TMI Tax Updates - e-Newsletter dated: October 12, 2020 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter October 12, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Highlights / Catch Notes GST: Demand of GST - case of the department was that the petitioner was selling packaged marked rice with registered trademark - When the raiding party had found stock of packaged rice carrying registered marks, the defence of the petitioner was that the same was old stock sold prior to 22.09.2017 but returned due to quality disputes which was still lying in the godown. We are not commenting on whether such defences are genuine or not. - HC Visit to Get Source GST: Classification of goods - rate of tax - renting of e-bikes(Miracle), bicycles(Move) without operator - Renting of e-bikes/ bicycles without operator cannot be classified under SAC 9973 - AAR Visit to Get Source GST: Demand of interest and penalty - When the scheme u/s 74 for avoiding a show cause notice is one that is optional to an assessee, the assessee has either to opt for it or look away from it. If assessee opts for the scheme, assessee has to comply with the terms under which the option is made available under the statute. Assessee cannot seek a variation of the said scheme. - HC Visit to Get Source GST: Cancellation of registration of petitioner - Validity of SCN - Perusal of the same indicates that to such show cause notice no response can be given by any assessee. The show cause notice is as vague as possible and does not refer to any particular facts much less point out so as to enable the noticee to give his reply - SCN quashed - HC Visit to Get Source Income Tax: Interest u/s 234 A, B & C - ‘Assessment’ as defined under Section 2(28) of the Act has a comprehensive meaning and includes all steps and proceedings taken for determination of tax payable and for imposing liability on the assessee. It includes reassessment as well. Therefore, even after the matter is remitted, an order of assessment is passed, the same is referable to Section 143 or Section 144. Explanation- 3 only protects the assessee from levy of interest and confines the same when the original order of assessment is passed and not when the modified order of assessment is passed - HC Visit to Get Source Income Tax: Revision u/s 263 - PCIT, has not dealt with this specific objection, but, would fault the assessing officer for not invoking Section 56(2)(vii)(b)(ii) merely on the ground that the market value was higher. As point out earlier, the guideline value is only an indicator and that will always not represent the fair market value of the property and therefore, the invocation of the power under Section 263 by the PCIT is not sustainable in law. - HC Visit to Get Source Income Tax: Depreciation on intangibles - Whether 5th proviso to Section 32(1) of the Act restricts the total depreciation which can be claimed in case of succession etc. to the depreciation which would have been allowable had there been no succession? - Held No - The 5th proviso in any case will apply only in the year of succession and not in subsequent years and also in respect of overall quantum of depreciation in the year of succession. - HC Visit to Get Source Income Tax: Premium for hedging foreign exchange fluctuations on loans taken for the purpose of appellant's business - whether a capital loss by treating it as capital expenditure u/s 43A - exchange difference is required to be capitalized because liability has been incurred by the assessee for the purpose of acquiring fixed asset namely plant and machinery. - HC Visit to Get Source Income Tax: TP Adjustment - MAM selection - CUP OR TNMM - Matter was remanded back by the ITAT - As expected of the learned Tribunal also to realize the consequences of an open remand made or a remand made to the authorities below only for re-computation with the appropriateness of the method decided finally at its own end. - The multiplicity of the litigation and rounds of appeal, what we have described as a shuttle game, should have been seen by the learned Tribunal - HC Visit to Get Source Income Tax: TDS u/s 194I - Addition u/s 40(a)(ia) - The rooms were hired on as and when available basis at the regular tariff rates subject to the discounts as agreed at the time of booking of rooms. Under these circumstances, the assessee deserves to be given the benefit of the circular issued by the Board providing that under these circumstances, TDS will not be required to be made u/s 194I. - AT Visit to Get Source Income Tax: Short-deduction of tax at source (TDS) - if the assessee continues to deduct tax at the rate specified in the certificate, even, in respect of payment made over and above the sum specified in the certificate, it cannot be treated as assessee in default for short deduction of tax - AT Visit to Get Source Income Tax: Long term capital gain - transfer u/s 2(47) - Year of assessment - What has to be taxed is the amount received or accrued and not any notional or hypothetical income. - if income does not result, there cannot be a tax, even though in book-keeping an entry is made about a hypothetical income, which does not materialize.’ - AT Visit to Get Source Income Tax: Penalty imposed u/s. 221 r.w.s. 140A(3) - no self assessment tax was paid - the assessee shall not cease to be liable to any penalty under sub-section (1) of section 221 merely by reason of the fact that the assessee paid tax, but however taking into consideration the facts of circumstances, it is fair and just to restrict the penalty to the 1% of the tax amount - AT Visit to Get Source Income Tax: Addition u/s 68 - creditworthiness of the creditors and genuineness of the transaction - Merely low income declared in the return of income by the creditors is no ground to reject the explanation of the assessee-company because their creditworthiness is in several crores as is already admitted by the A.O. in the assessment order. - AT Visit to Get Source Income Tax: Nature of expenditure - R&D expenditure - Raw-Material, tools designs ultimately determined by the assessee and used for manufacture of customised products were not meant for uniform application for other customers also, and therefore the expenditure incurred for development of customized products and manufactured and sold by the assessee need not to be capitalized. These are to be treated as revenue expenditure and deserve to be allowed under section 37 of the Income Tax Act. - AT Visit to Get Source Income Tax: Addition u/s 56 (2)(vii)(b) - alleged excess value of share premium over fair value - in the absence of any defect in the valuation of shares arrived by the assessee on the basis of DCF method, impugned addition as made on the basis of net asset value method is liable to be deleted. - AT Visit to Get Source Income Tax: Disallowance of expenditure u/s. 37 - There is merit in the alternative contention of assessee that the expenses incurred on organizing an event to celebrate Ireland National Day in India which was included in sales promotion having been entirely disallowed by the authorities below and the said disallowance having been confirmed by us, the disallowance of 20% should be restricted out of the balance amount of sales promotion expenses - AT Visit to Get Source Customs: Classification of imported goods - air-conditioners - the six-digit and eight-digit level are to be ascertained with reference to the descriptions. The deemed erasure of any other heading thereafter precludes comparison with any tariff item that is not within the determined sub-heading. Hence, the rival entries must lie within the same group. - The impugned goods are not ‘window’ type but they are all of the ‘split’ type with an external condenser unit and an indoor evaporator unit. - The applicability of sub-heading no. 841581, 841582 and 841583 to the impugned goods lacks substance. - AT Visit to Get Source IBC: Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - courier service agreement for delivery service - the applicant cannot be treated as Operational Creditor under Section 5(20) of the IBC because the Operational Creditor means a person to whom an operational debt is owed and include any person to whom such debt has been legally assigned or transferred - Tri Visit to Get Source IBC: Conversion of claim - financial claim has been converted to an operational one - the CoC which has been reconstituted upon amending the aforesaid claim, consisting of home buyers as financial creditors along with other Financial Creditors, if any, would be vested with the voting rights to the exclusion of Greater Noida Authority. - Tri Visit to Get Source Service Tax: Works contract service - scope of the term Railways - stand of the tax authorities that the admitted exception of ‘railways’ was restricted to activities engaged in connection with railway undertakings of the Government - The exclusion of ‘metro’ or ‘monorail’ has occurred only after the period of dispute and therefore does not concern us. - Even where the ownership does not vest in the government, the operation of such railways is under special enactment which are not excluded from the sphere of the expression ‘railways’. - AT Visit to Get Source Service Tax: Levy of service tax - mark-up’, charged by them for recovery from the holders of credit cards - The complexity of exports and the lack of distinguishment for exports during much of the period of dispute is obvious from our exposition supra and it may not be unnatural for an assessee to resort to superficial interpretation without intention to evade tax - AT Visit to Get Source Service Tax: Reverse charge mechanism - information technology software service - The discharge of tax liability after incorporation of the new levy occurred during the investigations and, therefore, does not obtain for themselves the halo of diligence. - AT Visit to Get Source Articles RECENT DEVELOPMENTS IN GST Notifications Customs 2/2020-Customs (CVD) - dated 9-10-2020 - CVD Seeks to impose provisional countervailing duty on import of Flat rolled products of stainless steel, originating in, or exported from Indonesia. GST - States 61/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST Amendment in Notification No. 13/2020–State Tax, dated the 23rd June, 2020 54/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST Amendment in Notification No. 29/2020–State Tax, dated the 23rd June, 2020 53/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST Amendment in Notification No. 4/2018– State Tax, dated the 30th January, 2018 52/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST Amendment in Notification No. 76/2018–State Tax, dated the 31st December, 2018 51/2020-State Tax - dated 6-10-2020 - Himachal Pradesh SGST Amendment in Notification No. 13/2017–State Tax, dated the 30th June, 2017 Indian Laws RBI/2020-2021/52 IDMD.CDD.No.730/14.04.050/2020-21 - dated 9-10-2020 - Indian Law Sovereign Gold Bond Scheme (SGB) 2020-21- Series VII, VIII, IX, X, XI, XII G.S.R. 627 (E) - dated 9-10-2020 - Indian Law Sovereign Gold Bond Scheme 2020-21 Circulars / Instructions / Orders Customs - Addendum - ITO PUBLIC NOTICE NO.14/2018 - dated 7-10-2020 Request for amendment in procedure for the Shipping Bills selected by the Systems for detailed examination (Check Packets) Customs - Public Notice No. 23/2020 - dated 29-9-2020 Launch of e-office in the Office of the Commissioner of Customs, Mundra Customs - Public Notice NO. 48/2020 - dated 28-9-2020 Launch of e-office in Customs Commissionerate, ICD PPG & other ICDs Customs - PUBLIC NOTICE NO. 37 /2020 - dated 21-9-2020 ICES Advisory No. 33/2020 - Manufacturing and other operations in a Warehouse Regulations (MOOWR) and waiver of interest – Changes in ICES Customs - PUBLIC NOTICE NO. 34/2020 - dated 21-9-2020 Streamlining of UQCs in Export Declarations - Certain relaxations to Licence SBs Customs - PUBLIC NOTICE, NO. 39/2020 - dated 3-9-2020 Launch of e-Office in ICD (Import) Commissionerate, Tughlakabad, New Delhi Customs - PUBLIC NOTICE. NO. 16/2020 - dated 26-8-2020 Launch of e-Office in the office of Commissioner of Customs (Export). Inland Container Depot. Tughlakabad. New Delhi Customs - PUBLIC NOTICE NO. 28/2020 - dated 24-8-2020 Revised guidelines for conduct of personal hearings in virtual mode under CGST Act, 2017, IGST Act, 2017, Customs Act, 1962, Central Excise Act, 1944 and Chapter V of Finance Act, 1994 Customs - TRADE NOTICE NO. 01 / 2020-GRC - dated 18-8-2020 Constitution of Grievance Redressal Committees at Zonal/ State level for Redressal of grievances of taxpayers on GST related issues Customs - TRAPF NOTICE NO. 01/2020 - dated 17-8-2020 Launch Of e-Office in Kolkata South CGST & CX Commissionerate Customs - TRADE NOTICE NO. 15/2020 - dated 14-8-2020 Launch of e-Office in office of the Principal Commissioner, CGST, Visakhapatnam Customs - PUBLIC NOTICE NO. 06/2020 - dated 13-8-2020 Launch of e-Office in Customs Audit Commissionerate, Customs Delhi Zone Customs - TRADE NOTICE NO. 03/2020 - dated 7-8-2020 Launch of e-Office in Central Goods and Services Tax Commissionerate, Bhavnagar w.e.f. 11.08.2020 Customs - TRADE NOTICE NO. 05/2020 - dated 3-8-2020 Launch of e-Office in O/o The Principal Commissioner of Central Tax & Central Excise, Kochi Customs - Public Note No. 14/2020 - dated 15-7-2020 Setting up of the Turant Suvidha Kendra (TSK) for faceless assessment News Sovereign Gold Bond Scheme 2020-21 (Series VII) – Issue Price Sovereign Gold Bond Scheme 2020-21 Income Tax Department conducts search in Ahmedabad Case Laws: GST 2020 (10) TMI 435 Recovery of unpaid GST - case of the department was that the petitioner was selling packaged marked rice with registered trademark which activity, after 22.09.2017 was subject to Central as well as State GST which the petitioner had not paid - HELD THAT:- In the present case, the petitioner has raised number of disputed questions of facts about the nature of its activities and the manner in which the petitioner was selling rice after 22.09.2017. It is not possible for this Court, nor even necessary to examine these disputed questions of facts acting as a first appellate authority in a writ petition. For example, the petitioner, as noted, had contended that the segregation of the stock of rice in different qualities was for internal purpose and not for marking at the time of sale. When the raiding party had found stock of packaged rice carrying registered marks, the defence of the petitioner was that the same was old stock sold prior to 22.09.2017 but returned due to quality disputes which was still lying in the godown. We are not commenting on whether such defences are genuine or not. The order passed by the adjudicating authority takes to account the background of the case, refers to the case of the department in issuing of notice, records the stand of the petitioner in opposition, records in detail the contentions of the petitioner during personal hearing and thereafter records his own reasons for the conclusions. The order thus is a speaking order and cannot be criticized by suggesting that no reasons are recorded or that it is a non-speaking order - If its effect is such that a part of the order of the competent authority which has been tainted on account of this breach, is severable and insofar as his foundational findings are concerned, the same still be maintained, it may not be necessary to set aside the entire order only on this ground. We have made these remarks, particularly since the petitioner does not seem to have disputed the seizure of certain stock of rice bags, including the bags carrying registered trademarks. However, all these aspects must be gone into by the appellate authority and cannot be examined in a writ petition at the first instance. Petition dismissed. 