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TMI Tax Updates - e-Newsletter October 14, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Highlights / Catch Notes GST: Seeking withdrawal of best judgment assessment orders passed - return filed within (granted extended) time or not - If that were to be so, though the period of 30 days as provided under Section 62 (2) in the peculiar facts of the case, in light of permission granted by the court in its order dated 13.02.2019, the petitioner could continue to file the return within the time granted by the Court and the return filed was a return as contemplated under Section 62 (2) which is to be construed to be return filed within the time. - HC Visit to Get Source Income Tax: Validity of reopening of assessment u/s 147 - validity of reason to believe - during the scrutiny assessment, the case was discussed with the assessee on four dates, prior to which, a questionare containing as many as 13 questions were put to the assessee with direction to file relevant documents and on scrutiny of those documents, the Assessing Officer called for further particulars which had also been furnished by the assessee - the reopening of the assessment is a clear case of change of opinion - HC Visit to Get Source Income Tax: Estimation of cost of extraction of ore - AO gravely erred in relying upon the valuation report submitted by a Registered Valuer while assessing the income of the appellant, as such a report being invalid in law. Keeping in view the statutory provisions governing the filed, he should have sought a valuation by the District Valuation Officer and could have relied upon his report to assess the income of the appellant.- HC Visit to Get Source Income Tax: Correct head of income - lease income received by the assessee - the income earned by the assessee by constructing the shopping mall and letting out the same by providing various facilities are amounting to business activity of the assessee and the income earned out of such an activity has to be treated as a business income - AT Visit to Get Source Income Tax: Disallowance u/s.36(1)(ii) of interest expenditure on loans availed - assessee has made advance loans to directors and sister concerns - without any application of mind, the authorities below are passing orders year after year for reason best known to them when assessee has given the necessary details and no disallowance was done in earlier years as noted by the Tribunal - additions deleted - AT Visit to Get Source Income Tax: Transfer pricing - international transactions - Determination of the nature of services availed by the assessee - We observe that the rendition of services by Nalco, USA and Nalco Pacific Pte Ltd., Singapore has given effect only to the assessee and has, in no manner, resulted in protecting the individual interests of such companies. All the services rendered by them facilitated the carrying on of the assessee's business. In such circumstances, we are satisfied that the reliance of the AO on the decision in Morgan Stanley [2007 (7) TMI 201 - SUPREME COURT] is misconceived. - AT Visit to Get Source Income Tax: Penalty u/s. 271(1)(c) - unexplained cash credit u/s. 68 - Once, the substantial question of law on the quantum proceedings is admitted by the Hon'ble High Court, the issue in dispute became debatable. Hence, there cannot be any concealment penalty of the assessee for alleged furnishing of inaccurate particulars of income. - AT Visit to Get Source Income Tax: Disallowance u/s 40A(3) - cash payments made by the assessee above ₹ 20,000/- in a single day - when old ornaments are sold in dire need then why an unknown person (customer) will keep his money with the assessee, as the assessee makes payment in cash to the same customer on next day, (against the old ornaments purchased by the assessee). Further, it is beyond imagination that so many persons will behave in this manner on so many different dates - The payments was made beyond the limit prescribed u/s 40A(3) of the Act and the assessee's case are not covered in the exceptions mentioned under rule 6DD of the Income Tax Rules. - Additions confirmed - AT Visit to Get Source Customs: Detention of detenue - Smuggling of goods/abetting the smuggling of goods - seizure of gold - Though we are conscious of the fact that the period of detention would come to an end in a couple of days, since it is our constitutionally entrusted duty to safeguard the rule of law, more so, in a matter involving personal liberty which is sacrosanct and protected under Article 21 of the Constitution of India, we have no choice but to hold the detention to be bad in the eye of law. - HC Visit to Get Source Customs: Seeking permission to mutilate the imported goods - Waste Paper – White Wet Strength Waste - section 24 of Customs Act - There shall be a direction to the respondents to consider the representation of the petitioner dated 16.03.2021, and pass orders thereon, on merits and in accordance with law - HC Visit to Get Source Customs: Valuation of imported goods - Glass Chaton of various varieties - rejection of declared value - enhancement of value based on NIDB data - The order is set aside and matter once again is remanded to Commissioner (Appeals) for fresh order without relying on the earlier order of Commissioner (Appeals) and limiting himself to the grounds of appeal before the Commissioner (Appeals) - AT Visit to Get Source Indian Laws: Jurisdiction - power of National Green Tribunal (NGT) to exercise Suo Motu jurisdiction - The NGT, with the distinct role envisaged for it, can hardly afford to remain a mute spectator when no-one knocks on its door. The forum itself has correctly identified the need for collective stratagem for addressing environmental concerns. Such a society centric approach must be allowed to work within the established safety valves of the principles of natural justice and appeal to the Supreme Court. The hands-off mode for the NGT, when faced with exigencies requiring immediate and effective response, would debilitate the forum from discharging its responsibility and this must be ruled out in the interest of justice. - NGT is vested with suo motu power in discharge of its functions under the NGT Act. - SC Visit to Get Source Indian Laws: Professional and/or other misconduct - Chartered Accountant (CA) - Where the Council has found any member of the Institute to be guilty of misconduct, it is required under the Act to forward the matter to the High Court with its recommendations and the High Court has to pass final order either dismissing the complaint or penalizing the member of the Institute. The order of the Council, imposing penalty upon the member, is also appealable by the members aggrieved before the High Court. In the circumstances, it is all the more necessary that the recommendation/order of the Council should contain reasons for the conclusion - the High Court has equally erred in accepting the recommendations of the Council without applying its own logic to this aspect of the matter. - SC Visit to Get Source Indian Laws: Dishonor of Cheque - insufficiency of funds - acquittal of the accused - rebuttal of statutory presumption u/s 139 - earlier transaction had been settled by repayment i - The present cheque was one issued as security in the discharge of that liability and such cheque was misused by the appellant/complainant to make it appear that there was a subsequent transaction - The prosecution of the 2nd respondent/accused under Section 138 of the Negotiable Instruments Act must necessarily fail - HC Visit to Get Source Service Tax: Denial of CENVAT Credit with penalty - suppression of facts or not - The material on record does not indicate that the respondent-Bank has indulged in any one of the ingredients contemplated under Section 73 of the Finance Act, 1994 and therefore, the proviso to Section 73 of the Act would not be available to the revenue. - HC Visit to Get Source Service Tax: Claim of Refund - Post GST, on demand, appellant paid service tax under reverse charge basis and claim refund as the same is eligible as Input Tax Credit under the erstwhile law - Section 142 (3) is the transitional provision for claim of refund after the introduction of GST Act, 2017. It says that refund claims of any amount paid under the erstwhile law have to be disposed according to the provisions of the erstwhile law and the amount has to be paid in cash. The appellants have paid the tax under the erstwhile law. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, only sub-section (3) of section 142 will be attracted. Rejection of the refund claim by referring to sub-section (8) of Section 142 of CGST Act, 2017 is mis-placed. For these reasons, rejection of refund is unjustified. - AT Visit to Get Source Central Excise: Cenvat Credit - LPG, Exempt goods or not - The LPG generated during the course of manufacture of motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. is dutiable right from the stage of receipt of input and input services till the completion of manufacture of LPG. Therefore, during that stage availment of Cenvat Credit is absolutely in conformation to Cenvat Credit Rules, 2004. - even upto manufacture of LPG it is not known that LPG is exempted goods, it is only at the time of clearance of goods on end use basis under PDS it is cleared under exemption. - The Cenvat Credit cannot be reduced on the input and input services attributed to LPG - Reversal of cenvat credit is not required - AT Visit to Get Source Central Excise: Classification of goods - Nimbooz - fruit pulp or fruit juice based drinks - ‘Nimbooz’ would be classifiable under CETH 2202 10 20 of the First Schedule to the Central Excise Tariff Act. - AT Visit to Get Source Articles IS INPUT TAX CREDIT ON ‘INSTALLATION SERVICES’ BLOCKED ? Notifications Customs 49/2021 - dated 13-10-2021 - Cus Seeks to reduce AIDC on crude soya, sunflower and palm oils 48/2021 - dated 13-10-2021 - Cus Seeks to reduce BCD on crude and refined soya, sunflower and palm oils till 31.03.2022 FEMA S.O. 4242(E) - dated 12-10-2021 - FEMA Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2021 GST - States (10/2021) FD 55 CSL 2021 - dated 30-9-2021 - Karnataka SGST Amendment in Notification (04/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (09/2021) FD 55 CSL 2021 - dated 30-9-2021 - Karnataka SGST Amendment in Notification No. (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017, (08/2021) FD 55 CSL 2021 - dated 30-9-2021 - Karnataka SGST Amendment in Notification No. (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (07/2021) FD 55 CSL2021 - dated 30-9-2021 - Karnataka SGST Amendment in Notification No. (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017, (06/2021) FD 55 CSL 2021 - dated 30-9-2021 - Karnataka SGST Amendment in Notification No. FD 48 CSL 2017, dated the 29th June, 2017 Circulars / Instructions / Orders SEZ - Instruction No. 108 - dated 11-10-2021 Alternate method for transfer of space by an exiting unit under Rule 74 of the SEZ Rules, 2006 News 1 arrested by Delhi CGST Officials for fraudulently claiming ITC of ₹ 134 crore Case Laws: GST 2021 (10) TMI 580 Seeking direction to respondent to accept GST TRAN-1 filed manually - HELD THAT:- Taking note of the decision in M/S. SHRIPROP PROJECTS PRIVATE LIMITED, M/S. ASIAN FAB TEC LTD., M/S. STEEL AND STEELS, M/S. STEEL CENTRE, ALLIANCE BUILDWELL PROJECTS PVT. LTD., M/S. URS KARS SERVICE CENTRE PVT. LTD., M/S. VIDHATRI MOTORS PVT. LTD., M/S. SI GLOBAL PRIVATE LIMITED, M/S. NUANCE GROUP (INDIA) PVT. LTD., M/S. BANGALORE MOTORS PRIVATE LIMITED, M/S. YOKOGAWA INDIA LTD., SRI. POLYA RAMESH VERSUS THE UNION OF INDIA, THROUGH ITS REVENUE SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, THE GOODS AND SERVICES TAX COUNCIL, NEW DELHI THE COMMISSIONER OF COMMERCIAL TAXES, THE NODAL OFFICER/PRINCIPAL CHIEF COMMISSIONER OF CENTRAL TAX [ 2021 (3) TMI 1078 - KARNATAKA HIGH COURT] , the respondent No.7 is directed to take on record GST TRAN-1 filed vide Annexure-R and to consider the same on or before 10.10.2021. However, the respondents are at liberty to verify the genuineness of merits of the claim of the petition, in accordance with law. Petition disposed off. 2021 (10) TMI 579 Restoration of credit - petitioner has claimed credit from the ITC lying in books under the repealed acts - permission to file revised Form GST TRAN-1 in accordance with provision of Rule 120A of the CGST Rules, 2017 to correct the error - HELD THAT:- The Respondents are directed to permit petitioner to file revised FORM GST TRAN-1 either electronically or manually on or before 10.10.2021. However, the respondents are liberty to verify the genuineness on the merits of the claim of the petitioner in accordance with law. Petition allowed. 