSUS COMMISSIONER OF STATE TAX ODISHA, CUTTACK AND OTHERS [ 2021 (6) TMI 412 - ORISSA HIGH COURT ] so long as the appeal was preferred electronically within the prescribed period, merely because the certified copy was subsequently filed physically by the petitioner / assessee, the said circumstance cannot be made the basis to come to the conclusion that the appeal was filed beyond the prescribed period; in the instant case as stated supra, the petitioner had preferred the appeal electronically on 30.03.2019, within the prescribed period and as such, the findings recorded by the respondent No.2 / Appellate Authority that the appeal preferred by the petitioner was barred by limitation deserve to be set aside. Matter is remitted back to respondent No.2 / Appellate Authority for reconsideration afresh on all aspects of the matter, in accordance with law, excluding the aspect of limitation in preferring the appeal by the petitioner, which stands concluded in favour of the petitioner by virtue of this order - petition allowed by way of remand.

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• Indian Laws

• 2022 (10) TMI 187
  Seeking extension of time for repayment of outstanding loan - Cancellation of OTS - failure to pay entire outstanding amount together with interest - HELD THAT:- In the present case, it is specifically contended by the petitioner that he is doing real estate business, due to the present COVID- 19 pandemic situation, he sustained loss. However, to clear the loan, he sold the property and received money from the purchaser and deposited the same in the account and paid the entire loan amount including the interest vide his letter dated 28.07.2021. There is only one day delay. Therefore, according to this Court, it is a fit case to extend the time to the petitioner to repay the loan amount. The letters, dated 31-07.2021 and 06.08.2021 issued by 2nd respondent bank are set aside. 2nd respondent bank is directed to receive the said amount of Rs.37,87,567/- (Rs.35,09,995.38ps + interest of Rs.2,77,571.62ps) from the petitioner and close the loan account bearing No. A/c.No.35424522518 of the petitioner - Petition allowed.

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• 2022 (10) TMI 186
  Application for building permit - respondents are refusing to consider the same on the ground that a portion of the property is still retained as nilam in the revenue records - petitioner submits that the petitioner is prepared to appear before the Secretary of the Panchayat, with all relevant records and that the application may be considered after hearing the petitioner also - HELD THAT:- There will, accordingly, be a direction to the 2nd respondent to take up the application submitted by the petitioner for building permit and to consider and pass orders on the same, after hearing the petitioner through any appropriate means including video conferencing. The petitioner shall be free to produce all the documents relied on by him before the 2nd respondent for a proper consideration of the application. Appropriate orders shall be passed on the application submitted by the petitioner, within three weeks from the date of receipt of a copy of this judgment.

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