2020 (10) TMI 434 Classification of goods - rate of tax - renting of e-bikes(Miracle), bicycles(Move) without operator - to be classified under the SAC 9973, Leasing or rental services without operator or otherwise? - benefit of Sl.No.17 (viia) of Notification No.11/2017 Central Tax (Rate) dated 28th June 2017 as amended - HELD THAT:- It is observed, from the applicant s interpretation of law, that the applicant construed the amendment to the rate notification under Notification No. 20/2019-CT(R) dated 30.09.2019 as that of the amendment to the classification, which is incorrect. The classification of the services does not change but the rate of tax can be changed by the rate notification. It is an admitted fact that the applicant is involved in renting of e-bikes (Miracle) bicycles (Move), which are meant for transportation and hence are covered under transport vehicles. The Heading 9966 reads as Rental Services of transport vehicles with or without operators. Heading 9973 reads as Leasing or rental services with or without operator and includes rental or operational leasing of machinery and equipment, personal and household goods, but does not include leasing services of machinery and equipment of personal and household goods on a purely financial service basis. Further sub headings of 9973 pertain to other goods, IPR, etc with no mention of transport goods/vehicle. Thus the applicant s services are squarely covered under SAC 9966. The specific description is preferred to general one as per the Explanatory Notes and hence we conclude that applicant s activity is classifiable under Heading 9966. Applicant s interpretation that post 30th Sept 2019, renting/leasing of all goods without operator should be falling under Heading 9973 is not correct and hence is not tenable under the law, for the reason that the so called amendment, under Notification No. 20/2019-C.T.(R) dated 30.09.2019, is to the rate of GST for the services covered under SAC 9973, but not to the classification of the services. Further the amendment under Notification No. 20/2019-CT (R) dated 30.09.2019 amends entry bearing SI.No.17, covering the services classified under SAC 9973, to substitute Leasing or rental services, without operator, other than (i), (ii), (iii), (iv), (vi) and (viia) above . Therefore the said amendment is irrelevant to the instant case. Thus, Renting of e-bikes/ bicycles without operator cannot be classified under SAC 9973 - Leasing or rental services without operator and Sl.no.17(viia) of Notification no.11/2017 CT(R) dated 28th June 2017 as amended is not applicable to the instant case. 2020 (10) TMI 433 Demand of interest and penalty - the contention of the petitioner is essentially that she must be permitted to avail the option envisaged under Section 74 without paying the interest and penalty amounts that are stipulated as conditional payments for avoiding the show cause notice envisaged under the said provision - HELD THAT:- The contention of the petitioner that she should be exempted from the requirement of paying interest and penalty while availing the option of payment of tax for the purposes of avoiding the show cause notice cannot be accepted. The scheme of making a payment of tax together with interest and 15% of the amount as penalty envisaged under Section 74 is for the purposes of enabling an assessee to avoid the show cause notice contemplated under the said provision. What is offered to the petitioner under the provision is an option of either (i) paying the tax intimated by the statutory authorities, together with interest thereon and a fixed amount towards penalty, in which event a show cause notice would not follow or (ii) denying her liability to tax, interest and penalty and contest the show cause notice that would follow. When the scheme under Section 74 for avoiding a show cause notice is one that is optional to an assessee, the assessee has either to opt for it or look away from it. If she opts for the scheme, she has to comply with the terms under which the option is made available under the statute. She cannot seek a variation of the said scheme. Petition dismissed. 2020 (10) TMI 432 Direction to the respondents to supply copies of the seized documents to the petitioner - HELD THAT:- Mr. Harpreet Singh, senior standing counsel for the respondent accepts notice. He states that the photocopies of the seized documents shall be supplied by Superintendent of CGST, Anti-Evasion, Group-IV to the petitioner. - Accordingly directions issued. 2020 (10) TMI 431 Cancellation of registration of petitioner - Validity of SCN - case of petitioner is that without fixing a date for hearing and without waiting for any reply to be filed by the petitioner, the cancellation order was passed on 30.07.2020 whereby registration of the petitioners with GST department was cancelled - principles of natural justice - HELD THAT:- Perusal of the same indicates that to such show cause notice no response can be given by any assessee. The show cause notice is as vague as possible and does not refer to any particular facts much less point out so as to enable the noticee to give his reply. - We are not entering into the merits of the impugned order as we are convinced that the show cause notice itself cannot be sustained for the reasons already recorded above. Therefore, the cancellation of registration resulting from the said show-cause notice also cannot be sustained. The impugned show cause notice dated 20.07.2020 (Annexure-H) and the impugned cancellation order dated 30.07.2020 (Annexure-I) are hereby quashed - Petition allowed. 2020 (10) TMI 430 Principles of Natural Justice - request to redress the grievance - according to petitioner, grievance in Grievance redressal portal of GST was not solved and was closed without doing anything - HELD THAT:- The present writ petition is disposed off by issuing direction to the 2nd respondent to decide representation Ext.P5 dated 06.02.2020 after affording an opportunity of hearing to the petitioner in accordance with law. 2020 (10) TMI 429 Condonation of delay in filing returns - Rejection of refund claim - rejection on finding that the returns claiming the input tax credit had not been filed within time - HELD THAT:- Probably on account of the fact that Ext.P4 order of the assessing authority had not been carried in appeal by the petitioner, the 1st respondent, when considering the delay condonation application preferred by the petitioner, passed Ext.P2 order refusing to condone the delay - When the matter came up for admission before this Court, and on a request made by the learned counsel for the petitioner, he was permitted to prefer an appeal against Ext.P4 order of the Assessing Officer so as to keep the issue of belated filing of return and condonation thereof alive. The petitioner has accordingly prefered Ext.P5 appeal before the Joint Commissioner [Appeals], Ernakulam, who is suo motu impleaded as the additional 3rd respondent in the Writ Petition. The 1st respondent shall consider the delay condonation application filed by the petitioner afresh within three weeks from the date of receipt of the copy of the judgment, after hearing the petitioner, and taking note of the filing of Ext.P5 appeal against Ext.P4 order before the additional 3rd respondent - Petition disposed off. Income Tax 2020 (10) TMI 418 TDS u/s 194J - roaming charges paid by the assessee to the other telecom service provider (Reliance Telecom Ltd.) are in the nature of Fee for technical Services - Default u/s 201(1)/201(1A) - AO had invoked the provisions of section 201(1)/201(1A) for non-deduction of tax at source on payment of roaming charges terming it as fee for technical services - CIT(A) reversed the findings of AO and held that the payment for roaming charges are not akin to fee for technical services and hence, the provisions of section 194J are not attracted - Department assailed the findings of CIT(A) before the Tribunal in aforementioned appeals and the same were dismissed - HELD THAT:- Identical reasons the provisions of section 201(1)/201(1A) of the Act were invoked in assessee s own case in AY 2010-11 and 2011-12 [ 2016 (4) TMI 811 - ITAT MUMBAI ]. We observe that in above said appeals, grounds raised by the Department assailing the finding of CIT(A) are identical to grounds raised in the present appeal. Tribunal did not have the benefit of decision rendered in the case of CIT vs. Vodafone South Ltd. [2016 (8) TMI 422 - KARNATAKA HIGH COURT] as the said judgement is later in time. Post Vodafone South Ltd. (supra) various benches of the Tribunal have been consistently following the law laid down by Hon ble Karnataka High Court. We hold that the roaming charges paid by the assessee are not in the nature of fee for technical services . DR has not brought before us any contrary decision. We find no infirmity in the impugned order. Accordingly, the same is upheld and ground No.1 (a) of the appeal is dismissed sans-merit. Interest levied under section 201(1A) - Since we have held that the roaming charges paid by the assessee to the other telecom service provider are not in the nature of fee for technical services no TDS under section 194J is liable to be deducted. Once there is no liability for deducting tax at source, question of charging interest under section 201(1A) of the Act does not arise. 2020 (10) TMI 417 Entitlement to deduction u/s 80P(2)(a)(i) - whether the interest income received on investments can be treated as income from business and granted deduction u/s 80P(2)(d)? - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. Appeals filed by the assessee are partly. 2020 (10) TMI 416 Entitled to deduction u/s 80P(2)(a)(i) - interest income earned from bank - PCIT held that the assessee was not entitled to deduction u/s 80P(2)(a)(i) as relying on case of Totagars Co-operative Sale Society[ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] - assessee contended that surplus funds for which there was no immediate need were deposited with the banks and interest income earned on such investments was to be considered as income from business since these funds were relating to business of providing credit facilities to the members - PCIT accepted the assessee s contentions that it is a primary agricultural credit society and it was entitled to claim deduction - HELD THAT:- Whether the source of funds were assessee's own funds or out of liability was not the subject matter of decision of the TOTAGARS CO-OPERATIVE SALE SOCIETY [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] relied on by the Id. PCIT. To this extent, the judgment of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Society Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] [relied on by the assessee] still holds good. Hence from this aspect, the issue should be considered by the AO after examining the facts in light of the judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sales Society [ 2010 (2) TMI 3 - SUPREME COURT] and the judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Co-op. Society Ltd. (supra). Therefore, the directions of the PCIT to assess the interest income under the head income from other sources and grant permissible deduction u/s. 57 of the Act is quashed. The AO will afford adequate opportunity of being heard to the assessee for filing details/evidence to substantiate its case before deciding the issue. Assessee's appeal is partly allowed. 2020 (10) TMI 415 TDS u/s 194I - Addition u/s 40(a)(ia) - non-deduction of TDS on rent paid to Royal Yacht Club - benefit of circular CBDT circular No.5 of 2002 dated 30-07-2002 - CIT(A) confirmed the addition by holding that the assessee has paid accommodation charges for the hotel accommodation which is on regular basis from the club without deduction of TDS - HELD THAT:- Accommodation was booked by the assessee in the club not on a regular basis but on casually and occasionally as and when the foreign consultants visits the assessee in connection with assessee s business. We are quite convinced with the arguments of Assessee that this accommodation is occasional/ casual as no specific accommodation is earmarked and the same is made available to the assessee on the availability basis. In our opinion, the case is squarely covered by the decision of Red Chillies Entertainment Pvt. Ltd. [ 2017 (3) TMI 333 - ITAT MUMBAI] as held nothing has been brought before us to show that assessee had entered into any prior contract with the hotels for any specific room or rooms for any specific rates or rooms for any specific period. The rooms were hired on as and when available basis at the regular tariff rates subject to the discounts as agreed at the time of booking of rooms. Under these circumstances, the assessee deserves to be given the benefit of the circular No.5 of 2002 dated 30-07-2002 issued by the Board providing that under these circumstances, TDS will not be required to be made u/s 194I. - Decided in favour of assessee. 