2021 (10) TMI 578 Seeking withdrawal of best judgment assessment orders passed - return filed within (granted extended) time or not - period September, 2017 to December, 2018 - HELD THAT:- It is clear that the time was in fact granted to the petitioner to file return within a specified time and the return to be filed within the said time referred to the return under Section 62 (2) and in light of appropriation of tax paid under the wrong head, this court by its order of 13.02.2019 had further extended the time within which time returns were to be filed. If that were to be so, though the period of 30 days as provided under Section 62 (2) in the peculiar facts of the case, in light of permission granted by the court in its order dated 13.02.2019, the petitioner could continue to file the return within the time granted by the Court and the return filed was a return as contemplated under Section 62 (2) which is to be construed to be return filed within the time. If that were to be so, the return filed in terms of the order dated 20.09.2018 was a return in terms of Section 62(2) and the best judgment assessment orders passed under Section 62(1) would stand withdrawn viz., assessment orders. The impugned endorsement is set aside and the return filed under Section 62 (2) of the Act is directed to be proceeded with in accordance with law. Income Tax 2021 (10) TMI 577 Validity of reopening of assessment u/s 147 - Validity of reason to believe - revision v/s review - whether there is any allegation against the assessee having failed to fully and truly disclose all material facts necessary for the assessment? - HELD THAT:- We have purported the reasons for reopening in the preceding paragraphs and bare reading of those reasons will show that there is no such allegation against the assessee. That apart, the reopening having been made beyond the period of four years, unless and until there is fresh tangible material available in the hands of the Assessing Officer and putforth to the assessee in the proper manner, reopening could not have been resolved. The decision of the Hon'ble Supreme Court in Kelvinator India Pvt Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] would clearly come to the aid and assistance of the assessee. In the absence of any allegation against the assessee of any non-disclosure, we have no hesitation to hold that the assessment is a clear case of change of opinion, which has been held to be bad in law in terms of decision of the Hon'ble Supreme Court in the case of Kelvinator India Pvt Ltd. We found that during the scrutiny assessment, the case was discussed with the assessee on four dates, prior to which, a questionare containing as many as 13 questions were put to the assessee with direction to file relevant documents and on scrutiny of those documents, the Assessing Officer called for further particulars which had also been furnished by the assessee on 04.06.2018 and therefore, it has to be presumed that the order has been passed by the Assessing Officer under Section 143(3) of the Act dated 17.09.2008 by forming an opinion and reopening the same on the same ground for the very same issue is a clear case of review. We are of the clear view that the reopening of the assessment is a clear case of change of opinion and what is the Assessing Officer purported to review the scrutiny assessment, which is impermissible under law. - Decided in favour of assessee. 2021 (10) TMI 576 Validity of reopening of assessment u/s 147 - notice issued in favour of the assessee, who was no longer alive on the date of the notice - HELD THAT:- As to prove the factum of death, the petitioner has also placed on record the death certificate issued by the North Delhi Municipal Corporation. Respondent has not disputed the factum of death of the assessee prior to the issuance of the Impugned Notice. He, however, submits that in the present case, even if this Notice is set aside by this Court, the respondents still be entitled to issue a fresh notice to the LRs of the deceased assessee in accordance with law. In view of the above and taking into account the judgment of this Court in Savita Kapila [ 2020 (7) TMI 441 - DELHI HIGH COURT] the Impugned Notice having been issued in favour of the assessee who was no longer alive, is set aside. - Decided in favour of assessee. 2021 (10) TMI 575 Weighted deduction u/s 35(2AB) - denial of weighted deduction of 150% u/s 35(2AB) as assessee has not filed revised return claiming the weighted deduction for the subject Assessment Year, and that the agreement with the Department, which is a condition precedent, was entered into subsequent to the Financial Year during which the deduction is claimed - HELD THAT:- A few judgments are referred to for bringing home the argument that once recognition is granted, approval is not very essential and need not be considered for the reason that Section 35(2AB) is an additional incentive or deduction provided by the Act. The claim is dependent on fulfilling the requirements of the Section. This argument need not be considered for the reasons that the assessee, on the strength of a right in its favour or infirmity in the stipulation of period by DSIR, availed the writ remedy. The prayers of assessee were rejected. The result is that the conclusion recorded against the assessee by the judgment in [ 2010 (4) TMI 48 - DELHI HIGH COURT ] bars the assessee from re-agitating the same issue in subject assessment proceedings. The request of the assessee was to give approval with effect from 01.04.2004. For available reasons, and now approved by the judgment in [ 2010 (4) TMI 48 - DELHI HIGH COURT ] it has been granted with effect from 01.04.2007 to 31.03.2010. This conclusion is confirmed by the Delhi High Court. The effort of the assessee again is in respect of the very same Assessment Year for which a different conclusion is attempted to be invited from this Court. The argument for weighted depreciation is rightly rejected by all the authorities under the Act. - Decided against assessee. 2021 (10) TMI 574 Estimation of cost of extraction of ore - reference to the valuation officer under the provisions of Section 142A of the Act by the search officer - addition of income, which was added based upon the valuation report of the Registered Valuer - whether the person, who has valued the stock in trade i.e., stock of iron ore, was a person, who is a Valuation Officer, as defined under clause (r) of Section 2 of the Wealth Tax Act? - HELD THAT:- Regional Valuation Officers, District Valuation Officers, Valuation Officers and Assistant Valuation Officers are all officers appointed by the Central Government. A Registered Valuation Officer is not an officer appointed by the Central Government and would come under the category of a Valuation Officer or even an Assistant Valuation Officer. A Valuer, who is registered under Section 34AB of the Wealth Tax Act shall be called as a Registered Valuer. A Registered Valuer can appear on behalf of an assessee before the assessing officer under the provisions of Section 34AB of the Wealth Tax Act. A person who is registered as a Registered Valuer cannot be a Valuation Officer. Section 16A of the Wealth Tax Act empowers the assessing officer to make a reference to a Valuation Officer, in a case, where the assessing officer is of the opinion that the fair market value of the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in that behalf or in any case, where having regard to the nature of the asset and other relevant circumstances, the assessing officer deems it necessary to do so. In the present case, the facts of the case reveal that the appellant has disclosed the closing stock of iron ore at ₹ 5,96,74,794/- as against the valuation of ₹ 11,10,01,980/- obtained by the authorized officer. The same fact could have led the assessing officer to believe that the appellant has suppressed the value of the asset in the return of income filed by him and the proper course of action would have been to get a valuation report done by the aforesaid Valuation Officers. If the stock in trade comes under the purview of Section 142(2A) of the Act of 1961, the aforesaid Valuation Officer is the person authorized to value the same and by no stretch of imagination, the assessing officer could have relied upon the Valuation Report furnished by a Registered Valuer to the authorized officer for the purpose of framing the assessment. AO gravely erred in relying upon the valuation report submitted by a Registered Valuer while assessing the income of the appellant, as such a report being invalid in law. Keeping in view the statutory provisions governing the filed, he should have sought a valuation by the District Valuation Officer and could have relied upon his report to assess the income of the appellant. The provisions of the Wealth Tax Act and the Rules applicable for the assessment year 2008-2009 are governing the field and therefore, substantial question of law to be answered in favour of the appellant and against the respondent/revenue by deleting the addition of income, which was added based upon the valuation report of the Registered Valuer. 2021 (10) TMI 573 Disallowance u/s 14A - Addition amount of expenditure incurred in relation to an exempt income - assessee has claimed before the Assessing Officer that it has not incurred any expenditure towards earning exempt income - HELD THAT:- AO can determine the amount of expenditure incurred in relation to an exempt income if the Assessing Officer having regard to accounts of the assessee is not satisfied with the correctness of the claim of the assessee but it has not incurred any expenditure in order to earn exempt income. AO is therefore, required to record its satisfaction that it has not incurred any expenditure in order to earn exempt income. Assessee has claimed before the AO that it has not incurred any expenditure towards earning exempt income, which has been reproduced by the Assessing Officer in para 5 of its order - from scrutiny of the order passed by the Assessing Officer, it is evident that the Assessing Officer has not recorded satisfaction with regard to claim of the assessee that it has not incurred any expenditure in order to earn exempt income. Therefore, the condition precedent for invoking Rule 8D of the Rules as per Section 14A of the Act is not fulfilled. For the aforementioned reasons, the first substantial question of law is answered in favour of the assessee and against the revenue. Assessee not earned any exempt income - In the instant case, the assessee had not received any share or profit from the partnership firm during the year and in fact the partnership firm had incurred the loss and no exempt income was earned by the assessee. In the absence of any exempt income during the year, there could not be any disallowance u/s 14A. Capital contribution in the firm of M/s Lakshmi Estate due to business expediency cannot be treated as investment in accordance with Section 14A - The assessee had made fake advances to M/s Lakshmi Estate and later became a partner to the extent of 75% share in the partnership firm from the year 2003 onwards. It is claimed by the assessee that it had not borrowed funds for the purpose of making original advances to M/s Lakshmi Estate, requires adjudication of facts and therefore, in the facts and circumstances of the case, we deem it appropriate to remit the matter to the Assessing Officer to decide the claim of the assessee whether or not it had used borrowed funds for the purposes of making original advances to M/s Lakshmi Estate for the Assessment Year 2008-09. Therefore, it is not necessary for us to answer the fourth substantial question of law. 2021 (10) TMI 572 Quantum of deduction allowed u/s 80IA - assessee has declared loss under the head income from business and it has earned interest income which was declared under the head Income from other sources - A.O. took the view that the deduction u/s 80IA of the Act has been allowed against interest income assessed under Income from other sources - HELD THAT:- The Hon ble Supreme Court in the case of CIT vs. Reliance Energy Ltd ( 2021 (4) TMI 1237 - SUPREME COURT ] held that there is no limitation on deduction admissible under Section 80-IA of the Act to income under the head business only. Hence the view expressed by the AO in the instant case was not right and accordingly, we confirm the order passed by Ld CIT(A) on this issue. Disallowance made u/s 14A - CIT(A) restricted the disallowance to the amount of exempt income by following the decision rendered by Hon ble Karnataka High Court in the case of Pragathi Krishna Grameena Bank [ 2018 (6) TMI 1283 - KARNATAKA HIGH COURT ] and also various Tribunal decisions - HELD THAT:- We notice that the Ld CIT(A) has decided this issue following the binding decision of Hon ble jurisdictional Karnataka High Court. Hence we do not find any reason to interfere with his decision rendered on this issue. 2021 (10) TMI 571 Deduction u/s 80P - Assessee is a co-operative society providing credit facilities to its members - entire claim of deduction u/s 80P denied for the reason that the assessee is a co-operative bank and not a co-operative society - HELD THAT:- The Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] had held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) - It was further held by the Hon ble Apex Court that section 80P(4) of the I.T.Act is to be read as a proviso. It was stated by the Hon ble Apex Court that section 80P(4) of the I.T.Act now specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. The Hon ble Apex Court had enunciated various principles in regard to deduction u/s 80P - We restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. Denial of alternative claim of deduction u/s 80P(2)(d) of the I.T.Act stating that since section 80P(4) of the I.T.Act is invoked, the assessee is not entitled to any deduction u/s 80P - We direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, the same is entitled to deduction u/s 80P(2)(d) of the I.T.Act. With these observations, I restore the issue to the files of the A.O. CIT(A) has also directed the A.O. to verify whether the assessee has deducted TDS on interest payment to non-members (interest payment exceeding ₹ 10,000 poer annum). The direction of the CIT(A) is in accordance with law, since the assessee ought to have deducted TDS on interest payment to non-members when the payment exceeds ₹ 10,000 per annum. Therefore, the direction of the CIT(A) is upheld. Appeal filed by the assessee is partly allowed for statistical purposes. 