2020 (10) TMI 414 Penalty levied u/s.271(1)(c) - addition made on account of prior period expenses and foreign exchange loss - CIT(A) himself upheld the action of the AO in respect of the quantum addition - HELD THAT:- Revenue has not doubted the genuinity of the return filed by the assessee and has not said that the particular of expenses claimed in the return were not correct. The expenses were claimed and quantum additions have been upheld by the Tribunal. However, in the separate proceedings of penalty u/s.271(1)(c) of the Act when the Revenue has accepted the return of the assessee and has not brought on record any material to show that whatever stated in the return is incorrect or inaccurate, in such scenario, there is no question of imposing penalty under the said provision. In view of the above facts and circumstances and relying on the aforesaid judgment of the Hon‟ble Apex Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] we are of the view that on these grounds, penalty u/s.271(1)(c) of the Act cannot be levied. Thus, Ground No.1 and 3 raised in appeal by the Revenue are dismissed. 2020 (10) TMI 413 Short-deduction of tax at source - appellant while making payments had deducted lower tax in respect of part of the amount paid to the deductee - payments exceeding the amounts specified in the certificates issued in form no.13, r/w section 197(2) and rule 28AA - HELD THAT:- We notice from the record that assessee had made the payment to M/s Times Innovative Media Ltd to the extent of ₹ 8,22,37,744/- and deducted TDS @ 0.1%. M/s Times Innovative Media Ltd has submitted the short deduction certification issued u/s 197 and as per the certificate, the approved limit of short deduction is ₹ 7,51,10,831/-, but assessee continued to deduct the tax at the concessional rate beyond the certificate limit of ₹ 7,51,10,831/- instead of deducting the TDS @ 2%. In the subsequent financial year, assessee was brought to the notice of short deduction by the department and assessee has remitted the shortfall amount alongwith interest. However, AO and Ld. CIT(A) has sustained the disasllowance u/s 40(a)(ia) for the above said default on the part of the assessee. Since the facts of the case are similar to the facts of the case titled Tata Communications Ltd. Vrs. DCIT [ 2019 (12) TMI 442 - ITAT MUMBAI ] as held statutory provisions providing for deduction of tax at source at lower rate is person specific and cannot be extended to the amounts specified by the recipients of the payment while making application for grant of certificate in Form no.13, in terms of section 197 of the Act. Thus, the Tribunal has ultimately held that in such circumstances, if the assessee continues to deduct tax at the rate specified in the certificate, even, in respect of payment made over and above the sum specified in the certificate, it cannot be treated as assessee in default for short deduction of tax. - Decided in favour of assessee. 2020 (10) TMI 412 Validity of exercise of revisional jurisdiction u/s 263 - time limit for completion of assessment, reassessment and re-computation - time limit to do so as provided in Sec.153(3) as well as Sec. 153(5) expired - HELD THAT:- The provisions of Section 153 provide time limit for completion of assessment, reassessment and re-computation. As per sub section (3), an order of fresh assessment pursuant to Section 263, setting aside or cancelling an assessment, may be made at any time before the expiry of 9 months from the end of financial year in which order u/s 263 has been passed by revisional authority. This period, in assessee s case is 31/12/2019. The proviso to the said sub-section extending the time limit to 12 months is not applicable since revisional order has been passed prior to 01/04/2019. As per sub-section (5), where effect to an order u/s 263 was to be given by Assessing officer, wholly or partly, otherwise than by making a fresh assessment or reassessment, such effect shall be given within a period of 3 months from the end of the month in which the order u/s 263 has been passed by revisional authority. As per proviso to this sub-section (5), where it is not possible for Ld. AO to give effect to such order within the aforesaid period for reasons beyond his control, the prescribed authority may allow an additional period of 6 months to give effect to that order. Allowing this extended period to assessee s case, the time limit to pass the consequential order would be 31/05/2019. Viewing from any angle, the time limit to pass consequential order has already been expired and the same has become time-barred. In fact, no such order has been passed till date. Consequently, the plea of Ld. Sr. Counsel has to be accepted and therefore, the appeal would stand dismissed as being infructuous. 2020 (10) TMI 411 Long term capital gain - transfer u/s 2(47) - Year of assessment - AO on perusal of agreement was of the view that under the agreement,assessee as well as other co-owners of Unisol were to receive in aggregate a sum of ₹ 20 crores and proceeded to tax entire amount of ₹ 20 crores in the subject assessment year in the hands of all co-owners of shares - HELD THAT:- Commissioner (Appeals) deleted the addition of ₹ 4.48 crores made by the Assessing Officer on the ground that it is notional. On further appeal, the Tribunal upheld the findings of the Commissioner (Appeals) inter alia holding that as there is no certainty of receiving any amount as deferred consideration, the bringing to tax the maximum amount of ₹ 20 crores provided as a cap on the consideration in the agreement dated 25-1- 2006 is not tenable. What amount has to be brought to tax is the amount which has been received and/or accrued to the respondent-assessee and not any notional or hypothetical income as the revenue is seeking to tax the respondent-assessee in the subject assessment year 2006-07. What has to be taxed is the amount received or accrued and not any notional or hypothetical income. As observed by the Apex Court in CIT v. Shoorji Vallabhdas Co [ 1962 (3) TMI 6 - SUPREME COURT] Income-tax is a levy on income. No doubt, the Income-tax Act takes into account two points of time at which liability to tax is attracted, viz., the accrual of its income or its receipt; but the substance of the matter is income, if income does not result, there cannot be a tax, even though in book-keeping an entry is made about a hypothetical income, which does not materialize. In this case ₹ 20 crores cap in the agreement is not income in the subject assessment year. In this case the amount of ₹ 20 crores is neither received nor it has accrued to the respondent-assessee during the subject assessment year. We are informed that for the subsequent assessment year (save Assessment Year 2007-08 for which there is no deferred consideration on application of formula), the Assessee has offered to tax the amounts which have been received on the application of formula provided in the agreement dated 25th January, 2006 pertaining to the transfer of shares - Appeal filed by the Revenue is dismissed. 2020 (10) TMI 410 Penalty imposed u/s. 221 r.w.s. 140A(3) - self assessment tax was not paid - assessee was requested to pay tax dues but no response from the assessee - assessee raised a ground that due to financial liquidity crisis the assessee could not pay taxes - HELD THAT:- CIT-A examined the financial position of assessee as on the due dates of installments of payments of advance tax and also on due date for filing of return of income, wherein we note that the assessee had sufficient balance amount in its accounts to discharge the tax liability as on the due dates of installments in terms of section 211 of the Act. Therefore, we completely agree with the reasons recorded by the CIT(A) in its order that the assessee had sufficient funds to discharge its liability. Whether provision u/s. 273B of the Act is applicable to the assessee or not? - reasonable cause as defined u/s. 273B in our opinion is not applicable to the penalty imposable u/s. 221 of the Act. The term advance tax refers to paying a part of taxes before the end of the financial year. It should be paid in the year in which the income is received. Assessee paid ₹ 11,21,000/- on two dates 13-03-2015 and 16-03-2015 i.e. after passing of penalty order on 03-03-2015 and an amount of ₹ 35,00,000/- on 16-01-2017 i.e. just before passing impugned order on 23-02-2017. We agree with the submission of Shri Alok Malviya that the assessee shall not cease to be liable to any penalty under sub-section (1) of section 221 merely by reason of the fact that the assessee paid tax, but however taking into consideration the facts of circumstances, it is fair and just to restrict the penalty to ₹ 66,134/- being 1% of ₹ 66,13,420/- and we confirm the penalty to an amount of ₹ 66,134/- and the order of CIT(A) is modified accordingly. Thus, grounds raised by the assessee are partly allowed. 2020 (10) TMI 409 Deduction u/s 80P(2)(a)(i) - assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 - assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 01.04.2007, the assessee will not be entitled to deduction u/s 80P - HELD THAT:- In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (9) TMI 782 - SC ORDER] we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - the issue raised in these appeals is restored to the files of the Assessing Officer. Appeal filed by the assessee is allowed for statistical purposes. 2020 (10) TMI 408 Disallowance of interest in respect of interest free advances given to related concerns - loans and advances to relatives have decreased during the year - appellant has not charged any interest on the loans and advances as the appellant has sufficient interest free capital and trade creditors for making the interest free advance to the above parties - Whether A.O. has not established the direct nexus between interest bearing loan taken and interest free loan given? - HELD THAT:- As fund flow statement will reflect such a position of interest free funds which are available to be utilized and which the assessee has failed to furnish during the appellate proceedings before him. Even during the course of present proceedings, the assessee has not furnished any fund flow statement and therefore, the said findings of the CIT(A) remain uncontroverted and we are thus not inclined to interfere with the same and thus, the contentions so advanced by the ld AR cannot be accepted as the same remain unsubstantiated. Regarding the contention of the AR that other advances to related concerns are in nature of trade debtors and the matter has not been examined by the AO, the matter is set-aside to the file of the AO with a direction to verify the said claim and where, on verification, it is found that such transactions are in course of the assessee s business, the same is directed to be excluded while working out the disallowance of interest. 2020 (10) TMI 428 Interest u/s 234 A, B C - Whether such an order is a regular assessment which alone attracts such levy of interest? - AO held that the assessee is not carrying on any business activity and treated it as an Association of Persons and completed the assessment - Whether assessee is not carrying on any business activities, whether the authorities were justified in holding that the respondent assessee is a firm and not an Association of Persons? - HELD THAT:- The interest under Section 34A(1) of the Act is levied under the circumstances mentioned therein namely where the return of income has not been furnished under sub- Sections (1) and (4) of Section 139 or in response to the notice under sub-Section (1) of Section 142 and / or is not furnished after due date. Assessee is liable to pay simple interest at the prescribed rate for every month. It is also not in dispute that if an order of assessment get effaced, it ceases to exist and a fresh order of assessment has to be passed - in the case of MODI INDUSTRIES [1995 (9) TMI 324 - SUPREME COURT ] has held that the expression regular assessment has to be deemed to have been completed on the date when first order of assessment has been passed and not when modified order of assessment has been passed, as the assessee cannot be penalized for lapse of time between the first assessment order and modified assessment order without there being any fault on his part. Therefore, the interest under Section 234A can be levied upto the date of first assessment order only. Assessment as defined under Section 2(28) of the Act has a comprehensive meaning and includes all steps and proceedings taken for determination of tax payable and for imposing liability on the assessee. It includes reassessment as well. Therefore, even after the matter is remitted, an order of assessment is passed, the same is referable to Section 143 or Section 144. Explanation- 3 only protects the assessee from levy of interest and confines the same when the original order of assessment is passed and not when the modified order of assessment is passed - Decided against assessee. 2020 (10) TMI 427 Valuation of closing stock - Whether addition would arise only when the stock continues to be held by the assessee in the next year and not in a case where the business of the assessee along with stock was taken over by a company on 08.01.2012? - HELD THAT:- Whether valuation of closing stock would arise when the business of the assessee along with the stock was taken over by the company needs to be decided. This is a mixed question of fact and law, which has to be considered because the revenue did not dispute the fact that the business of the assessee along with the stock was taken over by the company on 08.01.2012, therefore, we deem it appropriate to remand the matter to the assessing officer for fresh consideration on this aspect after due opportunity to the assessee. For the above reasons, the Tax case Appeal is allowed. The impugned order passed by the Tribunal is set aside and the matter is remanded to the Assessing Officer to verify the aspect, which has been pointed out in the preceding paragraphs. 