2021 (10) TMI 570 Disallowance of depreciation claimed on property - assessee had claimed depreciation @ 10% on residential property - restricting the disallowance to 5% by AO - HELD THAT:- Contention of the assessee that the disallowance has been made for the first time in the year under consideration and there has been no disallowance either in the preceding assessment year or succeeding assessment year has not been controverted by the Revenue - For restricting the disallowance to 5% no reasons have been given by AO which according to us would mean that assessee using the premises for the purpose of business has not been doubted. AO was not justified in restricting the claim of depreciation to 5%. We direct the AO to allow the claim of depreciation @ 10%. Thus the ground of the assessee is allowed. 2021 (10) TMI 569 Income from house property - Estimation of ALV of two properties - assessee has paid house tax - HELD THAT:- Assessing Officer without any basis, estimated the annual letting value of the said properties. The said properties were not let out during the present Assessment Year. As those properties were not in habitable conditions and no tenant was found in respect of those properties. Therefore, the CIT(A) has rightly deleted the addition. There is no need to interfere with the findings of the CIT(A). Hence, Ground No. 1 of the Revenue s appeal is dismissed. Unexplained credits - loan was taken from the daughter of the assessee and the assessee has not given any details relating to the amount - AR submitted that the identity, creditworthiness and genuineness of the transaction with regard to the amounts credited as loan from assessee s daughter have been proved as Ms. Asima Gupta has disclosed the particulars regarding long term capital gain earned by her - HELD THAT:- CIT(A) has observed that the Assessing Officer has mislead the facts as only an amount of ₹ 61,36,000/- had been received as loan during the year under consideration from Ms. Asima Gupta. The evidences shown before the Assessing Officer has established the genuineness of the transaction and details related to the origin of the sales of the shares were also before the Assessing Officer. The CIT(A) has given a categorical finding that the sources of credit in the lenders bank account are directly related to the purchase of shares and the same was also placed before the Assessing Officer. Therefore, the CIT(A) has rightly deleted this addition Disallowance of interest - assessee has given loan without any interest to her spouse - AO charged the interest on the said additions at the rate of 12% - AR submitted that the assessee has not received any interest on the said advance/loan to her husband and the Assessing Officer has presumed the notional interest which was rightly deleted by the CIT(A) - HELD THAT:- AO has presumed the notional interest at the rate of 12% without any basis. The Assessing Officer merely on surmises and conjunctures observed that the advance was interest bound and not interest free. The assessee has given an advance to her husband without charging any interest. Thus, it is rightly deleted by the CIT(A). Unexplained sale / purchase of shares - DR submitted that the assessee has sold shares of MOIL at a consideration of ₹ 16,91,903/- against purchase of ₹ 21,05,075/- without any documentary evidence in respect of purchase and sale - CIT(A) has deleted this addition only on the ground that the details were there before the CIT(A) - HELD THAT:- CIT(A) has gone through the details which were very much before the Assessing Officer and after going through the same has deleted this addition. The purchase of shares as well as the sales of the said shares were through recognized stock exchange and is supported by the broker note and the details thereof. Thus, the transactions were genuine and the CIT(A) rightly deleted this addition. Unexplained credits u/s 68 - HELD THAT:- All the records were before the Assessing Officer and there is a single sentence in the assessment order stating that the assessee has not given any evidence. But, the assessee s reply along with Annexure-13 dated 27/2/2015 was before the Assessing Officer which has explained the nature of the transaction and the advance given by Nina Bhartia. Hence, the identity, genuineness and creditworthiness was established by the assessee. The CIT(A) has rightly given finding that the transaction was genuine and deleted the addition. Appeal decided against revenue. 2021 (10) TMI 568 Reopening of assessment u/s 147- Notice not sent to correct address - no service of valid notice on the assessee and the notice for re-assessment proceedings was served through affixture which even does not mention the name of the witnesses - HELD THAT:- CIT(A) has not adjudicated the grounds challenging the validity of the re-assessment proceedings and has straightaway proceeded to decide the appeal on merit. Therefore in the interest of justice, we deem it proper to restore the issue to the file of Ld. CIT(A) with a direction to decide the grounds challenging the validity of re-assessment proceedings taken before her. CIT(A) shall decide the issue afresh including the grounds challenging the validity of re-assessment proceedings in accordance with Law, after giving due opportunity of being heard to the assessee - Appeal of the Assessee is allowed for statistical purposes. 2021 (10) TMI 567 Disallowance u//s 14A - disallow the expenditure incurred in relation to earning of exempt income - contention of the assessee so far interest expenditure claimed by the assessee is concerned that related to specific loans and did not relate to the investment out of which the assessee had earned dividend income - HELD THAT:- It is well settled law that for making disallowance u/s 14A of the Act, there has to be an expenditure related to the exempt income which has been charged in P L Account by the assessee. It is the contention of the assessee that so far interest expenditure is concerned, firstly, it related to specific loans and were not related to exempt income and secondly, the investment was made way back in the share of bankers of the assessee, such shares were kept in DEMAT account. So far, the administrative expenses i.e. are concerned, there is no dispute with regard to the fact that Rule 8D of the Income Tax Rules, 1962 is in operation for Assessment Year under consideration - we restrict the disallowance to the extent of the administrative expenses one-half percent of the average of the value of investment as on the first day and the last day of the previous year i.e. ₹ 9,44,000/- i.e. 4,720/-. Thus, Ground No.1 raised by the assessee is partly allowed. Disallowance of interest and not allowing the depreciation thereon which was treated by the AO being incurred on capital expansion - Capitalization of interest was rejected on the basis that before the Assessing Officer, such ground could not have been taken without claiming it in the return of income. In support of this, Ld.CIT(A) has placed reliance on the judgement of Goetze India Ltd. vs CIT [ 2006 (3) TMI 75 - SUPREME COURT] - HELD THAT:- CIT(A) has mis-directed himself as the judgement of the Hon ble Supreme Court does not put fetters on the power of the appellate authority below for entertaining such claim. Therefore, considering the totality of the facts and material placed before us, we deem it proper and in the principle of natural justice to restore this ground to the file of Ld.CIT(A) to decide the issue afresh - Appeal of assessee are allowed for statistical purposes. Disallowance of subscription and membership expenses - contentions of the assessee are, firstly, the expenditure was incurred for business expediency and secondly, the disallowance is highly excessive - HELD THAT:- We find that the expenditure is related to subscription or membership fee and expenditure incurred for business meetings. It is the contention of the assessee that the facility was provided to senior managerial personnel of the company under the terms of employment for having meetings with senior executives and probable customers. We find merit in this contention of the assessee that such membership is used for furthering social relationship and also develop business communication - disallowance made by the AO is not justified. Hence, same is hereby deleted. This ground of assessee s appeal is allowed. 2021 (10) TMI 566 Disallowance of deduction u/s 80P - assessee was having more than 15% members as associate / nominal members, which violates the provisions of Karnataka Co-operative Societies Act, 1959 - HELD THAT:- The Division Bench of the Tribunal in the case of M/s.Ravindra Multipurpose Co-operative Society Limited [ 2021 (9) TMI 342 - ITAT BANGALORE ] had remanded the identical issue to the files of the A.O. for de novo consideration. The Tribunal directed the A.O. to follow the dictum laid down by the Hon ble Apex Court in the case of M/s.Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2021 (1) TMI 488 - SUPREME COURT ]. In view of the order of the ITAT, which is identical to the facts of the instant case, restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. Claim of deduction u/s 80P(2)(d) - CIT(A) has not adjudicated the same for the reason that the assessee has violated the principle of mutuality. If the assessee receives / earns interest / dividend income out of investments with co-operative society, the same is entitled to deduction u/s 80P(2)(d) of the I.T.Act. With these observations, we direct the A.O. to examine the claim of deduction u/s 80P(2)(d) of the I.T.Act, afresh. Deduction u/s 57 in respect of expenditure for earning the interest income - Inspite of such plea not being raised before the lower authorities, since the fundamental principle under Income-tax Act being that only net income has to be taxed and not the gross income, this plea of the assessee has to be necessarily entertained, especially in the light of the judgment of the Hon ble jurisdictional High Court in the case of Totgars Sales Co-operative Society Limited [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT ]. Accordingly, the issue of deduction u/s 57 of the I.T.Act is restored to the files of the A.O. The A.O. is directed to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources . If so, the same shall be allowed as deduction u/s 57 of the I.T.Act. The assessee is directed to co-operate with the department and furnish the necessary evidence for expeditious disposal of the matter. Appeal filed by the assessee is allowed for statistical purposes. 2021 (10) TMI 565 Addition u/s 68 in respect of loan received by the assessee from four persons - Addition being unsecured loan creditors under section 41(1) as repayment of loan - assessee could not produce PAN on confirmation - HELD THAT:- Loan taken from Ms.Shamala since the additional evidence is admitted, as regards the addition made for loan taken from Smt.Shalama amounting to ₹ 1,50,000, I restore the issue to the files of the A.O. The A.O. shall consider whether the loan taken for ₹ 1,50,000 has been repaid. The assessee has also produced the confirmation, wherein it is clearly stated that the loan of ₹ 1,50,000 was received by cheque and amount was repaid vide cheque along with interest of ₹ 34,000 totaling to ₹ 1,84,000 on 14.03.2014. If these facts narrated in the confirmation are true, the addition of ₹ 1,50,000 is to be deleted by the A.O. It is ordered accordingly. Loan taken from Mr.Ramrathana - As assessee claims the loan received from Mr.Ramrathana has been repaid subsequently on 10.04.2014 vide cheque No.5593. However, the assessee has not submitted any evidence even before the Tribunal as regards the PAN and the mode of repayment of the loan. Hence, confirm the addition Assessee has contended that the amount of loan taken from both Sri.Manu K.P. and Smt.Roopa Manu has been paid in the subsequent year, thus that the matter needs to be examined afresh by the A.O. The A.O. is directed to delete the addition u/s 68 of the I.T.Act in respect of loans received from Sri Manu K.P. and Smt.Roopa Manu, if the assessee is able to prove that loan amount has been repaid (claim of the assessee it has been repaid in the year 2014). CIT(A) has enhanced the addition to ₹ 14,75,000 instead of ₹ 14,00,000 made by the A.O. It is not clear whether the CIT(A) has served enhancement notice to the assessee. Without serving enhancement notice, it is settled position of law that no enhancement can be made by the CIT(A). Therefore, I direct the A.O., after examining the issues that are restored to him, the total addition cannot exceed more than ₹ 14,00,000. (since I have confirmed an addition of ₹ 1,25,000, the A.O. shall limit the addition, if at all required to ₹ 12,75,000). Appeal filed by the assessee is partly allowed for statistical purposes. 2021 (10) TMI 564 Correct head of income - lease income received by the assessee - business income or income from house property - Main object of assessee - HELD THAT:- In the present case, the assessee main object is to construct buildings and leased out the same for the purpose of business therefore, the main object of the assessee itself is to carry the business, the income arising out of such an activity has to be treated as a business income. Recently, in the case of PCIT v. City Centre Mall Nashik (P.) Ltd. [ 2020 (1) TMI 872 - BOMBAY HIGH COURT] held that where the assessee leased out shops in a mall along with various other facilities and amenities. In view of the fact that the assessee did not merely intended to give shops on rent rather the assessee has intended to do business of renting out commercial space to interested parties amount received by the assessee was to brought to tax as a business income. We are of the opinion that the income earned by the assessee by constructing the shopping mall and letting out the same by providing various facilities are amounting to business activity of the assessee and the income earned out of such an activity has to be treated as a business income - case followed M/S CHENNAI PROPERTIES INVESTMENTS LTD VERSUS THE COMMISSIONER OF INCOME TAX [ 2015 (5) TMI 46 - SUPREME COURT] - Decided in favour of assessee. 2021 (10) TMI 563 Disallowance of service expenses - said expense was not supported by evidences - Allowable business expenses or not? - HELD THAT:- Although agreement entered between assessee and M/s. Sundaram Finance Ltd., was on 14.03.2013, but the services has been availed for the entire financial year on PAN India basis, which is evident from the fact that except shared cost and service expenses, no other expenses was incurred by the assessee in its business - when the assessee has demonstrated with evidence that it does not have any permanent establishment and other infrastructure facilities to carry out its business operations and further, it had availed services of M/s. Sundaram Finance Ltd., through network of its branches across the country, the AO was erred in disallowing expenses merely for the reason that said expense was not supported by evidences, more particularly when the assessee has filed agreement between the parties and debit note raised by M/s. Sundaram Finance Ltd. It is not a case of the AO that expenditure incurred by the assessee is not genuine. In fact, the AO has not questioned genuineness of expenses, but what was doubted is necessity and rationale behind incurring expenditure. It is a well settled principle of law that AO cannot question rationale behind incurring any expenditure. We further noted that in the subsequent financial year relevant to assessment year 2014-15, the AO has accepted the claim of the assessee towards reimbursement of shared cost and service expenses to M/s. Sundaram Finance Ltd. Therefore, we are of the considered view that when expenditure was considered as genuine and further, it was incurred wholly and exclusively for the purpose of business, then there is no reason for the AO to disallow said expenditure without assigning proper reasons. The ld.CIT(A) after considering relevant facts, has rightly deleted addition made by the AO - Appeal filed by the Revenue is dismissed. 2021 (10) TMI 562 Deduction u/s 10B and 10A - admission of additional evidence - Whether CIT(A) erred in allowing the claim of exemption after admitting fresh evidence, which was admitted without granting the AO any opportunity to examine it? - DR submitted deduction claimed by the assessee in the original return of income was only u/s. 10B of the Act and the deduction u/s. 10A of the Act cannot be considered - CIT(A) has granted s. 10A of the Act by observing that the assessee has substantiated the statutory conditions prescribed u/s. 10A of the Act are fulfilled - HELD THAT:- We find that when the assessee has not filed any details in respect of the claim of deduction u/s. 10A of the Act before the A.O and the necessary documents which are filed only before Ld. CIT(A), the Ld. CIT(A) ought to have been called the remand report and thereafter, the eligibility for the assessee u/s. 10A of the Act has to be considered. CIT(A) without calling remand report and without giving an opportunity to the A.O a claim which is substantiated first time before the Ld. CIT(A) considered and allowed. In our opinion, the order passed by the Ld. CIT(A) is not correct. Therefore, we set aside the order passed by the Ld. CIT(A) and remit the issue back to the A.O to consider the eligibility of the assessee for deduction u/s. 10A of the Act afresh, denovo in accordance with law. Hence, the appeal filed by the Revenue is allowed for statistical purposes. 2021 (10) TMI 561 Reopening of assessment u/s 147 - computing long term capital gains - sale consideration received by the assessee as per s. 50C - referece to DVO - DR has submitted that once the issue of valuation of property has been referred to DVO as per the request of the assessee, the A.O has to follow the same and therefore, he strongly supported the LTCG calculated by the A.O as per the DVO report - HELD THAT:- We find that the A.O in this case has correctly reopened the assessment by following due procedure and we find no infirmity in the order passed by the Ld. CIT(A). Thus, grounds of appeal No.1 to 3 raised by the assessee are dismissed. Addition of capital gain - The assessee has sold the property for ₹ 7,00,000/-, whereas the market value as per SRO is at ₹ 68,77,000/-. When the A.O has initially asked, the assessee has submitted that the land was purchased along with three persons and thereafter they gave up their ownership through a settlement. However, the original seller Shri Doraisamy shall continued to stay on the land and his son Shri D. Gopal took the control of the land. So far as this fact is concerned, the assessee has not placed any material. When the AO has asked the assessee to submit E.C, as per E.C the person who purchased the land from the assessee subsequently partitioned the land and sold it to various individuals during 2008 to 2012 and again the A.O has asked explanation. The assessee has submitted that the land to the extent of 4600 Sq. meters appropriated by the Govt. of Tamil Nadu under the Urban Land Ceiling Act only left over 12 cents. In the assessment order, the A.O has noted that Shri Doraisamy has sold the property to the assessee and the assessee has sold the land to Shri D. Gopal, Son of Doraisamy and further, Shri D Gopal sold it to various parties. All these transactions have been properly registered with the Sub-Registrar and stamp value has been paid in all these transactions therefore, the land was forcibly taken over by Shri D. Gopal and appropriated by the Govt. of Tamil Nadu is not believed by the A.O - assessee has not placed any evidence in respect of continuous possession of the Shri Doraisamy and also land was forcibly taken away by the Doraisamy son D. Gopal. These are the only explanations given by the assessee without any basis. Therefore, these baseless reasons given by the assessee cannot be considered. Apart from the above, as per the assessee request, the issue was referred to the District Valuation Officer, the DVO vide order dated 15.10.2018 valued the property for ₹ 45,20,000/-. The A.O by considering the same, recomputed the capital gains and the same was confirmed by the Ld. CIT(A) - By considering the entire facts and circumstances of the case, we find no infirmity in the order passed by the Ld. CIT(A). Hence, these grounds of appeal raised by the assessee are dismissed. 2021 (10) TMI 560 Deduction u/s. 80IA(4)(iv) on gross total income - computing the total income of the assessee - gross total income of eligible business including income from capital gain and Income from other sources - in assessee's case includes income from capital gain and income from other sources whereas as per sec. 80IA(1), the said deduction is envisaged out of profit and gains from the eligible business only - whether CIT(A) has erred in concluding that gross total income of eligible business includes also income from capital gain and Income from other sources? - non-obstente clause appearing in section 80IA(5) - HELD THAT:- Once income had been determined by applying the methodology as provided in Section 80HHC(3), the question of restricting the deduction in terms of Section 80AB would not arise. That in Section 80AB(2) of the Act, the restriction of deduction is on gross total income and in such circumstances, restriction on the total profit of business was not at all justified. This decision of the Hon‟ble Bombay High Court squarely covers the issue in favour of the assessee and in view thereof, the Ld. CIT(Appeal) has provided relief to the assessee. That even before us, the Ld. DR fairly conceded that the issue is covered by the aforesaid decisions of the Hon‟ble Bombay High Court in V M Salgaocar Brothers [ 2015 (4) TMI 1108 - BOMBAY HIGH COURT ] in favour of the assessee. 2021 (10) TMI 559 Disallowance u/s.36(1)(ii) of interest expenditure on loans availed - As pleaded that AO has failed to consider that assessee has incurred expenditure on account of interest on various loans that assessee has made advance loans to directors and sister concerns received for business purpose and out of that advances they have earned interest income - HELD THAT:- We note that AO in the assessment order has opined that assessee has incurred abnormally high expenditure as compared to income declared. This is an abstract observation without any figures given for comparison - As mentioned that similar interest on loans taken from the parties were disallowed in earlier years as assessee has failed to prove the nexus between interest expenditure incurred and income earned - AO observed that assessee failed to justify the nexus of interest paid and income earned as there was no business activity during the year. This again is an abstract observation in contrast to the earlier observation that there was income declared by the assessee. AO further mentioned that assessee was asked to explain as to why the entire interest payment should not be disallowed and added. After putting this issue in the order sheet that question was issued to the assessee, there is no mentioned as to whatsoever was the reply of the assessee. The AO simply says that in earlier years the disallowance was done and assessee had not made cogent or convincing explanation, hence the AO disallowed the amount of interest paid to these parties. Thus without any application of mind, the authorities below are passing orders year after year for reason best known to them when assessee has given the necessary details and no disallowance was done in earlier years as noted by the Tribunal. Without any change in facts and circumstances and without any application of mind, the revenue authorities are going on making the additions in abstract manner without bringing on record, cogent material. Such a relinquishment of statutory duties cannot be rewarded by remitting the matter for fresh inning every time. In this view of the matter, in our considered opinion, the orders of the authorities below shows complete lack of application of mind and in the background of aforesaid discussions, we are inclined to set aside the order of the authorities below and decide the issue in favour of the assessee. Admission of fresh claim - ITAT power in admitting fresh claims otherwise that by revised return - HELD THAT:- Authorities below have declined to accept the fresh claim of the assessee on the touchstone of Hon ble Supreme Court in the case Goetz( India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT ] wherein as held that their decision in that case will not impinge upon the ITAT power in admitting fresh claims otherwise that by revised return. Accordingly, we remit the issue to the file of AO and direct him to examine the factual veracity of assessee s claim and decide the same after giving due opportunities of being heard to the assessee. 2021 (10) TMI 558 Condonation of delay - delay of 366 days in filing the present appeal - sufficiency of cause for filing the appeals belatedly - HELD THAT:- As regards the sufficiency of cause for filing the appeals belatedly, it is settled principles of law that the Courts have to take liberal approach while interpreting the expression sufficient cause for condonation of delay. In case of Collector, Land Acquisition Vs. Mst. Katiji [ 1987 (2) TMI 61 - SUPREME COURT ] considering the matters for condonation of delay, the law must be applied in a meaningful manner which subserves ends of justice and technical considerations should not come in the way of cause of substantial justice. There is no quarrel that the explanation and reasons explained for delay must be bonafide and not merely a device to cover an ulterior purpose such as laches on the part of the litigant or an attempt to save limitation in the underhand way. If we apply the settled principles as laid down by the Hon ble Supreme Court as well as other courts on the facts of the present case we find that the assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 366 days in filing the present appeal and admit the appeal for hearing. Non filing of E-appeal - mandatory requirement of e-filing of appeal have not been fulfilled by the assessee - appeal filed manually was not treated as valid appeal - HELD THAT:- We find that Hon ble Supreme Court in the case of State of Punjab Vs. Shyamalal Murari and others [ 1975 (10) TMI 105 - SUPREME COURT ] has categorically held that courts should not go strictly by the rulebook to deny justice to the deserving litigant as it would lead to miscarriage of justice. It has been reiterated by the Hon ble Supreme Court that all the rules of procedure are handmaid of Justice. From the facts of the present case, we gathered that the assessee had already filed the appeal in paper form, however only the e-filing of appeal has not been done by the assessee and according to us, the same is only a technical consideration. In this respect, we rely upon the judgement of Hon ble Supreme Court, wherein the Hon ble Supreme Court has reiterated that if in a given circumstances, the technical consideration and substantial Justice are pitted against each other, then in that eventuality the cause of substantial Justice deserves to be preferred and cannot be overshadowed or negatived by such technical considerations. Apart from above we have also noticed that the Coordinate Bench of Hon ble ITAT Delhi Bench in appeal in case titled Gurinder Singh Dhillon [ 2017 (4) TMI 1359 - ITAT DELHI ] had restored the matter to the file of Ld. CIT(A) under identical circumstances with a direction do decide appeal afresh on merit, after condoning the delay, if any. Since in the present case, we find that appeal in the paper form was already with CIT(A), therefore in that eventuality the Ld. CIT(A) ought not to have dismissed the appeal solely on the ground that the assessee has not filed the appeal electronically before the appellate Commissioner. 