2020 (10) TMI 426 Deduction u/s 10AA - CIT(A) concluded that the process done by the assessee would qualify as 'manufacture', under the SEZ Act - Tribunal following that the activity of the assessee of purchasing illuminate and removing dust from it and selling the dust removed illuminate amounts to 'manufacture', when Clause(r) of Section 2 of the special Ezonomic Zones Act, 2005 defines 'manufacture' otherwise and that the assessee is eligible for deduction under Section 10AA - HELD THAT:- Semi finished material purchased by the assessee is not marketable and usable in the industry, as what is purchased by the assessee includes silicon, sand and waste, which cannot be marketed as such, unless the waste materials are removed. The flow chart, which was produced by the assessee before the AO was referred to CIT(A) and he came to the conclusion that the Assessing Officer was himself mislead by the nomenclature used in the Gate Pass. Revenue carried the matter by way of appeal to the tribunal and the tribunal once again re-appreciated the factual position and found that there is a process of 'manufacture' as defined under the SEZ Act, which takes place in the SEZ unit and also pointed out that the AO himself has accepted that the assessee's unit, processed the raw materials by removing 10 to 20% impurities. Cost comparison of the semi finished product with that of the raw material was also referred to and it was also pointed out that the Assessing Officer could not establish that the assessee has suppressed the purchase cost of semi-finished goods in order to claim higher deduction under Section 10AA of the Act. Certificate issued by the Assistant Development Officer was accepted on the ground that the revenue could not prove the same to be not genuine. Tribunal sustained the factual finding recorded by the CIT(A). Entire factual matrix has not only been analyzed by the CIT(A), but, also by the tribunal. Substantial Question of Law is answered against the Revenue. 2020 (10) TMI 425 Revision u/s 263 - Scope of limited scrutiny - AO did not invoke Section 56(2)(vii)b(ii) - HELD THAT:- AO has noted that the sale consideration paid by the assessee was ₹ 41,50,000/- and she has paid stamp duty and other expenses of ₹ 5,75,000/-. The source of funds was verified and the assessing officer was satisfied with the same. PCIT while invoking his power u/s 263 faults the assessing officer on the ground that he did not make proper enquiry. It is not clear as to what in the opinion of the PCIT is 'proper enquiry'. By using such expression, it presupposes that the AO did conduct an enquiry. PCIT, the enquiry was not proper in absence of not clearly stating as to why in the opinion of PCIT, the enquiry was not proper, we have to necessarily hold that the invocation of the power u/s 263 was not justified. Only reason for setting aside the scrutiny assessment was on the ground that the guide line value of the property, at the relevant time, was higher than the sale consideration reflected in the registered document. Question would be as to what is the effect of the guideline value fixed by the State Government. There are long line of decisions of the Hon'ble Supreme Court holding that guideline value is only an indicator and the same is fixed by the State Government for the purposes of calculating stamp duty on a deal of conveyance. Merely because the guideline was higher than the sale consideration shown in the deed of conveyance, cannot be the sole reason for holding that the assessment is erroneous and prejudicial to the interest of revenue. AO in his limited scrutiny, has verified the source of funds, noted the sale consideration paid, the expenses incurred for stamp duty and other charges - assessee in their reply dated 11.01.2019 to the show cause notice dated 26.10.2018 issued by the PCIT has specifically stated that the assessment was getting time barred, assessing officer took upon himself the role of a valuation officer u/s 50(C)(2) and found that the guideline value was not actual fair market value of the property and the actual consideration paid was the fair market value and therefore, he did not choose to make any addition under Section 50(C) of the Act. PCIT, has not dealt with this specific objection, but, would fault the assessing officer for not invoking Section 56(2)(vii)(b)(ii) merely on the ground that the market value was higher. As point out earlier, the guideline value is only an indicator and that will always not represent the fair market value of the property and therefore, the invocation of the power under Section 263 by the PCIT is not sustainable in law. - Decided against the revenue. 2020 (10) TMI 407 Revision u/s 263 - deduction claimed by the assessee u/s 54F disallowed - case of the assessee was taken up for limited scrutiny as per the notice issued under section 143(2) - PCIT on perusal of the assessment record noticed that the deduction u/s 54F allowed by the AO in respect of purchase of agricultural land and construction of house which is not admissible - HELD THAT:- When the enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of assessment, but the same is apparent from the record of the proceedings, the invocation of jurisdiction by the ld. CIT was unsustainable. See DG HOUSING PROJECTS LTD [ 2012 (3) TMI 227 - DELHI HIGH COURT] Where the AO has made an enquiry and taken a possible/permissible view, then the said order cannot be treated as erroneous and prejudicial to the interests of the revenue unless the view taken by the AO is unsustainable in law. In case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] has held that an order of ITO cannot be treated as prejudicial to the interests of the revenue if the ITO adopted one of the course permissible in law and it has resulted in loss of revenue or two views are possible and the ITO has taken one view with which the ld. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. The view taken by the AO is a possible view though may not be the only view. Further once the issue of allowability of deduction under section 54F is a debatable issue and the AO has taken a possible view, then the ld. PCIT is not permitted to invoke the provisions of section 263 merely because he does not agree with the view of the AO. Hence we hold that the impugned order passed by the ld. PCIT is not sustainable and the same is liable to be set aside. - Decided in favour of assessee. 2020 (10) TMI 406 Eligibility of deduction u/s.80IB(10) - area violation - completion certificate has been issued by MCGM as constructed as per approved plan - HELD THAT:- As decided in own case [ 2017 (4) TMI 1513 - ITAT MUMBAI] AO should be directed to examine the date of approval of the project in question and apply the said decisions on the said clause (Ex. Emgeen Holdings (P) Ltd 2011 (7) TMI 199 - ITAT MUMBAI (Mumbai) . Accordingly we order. AO shall grant reasonable opportunity of being heard to the assessee as per the set principles of natural justice. Appeals of the revenue are allowed for statistical purposes. 2020 (10) TMI 405 Addition u/s 68 - creditworthiness of the creditors and genuineness of the transaction proved or not? - HELD THAT:- A.O. did not make any adequate enquiry on the documentary evidences filed by the assessee-company clearly established that assessee-company proved identity of the creditors, their creditworthiness and the genuineness of the transaction in the matter. Merely low income declared in the return of income by the creditors is no ground to reject the explanation of the assessee-company because their creditworthiness is in several crores as is already admitted by the A.O. in the assessment order. We set aside the orders of the authorities below and delete the entire addition. - Decided in favour of assessee. 2020 (10) TMI 424 Depreciation on intangibles - trademarks owned wholly or partly by the assessee - assessee succeeded to the business of the partnership firm, which had trademarks registered in its name - whether absence of any tangible material but merely on the basis of additions made in subsequent assessment year 2007- 08? - eligibility to claim depreciation only with reference to the written down value of transferred assets in the hands of predecessor firm and not with reference to actual cost incurred by it - HELD THAT:- Intangible asset of the assessee has a real money value. The aforesaid trademark viz., the intangible assets were transferred to the assessee for a valuable consideration. Section 32(1) provides for depreciation in respect of trademarks owned wholly or partly by the assessee. In the instant case, the assessee succeeded to the business of the partnership firm, which had trademarks registered in its name - assessee u/s 32(1) was entitled for depreciation. It is also pertinent to note that under Section 47 of the Act, any transfer of capital asset or a intangible asset by a firm to a company as are result of succession of the firm by a company is a recognized mode of transfer. Admittedly, the assessee and the erstwhile partnership firm are different entities and there was transfer of intangible assets by the partnership firm to the assessee for a valuable consideration that is by way of allotment of shares. Thus, the aforesaid transaction is squarely covered under Section 47(xiii) of the Act and therefore, the assessee under Section 32(1) was entitled for depreciation with reference to actual cost incurred by it with reference to intangible assets. Accordingly, the second substantial question of law is answered in favour of the assessee and against revenue. Whether 5th proviso to Section 32(1) of the Act restricts the total depreciation which can be claimed in case of succession etc. to the depreciation which would have been allowable had there been no succession? - 5th proviso to Section 32 of the Act restricts aggregate deduction both by the predecessor and the successor and if in a particular year there is no aggregate deduction, the 5th proviso does not apply. Thus, it is axiomatic that until and unless it is the case of aggregate deduction, the proviso has no role to play. The 5th proviso in any case will apply only in the year of succession and not in subsequent years and also in respect of overall quantum of depreciation in the year of succession. Accordingly, the third substantial question of law is answered in favour of the assessee and against the revenue. Invoking Explanation 3 to Section 43(1) - It has to be established that apart from claiming additional depreciation on enhanced cost there is no other main purpose for acquiring the asset in question and the AO has to obtain the previous approval of the joint commissioner to disregard the enhanced price. AO in the instant case, in the order of assessment has neither complied with the aforesaid conditions nor has recorded any finding in this regard. CIT (Appeals) however, failed to appreciate the aforesaid aspect. Therefore, the Tribunal committed an error of law in upholding the order of Commissioner of Income Tax (Appeals) in invoking Explanation 3 to Section 43(1) - Decided in favour of the assessee. 2020 (10) TMI 423 Interest expense on moneys borrowed disallowed u/s 57(iii) - appeal filed before the Tribunal, the assessee contended that the CIT did not consider the statement of confirmations given evidencing that no new loan was taken during the year under consideration - HELD THAT:- Assessee specifically stated that the loans were availed through banking channels and the interest amounts were paid to the lenders, who have disclosed the same in their respective return of income and tax had been remitted by them on the interest income. Had AO directed the assessee to produce those lenders to appear for an enquiry by issuing notice, probably correct factual decision would have been ascertained. This aspect had not been dealt with in the impugned order passed by the Tribunal. As mentioned earlier, the Tribunal proceeded on a totally different footing, which neither appears to be the case of the assessee nor that of the Revenue. The assessee cannot be worse off before the Tribunal in his own appeal. Considering the facts and circumstances of the case and taking note of the nature of business activities done by the assessee, we deem it appropriate to set aside the orders passed by the AO, the CIT(A) and the Tribunal and remand the matter to the AO for a fresh consideration. Above tax case appeal is allowed, the orders passed by the AO, the CIT(A) and the Tribunal are set aside and the matter is remanded to the Assessing Officer for a fresh consideration. 2020 (10) TMI 422 Expenditure incurred on the lease premises towards civil works, furniture, etc. - revenue expenditure OR capital expenditure - HELD THAT:- In the present case, the Assesses had incurred substantial expenditure towards renovation leading to enduring benefit. They are not merely repairs. The Assessees had also incurred expenditures towards improvement and construction of the building. These cannot be termed as 'repairs'. Consequently, this alternate submission is rejected by us. Second alternate submission advanced by Mr.M.P.Senthil Kumar that the case should be remitted back to the Assessing Officer is also rejected since the fact have been addressed and settled by the Authorities below and it had been concurrently found that the expenditure were capital in nature. The issue of bifurcating the said expenses as capital and revenue would therefore not arise. Substantial questions of law have to be answered in favour of the Revenue and against the Assessee 2020 (10) TMI 421 Exemption u/s 11 - whether the assessee would be entitled to get registration u/s 12A(a) with effect from the date of application dated 11.3.2009 namely the first application or the CIT was right in granting registration with effect from 01.4.2011 by taking into consideration the second application dated 28.6.2011? - HELD THAT:- The first application is dated 11.3.2009 in Form 10A in accordance with Rule 17A of the Income Tax Rules, 1962. The second application dated 28.6.2011 is also in Form 10A and on going by the form of application, it is clear that it is a fresh application and it is not a letter in continuation of the earlier application. Assessee is deemed to have abandoned or waived their claim made in the first application dated 11.3.2009 owing to the fact that they made the second application dated 28.6.2011, which is a fresh application. CIT was well justified in granting registration with effect from 01.4.2011 while noting the assessee's contention that M/s.Carmel Educational and Charitable Trust, Kollampalayam Erode is a separate entity registered under the Tamil Nadu Societies Registration Act, 1975 and the current registration was falling under the financial year 2011-12 and accordingly, he granted registration for the assessment year 2012-13. We find that the CIT had taken a decision on facts thus no substantial question of law. 2020 (10) TMI 420 Premium for hedging foreign exchange fluctuations on loans taken for the purpose of appellant's business - whether a capital loss by treating it as capital expenditure u/s 43A - asset was purchased within India - HELD THAT:- The findings/observations made ELECON ENGINEERING CO. LTD. [ 2010 (2) TMI 23 - SUPREME COURT] would squarely cover the case of the assessee - nature of transaction in the said judgment was identical to that of the transaction done by the assessee herein - exchange difference is required to be capitalized because liability has been incurred by the assessee for the purpose of acquiring fixed asset namely plant and machinery. The decision of the Hon'ble Supreme Court in the case of Elecon Engineeing Co. Ltd., was followed in the case of CIT Vs. Indian Rayon Industries Ltd. [ 2010 (3) TMI 299 - BOMBAY HIGH COURT] . The decision of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. Vs. CIT [ 1996 (12) TMI 6 - SUPREME COURT] would also support the stand taken by the Revenue by treating the expenditure as capital expenditure. In the decision of this Court in the case of Tube Investments of India Vs. JCIT [ 2014 (3) TMI 731 - MADRAS HIGH COURT] the question was as to whether the Tribunal was right in confirming the disallowance of interest and additional expenditure incurred on account of exchange fluctuation. It was held that if any part of the loan was not used for purchase of a capital asset, the corresponding loss had to be treated as a capital expenditure - Decided against assessee. 