2021 (10) TMI 557 Addition on account of peak balance during the year in two bank accounts with HSBC Private Bank(Suisse) SA, Geneva - HELD THAT:- The source of the funds transferred from HSBC Abu Dhabi, UAE were stated to be out of the income earned in Abu Dhabi and savings made by the respondent assessee during his stay in Abu Dhabi, UAE as a non-resident Indian since 1976.After considering the facts of the case are in full agreement with the conclusion drawn by the ld CIT(A) that the assessee is not beneficial owner of the bank account held by Blueridge Investment Corporation with HSBC Geneva. Similarly, as regards the joint account of the assessee with his brother in HSBC Geneva , the ld CIT(A) recorded a finding on the basis of evidences that money was transferred in the bank account out of the income earned in Abu Dhabi and savings made by the respondent assessee during his stay in Abu Dhabi, UAE as a non-resident Indian since 1976 - we are inclined to uphold the order of ld CIT(A) by dismissing the appeal of the revenue. 2021 (10) TMI 556 Computation of book profit u/s 115JB for Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We agree with the contention of the Ld. AR that the case of the Revenue is not tenable for the reason that ITAT Delhi Special Bench in the case of ACIT vs. Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] has categorically held that computation under clause (f) of Explanation-1 to Section 115JB (2) of the Act is to be made without resorting to the computation as contemplated u/s. 14A read with Rule 8D of the Income Tax Rules, 1962. Also decided in favour of own case in IFCI LIMITED AND VICE-VERSA [ 2020 (10) TMI 528 - ITAT DELHI] . Also in BHUSHAN STEEL LTD. [ 2015 (9) TMI 1424 - DELHI HIGH COURT] held that addition cannot be made u/s. 14A to the book-profits in absence of any specific reference in section 115JB - Decided in favour of assessee. 2021 (10) TMI 555 Reopening of assessment u/s 147 - Addition u/s 68 - Denial of natural justice - non-supply of the report of the enquiry to the assessee and not affording opportunity to the assessee to cross-examine the searched person - HELD THAT:- We find no merit in making addition in the reassessment proceeding under Section 68 of the Act particularly for non-supply of the report of the enquiry to the assessee and not affording opportunity to the assessee to cross-examine the searched person which goes to the root of the matter. We do not find any basis in such proceeding and hence the same is hereby quashed. Consequently, the addition made therein is hereby deleted. Hence, assessee's appeal is, thus, allowed. 2021 (10) TMI 554 Deduction u/s 35(1)(ii) - donations given to School of Human Genetics and Population Health, Kolkata, which is a charitable institution and was having registration under section 12A of the Income Tax Act, 1961 - onus to prove - HELD THAT:- We find that Hon'ble Gujarat High Court in the case of PCT Vs. Thakkar Ganpatlal HUF [ 2020 (2) TMI 31 - GUJARAT HIGH COURT] has dealt with the issue, and while allowing the claim of the assessee, has also referred to the decision in the case of S.G. Vat Care P. Ltd.[ 2020 (2) TMI 31 - GUJARAT HIGH COURT] which was authored by one of us. In this The Hon'ble Gujarat High Court noted the observation and finding of the Tribunal on this issue, and came to the conclusion that the onus placed on the assessee has been discharged and no interference in the order of the ITAT is required. The Hon'ble Court, thus allowed claim of donation made to M/s. Herbicure Healthcare Bio-Herbal Research Foundation - Decided in favour of assessee. 2021 (10) TMI 553 Undisclosed income from commercial activities and non members - Addition of interest on FDR, interest on SB account and interest from Clarion Properties - assessee stated at the time of handing over of possession the builder executed with each owner a maintenance agreement as per which the owners were requested to pay one time Interest Free Maintenance Deposit (IFMD) towards maintenance of the society for which the builder was entitled to use income from the said deposit at the rate of 6% per annum towards the provision of maintenance service - As contended reimbursement received by the association was not taxable in the hands of the association as IFMD was not a voluntary deposit made by the apartment owners with the object of earning an income but was a compulsory condition for receiving possession of the apartment HELD THAT:- In the light of this judgment of the Hon'ble Supreme Court in the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT ] find that the first appellate authority has examined the relevant part of the agreement between Clarison property, the owners/users, the legend Condominium Association, M/s. Ajanta Builder Pvt. Ltd. The relevant findings of the agreement has been extracted elsewhere in the findings of the CIT(A). Considering the relevant part of the agreement in the light of the decision of the Hon'ble Supreme Court (supra). I do not find any error or infirmity in the findings of the CIT(A). - Decided against assessee. 2021 (10) TMI 552 Addition u/s 68 - Unexplained loan transaction - no evidences to prove the creditworthiness of the loan creditor and genuineness of the transactions were furnished by the assessee - HELD THAT:- No evidences whatsoever have been filed to controvert the same by the assessee before us. Hence, we hold that the ld. CIT(A) had elaborately discussed the issue in dispute and had observed that assessee had not proved the creditworthiness of the loan creditors and genuineness of the transactions in respect of loans received from M/s. Nakshatra Business Private Limited and Hema Trading Company. Hence, we do not find any infirmity in the order of the ld. CIT(A) in this regard - Decided against assessee. Disallowance of ROC charges - Addition on the basis with the same is related to increase in authorised share capital and hence, it is capital expenditure - disallowance has been upheld by the ld. CIT(A) - HELD THAT:- We find that this issue is no longer res integra in view of the decision of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. v. CIT [ 1997 (2) TMI 11 - SUPREME COURT ] wherein it was held that fees paid to ROC for increase in authorised share capital is capital expenditure and cannot be allowed as a deduction. Accordingly, the ground No. 2 raised by the assessee is dismissed. 2021 (10) TMI 551 Exemption u/s 54 - Claim of the assessee denied as assessee failure not to adhere to mandatory requirment to file the return of income for the year under consideration - Assessee's contention is this that the amendment of this proviso of Section 139(1) is applicable w.e.f. assessment 2020-21 which is not applied in the case of the applicant - HELD THAT:- We find merit and substance in the case made out by the assessee. It appears that the 6th Proviso of Section 139(1) after amendment is applicable for A.Y. 2020-21. The assessee's case is not coming unde the purview of such proviso. Hence, we hold that the assessee is entitled to such claim under Section 54 of the Act. We, therefore, allow the appeal by directing the Ld. AO to pass orders in accordance with law. - Decided in favour of assessee. 2021 (10) TMI 550 Transfer pricing - international transactions - Determination of the nature of services availed by the assessee - Nature of stewardship activity or core business intra-group services - rendition of services by Nalco, USA and Nalco Pacific Pte Ltd., Singapore - Whether services performed by the AEs were in the nature of stewardship activity? - as per CIT intra group activities performed by NALCO USA under 'SA' and by Nalco Pacific under the 'TAMA' constitute intra group services and the said activities are not in the nature of stewardship activity - HELD THAT:- The object is to protect the interest of the MSCo. These stewards are not involved in day to day management or in any specific services to be undertaken by MSAS. The stewardship activity is basically to protect the interest of the customer - In such a case it cannot be said that MSCo has been rendering the services to MSAS. In our view MSCo is merely protecting its own interests in the competitive world by ensuring the quality and confidentiality of MSAS services'. On going through the decision in Morgan Stanley [ 2007 (7) TMI 201 - SUPREME COURT ] it gets graphically clear that the stewardship activities are confined to protecting one's own interest rather than rendering benefit to the other company. We observe that the rendition of services by Nalco, USA and Nalco Pacific Pte Ltd., Singapore has given effect only to the assessee and has, in no manner, resulted in protecting the individual interests of such companies. All the services rendered by them facilitated the carrying on of the assessee's business. In such circumstances, we are satisfied that the reliance of the AO on the decision in Morgan Stanley [ 2007 (7) TMI 201 - SUPREME COURT ] is misconceived. We, therefore, accord our imprimatur to the conclusion drawn by the ld. CIT(A) that the services rendered by the two companies were in the nature of intra group services and not stewardship activity. Ordinarily, after answering the character of the services, the next point would have been to determine the ALP of the intra group services. We have noticed above that the TPO determined Nil ALP by holding that the services provided by Nalco, USA and Nalco Pacific Pte Ltd., Singapore were in the nature of stewardship activity. The ld. CIT(A) overturned the TPO's view on this score and further held that the transacted value of the intra group services was at ALP, albeit without carrying out any analysis. The ground taken by the Revenue, as reproduced above, is confined only to challenging the decision of the ld. CIT(A) in construing the services as intra group services.We, therefore, refrain from going into the aspect of the ALP determination, for which no ground has been raised. In the ultimate analysis, the ground raised in the appeal is not allowed. Disallowance of Travelling and Conveyance to 5% - assessee claimed Travelling expenses which included a sum as reimbursement of Travelling to employees - HELD THAT:- As observed that the lower authorities have gone with their respective views taken for the immediately preceding year. The matter came up for consideration before the Tribunal for the A.Y. 2008-09. Vide its order [ 2017 (4) TMI 446 - ITAT KOLKATA ] dated 05-04-2017, the Tribunal dismissed the Revenue's ground by holding that the approach adopted by the ld. CIT(A) did not warrant interference. As the facts and circumstances of this ground are mutatis mutandis similar to those of the immediately preceding year, respectfully following the precedent, we uphold the impugned order on this score. Appeal is dismissed. 2021 (10) TMI 549 Penalty u/s. 271(1)(c) - unexplained cash credit u/s. 68 - assessee had furnished inaccurate particulars of income - HELD THAT:- In the instant case, the assessee had indeed furnished all the relevant documents that are necessary for factual adjudication of the issue in dispute. It is only question of non-acceptance of the said evidence by the ld. AO due to astronomical increase in share price of the scrip dealt by the assessee which had eventually led to addition. The substantial question of law raised by the assessee on such addition has been admitted filed by the assessee. Once, the substantial question of law on the quantum proceedings is admitted by the Hon'ble High Court, the issue in dispute became debatable. Hence, there cannot be any concealment penalty of the assessee for alleged furnishing of inaccurate particulars of income. Reliance in this regard is placed on the decision of in the case of PCIT vs. Harsh International Pvt. Ltd.[ 2020 (12) TMI 1082 - DELHI HIGH COURT] - Hence, we have no hesitation in directing the ld. AO to delete the penalty in the instant case. Accordingly, the ground raised by the assessee is allowed. 2021 (10) TMI 548 Disallowance u/s.14A read with Rule 8D - assessee had not produced any documentary evidences to demonstrate that the investments were not related to earning exempt income - HELD THAT:- CIT(A) shows that while allowing complete relief to the assessee on the issue of disallowance U/s. 14A CIT(A) has completely ignored the observations of the AO that the total turnover of the mutual fund was ₹ 101/- Crores and that the major expenditure relating the turnover were audit expenses as the auditor of the company had audited all the transaction expenses relating to turnover. AO had also pointed out incurrence of banking charges for the banking transactions and also incurrence of rental expense, personnel cost, depreciation, communication cost etc - CIT(A) did not consider these observations of the Assessing Officer as being relevant while allowing entire relief to the assessee company. A perusal of the impugned order also shows that the CIT(A) did not refer to any documentary evidences submitted by the assessee in this regard which the assessee would have relied upon to refute the observations of the AO. There is also no bifurcation of income earned as tax free income and taxable income. Apparently CIT(A) has accepted the contention of the assessee without giving a proper and thoughtful consideration to the issue before him. In such circumstance, we have no option but to direct the Ld. CIT(A) to re-examine the issue before him and adjudicate the same after giving proper opportunity to the assessee to present its case. Appeal of the Department stands allowed for statistical purposes. 2021 (10) TMI 547 Disallowance u/s 40A(3) - cash payments made by the assessee above ₹ 20,000/- in a single day - assessee had not made any vouchers related to cash payments on different dates - HELD THAT:- The assessee, for the sake of its convenience, has mentioned on the bills to separate figures of below ₹ 20000/-. The ld Counsel has argued before the Bench that old ornaments are sold in dire need and necessity. We note that when old ornaments are sold in dire need then why an unknown person (customer) will keep his money with the assessee, as the assessee makes payment in cash to the same customer on next day, (against the old ornaments purchased by the assessee). Further, it is beyond imagination that so many persons will behave in this manner on so many different dates. Thus, we note that arguments made by the ld Counsel is an attempt to avoid the disallowance. We note that no convincing reply has been put forward by ld Counsel and we also observe that arguments made by the ld Counsel is certainly not based on exception given in rule 6DD of the Rules. The argument of ld Counsel is not acceptable in so far, bill no.2608 amounting to ₹ 68,625/- , is concerned, as the same was not included in the total amount of ₹ 22,92,113/-, as noted by the assessing officer The payments to the extent of ₹ 23,22,676/- was made beyond the limit prescribed u/s 40A(3) of the Act and the assessee's case are not covered in the exceptions mentioned under rule 6DD of the Income Tax Rules. Besides, the judgments, cited by the ld Counsel have been distinguished by the ld CIT(A) in his findings, as noted by us in above para, hence we observe that none of the judgment is favoring to the assessee`s case. We are therefore of the considered view that the plea of the ld Counsel does not merit legal acceptance, thus, we sincerely believe that the plea of the ld Counsel must be rejected - Decided against assessee. 2021 (10) TMI 546 Unexplained investment in purchaser of land - lands purchased at higher prices but in the registry actual amount paid by them was not declared - purchase consideration paid being less than the guideline value - as during the year under appeal assessee purchased lands at Rau and value as per registry was as different from guideline value - as loose papers found and seized from the premises of Shri Mukesh Jhaveri and also gave reference to the statement of some of the sellers who accepted to have received on money - HELD THAT:- As decided by CIT-A addition has been made on the basis of the statements of the sellers of the land which have neither been provided to the appellant nor opportunity of cross examining the sellers giving to the appellant. AO has not brought any evidence on record to show that the appellant had paid any amount over and above the amount mentioned in the sales deed. AO during the assessment proceeding had given a show cause notice in which it was proposed to add the difference between the guideline value and the purchase price mentioned in the purchase deed as undisclosed investment. For making an addition the requirement is that the assessee should have incurred expenditure, offers no explanation about the source of such expenditure and the explanation offered by him is not satisfactory in the opinion of the Assessing Officer. Section 69C can be invoked only when there is evidence of unexplained expenditure. AO has made the addition on account of undisclosed receipts. The appellant's real estate project is still in progress and no land had been sold for the period under consideration and clearly this is not a case of undisclosed receipts. For the assessment year under consideration there was no statute in the Income Tax Act for taxing the purchase consideration paid by assessee if it is less than the guideline value. As held that additions made on account of alleged undisclosed investment for purchase of land on account of the purchase consideration paid being less than the guideline value cannot be sustained. - Decided in favour of assessee. Customs 2021 (10) TMI 545 Detention of detenue - Smuggling of goods/abetting the smuggling of goods - seizure of gold weighing 30244.90 grams - presence of evidences or not - non-application of mind - HELD THAT:- Having gone through Ext.P9 order, in a case about which the detaining authority was fully aware that the non-placing and non-consideration of the same assumes significance. The order was passed on 10-082021, whereas the order of detention in the instant case is almost two months later on 9-10-2020. We cannot but hold that Ext. P9 was vital and relevant material, that had a bearing on the question to detain or not, and non-consideration of the said material vitiates the detention for non-application of mind. What weight Ext.P9 would carry if it was within the knowledge of the detaining authority is altogether a different matter. It is not disputed that Ext. P9 was not placed before and considered by the detaining authority. The detention order will be vitiated on the ground of non-application of mind if a piece of evidence that is relevant, though not binding, had not been considered at all. If a fact or material that might reasonably have affected the decision, whether or not to pass an order of detention, is excluded from consideration, there would be a failure of application of mind which would, in turn, invalidate the detention order. Though we are conscious of the fact that the period of detention would come to an end in a couple of days, since it is our constitutionally entrusted duty to safeguard the rule of law, more so, in a matter involving personal liberty which is sacrosanct and protected under Article 21 of the Constitution of India, we have no choice but to hold the detention to be bad in the eye of law. The order of detention impugned is quashed - Petition allowed. 2021 (10) TMI 544 Seeking permission to mutilate the imported goods - Waste Paper White Wet Strength Waste - section 24 of Customs Act - HELD THAT:- It is the claim of the petitioner that, it is only a waste paper and it has not been mis-declared, therefore, the petitioner is entitled to get release of the goods by paying the proper customs duty, or else, in case, if the respondent raises any doubt still about the goods in question, the petitioner is ready to mutilate the same, and therefore, such permission can be granted to them under Section 24 of the Customs Act. If that is the claim of the petitioner, that can very well be considered by the respondent Customs Department and accordingly, the plea of the petitioner raised in the representation dated 16.03.2021 can be decided and disposed of in the manner known to law, within a stipulated period, on merits. There shall be a direction to the respondents to consider the representation of the petitioner dated 16.03.2021, and pass orders thereon, on merits and in accordance with law - Petition disposed off. 2021 (10) TMI 543 Refund of SAD - appellant has not furnished the Chartered Accountant certificate as well as correlation statement as required under para 5 of Circular No. 6/2008-Cus dated 28.4.2008 - benefit under N/N. 102/2007- Cus. dated 14.8.2017 denied - HELD THAT:- The Board vide Circular No. 16/2008-Cus has clarified that it is not required to produce the original challans. In the present case, there is no doubt with regard to any of the VAT / ST paid by the appellant. It is summarily rejected stating that the appellant has not produced the original challans. As per the circular, the authority cannot insist for producing the entire original VAT / ST challans unless any deficiency memo is issue informing discrepancy. The appellant having furnished Chartered Accountant certificate and the Commissioner (Appeals) having recorded that it stands correlated the rejection holding that appellant has not furnished the original of VAT / ST challan is unjustified. Appeal allowed. 2021 (10) TMI 542 Valuation of imported goods - Glass Chaton of various varieties - rejection of declared value - enhancement of value based on NIDB data - It has been argued that the NIDB data is based on reassessment and not based on actual invoice value - HELD THAT:- In the appeal before Commissioner (Appeals) the revenue has argued that the adjudicating authority while passing the impugned order has not considered the OIA of the Commissioner (A), Ahmedabad, wherein the enhancement of transaction value has been upheld. The said order has already been set aside and no reliance can be placed on the said order. The Order In Original gives specific grounds why the declared value cannot be rejected. The impugned order does not give any findings on why the said order is incorrect except to rely on the earlier order of Commissioner (Appeals) which has already been set aside by Tribunal. The matter once again is remanded to Commissioner (Appeals) for fresh order without relying on the earlier order of Commissioner (Appeals) and limiting himself to the grounds of appeal before the Commissioner (Appeals) - appeal allowed by way of remand. Corporate Laws 2021 (10) TMI 541 Sanction of scheme of Amalgamation - seeking directions with regard to meeting of Shareholders and Creditors in connection with the Scheme of Amalgamation - Section 230(1) read with Section 232(1) of the Companies Act, 2013 - HELD THAT:- Meetings of the Equity Shareholders Unsecured Creditors of the Applicant No. 1 Applicant No. 2 are dispensed with under section 230(1) read with Section 232(1) of the Act - Directions regarding issuance of various notices also issued. Application disposed off. Insolvency & Bankruptcy 2021 (10) TMI 540 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- As per Form V, Part IV of the application, the corporate debtor is liable to pay an outstanding sum of Rs. ₹ 4,00,000/- along with interest @12% p.a. The date of default as per part IV is 18.12.2019. The present application was filed on 28.02.2020, hence the debt is not time barred and the application is filed within the period of limitation - The Applicant has filed an affidavit under section 9(3)(b) dated 22.02.2020 affirming that no notice of dispute has been given by the corporate debtor relating to dispute of the unpaid operational debt - The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. The present application is complete and the Applicant is entitled to claim its dues, remained uncontroverted by the Corporate Debtor, as no dispute was raised against section 8 notice reply to section 9 application was not filed on e-portal hence we proceeded the matter with hearing. The default in payment of the operational debt is beyond doubt and is established and even after order was reserved, on the day of clarification the corporate debtor requested to defer order for settlement but no settlement was forthcoming. The present application is admitted, in terms of section 9 (5) of IBC, 2016. Application admitted - moratorium declared. 2021 (10) TMI 539 Seeking Liquidation of the Corporate Debtor - Section 33 (2) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal after taking into consideration the present facts, circumstances and the provisions of law, hereby order for liquidation of the corporate debtor and in the circumstances the corporate debtor stands Liquidated, and the incidence of liquidation is to follow, on and from the date of this order, in terms of the provisions of IBC, 2016 and more particularly as given in Chapter - III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017. The Liquidation order is allowed - application allowed. 2021 (10) TMI 538 Seeking approval of Resolution Plan - consent of aggrieved homebuyers received or not - Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 and read with Regulation 39 of the IBBI (CIRP) Regulations, 2016 - HELD THAT:- It is seen from record that objectors are 20 homebuyers. The plan is approved with 100% voting share of CoC which comprises of two banks HDFC bank, Axis bank and also association of home buyers, comprising of approximately by 343 homebuyers. They have after deliberation passed resolution approving plan. In present case 37.69% homebuyers have consented in favour. It is only 20 No. of homebuyers who have raised objections to approval of plan. Moreover, the apex court has held that commercial wisdom of CoC need not be interfered by adjudicating authority and in present case it is approved by 100% voting share of CoC. The provisions of section 31 read with regulations are complied. The financial creditors have been provided with 80.44% of amount claimed and operational creditor are paid 0.295% of claim wherein if the company goes in liquidation the same values will deplete substantially. Thus, the resolution plan needs to be approved. The resolution plan, as approved by the CoC, is in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code; we hereby approve the Resolution Plan under sub-section (1) of Section 31 of the Code - It is hereby declared that the Resolution Plan is binding on the corporate debtor, members, employees of the corporate debtor, creditors of the corporate debtor and other stakeholders involved in the Resolution Plan - moratorium order passed by this bench under Section 14 of the Code shall cease to have effect. Resolution Plan approved - application allowed. 