2020 (10) TMI 404 Nature of expenditure - R D expenditure - revenue or capital expenditure - Alternative claim u/s 35(1)(iv) r.w.s. 35(2)(ia) - As per assessee expenditure incurred for development of new product range as well as valued engineering of existing product ranges and same resulted into enduring benefit to the assessee - CIT(A) rejected the contentions of the assessee and affirmed the finding of the ld.AO - HELD THAT:- AO has not even granted depreciation - overall analysis of the record would indicate that the assessee has incurred this expenditure for fulfilling the requirement of a specified product required to be supplied to a particular customer. Raw- Material, tools designs ultimately determined by the assessee and used for manufacture of customised products were not meant for uniform application for other customers also, and therefore the expenditure incurred for development of customized products and manufactured and sold by the assessee need not to be capitalized. These are to be treated as revenue expenditure and deserve to be allowed under section 37 of the Income Tax Act. Alternative argument of assessee even in that case the expenditure is allowable under section 35 - These are the expenditure which were incurred by the assessee for preparing pro-type or preparing a product specifically required by its customers. In other words, it has incurred certain expenditure for development on a mechanism which can help it to produce a product specifically demanded by a specific customer, and according to the needs of that customer. If any amount is being incurred towards R D for the purpose of business for manufacturing customized products, then that can be considered under R D which can be allowed under section 35(1)(iv) r.w.s. 35(2)(ia) of the Act. In view of the above discussion, we are of the view that the claim of the assessee deserves to be allowed. 2020 (10) TMI 419 TP Adjustment - MAM selection - CUP OR TNMM - Matter was remanded back by the ITAT - HELD THAT:- As decided in own case [ 2016 (11) TMI 1660 - ITAT CHENNAI] and [2020 (9) TMI 1054 - MADRAS HIGH COURT ] matter of some time to be granted by the Tribunal to direct both the sides to adduce such evidence from the public domain available for comparison, to decide as to which is the most appropriate method to be adopted looking to the nature of business etc. as in Section 92C - Of course, the mathematical computation work could have been left to the Adjudicating Authorities below, or done by the Tribunal itself with the assistance of Counsels/Assessees etc. As far as the appropriateness of the method to be adopted for TP adjustments was required to be done, in our considered opinion, the Tribunal should not have remanded the matter back to the authorities below and that too to the two different authorities, viz., Dispute Resolution Panel and CIT (Appeals), in previous order, and that too by committing a mistake of misreading of the previous order dated 21.12.2012 and holding that CUP Method was already decided to be the only appropriate method, whereas the Assessee has been contending otherwise throughout, and is aggrieved by the adoption of the CUP method and was pressing of TNM Method. Assessee is again in the second round of appeals before the learned Tribunal against the orders passed by the authorities below on the remand made by the previous order dated 21.12.2012. As expected of the learned Tribunal also to realize the consequences of an open remand made or a remand made to the authorities below only for re-computation with the appropriateness of the method decided finally at its own end. The multiplicity of the litigation and rounds of appeal, what we have described as a shuttle game, should have been seen by the learned Tribunal and therefore, we expect at least from now on, the learned Tribunal will decide on the issue of the appropriateness of the method for TP adjustments, while deciding all the pending appeals before it, as far as this Assessee is concerned and also other Assessee by recording its own reasons and taking into account the relevant evidence and materials on record, and if necessary, by calling additional evidence before it, with regard to the external comparables, from both the sides. We do not expect a further open remand by the learned Tribunal on the said issue any more because such decision of the learned Tribunal is likely to affect not only the years under consideration before the learned Tribunal but also the future assessment years, as the Assessee continues to remain in the same business for such future years also. 2020 (10) TMI 403 Addition u/s 56 (2)(vii)(b) - alleged excess value of share premium over fair value as determined for the unquoted equity shares as issued at premium by the Appellant to its Holding Co. - Value determined either on DCF method or NAV method - assessee had opted for clause (b) of Rule 11UA(2) of I.T. Rules by applying DCF method and obtained valuation report form a chartered accountant thereby fulfilling both the requirements of such specific Rule - HELD THAT:- Unlike Explanation (a)(ii) of section 56 (2)(viib), where it has been specifically provided that valuation is to be substantiated to the satisfaction of the AO, there is no such provision specified therein in Explanation (a) (i) of section 56(2)(viib) as opted for by the assessee for substantiating its valuation to the satisfaction of the AO. Hence AO was not empowered to disregard the DCF valuation as carried out by the valuer and such action of the authorities below of rejecting such valuation report cannot be upheld. AO was not able to pinpoint any specific inaccuracies or short comings in the DCF valuation report of the Chartered Accountant/Valuer other than stating that year- wise results as projected are not matching with the actual results declared in the final accounts. Before the ld. CIT(A), reasons for variation between projected and actuals were duly explained. CIT(A) has accepted such explanation but rejected the DCF valuation report as submitted by the assessee. Accordingly, in the absence of any defect in the valuation of shares arrived by the assessee on the basis of DCF method, impugned addition as made on the basis of net asset value method is liable to be deleted. The rejection is unjustified as the valuation report is required under Rule 11UA of The Income Tax rules is based on the future aspects of the company at the time of issuing the shares, it may vary from the actual figures depending on the market condition at the present point of the time. Thus, keeping in view the entire facts of the case, the reports of the valuer, the comparison of the actual and projected revenues, provisions of Section 56(2)(viib) and keeping in view the order of Co-ordinate Bench of ITAT in the case of Cinestaan Entertainment Pvt. Ltd.[ 2019 (6) TMI 1367 - ITAT DELHI] wherein it has been held that the Assessing Officer cannot substitute his own value in place of the value determined either on DCF method or NAV method, the appeal of the assessee is hereby allowed. 2020 (10) TMI 402 Expenditure for cost of adhesive stamp in connection with preparation of deed of transfer and assignment of receivables - Revenue or capital expenditure - assessee had stated that the same was in connection with acquisition of business and was claimed as revenue expenditure - HELD THAT:- This assignment is admittedly for facilitating the business of the assessee by assigning receivables and as the assessee has acquired the said industrial unit for a lump sum consideration. The expenditure is in connection with facilitating recovery of receivables which is a part of current asset - expenditure in this regard cannot be said to be in the capital filed of acquiring business. It is in fact for facilitating the business of the assessee and in this view of the matter expenditure is allowable as business expenditure. The case laws referred by learned counsel of the assessee in the case of Bombay Dyeing Mfg. [ 1996 (2) TMI 8 - SUPREME COURT] and India Cements Ltd. [ 1965 (12) TMI 22 - SUPREME COURT] are accordingly germane and support the case of the assessee. CIT(A) has been in error in holding that the case laws are not applicable here. - Decided in favour of assessee. Provision for warranty as claimed as expenditure - Claim denied by AO on the ground that it is an unascertained liability and a contingent liability - CIT(A) in principal upheld the action of AO but directed that only the provision made during the year should be disallowed - HELD THAT:- As relying on case ROTORK CONTROLS INDIA (P) LTD. case [ 2009 (5) TMI 16 - SUPREME COURT] authorities below have erred in considering the provisions of warranty as contingent liability. As already submitted by learned Counsel of the assessee in assessee's own case, subsequently revenue authorities have allowed the expenditure on the basis of same Hon'ble Supreme Court decision. Hence, we set aside the order of the authority below and decide the issue in favour of the assessee. Depreciation in respect of customer contracts - assessee had claimed that the customer contracts are valuable right and therefore capital asset - Claim denied by the authorities below it was held that the assessee cannot be allowed depreciation as intangible asset u/s 32(1)(ii) as this does not fall under the definition of intangible asset as contained in section 2(11) - HELD THAT:- In case of Areva T D India Ltd. v. CIT [ 2012 (4) TMI 79 - DELHI HIGH COURT] has held that excess amount paid over and above tangible asset for acquisition of various business and commercial rights and slump sale can be categorised under the goodwill and difference between purchase consideration and value of tangible asset taken over being the balancing figure was held to be goodwill and depreciation thereon was held to be allowable on the touchstone of decision of Techno Shares and Stocks Ltd. [ 2010 (9) TMI 6 - SUPREME COURT] and CIT v. Simfs Securities Ltd [ 2012 (8) TMI 713 - SUPREME COURT] - The details of value of tangible assets taken over by the assessee by the slump sale agreement are necessary to be considered for adjudication of this issue - the issue of depreciation of goodwill and customer contracts being an intangible asset claimed in this case by the assessee needs to be examined by the Assessing Officer on the touchstone of the aforesaid decision. Accordingly the issue of depreciation of customer contracts and goodwill is remitted to the file of the AO. 2020 (10) TMI 401 Disallowance of expenditure u/s. 37 - supply of Alcohol to Ireland Embassy where the Director of the company was Honorary Member and payment made to Taj Bengal, both dedicated under the head 'Sales Promotion Expenses' - appellant's alleged failure to establish the nexus with the business need - HELD THAT:- As rightly pointed out by the DR the bills for the expenditure in question claimed to be incurred by the assessee on supply of alcohol issued by the Embassy of Ireland and for other expenses issued by Hotel Taj Bengal, Kolkata were raised in the personal name of Shri M.K. Jalan as Honorary Counsel of Ireland with the Care of Address of Keventer Agro Limited - no evidence to establish the involvement of the assessee-company in the said expenditure - we are unable to accept the claim of the assessee that the expenditure in question incurred on organizing an event to celebrate the Ireland National Day in India by its Managing D rector, Shri M.K. Jalan in his individual capacity was wholly and exclusively incurred for the purpose of business of the assessee-company and he same, in our view, was rightly disallowed by the authorities below. - Decided against assessee. Disallowance of 20% of sales promotion expenses - assessee contended by relying on the provision of sub section (2) of section 142 that the Assessing Officer was required to carry out the necessary enquiry to establish that part of the expenses claimed by the assessee on sales promotion were not for the purpose of its business - HELD THAT:- Assessee-company failed to discharge the said onus successfully and satisfactorily inasmuh as the details and supporting bills and vouchers verified by the AO revealed that unverifiable and personal element was involved in the said expenditure. As rightly contended by the Id. DR, such personal and unverifiable event involved in the said expenses warranted a disallowance out of such expenses to some extent and since the disallowance so made by the AO and confirmed by the Id. CIT (A) at 20% of the sales promotion expenses is air and reasonable, we do not find any justifiable reason to interfere with the same. - There is merit in the alternative contention of assessee that the expenses incurred on organizing an event to celebrate Ireland National Day in India which was included in sales promotion having been entirely disallowed by the authorities below and the said disallowance having been confirmed by us, the disallowance of 20% should be restricted out of the balance amount of sales promotion expenses - Decided partly in favour of assessee. Disallowance of miscellaneous expenses - CIT (Appeals) confirmed the said disallowanae made by the AO keeping in view the unverifiable element involved in the expenses claimed by the assessee as specifically pointed out by the AO - HELD THAT:- We agree with the view taken by the authorities below that the expenses claimed by the assessee under the head general expenses and office expenses were not fully verifiable and the same being not fully established as wholly and exclusively incurred for the purpose of the assessee's business some disallowance out of the same was called for. Since the disallowance so made at 20% by the Assessing Officer and confirmed by the Id. CIT (A) in the facts and circumstances of the case is fair and reasonable, we do not find any justifiable reason to interfere with the same - Decided against assessee. Disallowance u/s 14A r.w.r. 8D - Suo moto disallowance by assessee - assessee earned dividend income which was claimed exempt from tax under section 10(34) - HELD THAT:- We hold that the disallowance of ₹ 1,62,02,191/- made by the Assessing Officer and confirmed by the Id. CIT (A) u/ s 14A r.w. Rule 8D is liable to be restricted to ₹ 8,88,566/- being the exempt income actually earned by the assessee during the year under consideration. - Decided in favour of assessee partly. 