2021 (10) TMI 537 Maintainability of application - initiation of CIRP - Dishonor of Cheque - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The matter has been listed on board from time to time since August 2019. The Director of the Corporate Debtor is putting up appearance regularly before this Bench and did not choose to file any reply. On the other hand, the Director of the Corporate Debtor admitted the liability and made a statement that they will discharge the liability of all their creditors in few days. However, nothing happened. Finally, on 04.08.2021 when the matter was listed on board for final hearing Mr. Anaveer Nanna, Director of the Company appeared through virtual hearing and made the same request which is outrightly liable to be rejected. It is very clear from the conduct of the Corporate Debtor and the various orders passed by this Bench from time to time that the Corporate Debtor having admitted the liability is not inclined to resolve the same and the above Company Petition shall be admitted forthwith. There are no valid grounds warranting the rejection of the above Company Petition as the debt and default are clearly established and the debt is also within limitation - Petition admitted - moratorium declared. Service Tax 2021 (10) TMI 536 Permission for withdrawal of appeal - Principles of natural justice - maintainability of appeal filed by the Department without considering the plea as to the necessity of possessing a registration certificate for availing CENVAT credit of service tax paid on input services for the purpose of claiming refund - HELD THAT:- The learned Senior Standing Counsel appearing for the appellant sent a letter dated 28.9.2021 to the Registry seeking to list the above appeal for withdrawal. Hence, the matter is listed today under the caption 'for withdrawal'. Today, when the case is called, a similar request is made to that effect. The appeal is dismissed as withdrawn. 2021 (10) TMI 535 Denial of CENVAT Credit with penalty - extended period of limitation - first year of service tax implementation - recovery of service tax not paid - failure to submit half yearly returns in time - service tax was not paid in time - suppression of facts or not - Section 73(1) of the Finance Act, 1994 - HELD THAT:- The respondent-Bank has maintained separate accounts in respect of service tax and education cess. The service tax was implemented with effect from 10.09.2004. The Commissioner and the Tribunal both have arrived at a conclusion that the assessee are new to service tax matters. The Commissioner as well as the Tribunal have also arrived at a conclusion that the respondent-Bank has accounted service tax and education cess separately while making cash payments. The material on record does not indicate that the respondent-Bank has indulged in any one of the ingredients contemplated under Section 73 of the Finance Act, 1994 and therefore, the proviso to Section 73 of the Act would not be available to the revenue. The Commissioner was of the view that there was a technical lapse on the part of the respondent Bank - The service tax was implemented in the month of September 2005 and therefore, the material on record clearly indicates that there was no deliberate intent to evade tax and any lapse on the part of the respondent-Bank was rightly viewed by the authority as a technical lapse. There are no infirmity or illegality in the order under challenge - appeal dismissed. 2021 (10) TMI 534 Seeking order to repay the amount under SABKA VISWAHS SCHEME 2019 - the petitioner has given a representation to the respondents on 23.10.2020 to reconsider the issue and to accept the payment and permit the petitioner to avail the benefit of the scheme - HELD THAT:- The said representation since has been considered by the respondents and it has been rejected through the order, dated 10.03.2021 and the copy of the same also has been annexed in the typed set of papers filed by the petitioner, without challenging the said order, dated 10.03.2021, since the petitioner has moved this writ petition once again seek for a writ of Mandamus to consider his representation, dated 23.10.2020, therefore, the same cannot be entertained by this Court. Petition dismissed. 2021 (10) TMI 533 Refund of CENVAT Credit - denial of refund on the ground that the appellant had not debited the amount claimed as refund from their CENVAT credit account, which according to the said authority, was in violation of Para 2(h) of N/N. 27/2012-CE (NT) dated 18.06.2012 - Rule 5 of CENVAT Credit Rules, 2004 (CCR) - HELD THAT:- It is the case of the appellant that the claim of the appellant has been filed before the expiry of the quarter in which one year period from the last date of receipt of falls and accordingly the applications for refund is well within time. But, however, as regards the reversal, it could be gathered from the records, that the adjudicating officer had no chance of verifying the veracity of the appellant s claim vis- -vis ST-3 Returns in the subsequent period wherein the said reversal was claimed to have been made. It is deemed proper to remand the case for the file of adjudicating authority before whom the appellant shall furnish its ST-3 Returns for the subsequent period wherein the said reversal is reflected - appeal allowed by way of remand. 2021 (10) TMI 532 Refund of service tax paid - services provided to Military Engineering Services (MES), which were exempted from payment of service tax vide N/N. 25/2012-ST dated 20/06/2012 as amended by N/N. 09/2016-ST dated 01/03/2016 - denial of refund on the ground of unjust enrichment - HELD THAT:- This Bench on an earlier occasion, in an almost identical situation, in the case of SN ATIWADKAR VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM [ 2019 (5) TMI 661 - CESTAT BANGALORE ] where it was held that the appellant is claiming the refund as a representative of the MES and not on his own account and therefore the principle of unjust enrichment under the provisions of Section 11B of the Central Excise Act is not applicable to the present case. The denial of refund cannot be sustained and hence, the impugned order deserves to be set aside - Appeal allowed - decided in favor of appellant. 2021 (10) TMI 531 Claim of Refund - Post GST, on demand, appellant paid service tax under reverse charge basis and claim refund as the same is eligible as Input Tax Credit under the erstwhile law - denial of credit on the ground that the payment made by the appellant is consequent to an assessment/adjudication proceeding and therefore, when recovered as an arrears of tax, the appellant is not admissible for the input tax credit - transitional provisions under GST for claim of refund - HELD THAT:- It is not in dispute that the appellants have been called upon to pay service tax under reverse charge mechanism. During the process of audit it was noticed that they have made certain foreign remittances and that they are liable to pay service tax for the input services received from their parent company. Consequently, they are eligible for credit. However, the said omission or default for not paying the tax under the reverse charge mechanism came to the knowledge of the appellant only after the Audit Officers pointed out the same. They immediately paid the amount on 22.01.2018. Though they were eligible for credit since the time to carry forward the Cenvat Credit to the GST regime had expired on 27.12.2017, the appellant could not follow the procedure to carry the Cenvat Credit to the GST regime. They then applied for refund of the said credit. On bare perusal of Section 142 (8), it can be seen that this sub-section (8) provides for recovery of arrears of tax after the implementation of GST Act, 2017. It deals with the provisions for assessment/adjudication proceedings that are carried out under the erstwhile law after introduction of GST. The section states that in such proceedings for recovery of arrears, the assessee will not be getting the benefit of any input credit for adjustment under GST Act. 2017. In the present case, there is no credit that requires to be adjusted to the GST Act, 2017. The entire tax paid is claimed as credit under the existing law. The sub-section states that input tax credit will not be available under GST Act. It does not say that credit is not eligible under existing law (erstwhile law). This means in consequent to recovery of arrears in assessment/adjudication proceedings no input credit can be availed under GST Act, 2017. To be more clear, if there are any arrears to be recovered under the existing law, the same can be recovered by invoking the transitional provisions of the GST Act, however, input tax credit will not be admissible under the GST Act. Section 142 (3) is the transitional provision for claim of refund after the introduction of GST Act, 2017. It says that refund claims of any amount paid under the erstwhile law have to be disposed according to the provisions of the erstwhile law and the amount has to be paid in cash. The appellants have paid the tax under the erstwhile law. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, only sub-section (3) of section 142 will be attracted. Rejection of the refund claim by referring to sub-section (8) of Section 142 of CGST Act, 2017 is mis-placed - appeal allowed - decided in favor of appellant. Central Excise 2021 (10) TMI 530 CENVAT Credit - time limitation - denial of credit on the ground that appellant has not availed the Cenvat credit immediately on receipt of inputs therefore, it becomes time bar - period of 2009-2010 and 2010-11 in July 2013 - HELD THAT:- This issue has been considered by the Honb le Punjab and Haryana High Court in the case of INDUSTRIAL CABLES VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2009 (1) TMI 281 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH] wherein the same issue of limitation for availing the Cenvat credit was considered and it was held that The interpretation of Rule 57G adopted by the Tribunal is incorrect and unjust and, therefore, the period of limitation of six months imported by the Tribunal in Rule 57G is unsustainable as the Tribunal or the Courts are not competent to import any specific period of limitation by implication. It is thus settled legal position of law the cenvat credit cannot be denied on the ground of limitation in absence of any statutory time limit prescribed - appeal allowed - decided in favor of appellant. 2021 (10) TMI 529 Seeking refund to Large Taxpayer Unit (Mumbai) of Cenvat Credit reversed/paid for LPG - LPG removed without payment of duty under Domestic LPG Subsidy Scheme - LPG, Exempt goods or not - requirement to maintain separate account in terms of Rule 6 (2) - Rules 6(3) of Cenvat Credit Rules, 2004 - HELD THAT:- As per the above Rule 6 (1) Cenvat Credit shall not be allowed on such quantity of input or input services used in or in relation to manufacture of exempted goods however, the exception is provided in the circumstances mention in sub rule 6 (2). In the present case the respondents have used input and input services in the manufacture of dutiable goods i.e. motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. the LPG is generated as one of the product which also dutiable but under the said scheme of the Government i.e. PDS when it is decided to clear dutiable LPG under the PDS there is an exemption on excise duty. However, the main products which are dutiable are motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc are the products only for the manufacture of the same entire input and input services are used therefore it cannot be said that any input or input service is used right from the beginning of the process in the manufacture of exclusively exempted goods therefore, Rule 6 (1) is not applicable. Consequently rule 6 (2) is also not applicable. The LPG generated during the course of manufacture of motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. is dutiable right from the stage of receipt of input and input services till the completion of manufacture of LPG. Therefore, during that stage availment of Cenvat Credit is absolutely in conformation to Cenvat Credit Rules, 2004. In the process or refining crude oil to obtain value added finished goods namely motor sprit (MS), High Speed Diesel Oil, aviation Turbine fuel (ATF), Naphtha, Fuel oil etc. the LPG inevitably arises and tapped from the crude distillation unit, coker unit, fluid catalytic cracking unit (FCCU), platformer unit etc. in these process it is not as if respondent had set out to manufacture LPG. The same arises in the refining process and that the same could not have been limited or curtailed the production of LPG nor could have been manufactured other value added products using a less quantity of input of input services as whether the LPG then or otherwise - the input and input services of such dutiable product the Cenvat Credit on such input and input