2020 (10) TMI 400 Disallowance u/s. 14A r.w. Rule 8D disallowed while computing even the book profits u/s. 115JB - HELD THAT:- As decided in own case [ 2018 (6) TMI 1720 - ITAT MUMBAI] we direct the Assessing Officer to accept the computation of disallowance u/s. 14A of the Act as worked out by the assessee for the purpose of computing the book profits u/s. 115JB of the Act for A.Ys. 2013-14 and 2014-15. CIT(A) directing AO to exclude the investments which have not yielded any exempt income during the year - HELD THAT:- We find that this issues are squarely covered by the decision of the Special Bench of the Delhi Tribunal in the case of ACIT v. Vireet Investments Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI ]. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue. 2020 (10) TMI 399 Disallowance of depreciation - purchase bills as submitted by the assessee are treated as not genuine - HELD THAT:- Assessee has fairly agreed with the Bench that out of ₹ 14,33,621/-, ₹ 1,00,000/- may be disallowed on account of miscellaneous deficiency or differences - revenue has also agreed with the bench that in order to cover the miscellaneous deficiencies a minimum of ₹ 1,00,000/- may be disallowed. Therefore out of ₹ 14,33,621/- we disallow ₹ 1,00,000/- and balance of ₹ 13,23,621/-, is directed to be deleted. Order is being pronounced after 90 days of hearing - Taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of JSW LIMITED AND (VICE-VERSA) [ 2020 (5) TMI 359 - ITAT MUMBAI] Customs 2020 (10) TMI 398 Classification of imported goods - air-conditioners - classified under tariff item no. 84151010 of the First Schedule to Customs Tariff Act, 1975 or otherwise - argument of Revenue that the expansion of the description corresponding to tariff item no. 84151010 of the First Schedule to Customs Tariff Act, 1975, by Finance Act, 2016 is demonstrative of legislative intent to classify ceiling mounted and ceiling suspended air-conditioning units in other sub-headings does not find favour with us - HELD THAT:- The sanctity of the classification narrative lies in its inexorable logic from beginning to end and within itself. Hence, the groupings, as well as descriptions, have a significance that are not to be ignored. The General Rules for Interpretation also acknowledges this inherent logic and rule 3 is applicable when goods are classifiable under two headings. It is now settled law that though the importer may seek a classification it is the responsibility of the assessing officer to determine the appropriate heading; hence the application of rule 3 of General Rules of Interpretation are not intended for resolving difference of opinion between importer and assessing officer but for guiding the assessing authority in clarifying for itself when in doubt over two headings. From the impugned order, the adjudicating authority did not appear to have been beset with such dilemma. Furthermore, the said Rules, except for rule 6, are concerned with headings and hence the first mandate to an assessing authority is to determine the appropriate heading at the four-digit level. Thereafter, the six-digit and eight-digit level are to be ascertained with reference to the descriptions. The deemed erasure of any other heading thereafter precludes comparison with any tariff item that is not within the determined sub-heading. Hence, the rival entries must lie within the same group. Under the primary residuary grouping at the - level, the distinction among the three sub-headings is determined by the incorporation of refrigerating unit , at the first instance, in air conditioning machines and the incorporation of valve for reversal of heat or cooling cycle subsequently. As these sub-headings and tariff items within the residuary category are so distinguished and the expression refrigerating unit is not defined, it cannot be supposed that it refers to the cooling unit for if it did, the first heading would have no place within the description of air conditioning machines . It, therefore, is intended for some component other than the normal cooling facility built into all air conditioning machines and, by not subjecting that expression to the test of existence in the impugned goods, the show cause notice has tripped upon itself in its haste to carry the impugned goods beyond the scope of eligibility for the exemption notification. The applicability of sub-heading no. 841581, 841582 and 841583 to the impugned goods lacks substance. The impugned goods are not window type but they are all of the split type with an external condenser unit and an indoor evaporator unit. In the Explanatory Notes to the Harmonized System of Nomenclature pertaining to sub-heading no. 841510, we find no qualifying characteristic that restricts the adoption thereof to cooling facility alone; neither is there any capacity qualification included therein - There is no doubt that the expression refrigerating unit is not defined and we have observed that, to deem the cooling unit to be the refrigerating unit , an entire sub-heading the tariff would stand earsed which is neither within the empowerment of the Tribunal let alone the adjudicating authority. In the absence of definition, the appreciation of common parlance meaning would have rendered the task of the adjudicating authority in this exercise more meaningful. The adjudicating authority has insinuated non-existent restrictive qualifications on the description of, and tariff item under, sub-heading no 841510 of the First Schedule to Customs Tariff Act, 1975 and that, too, without the assistance of definition of, or common parlance understanding of, the expression refrigerant unit rendering the re-classification to lack the authority of law - Appeal allowed - decided in favor of appellant. Corporate Laws 2020 (10) TMI 397 Sanction the scheme of amalgamation - sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- In his report, the Regional Director, MCA has concluded that the scheme appears to be fair, reasonable and not detrimental against the members or creditors or contrary to public policy and the same can be approved. The scheme appears to have been proposed for better performance management, for greater clarity in roles, responsibilities and performance objectives of the individual specialised divisions at the corporate as well as individual level for key management. On a consideration of the facts of the case as mentioned in the preceding paragraphs, which are not elaborated here again to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the scheme of amalgamation, as approved by the boards of the petitioner companies, can be sanctioned. The scheme is sanctioned. 2020 (10) TMI 396 Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules - It has also been affirmed in the petition that the Scheme is in the interest of the transferor company and also the transferee company including their shareholders, creditors, employees and all concerned. Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, report filed by the official liquidator and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The scheme is approved. 2020 (10) TMI 395 Approval of the Scheme of Arrangement by way of Demerger - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and the report filed by Income Tax Department and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme - Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The scheme is sanctioned. Insolvency & Bankruptcy 2020 (10) TMI 394 Release of part amount of salary of the members of the Applicants - it is prayed that some part of the sale proceeds of the property of the Corporate Debtor be distributed towards the claims due of the employees of the Corporate Debtor - HELD THAT:- The order is already challenged by another employees association and the same is pending before the Hon ble NCLAT - There is no provision under the Insolvency and Bankruptcy Code, 2016 and the National Company Law Tribunal Rules, 2016 for review or reconsideration of the order passed by the Adjudicating Authority. The Hon ble NCLAT in DEEPAKK KUMAR DIRECTOR OF M/S SOVEREIGN INFRASTRUCTURE DEVELOPERS LTD. VERSUS M/S PHOENIX ARC PVT. LTD. (TRUSTEE OF PHOENIX TRUST FY 16-15 SCHEME B) , M/S SOVEREIGN INFRASTRUCTURE DEVELOPERS LTD. [ 2020 (9) TMI 801 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] held that, rehearing and correction of the judgement passed by the Tribunal is impermissible in law. The ratio laid down in the said judgement is applicable to the case on hand. The reliefs sought are for interim payment to the employees of the Applicants Associations. There is no provision in the Code for payment to any creditors including these Applicants when the CIRP is under progress. Hence on that count also this Application has to fail - Application dismissed. 2020 (10) TMI 393 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On 04.03.2020, copies of the email exchanged between the parties were handed over across the bar. A perusal of this correspondence reveals that on 02.03.2020, learned counsel for the employee- Operational Creditor addressed a communication to the Corporate Debtor, drawing attention to this Adjudicating Authority s order dated 10.02.2020, and stating that there has not been a single call from the side of the Corporate Debtor towards settlement. The Corporate Debtor replied vide email of the same date, i.e., 02.03.2020, to the effect that we have reviewed the matter internally but will not be able to give any payment commitment before next eighteen months due to financial constraints. This email has remained uncontroverted. Therefore, there is a liability that is clearly admitted by the Corporate Debtor. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared. 2020 (10) TMI 392 Continuation of proceedings in the Commercial Suits - HELD THAT:- The enforcement of the settlement entered into between the litigating parties in the two commercial suits would require legal proceedings to be instituted, which would squarely fall within the meaning other legal proceeding mentioned in the proviso to sub-section (5) of section 33 - Considering the value of the settlement arrived at, we are convinced that the terms of the settlement entered into in the two Commercial Suits bearing No.842/2017 and No.310/2018 before the Hon ble Bombay High Court will inure to the benefit of the Corporate Debtor, thus increasing its liquidation value. This Adjudicating Authority hereby accords its approval to the Liquidator to take appropriate legal steps to enforce the settlement in the two Commercial Suits bearing No.842/2017 and No.310/2018 before the Hon ble Bombay High Court, for the benefit of the Corporate Debtor - Application disposed off. 2020 (10) TMI 391 Restoration of the Company Petition which was dismissed inter alia for non-prosecution by this Adjudicating Authority - initiation of CIRP - HELD THAT:- It is a settled judicial principle that procedure should ultimately subserve the cause of justice, and that procedural niceties should not be allowed to defeat the same. With this cardinal principle in mind, we have examined the rival contentions in the present application. For good measure, we have also carefully looked at the main Company Petition itself to see whether there is indeed a case made out for restoration of the Company Petition and retrieve it from procedural tangles. There is a finding of this Adjudicating Authority that at the very threshold the debt in question is disputed by the Respondent/ Corporate Debtor. This is a finding that has not been challenged so far in a manner known to law. There is a further finding that the petition is not complete in all respects and therefore the petition is dismissed on the ground of non-prosecution. Therefore, there are two reasons for dismissal (1) that the debt is disputed; and (2) that the petition was not prosecuted diligently by the Applicant/ Operational Creditor. The present application has been filed even without the mandatory affidavit verifying the contents. Even without this, the present application is devoid of merits and deserves to be dismissed - application dismissed. 2020 (10) TMI 390 Invocation of Bank Guarantee - Whether a third party who happened to be employer/ contracting party of the Corporate Debtor can be restrained from invocation of its Performance Bank Guarantee as per the terms of the Guarantee/ Contract executed for completion of work contract/ project? HELD THAT:- Such issue has already been examined by the Hon ble NCLAT in the matter of GAIL (INDIA) LIMITED VERSUS RAJEEV MANAADIAR ORS. [ 2018 (7) TMI 2144 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] and it is held by their Lordships that the security interest shall not include the Performance Bank Guarantee and the Performance Bank Guarantee given by the Corporate Debtor in favour of the party (Gail India Limited) is not covered by Section 14 and such party (Gail India Limited) is entitled to invoke its Performance Bank Guarantee in full or in part - Since the debatable issue involved in the present M.A. has now been legally settled by the Hon ble NCLAT, in the above referred judgement of GAIL (India) Ltd. , this Bench is not expected to go into the controversy of the other issues, hence the objection raised by the Applicant or Corporate debtor is not sustainable in the eye of law and invocation of the Performance Bank Guarantee does not fall within the purview of Section 14 of the I B Code and the relief being sought for cannot be granted. The status quo order granted against the Respondent no.1 stands ceased to have its effect automatically soon after the approval of Resolution Plan. Further, there cannot be status quo against Respondent no.2 Axis Bank for discharging contractual obligation and performing its part of contract. Therefore, the Respondent no.1 being a contracting party is eligible and entitled to invoke its Performance Bank Guarantee. It cannot be restrained by this Adjudicating Authority at the instance of Corporate Debtor and it is upto a competent civil court/ forum and not necessarily by this Adjudicating Authority under the provisions of the I B Code to deal with and decide the same. Hence, no injunction order can be passed, being out of the purview of the Section 14 of the I BC Moratorium. Application rejected. 