services cannot be curtailed or reduced by applying rule 6 (1), 6 (2) and 6 (3A) of Cenvat Credit Rules, 2004. In this undisputed facts when the entire quantity of input and input services was required for manufacture of dutiable finished goods and when LPG emerged inevitably without any deliberate attempt to manufacture it, the provision of Rule 6 (1) was not violated in any manner. The identical issue has been considered by the jurisdictional Hon ble Gujarat High Court in the case of COMMISSIONER OF C. EX. CUSTOMS, VADODARA-I VERSUS STERLING GELATIN [ 2010 (9) TMI 857 - GUJARAT HIGH COURT] wherein in the issue before the Hon ble Court was that whether the assessee was required to pay an amount of 8%/10% of the value of exempted goods under Rule 6 (3) (b) of the CCR, as one of the inputs namely Hydrochloric acid was used in the manufacture of dutiable goods (Gelatin) as well as for manufacture of exempted goods Dicalcium Phosphate and the assessee was not maintaining separate account under rule 6(2) of CCR,2004. The Hon ble Gujarat High Court after examining the provision of Cenvat scheme and the argument that the assessee therein could not have manufactured Gelatin using a lesser quantity of Hydrochloric acid held that rule 6 (1) of the CCR itself would not come into play. The similar issue has been considered by Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS M/S NATIONAL ORGANIC CHEMICAL INDUSTRIES LIMITED [ 2008 (11) TMI 6 - SUPREME COURT] , in that case exemption under notification No. 217/86-CE dated 02.04.1986 was available to ethylene and propylene (falling under chapter 29) when captively used in the process cracking raw naphtha for the manufacture of ethylene and propylene - The Hon ble Supreme Court held that the emergence of ethane and methane in the process of manufacturing ethylene and propylene was inevitable therefore no ground for denying the exemption. It was held that the assessee could not have manufactured ethylene and propylene without manufacturing ethane and methane and in any technology the emergence of ethane and methane was inevitable. It was also held that since the identical quantity of ethylene and propylene was used in the manufacture of ethane and methane, it cannot be said that benefit of exemption was not available. Since the respondent would not have manufactured the dutiable goods by using lesser quantity of Input and input services the entire cenvatable Input and Input service were used for manufacture of dutiable finished goods therefore, the requirement of Rule 6 (2) stood satisfied as the entire credit was attributed to the manufacturer of the finished dutiable goods only - In the present case on date of availing credit on input and input services, there was no basis for presuming that any part of the same will be used in the manufacture of any exempted goods for the reason that at that time LPG was dutiable good only after the receipt Input and Input services and availment of credit, even upto manufacture of LPG it is not known that LPG is exempted goods, it is only at the time of clearance of goods on end use basis under PDS it is cleared under exemption. The objective of CBEC Manual of Supplementary Instruction at Para 3.7 of Chapter 5 is that once the input or input services used in the manufacture of main product which is dutiable, it is sufficient to allow the entire credit for the reason that all the input and input services were used for manufacture of dutiable goods even if the small part of the byproduct is generated unavoidably. In the present case also the Input and Input services was used for manufacture of other dutiable goods i.e. MS, HSD,ATF, Naphtha, Fuel oil etc and the LPG emerged unavoidably. The Cenvat Credit cannot be reduced on the input and input services attributed to LPG. With this objective behind the Para 3.7 which is directly applicable in the present case, the respondent is not required to reverse cenvat credit in terms of Rule 6 of CCR on this ground. The respondents is not required to pay any amount under Rule 6(3) in respect of LPG cleared under exemption under PDS. Therefore, the amount paid by the respondent was liable to be refunded to them - appeal dismissed - decided against Revenue. 2021 (10) TMI 528 Classification of goods - Nimbooz - to be classified under CETH 2202 10 20 of the First Schedule to the Central Excise Tariff Act, 1985 or under CETH 2202 90 20 under the category of fruit pulp or fruit juice based drinks ? - extended period of limitation - HELD THAT:- A Larger Bench of the Tribunal in M/S BRINDAVAN BEVERAGES PRIVATE LIMITED, KRANTI KUMAR CHANDRAKAR, M/S PEPSICO INDIA HOLDINGS PRIVATE LIMITED VERSUS COMMISSIONER CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HAPUR AND BAREILLY [ 2019 (10) TMI 762 - CESTAT ALLAHABAD (LB)] has held that Nimbooz would be classifiable under CETH 2202 10 20 of the First Schedule to the Central Excise Tariff Act. Extended period of limitation - HELD THAT:- The issue as to whether the Department was justified in invoking the extended period of limitation does not arise. The order dated 31.03.2015 passed by the Commissioner confirming the demand of differential duty for the normal period of limitation with interest and penalty, therefore, cannot be sustained and is set aside - Appeal allowed - decided in favor of appellant. Indian Laws 2021 (10) TMI 527 Jurisdiction - power of National Green Tribunal (NGT) to exercise Suo Motu jurisdiction in discharge of its functions under the National Green Tribunal Act, 2010 - HELD THAT:- The NGT Act, when read as a whole, gives much leeway to the NGT to go beyond a mere adjudicatory role. The Parliament s intention is clearly discernible to create a multifunctional body, with the capacity to provide redressal for environmental exigencies. Accordingly, the principles of environmental justice and environmental equity must be explicitly acknowledged as pivotal threads of the NGT s fabric. The NGT must be seen as a sui generis institution and not unus multorum, and its special and exclusive role to foster public interest in the area of environmental domain delineated in the enactment of 2010 must necessarily receive legal recognition of this Court. The environmental impacts on climate change are gaining increasing visibility in the shape of uncertain rains, species extinction, loss of natural habitat and so on. These also have the propensity to diminish fresh water resources, reduce agricultural yields and impact public health, particularly in the cities. The flooding and erosion in riverine and coastal areas are matters of serious concern - It is vital for the wellbeing of the nation and its people, to have a flexible mechanism to address all issues pertaining to environmental damage and resultant climate change so that we can leave behind a better environmental legacy, for our children, and the generations thereafter. The NGT, with the distinct role envisaged for it, can hardly afford to remain a mute spectator when no-one knocks on its door. The forum itself has correctly identified the need for collective stratagem for addressing environmental concerns. Such a society centric approach must be allowed to work within the established safety valves of the principles of natural justice and appeal to the Supreme Court. The hands-off mode for the NGT, when faced with exigencies requiring immediate and effective response, would debilitate the forum from discharging its responsibility and this must be ruled out in the interest of justice. Institutions which are often addressing urgent concerns gain little from procedural nitpicking, which are unwarranted in the face of both the statutory spirit and the evolving nature of environmental degradation. Not merely should a procedure exist but it must be meaningfully effective to address such concerns. The role of such an institution cannot be mechanical or ornamental. Registry may do the needful and post the matters on 25.10.2021 for direction and fixing date of hearing, before the Bench presided - For the purpose of further hearing, the respective cases shall not be treated as part-heard before this Bench. 2021 (10) TMI 526 Professional and/or other misconduct - removal of the name of the appellant from the membership of the respondent Institute for a period of five years - wrong deposit of amount in local treasury unit of Income tax Department at Agra - further, allegation is that the appellant had interpolated assessees copies of challans to show higher figures and claimed the higher amount - HELD THAT:- The Institute of Chartered Accountants of India is a statutory body created by an Act of Parliament that is the Chartered Accountants Act, 1949. In accordance with Section 9 of the Act, the management of the affairs of the Institute are vested in the Central Council. The Council performs its function through three different standing committees constituted under Section 17 of the Act and various other committees. One of the standing committees of the Institute is the Disciplinary Committee. Section 21 of the Act prescribes the procedure to be followed with regard to an inquiry relating to the misconduct of the members of the Institute. Section 22 A provides for filing of an appeal by a member against imposition of penalty. The Act was amended on 08.08.2006 by Act 9 of 2006. The findings by the Council constitute the determinative decision as to the guilt of the member and because it is determinative in character, the Act requires it to be recorded. Thus, the Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. Sub section (4) of Section 21 mandates that where a member of the Institute has been guilty of professional misconduct specified in the First Schedule of the Act, the Council shall afford to such member an opportunity of being heard before any orders are passed against him. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. In INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VERSUS PRICE WATERHOUSE AND ANR. [ 1997 (7) TMI 649 - SUPREME COURT ] it was held by this Court that the Disciplinary Committee is a fact finding body which is subordinate to the Council as a fact finding Authority. After analysing Section 21 and Regulation 15, this Court held that the Council is required to independently consider the explanation submitted by the member and the evidence adduced in the inquiry before the Disciplinary Committee and the report of the Committee. Recording of reasons is a principle of natural justice and every judicial/quasi judicial order must be supported by reasons to be recorded in writing. It ensures transparency and fairness in the decision making process. The person who is adversely affected wants to know as to why his submissions have not been accepted. Giving of reasons ensures that a hearing is not rendered as a meaningless charade - It is a well known principle that justice should not only be done but should also be seen to be done. An unreasoned decision may be just, but it may not appear to be so to the person affected. A reasoned decision, on the other hand, will have the appearance of fairness and justice. Where the Council has found any member of the Institute to be guilty of misconduct, it is required under the Act to forward the matter to the High Court with its recommendations and the High Court has to pass final order either dismissing the complaint or penalizing the member of the Institute. The order of the Council, imposing penalty upon the member, is also appealable by the members aggrieved before the High Court. In the circumstances, it is all the more necessary that the recommendation/order of the Council should contain reasons for the conclusion - the High Court has equally erred in accepting the recommendations of the Council without applying its own logic to this aspect of the matter. The recommendations/order(s) passed by the Council of the Institute of Chartered Accountants of India are set aside - matters are remitted back to the Council for fresh consideration and disposal in accordance with law - Appeal allowed. 2021 (10) TMI 525 Dishonor of Cheque - insufficiency of funds - misuse of cheque issued as security for older transaction - acquittal of the accused - rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt or not - HELD THAT:- The fact that there was an earlier transaction in the year 1995 and that liability had been settled by repayment is a factor which would lend credence to the case of the 2nd respondent/accused that Ext.P1 cheque was one issued as security in the discharge of that liability and such cheque was misused by the appellant/complainant to make it appear that there was a subsequent transaction. In the totality of the facts and circumstance of this case, this Court should not interfere with the findings rendered by the trial court. The 2nd respondent/accused has succeeded in showing that the statutory presumption under Section 139 of the Negotiable Instruments Act should not be applied. In other words the 2nd respondent/accused has been able to rebut the statutory presumption. The appellant/complainant has not thereafter been able to bring in any evidence suggesting the existence of a transaction resulting in a legally enforceable debt payable by 2nd respondent/accused. The prosecution of the 2nd respondent/accused under Section 138 of the Negotiable Instruments Act must necessarily fail - this Court is of the view that the 2nd respondent/accused has succeeded in rebutting the statutory presumption under Section 139 of the Negotiable Instruments Act - Appeal dismissed.
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