2020 (10) TMI 389 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt or not - courier service agreement for delivery service - existence of debt and dispute or not - HELD THAT:- The operational debt means a claim, in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being enforce and payable to the Central Government, any State Government or any Local Authority and debt as a defined under Section 3(11) means a liability or obligation in respect of a claim which is due from any person and includes a financial debt or the operational debt and the claim is defined under Section 3(6) which shows that it means a right to payment whether or not such right is reduced to judgment fix, disputed, undisputed, legal, equitable, secured or unsecured or right to remedy for breach of contract under any law for the time being enforce, If such breach give rise to right to payment - in the case in hand, the applicant filed an application under Section 9 of the IBC which relates to the operational debt which is defined under Section 5(21) of the IBC and it is a claim in respect of provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being enforce. Therefore, only those claim in respect of which the provisions of goods or services including employment are provided comes under the definition of operational debt or if it is a debt in respect of the payment of dues arising under any law for the time being enforce and payable to the Central Government, any State Government or any Local Authority. In view of Section 5(21) the amount which the applicant claim does not come under the definition of operational debt and since the amount claimed by the applicant does not come under the definition of operational debt. Therefore, the applicant cannot be treated as Operational Creditor under Section 5(20) of the IBC because the Operational Creditor means a person to whom an operational debt is owed and include any person to whom such debt has been legally assigned or transferred - there is force in the contention raised on behalf of the Ld. Counsel appearing for the Corporate Debtor that the claim of the applicant does not come under the definition of Operational debt and the applicant is not the Operational Creditor. The present application is not maintainable and liable to be dismissed - Application dismissed. 2020 (10) TMI 388 Sanction/approval of the Respondents for attachment of the properties of the Corporate Debtor - violation of Section 14 of the Code - release of properties of the Corporate Debtor in favor of the application - HELD THAT:- This Adjudicating Authority is of the considered view that once the CIRP is triggered and moratorium is imposed, all the assets and properties come under the possession of the Resolution Professional and the CoC. The Insolvency and Bankruptcy Code, 2016 was enacted with a view to bring about a complete reorganization and insolvency resolution of Corporate Debtors in a time bound manner and to inspire life into a Corporate Debtor struggling to repay its debts. Section 238 was inserted in the Code. Provisions of this Section 238 override other laws - The Income Tax Department is not in order to attach the properties of the Corporate Debtor when CIRP of the Corporate Debtor has started and the Resolution Professional is the custodian of the properties of the Corporate Debtor. The properties attached need to be returned to the Resolution Professional so that Corporate Insolvency Resolution Process is completed in time. The Respondents No. 1 and 2 are directed to release the properties of the Corporate Debtor in favour of the applicant - The Income Tax Department may lodge their claim with the Resolution Professional with documents in support of their claim as an Operational Creditor and the Resolution Professional is directed to examine the same as per the provisions of the Code. Application disposed off. 2020 (10) TMI 387 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - whether this adjudicating authority is competent to decide the question regarding the point raised by the petitioner in a proceeding, which is initiated under Section 9 of the IBC? - HELD THAT:- The demand notice was issued on 04.07.2019 and reply to the demand notice was sent on 15.07.2019 and we further find that at page 4, the applicant has not enclosed, tracking report of the delivery of the demand notice to show when the demand notice was delivered, of course, it is dated 14.07.2019 but in the absence of the delivery report and tracking report to show, when it was delivered, we had no option but to hold that the reply of the demand notice is filed within 10 days from the date of receipt of demand notice and this fact has not been disputed by the petitioner. Also, the respondent has raised the dispute prior to the delivery of demand notice. While considering the application under Section 9 the Adjudicating Authority is not competent to examine whether the dispute is according with the law or not. These are the facts which are required to be decided by the Court having the jurisdiction to try the suit, while exercising under Section 9 the Adjudicating Authority is required to see only whether there is existence of dispute between the parties or the record of pendency of suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute or not. We are unable to accept the submission of the Ld. Counsel for petitioner that this adjudicating authority is competent to decide the point which has been raised by the Ld. Counsel for petitioner in course of arguments, whether the respondent is competent to forfeit the amount in terms of forfeiture clause or not? Since, there is existence of dispute which has been raised before the issue of demand notice and the documents which enclosed with the application, shows that there is existence of dispute. Therefore, in view of Section 9(5)(ii), the present application is not maintainable. Application dismissed. 2020 (10) TMI 386 Maintainability of application - initiation of CIRP - Corporate Debtor unable to liquidate its financial debt - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority is of the view that a Financial Creditor can, in relation to a debt under Section 7 of IBC 2016, proceed against two Corporate Guarantors or one Corporate Guarantor and the Principal Borrower and there is no bar/per se. As per the DTD entered between the Principal Borrower and the Financial Creditor the Principal amount was to be repaid by the Principal Borrower in 4 equal quarterly instalments, wherein the Principal Borrower defaulted in making payment of the first instalment amounting to ₹ 13,12,50,000, therefore the Financial Creditor invoked the Corporate Guarantee issued by the Corporate Debtor dated 13.06.2017 and demanded payment of the first instalment as the same duties and obligations fell upon them under the DTD and the Deed of Corporate Guarantee therefore it is observed that the claim of the Financial Creditor against the Corporate Debtor arises from the same set of debt owed by the Principal Borrower. Since an application against the Principal Borrower has already been admitted vide order dated 08.01.2020 in CP. No. 1348 of 2019, this Adjudicating Authority is of the view that the present application is bound to be rejected without any cost. Let the copy of the order be communicated to the Financial Creditor and the Corporate Debtor. 2020 (10) TMI 385 Conversion of claim - financial claim has been converted to an operational one - It is submitted that till the 6th COC, the RP had considered their claim as a financial one, but subsequently converted, it to an operational one - HELD THAT:- This Bench is of the opinion that the claim of the Greater Noida Authority can unequivocally be categorised as being an ''operational debt . We therefore do not find any infirmity in the decision of the Resolution Professional who has deemed it justified to amend and correct the claim of the Greater Noida Authority from one of financial claim to an operational debt . Accordingly, the CoC which has been reconstituted upon amending the aforesaid claim, consisting of home buyers as financial creditors along with other Financial Creditors, if any, would be vested with the voting rights to the exclusion of Greater Noida Authority. As the pending objections have been dismissed, arguments on the Resolution Plan be addressed on the next date. To come up on 11th March, 2020. 2020 (10) TMI 384 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The transfer of the money from the petitioner to the respondent is evidenced by the Banking record. Further, its receipt is not denied by the respondents. They only seek to resist it on the point of limitation and the fact that no formal agreement was executed categorizing it as a Loan . This Bench is of the opinion that there need not be an agreement in writing to ascertain a financial transaction. The liability to pay interest, and if so, at what rate, may be debatable in the absence of a written contract, but a financial claim may be one with or without interest. The Corporate Debtor has acknowledged the same as a borrowing in their financial statements. This Bench is of the view that the objection raised by the respondents with respect to absence of a loan agreement is not fatal to the case of the financial creditor as the transaction itself is admitted. This bench is of the view that, the objections raised by the respondents with respect to absence of loan agreement is not fatal to the case of Financial Creditor since the transaction has not been denied by the Respondent. Further, this bench finds merit in the arguments made by the Ld. Senior Counsel appearing for the petitioner on the issue of limitation and commission of default. The law on this point is very clear that in matters where the term of the loan has not been fixed, the same is payable on Demand and the limitation shall commence when the loanee fails to respond, giving rise to a cause of action. The Demand in this case was made on dated 07.02.2019 and therefore, this petition which has been filed on 28.03.2019 is within the period of limitation - Petition admitted. 2020 (10) TMI 383 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Existence of debt and dispute or not - HELD THAT:- The claim made by the Petitioner is not established beyond doubt by producing evidence and it is also on record, even prior to the Statutory Demand Notice dated 15.05.2018, there is a clear dispute with regard to the claim made by the Petitioner. Moreover, the parties also admitted to have settled the claim amount for a sum of ₹ 6,70,167/- by email 29.03.2018, after discussing the issue in question between the parties, in order to start new business relationship. Even though reply given by the Respondent raising various contentions but expressed their willingness to settle the issue, provided the Petitioner to submit their claim with substantial evidence. Therefore, it would be just and proper to leave the matter to the parties first try to settle the claim wherein the Petitioner can its claim with all supporting evidence to the Respondent so as to consider the same as per merits. It is settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount(s). In view of the willingness of both the parties to settle the issue, we are inclined to dispose of the Company Petition with a permission to the Petitioner to submit its claim with all the supporting evidence to the Respondent for its considerations and thereafter, if any grievances remains for the Petitioner, it can approach this Authority - Petition disposed off. 2020 (10) TMI 382 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make the repayment of its dues - time limitation - amount due and payable by the Corporate Debtor to the Financial Creditor or not - whether petition has been preferred for the purposes other than resolution of the Corporate Debtor? - incompleteness of Form 1 filed by the Financial Creditor in terms of its Part IV. Time Limitation - also alleged that the petition has failed to establish that the outstanding amount is within period of limitation - HELD THAT:- This contention of the Corporate Debtor does not stand upon a careful reading of the Annual Report of the Corporate Debtor for the year ended on 31/03/2017 wherein it is evident that the first default occurred on 23/09/2016 and the said petition has been filed in the month of August, 2019. Moreover, the Balance Sheet, of the Corporate Debtor dated 06/05/2019 also clearly mentions that the amount is due upon them, which is a clear admission on their part. Also, during assignment of the loan by State Bank of India to the Financial Creditor, there has been an acknowledgement by the Corporate Debtor vide their letter dated 18/11/2016. Therefore, it can be safely concluded that any problem regarding the issue of limitation does not arise as the petition was filed on 9/08/2019 and thus, is well in time i.e. before the completion of three years. Amount due and payable by the Corporate Debtor to the Financial Creditor or not - HELD THAT:- This contention raised by the Corporate Debtor that no amount is due and payable by the Corporate Debtor to the Financial Creditor also does not survive because the Annual Report of the Corporate Debtor for the year ended on 31/03/2019 itself acknowledge the outstanding loan payable to the Financial Creditor. Also, it is to be noted that at the time of assignment of the matter to the Financial Creditor, the loan account of the Corporate Debtor in the books of the assignor was a Non-Performing Asset (NPA). There is no doubt that the Adjudicating Authority needs to satisfy itself that the default has occurred before admitting an application under Section 7 of the IBC, 2016. Therefore, after perusing the documents, it has become crystal clear that the Corporate Debtor is liable to pay the outstanding dues to the Financial Creditor. Whether petition has been preferred for the purposes other than resolution of the Corporate Debtor? - HELD THAT:- The Corporate Debtor has relied upon the minutes of the Joint Lenders Meeting dated 17/05/2018 and 23/07/2018 and contended this petition is merely an arm twisting method on the part of the Financial Creditor. Also, it can be made out from the past conduct of the Financial Creditor that they made efforts to restructure the debt of the Corporate Debtor and therefore, this cannot be used by them to shield themselves from their existence liability. In this present matter, this Bench has already established the existence of debt and the default on the part of the Corporate Debtor and therefore, this Bench is of the opinion that only because of this, the present petition has been preferred by the Financial Creditor against the Corporate Debtor. I ncompleteness of Form 1 filed by the Financial Creditor in terms of its Part IV wherein it is necessary to provide the date from which the debt fell due - HELD THAT:- This contention is merely technical in nature which can be easily rectified if the Bench directs so. Also, it was stated that the petition is to be dismissed for the reason that the petitioner failed to submit information from Information Utility. But we are of the opinion that while dealing with these objections this Bench finds no cogent reason/ground for rejecting this petition on such minor technical issues particularly when the existence of debt and default is established - There was also a Demand Notice dated 17/06/2019 sent by the Financial Creditor to the Corporate Debtor demanding the outstanding amount along with interest amounting to ₹ 68,10,47,170/- there was neither any reply to this notice nor was any payment made by the Corporate Debtor. Also, it is to be noted that this petition fulfils all the requisite conditions to admit a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 and therefore, the petition deserves to be admitted. This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed. In the light of above facts and circumstances, the existence of debt and default is reasonably established by the Financial Creditor as a major constituent for admission of a petition under section 7 of the I B Code. Therefore, the Application under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition - application admitted - moratorium declared. 2020 (10) TMI 381 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority, on perusal of the documents filed by the Financial Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition. Application admitted - moratorium declared. Service Tax 2020 (10) TMI 380 Works contract service - scope of the term Railways - stand of the tax authorities that the admitted exception of railways was restricted to activities engaged in connection with railway undertakings of the Government is, according to him, erroneous - N/N. 9/2016-ST dated 1st March 2016 - HELD THAT:- The decision of the Hon ble Supreme Court in Commissioner of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] was not available to the adjudicating authority and the finding therein that all the component activities of works contract service , to the extent taxable under separate entries prior to the new taxable service, were intended to cover service simpliciter. Consequently, the claim of the appellant to be provider of works contract service cannot but be accepted. The exclusion, whether under the separate entry or within the umbrella of the new taxable service, of railways continued unabated. It would appear that the adjudicating authority was particularly impressed by the activity brought within the tax net to be ascertained on the basis of commerciality to bring it in conformity with the description of the taxable activity. Hence, according to him, the operation of the two recipients of service, being evidently commercial, did not merit the exclusion contained therein - adjudicating authority is far from correct in assuming that the dutiability devolving, under Customs Act, 1962 and Central Excise Act, 1944, on governmental transactions by specific inclusion in the statutes is, similarly, present in Finance Act, 1994. Nor does the reason ascribed by him as the prompting for such inclusion in the commodity tax statutes find resonance in any decision, circular or elucidation. Furthermore, to the extent of our understanding, the operations, or its popular designation as Indian Railways , of government-run Railways is not stripped of its commercial mantle. A stray reference to the statute governing railway operations does not establish the postulate of such definition to be applicable in every special dispensation. In the absence of any qualification for the railway incorporated in the exclusion component of the taxable service, any railway, irrespective of ownership, is covered. Within the scheme of negative list , there is a specific exemption for metro or monorail within the broader exclusion available to Railways. The exclusion of metro or monorail has occurred only after the period of dispute and therefore does not concern us. The exemption afforded by notification no. 25/2012-ST dated 20th June 2012 extends to all activities that have been filtered through the statutory hierarchy referred to supra to remain taxable but for exercise of powers under section 93 of Finance Act, 1994. Therein, the specific escapement afforded for services rendered in connection with construction of railways is. by inclusion, extended to construction of monorail and metro - there are no incongruity here. Under the Railways Act, 1989, the monopoly of establishing the rail networks vests with the Indian Railways and any other operator functions within a policy pertaining to outsourcing of such activities save where the law, for particular objectives, makes an exception. One such is the metro operations for which specific enactments enable other operators without derogating from the status of being railway and, more often than not, by enterprises that are jointly owned by the Central and State Governments. Even where the ownership does not vest in the government, the operation of such railways is under special enactment which are not excluded from the sphere of the expression railways . Appeal allowed - decided in favor of appellant. 2020 (10) TMI 379 Levy of service tax - mark-up , charged by them for recovery from the holders of credit cards issued by them towards transactions entered into with overseas merchant establishments - export of services - period from April 2002 to April 2007 - HELD THAT:- The amount recovered from the card holder , to the extent paid out by issuing bank to acquiring bank , is not in dispute. The claim made on behalf of the appellant is that the mark-up is also an element of the foreign exchange rate for conversion of the invoice amount to Indian currency. This submission does not find favour as this mark-up is, demonstrably, not shown separately, either as exchange rate or additionally, in the statement issued to the card holder . Exchange rate for reimbursement to acquiring bank is contractually enshrined and, in the absence of any other cost associated with the conversion taxation to be borne by the issuing bank , is not an element of the rate for conversion of the invoice amount to domestic currency. The amount charged by the appellant from the card holder is in excess of the purchase price contracted with the member establishment for the goods or service transacted and as the issuing bank escapes tax liability only to the extent of the purchase price, the mark-up represents consideration for a service. This is, thus, liable to tax except if the consideration was, as claimed by Learned Counsel, transacted for export of service. In the intangible world of service transactions, the location of recipient and flow of consideration in foreign currency are sure demonstration of exports. In the present dispute, there is no doubt that the recipients are domestically based and the claim of overcoming the first test by temporary location overseas is but a poor excuse. Learned Counsel submits that, for the entire period of the dispute, repatriation of consideration in convertible foreign currency, was not a necessary qualification. Notification no. 6/99-ST dated 9th April 1999, circular no. 36/4/2001 dated 8th October 2001 of Central Board of Excise Customs and notification no. 2/2003-ST dated 1st March 2003 do not address exemption to export of services but with taxability when the services are rendered in India even though clarifying for exemption, or otherwise, in the circumstances narrated therein. This is apparent from circular no. 56/5/2003 dated 25th April 2003 of Central Board of Excise Customs which distinguishes exports for exemption despite domestic rendition of services being taxable even if transacted in convertible foreign currency. The essential qualification of export is the delivery thereof outside the territory of India and, in the absence of palpable markers, there can be no alternative to receipt of consideration in foreign currency as the underlying condition even if not articulated specifically - there is no statutory basis for arriving at the conclusion that delivery of service outside the tax jurisdiction could be established without corresponding inflow of convertible foreign currency. The complexity of exports and the lack of distinguishment for exports during much of the period of dispute is obvious from our exposition supra and it may not be unnatural for an assessee to resort to superficial interpretation without intention to evade tax - the show cause notice, and the impugned order, lack convincing evidence of suppression or misrepresentation and, in the circumstances of discharge of tax liability, along with interest, for the period of dispute, it would have been appropriate for the proceedings to have terminated under section 73(3) of Finance Act, 1994 without issue of show cause notice. The imposition of penalty under section 78 of Finance Act, 1994 is not merited - Appeal allowed - decided in favor of appellant. 2020 (10) TMI 378 Reverse charge mechanism - information technology software service - Recovery of Service Tax - period of dispute from 26th July 2006 to 31st August 2009 - It is contended by Learned Chartered Accountant that self-assessment to tax, on incorporation of information technology software service in section 65(105)(zzzza) of Finance Act, 1994, is ample evidence of their diligence in discharge of tax liability to exclude the possibility of having contemplated evasion of tax - HELD THAT:- In terms of the activity that is sought to be taxed by these two entries, the connection with electronic data processing is unmistakable. Considering the mechanism incorporated in the two definitions to render the activity functional, the minor differences between them should have led to a similar speculative reasoning on the part of the assessee and the deliberate discard of applicability after initial discharge of tax liability should have been justified in the proceedings instead of relying upon decisions of the Tribunal rendered subsequent to the period of dispute. The discharge of tax liability after incorporation of the new levy occurred during the investigations and, therefore, does not obtain for themselves the halo of diligence. It is seen that appellant has been discharging tax liability since 16th May 2006 and, with payment of taxes amounting to ₹ 16,85,335 at some stage before ceasing to do so in July 2007, the unpaid dues is limited to ₹28,56,559 - while upholding the impugned order as being consistent with the law, the penalty under section 78 of Finance Act, 1994 is capped at this amount. Appeal dismissed. Central Excise 2020 (10) TMI 377 Allowability of common registration - doctrine of merger - HELD THAT:- Revenue have accepted the order dated 31.01.2014 passed by the jurisdictional Commissioner, granting common registration and have not filed any appeal against the same. Further, the issue of revocation of amended registration certificate has also attained finality by the order of the Hon ble Rajasthan High Court in favour of the respondent-assessee. Accordingly, the present show cause notice proceeding is hit by both doctrine of merger and also under the doctrine of in - subordination . There is no merit in the appeal of the Revenue - Appeal dismissed. 2020 (10) TMI 376 Imposition of penalty - CENVAT Credit - electricity sold by the Respondent to the Electricity Board - reversal of CENVAT credit on inputs used in the plant for generating power that was partly sold to the Electricity Board - HELD THAT:- It is clear from a perusal the documents enclosed with the cross-objections, particularly the letter dated January 25, 2012 sent by the Respondent to the Superintendent of the Excise Department - The Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ] and COMNR. OF CENTRAL EXCISE CUSTOMS VERSUS M/S. PRECOT MERIDIAN LTD. [ 2015 (11) TMI 323 - SUPREME COURT ] held that reversal of credit means that the party has not availed the input service credit. Such being the position, the imposition of penalty of ₹ 30,00,000/- upon the Respondent in respect of the electricity sold to the Electricity Board is bad in law - cross-objections is allowed. 2020 (10) TMI 375 Imposition of penalty of ₹ 1,00,000 under rule 209A of erstwhile Central Excise Act, 1944 - physical handling of the goods that were allegedly removed without payment of duty - HELD THAT:- On a perusal of the decision of the Hon ble High Court of Bombay in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. BANSAL STEEL CORPORATION OTHERS, SHRI ASHOK KUMAR NAGESHWAR SINGH, PARTNER OF M/S. BANSAL STEEL CORPORATION [ 2017 (9) TMI 704 - BOMBAY HIGH COURT] , while the facts leading to the dispute is, as narrated by Learned Authorised Representative, the principle laid down therein is that any of the enumerated activities in rule 209A of the erstwhile Central Excise Rules, 1944 must necessarily involve physical handling. In the circumstances of the lack of evidence of physical dealing by the appellant of the impugned goods, the penalty is set aside - Appeal allowed - decided in favor of appellant.
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